In The News

XPO Logistics Announces Second Quarter 2015 Results

By Contributing Writer
Posted Aug 7th 2015 11:52AM

Reports $80 million of adjusted EBITDA

Achieves significant margin improvement in transportation and logistics

Issues 2019 targets for $23 billion of revenue and $1.5 billion of EBITDA

GREENWICH, Conn. - XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the second quarter of 2015, including 22 days of financial performance from the operations of Norbert Dentressangle SA. Total gross revenue increased 109.3% year-over-year to $1.2 billion, and net revenue increased 317.2% to $508.6 million.

On a GAAP basis, the company reported a net loss of $78.8 million for the quarter, compared with a net loss of $13.8 million for the same period in 2014. The net loss available to common shareholders was $75.1 million, or a loss of $0.89 per diluted share, compared with a net loss available to common shareholders of $14.5 million, or a loss of $0.28 per diluted share, for the same period in 2014.

On an adjusted basis, the net loss available to common shareholders, a non-GAAP measure, was $13.6 million, or a loss of $0.16 per share for the quarter, excluding the items detailed below. This compares with an adjusted net loss available to common shareholders of $11.6 million, or a loss of $0.22 per share, for the second quarter of 2014.

Adjusted net loss available to common shareholders for the second quarter of 2015 excludes: $78.8 million, or $62.6 million after-tax, of transaction and integration costs; $8.6 million, or $6.1 million after-tax, of debt commitment fees; $4.4 million, or $3.2 million after-tax, of rebranding costs; $0.4 million, or $0.3 million after-tax, of costs related to the conversion of the company's convertible senior notes; a $6.6 million benefit from reversing the non-controlling interests related to the adjustments; and a $5.7 million benefit, or $4.1 million after-tax, related to the gain on sale of intermodal equipment. Reconciliations of adjusted net loss available to common shareholders and adjusted EPS are provided in the attached financial tables.

Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP financial measure, improved to $79.7 million for the quarter, compared with $14.1 million for the same period in 2014. The acquisitions of Norbert Dentressangle and Bridge Terminal Transport accounted for $34.3 million of adjusted EBITDA. Adjusted EBITDA in the second quarter of 2015 excludes $78.8 million of transaction and integration costs; $4.4 million of non-controlling interests; $2.5 million of rebranding costs; and a $5.7 million benefit related to the gain on sale of intermodal equipment assets. Adjusted EBITDA in the quarter includes $4.6 million of non-cash share-based compensation. A reconciliation of adjusted EBITDA to net loss is provided in the attached financial tables.

The company had $1.2 billion of cash as of July 31, 2015.

Issues New Long-Term Targets

The company issued new long-term financial targets to reflect its expanded platform for global growth. For the full year 2019, the targets are:

Revenue of approximately $23 billion; and
EBITDA of approximately $1.5 billion.

CEO Comments

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "We're continuing to grow the company at a rapid pace, well ahead of plan. In the second quarter, we more than doubled our gross revenue year-over-year, grew our net revenue four-fold, and increased adjusted EBITDA more than five-fold. These results included just 22 days of the Norbert Dentressangle acquisition and one month of Bridge Terminal Transport. The most notable organic contributions to EBITDA came from our businesses in truck brokerage, expedite and last mile, where we recently won a coveted e-commerce contract.

"The integration of Norbert Dentressangle is exceeding expectations, and the rebranding to XPO Logistics is moving along quickly. We've already begun to realize synergies between our operations. Next month, for example, we'll open a contract logistics facility in Pennsylvania to support a Spain-based retailer in expanding its U.S. footprint. Our European operations have served this customer for years - now it's an important new relationship for us in North America as well. And with last mile, our customers have been asking us to bring this expertise to Europe."

Jacobs continued, "We're in a strong position to act on acquisition opportunities on both sides of the Atlantic, with more than $1.2 billion in cash, an untapped ABL facility, and a highly integrated global platform. Our new trajectory puts us on track to nearly triple the size of our company in four years. We're now targeting approximately $23 billion of revenue and $1.5 billion of EBITDA in 2019."

Second Quarter 2015 Results by Segment

Transportation: The company's transportation segment, which includes truck brokerage and intermodal, last mile, expedite, less than truckload, truckload, and global forwarding, generated total gross revenue of $861.2 million for the quarter, a 48.2% increase from the same period in 2014. The year-over-year increase in segment revenue was primarily due to the acquisition of Norbert Dentressangle, and to 4% organic growth, or an estimated 10% organic growth excluding the impact of lower fuel prices. Net revenue margin for the second quarter was 22.5%, compared with 21.0% in 2014. The increase in net revenue margin was primarily due to organic margin improvements in the truck brokerage, last mile and expedite businesses, and to the acquisitions of Norbert Dentressangle and Bridge Terminal Transport. Second quarter EBITDA for the segment improved to $52.1 million, compared with $27.9 million a year ago. Operating income improved to $23.0 million, compared with $3.2 million a year ago. The increases in EBITDA and operating income were largely due to improved performance by the company's truck brokerage, last mile and expedite businesses, and to the acquisition of Norbert Dentressangle. Transportation EBITDA and operating income reflect $5.9 million of transaction and integration costs. The company's European business contributed transportation gross revenue of $171.6 million, EBITDA of $8.4 million, and operating income of $1.9 million. A reconciliation of EBITDA to operating income for the transportation segment is provided in the attached financial tables.

Logistics: The company's logistics segment, which provides contract logistics and related supply chain services, generated gross revenue of $359.6 million, net revenue of $314.0 million, EBITDA of $30.9 million and operating income of $4.3 million. Logistics EBITDA and operating income reflect $5.5 million of transaction and integration costs. The company's European business contributed logistics gross revenue of $177.4 million, net revenue of $133.0 million, EBITDA of $6.2 million and operating loss of $3.8 million. A reconciliation of EBITDA to operating income for the logistics segment is provided in the attached financial tables.

Corporate: Corporate SG&A expense was $57.4 million, compared with $15.1 million for the second quarter of 2014. The increase was primarily due to an increase in restructuring, legal and acquisition-related transaction costs. Expense for the quarter includes: $39.8 million, or $33.8 million after-tax, of transaction and integration costs related to acquisitions; $1.9 million, or $1.3 million after-tax, of non-cash share-based compensation; and $1.4 million, or $1.1 million after-tax, of litigation costs.

Six Months 2015 Financial Results

For the six months ended June 30, 2015, the company reported total revenue of $1.9 billion, a 122.2% increase from the same period in 2014.

On a GAAP basis, the company reported a net loss of $93.2 million for the first six months, compared with a net loss of $42.1 million for the same period last year. The net loss available to common shareholders was $90.3 million, or a loss of $1.11 per diluted share, compared with a net loss of $43.6 million, or a loss of $0.92 per diluted share, for the same period in 2014.

On an adjusted basis, the net loss available to common shareholders, a non-GAAP measure, was $22.7 million, or a loss of $0.28 per share for the first six months, excluding the items detailed below. This compares with an adjusted net loss available to common shareholders of $25.3 million, or a loss of $0.54 per share, for the same period in 2014.

Adjusted net loss for the first six months of 2015 excludes $79.6 million, or $63.2 million after-tax, of transaction and integration costs; $8.6 million, or $6.1 million after-tax, of debt commitment fees; $6.9 million, or $5.5 million after-tax, of costs related to the conversion of the company's convertible senior notes; $4.9 million, or $3.5 million after-tax, of rebranding costs; a $6.6 million benefit from reversing the non-controlling interests related to the adjustments; and a $5.7 million benefit, or $4.1 million after-tax, related to the gain on sale of intermodal equipment assets. Reconciliations of adjusted net loss to common shareholders and adjusted EPS are provided in the attached financial tables.

Adjusted EBITDA for the first six months of 2015 improved to a gain of $109.3 million, compared with a gain of $14.8 million for the same period in 2014. Adjusted EBITDA for the first six months of 2015 excludes $79.6 million of transaction and integration costs; $4.4 million of non-controlling interests; $2.5 million of rebranding costs; and a $5.7 million benefit related to the gain on sale of intermodal equipment assets. Adjusted EBITDA for the first six months of 2015 includes $6.9 million of non-cash share-based compensation. A reconciliation of adjusted EBITDA to net loss is provided in the attached financial table.

Conference Call

The company will hold a conference call on Thursday, August 6, 2015, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-708-4539; international callers dial +1-847-619-6396. A live webcast of the conference will be available on the investor relations area of the company's website, www.xpo.com/investors. The conference will be archived until September 5, 2015. To access the replay by phone, call toll-free (from U.S./Canada) 1-888-843-7419; international callers dial +1-630-652-3042. Use participant passcode 40169457.

About XPO Logistics, Inc.

XPO Logistics, Inc. (NYSE: XPO) is a top ten global provider of cutting-edge supply chain solutions to the most successful companies in the world. The company provides high-value-added services for surface transportation, including freight brokerage, intermodal, last mile and expedite; highly engineered contract logistics; warehousing and distribution; and global forwarding by ground, air and sea. XPO serves more than 30,000 customers with a highly integrated network of over 54,000 employees and 887 locations in 27 countries. www.xpo.com

XPO's corporate headquarters is in Greenwich, Conn., USA, and its European headquarters is in Lyon, France. The company holds an 86.25% controlling interest in Norbert Dentressangle SA. The remaining ND stock is traded as GND on Euronext Paris / Euronext London - Isin FR0000052870. www.norbert-dentressangle.com