In The News

XPO Logistics Announces Third Quarter 2012 Results

Adds Three New Cold-starts

GREENWICH, Conn. — November 6, 2012 — XPO Logistics, Inc. (NYSE: XPO) yesterday announced financial results for the third quarter of 2012. Total revenue was $71.0 million for the quarter, a 49.8% increase from the same period last year.

Net loss was $3.1 million for the quarter, compared with net income of $190,000 for the same period last year. The company reported a third quarter net loss available to common shareholders of $3.9 million, or a loss of $0.22 per diluted share, compared with a net loss available to common shareholders of $44.4 million, or a loss of $5.38 per diluted share, for the same period in 2011. The third quarter 2011 results reflected a $44.6 million non-cash accounting charge related to the September 2011 equity investment in the company.

Adjusted earnings per share ("adjusted EPS"), a non-GAAP financial measure, was a loss of $0.38 for the third quarter 2012, excluding a benefit of $2.8 million, or $0.16 per diluted share, related to the reversal of a valuation allowance for deferred tax assets recorded in the second quarter of 2012. EPS and adjusted EPS include a charge of $0.04 per diluted share related to $750,000 in cumulative preferred dividends.

Earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP financial measure, was a loss of $8.9 million for the third quarter of 2012, compared with EBITDA of $775,000 for the same period in 2011. EBITDA for the third quarter of 2012 includes $1.2 million in non-cash share-based compensation expense. A reconciliation of each non-GAAP measure to its most directly comparable GAAP measure is provided in the attached financial tables.

The company had approximately $265 million of cash as of October 31, 2012.

CEO Comments

Bradley Jacobs, chairman and chief executive officer, said, "We are on point with our plan, gaining scale through acquisitions, cold-starts and the rapid expansion of our salesforce. Our revenues were up 50% in the quarter, with a 21% increase in gross margin dollars. In our freight brokerage business, gross margin dollars almost tripled from 2011. While our expedite and freight forwarding businesses faced soft market conditions, we're positioning these operations for long-term growth. For all three of our business units, we're executing a very specific strategy – making investments that restrain earnings in the near-term, but should create significant shareholder value over time."

Jacobs continued, "In October, we achieved an important milestone with our acquisition of Turbo Logistics. We also acquired a small freight brokerage business, BirdDog Logistics, which we tucked into our new Charlotte cold-start. We now have four acquisitions under our belt and 15 cold-starts, including eight in freight brokerage. We added 119 salespeople in the third quarter, and we're putting our recruits through an intensive training program. In addition, we're beta-testing new technology to empower our salespeople with proprietary pricing tools and truck-finding capabilities. We're now fast approaching a $500 million annual revenue run rate."

Third Quarter 2012 Results by Business Unit

Freight brokerage: The company's freight brokerage business generated revenue of $32.2 million for the quarter, a 290% improvement from the same period last year. Revenue growth was primarily due to the impact of acquisitions and the performance of the company's eight cold-start locations. The acquisition of Kelron Logistics on August 3, 2012, had a positive revenue impact of $13.5 million. Gross margin was 12.6% for the quarter, compared with 16.5% in 2011. The decline in gross margin was primarily due to lower-margin sales during the start-up phase of cold-start locations. Operating loss was $2.4 million for the quarter, compared with operating income of $499,000 in the prior year's period, reflecting a planned increase in SG&A expense. The increase in SG&A expense was primarily due to the expansion of the company's cold-start branches and national operations center in Charlotte, as well as the acquisition of Kelron.

Expedited transportation: The company's Express-1 business generated total revenue of $23.8 million for the quarter, a 1.4% improvement from the same period last year. The improvement was primarily due to an increase in revenues from temperature control shipments. Gross margin percentage for the quarter was 16.6%, compared with 21.4% in 2011. The decrease in gross margin percentage reflects a soft market for expedite freight, as well as higher rates paid to independent fleet owners that went into effect on March 1, 2012. Operating income was $1.2 million for the quarter, a 50.4% decrease from the same period last year, primarily due to lower gross margins and an increase in SG&A expense. The increase in SG&A expense was primarily due to increased headcount and expanded recruitment efforts for independent fleet owners, partially offset by lower incentive compensation.

Freight forwarding: The company's Concert Group Logistics (CGL) business generated total revenue of $17.3 million for the quarter, a 2.3% increase from the same period last year. The increase is primarily related to higher revenues generated by company-owned branches, partially offset by a decrease in revenues at independent agent stations. Gross margin for the quarter was essentially flat at 11.1%, compared with 11.0% a year ago. Operating income was $97,000 for the quarter, compared with $639,000 last year, primarily reflecting higher SG&A costs associated with investments in cold-starts in Charlotte, N.C., Atlanta, Ga., Los Angeles, Calif., and Houston, Texas.

Corporate: The company's corporate SG&A expense in the third quarter of 2012 was $8.2 million, an increase of $5.1 million compared with the same period in 2011. The increase reflects a $2.0 million increase in salaries and benefits related to executive appointments and headcount additions in corporate shared services, $1.4 million of litigation-related legal costs, $1.1 million of M&A transaction costs and a $1.0 million increase in non-cash share-based compensation expense.
Nine Months 2012 Financial Results

For the nine months ended September 30, 2012, the company reported total revenue of $170.1 million, a 27.9% increase from the first nine months of 2011.

Net loss was $11.0 million, compared with net income of $2.2 million for the same period last year. The company reported a nine-month 2012 net loss available to common shareholders of $13.3 million, or a loss of $0.89 per diluted share, compared with a net loss available to common shareholders of $42.4 million, or a loss of $5.15 per diluted share, for the same period last year. The results from the first nine months of 2011 reflected a $44.6 million non-cash accounting charge related to the September 2011 equity investment in the company. EPS includes a charge of $0.15 per diluted share related to $2.3 million in cumulative preferred dividends.

EBITDA was a loss of $15.7 million for the first nine months of 2012, compared with EBITDA of $5.0 million for the same period in 2011. EBITDA for the first nine months of 2012 includes $5.6 million, or $0.37 per diluted share, of salaries and benefits expense related to the executive team appointments and headcount additions for corporate shared services; $1.9 million, or $0.13 per diluted share, of M&A transaction costs; and $1.4 million, or $0.09 per diluted share, of litigation-related legal costs.

Adds Three Cold-starts and Tuck-in Acquisition

The company announced the opening of three new cold-starts in the third quarter: one in freight brokerage and two in freight forwarding. The new freight brokerage branch in Charlotte, N.C., will be led by Drew Wilkerson. Mr. Wilkerson most recently led the Columbia, S.C., branch that the company acquired through the Continental Freight Services transaction in May. The new freight forwarding locations are in Houston, Texas, and Kansas City, Mo. In addition, freight forwarding agent-owned locations in Chicago, Ill., and Minneapolis, Minn., were transitioned to company-owned branches.

On October 1, 2012, the company acquired certain assets of BirdDog Logistics, LLC, a freight brokerage operation with approximately $7 million of revenue, located in Charlotte, N.C. BirdDog's salesforce and customer and lane histories were merged with the company's cold-start in Charlotte.

About XPO Logistics, Inc.

XPO Logistics, Inc. (NYSE: XPO) is one of the fastest growing providers of non-asset based, third-party freight transportation services in North America. The company uses its network of more than 20,000 relationships with ground, sea and air carriers to find the best transportation solutions for its customers. XPO Logistics offers its services through three distinct business units: freight brokerage; expedited transportation (Express-1, Inc.); and freight forwarding (Concert Group Logistics, Inc.). The company serves more than 7,500 customers in the retail, commercial, manufacturing and industrial sectors through 56 locations, including 33 branches in the United States and Canada and 23 agent offices. www.xpologistics.com

Investor Contact:
XPO Logistics, Inc.
Michelle Muniz, +1-203-930-1459
[email protected]

Media Contact:
Brunswick Group
Steve Lipin / Gemma Hart, +1-212-333-3810