XPO Logistics Announces Second Quarter 2013 Results
Reports 65% Organic Growth and Significant Margin Expansion in Freight Brokerage
XPO Logistics, Inc. today announced financial results for the second quarter of 2013.
Total revenue was $137.1 million for the second quarter, a 151.4% increase from the same period in 2012. Gross margin dollars increased 128.4% year-over-year to $19.3 million, and gross margin percentage was 14.1%.
For the second quarter of 2013, the company reported a net loss of $17.4 million, compared with a net loss of $5.2 million for the same period in 2012. The net loss available to common shareholders was $18.1 million, or a loss of $1.00 per diluted share, compared with a net loss of $5.9 million, or a loss of $0.34 per diluted share, for the same period in 2012. The company’s second quarter results reflect the positive impact of acquisitions from prior periods and significant organic growth, offset by planned strategic investments in long-term value creation, transaction-related costs and litigation costs.
Earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, was a loss of $12.4 million for the second quarter of 2013, compared with a loss of $3.0 million for the same period in 2012. EBITDA includes $1.1 million and $1.2 million of non-cash share-based compensation for the second quarters of 2013 and 2012, respectively. A reconciliation of EBITDA to net income is provided in the attached financial tables.
The company had $178.2 million of cash as of June 30, 2013.
Reaffirms Full Year 2013 Financial Outlook
The company has reaffirmed its full year outlook for an annual revenue run rate of more than $1 billion as of December 31, and positive EBITDA for the fourth quarter of 2013.
3PD Acquisition to Close in Third Quarter
On July 15, 2013, the company announced that it had entered into a definitive agreement to acquire all of the common stock of 3PD, Inc. (3PD) in a transaction valued at approximately $365 million. 3PD is the largest non-asset, third party provider of heavy goods, last-mile logistics in North America. The acquisition is expected to close in the third quarter of 2013, subject to customary conditions.
3PD, based in Atlanta, was founded in 2001 to capitalize on the rapid growth in last-mile logistics. 3PD provides blue chip retail shippers with customized solutions tailored to their supply chain needs, and serves small and mid-sized shippers by matching them to carriers on a transactional basis. The business has differentiated itself through its ability to assure a superb customer experience using proprietary technology and industry-leading process management.
CEO Comments
Bradley Jacobs, chairman and chief executive officer, said, “In the second quarter, we delivered a 151% increase in revenue year-over-year, and 128% more gross margin dollars. Our freight brokerage business achieved robust organic growth of 65%, driven in large part by the traction of our eight brokerage cold-starts. These locations are barely a year old on average, but they’re already generating a combined revenue run rate of over $90 million and sequential improvements in gross margin percentage. We’re in the process of opening a new mega-branch in Cincinnati with a highly experienced leader to scale it up. And our acquisition pipeline remains very active, with a current list of about 100 targets.
“Our expedited business saw pressure on margin throughout the quarter, as demand for expedited services remained soft. Capacity tightened somewhat in early July, however, and margins have expanded in recent weeks. Our freight forwarding business is outpacing industry growth by capturing more international business. Freight forwarding revenue increased 17% in the second quarter, gross margin was up 230 basis points, and EBITDA increased significantly by 157%.”
Jacobs continued, “We’ve entered the back half of the year with a lot of momentum. Our productivity per brokerage employee improved quarter-to-quarter, despite the addition of almost 100 net new hires. Our strategic and national account teams recently had major wins in truckload brokerage, as well as cross-border, less-than-truckload and expedite. And soon we’ll complete the XPO supply chain with the acquisition of 3PD’s heavy goods, last-mile capabilities. 3PD is the clear market leader in this space, with an impressive growth trajectory. We intend to scale up the business and capitalize on the rapidly growing demand for last-mile logistics. I’m pleased that we’re on track to meet our revenue outlook for a billion dollar run rate by year-end – that’s an exciting milestone in our plan to build XPO into a world-class company.”