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8-K - FORM 8-K - XPO Logistics, Inc.d817933d8k.htm

Exhibit 99.1

 

LOGO

XPO Logistics Announces Third Quarter 2014 Results

Generates 48% organic revenue growth company-wide

Reaffirms year-end target run rates for $3 billion of revenue and $150 million of EBITDA

Adds freight brokerage cold-start in Denver

GREENWICH, Conn. — November 5, 2014 — XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the third quarter of 2014. Total gross revenue increased 241.5% year-over-year to $662.5 million, and net revenue increased 402.7% to $175.1 million.

The company reported a net loss of $11.7 million for the quarter, compared with a net loss of $6.0 million for the same period in 2013. The net loss available to common shareholders was $12.4 million, or a loss of $0.23 per diluted share, compared with a net loss of $6.8 million, or a loss of $0.28 per diluted share, for the same period in 2013.

On an adjusted basis, the net loss available to common shareholders, a non-GAAP measure, was $7.3 million, or a loss of $0.13 per share for the quarter, excluding the items detailed below. This compares to an adjusted net loss available to common shareholders of $10.9 million, or a loss of $0.45 per share, in the third quarter of 2013.

Adjusted net loss excludes a debt commitment fee of $9.8 million, or $6.1 million after-tax, related to the acquisition of New Breed, which closed on September 2, 2014; $10.0 million, or $7.1 million after-tax, of transaction and integration costs primarily related to the acquisitions of New Breed, Pacer and ACL; $846,000, or $524,000 after-tax, of charges related to the rebranding of the company’s ground expedited and last mile businesses to XPO Express and XPO Last Mile, respectively; and a $8.6 million tax benefit related to the release of a valuation allowance against deferred tax assets. Reconciliations of adjusted net loss to common shareholders and adjusted EPS are provided in the attached financial tables.

Adjusted earnings (loss) before interest, taxes, depreciation and amortization (“adjusted EBITDA”), a non-GAAP financial measure, improved to a gain of $24.2 million for the quarter, compared with a loss of $7.1 million for the same period in 2013. Adjusted EBITDA excludes $10.0 million of transaction and integration costs primarily related to the acquisitions of New Breed, Pacer and ACL, as well as $846,000 of rebranding costs; and includes 29 days of New Breed results, as well as $1.8 million of non-cash share-based compensation. A reconciliation of adjusted EBITDA to net income is provided in the attached financial table.

The company had approximately $690 million of cash, including $10 million of restricted cash, as of September 30, 2014.


Reaffirms Full Year 2014 Financial Outlook

The company has reaffirmed its full year 2014 outlook for an annual revenue run rate of more than $3 billion by December 31, and an annual EBITDA run rate of at least $150 million by December 31.

CEO Comments

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “The third quarter was transformational for us on many fronts. We raised $1.2 billion of capital to fund our growth. We generated a net revenue increase of more than 400%, reflecting the benefit of acquisitions and 48% organic growth. And we turned in our strongest adjusted EBITDA performance to date – $24 million – which reflects less than a month of owning New Breed, our largest acquisition so far. We delivered 58% organic growth in our freight brokerage business, and more than doubled the revenue run rate of our brokerage cold-starts in 12 months to $250 million. Most important, our entire organization is gelling into one integrated operation with a single-minded focus on customer service.

“All of our acquisitions are on track and thriving. In September, we gained critical mass when we acquired New Breed. Our contract logistics business is off to a great start, ahead of plan in its first month out of the gate. In July, we acquired ACL, which recently had a big e-commerce customer win as part of XPO Last Mile. And in intermodal, our team is doing a very good job of meeting shipper requirements in a congested rail market. We’ve made significant gains in intermodal customer satisfaction and proprietary IT development, including our new Rail Optimizer system currently in beta test.”

Jacobs continued, “We’ve built a range of technology-based supply chain services that has grabbed the attention of shippers in North America. And we’re currently in discussions with a number of attractive acquisition prospects in a very active pipeline. Our targets are primarily in our existing lines of business, including contract logistics, last mile and freight brokerage.”

Third Quarter 2014 Results by Business Unit

 

    Freight brokerage: The company’s freight brokerage business generated total gross revenue of $518.7 million for the quarter, a 239.8% increase from the same period in 2013. Net revenue margin grew to 20.8%, from 18.1% in 2013, an improvement of 270 basis points. The year-over-year increases in revenue and margin were primarily due to the acquisitions of 3PD, Optima and Pacer, and 58% organic revenue growth. Organic revenue growth included cold-starts, which are on an annualized revenue run rate of approximately $250 million, compared with $120 million a year ago. Excluding the margin benefit of the last mile and intermodal operations, freight brokerage net revenue margin improved year-over-year. Third quarter operating income improved to a gain of $2.0 million, compared with a loss of $3.4 million a year ago.

 

    Contract logistics: The company’s contract logistics business generated net revenue of $50.1 million and operating income of $4.5 million. The New Breed acquisition was completed on September 2, 2014.

 

   

Expedited transportation: The company’s expedited transportation business generated total gross revenue of $36.5 million for the quarter, a 45.4% increase from the same period in 2013. Net revenue margin grew to 30.2%, compared with 18.1% in 2013, an


 

improvement of 1,210 basis points. The increase in net revenue margin is primarily attributable to the acquisition of NLM, which recognizes revenue on a net basis. Third quarter operating income increased to $2.9 million, from $1.7 million a year ago.

 

    Freight forwarding: The company’s freight forwarding business generated total gross revenue of $59.7 million for the quarter, a 212.2% increase from the same period in 2013. Net revenue margin was 10.5%, compared with 13.8% in 2013. The increase in total gross revenue and the decrease in net revenue margin were due in part to the consolidation of the former Pacer freight forwarding operations, which shifted the revenue mix toward higher-revenue, lower-margin international transactions. Third quarter operating loss was $20,000, compared with a loss of $2.6 million a year ago.

 

    Corporate: Corporate SG&A expense for the third quarter of 2014 was $23.0 million, compared with $14.2 million for the third quarter of 2013. Corporate SG&A for the third quarter of 2014 includes: $10.0 million, or $7.1 million after-tax, of transaction and integration costs related to acquisitions; $1.8 million, or $1.1 million after-tax, of non-cash share-based compensation; and $1.5 million, or $918,000 after-tax, of litigation costs.

Nine Months 2014 Financial Results

For the nine months ended September 30, 2014, the company reported total revenue of $1.5 billion, a 242.8% increase from the first nine months of 2013.

For the first nine months of 2014, net loss was $53.6 million, compared with net loss of $37.9 million for the same period last year. The net loss available to common shareholders was $55.8 million, or a loss of $1.13 per diluted share, compared with a net loss of $40.2 million, or a loss of $1.99 per diluted share, for the same period in 2013.

On an adjusted basis, the net loss available to common shareholders, a non-GAAP measure, was $28.7 million, or a loss of $0.58 per share for the first nine months of 2014, excluding the items detailed below. This compares to an adjusted net loss available to common shareholders of $32.6 million, or a loss of $1.61 per share, for the first nine months of 2013.

Adjusted net loss for the first nine months of 2014 excludes $22.3 million, or $15.4 million after-tax, of transaction and integration costs related primarily to the acquisitions of New Breed, Pacer and ACL; debt commitment fees of $14.4 million, or $8.9 million after-tax, related to the acquisitions of New Breed and Pacer; $3.3 million, or $2.1 after-tax, of accelerated amortization of trade names; and $1.2 million, or $722,000 after-tax, of charges related to the rebranding of the company’s ground expedited and last mile businesses. Reconciliations of adjusted net loss to common shareholders and adjusted EPS are provided in the attached financial tables.

Adjusted EBITDA improved to a gain of $39.8 million for the first nine months of 2014, compared with a loss of $27.0 million for the same period in 2013. Adjusted EBITDA for the first nine months of 2014 excludes $22.3 million of transaction and integration costs related primarily to the acquisitions of New Breed, Pacer and ACL; $1.2 million of charges related to the rebranding of the company’s ground expedited and last mile businesses; and includes $5.6 million and $3.4 million of non-cash share-based compensation for 2014 and 2013, respectively. A reconciliation of adjusted EBITDA to net income is provided in the attached financial table.


Expands Freight Brokerage Network with Cold-start and State Incentives

The company announced the further expansion of its freight brokerage network with the addition of a cold-start location in Denver, Colo., in the fourth quarter. The company also announced that it has been approved for tax incentives through the Kentucky Business Investment Program to create up to 88 jobs at its Newport, Ky., brokerage location; and has been approved by the Missouri Department of Economic Development for an economic incentive package to create up to 125 new jobs at its Kansas City, Mo., brokerage location.

Conference Call

The company will hold a conference call on Thursday, November 6, 2014, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-708-4540; international callers dial +1-847-619-6397. 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 December 6, 2014. 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 38176896.

About XPO Logistics, Inc.

XPO Logistics, Inc. (NYSE: XPO) facilitates more than 33,000 deliveries a day as one of the fastest growing providers of transportation logistics services in North America. XPO is the fourth largest freight brokerage firm, the third largest provider of intermodal services, the largest provider of last mile logistics for heavy goods, the largest manager of expedited shipments, and the leading provider of highly engineered, technology-enabled contract logistics. Additionally, the company has growing positions in managed transportation, global freight forwarding and less-than-truckload brokerage.

XPO has 199 locations and approximately 10,700 employees. Its four business segments – freight brokerage, contract logistics, expedited transportation and freight forwarding – utilize relationships with ground, rail, sea and air carriers and other suppliers to serve over 15,000 customers in the manufacturing, industrial, retail, technology, aerospace, commercial, life sciences and governmental sectors. The company has more than 4,000 trucks under contract to its drayage, expedited and last mile subsidiaries, and has access to additional capacity through its relationships with over 28,000 other carriers. For more information: www.xpo.com

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined under Securities and Exchange Commission (“SEC”) rules, such as adjusted net loss available to common shareholders, adjusted EPS, adjusted earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”), in each case for the quarters and nine-month periods ended September 30, 2014 and 2013. As required by SEC rules, we provide reconciliations of these measures to the most directly comparable measure under United States generally accepted accounting principles (“GAAP”), which are set forth in the attachments to this release. We believe that adjusted net loss available to common shareholders improves comparability from period to period by removing the impact of nonrecurring expense items, including items related to our rebranding of Express-1 to XPO Express and our acquisition of Pacer, which we completed on March 31, 2014, and our acquisitions of ACL and New Breed, which we completed during the third quarter. We believe that adjusted EBITDA improves comparability from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base


(depreciation and amortization), tax consequences and transaction and integration costs related to the acquisitions of New Breed, Pacer and ACL. In addition to its use by management, we believe that adjusted EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate adjusted EBITDA differently, and therefore our measure may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from adjusted EBITDA are significant and necessary components of the operations of our business, and, therefore, adjusted EBITDA should only be used as a supplemental measure of our operating performance.

Forward-looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including the company’s full year 2014 financial targets and the receipt of tax incentives from the Kentucky Business Investment Program. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed in XPO’s filings with the SEC and the following: economic conditions generally; competition; XPO’s ability to find suitable acquisition candidates and execute its acquisition strategy; the expected impact of the acquisitions, including the expected impact on XPO’s results of operations; the ability to realize anticipated synergies and cost savings with respect to acquired companies; XPO’s ability to raise debt and equity capital; XPO’s ability to attract and retain key employees to execute its growth strategy, including management teams; litigation, including litigation related to alleged misclassification of independent contractors; the ability to develop and implement a suitable information technology system; the ability to maintain positive relationships with XPO’s networks of third-party transportation providers; the ability to retain XPO’s and acquired companies’ largest customers; XPO’s ability to successfully integrate New Breed, ACL and other acquired businesses; rail and other network changes; weather and other service disruptions; and governmental regulation. All forward-looking statements set forth in this press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, XPO or its businesses or operations. Forward-looking statements set forth in this document speak only as of the date hereof, and XPO undertakes no obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events except to the extent required by law.


Investor Contact:

XPO Logistics, Inc.

Tavio Headley, +1-203-930-1602

tavio.headley@xpo.com

Media Contacts:

Brunswick Group

Darren McDermott, +1-212-333-3810


XPO Logistics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2014     2013     2014     2013  

Revenue

   $ 662,470      $ 193,982      $ 1,525,882      $ 445,071   

Operating expenses

        

Cost of purchased transportation and services

     487,365        159,147        1,170,509        374,636   

Direct operating expense

     71,026        2,077        102,118        2,077   

Sales, general and administrative expense

     117,717        51,177        300,148        112,159   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     676,108        212,401        1,572,775        488,872   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (13,638     (18,419     (46,893     (43,801
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense

     296        235        546        294   

Interest expense

     17,842        6,415        31,303        12,585   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax provision

     (31,776     (25,069     (78,742     (56,680

Income tax benefit

     (20,077     (19,044     (25,147     (18,748
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (11,699     (6,025     (53,595     (37,932

Cumulative preferred dividends

     (733     (743     (2,208     (2,229
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss available to common shareholders

   $ (12,432   $ (6,768   $ (55,803   $ (40,161
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic loss per share

        

Net loss

   $ (0.23   $ (0.28   $ (1.13   $ (1.99

Diluted loss per share

        

Net loss

   $ (0.23   $ (0.28   $ (1.13   $ (1.99

Weighted average common shares outstanding

        

Basic weighted average common shares outstanding

     54,470        24,222        49,497        20,167   

Diluted weighted average common shares outstanding

     54,470        24,222        49,497        20,167   


XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

 

     September 30,     December 31,  
     2014     2013  
     (Unaudited)        
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 680,101      $ 21,524   

Accounts receivable, net of allowances of $8,148 and $3,539, respectively

     475,323        134,227   

Prepaid expenses

     16,682        3,935   

Deferred tax asset, current

     8,581        3,041   

Income tax receivable

     13,217        —     

Other current assets

     9,875        7,304   
  

 

 

   

 

 

 

Total current assets

     1,203,779        170,031   
  

 

 

   

 

 

 

Property and equipment, net of $33,392 and $11,803 in accumulated depreciation, respectively

     224,138        56,571   

Goodwill

     918,485        363,448   

Identifiable intangible assets, net of $54,560 and $15,411 in accumulated amortization, respectively

     363,004        185,179   

Deferred tax asset, long-term

     76        72   

Restricted cash

     10,315        2,141   

Other long-term assets

     26,496        2,799   
  

 

 

   

 

 

 

Total long-term assets

     1,542,514        610,210   
  

 

 

   

 

 

 

Total assets

   $ 2,746,293      $ 780,241   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 241,354      $ 71,391   

Accrued salaries and wages

     45,577        11,741   

Accrued expenses, other

     47,772        9,489   

Current maturities of long-term debt

     2,907        2,028   

Other current liabilities

     7,960        4,684   
  

 

 

   

 

 

 

Total current liabilities

     345,570        99,333   
  

 

 

   

 

 

 

Senior notes due 2019

     500,000        —     

Convertible senior notes

     102,339        106,268   

Revolving credit facility and other long-term debt, net of current maturities

     229        75,373   

Deferred tax liability, long-term

     83,813        15,200   

Other long-term liabilities

     61,854        28,224   
  

 

 

   

 

 

 

Total long-term liabilities

     748,235        225,065   
  

 

 

   

 

 

 

Commitments and contingencies

    

Stockholders’ equity:

    

Series A convertible perpetual preferred stock, $.001 par value; 10,000,000 shares; 73,335 and 74,175 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively

     42,258        42,737   

Series B convertible perpetual preferred stock, $.001 par value; 371,848 shares; 371,848 and 0 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively

     363,898        —     

Common stock, $.001 par value; 150,000,000 shares authorized; 64,486,445 issued and outstanding at September 30, 2014 and 30,583,073 and 30,538,073 shares issued and outstanding, respectively, at December 31, 2013

     64        30   

Additional paid-in capital

     1,413,860        524,972   

Treasury stock, at cost, 0 and 45,000 shares held, respectively

     —          (107

Accumulated deficit

     (167,592     (111,789
  

 

 

   

 

 

 

Total stockholders’ equity

     1,652,488        455,843   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 2,746,293      $ 780,241   
  

 

 

   

 

 

 


XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Nine Months Ended  
     September 30,  
     2014     2013  

Operating activities

    

Net loss

   $ (53,595   $ (37,932

Adjustments to reconcile net loss to net cash from operating activities

    

Provisions for allowance for doubtful accounts

     5,108        1,855   

Depreciation and amortization

     63,790        11,743   

Stock compensation expense

     5,636        3,374   

Accretion of debt

     4,199        4,437   

Deferred tax expense

     (28,686     (18,882

Other

     2,147        (201

Changes in assets and liabilities, net of effects of acquisitions:

    

Accounts receivable

     (73,472     (28,096

Income tax payable (receivable)

     2,889        (662

Prepaid expense and other current assets

     3,027        (2,373

Other long-term assets

     (1,688     (97

Accounts payable

     39,714        (1,725

Accrued expenses and other liabilities

     17,674        7,014   
  

 

 

   

 

 

 

Cash flows used by operating activities

     (13,257     (61,545
  

 

 

   

 

 

 

Investing activities

    

Acquisition of businesses, net of cash acquired

     (813,657     (352,266

Payment for purchases of property and equipment

     (21,600     (6,535

Other

     339        125   
  

 

 

   

 

 

 

Cash flows used by investing activities

     (834,918     (358,676
  

 

 

   

 

 

 

Financing activities

    

Proceeds from common stock offerings, net

     733,954        239,660   

Proceeds from issuance of preferred stock, net

     363,898        —     

Proceeds from issuance of senior notes, net

     489,641        —     

Proceeds from borrowing on revolving credit facility

     130,000        —     

Repayment of borrowings on revolving credit facility

     (205,000     —     

Dividends paid to preferred stockholders

     (2,208     (2,229

Payments of tax withholdings for restricted shares

     (2,501     (1,585

Other

     (1,032     (659
  

 

 

   

 

 

 

Cash flows provided by financing activities

     1,506,752        235,187   
  

 

 

   

 

 

 

Net increase (decrease) in cash

     658,577        (185,034

Cash and cash equivalents, beginning of period

     21,524        252,293   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 680,101      $ 67,259   
  

 

 

   

 

 

 

Supplemental disclosure of cash flow information:

    

Cash paid for interest

   $ 15,282      $ 6,611   

Cash (received) paid for income taxes

   $ (1,091   $ 907   

Equity portion of acquisition purchase price

   $ 138,252      $ 10,446   


Freight Brokerage

Summary Financial Table

(Unaudited)

(In thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2014      2013     $ Variance      Change %     2014      2013     $ Variance      Change %  

Revenue

   $ 518,656       $ 152,616      $ 366,040         239.8   $ 1,243,734       $ 326,206      $ 917,528         281.3

Cost of purchased transportation and services

     410,977         124,966        286,011         228.9     986,631         275,923        710,708         257.6
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Net revenue

     107,679         27,650        80,029         289.4     257,103         50,283        206,820         411.3
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Direct operating expense

     29,090         2,077        27,013         1300.6     60,182         2,077        58,105         2797.5

SG&A expense

                    

Salaries & benefits

     39,608         17,442        22,166         127.1     103,928         39,972        63,956         160.0

Other SG&A expense

     13,209         5,172        8,037         155.4     32,389         10,097        22,292         220.8

Purchased services

     4,641         1,763        2,878         163.2     11,449         3,556        7,893         222.0

Depreciation & amortization

     19,158         4,611        14,547         315.5     46,747         6,805        39,942         587.0
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total SG&A expense

     76,616         28,988        47,628         164.3     194,513         60,430        134,083         221.9
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Operating income (loss)

   $ 1,973       $ (3,415   $ 5,388         -157.8   $ 2,408       $ (12,224   $ 14,632         -119.7
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Note: Total depreciation and amortization for the Freight Brokerage reportable segment included in both direct operating expense and SG&A, was $21,090,000 and $4,611,000 for the three-months ended September 30, 2014 and 2013, respectively, and $49,354,000 and $6,805,000 for the nine-months ended September 30, 2014 and 2013, respectively.

Freight Brokerage

Key Data

(In thousands, except personnel data)

 

     3 Mos Ended     3 Mos Ended     9 Mos Ended     9 Mos Ended  
     September 30,     September 30,     September 30,     September 30,  
     2014     2013     2014     2013  

Revenue

        

Truckload, LTL, and Intermodal

   $ 395,246      $ 106,081      $ 927,322      $ 279,671   

Last Mile

     123,410        46,535        316,412        46,535   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Revenue

   $ 518,656      $ 152,616      $ 1,243,734      $ 326,206   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenue

        

Truckload and LTL

   $ 25,387      $ 14,063      $ 69,438      $ 36,404   

Intermodal

     47,198        380        97,110        672   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Truckload, LTL, and Intermodal

     72,585        14,443        166,548        37,076   

Last Mile

     35,094        13,207        90,555        13,207   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Net Revenue

   $ 107,679      $ 27,650      $ 257,103      $ 50,283   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Revenue %

        

Truckload, LTL, and Intermodal

     18.4     13.6     18.0     13.3

Last Mile

     28.4     28.4     28.6     28.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Overall Net Revenue %

     20.8     18.1     20.7     15.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Direct Operating Expense

        

Intermodal

   $ 23,361      $ —        $ 46,233      $ —     

Last Mile

     5,729        2,077        13,949        2,077   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Direct Operating Expense

   $ 29,090      $ 2,077      $ 60,182      $ 2,077   
  

 

 

   

 

 

   

 

 

   

 

 

 

Freight Brokerage personnel (end of period)

     2,411        1,489       

Note: Employee totals are as of period end, and primarily include the positions of shipper sales, carrier procurement and brokerage operations, and reflect the impact of recruitment and acquisitions.


Expedited Transportation

Summary Financial Table

(Unaudited)

(In thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2014      2013      $ Variance      Change %     2014      2013      $ Variance      Change %  

Revenue

   $ 36,489       $ 25,101       $ 11,388         45.4   $ 106,530       $ 75,421       $ 31,109         41.2

Cost of purchased transportation and services

     25,479         20,563         4,916         23.9     72,988         62,866         10,122         16.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Net revenue

     11,010         4,538         6,472         142.6     33,542         12,555         20,987         167.2
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

SG&A expense

                      

Salaries & benefits

     4,341         1,893         2,448         129.3     12,871         5,854         7,017         119.9

Other SG&A expense

     1,607         470         1,137         241.9     4,734         1,587         3,147         198.3

Purchased services

     608         212         396         186.8     1,604         747         857         114.7

Depreciation & amortization

     1,580         224         1,356         605.4     8,077         689         7,388         1072.3
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total SG&A expense

     8,136         2,799         5,337         190.7     27,286         8,877         18,409         207.4
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     2,874         1,739         1,135         65.3     6,256         3,678         2,578         70.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Accelerated amortization of Express-1 trade name

     —           —           —           0.0     3,346         —           3,346         100.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted operating income

   $ 2,874       $ 1,739       $ 1,135         65.3   $ 9,602       $ 3,678       $ 5,924         161.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Note: Total depreciation and amortization for the Expedited Transportation reportable segment included in both cost of purchased transportation and services and SG&A, was $1,615,000 and $262,000 for the three-months ended September 30, 2014 and 2013, respectively, and $8,181,000 and $821,000 for the nine-months ended September 30, 2014 and 2013, respectively.

Note: Please refer to the “Non-GAAP Financial Measures” section of the press release.

Freight Forwarding

Summary Financial Table

(Unaudited)

(In thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2014     2013     $ Variance     Change %     2014     2013     $ Variance     Change %  

Revenue

   $ 59,721      $ 19,129      $ 40,592        212.2   $ 133,405      $ 54,700      $ 78,705        143.9

Cost of purchased transportation and services

     53,424        16,481        36,943        224.2     118,797        47,103        71,694        152.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     6,297        2,648        3,649        137.8     14,608        7,597        7,011        92.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

SG&A expense

                

Salaries & benefits

     3,674        1,618        2,056        127.1     9,180        4,569        4,611        100.9

Other SG&A expense

     1,610        328        1,282        390.9     3,578        1,048        2,530        241.4

Purchased services

     524        63        461        731.7     1,108        311        797        256.3

Depreciation & amortization

     509        3,227        (2,718     -84.2     1,110        3,407        (2,297     -67.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total SG&A expense

     6,317        5,236        1,081        20.6     14,976        9,335        5,641        60.4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

   $ (20   $ (2,588   $ 2,568        -99.2   $ (368   $ (1,738   $ 1,370        -78.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Contract Logistics

Summary Financial Table

(Unaudited)

(In thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2014      2013      $ Variance      Change %     2014      2013      $ Variance      Change %  

Net revenue

   $ 50,120       $ —         $ 50,120         100.0   $ 50,120       $ —         $ 50,120         100.0

Direct operating expense

     41,936         —           41,936         100.0     41,936         —           41,936         100.0

SG&A expense

                      

Salaries & benefits

     1,582         —           1,582         100.0     1,582         —           1,582         100.0

Other SG&A expense

     516         —           516         100.0     516         —           516         100.0

Purchased services

     358         —           358         100.0     358         —           358         100.0

Depreciation & amortization

     1,224         —           1,224         100.0     1,224         —           1,224         100.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total SG&A expense

     3,680         —           3,680         100.0     3,680         —           3,680         100.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

   $ 4,504       $ —         $ 4,504         100.0   $ 4,504       $ —         $ 4,504         100.0
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Note: Total depreciation and amortization for the Contract Logistics reportable segment included in both direct operating expense and SG&A, was $3,450,000 for the three- and nine-months ended September 30, 2014.


XPO Corporate

Summary of Sales, General & Administrative Expense

(Unaudited)

(In thousands)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2014      2013      $ Variance      Change %     2014      2013      $ Variance      Change %  

SG&A expense

           

Salaries & benefits

   $ 7,127       $ 5,995       $ 1,132         18.9   $ 23,922       $ 15,095       $ 8,827         58.5

Other SG&A expense

     4,660         2,097         2,563         122.2     10,153         4,791         5,362         111.9

Purchased services

     10,599         5,767         4,832         83.8     23,923         12,921         11,002         85.1

Depreciation & amortization

     583         296         287         97.0     1,695         710         985         138.7
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Total SG&A expense

   $ 22,969       $ 14,155       $ 8,814         62.3   $ 59,693       $ 33,517       $ 26,176         78.1
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

    

 

 

 

Note: Intercompany eliminations included revenue of $2.5 million and $2.9 million for the three-months ended September 30, 2014 and 2013, respectively, and $7.9 million and $11.3 million for the nine-months ended September 30, 2014 and 2013, respectively.

Reconciliation of Non-GAAP Measures

XPO Logistics, Inc.

Consolidated Reconciliation of EBITDA to Net Loss

(In thousands)

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2014     2013     Change%     2014     2013     Change%  

Net loss available to common shareholders

   $ (12,432   $ (6,768     83.7   $ (55,803   $ (40,161     38.9

Preferred dividends

     (733     (743     -1.3     (2,208     (2,229     -0.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (11,699     (6,025     94.2     (53,595     (37,932     41.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Debt commitment fees(1)

     9,772        3,018        223.8     14,396        3,018        377.0

Other interest expense

     8,070        3,397        137.6     16,907        9,567        76.7

Income tax benefit

     (20,077     (19,044     5.4     (25,147     (18,748     34.1

Accelerated amortization of trade names

     —          3,070        -100.0     3,346        3,070        9.0

Other depreciation and amortization

     27,247        5,326        411.6     60,444        8,673        596.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 13,313      $ (10,258     -229.8   $ 16,351      $ (32,352     -150.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Transaction and integration costs

     10,004        3,150        217.6     22,290        5,307        320.0

XPO Express and XPO Last Mile rebranding costs

     846        —          100.0     1,166        —          100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 24,163      $ (7,108     -439.9   $ 39,807      $ (27,045     -247.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)  Debt commitment fees are recorded in interest expense.

Note: Please refer to the “Non-GAAP Financial Measures” section of the press release.


Reconciliation of Non-GAAP Measures

XPO Logistics, Inc.

Consolidated Reconciliation of GAAP Net Loss and Net Loss Per Share to Adjusted Net Loss and Net Loss Per Share

 

     Three Months Ended     Nine Months Ended  
     September 30,     September 30,  
     2014     2013     2014     2013  

GAAP net loss available to common shareholders

   $ (12,432   $ (6,768   $ (55,803   $ (40,161

Accelerated amortization of trade names

     —          3,070        3,346        3,070   

XPO Express and XPO Last Mile rebranding costs

     846        —          1,166        —     

Transaction and integration costs

     10,004        3,150        22,290        5,307   

Debt commitment fees(1)

     9,772        3,018        14,396        3,018   

Tax impact of above adjustments

     (6,902     (2,964     (14,110     (3,788

Release of tax valuation allowance

     (8,592     (10,437     —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss available to common shareholders

   $ (7,304   $ (10,931   $ (28,715   $ (32,554
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted basic loss per share

        

Adjusted net loss

   $ (0.13   $ (0.45   $ (0.58   $ (1.61

Adjusted diluted loss per share

        

Adjusted net loss

   $ (0.13   $ (0.45   $ (0.58   $ (1.61

Weighted average common shares outstanding

        

Basic weighted average common shares outstanding

     54,470        24,222        49,497        20,167   

Diluted weighted average common shares outstanding

     54,470        24,222        49,497        20,167   

 

(1)  Debt commitment fees are recorded in interest expense.

Note: Please refer to the “Non-GAAP Financial Measures” section of the press release.

XPO Logistics, Inc.

Consolidated Calculation of Diluted Weighted Shares Outstanding

 

     Three Months Ended      Nine Months Ended  
     September 30, 2014      September 30, 2013      September 30, 2014      September 30, 2013  

Basic common stock outstanding

     54,469,943         24,221,987         49,497,353         20,167,436   
  

 

 

    

 

 

    

 

 

    

 

 

 

Potentially Dilutive Securities:

           

Shares underlying the conversion of preferred stock to common stock

     10,476,430         10,604,891         10,485,283         10,608,752   

Shares underlying the conversion of the convertible senior notes

     7,341,490         8,749,239         7,473,420         8,749,239   

Shares underlying warrants to purchase common stock

     8,222,305         7,348,157         8,011,371         6,721,704   

Shares underlying stock options to purchase common stock

     557,973         424,122         529,072         347,356   

Shares underlying restricted stock units

     821,892         432,888         713,498         332,488   
  

 

 

    

 

 

    

 

 

    

 

 

 
     27,420,090         27,559,297         27,212,644         26,759,539   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted weighted shares outstanding

     81,890,033         51,781,284         76,709,997         46,926,975   
  

 

 

    

 

 

    

 

 

    

 

 

 

Note: For dilution purposes, GAAP requires diluted shares to be reflected on a weighted average basis, which takes into account the portion of the period in which the diluted shares were outstanding. The table above reflects the weighted average diluted shares for the periods presented. Due to the contingent stockholder approval necessary to convert the Series B Convertible Perpetual Preferred Stock into common stock, the Series B Convertible Perpetual Preferred Stock will not be included in the denominator used to calculate diluted earnings per common share until the contingency has been satisfied. The impact of this dilution was not reflected in the earnings per share calculations on the Condensed Consolidated Statements of Operations because the impact was anti-dilutive. The treasury method was used to determine the shares underlying the warrants to purchase common stock with an average closing market price of common stock of $31.57 per share and $22.31 per share for the three months ended September 30, 2014 and 2013, respectively, and $28.96 per share and $18.81 per share for the nine months ended September 30, 2014 and 2013, respectively.


For informational purposes, the following table represents fully diluted shares as of September 30, 2014, calculated on a non-weighted basis without giving effect to the portion of any period in which the diluted shares were outstanding. The Series B Convertible Perpetual Preferred Stock conversion into common stock has been included for informational purposes although conversion is contingent upon obtaining shareholder approval. The dilutive effect of the warrants, options and RSUs in the table was calculated using the closing market price of common stock on September 30, 2014. A non-weighted basis for calculating fully diluted shares is a non-GAAP financial measure as defined under SEC rules.

XPO Logistics, Inc.

 

     Diluted Shares as of
September 30, 2014
 

Common stock outstanding

     64,486,445   

Series A preferred stock

     10,476,430   

Series B preferred stock

     12,128,115   

Convertible senior notes

     7,341,341   

Warrants

     8,602,026   

Outstanding stock options

     681,468   

Restricted stock units

     1,959,906   
  

 

 

 

Total

     105,675,731