XPO Logistics Announces Fourth Quarter and Full Year 2013 Results
By on Feb 26, 2014
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XPO Logistics has announced financial results for the fourth quarter and full year 2013.
For the fourth quarter of 2013, total revenue increased 137.1% year-over-year to $257.2 million. Gross margin dollars increased 238.8% to $53.1 million, and gross margin percentage increased by 620 basis points to 20.6%.
The company reported a net loss of $10.6 million for the quarter, compared with a net loss of $9.3 million for the same period in 2012. The net loss available to common shareholders was $11.3 million, or a loss of $0.37 per diluted share, compared with a net loss of $10.1 million, or a loss of $0.57 per diluted share, for the same period in 2012.
Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP financial measure, improved dramatically year-over-year. EBITDA was a gain of $343,000 for the quarter, compared with a loss of $9.9 million for the same period in 2012. EBITDA for the fourth quarters of 2013 and 2012 reflects $1.4 million and $913,000 of non-cash share-based compensation, respectively. A reconciliation of EBITDA to net income is provided in the attached financial tables.
The company had approximately $358 million of cash as of February 21, 2014.
Provides 2014 Outlook and Updates Long-Term Targets
The company provided the following financial targets for 2014:
- An annual revenue run rate of at least $2.75 billion by December 31;
- An annual EBITDA run rate of at least $100 million by December 31; and
- At least $400 million of acquired historical annual revenue, excluding the Pacer International acquisition.
The company updated its financial targets for the full year 2017:
- Revenue of approximately $7.5 billion; and
- EBITDA of approximately $425 million.
CEO Comments
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "For the second straight quarter, we increased our gross margin percentage in every one of our business units. Our freight brokerage operations improved gross margin by 110 basis points year-over-year, excluding the benefit of our last-mile acquisitions. And our expedited transportation and freight forwarding units both generated double-digit growth in profitability. We achieved our company-wide targets of positive EBITDA in the quarter and an annual revenue run rate exceeding $1 billion.
"Our multi-modal service offering is now one of the strongest in the industry, with leading positions in some of the fastest-growing areas of logistics. Our acquisitions of Optima Service Solutions and NLM in the fourth quarter, and our recent agreement to acquire Pacer International, have strengthened our positions in last-mile logistics, expedite and intermodal. In freight brokerage, the largest component of our 2013 revenue, we grew the business into the fourth largest provider in North America through acquisitions, cold-starts and recruitment. Our brokerage cold-starts are now on a combined revenue run rate of over $150 million - more than two and a half times the $60 million run rate of a year ago."
Jacobs continued, "By year-end, we expect to almost triple our current revenue run rate and attain an EBITDA run rate of at least $100 million. Given the growth embedded in our model, we're now targeting $7.5 billion in revenue and $425 million in EBITDA for 2017."
Fourth Quarter 2013 Results by Business Unit
- Freight brokerage: The company's freight brokerage business generated total revenue of $215.2 million for the quarter, a 202.5% increase from the same period in 2012. Gross margin percentage was 21.3% for the quarter, compared with 13.4% for the same period in 2012, an improvement of 790 basis points. Gross margin percentage for freight brokerage has improved year-over-year in five of the last six quarters. The year-over-year increases in revenue and gross margin percentage were primarily driven by the acquisitions of 3PD, Inc. and Optima Service Solutions last-mile operations, which typically generate a higher gross margin percentage than truckload brokerage, as well as prior acquisitions and growth of the company's brokerage cold-start locations. Excluding last-mile results, freight brokerage gross margin improved 110 basis points versus the same period in 2012. Fourth quarter operating income was $801,000, compared with a loss of $2.5 million a year ago, reflecting the acquisition of 3PD and Optima, partially offset by an increase in SG&A costs for sales force expansion, technology and training.
- Expedited transportation: The company's expedited transportation business generated total revenue of $26.4 million for the quarter, a 19.4% increase from the same period in 2012. Gross margin percentage was 17.5% for the quarter, compared with 16.5% for the same period in 2012, an improvement of 100 basis points. The year-over-year increase in gross margin percentage primarily reflects lower direct expenses, partially offset by the addition of lower-margin expedited air charter revenue from the acquisition of East Coast Air Charter in 2013. Fourth quarter operating income was $1.5 million, compared with $988,000 a year ago, primarily reflecting the increase in gross margin.
- Freight forwarding: The company's freight forwarding business generated total revenue of $18.5 million for the quarter, flat from the same period in 2012. Gross margin percentage was 14.3% for the quarter, an improvement of 80 basis points, compared with 13.5% for the same period in 2012. The increase in gross margin percentage was primarily due to higher revenue from company-owned locations. Fourth quarter operating income was $744,000, compared with $454,000 a year ago.
- Corporate: Corporate SG&A expense for the fourth quarter of 2013 was $11.6 million, compared with $10.1 million for the fourth quarter of 2012. Corporate SG&A includes $1.2 million, or $0.8 million after-tax, of acquisition-related costs; and $1.0 million, or $0.6 million after-tax, of litigation costs.
Appoints Chris Healy to Lead Expedited Transportation Unit
Chris Healy has been appointed as president of the company's four expedited operations: Express-1, XPO NLM, XPO Air Charter and the Gainesville, Ga., expedited office. Healy is a 30-year veteran of the transportation industry with deep experience in expedited services. His career has included senior positions with Active Aero Charter, Boyd Brothers Transportation, Caliber Logistics (now FedEx Supply Chain Services) and Roberts Express (now FedEx Custom Critical).
Opens Freight Forwarding Cold-starts
The company announced the addition of two cold-start locations to its freight forwarding network: Salt Lake City, Utah, opened in December 2013, and Seattle, Wash., opened in February 2014.
Full Year 2013 Operational Highlights
During 2013, the company:
- Built XPO into the fourth largest freight brokerage firm, the largest provider of last-mile logistics for heavy goods, and the largest manager of expedited shipments, with a new foothold in managed transportation;
- Grew the number of deliveries facilitated per day to more than 20,000;
- Opened three freight brokerage cold-starts in Cincinnati, Ohio; Richmond, Va.; and Houston, Texas - the company's 10 freight brokerage cold-starts are currently on an annual revenue run rate of more than $150 million;
- Completed six acquisitions: East Coast Air Charter, Covered Logistics, Interide Logistics, 3PD, Optima Service Solutions and NLM;
- Rebranded the freight forwarding business unit as XPO Global Logistics and opened five cold-starts in Nashville, Tenn.; Montreal, Quebec; Orlando, Fla.; Dallas, Texas; and Salt Lake City, Utah; and
- Enhanced XPO technology with new algorithms for pricing and carrier procurement, customer and carrier portals, and analytic capabilities for truckload market conditions; and acquired strong technologies for customer experience management (3PD) and managed transportation (NLM).
In January 2014, the company agreed to acquire Pacer International, the third largest provider of intermodal services in North America, and the largest provider of intermodal services to the fast-growing cross-border Mexico market.
Full Year 2013 Financial Results
For the full year 2013, the company reported total revenue of $702.3 million, a 152.1% increase from 2012.
Consistent with the company's previously announced strategy, investments in long-term growth impacted results. Net loss for the full year 2013 was $48.5 million, compared with a net loss of $20.3 million for 2012. The company reported a full year 2013 net loss available to common shareholders of $51.5 million, or a loss of $2.26 per diluted share, compared with a net loss of $23.3 million, or a loss of $1.49 per diluted share, for 2012. These results reflect a $10.3 million tax benefit related to the release of a valuation allowance; $3.1 million, or $1.9 million after-tax, in accelerated amortization of intangible assets related to the rebranding of the freight forwarding business; and $3.0 million, or $1.9 million after-tax, for a commitment fee related to an undrawn debt funding option for the 3PD transaction.
EBITDA for the full year 2013 was a loss of $32.0 million, compared with a loss of $25.6 million for 2012, primarily reflecting planned investments in scale, including a significant increase in sales headcount year-over-year. EBITDA for 2013 reflects $6.5 million, or $4.9 million after-tax, of acquisition-related costs; $4.9 million, or $3.1 million after-tax, of litigation costs; and $4.7 million of non-cash compensation.
The CEO of XPO Logistics, Brad Jacobs, will be a featured panellist and speaker at this year’s 3PL Summit – June 11-13th , Chicago (www.3PLSummit.com) where he will be sharing more on XPO’s Acquisitions and provide you with insight into the company’s strategy moving forward.