XPO Logistics Announces Fourth Quarter and Full Year 2015 Results
Posted by on Mar 2, 2016
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Reports $218 million of adjusted EBITDA for the fourth quarter, reflecting two months' contribution from the Con-way acquisition
GREENWICH, Conn. - February 24, 2016 -XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the fourth quarter and full year of 2015. For the fourth quarter of 2015, total gross revenue increased 302.3% year-over-year to $3.3 billion, and net revenue increased 419.8% to $1.6 billion.
On a GAAP basis, the company reported a net loss of $63.1 million for the quarter, compared with a net loss of $9.9 million for the same period in 2014. The net loss attributable to common shareholders was $62.8 million, or a loss of $0.58 per diluted share, compared with a net loss attributable to common shareholders of $51.5 million, or a loss of $0.77 per diluted share, for the same period in 2014. The fourth quarter 2015 GAAP net loss includes $64.7 million of one-time after-tax transaction-related costs net of noncontrolling interests, and a $42.7 million non-cash after-tax amortization charges.
The adjusted net loss attributable to common shareholders, a non-GAAP measure, was $23.1 million, or a loss of $0.21 per share for the fourth quarter of 2015, excluding the items detailed below. This compares with an adjusted net loss attributable to common shareholders of $6.5 million, or a loss of $0.10 per share, for the fourth quarter of 2014.
The adjusted net loss attributable to common shareholders for the fourth quarter of 2015 excludes: $93.8 million, or $64.7 million after-tax, of one-time transaction-related costs net of noncontrolling interests; $2.0 million, or $1.7 million after-tax, of costs related to the conversion of convertible senior notes; a $12.5 million benefit due to the release of a tax valuation allowance; $12.0 million of unrealized foreign exchange benefit, net of tax; and a $3.5 million benefit, or $2.2 million after-tax, related to the gain on sale of intermodal equipment. Reconciliations of adjusted net loss attributable 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 $217.6 million for the quarter, compared with $42.0 million for the same period in 2014. Adjusted EBITDA in the fourth quarter of 2015 excludes $82.6 million of one-time transaction-related costs; and a $3.5 million benefit related to the gain on sale of intermodal equipment assets. A reconciliation of adjusted EBITDA to net loss is provided in the attached financial tables.
As of December 31, 2015, the company had approximately $290 million of cash and cash equivalents, and a $1 billion asset-backed revolver. Approximately 72% of the company's debt will mature in 2021 or later.
Financial Targets
For 2016, the company reaffirmed its full year target of at least $1.25 billion of adjusted EBITDA.
For 2018, the company reaffirmed its full year target of approximately $1.7 billion of adjusted EBITDA.
CEO Comments
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "In the fourth quarter, we delivered organic adjusted EBITDA growth of 33%, and organic revenue growth of 8.4% ex-fuel. EBITDA growth in our transportation segment was led by our asset-light freight brokerage business, which continues to improve productivity through technology and the increasing tenure of our sales force. For freight brokerage, last mile, expedite and global forwarding combined, we grew organic net revenue margin by 280 basis points to 21.7%. In our logistics segment, we realized higher-than-expected EBITDA and operating income, led by our European logistics business. We're winning multi-year contracts with world-class customers in Europe, some of which can use our new last mile network. Globally, our transportation and logistics segments both have deep roots in e-commerce, the single biggest growth trend in retail.
"We completed the Con-way transaction one month into the quarter. The integration is going extremely well, and we've already taken out over $50 million of costs in annual savings in the first three months, while improving customer service levels. We're on track with our plan to deliver $170 million to $210 million of profit improvement within two years."
Jacobs continued, "Looking at 2016, we have a high-impact agenda that includes accelerated cross-selling, the strategic sourcing of nearly $3 billion of spend, the optimization of our purchased transportation, and the global integration of corporate services. These and other major initiatives give us the ability to grow the business across a range of economic conditions."
Fourth Quarter 2015 Results by Segment
Transportation:The company's transportation segment generated total gross revenue of $2.1 billion for the quarter, a 216.8% increase from the same period in 2014. The year-over-year increase in revenue was primarily due to the acquisitions of Norbert Dentressangle, Con-way, Bridge Terminal Transport, and UX Specialized Logistics, and to organic revenue growth led by the last mile and freight brokerage businesses.
Net revenue margin for the fourth quarter improved to 27.3%, compared with 20.0% in 2014. The increase in segment net revenue margin was primarily due to the acquisition of the less-than-truckload business, and to significant year-over-year margin improvements in all of the company's existing businesses, including freight brokerage, last mile, expedite and global forwarding. The improvements in existing operations were largely driven by better pricing, lower purchased transportation costs, and the shedding of unprofitable business.
Fourth quarter adjusted EBITDA for the segment improved to $151.4 million, compared with $31.6 million a year ago. Fourth quarter operating loss was $6.1 million, compared with operating income of $10.7 million a year ago. The increase in adjusted EBITDA primarily reflects the impact of acquisitions, as well as improved profitability led by freight brokerage. The decrease in operating income reflects non-cash depreciation and amortization expenses, as well as one-time transaction-related costs. A reconciliation of adjusted EBITDA to operating income for the transportation segment is provided in the attached financial tables.
Logistics:The company's logistics segment generated gross revenue of $1.3 billion, compared with $166.5 million from the same period in 2014. Gross margin was $166.4 million, up from $25.2 million a year ago. Adjusted EBITDA was $98.5 million, up from $26.0 million a year ago. Operating income for the fourth quarter was $34.8 million, versus $13.1 million a year ago.
In the logistics segment, the year-over-year increases in gross revenue and gross margin, adjusted EBITDA and operating income were primarily due to the 2015 acquisitions of Norbert Dentressangle and Con-way, as well as organic growth. Adjusted EBITDA and operating income were both higher than expected in the quarter, primarily due to operational improvements, strong demand from the retail and e-commerce sectors, and the shedding of unprofitable business. A reconciliation of adjusted EBITDA to operating income for the logistics segment is provided in the attached financial tables.
Corporate:Corporate SG&A expense was $66.6 million, compared with $17.8 million for the fourth quarter of 2014. The increase was largely due to one-time transaction-related costs, as well as higher incentive compensation, health insurance and legal costs.
Full Year 2015 Financial Results
For the full year 2015, the company reported total revenue of $7.6 billion, a 223.5% increase from 2014.
On a GAAP basis, the company reported a net loss of $191.6 million for the full year 2015, compared with a net loss of $63.6 million last year. The net loss attributable to common shareholders was $245.9 million, or a loss of $2.65 per diluted share, compared with a net loss of $107.4 million, or a loss of $2.00 per diluted share, for 2014. The 2015 GAAP net loss includes: $165.2 million of one-time after-tax transaction-related costs net of noncontrolling interests; a $102.2 million non-cash after-tax amortization charges; and $52.0 million of non-cash accounting charges related to the beneficial conversion features of the $1.26 billion equity private placement in June 2015.
The adjusted net loss attributable to common shareholders, a non-GAAP measure, was $36.9 million, or a loss of $0.40 per share for 2015, excluding the items detailed below. This compares with an adjusted net loss attributable to common shareholders of $33.0 million, or a loss of $0.62 per share, for 2014.
Adjusted net loss attributable to common shareholders for 2015 excludes: $220.7 million, or $165.2 million after tax, of one-time transaction-related costs net of noncontrolling interests; $52 million of non-cash accounting charges related to the beneficial conversion features of the $1.26 billion equity private placement; $10.0 million, or $8.2 million after-tax, of costs related to the conversion of convertible senior notes; $2.4 million, or $1.5 million after-tax of accelerated amortization of trade names; $12.0 million of unrealized foreign exchange benefit, net of tax; and a $9.5 million benefit, or $5.9 million after-tax, related to the gain on sale of intermodal equipment. Reconciliations of adjusted net loss to common shareholders and adjusted EPS are provided in the attached financial tables.
Adjusted EBITDA for 2015 improved to $493.1 million, compared with $81.4 million for 2014. Adjusted EBITDA for 2015 excludes $201.0 million of one-time transaction-related costs; and a $9.5 million benefit related to the gain on sale of intermodal equipment assets. A reconciliation of adjusted EBITDA to net loss is provided in the attached financial tables.
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 services for truckload brokerage and transportation, last mile logistics, engineered supply chain solutions, high-value-add warehousing and distribution, ground and air expedite, less-than-truckload transportation, intermodal, drayage, managed transportation and global forwarding. XPO serves more than 50,000 customers with a highly integrated network of over 89,000 employees and 1,443 locations in 33 countries. XPO's corporate headquarters is in Greenwich, Conn., USA, and its European headquarters is in Lyon, France. www.xpo.com