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10-Q
XPO LOGISTICS, INC. filed this Form 10-Q on 11/05/2018
Entire Document
 

Logistics
Summary Financial Table
 
 
Three Months Ended September 30,
 
Percent of Revenue
 
Change
 
Nine Months Ended September 30,
 
Percent of Revenue
 
Change
(Dollars in millions)
 
2018 (1)
 
2017 (1)
 
2018
 
2017
 
2018 vs. 2017
 
2018 (1)
 
2017 (1)
 
2018
 
2017
 
2018 vs. 2017
Revenue
 
$
1,516.8

 
$
1,340.7

 
100.0
%
 
100.0
%
 
13.1
 %
 
$
4,472.7

 
$
3,781.9

 
100.0
%
 
100.0
%
 
18.3
%
Operating income
 
59.5

 
67.3

 
3.9
%
 
5.0
%
 
(11.6
)%
 
174.3

 
149.6

 
3.9
%
 
4.0
%
 
16.5
%
(1)
Certain immaterial organizational changes were made in the first quarter of 2018 related to our managed transportation business. Managed Transportation previously had been included in the Logistics segment, and as of January 1, 2018, it is reflected in the Transportation segment. Prior period information was recast to conform to the current year presentation.
Note: Total depreciation and amortization for the Logistics segment included in Cost of transportation and services, Direct operating expense and SG&A was $59.3 million and $53.0 million for the three months ended September 30, 2018 and 2017, respectively, and $172.4 million and $149.3 million for the nine months ended September 30, 2018 and 2017, respectively.
Logistics
Revenue in our Logistics segment increased by 13.1% to $1.5 billion for the third quarter of 2018, compared with $1.3 billion for the third quarter of 2017. For the nine-month period, revenue increased by 18.3% to $4.5 billion for the first nine months of 2018, compared with $3.8 billion for the first nine months of 2017. The increase in both the third quarter and nine-month periods was driven by strong demand for contract logistics in both Europe and North America, led by the growth of e-commerce logistics. In Europe, the largest gains came from the retail and fashion sectors. In North America, the largest gains came from the omnichannel retail, consumer packaged goods, and food and beverage sectors. Foreign currency movement decreased revenue growth by approximately 0.7 percentage points in the third quarter of 2018 and contributed approximately 4.2 percentage points in the first nine months of 2018.
Operating income for the third quarter of 2018 decreased to $59.5 million, or 3.9% of revenue, compared with $67.3 million, or 5.0% of revenue, for the same quarter in 2017. The decrease in the third quarter was driven by higher bad debt expense partially offset by lower payroll and benefit expenses. Operating income for the first nine months of 2018 increased to $174.3 million, or 3.9% of revenue, compared with $149.6 million, or 4.0% of revenue, for the same nine-month period in 2017. The increase in the nine-month period was driven by strong revenue growth and site productivity improvements, partially offset by higher direct operating costs related to new contract startups that resulted in higher temporary labor costs, payroll expenses, and higher use of purchased services.
Liquidity and Capital Resources
Our principal existing sources of cash are cash generated from operations and borrowings available under the Second Amended and Restated Revolving Loan Credit Agreement (the “ABL Facility”). As of September 30, 2018, we had cash and cash equivalents of $427.9 million and availability under the ABL Facility of $697.2 million. Availability under the ABL Facility is based on a borrowing base of $935.4 million, as well as outstanding letters of credit of $238.2 million, respectively. In some cases, we utilize receivables securitization and factoring programs to offset the impact of certain customers extending payment terms. The factoring programs are treated as a sale and are accounted for as a reduction in trade receivables. The amount of receivables sold, and the cost of participating in these programs, has been immaterial.
We continually evaluate our liquidity requirements, capital needs and the availability of capital resources based on our operating needs and our planned growth initiatives. We believe that our existing sources of cash will be sufficient to support our existing operations over the next 12 months.
Refinancing of Existing Term Loans
In February 2018, we entered into a Refinancing Amendment (Amendment No. 3 to Credit Agreement) (the “Third Amendment”), by and among XPO, its subsidiaries signatory thereto, as guarantors, the lenders party thereto and


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