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|XPO Logistics Announces Third Quarter 2013 Results and Reaffirms Full Year Outlook|
Reports 42% Organic Growth Company-wide
Generates Significant Gross Margin Percentage Improvement in All Business Units
Rebrands Freight Forwarding Division as XPO Global Logistics
Opens Freight Forwarding Cold-start in Dallas and Adds
GREENWICH, Conn. - November 4, 2013 - XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the third quarter of 2013.
Total revenue was $194.0 million for the third quarter, a 173.3% increase from the same period in 2012. Gross margin dollars increased 251.0% year-over-year to $34.8 million, and gross margin percentage increased by 400 basis points to 18.0%.
For the third quarter of 2013, the company reported a net loss of $6.0 million, compared with a net loss of $3.1 million for the same period in 2012. The net loss available to common shareholders was $6.8 million, or a loss of $0.28 per diluted share, compared with a net loss of $3.9 million, or a loss of $0.22 per diluted share, for the same period in 2012. The company's third quarter results reflect: a $10.3 million tax benefit related to the release of a valuation allowance against deferred tax assets; $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.
Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP financial measure, was a loss of $10.3 million for the third quarter of 2013, compared with a loss of $8.9 million for the same period in 2012. EBITDA includes $1.2 million of non-cash share-based compensation in each of the third quarters for 2013 and 2012. A reconciliation of EBITDA to net income is provided in the attached financial tables.
The company had $67.3 million of cash as of September 30, 2013.
Rebrands Freight Forwarding Division as XPO Global Logistics
The company has rebranded its formerly named Concert Group Logistics (CGL) division as XPO Global Logistics, to better reflect the role of freight forwarding within the company's broader service offering. XPO Global Logistics provides domestic and international freight forwarding services through 28 locations in the United States and Canada. The division has launched a new website at www.xpogloballogistics.com.
Reaffirms Full Year 2013 Financial Outlook
The company has reaffirmed its full year 2013 outlook for an annual revenue run rate of more than $1 billion as of December 31, and positive EBITDA for the fourth quarter.
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "In the third quarter, we drove 42% organic revenue growth on a year-over-year basis company-wide. We also achieved significant increases in gross margin percentage in every business unit. We delivered 146% organic revenue growth in our freight brokerage division, and improved our truckload brokerage gross margin percentage by 100 basis points. Our expedite division operated more efficiently, resulting in year-over-year improvements in revenue and margin performance. And our freight forwarding division continued to generate double-digit growth.
"We have brokerage cold-starts underway in Houston and Richmond, where we're immersed in recruiting transportation talent. We recently received approval for up to $1.9 million in state and local tax incentives to develop a large brokerage facility in Louisville, Kentucky. And we're continuing to grow our positions in LTL and intermodal. Our momentum is resonating with large shippers who see that we have both the desire to outperform, and the resources to deliver."
Jacobs continued, "While we reported a loss, as expected, our strategic investments are driving significant revenue growth and margin improvement. Given our trajectory, we're on track to meet our 2013 targets for positive EBITDA in the fourth quarter and a billion dollar revenue run rate by year-end."
Third Quarter 2013 Results by Business Unit
Nine Months 2013 Financial Results
For the nine months ended September 30, 2013, the company reported total revenue of $445.1 million, a 161.7% increase from the first nine months of 2012.
Net loss was $37.9 million for the first nine months of 2013, compared with net loss of $11.0 million for the same period last year. The company reported a nine-month net loss available to common shareholders of $40.2 million, or a loss of $1.99 per diluted share, compared with a net loss of $13.3 million, or a loss of $0.89 per diluted share, for the same period in 2012. The company's nine months results reflect: a $10.3 million tax benefit related to the release of a valuation allowance against deferred tax assets; $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 was a loss of $32.4 million for the first nine months of 2013, compared with a loss of $15.7 million for the same period in 2012, primarily reflecting planned investments in scale, including a significant increase in sales headcount year-over-year.
The company announced the August opening of a freight forwarding cold-start in Dallas, Texas, and the addition of two freight brokerage cold-starts in Houston, Texas, and Richmond, Va. In addition, the company has received approval for as much as $1.9 million in state and local tax incentives related to a planned brokerage center in Louisville, Ky.
Enters into ABL Facility
On October 18, 2013, the company entered into a $125 million multicurrency secured revolving loan credit agreement (the "ABL facility") with a maturity of five years. The principal amount of the commitments under the ABL facility may be increased up to $200 million, subject to certain terms and conditions.
The company will hold a conference call on Tuesday, November 5, 2013, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-447-0521; international callers dial +1-847-413-3238. A live webcast of the conference will be available on the investor relations area of the company's website, www.xpologistics.com/investors. The conference will be archived until December 5, 2013. 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 35737223.
About XPO Logistics, Inc.
XPO Logistics, Inc. (NYSE: XPO) is one of the fastest growing providers of transportation logistics services in North America, offering freight brokerage, expedited transportation, white glove delivery and freight forwarding services. The company is one of the leading freight brokerage firms in North America, the largest provider of heavy goods, last-mile logistics, and a top expediter.
XPO is built to deliver constant growth in capacity and passionate service through market-facing technologies and 89 locations in the United States and Canada. The company uses its relationships with more than 23,000 ground, sea and air carriers to move freight for over 9,500 customers in the manufacturing, industrial, retail, commercial, life sciences and government sectors. www.xpologistics.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 earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") for the quarters and nine-month periods ended September 30, 2013, and September 30, 2012. 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 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) and tax consequences. In addition to its use by management, we believe that 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 EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures of other companies. 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 EBITDA are significant and necessary components of the operations of our business, and, therefore, EBITDA should only be used as a supplemental measure of our operating performance.
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, without limitation, our 2013 outlook with respect to annual revenue and fourth quarter 2013 EBITDA, the planned addition of a brokerage center in Louisville, Ky., the amount of potential tax incentives in connection with such brokerage center, and other such matters. 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, but are not limited to, those discussed in our filings with the SEC and the following: economic conditions generally; competition; our ability to find suitable acquisition candidates and execute our acquisition strategy; our ability to raise debt and equity capital; our ability to attract and retain key employees to execute our growth strategy; litigation, including litigation related to misclassification of independent contractors; our ability to develop and implement a suitable information technology system; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to retain our largest customers; our ability to successfully integrate acquired businesses; 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 by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this press release speak only as of the date hereof and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, including our 2013 outlook, except to the extent required by law.
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.
Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A, was $262 and $127 for the three-months ended September 30, 2013 and 2012, respectively, and $821 and $393 for the nine-month periods ended September 30, 2013 and 2012, respectively.
Note: Intercompany eliminations included revenue of $2.9 million and $2.2 million for the three-months ended September 30, 2013 and 2012, respectively, as well as revenues of $11.3 million and $5.0 million for the year to date periods ended September 30, 2013 and 2012, respectively, that eliminate upon consolidation.
Note: Please refer to the "Non-GAAP Financial Measures" section of the press release.
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. 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 $22.31 per share and $14.43 per share for the three-month periods ended September 30, 2013 and 2012, respectively, and $18.81 per share and $15.17 per share for the nine-month periods ended September 30, 2013 and 2012, respectively.
For informational purposes, the following table represents fully diluted shares as of September 30, 2013, calculated on a non-weighted basis without giving effect to the portion of any period in which the diluted shares were outstanding. The dilutive effect of the warrants, options and RSUs in the table was calculated using the average closing market price of common stock for the three-month period ended September 30, 2013. A non-weighted basis for calculating fully diluted shares is a non-GAAP financial measure as defined under SEC rules.
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