Exhibit 99.1
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 |
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| 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 | ||||||||||||
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| Total operating expenses |
676,108 | 212,401 | 1,572,775 | 488,872 | ||||||||||||
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| Operating loss |
(13,638 | ) | (18,419 | ) | (46,893 | ) | (43,801 | ) | ||||||||
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| Other expense |
296 | 235 | 546 | 294 | ||||||||||||
| Interest expense |
17,842 | 6,415 | 31,303 | 12,585 | ||||||||||||
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| Loss before income tax provision |
(31,776 | ) | (25,069 | ) | (78,742 | ) | (56,680 | ) | ||||||||
| Income tax benefit |
(20,077 | ) | (19,044 | ) | (25,147 | ) | (18,748 | ) | ||||||||
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| Net loss |
(11,699 | ) | (6,025 | ) | (53,595 | ) | (37,932 | ) | ||||||||
| Cumulative preferred dividends |
(733 | ) | (743 | ) | (2,208 | ) | (2,229 | ) | ||||||||
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| Net loss available to common shareholders |
$ | (12,432 | ) | $ | (6,768 | ) | $ | (55,803 | ) | $ | (40,161 | ) | ||||
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| Basic loss per share |
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| Net loss |
$ | (0.23 | ) | $ | (0.28 | ) | $ | (1.13 | ) | $ | (1.99 | ) | ||||
| Diluted loss per share |
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| Net loss |
$ | (0.23 | ) | $ | (0.28 | ) | $ | (1.13 | ) | $ | (1.99 | ) | ||||
| Weighted average common shares outstanding |
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| 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: |
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| 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 | ||||||
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| Total current assets |
1,203,779 | 170,031 | ||||||
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| 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 | ||||||
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| Total long-term assets |
1,542,514 | 610,210 | ||||||
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| Total assets |
$ | 2,746,293 | $ | 780,241 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| 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 | ||||||
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| Total current liabilities |
345,570 | 99,333 | ||||||
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| 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 | ||||||
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| Total long-term liabilities |
748,235 | 225,065 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity: |
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| 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 | ) | ||||
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| Total stockholders’ equity |
1,652,488 | 455,843 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 2,746,293 | $ | 780,241 | ||||
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XPO Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2014 | 2013 | |||||||
| Operating activities |
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| Net loss |
$ | (53,595 | ) | $ | (37,932 | ) | ||
| Adjustments to reconcile net loss to net cash from operating activities |
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| 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: |
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| 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 | ||||||
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| Cash flows used by operating activities |
(13,257 | ) | (61,545 | ) | ||||
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| Investing activities |
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| 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 | ||||||
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| Cash flows used by investing activities |
(834,918 | ) | (358,676 | ) | ||||
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| Financing activities |
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| 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 | ) | ||||
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| Cash flows provided by financing activities |
1,506,752 | 235,187 | ||||||
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| Net increase (decrease) in cash |
658,577 | (185,034 | ) | |||||
| Cash and cash equivalents, beginning of period |
21,524 | 252,293 | ||||||
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| Cash and cash equivalents, end of period |
$ | 680,101 | $ | 67,259 | ||||
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| Supplemental disclosure of cash flow information: |
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| 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 | % | ||||||||||||||||||||||
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| Net revenue |
107,679 | 27,650 | 80,029 | 289.4 | % | 257,103 | 50,283 | 206,820 | 411.3 | % | ||||||||||||||||||||||
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| Direct operating expense |
29,090 | 2,077 | 27,013 | 1300.6 | % | 60,182 | 2,077 | 58,105 | 2797.5 | % | ||||||||||||||||||||||
| SG&A expense |
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| 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 | |||
|
|
|
|||