Exhibit 99.1
XPO Logistics Announces Second Quarter 2014 Results
Reports 49% organic growth company-wide
Generates higher-than-expected gross revenue and EBITDA
Raises year-end target run rates to $3 billion of revenue and $150 million of EBITDA
GREENWICH, Conn. — July 29, 2014 — XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the second quarter of 2014. Total gross revenue increased 323.8% year-over-year to $581.0 million, and net revenue increased 530.1% to $121.9 million.
The company reported a net loss of $13.8 million for the quarter, compared with a net loss of $17.4 million for the same period in 2013. The net loss available to common shareholders was $14.5 million, or a loss of $0.28 per diluted share, compared with a net loss of $18.1 million, or a loss of $1.00 per diluted share, for the same period in 2013.
The adjusted net loss available to common shareholders, a non-GAAP measure, was $11.6 million, or a loss of $0.22 per share for the quarter. Adjusted net loss excludes: a primarily non-cash charge of $3.7 million, or $2.3 million after-tax, of accelerated amortization due to the rebranding of the company’s Express-1 business; and $720,000, or $593,000 after-tax, of transaction and integration costs related to the acquisition of Pacer International, Inc. (“Pacer”). 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, was a gain of $14.1 million for the quarter, compared with a loss of $12.4 million for the same period in 2013. Adjusted EBITDA for 2014 excludes $627,000 of transaction and integration costs related to the acquisition of Pacer and $321,000 of rebranding costs; and includes $1.6 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 $129 million of cash, including $17 million of restricted cash, as of June 30, 2014.
Raises Full Year Financial Targets
The company has raised its full year 2014 financial targets as follows:
| | • | | An annual revenue run rate of more than $3 billion by December 31, up from a prior target of $2.75 billion; and |
| | • | | An annual EBITDA run rate of at least $150 million by December 31, up from a prior target of $100 million. |
Acquisition Announcements
On July 29, 2014, the company announced that it has entered into a definitive agreement to acquire non-asset based logistics company New Breed Holding Company (“New Breed”) in a transaction valued at approximately $615 million. New Breed is the preeminent U.S. provider of industry-defining contract logistics services for omni-channel distribution, reverse logistics, transportation management, freight bill audit and payment, lean manufacturing support, aftermarket support and supply chain optimization. The transaction is expected to close in the third quarter, subject to customary approvals and conditions.
The company further announced that it has completed the acquisition of Atlantic Central Logistics (“ACL”), in a transaction valued at approximately $36.5 million. ACL is a non-asset based, third party provider of last mile logistics with 14 East Coast locations. The full text of the company’s acquisition announcements can be found atwww.xpologistics.com/investors.
CEO Comments
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “In the second quarter, we outperformed a favorable brokerage environment and delivered strong results across the board. Our gross revenue, volume, net revenue margin and EBITDA all came in significantly ahead of plan. We reported robust organic growth of 49% company-wide, and in our freight brokerage unit, we generated outsized organic growth of 67%. We accomplished this by capitalizing on our increasing scale and lane density, and by improving the productivity of our sales force.”
Jacobs continued, “We’re very bullish about the two acquisitions we announced today. New Breed is the Rolls Royce of contract logistics – the preeminent provider of high margin, technology-intense, engineered solutions for blue chip customers. This will be a transformational addition to our service offering and a major increase in scale. Our XPO network will grow to more than 200 locations and approximately 10,000 employees. We’ll offer the most comprehensive range of logistics services in North America, with world-class technology and expertise.
“ACL is a strategically attractive, 14-location, last mile logistics company that we acquired yesterday. This transaction expands our tier one relationships in the e-commerce space, where the demand for last mile service is skyrocketing. ACL specializes in facilitating the time-sensitive, local movement of e-commerce goods between distribution centers and the end-consumer. We’ll integrate these operations with our XPO Last Mile business and leverage our combined capacity and expertise.”
Jacobs concluded, “We’ve raised our 2014 outlook to reflect our accelerated growth trajectory. We now expect a year-end revenue run rate of more than $3 billion, and an EBITDA run rate of at least $150 million – 50% more EBITDA than our original target.”
Second Quarter 2014 Results by Business Unit
| | • | | Freight brokerage:The company’s freight brokerage business generated total gross revenue of $493.4 million for the quarter, a 417.4% increase from the same period in 2013. Net revenue margin was 21.3%, compared with 13.2% in 2013, an improvement of 810 basis points. The year-over-year increases in revenue and margin were primarily due to the acquisitions of 3PD, Optima Service Solutions and Pacer, and 67% organic revenue growth. Organic growth included revenue growth from our cold-starts, which are on an |
| | annualized revenue run rate of $220 million, compared with $90 million a year ago. Excluding the margin benefit of our last mile and intermodal operations, freight brokerage net revenue margin improved year-over-year, reflecting a more seasoned sales force and data-rich information technology. Second quarter operating income was a gain of $4.4 million, compared with a loss of $5.0 million a year ago. |
| | • | | Expedited transportation:The company’s expedited transportation business generated total gross revenue of $36.2 million for the quarter, a 37.0% increase from the same period in 2013. Net revenue margin was 30.8%, compared with 15.9% in 2013, an improvement of 1,490 basis points. Our ability to achieve more revenue per mile drove margin higher year-over-year, even excluding the substantial benefit of our XPO NLM business, acquired in December 2013. Second quarter operating income was a loss of $363,000, compared with a gain of $1.2 million a year ago, reflecting a one-time non-cash charge of $3.3 million related to the rebranding of Express-1 to XPO Express. Excluding this charge, second quarter operating income was a gain of $3.0 million. |
| | • | | Freight forwarding:The company’s freight forwarding business generated total gross revenue of $54.2 million for the quarter, a 180.2% increase from the same period in 2013. Net revenue margin was 10.3%, compared with 13.3% in 2013. The decrease in net revenue margin was due in part to the consolidation of the former Pacer freight forwarding operations into the XPO Global Logistics network, which shifted the revenue mix toward higher-revenue, lower-margin international transactions. Operating income was a loss of $903,000, compared with a gain of $478,000 a year ago, due in part to the consolidation of Pacer operations. |
| | • | | Corporate: Corporate SG&A expense for the second quarter of 2014 was $15.1 million, compared with $10.7 million for the second quarter of 2013. The higher corporate SG&A expense includes the allocation of expenses related to Pacer. Corporate SG&A for the second quarter includes: $627,000, or $516,000 after-tax, of integration charges related to the acquisition of Pacer; $1.3 million, or $1.1 million after-tax, of additional acquisition-related transaction costs; and $1.7 million, or $1.4 million after-tax, of litigation costs. |
Six Months 2014 Financial Results
For the six months ended June 30, 2014, the company reported total revenue of $863.4 million, a 243.9% increase from the first six months of 2013.
Net loss was $41.9 million for the first six months of 2014, compared with net loss of $31.9 million for the same period last year. The company reported a six-month net loss available to common shareholders of $43.4 million, or a loss of $0.92 per diluted share, compared with a net loss of $33.4 million, or a loss of $1.84 per diluted share, for the same period in 2013.
Adjusted EBITDA was a gain of $14.8 million for the first six months of 2014, compared with a loss of $22.1 million for the same period in 2013. Adjusted EBITDA excludes $11.4 million of transaction and integration costs related to the acquisition of Pacer, and includes $3.8 million and $2.1 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.
Rebrands Expedited Transportation and Last Mile Operations
In June, the company rebranded two of its core businesses to further its market strategy of serving customers as one, integrated portfolio of supply chain services under the XPO brand. The Express-1 expedited transportation business now operates as XPO Express, and the 3PD last mile business now operates as XPO Last Mile. More information about these services can be found atwww.xpo-express.com andwww.xpolastmile.com, respectively.
Conference Call
The company will hold a conference call on Wednesday, July 30, 2014, at 9:30 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.xpologistics.com/investors. The conference will be archived until August 29, 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 37627194.
About XPO Logistics, Inc.
XPO Logistics, Inc. (NYSE: XPO) is one of the fastest growing providers of transportation logistics services in North America: the fourth largest freight brokerage firm, the third largest provider of intermodal services, the largest provider of last-mile logistics for heavy goods, and the largest manager of expedited shipments, with growing positions in managed transportation, global freight forwarding and less-than-truckload brokerage. The company facilitates more than 31,000 deliveries a day throughout the U.S., Mexico and Canada.
XPO Logistics has 148 locations and approximately 3,100 employees. Its three business segments – freight brokerage, expedited transportation and freight forwarding – utilize relationships with ground, rail, sea and air carriers to serve over 14,000 customers in the manufacturing, industrial, retail, commercial, life sciences and government sectors. The company has more than 3,600 trucks under contract to its drayage, expedited and last-mile subsidiaries, and has access to additional capacity through its relationships with over 27,000 other carriers. For more information: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 adjusted net loss available to common shareholders and adjusted EPS, in each case for the quarter ended June 30, 2014, and earnings (loss) before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA for the quarters ended June 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 related to our rebranding of Express-1 to XPO Express and our acquisition of Pacer, which we completed on March 31, 2014. We believe that EBITDA and adjusted EBITDA improve 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, and, in the case of adjusted EBITDA, non-recurring costs related to the Pacer acquisition. In addition to its use by management, we believe that EBITDA and adjusted EBITDA are measures widely used by
securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate EBITDA and adjusted EBITDA differently, and therefore our measures may not be comparable to similarly titled measures of other companies. EBITDA and adjusted EBITDA are not measures 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 and adjusted EBITDA are significant and necessary components of the operations of our business, and, therefore, EBITDA and adjusted EBITDA should only be used as supplemental measures 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. 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 of New Breed and ACL, including the expected impact on XPO’s results of operations; the ability to obtain the requisite regulatory approvals and the satisfaction of other conditions to consummation of the New Breed transaction; 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 New Breed’s and ACL’s 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@xpologistics.com
Media Contacts:
Brunswick Group
Gemma Hart, Darren McDermott, +1-212-333-3810
XPO Logistics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
Revenue | | $ | 581,009 | | | $ | 137,091 | | | $ | 863,412 | | | $ | 251,090 | |
Operating expenses | | | | | | | | | | | | | | | | |
Cost of purchased transportation and services | | | 459,139 | | | | 117,751 | | | | 683,145 | | | | 215,490 | |
Direct operating expense | | | 27,212 | | | | — | | | | 31,092 | | | | — | |
Sales, general and administrative expense | | | 106,553 | | | | 33,355 | | | | 182,431 | | | | 60,982 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 592,904 | | | | 151,106 | | | | 896,668 | | | | 276,472 | |
| | | | | | | | | | | | | | | | |
Operating loss | | | (11,895 | ) | | | (14,015 | ) | | | (33,256 | ) | | | (25,382 | ) |
| | | | | | | | | | | | | | | | |
Other expense | | | 235 | | | | 167 | | | | 250 | | | | 58 | |
Interest expense | | | 3,403 | | | | 3,106 | | | | 13,461 | | | | 6,170 | |
| | | | | | | | | | | | | | | | |
Loss before income tax provision | | | (15,533 | ) | | | (17,288 | ) | | | (46,967 | ) | | | (31,610 | ) |
Income tax (benefit) provision | | | (1,771 | ) | | | 74 | | | | (5,070 | ) | | | 296 | |
| | | | | | | | | | | | | | | | |
Net loss | | | (13,762 | ) | | | (17,362 | ) | | | (41,897 | ) | | | (31,906 | ) |
Cumulative preferred dividends | | | (733 | ) | | | (743 | ) | | | (1,475 | ) | | | (1,486 | ) |
| | | | | | | | | | | | | | | | |
Net loss available to common shareholders | | $ | (14,495 | ) | | $ | (18,105 | ) | | $ | (43,372 | ) | | $ | (33,392 | ) |
| | | | | | | | | | | | | | | | |
Basic loss per share | | | | | | | | | | | | | | | | |
Net loss | | $ | (0.28 | ) | | $ | (1.00 | ) | | $ | (0.92 | ) | | $ | (1.84 | ) |
Diluted loss per share | | | | | | | | | | | | | | | | |
Net loss | | $ | (0.28 | ) | | $ | (1.00 | ) | | $ | (0.92 | ) | | $ | (1.84 | ) |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | |
Basic weighted average common shares outstanding | | | 52,565 | | | | 18,180 | | | | 46,970 | | | | 18,107 | |
Diluted weighted average common shares outstanding | | | 52,565 | | | | 18,180 | | | | 46,970 | | | | 18,107 | |
XPO Logistics, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
| | | | | | | | |
| | | June 30,
2014 | | | December 31,
2013 | |
| | | (Unaudited) | | | | |
| ASSETS | | | | | | | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | $ | 111,620 | | | $ | 21,524 | |
Accounts receivable, net of allowances of $6,593 and $3,539, respectively | | | 342,182 | | | | 134,227 | |
Prepaid expenses | | | 12,764 | | | | 3,935 | |
Deferred tax asset, current | | | 6,885 | | | | 3,041 | |
Other current assets | | | 9,965 | | | | 7,304 | |
| | | | | | | | |
Total current assets | | | 483,416 | | | | 170,031 | |
| | | | | | | | |
Property and equipment, net of $22,634 and $11,803 in accumulated depreciation, respectively | | | 97,378 | | | | 56,571 | |
Goodwill | | | 540,954 | | | | 363,448 | |
Identifiable intangible assets, net of $37,655 and $15,411 in accumulated amortization, respectively | | | 231,915 | | | | 185,179 | |
Deferred tax asset, long-term | | | 75 | | | | 72 | |
Restricted cash | | | 17,017 | | | | 2,141 | |
Other long-term assets | | | 10,075 | | | | 2,799 | |
| | | | | | | | |
Total long-term assets | | | 897,414 | | | | 610,210 | |
| | | | | | | | |
Total assets | | $ | 1,380,830 | | | $ | 780,241 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
Current liabilities: | | | | | | | | |
Accounts payable | | $ | 216,969 | | | $ | 71,391 | |
Accrued salaries and wages | | | 16,454 | | | | 11,741 | |
Accrued expenses, other | | | 30,947 | | | | 9,489 | |
Current maturities of long-term debt | | | 1,565 | | | | 2,028 | |
Other current liabilities | | | 6,819 | | | | 4,684 | |
| | | | | | | | |
Total current liabilities | | | 272,754 | | | | 99,333 | |
| | | | | | | | |
Convertible senior notes | | | 101,074 | | | | 106,268 | |
Revolving credit facility and other long-term debt, net of current maturities | | | 484 | | | | 75,373 | |
Deferred tax liability, long-term | | | 21,658 | | | | 15,200 | |
Other long-term liabilities | | | 34,108 | | | | 28,224 | |
| | | | | | | | |
Total long-term liabilities | | | 157,324 | | | | 225,065 | |
| | | | | | | | |
Commitments and contingencies | | | | | | | | |
| | |
Stockholders’ equity: | | | | | | | | |
Preferred stock, $.001 par value; 10,000,000 shares; 73,335 and 74,175 shares issued and outstanding, respectively | | | 42,258 | | | | 42,737 | |
Common stock, $.001 par value; 150,000,000 shares authorized; 52,637,017 and 30,583,073 shares issued, respectively; and 52,592,017 and 30,538,073 shares outstanding, respectively | | | 53 | | | | 30 | |
Additional paid-in capital | | | 1,063,709 | | | | 524,972 | |
Treasury stock, at cost, 45,000 shares held | | | (107 | ) | | | (107 | ) |
Accumulated deficit | | | (155,161 | ) | | | (111,789 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 950,752 | | | | 455,843 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 1,380,830 | | | $ | 780,241 | |
| | | | | | | | |
XPO Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| | | | | | | | |
| | | Six Months Ended
June 30, | |
| | | 2014 | | | 2013 | |
Operating activities | | | | | | | | |
Net loss | | $ | (41,897 | ) | | $ | (31,906 | ) |
Adjustments to reconcile net loss to net cash from operating activities | | | | | | | | |
Provisions for allowance for doubtful accounts | | | 3,180 | | | | 627 | |
Depreciation and amortization | | | 36,543 | | | | 3,349 | |
Stock compensation expense | | | 3,843 | | | | 2,147 | |
Accretion of debt | | | 2,663 | | | | 2,916 | |
Deferred tax expense | | | (7,071 | ) | | | 167 | |
Other | | | 2,335 | | | | (130 | ) |
Changes in assets and liabilities, net of effects of acquisitions: | | | | | | | | |
Accounts receivable | | | (57,334 | ) | | | (24,134 | ) |
Income tax payable | | | 2,441 | | | | (732 | ) |
Prepaid expense and other current assets | | | (3,551 | ) | | | (275 | ) |
Other long-term assets | | | (7,101 | ) | | | (28 | ) |
Accounts payable | | | 37,791 | | | | (4,013 | ) |
Accrued expenses and other liabilities | | | 1,552 | | | | 2,939 | |
| | | | | | | | |
Cash flows used by operating activities | | | (26,606 | ) | | | (49,073 | ) |
| | | | | | | | |
Investing activities | | | | | | | | |
Acquisition of businesses, net of cash acquired | | | (200,999 | ) | | | (19,660 | ) |
Payment for purchases of property and equipment | | | (9,822 | ) | | | (3,864 | ) |
Other | | | 265 | | | | 125 | |
| | | | | | | | |
Cash flows used by investing activities | | | (210,556 | ) | | | (23,399 | ) |
| | | | | | | | |
Financing activities | | | | | | | | |
Repayment of borrowings on revolving credit facility | | | (75,000 | ) | | | — | |
Proceeds from stock offering, net | | | 413,164 | | | | — | |
Payment for cash held as collateral in lending arrangement | | | (8,503 | ) | | | — | |
Dividends paid to preferred stockholders | | | (1,475 | ) | | | (1,486 | ) |
Other | | | (928 | ) | | | (180 | ) |
| | | | | | | | |
Cash flows provided (used) by financing activities | | | 327,258 | | | | (1,666 | ) |
| | | | | | | | |
Net increase (decrease) in cash | | | 90,096 | | | | (74,138 | ) |
Cash and cash equivalents, beginning of period | | | 21,524 | | | | 252,293 | |
| | | | | | | | |
Cash and cash equivalents, end of period | | $ | 111,620 | | | $ | 178,155 | |
| | | | | | | | |
Supplemental disclosure of cash flow information: | | | | | | | | |
Cash paid for interest | | $ | 4,726 | | | $ | 3,337 | |
Cash (received) paid for income taxes | | $ | (291 | ) | | $ | 906 | |
Equity portion of acquisition purchase price | | $ | 108,187 | | | $ | 3,089 | |
Freight Brokerage
Summary Financial Table
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $Variance | | | Change % | | | 2014 | | | 2013 | | | $Variance | | | Change % | |
Revenue | | $ | 493,390 | | | $ | 95,360 | | | $ | 398,030 | | | | 417.4 | % | | $ | 725,078 | | | $ | 173,590 | | | $ | 551,488 | | | | 317.7 | % |
Cost of purchased transportation and services | | | 388,282 | | | | 82,793 | | | | 305,489 | | | | 369.0 | % | | | 575,654 | | | | 150,957 | | | | 424,697 | | | | 281.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 105,108 | | | | 12,567 | | | | 92,541 | | | | 736.4 | % | | | 149,424 | | | | 22,633 | | | | 126,791 | | | | 560.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Direct operating expense | | | 27,212 | | | | — | | | | 27,212 | | | | 100.0 | % | | | 31,092 | | | | — | | | | 31,092 | | | | 100.0 | % |
SG&A expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries & benefits | | | 38,795 | | | | 12,367 | | | | 26,428 | | | | 213.7 | % | | | 64,321 | | | | 22,530 | | | | 41,791 | | | | 185.5 | % |
Other SG&A expense | | | 11,339 | | | | 3,031 | | | | 8,308 | | | | 274.1 | % | | | 19,180 | | | | 4,926 | | | | 14,254 | | | | 289.4 | % |
Purchased services | | | 4,736 | | | | 979 | | | | 3,757 | | | | 383.8 | % | | | 6,808 | | | | 1,793 | | | | 5,015 | | | | 279.7 | % |
Depreciation & amortization | | | 18,595 | | | | 1,180 | | | | 17,415 | | | | 1475.8 | % | | | 27,589 | | | | 2,194 | | | | 25,395 | | | | 1157.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SG&A expense | | | 73,465 | | | | 17,557 | | | | 55,908 | | | | 318.4 | % | | | 117,898 | | | | 31,443 | | | | 86,455 | | | | 275.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating income (loss) | | $ | 4,431 | | | $ | (4,990 | ) | | $ | 9,421 | | | | -188.8 | % | | $ | 434 | | | $ | (8,810 | ) | | $ | 9,244 | | | | -104.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Total depreciation and amortization for the Freight Brokerage reportable segment included in both direct operating expense and SG&A, was $ 19,271,000 and $1,180,000 for the three-months ended June 30, 2014 and 2013, respectively, and $28,264,000 and $2,194,000 for the six-months ended June 30, 2014 and 2013, respectively.
Freight Brokerage
Key Data
(In thousands, except personnel data)
| | | | | | | | | | | | | | | | |
| | | 3 Mos Ended
June 30,
2014 | | | 3 Mos Ended
June 30,
2013 | | | 6 Mos Ended
June 30,
2014 | | | 6 Mos Ended
June 30,
2013 | |
Revenue | | | | | | | | | | | | | | | | |
Truckload, LTL, and Intermodal | | $ | 387,492 | | | $ | 95,360 | | | $ | 532,076 | | | $ | 173,590 | |
Last Mile | | | 105,898 | | | | — | | | | 193,002 | | | | — | |
| | | | | | | | | | | | | | | | |
Total Revenue | | $ | 493,390 | | | $ | 95,360 | | | $ | 725,078 | | | $ | 173,590 | |
| | | | | | | | | | | | | | | | |
Net Revenue | | | | | | | | | | | | | | | | |
Truckload and LTL | | $ | 23,894 | | | $ | 12,489 | | | $ | 43,612 | | | $ | 22,582 | |
Intermodal | | | 50,149 | | | | 78 | | | | 50,351 | | | | 51 | |
| | | | | | | | | | | | | | | | |
Total Truckload, LTL, and Intermodal | | | 74,043 | | | | 12,567 | | | | 93,963 | | | | 22,633 | |
Last Mile | | | 31,065 | | | | — | | | | 55,461 | | | | — | |
| | | | | | | | | | | | | | | | |
Total Net Revenue | | $ | 105,108 | | | $ | 12,567 | | | $ | 149,424 | | | $ | 22,633 | |
| | | | | | | | | | | | | | | | |
Net Revenue % | | | | | | | | | | | | | | | | |
Truckload, LTL, and Intermodal | | | 19.1 | % | | | 13.2 | % | | | 17.7 | % | | | 13.0 | % |
Last Mile | | | 29.3 | % | | | — | | | | 28.7 | % | | | — | |
| | | | | | | | | | | | | | | | |
Overall Net Revenue % | | | 21.3 | % | | | 13.2 | % | | | 20.6 | % | | | 13.0 | % |
| | | | | | | | | | | | | | | | |
Direct Operating Expense | | | | | | | | | | | | | | | | |
Intermodal | | $ | 22,872 | | | $ | — | | | $ | 22,872 | | | $ | — | |
Last Mile | | | 4,340 | | | | — | | | | 8,220 | | | | — | |
| | | | | | | | | | | | | | | | |
Total Direct Operating Expense | | $ | 27,212 | | | $ | — | | | $ | 31,092 | | | $ | — | |
| | | | | | | | | | | | | | | | |
Freight Brokerage personnel (end of period) | | | 2,245 | | | | 788 | | | | | | | | | |
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 June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $ Variance | | | Change % | | | 2014 | | | 2013 | | | $ Variance | | | Change % | |
Revenue | | $ | 36,231 | | | $ | 26,445 | | | $ | 9,786 | | | | 37.0 | % | | $ | 70,041 | | | $ | 50,320 | | | $ | 19,721 | | | | 39.2 | % |
Cost of purchased transportation and services | | | 25,067 | | | | 22,235 | | | | 2,832 | | | | 12.7 | % | | | 47,510 | | | | 42,302 | | | | 5,208 | | | | 12.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 11,164 | | | | 4,210 | | | | 6,954 | | | | 165.2 | % | | | 22,531 | | | | 8,018 | | | | 14,513 | | | | 181.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SG&A expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries & benefits | | | 4,376 | | | | 2,016 | | | | 2,360 | | | | 117.1 | % | | | 8,530 | | | | 3,961 | | | | 4,569 | | | | 115.3 | % |
Other SG&A expense | | | 1,670 | | | | 513 | | | | 1,157 | | | | 225.5 | % | | | 3,127 | | | | 1,117 | | | | 2,010 | | | | 179.9 | % |
Purchased services | | | 562 | | | | 246 | | | | 316 | | | | 128.5 | % | | | 996 | | | | 535 | | | | 461 | | | | 86.2 | % |
Depreciation & amortization | | | 4,919 | | | | 248 | | | | 4,671 | | | | 1883.5 | % | | | 6,497 | | | | 465 | | | | 6,032 | | | | 1297.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SG&A expense | | | 11,527 | | | | 3,023 | | | | 8,504 | | | | 281.3 | % | | | 19,150 | | | | 6,078 | | | | 13,072 | | | | 215.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating (loss) income | | | (363 | ) | | | 1,187 | | | | (1,550 | ) | | | -130.6 | % | | | 3,381 | | | | 1,940 | | | | 1,441 | | | | 74.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accelerated amortization of Express-1 trade name | | | 3,346 | | | | — | | | | 3,346 | | | | 100.0 | % | | | 3,346 | | | | — | | | | 3,346 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted operating income (loss) | | $ | 2,983 | | | $ | 1,187 | | | $ | 1,796 | | | | 151.3 | % | | $ | 6,727 | | | $ | 1,940 | | | $ | 4,787 | | | | 246.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Total depreciation and amortization for the Expedited Transportation reportable segment included in both cost of purchased transportation and services and SG&A, was $4,954,000 and $291,000 for the three-months ended June 30, 2014 and 2013, respectively, and $6,566,000 and $559,000 for the six-months ended June 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 June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $ Variance | | | Change % | | | 2014 | | | 2013 | | | $ Variance | | | Change % | |
Revenue | | $ | 54,178 | | | $ | 19,338 | | | $ | 34,840 | | | | 180.2 | % | | $ | 73,684 | | | $ | 35,571 | | | $ | 38,113 | | | | 107.1 | % |
Cost of purchased transportation and services | | | 48,580 | | | | 16,775 | | | | 31,805 | | | | 189.6 | % | | | 65,373 | | | | 30,622 | | | | 34,751 | | | | 113.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net revenue | | | 5,598 | | | | 2,563 | | | | 3,035 | | | | 118.4 | % | | | 8,311 | | | | 4,949 | | | | 3,362 | | | | 67.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SG&A expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries & benefits | | | 1,627 | | | | 1,518 | | | | 109 | | | | 7.2 | % | | | 3,262 | | | | 2,951 | | | | 311 | | | | 10.5 | % |
Other SG&A expense | | | 4,130 | | | | 317 | | | | 3,813 | | | | 1202.8 | % | | | 4,478 | | | | 720 | | | | 3,758 | | | | 521.9 | % |
Purchased services | | | 243 | | | | 157 | | | | 86 | | | | 54.8 | % | | | 320 | | | | 247 | | | | 73 | | | | 29.6 | % |
Depreciation & amortization | | | 501 | | | | 93 | | | | 408 | | | | 438.7 | % | | | 601 | | | | 181 | | | | 420 | | | | 232.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SG&A expense | | | 6,501 | | | | 2,085 | | | | 4,416 | | | | 211.8 | % | | | 8,661 | | | | 4,099 | | | | 4,562 | | | | 111.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Operating (loss) income | | $ | (903 | ) | | $ | 478 | | | $ | (1,381 | ) | | | -288.9 | % | | $ | (350 | ) | | $ | 850 | | | $ | (1,200 | ) | | | -141.2 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
XPO Corporate
Summary of Sales, General & Administrative Expense
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | $ Variance | | | Change % | | | 2014 | | | 2013 | | | $ Variance | | | Change % | |
SG&A expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Salaries & benefits | | $ | 6,952 | | | $ | 4,590 | | | $ | 2,362 | | | | 51.5 | % | | $ | 16,795 | | | $ | 9,097 | | | $ | 7,698 | | | | 84.6 | % |
Other SG&A expense | | | 1,872 | | | | 1,337 | | | | 535 | | | | 40.0 | % | | | 5,492 | | | | 2,696 | | | | 2,796 | | | | 103.7 | % |
Purchased services | | | 5,692 | | | | 4,532 | | | | 1,160 | | | | 25.6 | % | | | 13,322 | | | | 7,154 | | | | 6,168 | | | | 86.2 | % |
Depreciation & amortization | | | 544 | | | | 231 | | | | 313 | | | | 135.5 | % | | | 1,112 | | | | 415 | | | | 697 | | | | 168.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total SG&A expense | | $ | 15,060 | | | $ | 10,690 | | | $ | 4,370 | | | | 40.9 | % | | $ | 36,721 | | | $ | 19,362 | | | $ | 17,359 | | | | 89.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: Intercompany eliminations included revenue of $2.8 million and $4.1 million for the three-months ended June 30, 2014 and 2013, respectively, and $5.4 million and $8.4 million for the six-months ended June 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 June 30, | | | Six Months Ended June 30, | |
| | | 2014 | | | 2013 | | | Change % | | | 2014 | | | 2013 | | | Change % | |
Net loss available to common shareholders | | $ | (14,495 | ) | | $ | (18,105 | ) | | | -19.9 | % | | $ | (43,372 | ) | | $ | (33,392 | ) | | | 29.9 | % |
Preferred dividends | | | (733 | ) | | | (743 | ) | | | -1.3 | % | | | (1,475 | ) | | | (1,486 | ) | | | -0.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net loss | | | (13,762 | ) | | | (17,362 | ) | | | -20.7 | % | | | (41,897 | ) | | | (31,906 | ) | | | 31.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Pacer debt commitment fee(1) | | | 93 | | | | — | | | | 100.0 | % | | | 4,624 | | | | — | | | | 100.0 | % |
Other interest expense | | | 3,310 | | | | 3,106 | | | | 6.6 | % | | | 8,837 | | | | 6,170 | | | | 43.2 | % |
Income tax (benefit) provision | | | (1,771 | ) | | | 74 | | | | -2493.2 | % | | | (5,070 | ) | | | 296 | | | | -1812.8 | % |
Accelerated amortization of Express-1 trade name | | | 3,346 | | | | — | | | | 100.0 | % | | | 3,346 | | | | — | | | | 100.0 | % |
Other depreciation and amortization | | | 21,924 | | | | 1,795 | | | | 1121.4 | % | | | 33,197 | | | | 3,349 | | | | 891.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | 13,140 | | | $ | (12,387 | ) | | | -206.1 | % | | $ | 3,037 | | | $ | (22,091 | ) | | | -113.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Pacer transaction and restructuring costs | | | 627 | | | | — | | | | 100.0 | % | | | 11,408 | | | | — | | | | 100.0 | % |
XPO Express and XPO Last Mile rebranding costs | | | 321 | | | | — | | | | 100.0 | % | | | 321 | | | | — | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 14,088 | | | $ | (12,387 | ) | | | -213.7 | % | | $ | 14,766 | | | $ | (22,091 | ) | | | -166.8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Pacer debt commitment fee is 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
June 30, | | | Six Months Ended
June 30, | |
| | | 2014 | | | 2013 | | | 2014 | | | 2013 | |
GAAP net loss available to common shareholders | | $ | (14,495 | ) | | $ | (18,105 | ) | | $ | (43,372 | ) | | $ | (33,392 | ) |
Accelerated amortization of Express-1 trade name | | | 3,346 | | | | — | | | | 3,346 | | | | — | |
XPO Express and XPO Last Mile rebranding costs | | | 321 | | | | — | | | | 321 | | | | — | |
Pacer transaction and restructuring costs | | | 627 | | | | — | | | | 11,408 | | | | — | |
Pacer debt commitment fee(1) | | | 93 | | | | | | | | 4,624 | | | | | |
Adjustment to tax benefit | | | (1,460 | ) | | | | | | | (3,883 | ) | | | | |
| | | | | | | | | | | | | | | | |
Adjusted net loss available to common shareholders | | $ | (11,568 | ) | | $ | (18,105 | ) | | $ | (27,556 | ) | | $ | (33,392 | ) |
| | | | | | | | | | | | | | | | |
Adjusted basic loss per share | | | | | | | | | | | | | | | | |
Adjusted net loss | | $ | (0.22 | ) | | $ | (1.00 | ) | | $ | (0.59 | ) | | $ | (1.84 | ) |
Adjusted diluted loss per share | | | | | | | | | | | | | | | | |
Adjusted net loss | | $ | (0.22 | ) | | $ | (1.00 | ) | | $ | (0.59 | ) | | $ | (1.84 | ) |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | |
Basic weighted average common shares outstanding | | | 52,565 | | | | 18,180 | | | | 46,970 | | | | 18,107 | |
Diluted weighted average common shares outstanding | | | 52,565 | | | | 18,180 | | | | 46,970 | | | | 18,107 | |
| (1) | Pacer debt commitment fee is 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 | | | Six Months Ended | |
| | | June 30, 2014 | | | June 30, 2013 | | | June 30, 2014 | | | June 30, 2013 | |
Basic common stock outstanding | | | 52,564,636 | | | | 18,179,570 | | | | 46,969,847 | | | | 18,106,564 | |
| | | | | | | | | | | | | | | | |
Potentially Dilutive Securities: | | | | | | | | | | | | | | | | |
Shares underlying the conversion of preferred stock to common stock | | | 10,476,430 | | | | 10,610,714 | | | | 10,489,784 | | | | 10,610,714 | |
Shares underlying the conversion of the convertible senior notes | | | 7,341,524 | | | | 8,749,239 | | | | 7,540,478 | | | | 8,749,239 | |
Shares underlying warrants to purchase common stock | | | 7,765,457 | | | | 6,262,380 | | | | 7,886,891 | | | | 6,302,668 | |
Shares underlying stock options to purchase common stock | | | 497,716 | | | | 526,813 | | | | 513,254 | | | | 533,977 | |
Shares underlying restricted stock units | | | 714,896 | | | | 436,275 | | | | 657,583 | | | | 418,898 | |
| | | | | | | | | | | | | | | | |
| | | 26,796,023 | | | | 26,585,421 | | | | 27,087,990 | | | | 26,615,496 | |
| | | | | | | | | | | | | | | | |
Diluted weighted shares outstanding | | | 79,360,659 | | | | 44,764,991 | | | | 74,057,837 | | | | 44,722,060 | |
| | | | | | | | | | | | | | | | |
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 common stock of $26.41 per share and $16.85 per share for the three months ended June 30, 2014 and 2013, respectively, and $27.61 per share and $17.00 per share for the six months ended June 30, 2014 and 2013, respectively.
