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XPO Logistics Announces First Quarter 2012 Results

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 before interest, taxes, depreciation and amortization (“EBITDA”) for the quarters ended March 31, 2012 and March 31, 2011. As required by SEC rules, we provide reconciliations of these measures to the most directly comparable measure (net income) under United States generally accepted accounting principles (“GAAP”), which are set forth in the attachments to this release. We believe that EBITDA is a useful measure of operating performance because it allows management, investors and others to evaluate and compare our core operating results 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 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.

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. 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 capital; our ability to attract and retain key employees to execute our growth strategy; 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; 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.

XPO Logistics, Inc.
Consolidated Statements of Operations
For the Three Months Ended March 31,
(Unaudited)
(in thousands)
       
 

For the Three Months Ended March 31,

Change
  2012     2011 2012     2011   %
Revenues
Operating revenue $ 44,560 $ 41,508 100.0 % 100.0 % 7.4 %
Direct expense
Transportation services 34,534 31,113 77.5 % 75.0 % 11.0 %
Station commissions 2,316 2,479 5.2 % 6.0 % -6.6 %
Insurance 473 293 1.1 % 0.7 % 61.4 %
Other   464     416 1.0 %   1.0 % 11.5 %
Direct expense   37,787     34,301 84.8 %   82.6 % 10.2 %
Gross margin   6,773     7,207 15.2 %   17.4 % -6.0 %
SG&A expense
Salaries & benefits 5,316 3,267 11.9 % 7.9 % 62.7 %
Purchased services 2,736 694 6.1 % 1.7 % 294.2 %
Depreciation & amortization 266 268 0.6 % 0.6 % -0.7 %
Other   2,679     978 6.0 %   2.4 % 173.9 %
Total SG&A expense   10,997     5,207 24.7 %   12.5 % 111.2 %
Operating (expense) income   (4,224 )   2,000 -9.5 %   4.8 % -311.2 %
Other (income) expense (21 ) 29 0.0 % 0.1 % 172.4 %
Interest expense   12     49 0.0 %   0.1 % -75.5 %
(Loss) income before income tax (4,215 ) 1,922 -9.5 % 4.6 % -319.3 %
Income tax (benefit) provision   (1,521 )   805 -3.4 %   1.9 % 288.9 %
Net (Loss) Income $ (2,694 ) $ 1,117 -6.0 %   2.7 % -341.2 %
Undeclared cumulative preferred dividends $ (750 ) $ - -1.7 %   0.0 % N/A  
Net (Loss) Income available to common shareholders $ (3,444 ) $ 1,117 -7.7 %   2.7 % -408.3 %
 
Basic earnings per common share
Net (loss) income available to common shareholders $ (0.36 ) $ 0.14
Diluted earnings per common share
Net (loss) income available to common shareholders $ (0.36 ) $ 0.13
Weighted average common shares outstanding
Basic weighted average common shares outstanding 9,501 8,176
Diluted weighted average common shares outstanding 9,501 8,522

Note: All share-related amounts in this press release and the financial tables reflect the 4-for-1 reverse stock split that was effected on September 2, 2011.

 
XPO Logistics, Inc
Condensed Consolidated Balance Sheets
(in thousands)
   
 
March 31, 2012 December 31, 2011
ASSETS (Unaudited)
Current assets:
Cash $ 204,496 $ 74,007
Accounts receivable, net of allowances of $409 and $356, respectively 24,350 22,425
Prepaid expenses 885 426
Deferred tax asset, current 1,305 955
Income tax receivable 2,846 1,109
Other current assets   1,544     219  
Total current assets   235,426     99,141  
 
Property and equipment, net of $4,118 and $3,937 in accumulated depreciation, respectively 4,315 2,979
Goodwill 16,959 16,959
Identifiable intangible assets, net of $3,427 and $3,356 in accumulated amortization, respectively 7,942 8,053
Loans and advances 130 128
Other long-term assets   474     381  
Total long-term assets   29,820     28,500  
Total assets $ 265,246   $ 127,641  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: -
Accounts payable $ 10,383 $ 8,565
Accrued salaries and wages 2,281 2,234
Accrued expenses, other 4,741 2,789
Current maturities of long-term debt and capital leases 9 1,675
Other current liabilities   774     808  
Total current liabilities   18,188     16,071  
 
 
Long-term debt and capital leases, net of current maturities 35 454
Deferred tax liability, long-term 2,711 2,346
Other long-term liabilities   978     410  
Total long-term liabilities   3,724     3,210  
 
Stockholders' equity:
Preferred stock, $.001 par value; 10,000,000 shares; 75,000 shares issued and outstanding 42,794 42,794
Common stock, $.001 par value; 159,200,000 shares authorized; 17,659,483 and 8,410,353 shares issued,
respectively; and 17,614,483 and 8,365,353 shares outstanding, respectively 17 8
Additional paid-in capital 241,022 102,613
Treasury stock, at cost, 45,000 shares held (107 ) (107 )
Accumulated deficit   (40,392 )   (36,948 )
Total stockholders' equity   243,334     108,360  
Total liabilities and stockholders' equity $ 265,246   $ 127,641  

Note: All share-related amounts in this press release and the financial tables reflect the 4-for-1 reverse stock split that was effected on September 2, 2011.

   
XPO Logistics, Inc.
Condensed Consolidated Statement of Cash Flow
(Unaudited)
(in thousands)
 
Three Months Ended
March 31, 2012 March 31, 2011
Operating activities
Net (loss) income $ (2,694 ) $ 1,117
 
Adjustments to reconcile net income to net cash from operating activities
Provisions for allowance for doubtful accounts 53 16
Depreciation and amortization expense 317 316
Stock compensation expense 1,033 39
Changes in assets and liabilities
Accounts receivable (1,979 ) (388 )
Deferred tax expense 13 422
Income tax receivable (1,737 ) 346
Prepaid expenses and other current assets (1,780 ) (87 )
Other long-term assets and advances (102 ) (14 )
Accounts payable 1,818 (41 )
Accrued expenses and other liabilities   2,282     257  
Cash (used in) provided by operating activities   (2,776 )   1,983  
 
Investing activities
Payment of acquisition earn-out (450 ) (450 )
Payment for purchases of property and equipment   (836 )   (86 )
Cash flows used in investing activities   (1,286 )   (536 )
 
Financing activities
Line of credit, net - (2,353 )
Payments of long-term debt and capital leases (2,084 ) (429 )
Excess tax benefit from stock options 167 97
Proceeds from exercise of options, net 233 727
Proceeds from common stock offering, net of issuance costs 136,985 -
Dividends paid to preferred stockholders   (750 )   -  
Cash flows provided by (used in) financing activities   134,551     (1,958 )
 
Net increase (decrease) in cash 130,489 (511 )
Cash, beginning of period   74,007     561  
Cash, end of period $ 204,496   $ 50  
 
Supplemental disclosure of noncash activities:
Cash paid during the period for interest 12 28
Cash paid (received) during the period for income taxes, net 84 (75 )
         
Expedited Transportation
(Express -1)
Summary Financial Table
(Unaudited)
(in thousands)
 
 

Three months ended March 31,

Percent of Revenue Change
  2012   2011 2012   2011   %
Revenues
Operating revenue $ 22,420 $ 20,742 100.0 % 100.0 % 8.1 %
Direct expense
Transportation services 17,362 15,512 77.4 % 74.8 % 11.9 %
Insurance 436 261 1.9 % 1.3 % 67.0 %
Other   463   416 2.1 % 2.0 % 11.3 %
Direct expense   18,261   16,189 81.4 % 78.0 % 12.8 %
Gross margin   4,159   4,553 18.6 % 22.0 % -8.7 %
SG&A expense
Salaries & benefits 1,660 1,807 7.4 % 8.7 % -8.1 %
Purchased services 197 385 0.9 % 1.9 % -48.8 %
Depreciation & amortization 85 111 0.4 % 0.5 % -23.4 %
Other   637   349 2.8 % 1.7 % 82.5 %
Total SG&A expense   2,579   2,652 11.5 % 12.8 % -2.8 %
Operating income $ 1,580 $ 1,901 7.0 % 9.2 % -16.9 %

Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A, was $137,000 and $159,000 for the three-month periods ended March 31, 2012 and 2011, respectively.

         
Freight Forwarding
(Concert Group Logistics)
Schedule of Operating Income
(Unaudited)
(in thousands)
 

For the Three Months Ended March 31,

Percent of Revenue Change
  2012     2011 2012     2011   %
Revenues
Operating revenue $ 15,457 $ 15,739 100.0 % 100.0 % -1.8 %
Direct expense
Transportation services 11,513 11,505 74.5 % 73.1 % 0.1 %
Station commissions 2,316 2,479 15.0 % 15.8 % -6.6 %
Insurance   43   29 0.3 % 0.2 % 48.3 %
Direct expense   13,872   14,013 89.7 % 89.0 % -1.0 %
Gross margin   1,585   1,726 10.3 % 11.0 % -8.2 %
SG&A expense
Salaries & benefits 787 723 5.1 % 4.6 % 8.9 %
Purchased services 41 67 0.3 % 0.4 % -38.8 %
Depreciation & amortization 144 142 0.9 % 0.9 % 1.4 %
Other   451   322 2.9 % 2.0 % 40.1 %
Total SG&A expense   1,423   1,254 9.2 % 8.0 % 13.5 %
Operating income $ 162 $ 472 1.0 % 3.0 % -65.7 %
         
Freight Brokerage
(Bounce Logistics and XPO Logistics)
Schedule of Operating Income
(Unaudited)
(in thousands)
 
 

For the Three Months Ended March 31,

Percent of Revenue Change
  2012     2011 2012   2011   %
Revenue
Operating revenue $ 7,928 $ 5,983 100.0 % 100.0 % 32.5 %
Direct expense
Transportation services 6,905 5,052 87.1 % 84.4 % 36.7 %
Insurance   (6 )   3 -0.1 % 0.1 % -300.0 %
Direct expense   6,899     5,055 87.0 % 84.5 % 36.5 %
Gross margin   1,029     928 13.0 % 15.5 % 10.9 %
SG&A expense
Salaries & benefits 859 526 10.8 % 8.8 % 63.3 %
Purchased services 62 43 0.8 % 0.7 % 44.2 %
Depreciation & amortization 20 10 0.3 % 0.2 % 100.0 %
Other   242     211 3.1 % 3.5 % 14.7 %
Total SG&A expense   1,183     790 14.9 % 13.2 % 49.7 %
Operating (loss) income $ (154 ) $ 138 -1.9 % 2.3 % -211.6 %
         
XPO Corporate
Summary of Selling, General & Administrative Expense
(Unaudited)
(in thousands)
 

For the Three Months Ended March 31,

Percent of Revenue Change
  2012     2011 2012   2011   %
SG&A expense
Salaries & benefits $ 2,010 $ 211 4.5 % 0.5 % 853 %
Purchased services 2,436 199 5.5 % 0.5 % 1124 %
Depreciation & amortization 17 5 0.0 % 0.0 % 240 %
Other   1,349     96 3.0 % 0.2 % 1305 %
Total SG&A expense $ 5,812   $ 511 13.0 % 1.2 % 1037 %
     
XPO Logistics, Inc.
Consolidated Reconciliation of EBITDA to Net Income
(Unaudited)
(in thousands)
 
 

Three Months Ended March 31,

Change
  2012     2011 %
 
Net (loss) income available to common shareholders $ (3,444 ) $ 1,117 -408.3 %
Interest expense 12 49 -75.5 %
Income tax (benefit) provision (1,521 ) 805 288.9 %
Depreciation and amortization   317     316 0.3 %
EBITDA $ (4,636 ) $ 2,287 -302.7 %

Note: Please refer to the “Non-GAAP Financial Measures” section of the press release.

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