- THE MAGAZINE
XPO Logistics Inc. announced financial results for the fourth quarter and full year 2013.
For the fourth quarter of 2013, total revenue increased 137.1 percent year-over-year to $257.2 million. Gross margin dollars increased 238.8 percent to $53.1 million, and gross margin percentage increased by 620 basis points to 20.6 percent.
The company reported a net loss of $10.6 million for the quarter, compared with a net loss of $9.3 million for the same period in 2012. The net loss available to common shareholders was $11.3 million, or a loss of $0.37 per diluted share, compared with a net loss of $10.1 million, or a loss of $0.57 per diluted share, for the same period in 2012.
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP financial measure, improved dramatically year-over-year. EBITDA was a gain of $343,000 for the quarter, compared with a loss of $9.9 million for the same period in 2012. EBITDA for the fourth quarters of 2013 and 2012 reflects $1.4 million and $913,000 of non-cash share-based compensation, respectively. A reconciliation of EBITDA to net income is provided in the attached financial tables.
The company had approximately $358 million of cash as of Feb. 21, 2014.
Provides 2014 Outlook and Updates Long-Term Targets
The company provided the following financial targets for 2014:
• An annual revenue run rate of at least $2.75 billion by December 31;
• An annual EBITDA run rate of at least $100 million by December 31; and
• At least $400 million of acquired historical annual revenue, excluding the Pacer International acquisition.
The company updated its financial targets for the full year 2017:
• Revenue of approximately $7.5 billion; and
• EBITDA of approximately $425 million.
Fourth Quarter 2013 Results by Business Unit
• Freight Brokerage: The company's freight brokerage business generated total revenue of $215.2 million for the quarter, a 202.5 percent increase from the same period in 2012. Gross margin percentage was 21.3 percent for the quarter, compared with 13.4 percent for the same period in 2012, an improvement of 790 basis points. Gross margin percentage for freight brokerage has improved year-over-year in five of the last six quarters. The year-over-year increases in revenue and gross margin percentage were primarily driven by the acquisitions of 3PD Inc. and Optima Service Solutions last-mile operations, which typically generate a higher gross margin percentage than truckload brokerage, as well as prior acquisitions and growth of the company's brokerage cold-start locations. Excluding last-mile results, freight brokerage gross margin improved 110 basis points versus the same period in 2012. Fourth quarter operating income was $801,000, compared with a loss of $2.5 million a year ago, reflecting the acquisition of 3PD and Optima, partially offset by an increase in SG&A costs for sales force expansion, technology and training.
• Expedited Transportation: The company's expedited transportation business generated total revenue of $26.4 million for the quarter, a 19.4 percent increase from the same period in 2012. Gross margin percentage was 17.5 percent for the quarter, compared with 16.5 percent for the same period in 2012, an improvement of 100 basis points. The year-over-year increase in gross margin percentage primarily reflects lower direct expenses, partially offset by the addition of lower-margin expedited air charter revenue from the acquisition of East Coast Air Charter in 2013. Fourth quarter operating income was $1.5 million, compared with $988,000 a year ago, primarily reflecting the increase in gross margin.
• Freight Forwarding: The company's freight forwarding business generated total revenue of $18.5 million for the quarter, flat from the same period in 2012. Gross margin percentage was 14.3 percent for the quarter, an improvement of 80 basis points, compared with 13.5 percent for the same period in 2012. The increase in gross margin percentage was primarily due to higher revenue from company-owned locations. Fourth quarter operating income was $744,000, compared with $454,000 one year ago.
• Corporate: Corporate SG&A expense for the fourth quarter of 2013 was $11.6 million, compared with $10.1 million for the fourth quarter of 2012. Corporate SG&A includes $1.2 million, or $0.8 million after-tax, of acquisition-related costs; and $1.0 million, or $0.6 million after-tax, of litigation costs.
Opens Freight Forwarding Cold-starts
The company announced the addition of two cold-start locations to its freight forwarding network: Salt Lake City, Utah, opened in December 2013, and Seattle, Wash., opened in February 2014.
Full Year 2013 Operational Highlights
During 2013, the company:
• Built XPO into the fourth largest freight brokerage firm, the largest provider of last-mile logistics for heavy goods, and the largest manager of expedited shipments, with a new foothold in managed transportation;
• Grew the number of deliveries facilitated per day to more than 20,000;
• Opened three freight brokerage cold-starts in Cincinnati, Ohio; Richmond, Va.; and Houston, Texas---the company's 10 freight brokerage cold-starts are currently on an annual revenue run rate of more than $150 million;
• Completed six acquisitions: East Coast Air Charter, Covered Logistics, Interide Logistics, 3PD, Optima Service Solutions and NLM;
• Rebranded the freight forwarding business unit as XPO Global Logistics and opened five cold-starts in Nashville, Tenn.; Montreal, Quebec; Orlando, Fla.; Dallas, Texas; and Salt Lake City, Utah; and
• Enhanced XPO technology with new algorithms for pricing and carrier procurement, customer and carrier portals, and analytic capabilities for truckload market conditions; and acquired strong technologies for customer experience management (3PD) and managed transportation (NLM).
In January 2014, the company agreed to acquire Pacer International, the third largest provider of intermodal services in North America, and the largest provider of intermodal services to the fast-growing cross-border Mexico market.
Full Year 2013 Financial Results
For the full year 2013, the company reported total revenue of $702.3 million, a 152.1 percent increase from 2012.
Consistent with the company's previously announced strategy, investments in long-term growth impacted results. Net loss for the full year 2013 was $48.5 million, compared with a net loss of $20.3 million for 2012. The company reported a full year 2013 net loss available to common shareholders of $51.5 million, or a loss of $2.26 per diluted share, compared with a net loss of $23.3 million, or a loss of $1.49 per diluted share, for 2012. These results reflect a $10.3 million tax benefit related to the release of a valuation allowance; $3.1 million, or $1.9 million after-tax, in accelerated amortization of intangible assets related to the rebranding of the freight forwarding business; and $3.0 million, or $1.9 million after-tax, for a commitment fee related to an undrawn debt funding option for the 3PD transaction.
EBITDA for the full year 2013 was a loss of $32.0 million, compared with a loss of $25.6 million for 2012, primarily reflecting planned investments in scale, including a significant increase in sales headcount year-over-year. EBITDA for 2013 reflects $6.5 million, or $4.9 million after-tax, of acquisition-related costs; $4.9 million, or $3.1 million after-tax, of litigation costs; and $4.7 million of non-cash compensation.