XPO Logistics' Q3 net loss available to common shareholders widens to US$6.8M from US$3.9M a year ago as revenue climbs 173.3% to US$194M; CEO says loss was expected, company on track for positive Q4 EBITDA

GREENWICH, Connecticut , November 5, 2013 (press release) – Reports 42% Organic Growth Company-wide

Generates Significant Gross Margin Percentage Improvement in All Business Units

Rebrands Freight Forwarding Division as XPO Global Logistics

Opens Freight Forwarding Cold-start in Dallas and Adds Brokerage Cold-starts in Houston and Richmond

XPO Logistics, Inc. (XPO) today announced financial results for the third quarter of 2013.

Total revenue was $194.0 million for the third quarter, a 173.3% increase from the same period in 2012. Gross margin dollars increased 251.0% year-over-year to $34.8 million, and gross margin percentage increased by 400 basis points to 18.0%.

For the third quarter of 2013, the company reported a net loss of $6.0 million, compared with a net loss of $3.1 million for the same period in 2012. The net loss available to common shareholders was $6.8 million, or a loss of $0.28 per diluted share, compared with a net loss of $3.9 million, or a loss of $0.22 per diluted share, for the same period in 2012. The company`s third quarter results reflect: a $10.3 million tax benefit related to the release of a valuation allowance against deferred tax assets; $3.1 million, or $1.9 million after-tax, in accelerated amortization of intangible assets related to the rebranding of the freight forwarding business; and $3.0 million, or $1.9 million after-tax, for a commitment fee related to an undrawn debt funding option for the 3PD transaction.

Earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP financial measure, was a loss of $10.3 million for the third quarter of 2013, compared with a loss of $8.9 million for the same period in 2012. EBITDA includes $1.2 million of non-cash share-based compensation in each of the third quarters for 2013 and 2012. A reconciliation of EBITDA to net income is provided in the attached financial tables.

The company had $67.3 million of cash as of September 30, 2013.

Rebrands Freight Forwarding Division as XPO Global Logistics

The company has rebranded its formerly named Concert Group Logistics (CGL) division as XPO Global Logistics, to better reflect the role of freight forwarding within the company`s broader service offering. XPO Global Logistics provides domestic and international freight forwarding services through 28 locations in the United States and Canada. The division has launched a new website at www.xpogloballogistics.com.

Reaffirms Full Year 2013 Financial Outlook

The company has reaffirmed its full year 2013 outlook for an annual revenue run rate of more than $1 billion as of December 31, and positive EBITDA for the fourth quarter.

CEO Comments

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "In the third quarter, we drove 42% organic revenue growth on a year-over-year basis company-wide. We also achieved significant increases in gross margin percentage in every business unit. We delivered 146% organic revenue growth in our freight brokerage division, and improved our truckload brokerage gross margin percentage by 100 basis points. Our expedite division operated more efficiently, resulting in year-over-year improvements in revenue and margin performance. And our freight forwarding division continued to generate double-digit growth.

"We have brokerage cold-starts underway in Houston and Richmond, where we`re immersed in recruiting transportation talent. We recently received approval for up to $1.9 million in state and local tax incentives to develop a large brokerage facility in Louisville, Kentucky. And we`re continuing to grow our positions in LTL and intermodal. Our momentum is resonating with large shippers who see that we have both the desire to outperform, and the resources to deliver."

Jacobs continued, "While we reported a loss, as expected, our strategic investments are driving significant revenue growth and margin improvement. Given our trajectory, we`re on track to meet our 2013 targets for positive EBITDA in the fourth quarter and a billion dollar revenue run rate by year-end."

Third Quarter 2013 Results by Business Unit

  • Freight brokerage: The company`s freight brokerage business generated total revenue of $152.6 million for the quarter, a 374.4% increase from the same period in 2012. Gross margin percentage was 18.1% for the quarter, compared with 12.6% for the same period in 2012, an improvement of 550 basis points. The year-over-year increases in revenue and gross margin percentage were primarily driven by the acquisition of 3PD, which typically generates higher gross margin percentage than truckload brokerage, prior acquisitions and growth of the company`s brokerage cold-start locations. Truckload brokerage gross margin, which excludes last-mile, improved 100 basis points versus the same period in 2012. Third quarter operating loss was $3.4 million, compared with a loss of $2.2 million a year ago, primarily reflecting an increase in SG&A costs for sales force expansion, technology and training, as well as increased intangible asset amortization relating to the acquisition of 3PD.  

  • Expedited transportation: The company`s expedited transportation business generated total revenue of $25.1 million for the quarter, a 5.7% increase from the same period in 2012. Gross margin percentage was 18.1% for the quarter, compared with 16.6% for the same period in 2012, an improvement of 150 basis points. The year-over-year increase in gross margin percentage primarily reflects lower direct expenses, partially offset by the addition of expedited air charter revenue from the 2013 acquisition of East Coast Air Charter; air charter services typically generate higher revenue per load but lower gross margin percentage than the company`s over-the-road expedited business. Third quarter operating income was $1.7 million, a 22.9% increase from the same period in 2012, primarily reflecting the increase in gross margin.  

  • Freight forwarding: The company`s freight forwarding business generated total revenue of $19.1 million for the quarter, a 10.5% increase from the same period in 2012. The increase in revenue was primarily driven by growth of the company`s freight forwarding cold-starts and a higher volume of international shipments. Gross margin percentage was 13.8% for the quarter, an improvement of 270 basis points, compared with 11.1% for the same period in 2012. The increase in gross margin percentage was primarily driven by branch conversions from independent ownership to company ownership. Third quarter operating loss was $2.6 million compared with income of $193,000 a year ago. The operating loss in the quarter reflects the accelerated amortization of $3.1 million, or $1.9 million after-tax, in intangible assets related to the CGL trade name. Excluding this accelerated amortization, operating income increased reflecting a higher gross margin.  

  • Corporate: Corporate SG&A expense for the third quarter of 2013 was $14.2 million, compared with $8.7 million for the third quarter of 2012. The increase in SG&A expense was largely driven by an increase in purchased services, including $3.2 million, or $2.0 million after-tax, of transaction costs primarily related to the 3PD acquisition; and $1.5 million, or $0.9 million after-tax, of litigation costs; as well as an increase in corporate shared services. 

Nine Months 2013 Financial Results

For the nine months ended September 30, 2013, the company reported total revenue of $445.1 million, a 161.7% increase from the first nine months of 2012.

Net loss was $37.9 million for the first nine months of 2013, compared with net loss of $11.0 million for the same period last year. The company reported a nine-month net loss available to common shareholders of $40.2 million, or a loss of $1.99 per diluted share, compared with a net loss of $13.3 million, or a loss of $0.89 per diluted share, for the same period in 2012. The company`s nine months results reflect: a $10.3 million tax benefit related to the release of a valuation allowance against deferred tax assets; $3.1 million, or $1.9 million after-tax, in accelerated amortization of intangible assets related to the rebranding of the freight forwarding business; and $3.0 million, or $1.9 million after-tax, for a commitment fee related to an undrawn debt funding option for the 3PD transaction.

EBITDA was a loss of $32.4 million for the first nine months of 2013, compared with a loss of $15.7 million for the same period in 2012, primarily reflecting planned investments in scale, including a significant increase in sales headcount year-over-year.

Announces Cold-starts

The company announced the August opening of a freight forwarding cold-start in Dallas, Texas, and the addition of two freight brokerage cold-starts in Houston, Texas, and Richmond, Va. In addition, the company has received approval for as much as $1.9 million in state and local tax incentives related to a planned brokerage center in Louisville, Ky.

Enters into ABL Facility

On October 18, 2013, the company entered into a $125 million multicurrency secured revolving loan credit agreement (the "ABL facility") with a maturity of five years. The principal amount of the commitments under the ABL facility may be increased up to $200 million, subject to certain terms and conditions.

Conference Call

The company will hold a conference call on Tuesday, November 5, 2013, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-447-0521; international callers dial +1-847-413-3238. A live webcast of the conference will be available on the investor relations area of the company`s website, www.xpologistics.com/investors. The conference will be archived until December 5, 2013. To access the replay by phone, call toll-free (from U.S./Canada) 1-888-843-7419; international callers dial +1-630-652-3042. Use participant passcode 35737223.

About XPO Logistics, Inc.  

XPO Logistics, Inc. (XPO) is one of the fastest growing providers of transportation logistics services in North America, offering freight brokerage, expedited transportation, white glove delivery and freight forwarding services. The company is one of the leading freight brokerage firms in North America, the largest provider of heavy goods, last-mile logistics, and a top expediter.

XPO is built to deliver constant growth in capacity and passionate service through market-facing technologies and 89 locations in the United States and Canada. The company uses its relationships with more than 23,000 ground, sea and air carriers to move freight for over 9,500 customers in the manufacturing, industrial, retail, commercial, life sciences and government sectors. www.xpologistics.com

Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules, such as earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA") for the quarters and nine-month periods ended September 30, 2013, and September 30, 2012. As required by SEC rules, we provide reconciliations of these measures to the most directly comparable measure under United States generally accepted accounting principles ("GAAP"), which are set forth in the attachments to this release. We believe that EBITDA improves comparability from period to period by removing the impact of our capital structure (interest expense from our outstanding debt), asset base (depreciation and amortization) and tax consequences. In addition to its use by management, we believe that EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate EBITDA differently, and therefore our EBITDA may not be comparable to similarly titled measures of other companies. EBITDA is not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from EBITDA are significant and necessary components of the operations of our business, and, therefore, EBITDA should only be used as a supplemental measure of our operating performance.

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, without limitation, our 2013 outlook with respect to annual revenue and fourth quarter 2013 EBITDA, the planned addition of a brokerage center in Louisville, Ky., the amount of potential tax incentives in connection with such brokerage center, and other such matters. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include, but are not limited to, those discussed in our filings with the SEC and the following: economic conditions generally; competition; our ability to find suitable acquisition candidates and execute our acquisition strategy; our ability to raise debt and equity capital; our ability to attract and retain key employees to execute our growth strategy; litigation, including litigation related to misclassification of independent contractors; our ability to develop and implement a suitable information technology system; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to retain our largest customers; our ability to successfully integrate acquired businesses; and governmental regulation. All forward-looking statements set forth in this press release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this press release speak only as of the date hereof and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, including our 2013 outlook, except to the extent required by law.

Investor Contact:
XPO Logistics, Inc.
Tavio Headley, +1-203-930-1602
tavio.headley@xpologistics.com
Media Contact:
Brunswick Group
Steve Lipin / Gemma Hart, +1-212-333-3810

XPO Logistics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
                       
  Three Months Ended   Nine Months Ended
  September 30,   September 30,
    2013     2012       2013     2012
                       
Revenues $ 193,982   $ 70,988   $ 445,071   $ 170,088
Expenses                      
  Direct expense   159,147     61,064     374,636     144,925
    Gross margin   34,835     9,924     70,435     25,163
  Sales general and administrative expense   53,254     19,204     114,236     42,035
Operating loss   (18,419)     (9,280)     (43,801)     (16,872)
  Other expense   235     314     294     319
  Interest expense   6,415     15     12,585     30
Loss before income tax provision   (25,069)     (9,609)     (56,680)     (17,221)
  Income tax benefit   (19,044)     (6,460)     (18,748)     (6,201)
Net loss   (6,025)     (3,149)     (37,932)     (11,020)
  Cumulative preferred dividends   (743)     (750)     (2,229)     (2,250)
Net loss available to common shareholders $ (6,768)   $ (3,899)   $ (40,161)   $ (13,270)
                       
Basic loss per share                      
  Net loss $ (0.28)   $ (0.22)   $ (1.99)   $ (0.89)
Diluted loss per share                      
  Net loss $ (0.28)   $ (0.22)   $ (1.99)   $ (0.89)
Weighted average common shares outstanding                      
  Basic weighted average common shares outstanding   24,222     17,663     20,167     14,952
  Diluted weighted average common shares outstanding   24,222     17,663     20,167     14,952

XPO Logistics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
           
  September 30,   December 31,
  2013   2012
ASSETS (Unaudited)      
Current assets:          
  Cash and cash equivalents $ 67,259   $                252,293
           
  Accounts receivable, net of allowances of $2,355 and $603, respectively   123,082                      61,245
  Prepaid expenses   3,435                        1,555
  Deferred tax asset, current   1,288                        1,406
  Income tax receivable   2,265                        2,569
  Other current assets   5,081                        1,866
    Total current assets   202,410                    320,934
           
  Property and equipment, net of $9,193 and $5,323          
  in accumulated depreciation, respectively   39,668     13,090
  Goodwill   302,847     55,947
  Identifiable intangible assets, net of $9,153 and $4,592          
  in accumulated amortization, respectively   154,026     22,473
  Deferred tax asset, long-term   73     0
  Other long-term assets   1,308     764
   Total long-term assets   497,922                      92,274
    Total assets $ 700,332   $                413,208
           
           
LIABILITIES AND STOCKHOLDERS` EQUITY          
Current liabilities:          
  Accounts payable $ 36,535   $ 22,108
  Accrued salaries and wages   8,598     3,516
  Accrued expenses, other   33,356     21,123
  Current maturities of notes payable and capital leases   723     491
  Other current liabilities   5,106     1,789
    Total current liabilities   84,318                      49,027
           
  Convertible senior notes   112,717                    108,280
  Notes payable and capital leases, net of current maturities   459                          676
  Deferred tax liability, long term   18,197                        6,781
  Other long-term liabilities   27,894                        3,385
    Total long-term liabilities   159,267                    119,122
           
Stockholders` equity:          
 Preferred stock, $.001 par value; 10,000,000 shares;          
   74,225 shares issued and outstanding   42,765                      42,794
  Common stock, $.001 par value; 150,000,000 shares authorized;          
  29,960,689 and 18,002,985 shares issued, respectively;          
  and 29,915,689 and 17,957,985 shares outstanding, respectively   29                            18
  Additional paid-in capital   514,508                    262,641
  Treasury stock, at cost, 45,000 shares held   (107)                         (107)
  Accumulated deficit   (100,448)                     (60,287)
    Total stockholders` equity   456,747                    245,059
      Total liabilities and stockholders` equity $ 700,332   $                413,208

XPO Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
             
    Nine Months Ended
    September 30,
      2013       2012
Operating activities          
 Net loss $ (37,932)   $ (11,020)
Adjustments to reconcile net loss to net cash from operating activities          
  Provisions for allowance for doubtful accounts   1,855     645
  Depreciation and amortization   11,743     1,462
  Stock compensation expense   3,374     3,485
  Accretion of debt   4,437                             -  
  Other   (201)     (8)
Changes in assets and liabilities, net of effects of acquisitions:          
  Accounts receivable   (28,096)     (8,078)
  Deferred tax expense   (18,882)     (4,276)
  Income tax receivable   (662)     (1,824)
  Prepaid expense and other current assets   (2,373)     (436)
  Other long-term assets   (97)     12
  Accounts payable   (6,137)     (3,136)
  Accrued expenses and other liabilities   11,426     6,255
             
Cash flows used by operating activities   (61,545)     (16,919)
Investing activities          
  Acquisition of businesses, net of cash acquired   (352,266)     (7,011)
  Proceeds from sale of business interests   125                             -  
  Payment for purchases of property and equipment   (6,535)     (3,986)
Cash flows used by investing activities   (358,676)     (10,997)
Financing Activities          
  Credit line, net activity   (115)     (2,178)
  Proceeds from issuance of convertible senior notes, net                          -       120,287
  Payments of notes payable and capital leases   (239)     (2,089)
  Payment of acquisition earn-out   (305)     (450)
  Proceeds from stock offering, net   239,660     136,961
  Proceeds from exercise of options, net                          -       131
  Payments of tax withholdings for restricted shares   (1,585)                             -  
  Dividends paid to preferred stockholders   (2,229)     (2,250)
Cash flows provided by financing activities   235,187     250,412
             
Net (decrease) increase in cash   (185,034)     222,496
Cash and cash equivalents, beginning of period   252,293     74,007
Cash and cash equivalents, end of period $ 67,259   $ 296,503
             
Supplemental disclosure of cash flow information:          
             
  Cash paid during the period for interest   6,611     29
  Cash paid during the period for income taxes   907     244
  Equity portion of acquisition purchase price   10,446                             -  

Freight Brokerage
Summary Financial Table
(Unaudited)
(In thousands)
                                           
  Three Months Ended September 30,     Nine Months Ended September 30,
  2013     2012     $ Variance       Change %   2013     2012     $ Variance       Change %
                                               
Revenue $ 152,616   $ 32,169   $ 120,447   374.4%   $ 326,206   $ 53,974   $ 272,232   504.4%
Direct expense                                          
  Transportation services   124,804     27,966     96,838   346.3%     275,466     47,128     228,338   484.5%
  Other direct expense   162     152     10   6.6%     457     244     213   87.3%
Total direct expense   124,966     28,118     96,848   344.4%     275,923     47,372     228,551   482.5%
    Gross margin   27,650     4,051     23,599   582.5%     50,283     6,602     43,681   661.6%
SG&A expense                                          
  Salaries & benefits   17,559     3,961     13,598   343.3%     40,089     6,392     33,697   527.2%
  Purchased services   2,269     694     1,575   226.9%     4,062     1,022     3,040   297.5%
  Other SG&A expense   6,626     1,248     5,378   430.9%     11,551     1,857     9,694   522.0%
  Depreciation & amortization   4,611     317     4,294   1354.6%     6,805     413     6,392   1547.7%
Total SG&A expense   31,065     6,220     24,845   399.4%     62,507     9,684     52,823   545.5%
Operating loss $ (3,415)   $ (2,169)   $ (1,246)   57.4%   $ (12,224)   $ (3,082)   $ (9,142)   296.6%

Freight Brokerage
Key Data
(Unaudited)
(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,
    2013     2012     2013     2012
Revenues                      
   Truckload, LTL, and Intermodal $            106,081   $              32,169   $            279,671   $              53,974
   Last Mile                46,535                         -                    46,535                         -  
Total Revenue $            152,616   $              32,169   $            326,206   $              53,974
                       
Gross Margin                      
   Truckload, LTL, and Intermodal $              14,443   $                4,051   $              37,076   $                6,602
   Last Mile                13,207                         -                    13,207                         -  
Total Gross Margin $              27,650   $                4,051   $              50,283   $                6,602
                       
Gross Margin %                      
   Truckload, LTL, and Intermodal   13.6%     12.6%     13.3%     12.2%
   Last Mile   28.4%                         -       28.4%                         -  
Overall Gross Margin %   18.1%     12.6%     15.4%     12.2%
                       
Freight Brokerage personnel (end of period)                  1,489     290            

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,
  2013     2012     $ Variance       Change %     2013     2012     $ Variance       Change %
                                           
Revenue $ 25,101     $ 23,755   $ 1,346   5.7%   $ 75,421     $ 71,906   $ 3,515   4.9%
Direct expense                                          
 Transportation services   19,766     18,803     963   5.1%     60,447     55,995     4,452   8.0%
 Other direct expense   797     1,008     (211)   -20.9%     2,419     2,673     (254)   -9.5%
Total direct expense   20,563     19,811     752   3.8%     62,866     58,668     4,198   7.2%
    Gross margin   4,538     3,944     594   15.1%     12,555     13,238     (683)   -5.2%
SG&A expense                                          
 Salaries & benefits   1,893     1,615     278   17.2%     5,854     4,940     914   18.5%
 Purchased services   212     259     (47)   -18.1%     747     707     40   5.7%
 Other SG&A expense   470     578     (108)   -18.7%     1,587     1,513     74   4.9%
 Depreciation & amortization   224     77     147   190.9%     689     241     448   185.9%
Total SG&A expense   2,799     2,529     270   10.7%     8,877     7,401     1,476   19.9%
Operating income $ 1,739   $ 1,415   $          324   22.9%   $ 3,678   $ 5,837   $     (2,159)   -37.0%

Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A, was $262 and $127 for the three-months ended September 30, 2013 and 2012, respectively, and $821 and $393 for the nine-month periods ended September 30, 2013 and 2012, respectively.

Freight Forwarding
Summary Financial Table
(Unaudited)
(In thousands)
                                           
  Three Months Ended September 30,   Nine Months Ended September 30,
  2013     2012     $ Variance       Change %   2013     2012     $ Variance       Change %
                                           
Revenue $ 19,129   $ 17,304   $ 1,825   10.5%   $ 54,700   $ 49,229   $ 5,471   11.1%
Direct expense                                          
 Transportation services   14,740     12,914     1,826   14.1%     41,593     36,577     5,016   13.7%
 Station commissions   1,706     2,428     (722)   -29.7%     5,407     7,201     (1,794)   -24.9%
 Other direct expense   35     34     1   2.9%     103     128     (25)   -19.5%
Total direct expense   16,481     15,376     1,105   7.2%     47,103     43,906     3,197   7.3%
   Gross margin   2,648     1,928     720   37.3%     7,597     5,323     2,274   42.7%
SG&A expense                                          
 Salaries & benefits   1,618     1,059     559   52.8%     4,569     2,770     1,799   64.9%
 Purchased services   63     207     (144)   -69.6%     311     394     (83)   -21.1%
 Other SG&A expense   328     324     4   1.2%     1,048     1,072     (24)   -2.2%
 Depreciation & amortization   3,227     145     3,082   2125.5%     3,407     433     2,974   686.8%
Total SG&A expense   5,236     1,735     3,501   201.8%     9,335     4,669     4,666   99.9%
Operating income $ (2,588)   $ 193   $ (2,781)   -1440.9%   $ (1,738)   $ 654   $ (2,392)   -365.7%

XPO Corporate
Summary of Selling, General & Administrative Expense
(Unaudited)
(In thousands)
                                           
  Three Months Ended September 30,   Nine Months Ended September 30,
  2013   2012   $ Variance       Change %   2013   2012   $ Variance       Change %
SG&A expense                                                  
 Salaries & benefits $ 5,995   $ 3,520   $ 2,475   70.3%   $ 15,095   $ 9,665   $ 5,430   56.2%
 Purchased services   5,767     4,016     1,751   43.6%     12,921     7,660     5,261   68.7%
 Other SG&A expense   2,097     1,050     1,047   99.7%     4,791     2,733     2,058   75.3%
 Depreciation &
amortization
  296     133     163   122.6%     710     223     487   218.4%
Total SG&A expense $ 14,155   $ 8,719   $ 5,436   62.3%   $ 33,517   $ 20,281   $ 13,236   65.3%

Note: Intercompany eliminations included revenue of $2.9 million and $2.2 million for the three-months ended September 30, 2013 and 2012, respectively, as well as revenues of $11.3 million and $5.0 million for the year to date periods ended September 30, 2013 and 2012, respectively, that eliminate upon consolidation.

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,
  2013   2012      Change %   2013   2012      Change %
                               
Net loss available to common shareholders $ (6,768)     $ (3,899)     73.6%   $ (40,161)     $ (13,270)     202.6%
Preferred dividends   (743)     (750)   -0.9%     (2,229)     (2,250)   -0.9%
Net loss   (6,025)     (3,149)   91.3%     (37,932)     (11,020)   244.2%
Interest expense   6,415     15   42666.7%     12,585     30   41850.0%
Income tax benefit   (19,044)     (6,460)   194.8%     (18,748)     (6,201)   202.3%
Depreciation and amortization   8,396     721   1064.5%     11,743     1,462   703.2%
EBITDA $ (10,258)   $ (8,873)   15.6%   $ (32,352)   $ (15,729)   105.7%

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, 2013   September 30, 2012   September 30, 2013   September 30, 2012
Basic common stock outstanding 24,221,987   17,663,403   20,167,436   14,952,059
               
Potentially Dilutive Securities:              
Shares underlying the conversion              
 of preferred stock to common stock                   10,604,891   10,714,286                     10,608,752   10,714,286
Shares underlying the conversion              
 of the convertible senior notes                    8,749,239                         330,784                      8,749,239                         111,066
Shares underlying  warrants to              
 purchase common stock 7,348,157   5,516,551                      6,721,704   5,770,577
Shares underlying  stock options              
 to purchase common stock                       424,122   507,425                         347,356   549,084
Shares underlying  restricted stock units                       432,888   138,921                         332,488   158,308
  27,559,297   17,207,967   26,759,539   17,303,321
               
Diluted weighted shares outstanding 51,781,284   34,871,370   46,926,975                     32,255,380

Note: For dilution purposes, GAAP requires diluted shares to be reflected on a weighted average basis, which takes into account the portion of the period in which the diluted shares were outstanding. The table above reflects the weighted average diluted shares for the periods presented. The impact of this dilution was not reflected in the earnings per share calculations on the Condensed Consolidated Statements of Operations because the impact was anti-dilutive. The treasury method was used to determine the shares underlying the warrants to purchase common stock with an average closing market price of $22.31 per share and $14.43 per share for the three-month periods ended September 30, 2013 and 2012, respectively, and $18.81 per share and $15.17 per share for the nine-month periods ended September 30, 2013 and 2012, respectively.

For informational purposes, the following table represents fully diluted shares as of September 30, 2013, calculated on a non-weighted basis without giving effect to the portion of any period in which the diluted shares were outstanding. The dilutive effect of the warrants, options and RSUs in the table was calculated using the average closing market price of common stock for the three-month period ended September 30, 2013. A non-weighted basis for calculating fully diluted shares is a non-GAAP financial measure as defined under SEC rules.

XPO Logistics, Inc.
 
   
  Diluted Shares as of September 30, 2013
 
Common Stock Outstanding                    29,915,689
Preferred stock                    10,603,571
Convertible senior notes                      8,749,239
Warrants                      7,348,157
Outstanding stock options                        724,536
Restricted stock units                        552,584
Total 57,893,776

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