XPO Logistics posts lower 3Q net income from continuing ops

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XPO Logistics Inc. on Monday, Nov. 7, announced total revenue from continuing operations for the third quarter of 2011 was $47.4 million, a 6.6 percent increase from the same period last year. Net income from continuing operations was $190,000 compared with $1.7 million.

“While our overall operating results in the quarter were mixed, we’re encouraged by the opportunities to enhance the earnings power of all three of our business units,” said Bradley Jacobs, chairman and chief executive officer of the Buchanan, Mich.-based company. “We have an extensive plan in place to expand XPO through acquisitions, organic growth and the optimization of our operations. In addition, we’ve assembled a highly experienced management team with the specific expertise required for this strategy.”

Jacobs said his new team began taking action immediately after closing the equity investment in early September. “For example, we’re opening a new truck brokerage location in Phoenix this month to replicate the high-growth model of our Bounce Logistics operation,” he said. “This is the first of what we intend to be an aggressive expansion of our truck brokerage footprint.”

Express-1 (expedited transportation solutions) generated revenue of $23.4 million, a 9.4 percent increase. Operating income was $2.5 million, a 3 percent decrease that primarily reflects a higher percentage of third-party brokered loads in 2011 and the loss of one-time project work from 2010 that was not replaced this year.

Concert Group Logistics (CGL) (freight forwarding) generated revenue of $16.9 million, a 9 percent decrease that primarily was the result of certain lost revenue from larger customers that more than offset an increase in the number of new customers. Operating income was $639,000 compared to $552,000; operating income benefited from an improvement in gross margin, reflecting a more favorable mix of higher-margin international business relative to lower-margin deferred shipments.

Bounce Logistics (premium truck brokerage) generated revenue of $8.2 million, a 44.8 percent increase. Operating income was $499,000, a 78.2 percent increase over $280,000. The improvements in revenue and operating income were driven primarily by increased volumes due to an improvement in sales productivity.

The company said it began implementing its growth strategy in September in three key areas:
• Targeted acquisitions. The company intends to make selective acquisitions of nonasset-based logistics truck brokerage businesses that would benefit from greater scale and potential access to capital, and may make similar acquisitions of freight forwarding, expedited and intermodal service businesses, among others. The company believes it is in a position to make the first phase of acquisitions by using existing cash and expanding its credit facilities.
• Organic growth. The company is planning to add a significant number of new truck brokerage offices throughout North America, and is actively recruiting managers with a track record of building successful broker operations. The new brokerage offices are expected to generate revenue growth by developing customer and carrier relationships in new territories.
• Optimized operations. The company intends to accelerate the earnings performance of its existing operations, acquired companies and greenfield locations by investing in an expanded sales and service work force, implementing an advanced IT infrastructure, incorporating industry best practices and leveraging scale to share capacity more efficiently and increase buying power.

In addition to Jacobs and Scott Malat, senior vice president of strategic planning, both announced previously, the following appointments are now effective:
• Thomas Connolly, senior vice president of acquisitions: Connolly is responsible for executing the company’s growth strategy related to the acquisition of transportation logistics businesses. He most recently served as managing director of Eve Partners, a financial advisory firm whose practice is focused exclusively on the transportation logistics industry.
• Troy Cooper, vice president of finance: Cooper is responsible for providing financial support to the company’s business units to align performance with strategic objectives. Cooper was most recently with United Rentals Inc., where he served as vice president–group controller responsible for field finance functions. Previously, he held controller positions with United Waste Systems Inc. and OSI Specialties Inc. (formerly a division of Union Carbide Inc.). Cooper began his career in public accounting with Arthur Andersen and Co. and is a certified public accountant.
• Gordon Devens, senior vice president and general counsel: Beginning Nov. 14, Devens will be responsible for all corporate legal matters, governance and compliance, as well as the company’s legal interests relating to acquisitions and other growth initiatives. He was most recently vice president–corporate development with AutoNation Inc., where he previously held positions as vice president–associate general counsel and senior counsel for its retail automotive group. Earlier, he was an associate at the law firm of Skadden, Arps, Slate, Meagher & Flom, where he specialized in mergers and acquisitions and securities law.
• Sean Fernandez, chief operating officer: Fernandez is responsible for the day-to-day operations and P&L performance of the company. Fernandez has more than 20 years of leadership experience with global companies in industries that include distribution, consumer goods manufacturing, trucking and transportation. He most recently served as senior vice president and general manager–consumables for NCR Corp., and earlier held positions as vice president–new growth platforms with Avery Dennison Corp.; chief operating officer with Sirva Inc.; group president with Esselte Corp.; chief operating officer–Asia Pac operations and divisional president with Arrow Electronics Inc.; and senior engagement manager with McKinsey & Co. Inc.
• Mario Harik, chief information officer: Beginning Nov. 14, Harik will be responsible for the design and implementation of the company’s integrated technology infrastructure. Harik has consulted to Fortune 100 firms and is experienced in building comprehensive IT organizations and proprietary platforms. His prior positions include chief information officer and senior vice president–research and development with Oakleaf Waste Management; chief technology officer with Tallan Inc.; co-founder of G3 Analyst, where he served as chief architect of Web and voice applications; and architect and consultant with Adea Solutions.
• Richard Metzler, senior vice president of acquisitions: Metzler is responsible for acquisitions and business development. Metzler most recently served as chief commercial officer for Greatwide Logistics Services, with prior positions as executive vice president of marketing–Americas for DHL Express Inc.; and senior vice president—marketing and customer service, Transport International Pool for GE Capital (now GE Trailer Fleet Services). Previously, he held numerous senior positions with Federal Express Corp., including vice president and general manager, FedEx Logistics–Americas. Metzler is a member of the boards of directors of EcoSquid Inc., Flash Global Logistics Inc. and the Transportation Marketing and Sales Association.
• Gregory Ritter, senior vice president of brokerage operations: Ritter is responsible for opening and developing new truck brokerage operations in North America, due diligence related to acquisitions, and recruitment of an expanded sales and carrier procurement work force. Ritter has more than three decades of sales and management experience in multi-modal transportation logistics. He most recently served as the president of a brokerage subsidiary that he established for one of the top 10 transportation logistics providers in North America. Previously, Ritter spent 22 years with C.H. Robinson Worldwide.