XPO Logistics on Monday, Aug. 6, announced its acquisition of the freight brokerage operations of Kelron Logistics, a Canadian nonasset third-party logistics business, for $8 million in cash, excluding working capital adjustments. The Greenwich, Conn.-based company also announced financial results for the second quarter of 2012.
Kelron Logistics serves more than 1,000 customers through locations in Toronto, Vancouver, Montreal and Cleveland. Kelron Logistics generated trailing 12 months revenue of about $100 million as of June 30.
“We’re pleased to have purchased Kelron Logistics as we continue to expand our brokerage operations,” said Bradley Jacobs, chairman and chief executive officer. “Its 2,500 carriers should be a valuable addition to our network. We plan to drive efficiencies at all four Kelron locations by providing access to our centralized carrier capacity and by migrating them to our IT system. We’ve successfully implemented this model with Continental Freight Services, which we bought in May.”
XPO Logistics said its total revenue for the second quarter of 2012 was $54.5 million, a 23.7 percent increase from the same period last year. Net loss was $5.2 million compared with net income of $914,000.
“We improved our performance in several key areas in the second quarter,” Jacobs said. “We increased total gross margin dollars by 18 percent compared with the second quarter last year, reversing a decline in the prior period. We turned a corner in freight forwarding with the first year-over-year revenue increase in five quarters. And we drove double-digit growth in the top line and the profitability of our expedited business. While our investments in infrastructure affect our earnings in the short-term, they are critical to our plan for growth. We’re transforming the company to create significant value over time.”
Jacobs said the company is either on track or ahead of schedule with the three core components of its growth plan: acquisitions, cold-starts and the optimization of operations. “Our cold-start program is progressing well,” he said. “We now have seven new brokerage branches in place, versus our initial target of five openings by yearend. Through a disciplined mix of acquisitions and cold-starts, we’ve now more than doubled our total brokerage revenue from a year ago. This growth is being supported by our national operations center in Charlotte, where we expect to have more than 100 people focused solely on carrier procurement by December. We remain comfortable with our projection for a $500 million annual revenue run rate by yearend.”