UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 5, 2012

 

 

XPO LOGISTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-32172		03-0450326
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

Five Greenwich Office Park, Greenwich, Connecticut 06831

(Address of principal executive offices)

(855) 976-4636

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition

On November 5, 2012, XPO Logistics, Inc. (the “Company”) issued a press release announcing its results of operations for the fiscal quarter ended September 30, 2012. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit No.		Exhibit Description
99.1		Press Release, dated November 5, 2012, issued by XPO Logistics, Inc.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: November 5, 2012				XPO LOGISTICS, INC.
				By:		/s/ Gordon E. Devens
						Gordon E. Devens
						Senior Vice President and General Counsel

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EXHIBIT INDEX

 

Exhibit No.		Exhibit Description
99.1		Press Release, dated November 5, 2012, issued by XPO Logistics, Inc.

Exhibit 99.1

XPO Logistics Announces Third Quarter 2012 Results

Adds Three New Cold-starts

GREENWICH, Conn. — November 5, 2012 — XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the third quarter of 2012. Total revenue was $71.0 million for the quarter, a 49.8% increase from the same period last year.

Net loss was $3.1 million for the quarter, compared with net income of $190,000 for the same period last year. The company reported a third quarter net loss available to common shareholders of $3.9 million, or a loss of $0.22 per diluted share, compared with a net loss available to common shareholders of $44.4 million, or a loss of $5.38 per diluted share, for the same period in 2011. The third quarter 2011 results reflected a $44.6 million non-cash accounting charge related to the September 2011 equity investment in the company.

Adjusted earnings per share (“adjusted EPS”), a non-GAAP financial measure, was a loss of $0.38 for the third quarter 2012, excluding a benefit of $2.8 million, or $0.16 per diluted share, related to the reversal of a valuation allowance for deferred tax assets recorded in the second quarter of 2012. EPS and adjusted EPS include a charge of $0.04 per diluted share related to $750,000 in cumulative preferred dividends.

Earnings before interest, taxes, depreciation and amortization (“EBITDA”), a non-GAAP financial measure, was a loss of $8.9 million for the third quarter of 2012, compared with EBITDA of $775,000 for the same period in 2011. EBITDA for the third quarter of 2012 includes $1.2 million in non-cash share-based compensation expense. A reconciliation of each non-GAAP measure to its most directly comparable GAAP measure is provided in the attached financial tables.

The company had approximately $265 million of cash as of October 31, 2012.

CEO Comments

Bradley Jacobs, chairman and chief executive officer, said, “We are on point with our plan, gaining scale through acquisitions, cold-starts and the rapid expansion of our salesforce. Our revenues were up 50% in the quarter, with a 21% increase in gross margin dollars. In our freight brokerage business, gross margin dollars almost tripled from 2011. While our expedite and freight forwarding businesses faced soft market conditions, we’re positioning these operations for long-term growth. For all three of our business units, we’re executing a very specific strategy – making investments that restrain earnings in the near-term, but should create significant shareholder value over time.”

Jacobs continued, “In October, we achieved an important milestone with our acquisition of Turbo Logistics. We also acquired a small freight brokerage business, BirdDog Logistics, which we tucked into our new Charlotte cold-start. We now have four acquisitions under our belt and 15 cold-starts, including eight in freight brokerage. We added 119 salespeople in the third quarter, and we’re putting our recruits through an intensive training program. In addition, we’re beta-testing new technology to empower our salespeople with proprietary pricing tools and truck-finding capabilities. We’re now fast approaching a $500 million annual revenue run rate.”

Third Quarter 2012 Results by Business Unit

 

•

Freight brokerage: The company’s freight brokerage business generated revenue of $32.2 million for the quarter, a 290% improvement from the same period last year. Revenue growth was primarily due to the impact of acquisitions and the performance of the company’s eight cold-start locations. The acquisition of Kelron Logistics on August 3, 2012, had a positive revenue impact of $13.5 million. Gross margin was 12.6% for the quarter, compared with 16.5% in 2011. The decline in gross margin was primarily due to lower-margin sales during the start-up phase of cold-start locations. Operating loss was $2.4 million for the quarter, compared with operating income of $499,000 in the prior year’s period, reflecting a planned increase in SG&A expense. The increase in SG&A expense was primarily due to the expansion of the company’s cold-start branches and national operations center in Charlotte, as well as the acquisition of Kelron.

 

•

Expedited transportation: The company’s Express-1 business generated total revenue of $23.8 million for the quarter, a 1.4% improvement from the same period last year. The improvement was primarily due to an increase in revenues from temperature control shipments. Gross margin percentage for the quarter was 16.6%, compared with 21.4% in 2011. The decrease in gross margin percentage reflects a soft market for expedite freight, as well as higher rates paid to independent fleet owners that went into effect on March 1, 2012. Operating income was $1.2 million for the quarter, a 50.4% decrease from the same period last year, primarily due to

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lower gross margins and an increase in SG&A expense. The increase in SG&A expense was primarily due to increased headcount and expanded recruitment efforts for independent fleet owners, partially offset by lower incentive compensation.

 

•

Freight forwarding: The company’s Concert Group Logistics (CGL) business generated total revenue of $17.3 million for the quarter, a 2.3% increase from the same period last year. The increase is primarily related to higher revenues generated by company-owned branches, partially offset by a decrease in revenues at independent agent stations. Gross margin for the quarter was essentially flat at 11.1%, compared with 11.0% a year ago. Operating income was $97,000 for the quarter, compared with $639,000 last year, primarily reflecting higher SG&A costs associated with investments in cold-starts in Charlotte, N.C., Atlanta, Ga., Los Angeles, Calif., and Houston, Texas.

 

•

Corporate: The company’s corporate SG&A expense in the third quarter of 2012 was $8.2 million, an increase of $5.1 million compared with the same period in 2011. The increase reflects a $2.0 million increase in salaries and benefits related to executive appointments and headcount additions in corporate shared services, $1.4 million of litigation-related legal costs, $1.1 million of M&A transaction costs and a $1.0 million increase in non-cash share-based compensation expense.

Nine Months 2012 Financial Results

For the nine months ended September 30, 2012, the company reported total revenue of $170.1 million, a 27.9% increase from the first nine months of 2011.

Net loss was $11.0 million, compared with net income of $2.2 million for the same period last year. The company reported a nine-month 2012 net loss available to common shareholders of $13.3 million, or a loss of $0.89 per diluted share, compared with a net loss available to common shareholders of $42.4 million, or a loss of $5.15 per diluted share, for the same period last year. The results from the first nine months of 2011 reflected a $44.6 million non-cash accounting charge related to the September 2011 equity investment in the company. EPS includes a charge of $0.15 per diluted share related to $2.3 million in cumulative preferred dividends.

EBITDA was a loss of $15.7 million for the first nine months of 2012, compared with EBITDA of $5.0 million for the same period in 2011. EBITDA for the first nine months of 2012 includes $5.6 million, or $0.37 per diluted share, of salaries and benefits expense related to the executive team appointments and headcount additions for corporate shared services; $1.9 million, or $0.13 per diluted share, of M&A transaction costs; and $1.4 million, or $0.09 per diluted share, of litigation-related legal costs.

Adds Three Cold-starts and Tuck-in Acquisition

The company announced the opening of three new cold-starts in the third quarter: one in freight brokerage and two in freight forwarding. The new freight brokerage branch in Charlotte, N.C., will be led by Drew Wilkerson. Mr. Wilkerson most recently led the Columbia, S.C., branch that the company acquired through the Continental Freight Services transaction in May. The new freight forwarding locations are in Houston, Texas, and Kansas City, Mo. In addition, freight forwarding agent-owned locations in Chicago, Ill., and Minneapolis, Minn., were transitioned to company-owned branches.

On October 1, 2012, the company acquired certain assets of BirdDog Logistics, LLC, a freight brokerage operation with approximately $7 million of revenue, located in Charlotte, N.C. BirdDog’s salesforce and customer and lane histories were merged with the company’s cold-start in Charlotte.

Conference Call

The company will hold a conference call on Tuesday, November 6, 2012, at 8:30 a.m. Eastern Time. Participants can call toll-free (from U.S./Canada) 1-800-446-1671; international callers dial +1-847-413-3362. A live webcast of the conference will be available on the Investor Relations area of the company’s website, www.xpologistics.com. The conference will be archived until December 6, 2012. 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 33535681.

About XPO Logistics, Inc.

XPO Logistics, Inc. (NYSE: XPO) is one of the fastest growing providers of non-asset based, third-party freight transportation services in North America. The company uses its network of more than 20,000 relationships with ground, sea and air carriers to find the best transportation solutions for its customers. XPO Logistics offers its services through three distinct business units: freight brokerage; expedited transportation (Express-1, Inc.); and freight forwarding (Concert Group Logistics, Inc.). The company serves more than 7,500 customers in the retail, commercial, manufacturing and industrial sectors through 56 locations, including 33 branches in the United States and Canada and 23 agent offices. www.xpologistics.com

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Non-GAAP Financial Measures

This press release contains certain non-GAAP financial measures as defined under Securities and Exchange Commission (“SEC”) rules, such as adjusted earnings per share (“adjusted EPS”) and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three- and nine-month periods ended September 30, 2012 and September 30, 2011. 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. As shown in such attachments, we present adjusted EPS to eliminate the impact of a benefit of $2.8 million related to the reversal of a valuation allowance for deferred tax assets that was recorded in the second quarter of 2012. We believe that it is appropriate for investors to consider adjusted EPS in addition to results in accordance with GAAP. We believe this measure provides a picture of our results that is more comparable among periods since it excludes the impact of special items, which may recur, but tend to be irregular as to timing, thereby making comparisons between periods more difficult. 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. 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; litigation; 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.

Investor Contact:

XPO Logistics, Inc.

Michelle Muniz, +1-203-930-1459

michelle.muniz@xpologistics.com or

Media Contact:

Brunswick Group

Steve Lipin / Gemma Hart, +1-212-333-3810

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XPO Logistics, Inc.

Condensed Consolidated Statement of Operations

(Unaudited)

(in thousands, except per share amounts)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Revenues
Operating revenue		$	70,988			$	47,389			$	170,088			$	132,991
Expenses
Direct expense			61,064				39,169				144,925				110,384
Gross margin			9,924				8,220				25,163				22,607
Sales general and administrative expense			19,204				7,750				42,035				18,494
Operating (loss) income			(9,280	)			470				(16,872	)			4,113
Other (income) expense			314				0				319				62
Interest expense			15				49				30				145
(Loss) income before income tax provision			(9,609	)			421				(17,221	)			3,906
Income tax provision			(6,460	)			231				(6,201	)			1,685
Net (loss) income			(3,149	)			190				(11,020	)			2,221
Preferred stock beneficial conversion charge and dividends			0				(44,586	)			0				(44,586	)
Cumulative preferred dividends			(750	)			0				(2,250	)			0
Net (loss) income available to common shareholders		$	(3,899	)		$	(44,396	)		$	(13,270	)		$	(42,365	)
Basic income per share
Net (loss) income		$	(0.22	)		$	(5.38	)		$	(0.89	)		$	(5.15	)
Diluted income per share
Net (loss) income		$	(0.22	)		$	(5.38	)		$	(0.89	)		$	(5.15	)
Weighted average common shares outstanding
Basic weighted average common shares outstanding			17,663				8,253				14,952				8,227
Diluted weighted average common shares outstanding			17,663				8,253				14,952				8,227

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XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(in thousands except share data)

 

		September 30, 2012				December 31, 2011
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	296,503			$	74,007
Accounts receivable, net of allowances of $420 and $356, respectively			42,881				22,425
Prepaid expenses			1,174				426
Deferred tax asset, current			1,484				955
Income tax receivable			2,790				1,109
Other current assets			1,376				219
Total current assets			346,208				99,141
Property and equipment, net of $4,769 and $3,937 in accumulated depreciation, respectively			8,083				2,979
Goodwill			22,521				16,959
Identifiable intangible assets, net of $3,902 and $3,320 in accumulated amortization, respectively			10,487				8,053
Other long-term assets			472				509
Total long-term assets			41,563				28,500
Total assets		$	387,771			$	127,641
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	12,286			$	8,565
Accrued salaries and wages			2,745				2,234
Accrued expenses, other			11,913				2,789
Current maturities of notes payable and capital leases			359				1,675
Other current liabilities			1,395				808
Total current liabilities			28,698				16,071
Convertible senior notes			92,757				0
Notes payable and capital leases, net of current maturities			734				454
Deferred tax liability, long term			9,761				2,346
Other long-term liabilities			3,083				410
Total long-term liabilities			106,335				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; 150,000,000 shares authorized; 17,863,223 and 8,410,353 shares issued, respectively; and 17,818,223 and 8,365,353 shares outstanding, respectively			17				8
Additional paid-in capital			260,252				102,613
Treasury stock, at cost, 45,000 shares held			(107	)			(107	)
Accumulated deficit			(50,218	)			(36,948	)
Total stockholders’ equity			252,738				108,360
Total liabilities and stockholders’ equity		$	387,771			$	127,641

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XPO Logistics, Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

(in thousands, except per share amounts)

 

		Nine Months Ended September 30,
		2012				2011
Operating activities
Net income		$	(11,020	)		$	2,221
Adjustments to reconcile net income to net cash from operating activities
Provisions for allowance for doubtful accounts			645				(23	)
Depreciation & amortization expense			1,463				944
Stock compensation expense			3,485				297
Other			1				(9	)
Changes in assets and liabilities, net of effects of acquisitions:
Account receivable			(8,078	)			(2,037	)
Deferred tax expense			(4,276	)			788
Income tax receivable			(1,824	)			479
Other current assets			(14	)			568
Prepaid expenses			(422	)			(351	)
Other long-term assets and advances			12				101
Accounts payable			(3,136	)			(1,625	)
Accrued expenses			6,232				1,653
Other liabilities			23				301
Cash provided (used) by operating activities			(16,909	)			3,307
Investing activities
Acquisition of businesses, net of cash acquired			(7,011	)			0
Payment of acquisition earn-out			(450	)			(450	)
Payment for purchases of property and equipment			(3,986	)			(442	)
Proceeds from sale of assets			0				9
Cash Flows used by investing activities			(11,447	)			(883	)
Financing Activities
Credit line, net activity			(2,178	)			(2,749	)
Proceeds from issuance of preferred stock, net of issuance costs			0				71,628
Proceeds from issuance of convertible senior notes, net			120,287				0
Payments of notes payable and capital leases			(2,089	)			(1,215	)
Excess tax benefit from stock options			0				97
Proceeds from stock offering			136,961				0
Proceeds from exercise of options, net			131				727
Dividends paid to preferred stockholders			(2,250	)			0
Cash flows provided by Financing Activities			250,862				68,488
Effect of exchange rate changes on cash			(10	)			0
Net increase in cash			222,496				70,912
Cash, beginning of period			74,007				561
Cash, end of period of period		$	296,503			$	71,473
Supplemental disclosure of noncash activities:
Cash paid during the period for interest			29				166
Cash paid during the period for income taxes			244				201

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Freight Brokerage

Summary Financial Table

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2012				2011				$ Variance				Change %				2012				2011				$ Variance				Change %
Revenue
Operating revenue		$	32,169			$	8,246			$	23,923				290.1	%		$	53,974			$	20,916			$	33,058				158.1	%
Direct expense																			—				—
Transportation services			27,959				6,868				21,091				307.1	%			47,119				17,562				29,557				168.3	%
Insurance			13				20				(7	)			-35.0	%			14				45				(31	)			-68.9	%
Other			146				—				146								239				1				238				23800.0	%
Total direct expense			28,118				6,888				21,230				308.2	%			47,372				17,608				29,764				169.0	%
Gross margin			4,051				1,358				2,693				198.3	%			6,602				3,308				3,294				99.6	%
SG&A expense																			—				—
Salaries & benefits			3,961				681				3,280				481.6	%			6,392				1,779				4,613				259.3	%
Purchased services			694				38				656				1726.3	%			1,022				113				909				804.4	%
Depreciation & amortization			316				11				305				2772.7	%			413				32				381				1190.6	%
Other			1,434				129				1,305				1011.6	%			2,255				575				1,680				292.2	%
Total SG&A expense			6,405				859				5,546				645.6	%			10,082				2,499				7,583				303.4	%
Operating (loss) income		$	(2,354	)		$	499			$	(2,853	)			-571.7	%		$	(3,480	)		$	809			$	(4,289	)			-530.2	%

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Expedited Transportation

Summary Financial Table

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2012				2011				$ Variance				Change %				2012				2011				$ Variance				Change %
Revenue
Operating revenue		$	23,755			$	23,419			$	336				1.4	%		$	71,906			$	67,221			$	4,685				7.0	%
Direct expense
Transportation services			18,803				17,634				1,169				6.6	%			55,995				50,888				5,107				10.0	%
Insurance			465				371				94				25.3	%			1,206				1,038				168				16.2	%
Other			543				406				137				33.7	%			1,467				1,247				220				17.6	%
Total direct expense			19,811				18,411				1,400				7.6	%			58,668				53,173				5,495				10.3	%
Gross margin			3,944				5,008				(1,064	)			-21.2	%			13,238				14,048				(810	)			-5.8	%
SG&A expense
Salaries & benefits			1,615				1,732				(117	)			-6.8	%			4,940				5,209				(269	)			-5.2	%
Purchased services			259				365				(106	)			-29.0	%			707				1,066				(359	)			-33.7	%
Depreciation & amortization			77				93				(16	)			-17.2	%			241				317				(76	)			-24.0	%
Other			776				365				411				112.6	%			2,179				1,088				1,091				100.3	%
Total SG&A expense			2,727				2,555				172				6.7	%			8,067				7,680				387				5.0	%
Operating income		$	1,217			$	2,453			$	(1,236	)			-50.4	%		$	5,171			$	6,368			$	(1,197	)			-18.8	%

Note: Total depreciation and amortization for the Expedited Transportation operating segment included in both direct expense and SG&A, was $127 and $144 for the three-month periods, respectively, and $393 and $465 for the nine-month periods, respectively, ended September 30, 2012 and 2011

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Freight Forwarding

Summary Financial Table

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2012				2011				$ Variance				Change %				2012				2011				$ Variance				Change %
Revenue
Operating revenue		$	17,304			$	16,918			$	386				2.3	%		$	49,229			$	48,379			$	850				1.8	%
Direct expense
Transportation services			12,914				12,231				683				5.6	%			36,577				34,643				1,934				5.6	%
Station commissions			2,428				2,798				(370	)			-13.2	%			7,201				8,387				(1,186	)			-14.1	%
Insurance			33				35				(2	)			-5.7	%			128				99				29				29.3	%
Other			0				0				0								0				(1	)			1				-100.0	%
Total direct expense			15,375				15,064				311				2.1	%			43,906				43,128				778				1.8	%
Gross margin			1,929				1,854				75				4.0	%			5,323				5,251				72				1.4	%
SG&A expense
Salaries & benefits			1,059				696				363				52.2	%			2,770				2,123				647				30.5	%
Purchased services			207				123				84				68.3	%			394				310				84				27.1	%
Depreciation & amortization			145				144				1				0.7	%			433				430				3				0.7	%
Other			421				252				169				67.1	%			1,339				878				461				52.5	%
Total SG&A expense			1,832				1,215				617				50.8	%			4,936				3,741				1,195				31.9	%
Operating income		$	97			$	639			$	(542	)			-84.8	%		$	387			$	1,510			$	(1,123	)			-74.4	%

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XPO Corporate

Summary of Selling, General & Administrative Expense

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,																Nine Months Ended September 30,
		2012				2011				$ Variance				Change %				2012				2011				$ Variance				Change %
SG&A expense
Salaries & benefits		$	2,301			$	311			$	1,990				639.9	%		$	6,180			$	598			$	5,582				933.4	%
Purchased services			4,017				2,470				1,547				62.6	%			7,660				3,423				4,237				123.8	%
Depreciation & amortization			133				5				128				2560.0	%			223				16				207				1293.8	%
Other			1,792				335				1,457				434.9	%			4,890				537				4,353				810.6	%
Total SG&A expense		$	8,243			$	3,121			$	5,122				164.1	%		$	18,953			$	4,574			$	14,379				314.4	%

Intercompany eliminations included revenues of $2.2 million and $1.2 million for the quarters ended September 30, 2012 and 2011, respectively, as well as revenues of $5.0 million and $3.5 million for the year to date periods ended September 30, 2012 and 2011, respectively.

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XPO Logistics, Inc.

Reconciliation of Adjusted EPS to Earnings per Common Shares Diluted

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2012				2011				2012				2011
Net (loss) income available to common shareholders		$	(3,899	)		$	(44,396	)		$	(13,270	)		$	(42,365	)
Add back: Out of Period Valuation Allowance Released			(2,824	)			0				0				0
Adjusted Net Loss		$	(6,723	)		$	(44,396	)		$	(13,270	)		$	(42,365	)
Earnings per common share—diluted			(0.22	)			(5.38	)			(0.89	)			(5.15	)
Add back: Valuation Allowance			(0.16	)			0.00				0.00				0.00
Adjusted Earnings Per Share		$	(0.38	)		$	(5.38	)		$	(0.89	)		$	(5.15	)
Weighted average number of common shares outstanding—diluted			17,663				8,253				14,952				8,227

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

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Reconciliation of Non-GAAP Measures

XPO Logistics, Inc.

Consolidated Reconciliation of EBITDA to Net Income

(Unaudited)

(in thousands)

 

		Three Months Ended September 30,								Change %				Nine Months Ended September 30,								Change %
		2012				2011								2012				2011
Net (loss) income available to common shareholders		$	(3,899	)		$	(44,396	)			91.2	%		$	(13,270	)		$	(42,365	)			68.7	%
Dividends and preferred shares conversion charge			(750	)			(44,586	)			98.3	%			(2,250	)			(44,586	)			95.0	%
Net (loss) income			(3,149	)			190				1757.4	%			(11,020	)			2,221				596.2	%
Interest expense			15				49				-69.4	%			30				145				-79.3	%
Income tax provision			(6,460	)			231				-2896.5	%			(6,201	)			1,685				-468.0	%
Depreciation and amortization			722				305				136.7	%			1,463				944				55.0	%
EBITDA		$	(8,872	)		$	775				1244.8	%		$	(15,728	)		$	4,995				414.9	%

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

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XPO Logistics, Inc.

Consolidated Calculation of Diluted Weighted Shares Outstanding

(Unaudited)

 

		Three Months Ended								Nine Months Ended
		September 30, 2012				September 30, 2011				September 30, 2012				September 30, 2011
Basic common stock outstanding			17,663,403				8,252,891				14,952,059				8,227,375
Potentially Dilutive Securities:
Shares underlying the conversion of preferred stock to common stock			10,714,286				3,260,870				10,714,286				1,098,901
Shares underlying the conversion of the convertible senior notes			330,784				0				111,066				0
Shares underlying warrants to purchase common stock			5,516,551				4,564,224				5,770,577				3,634,139
Shares underlying stock options to purchase common stock			507,425				402,819				549,084				361,707
Shares underlying restricted stock units			138,921				682				158,308				0
			17,207,966				8,228,595				17,303,320				5,094,746
Diluted weighted shares outstanding			34,871,369				16,481,486				32,255,379				13,322,121

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 three-month and nine-month periods ended September 30, 2012 and 2011, respectively. 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 common stock of $14.43 per share and $15.17 per share for the three-month and nine- month periods ended September 30, 2012, respectively.