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Investment in new executive team harms XPO Logistics' Q4 profits

XPO Logistics has announced its financial results for the fourth quarter and full year 2011. Total revenue in the fourth quarter of 2011 was $44.1m and a gross margin of $7.2m, increases of 6.1% and 11.6%, respectively, year-over-year.For the fourth quarter 2011, the company reported a net loss of $1.5m, compared with net income of $820,000 for the fourth quarter 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA), a non-GAAP financial measure, was a loss of $2.1m for the fourth quarter 2011, compared with a positive EBITDA of $1.7m for the same period in 2010. However, the company noted that fourth quarter 2011 EBITDA included $1.2m in compensation and professional fees related to the hiring of the company's new executive team, and $882,000 of non-cash share-based compensation.

Bradley Jacobs, chairman and chief executive officer, said, "Operationally, we had a strong fourth quarter, with a 6% revenue increase and a gross margin improvement of almost 12% year-over-year. Our freight brokerage and expedited teams improved on some key metrics. At the same time, the costs of putting an executive team and infrastructure in place had the anticipated impact on the bottom line. These are strategic investments that should return significant benefits as we further execute our plan."

Jacobs continued, "We have solid progress to report. XPO opened a new truck brokerage operation in Phoenix in December, the first of 20 cold-starts planned over the next few years. A second location is scheduled to open in Michigan in April. We also added new freight forwarding locations in Newark, Charlotte and Atlanta. We're on track to reach our goal of ten new freight forwarding locations by the end of 2013."

For the full year 2011, operating revenue and gross margin were $177.1m and $29.8m, increases of 12.1% and 8.7%, respectively, year-over-year. The company reported net income of $759,000 for 2011, compared with net income of $4.9m for 2010.

EBITDA was $2.9m for the full year 2011, compared with $9.7m for the full year 2010. Annual 2011 EBITDA includes $1.0m in indirect transaction fees associated with the equity investment led by Jacobs Private Equity, $2.7m of compensation and other fees related to the hiring of the company's new executive team, and $1.2m of non-cash share-based compensation.
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Source: XPO Logistics


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