XPO buys again and reduces losses


XPO Logistics keeps on making acquisitions. Yesterday, (5/5/2015) it announced the purchase of Bridge Terminal Transport Services, “one of the largest asset-light drayage providers in the United States” for US$100m. The company, which provides road based ISO container transport, has a revenue of US$232m built around a network of 28 terminals across the US east coast. The purchase price represented a price-to-earnings ratio of 8.1.

At the same time XPO announced its Q1 results, showing revenue more than doubling, yet losses halving. Of course this enormous increase in the size of the business is down to acquisitions, although XPO Logistics stated that underlying growth was 10%, and after stripping-out the effects of the falling price of fuel was 18%.

Revenue for the period was US$703m, up from $282m in Q1 of 2014. Operating loss fell from $21.4m in Q1 2014, to $4.8m in Q1 2015, whilst the net loss roughly halved to $14.7m. The company attributed the less negative returns “to improved performance by the company’s truck brokerage and expedite businesses, and to the intermodal acquisition”; the later presumably being Pacer which the company purchased in 2014. Obviously these numbers do not include Norbert Dentressangle which has yet to be formally purchased by XPO.

XPO Logistics now estimates that by the end of 2015 it will have an annualised revenue of $9.5bn and an Earnings Before Interest, Tax and Amortisation figure of $625m. Even allowing for the Dentressangle acquisition this implies further considerable purchases as well as breaking in a profit for XPO’s existing business.

Speaking after the release of the quarterly numbers, XPO’s CEO, Bradley Jacobs confirmed that he was looking to do further deals by the end of the year, either in North America or Europe. Although XPO Logistics has created its own freight-forwarding capabilities in the US, it might be observed that this is one area where the company is weaker compared to many of the very largest diversified logistics service providers. If they are looking to buy an air and/or sea forwarder there are no shortage of candidates.

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