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Xpo Logistics Inc has a market cap of $226 million; its shares were traded at around $14.21 with and P/S ratio of 1.3.
Highlight of Business Operations:Total gross margin for the second quarter of 2012 increased 17.9% to $8.5 million from $7.2 million in the same period of 2011. As a percentage of revenue, gross margin decreased to 15.5% as compared to 16.3% in 2011. The decrease in gross margin as a percentage of revenue was due primarily to increased revenues in our Freight Brokerage segment, which typically experience lower margins as compared to our consolidated gross margin as a percentage of revenue.
Total gross margin for the first six months of 2012 increased 5.9% to $15.2 million from $14.4 million in the same period of 2011. As a percentage of revenue, gross margin decreased to 15.4% as compared to 16.8% in 2011. The decrease in gross margin as a percentage of revenue is attributable primarily to increased revenues in our Freight Brokerage segment, which typically experience lower margins as compared to our consolidated gross margin as a percentage of revenue.
SG&A expense as a percentage of revenue was 23.0% in the first six months of 2012, an increase from 12.6% in the same period of 2011. Overall, SG&A expense increased by $12.1 million for the first six months of 2012 compared to the same period of 2011, primarily due to an increase in Corporate SG&A and costs associated with our new Freight Brokerage offices and our Operations Center. Corporate SG&A costs include $2.3 million in additional stock compensation costs, as well as $0.5 million in compensation and professional fees related to the hiring of the company’s new executive team and $0.5 million for consulting fees in connection with securing a tax incentive agreement with the state of North Carolina. Subject to our satisfaction of certain employment targets at our Operations Center, we expect to receive up to $3.2 million of tax incentives from the state of North Carolina during the ten-year term of the agreement.
SG&A expense increased 4.2% to $5.3 million in the first six months of 2012 from $5.1 million in the same period of 2011. As a percentage of revenue, SG&A expense decreased to 11.1% in the first six months of 2012, compared to 11.7% in the same period of 2011. The decrease in SG&A as a percentage of revenue in the first six months of 2012 as compared to the same period of 2011 was due to improved leverage as revenues increased. The change in other SG&A is primarily due to a change in our shared service corporate allocation methodology which does not have a net impact on consolidated SG&A.
Corporate SG&A expense for the first six months of 2012 increased by $9.3 million, compared to the same period of 2011. As a percentage of total consolidated revenue, Corporate SG&A expense increased to 10.8% in the first six months of 2012, compared with 1.7% in the same period of 2011. The increase of $3.6 million in salaries and benefits expense relate to the executive team appointments and headcount additions related to expansion of corporate shared services and carrier procurement capabilities in our Operations Center. Purchased services increased in the first six months of 2012 due to an increase in professional service fees incurred for audit and consulting services, as well as legal and accounting services related to, among other matters, due diligence reviews of potential acquisition targets. Purchased services also includes $0.5 million of compensation and professional fees related to the hiring of the company’s new executive team and $0.5 million of consulting fees in connection with securing a tax incentive agreement with the state of North Carolina. Subject to our satisfaction of certain employment targets at our Operations Center, we expect to receive up to $3.2 million of tax incentives from the state of North Carolina during the term of the agreement. Other SG&A increased primarily due to $2.3 million of stock compensation expense in the first six months of 2012 and increased travel costs associated with the changes in management structure and the transition of certain corporate shared services to our Operations Center in Charlotte.
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