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Express1 Expedited Solutions Inc Reports Operating Results (10-Q)

November 06, 2012 | About:
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10qk

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Express1 Expedited Solutions Inc (XPO) filed Quarterly Report for the period ended 2012-09-30.

Xpo Logistics Inc has a market cap of $237.4 million; its shares were traded at around $13.88 with and P/S ratio of 1.3.

Highlight of Business Operations:

Total gross margin for the third quarter of 2012 increased 20.7% to $9.9 million from $8.2 million in the same period of 2011. As a percentage of revenue, gross margin was 14.0% in the third quarter of 2012 as compared to 17.3% in the same quarter of 2011. The decrease in gross margin as a percentage of revenue was due to two factors: lower margins in our Expedited Transportation segment; and increased revenues in our Freight Brokerage segment, which typically experiences lower margins than our other operations. Freight Brokerages gross margins also have been negatively impacted by lower margin sales during the start-up phases of our cold-start sales offices.

Total gross margin for the first nine months of 2012 increased 11.3% to $25.2 million from $22.6 million in the same period of 2011. As a percentage of revenue, gross margin was 14.8% as compared to 17.0% 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 experiences lower margins than our other operations. Freight Brokerages gross margins also have been negatively impacted by lower margin sales during the start-up phases of our cold-start sales offices.

SG&A expense increased 6.7% to $2.7 million in the third quarter of 2012 from $2.6 million in the same period of 2011. As a percentage of revenue, SG&A expense was 11.5% in the third quarter of 2012, compared to 10.9% in the same quarter of 2011. The increase in SG&A expense as a percent of revenue was due to an increase in driver recruiting incentives and costs incurred in the opening of our new Birmingham, Alabama facility.

Corporate SG&A expense in the third quarter of 2012 increased by $5.1 million compared to the same period of 2011. As a percentage of consolidated revenue, Corporate SG&A expense was 11.6% in the third quarter of 2012, compared with 6.6% in the same period of 2011. Following the Equity Investment, we assembled a new senior management team. The $2.0 million increase in salaries and benefits expense relates to the executive team appointments and headcount additions of certain corporate shared services in our Operations Center in Charlotte. Purchased services increased in the third quarter of 2012 due to $1.4 million of legal fees incurred in connection with pending litigation with C.H. Robinson Worldwide, Inc. (the Robinson Litigation) and $1.1 million of acquisition diligence costs. Other SG&A increased primarily due to $1.0 million of additional stock compensation expense in the third quarter 2012 as well as increased travel costs associated with our acquisitions program.

Corporate SG&A expense for the first nine months of 2012 increased by $14.4 million, compared to the same period of 2011. As a percentage of total consolidated revenue, Corporate SG&A expense was 11.1% in the first nine months of 2012, compared with 3.4% in the same period of 2011. The increase of $5.6 million in salaries and benefits expense relates to the executive team appointments and headcount additions related to expansion of corporate shared services. Purchased services increased in the first nine months of 2012 due to an increase in professional service fees incurred for audit and consulting services, acquisition diligence costs and $1.4 million in legal fees incurred in connection with the Robinson Litigation 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 term of the agreement. Other SG&A increased primarily due to $3.3 million of stock compensation expense in the first nine months of 2012 and increased travel costs associated with our acquisitions program and the transition of certain corporate shared services to our Operations Center in Charlotte.

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