The third-party logistics provider also cut its first quarter loss in half.
Less than a week after committing to spend $3.5 billion to purchase French third-party logistics provider Norbert Dentressangle, XPO Logistics and CEO Brad Jacobs are at it again.
On Monday afternoon, Greenwich, Conn.-based XPO announced it made a deal to acquire Bridge Terminal Transport Services, one of the largest motor carriers serving ports and intermodal facilities in the United States, for $100 million.
The purchase price values Bridge Terminal Transport Services at a multiple of eight times operating profit, which was $12.4 million for the fiscal year ended March 31. During that period, BTT had total revenues of $232 million. Analysts will likely view the price paid as within the acceptable range for which a buyer in the logistics space can reasonably earn a return on capital.
BTT, a spin off from Maersk Line several years ago, operates 28 terminals around the country and manages about 1,300 independent owner operators. It has around 250 employees, led by CEO Hans Stig Moller, and 1,800 customers.
XPO, which already has a significant drayage operation through its 2014 acquisition of Pacer International, said adding BTT will significantly expand its drayage capacity on the East Coast.
“Our purchase of BTT will almost triple our drayage capacity to over 2,000 independent owner operators. When we close the transaction, we’ll have approximately 6,200 independent owner operators in our network, providing service to our customers in intermodal, last mile and expedite. We’ll integrate BTT and rebrand the operations under our single, global brand of XPO Logistics,” Jacobs said in a statement.
Terms of the deal were not disclosed, but the transaction does not include any assumption of debt and is expected to close in the second quarter.
XPO increased its annual revenue target from $9 billion to $9.5 billion, with operating profit of $625 million, by the end of the year. Several months ago, company officials set a goal for XPO to reach $9 billion in revenues by 2017.
If it passes the relevant regulatory approvals, the acquisition of Norbert Dentressangle would make XPO a top tier global 3PL, with a large European foothold and greatly expanded freight forwarding services. The company has grown at an exponential rate, from a truckload brokerage outfit to a full-service 3PL with last-mile delivery, contract warehousing, intermodal, drayage and e-commerce fulfillment capabilities, in just three years.
In February, XPO raised $400 million by selling corporate debt.
Meanwhile, the company said it cut in half its first quarter loss from a year ago to $14.7 million in the first quarter of 2015. It reported a 349 percent year-over-year increase in net revenues to $262.2 million for the quarter, most of it due to revenue from new acquisitions.
Earnings performance is difficult to gauge for investors because the of large acquisition-related costs associated with the rapid roll-up strategy, according to a client note from industry financial analyst Stifel. It will be a couple of years until the company reaches a steady state where operating performance can be better assessed as a function of management and market conditions, said Stifel.
Jacobs said the first quarter results were good for XPO’s last mile and expedited delivery segments, but that the 3PL’s results were undermined by a weak spot market for freight brokerage and the disruption of the intermodal business due to the West Coast port slowdowns.
XPO Logistics to buy port trucker Bridge Terminal Transport
