The logistics and freight brokerage provider also turned in its most profitable quarter in Q4 as acquisitions of Pacer, New Breed and last mile companies, coupled with organic growth paid dividends.
The freight brokerage and third party logistics services provider XPO Logistics had an operating profit of $42 million in the fourth quarter of 2014, a huge increase over the $1.5 million in profits after tax and interest in same period in 2013.
According to financial statements released Wednesday evening, XPO’s revenue in the fourth quarter swelled to $830.7 million, a 223 percent year-over-year increase, fueled by organic growth and several key acquisitions in the contract logistics, intermodal and last mile delivery markets.
XPO has seen a dramatic rise in revenue – from $177 million in 2011 to more than $3 billion in 2014 – on the back of more than a dozen acquisitions across its key business units. Most notable were its acquisition of Pacer International in early 2014 and New Breed Logistics for nearly $1 billion collectively.
Those two moves gave XPO scale and clout in the intermodal and contract logistics markets, respectively.
XPO Chief Executive Officer Brad Jacobs told American Shipper Wednesday that the company is targeting $5.3 billion in revenue by the end of 2015, with half of the growth to be achieved through more acquisitions and the other half to be met through organic growth.
In an interview with American Shipper in early 2014, Jacobs said XPO’s revenue target was $5 billion by 2017. Now the company is targeting $9 billion in revenue by 2017.
Jacobs said XPO has established industry leading positions in a number of its core business units – freight brokerage (where it is the third biggest company in North America), intermodal, expedited and last mile delivery. The goal, he said, is to build a company that uses its scale to add services and build IT systems that help shippers figure out supply chain problems on an end-to-end basis.
“We built broad-based momentum across our operations: company-wide organic growth of 39 percent, significant strength in our truck brokerage and contract logistics businesses, and a sales force focused on cross-selling our capabilities in the fastest-growing areas of logistics,” Jacobs said in a statement accompanying XPO’s earnings statement. “Our infrastructure, which we put in place to support a much larger organization, is beginning to return significant operating leverage.”
XPO is targeting $300 in operating profits in 2015, and $575 million by 2017. And the tide, in terms of investor sentiment, has apparently already been turned. When Jacobs and his team spoke to an audience of equity and venture capital investors at the Stifel Transportation and Logistics Conference in 2014, he was asked about when XPO would be profitable. At the conference this year, nary a question about profitability was asked.
Jacobs said the company is adding 15 to 30 “strategic accounts” per quarter and that it has cash facilities to make several more acquisitions in 2015.
He said at the Stifel conference that XPO’s strategy is to “acquire companies that are scalable, integrate them into one company, and optimize them.”
XPO’s 2014 revenue tops $3 billion as dramatic rise continues
