GREENWICH, Conn. - XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the second quarter of 2016. Total gross revenue increased 202.9% year-over-year to $3.7 billion. Net income attributable to common shareholders was $42.6 million for the quarter, or earnings of $0.35 per diluted share, compared with a net loss attributable to common shareholders of $75.1 million, or a loss of $0.89 per diluted share, for the same period in 2015.  The adjusted net income attributable to common shareholders, a non-GAAP measure, was $50.4 million, or earnings of $0.42 per diluted share for the second quarter of 2016, excluding the items detailed below. This compares with an adjusted net loss attributable to common shareholders of $13.6 million, or a loss of $0.16 per diluted share, for the second quarter of 2015.   The adjusted net income attributable to common shareholders for the second quarter of 2016 excludes: $21.5 million, or $13.9 million after-tax, of one-time transaction-related and rebranding costs net of noncontrolling interests; and a $6.1 million, or $4.1 million after-tax, benefit related to unrealized foreign exchange cost. Reconciliations of adjusted net income attributable to common shareholders and adjusted EPS, as well as reconciliations of other non-GAAP measures used throughout this release, are provided in the attached financial tables.   Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP financial measure, improved to $354.9 million for the quarter, compared with $79.7 million for the same period in 2015. Adjusted EBITDA in the second quarter of 2016 excludes $21.5 million of one-time transaction-related and rebranding costs.  The company generated $260.7 million of cash flow from operations and $169.5 million of free cash flow in the quarter. Raises 2016 Financial Targets  For 2016, the company has:
  • Increased its target for adjusted EBITDA to at least $1.265 billion, from $1.25 billion; and
  • Increased its target for free cash flow to at least $150 million, from a range of $100 million to $150 million.  
  • In addition, the company has reaffirmed its full year 2018 target of approximately $1.7 billion of EBITDA.
CEO Comments   Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, "In the second quarter, we generated $355 million of adjusted EBITDA, $261 million of cash flow from operations, and $170 million of free cash flow — all records for our company. We’re at an inflection point in the evolution of our business, accelerating our EBITDA and cash generation while continuing to invest in technology, our sales force and other levers of future growth.  “Our strong performance in the quarter was led by our North American operations for last mile and less-than-truckload, and by our European supply chain operations. While market conditions were sluggish overall, e-commerce was a major tailwind — driving margin expansion in last mile, and resulting in major contract wins in contract logistics on both sides of the Atlantic. In LTL, we increased operating income by 66% from last year’s second quarter, pre-acquisition.” Jacobs continued, “We’ve raised our 2016 target for adjusted EBITDA to at least $1.265 billion, up from $1.25 billion. We also raised our free cash flow target to at least $150 million, up from a range of $100 million to $150 million. From here, we have a well-defined path to our target of $1.7 billion of EBITDA for 2018. More than $300 million of our profit improvement opportunities are company-specific and independent of macro conditions, including the global optimization of our network and the rationalization of $14 billion of addressable spend.”  Second Quarter 2016 Results by Segment Transportation: The company's transportation segment generated total gross revenue of $2.4 billion for the quarter, a 180.9% increase from the same period in 2015. The year-over-year increase in revenue was primarily due to 2015 acquisitions, with contributions from growth in last mile and truck brokerage.   Net revenue margin for the second quarter improved to 29.1%, compared with 22.5% in 2015. The increase in margin was primarily due to the acquisition of the less-than-truckload business in October 2015, as well as margin improvements in last mile and global forwarding, partially offset by lower intermodal and expedite margins. Second quarter operating income for the transportation segment increased to $153.2 million, compared with operating income of $23.0 million a year ago. Second quarter adjusted EBITDA improved to $275.7 million, compared with $59.3 million a year ago. The increases in operating income and adjusted EBITDA were primarily due to 2015 acquisitions. In the North American LTL business, the company improved operating income to $115.5 million, a 66% increase from the same period a year ago, pre-acquisition. On an adjusted basis, LTL operating income increased 81%, excluding transaction-related costs and amortization related to the acquisition. The increase in LTL operating income was primarily driven by yield improvement and SG&A cost reductions.  Logistics: The company’s logistics segment generated gross revenue of $1.3 billion for the quarter, up 270.4% from $359.6 million for the same period in 2015. Operating income was $51.1 million, up from $4.3 million a year ago. Adjusted EBITDA was $106.9 million, up from $35.8 million a year ago. The increases in gross revenue, gross margin, operating income and adjusted EBITDA were primarily due to 2015 acquisitions. Adjusted EBITDA for the logistics segment was higher than expected in the quarter, led by volume increases from e-commerce and high tech and the strong performance of the European business overall. Corporate: Corporate SG&A expense was $34.0 million, compared with $57.4 million for the second quarter of 2015. The year-over-year decrease in corporate expense was primarily due to lower one-time transaction-related costs in the second quarter of 2016 than in the comparable 2015 period. The second quarter 2016 corporate expense included approximately $4.8 million of non-cash compensation; and $4.3 million of transaction-related costs. Six Months 2016 Financial Results  For the six months ended June 30, 2016, the company reported total revenue of $7.2 billion, a 276.7% increase from the same period in 2015.  The company reported net income attributable to common shareholders of $22.0 million, or $0.19 per diluted share, for the first six months of 2016, compared with a net loss of $90.3 million, or a loss of $1.11 per diluted share, for the same period in 2015.  The adjusted net income attributable to common shareholders, a non-GAAP measure, was $42.1 million, or $0.35 per diluted share for the first six months, excluding the items detailed below. This compares with an adjusted net loss attributable to common shareholders of $22.7 million, or a loss of $0.28 per diluted share, for the same period in 2015. Adjusted net income for the first six months of 2016 excludes $48.5 million, or $30.7 million after-tax, of one-time transaction, integration and rebranding costs net of noncontrolling interests; a $5.8 million, or $3.6 million after-tax, benefit to depreciation and amortization related to the updated purchase price allocation of acquired assets; and a $4.1 million, or $3.5 million after-tax, benefit related to unrealized foreign exchange positions. Adjusted EBITDA for the first six months of 2016, a non-GAAP measure, improved to $604.2 million, compared with $109.3 million for the same period in 2015. Adjusted EBITDA for the first six months of 2016 excludes $48.5 million of one-time transaction, integration and rebranding costs.  Launches Next Generation Website The company announced the next generation of its website at www.xpo.com and its new tagline Results MatterSM. The site’s enhanced functionality connects customers with transportation and logistics experts and provides more information about ways in which XPO helps customers manage their goods more efficiently throughout their supply chains.