Did XPO Logistics Squander Its Latest Sales Increase?

• Report this Comment On September 12, 2012, at 3:15 PM, jmmeacham1 wrote:

  I feel like you're trying to fit a square peg into a round hole.

  As I'm sure you know, the company was purchased Bradley came on-board a little over a year ago (I lose track of time, forgive me if it's been longer). He set the tone over the past year by investing in management and technology as the first step, followed by what is now the cold start/acquisition phase. Margins are probably going to keep deteriorating until the company hits a phase where it slows expansion and heats up in grabbing market share & increasing sales.

  Reviewing any fundamentals for XPO (now a growth stock) just doesn't make sense right now. Investors have to go off of faith in Jacobs as a career CEO and the results of cold starts and acquisitions. Value-seekers are going to have this stock at a dismal target price based on current fundamentals.

• Report this Comment On September 12, 2012, at 4:05 PM, nimbletrader wrote:

  @jmmeacham1:

  Don't take this kind of analysis seriously. They don't even read filings. So do not assume that they really understand the business they are analyzing. They just pull out numbers, crank and publish the output from their machine. Quite useless to investors. However, they have served Motley Fool well. That's how they get to pitch their services. This is just their marketing trick. Nothing meaningful.

• Report this Comment On September 13, 2012, at 4:57 AM, Quoteme2 wrote:

  Everyone knows that the backbone of the growth will be the newly develloped software. It costs money and time to get that running, but that will bevthe moment when you can really judge XPO. Untill that these numbers mean nothing, and you would be wiser to judge the strategy behind XPO

• Report this Comment On September 15, 2012, at 2:58 AM, mrrroy36 wrote:

  This is why XPO logistics will have healthy margins:

  (From the Q2 2012 Results - Earnings Call Transcript)

  Scott B. Malat - Senior Vice President of Strategic Planning and Investor Contact

  Thanks, John. I’ll review our three-part strategy, and how it ties to the financial picture. First on acquisitions, Kelron will be added to the company results as of August 3. Kelron has a strong top line, but we believe it can be operated much more efficiently. The goal is to empower Kelron employees with better technology to help them get their job done more efficiently.

  We’re also analyzing their customers and lanes and combining it with our technology tools to help make better pricing decisions. Charlotte will give them access to more capacity, and we’re introducing our training programs. At the same time, we will add more salespeople to all the four branches. This will increase SG&A in the short-term, but should drive longer term growth and profitability.

  With Continental, that was our first integration and it went very smoothly. We’re now moving our operation to a larger space in Columbia, and we’re adding sales people. On cold-starts, our success will largely be determined by attracting talented people, and enabling them with powerful technology and training. We’re happy to say, we’ve made a lot of progress in these areas.

  As you saw in the release, we added experienced branch managers to run our cold-starts. And we added Angela Gibbons as our VP of HR, and John Tuomala as our VP of Talent Management to our team. They are charged with developing a sales force of several thousand people over the next several years, which is something they’ve both done successfully for other companies.

  We’ve got some great hiring initiatives going like Super Saturdays and Power Thursdays across the country. These are more than job fairs, they connect us with prescreened candidates, and we’ve been able to increase our hit rate with top notch talent.

  Also we launched a new training program last week, and we currently have new hires going through combined classroom and simulation training. As we said from the start, both training and technology are critical to our strategy. And last night, we announced a key addition to our IT team. Many of you already know Dave Rowe, who joined us as our Chief Technology Officer, responsible for infrastructure services, operating platforms and integration.

  Dave is one of the top technology talents in logistics. He was one of the first employees at Echo Global Logistics serving as their CTO, leading the design and development of the company’s information systems, and the integration of acquisitions. Dave will be a core member of the team, helping us to grow and scale our technology platform. He will report to our CIO, Mario Harik.

  Our technology has come a long way in a short time. We rolled out some pricing tools for our sales force at the end of July. And we are working on additional tools that will enable our carrier procurement team to find the right trucks more efficiently. This new functionality will become more and more valuable as we integrate large amounts of lean history and customer data from our cold-starts and acquisitions.

  Lastly, on optimizing our existing businesses. For expedite, we expect continued growth in our strategic verticals cross-border-Mexico, temperature controlled, and defense. And our new regional hub will build our presence with manufacturers and distributors in the Southeast.

  For freight forwarding, the market there remains soft. But we think we can continue to take share as we open eight new offices over the next year and half, to gain critical mass across the country. In Brokerage, as you’ve heard today, it’s very much a mix of cold-starts and acquisitions, but our existing business in South Bend continues to perform very well. Our new South Bend President, Bryan Tumbleson, has set his 10 years of operations experience at Express-1. Bryan will be adding sales people to continue the growth.

  The economy is sluggish, and no one has a clear idea of when it will improve. Less freight moving around is not a positive for our business. But we think we can continue to grow in this type of environment by opening cold-starts, hiring sales people, and improving the productivity and efficiency of the organization.

  When demand eventually comes back, we believe capacity is going to be very tight because of driver demographics, regulations, and a host of other factors that we think are lining up in favor of our specific model, that’s when our centralized capacity will give us an even greater edge. Our deep relationships in Charlotte with large numbers of carriers will position us very well to be a preferred vendor to our shipper customers.

  Summing it up, we’re executing on our plan. We’ve got 12 cold-starts, seven of them in brokerage. We have two acquisitions under our belt. Charlotte has a lot of momentum, and it’s been a big home run. We’re up to 50 locations, half company-owned and half agent offices. Our model of centralized carrier procurement and operations is helping us to grow quickly company-wide. We’ve made great strides in recruiting, training and IT. Nine months into the rollout of our strategy, we feel very good about our direction.

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