XPO buys Canadian broker
XPO Logistics Inc.—the company formed by entrepreneur
Bradley S. Jacobs to establish a multibillion dollar footprint
in the truck brokerage, expedited transport, and freight forwarding industries—has acquired Kelron Logistics, a
Canada-based broker, for $8 million in cash.
Last year Jacobs invested $150 million in cash in a non-asset-based expedited transportation company called
Express- 1 Expedited Solutions Inc., renamed the company,
and installed himself as CEO. He aims to construct a company with annual revenues of $5 billion to $6 billion, mostly by unifying a deeply fragmented truck-brokerage segment through a combination of acquisitions and organic
expansion.
Mississauga, Ont.-based Kelron marks XPO’s second
acquisition; the company acquired Continental Freight
Services Inc., a South Carolina-based broker, in May 2012
for an undisclosed sum. Kelron generates 80 percent of its
business within the United States or in the U.S.-Canada
transborder trade. As of June 30, Kelron had reported $100
million in annual revenue.
XPO has also recently added brokerage locations in
Chicago; Jacksonville, Fla.; Morris County, N.J.; and
Montgomery, Ala., bringing the number of XPO brokerage
locations to seven. It has also added a location in
Birmingham, Ala., for its expedited business and another in
Los Angeles to support its freight forwarding network.
Jacobs has set a goal for XPO to hit about $500 million in
annual revenue in 2012, more than double its 2011 figure.
The revenue brought in by the Kelron acquisition puts XPO
at about $320 million through early August, according to
estimates from John G. Larkin, the lead transport analyst at
investment firm Stifel, Nicolaus & Co.
In a research note published Aug. 7, Larkin said XPO
would more than likely hit the $500 million mark by closing
on five to seven deals with companies each generating
between $25 million and $35 million in gross revenue.
The day before, XPO reported second-quarter revenue of
$54.5 million, a 23.7-percent increase from the same period
in 2011. The company posted a $5.2 million net loss for the
quarter, compared with net income of $914,000 for the
same period in 2011. Analysts expect the company to post
net losses into 2013 as it incurs significant costs while building its business and turning around Kelron, which has
struggled for profitability in recent quarters.
In a statement announcing the second-quarter results,
Jacobs said XPO “is either on track or ahead of schedule”
with the core components of its business plan. Jacobs noted
that the company doubled its brokerage revenue from year-ago levels and that its freight forwarding unit, Concert
Group Logistics, reported its first year-over-year revenue
increase in five quarters. ;
