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XPO Annual Report, Year Ended Dec 31, 2007

Filing Date
Filed March 27, 2008
Period End
December 31, 2007
Security
XPO
In the record · 2016–202610-K1110-Q338-K243

XPO filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 243 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Mar ’17Mar ’17
  2. Material agreement8-K · May ’19May ’19
  3. Leadership change8-K · Mar ’22Mar ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 27, 2008. Cited figures are marked; the original filing is the authoritative source.

Express-1 Expedited Solutions, Inc. reported 2007 operating revenue of $52.8 milliona, up 25.1% from $42.2 million in 2006, and income from operations of $3.47 million, up 25.0%.

Net income fell to $2.17 millionb, or $0.08 per diluted share, from $3.90 million, or $0.15 per share, in 2006, because the company recorded a $1.3 million current tax provision in 2007 versus a $1.1 million tax benefit in 2006. Express-1 contributed about 90% of 2007 revenue and Express-1 Dedicated about 10%. Gross margin as a share of revenue declined to 24.4% from 25.6%, reflecting weak freight rates and rising fuel costs, while SG&A held at 17.8% of revenue versus 19.0% a year earlier.

The filing's most significant subsequent event is the January 2008 purchase of substantially all assets of Concert Group Logistics, LLC, paid with $9.0 millionc in cash and 4.8 million shares of common stock, plus up to $2.0 million in contingent consideration. It was financed with a new $14.6 million National City Bank facility, comprising an $11.0 million receivables line and a $3.6 million term loan, and the company also formed Bounce Logistics, a premium truckload brokerage that began operations in March 2008. Those units were not consolidated in 2007 results, so the company will report a materially different business mix going forward.

Cash at year-end 2007 was $800,000d and working capital was $3.78 million, and the company stated it does not expect to pay dividends. Investors should weigh the company's concentration risk: its 25 largest customers generated about 50% of revenue, and roughly 30% of revenue came from the Big Three U.S. automakers and their suppliers.

The company relies heavily on independent contract drivers and third-party equipment, and it reported that most of its historical acquisitions have not been successful. The filing also discloses a $2.21 million earn-out paid in March 2008 that had been accrued at year-end 2007.

02—Key points

Key Highlights

  1. Revenue grew 25.1% to $52.8 million in 2007, led by Express-1, which rose 27.8% to $47.7 million on fleet growth of about 38%.
  2. Net income declined to $2.17 million ($0.08 per diluted share) from $3.90 million ($0.15 per share), mainly due to a $1.3 million tax provision in 2007 versus a $1.1 million benefit in 2006.
  3. Income from operations rose 25.0% to $3.47 million; gross margin fell to 24.4% of revenue from 25.6%, while SG&A improved to 17.8% of revenue from 19.0%.
  4. Acquired Concert Group Logistics in January 2008 for $9.0 million in cash, 4.8 million shares, and up to $2.0 million in contingent payments, adding a freight forwarding business not included in 2007 results.
  5. Entered a $14.6 million credit facility with National City Bank in January 2008, including an $11.0 million receivables line and a $3.6 million term loan, with an initial maturity of June 30, 2009.
  6. Customer concentration remains high: the 25 largest customers generated about 50% of revenue, and about 30% of revenue came from the Big Three U.S. automakers.
  7. Year-end 2007 cash was $800,000 and working capital was $3.78 million; the company does not plan to pay dividends and its stock traded on the AMEX under the symbol XPO.

03—Questions

Frequently Asked Questions

  1. What drove revenue growth in 2007?

    Express-1 revenue rose 27.8% to $47.7 million, driven by a fleet of independent contractor vehicles that grew about 38% during 2007 and by new and expanded customer accounts. Express-1 Dedicated revenue rose 4.4% to $5.1 million.

  2. Why did net income fall even though operating income rose?

    Income from operations increased 25.0% to $3.47 million, but the company recorded a $1.3 million income tax provision in 2007 compared with a $1.1 million tax benefit in 2006, reducing net income to $2.17 million from $3.90 million.

  3. What did the Concert Group Logistics acquisition involve?

    In January 2008 the company bought substantially all assets and certain liabilities of Concert Group Logistics, LLC for $9.0 million in cash and 4.8 million shares, with up to $2.0 million more payable based on 2008 and 2009 performance. It was financed through the new National City Bank credit facility and cash from working capital.

  4. What are the main risks to the business described in the filing?

    Key risks include customer concentration, with the 25 largest customers providing about 50% of revenue; dependence on the U.S. automotive industry; reliance on independent contract drivers and third-party equipment amid driver shortages; fuel price volatility; and intense competition that can pressure freight rates.

04—Continue

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