William B. Cassidy, Senior Editor | Aug 16, 2012 3:36PM EDT
With the purchase of Kelron Logistics, Bradley S. Jacobs says XPO Logistics is en route to completing acquisitions worth $250 million in revenue by year’s end.
“We’re about halfway there,” said Jacobs, the entrepreneur who became chairman and CEO of XPO last year after investing $150 million in the business.
With recent acquisitions and internal growth, “we’re comfortable with the target we set of being on a $500 million revenue run rate by year end,” Jacobs said.
In the first six months, XPO expanded revenue 15.8 percent — a rate that would push its revenue over $200 million by year end, excluding revenue from acquisitions.
That would be a major milestone in Bradley’s plan to build XPO into a multi-billion dollar freight brokerage and logistics business over the next few years.
In the first six months, XPO expanded revenue 15.8 percent — a rate that would push its revenue over $200 million by year end, excluding revenue from acquisitions.
XPO bought Canadian-based Kelron, which had approximately $100 million of trailing 12 months revenue in June, for $8 million in cash, the company said.
Kelron provides transportation management, dedicated truck capacity and truckload and less-than-truckload brokerage services in the U.S. and Canada.
The company, founded in 1992, opened an office in Cleveland, Ohio, last fall. It has offices in Mississauga, near Toronto, Montreal and Vancouver, British Columbia.
“About 40 percent of Kelron’s business is cross-border with the U.S., and 40 percent is purely U.S., with the remaining 20 percent intra-Canada,” Bradley said.
Studying Kelron’s lanes, “we found the intra-Canada business was the most lucrative of the three, so we’re going to double down on the Canadian business,” he said.
Kelron is XPO’s second major acquisition in recent months, following the $3.4 million purchase of Continental Freight Services, a $22 million company, in May.
Greenwich, Conn.-based XPO, a holding company, is creating an information technology backbone its subsidiaries can tap for access to more truck capacity.
In March, XPO opened a national operations center in Charlotte, N.C., an expansion Bradley called “the biggest event in the whole company. It’s the lynchpin.”
In Charlotte, “We’ve got 60 people now, including 40 who are solely involved in carrier procurement,” Bradley said. “That’s where we will get our capacity.”
Kelron’s 2,500 carrier partners will be added to that capacity pool, Bradley said, and Kelron will be able to draw on XPO’s existing carrier partnerships as well.
Bradley is betting big on truck brokerage, one of the three business lines at XPO, parent of expedited trucking operator Express-1 and Concert Group Logistics.
The investor envisions turning XPO into a multi-billion dollar enterprise much like his previous ventures, United Rentals and United Waste.
XPO, formerly Express-1 Expedited Solutions, increased operating revenue 12 percent in 2011 to $177.1 million and reported a net profit of $759,000.
In the second quarter, XPO increased revenue 23.7 percent year-over-year to $54.5 million, while reporting a net loss of $5.2 million, its third quarterly loss.
Those losses were not unexpected — the company has been spending a significant amount of money on organic expansion, acquisitions and technology.
“We’re up to 50 locations in the U.S. and Canada,” Bradley said. “We’re ahead of schedule on our cold starts,” with seven new brokerage branches in place.
XPO’s freight brokerage business increased revenue 107.5 percent from a year ago to $13.9 million, including $3.6 million from Continental Freight Services.
Most of the growth came from increased revenue at the cold-start locations, but the cost of rolling out new locations contributed to a $972,000 operating loss.
Freight forwarder Concert Logistics Group increased revenue 4.7 percent from a year ago to $16.5 million and reported a $128,000 operating profit for the quarter.
Express-1 increased revenue 11.6 percent to $25.7 million on higher volumes and revenue per load and boosted operating profit 17.9 percent to $2.4 million.
Contact William B. Cassidy at wcassidy@joc.com. Follow him on Twitter at @wbcassidy_joc
