March 12, 2019

XPO releases COO, scales back acquisition plans

XPO releases COO, scales back acquisition plans

Company invests in stock buyback plan, launches labor productivity software platform.

By Ben Ames

Stung by a missed earnings target in the fourth quarter of 2018, transportation and logistics provider XPO Logistics Inc. is making good on its plans to scale back its ambitious appetite for acquisitions in favor of investing in a sensible stock buyback plan, and has released the chief operating officer it hired to hunt for takeover targets.

Less than a year ago, XPO wooed executive Kenneth Wagers away from Inc., and charged him with looking for deals to continue the company's run of growing through mergers and acquisitions. However, that job ended yesterday when Greenwich, Conn.-based XPO eliminated the COO position and terminated Wagers, the company said.

An XPO spokesman confirmed the departure, saying, "We originally hired Kenny Wagers to work alongside our president, Troy Cooper, in anticipation of significant M&A activity. Now that we've decided to do a large stock buyback instead, we're returning to an executive lineup that makes the most commercial sense. We thank Kenny for his time at XPO and wish him the best."

The move dovetails with XPO's statements made Feb. 14 when the company said its fourth quarter financial results had fallen short of profit targets. XPO scaled back its goal for 2019 profits—measured as EBITDA, the acronym that describes "earnings before interest, tax, depreciation and amortization"—from its original range of 12 to 15 percent down to a range of 6 to 10 percent. XPO Chairman and CEO Bradley Jacobs said in that earnings report that revenue driven by rising global e-commerce demand had been outweighed by "headwinds in France and the U.K. and a loss of profit in the postal injection business with our largest customer."

In addition to boosting its stock buyback program, XPO is continuing to invest in logistics technology, and has continued to churn out new software products aimed at improving warehouse productivity. The company today launched a labor productivity system for XPO Smart, its technology suite of optimization tools. XPO has deployed the new system in 20 logistics facilities to date, including both dedicated customer warehouses and hubs for XPO Direct, its shared-space distribution network, and plans to make 200 total implementations by year-end.

The labor productivity system gives DC managers a "technological microscope" for examining warehouse operations as measured by workers' output and productivity. The software analyzes three main drivers: labor output (including gaps that need resolution), fast-moving inventory SKUs for optimal placement within the warehouse, and outbound production measured against on-time targets.

The new platform interfaces with the company's "WMx" warehouse management system—launched in 2018 to support the quick launch of robotics-based distribution centers—as well as third-party workforce management applications. "Our labor productivity system uses proprietary algorithms and site-specific machine learning to determine how individual output contributes to collective goals," XPO's chief information officer, Mario Harik, said in a release. "Very quickly, the system has had positive impacts with cost control and fulfillment speed."

About the Author

Ben Ames
Senior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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