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ACF 2020


ACF 2020


SAN DIEGO, CA: December 13, 2018. Shareholder rights law firm Johnson Fistel, with the assistance of former California deputy Attorney General and Special Prosecutor Tiffany Johnson, has announced it is investigating potential claims against XPO Logistics.

The move follows the publication today of a report by hedge fund Spruce Point Capital Management (Spruce Point) claiming XPO "is plagued by financial irregularities that conveniently cover its growing financial strain and inability to complete additional acquisitions despite repeated promises”.

Entitled 'Trucking Ridiculous; End of the Road', the Spruce Point analysis characterises XPO 's financials as ''unreliable and dubious'', adding it has uncovered ''concrete evidence to suggest dubious tax accounting, under-reporting of bad debts, phantom income through unaccountable M&A earn-out liabilities, and aggressive amortization assumptions: all designed to portray glowing 'Non-GAAP' results".

Spruce Point XPO LogisticsBy the end of today’s trading, XPO’s stock had dropped over 26 percent to finish at US$44.50.

Spruce Point said: “Given its unreliable and dubious financials, US$4.7 billion debt burden, inability to generate sustaining free cash flow, and dependency on external capital and asset sales, we have a worst-case terminal price target of zero.”

The company notes while XPO has completed 17 acquisitions since chairman Bradley Jacobs took control in 2011, at a capital cost of US$6.1 billion, it has generated only US$73 million of cumulative adjusted free cash flow.

“In our view, this is indicative of a failed business strategy yielding a paltry 1.2 percent return on invested capital. XPO is dependent on external capital, asset sales, and factoring receivables to survive and is covering up a working capital crunch that can been (sic) seen by bank overdrafts. As credit conditions tighten, cost of capital increases, and XPO’s business practices come under greater scrutiny (e.g. U.S. Senate), its share price could swiftly collapse in Enron-style fashion,” it declared.

In a response to Spruce Point, XPO told the financial newspaper Barron’s: “Today’s report from a short-selling firm is intentionally misleading with significant inaccuracies, and fails to reflect that XPO has delivered strong performance for its long-term shareholders.

“The facts demonstrate that the short seller’s claims, most of which have been previously floated and refuted, are baseless and an attempt to string together unrelated pieces of incorrect information to paint an inaccurate impression of the company. We will communicate directly with our investors regarding this short seller’s report,” the spokesman continued.

On December 04, 97 members of the US House of Representatives signed a letter urging the House Committee on Education and the Workforce to investigate several news reports of alleged mistreatment of XPO employees.

The company responded via its web site with a statement saying it was “deeply disturbed by recent media allegations” and was taking immediate action to investigate.

Three days later the Teamsters Union, which has expressed on-going support for XPO workers, called on Jacobs to “formally acknowledge his company’s failure to address ongoing issues at its Memphis, Tenn. distribution center that include pregnancy discrimination, worker intimidation, and harassment”.

The Spruce Point report is available here: XPO Logistics

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