Welcome to the XPO Logistics Third Quarter 2012 Conference Call and webcast. My name is John and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later we [book] and update question and answer session. Please note that this conference is being recorded. Before the call begin just let me read a brief statement on behalf of the Company regarding forward-looking statements and the use of non-GAAP financial measures. During the call, the Company will be making certain forward-looking statements within the meaning of applicable securities laws, which by their nature involving number of risks and uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the Company’s SEC filings. The forward-looking statements in the Company’s earnings release or made on this call are made only as of today and the Company has no obligation to update any of these forward-looking statements. During this call, the company also may refer to certain non-GAAP financial measures as defined under applicable SEC rules reconciliations of such non-GAAP financial measures to the most comparable GAAP measures are contained in the Company’s earnings release and the related financial tables. You can find a copy of the Company’s earnings release, which contains additional important information regarding forward-looking statements and non-GAAP financial measures in the Investors section on the Company’s website www.xpologistics.com. I will now turn the call over to Mr. Bradley Jacobs, Chairman and CEO. Sir, you may begin.

Thank you, operator and good morning everybody. Welcome to our third quarter conference call. With me today are John Hardig, our Chief Financial Officer; and Scott Malat, our Chief Strategy Officer. I’m pleased to say that in the third quarter, we made significant progress on each of the three main components of our plan on acquisitions, cold-starts, and optimizing our operations. We’re further developing our information technology, we’re expanding our sales force particularly in freight brokerage and are ramping up at our operations center in Charlotte. Two things I’m especially excited about in the quarter are the strong advances we made in recruitment and training. Our talent management program is becoming increasingly robust and we’re continuing to refine our training programs for new hires. These are two critical components of our long-term plan to create shareholder value. On our acquisition of Turbo Logistics, we won’t recap all the details since we just had a conference call about that 10 days ago. But suffice to say, bringing Turbo on board was a major milestone for XPO logistics. We’ve been spending a lot of time with the Turbo team in Gainesville, Reno, Chicago and Dallas. Last week we had about a dozen members of our leadership team onsite at the various locations. Our new Turbo employees have told us that morale is the highest it’s been at any time in Turbo’s 28 year history. If I had to describe a strategy for Turbo in one word, it’s scale. We’re going to scale it up substantially and quickly. On the cold-starts, we opened up a truck brokerage branch in Charlotte this quarter. This is an important branch that will grow alongside our operations center. We’re planning on hiring 100 of customer sales reps over the next few years in charlotte and we plan…

Thanks, Brad. I’ll start by giving some color on the performance of our three business units. Starting with freight brokerage, our revenue was up 290% from last year to $32.2 million and gross margin dollars nearly tripled to $4.1 million. $30.5 million of the revenue increase came from the mid quarter acquisition of Kelron on August 3. The balance of the increase came from organic growth and our acquisition of continental. Freight brokerage gross margin percentage was down year-over-year due to lower margins at our cold-starts during the startup phase. However, we improved margins sequentially. Gross margin percentage was up by 160 basis points to 12.6% in Q3 from 11% last year. This improvement was largely due to lower transportation costs mainly from Charlotte ramping up and doing a better job finding trucks, but also from a loosening of truck capacity during the third quarter. In expedited transportation or revenue was relatively flat with gross margin percentage was 16.6% down from 21.4% last year. Expedite business in general started to slow in July and stayed soft through the rest of the quarter. SG&A increased 7% as we’ve continued to make investments in our expedite sales force and recruiting efforts to increase the number of independent fleet owners we use. In our freight forwarding segment, we’re continuing to make headway despite soft market conditions. Revenue increased slightly and gross margin increased to 4% compared with the same quarter last year. We’re growing our Company on locations, which is more than offsetting the declining revenue in our agent-owned offices. Our newest freight forwarding locations in Houston and Kansas City take us up to six freight forwarding cold-starts this year. The effect of these growth investments is reflected in the decline and operating income for the quarter in freight forwarding. On the corporate…

Thanks John. I’ll review our three part strategy in more detail. First on acquisitions, the integration of Turbo in underway, we’re on schedule to move them over to our IT platform within 90 days and John Tuomala, our VP of Talent Management is working closely with [David Cocker] his team to accelerate the recruiting plans. We expect to begin hiring additional sales people in the fourth quarter. This will increase SG&A in the short term but should drive longer term growth and profitability. When you walk into the Gainesville office of our Turbo division, one of the first things you notice is how big it is. It’s a 40,000 sq building, there is 150 people in it now and there’s room to build it up to 400. Across the organization, we’ve made significant progress in recruiting, training and IT that will help us ramp up growth with both acquisitions and cold-starts. In recruiting we have innovative programs in place for hiring large number of highly qualified candidates. We’ve received literally thousands of resumes and we hired 119 sales people in the third quarter alone, some from the industry and some are from outside. Our training programs are helping our newer sales people get more productive. We have over 30 new recruits in sales and carrier procurement training this week. Our training team has built out 20 training modules which are a combination of classroom and structure simulations. They are continuing education and mentoring programs for recruits and our sales people get a significant amount of direct coaching from their branch president. We’re incorporating leading edge content into proprietary training programs and we think our approach has the potential to revolutionize the customer experience with XPO. On IT, we have a new technology in beta test right now. The algorithms that…

Thank you. (Operator Instructions) Our first question comes from William Greene from Morgan Stanley, please go ahead.

Yeah. Hi there. Good morning.

Good morning.

Can I just ask a couple of detailed questions on some of these acquisitions, just want to make sure I understand the timing on some this stuff. So Kelron came in, I guess you said August 3, contributed what did you say $13.5 million or so, but they had a run rate of $100 million so does that mean you are culling any business or maybe we’re missing some of the seasonality here?

Yeah. From Kerlon standpoint, we’re still analyzing the lanes and looking over what is the attractive business, some and what business we won’t be working with, but it’s fair to say that we’re on a path towards profitability and we’re looking at that as some of the business is unattractive.

Yeah. Okay then. So one of the things that happened at a competitor over at [Echo] was that they actually found after they made an acquisition the revenues that the company said it had weren’t quite as robust, how do you think about the risks here, as you do have a very fast acquisition strategy, some of these companies have the accounting systems in place to ensure that they know what they actually earn? How do you guys guard against that, or is that just part of the risks and you bake that into the payouts?

Well you want to do is much due diligence as you can and you want to balance your eagerness to do a deal with the need and importance of getting all the dots - eyes dotted and teeth crossed. We typically have a fairly large number of people in our organization who get into an acquisition towards the end stage. I am talking to something in the teens number people from operations, to IT, HR, from corporate, from finance, it’s quite a - you start planning integration before the deal is consummated not afterwards. And we also use inside and outside legal, and we often use outside accounting as well for the financial analysis of it. I we have a lot of bodies and we have other due diligence in the background check people involved. I think we do a pretty job at knowing what we’re going to buy before we buy it. That said, any company, our’s or [Echo’s] or anyone can make a mistake ones in a while and buy a company and did not work out the way you had expected it to work out, but we’ll get them almost all right if not all of them right.

The just last question, Scott, you mentioned sort of the pickup in the last week. I realized it’s still sort of early, but can you put any color on that just in terms of the magnitude of the pickups as we think about fourth-quarter trends. It’s not clear to me how to sort of bake that into your numbers? Thank you.

Sure, well you can break that up into three parts we have different businesses and Express-1 they were facing a soft market, which continued into October. When you get, this is what Express-1 is good at, you have, they can help in these situations when you have anything that disrupts the supply chain that could help our Express-1 business. So that will, we could help in those areas. In CGL it probably won’t affect their business much, if anything it could be a little bit negative to freight forwarding, some of the ports were closed and there wasn’t moving. On the Freight Brokerage division we’re growing very fast. So every week we make a new high over the week before and so and every month we make a new high over the month before. So it’s hard to discern exactly what comes from what. We would say the cost of capacity has moved up. We are - the vast-vast majority what we do is on spot. So we think we can get more business as we go to, as lot of shippers are trying us out, they are looking for capacity, they are asking around and they know that we have capacity and we are getting incoming contacts and outgoing calls to them to get business. So it should help us find new business, but it’s hard to discern from the trends because they are growing every week.

So you probably don’t have that much locked up under long-term contract that you get sort of squeezed on this. Is that fair?

That’s very fair, yes. That’s fair.

All right. Thank for the time.

Thank you.

Our next question comes from Justin Yagerman from Deutsche Bank. Please go ahead.

Hey, good morning guys.

Good morning.

So we had 15 cold-starts and I think when we started on this whole journey here you guys had talked about 20, 21-ish, obviously that sounds like it’s going to be eclipsed within your five-year plan pretty soon. Am I right in thinking that the pace is much more rapid? Is it that you are identifying more people than you thought you would and can you put a new number around what you think your five-year plan means in terms of number of cold-starts for XPO?

Well it’s correct to say that we’re ahead of plan on the cold-start on Greg Ritter and his group have put a lot of emphasis on getting out there and meeting lots of candidates for branch presidents and as the year is going on and as XPO has taken shape more we are attracting more people and more highly qualified people. But to the extent we find additional cold-start presidents that we love and we want to work with and we want to back and support and give the resources of the organization to - we’ll go ahead and hire them. But I think where we are now is we’re seeing we have got a number of these locations now across the country. Some of those branch presidents have visions for building it up to 50, 75, or 100 people over a few years, getting up to $50 million or $100 million in revenue and a subset of those cold-start presidents have much larger visions and in some cases have very propitious real estate. So for example, when I look at our system now, so we have got 56 locations in total around Canada and the United States, the ones that I zoom in on and I am spending most of my time on are Charlotte, where [Joe Rickelson] just started our cold-start and that’s a place that we have got the facilities. We have got the infrastructure and we got the talent pool in Charlotte to build that up to somewhere between 500 and 750 sales people, so that can be a real mega location and its right where our training programs are. It’s where our HR and the recruiting people are. It’s a good place to be and plus we are recruiting about one-third from the industry and two-thirds roughly inexperienced people and there is a fair number of competitors in Charlotte to recruit from. The other places I look at is the ones most scalable, I love the Jamesville location at Turbo and Jamesville is in a building that’s about 40,000 square feet, can hold 400 people and has presently got 150 people in it. So overtime it would be great to get that additional 250 heads there and running and going. Chicago is another place that’s got good scalability, we’ve got 40 people there right now, there is no reason that can’t be in the many hundreds of people a few years from now, and I could go on a few others. I am trying to make the point it’s not as, it’s partly the number of cold-starts and that’s important we’ll continue doing that, but it’s also let’s focus on the scalable ones. The one’s that we can really hit homeruns in.

So Brad as I try to translate headcount into dollars, how should I think about the productivity that you target for each employee as it relates to those. Charlotte is a 500 to 750 salesperson potential. Is that $500 million to $750 million in terms of that opportunity or is it more or less than that?

It could be more than that. So we tend to target at least $1 million for a salesperson in the first-year and it could scale up from there.

Piggy backing on one of Bill’s questions, I was curious you know as you talked about Kelron. I know you are a still parsing out the quality of the revenue there. At Turbo do you think that there is the same issue where you are going to have to call it before you can grow or is that going to be a straight growth opportunity?

Well that will be a - it’s very straight high growth opportunity. Turbo had a completely different MO than Kelron. Kelron had a fair number of lanes and customers that were marginal or losing money and we knew that, going into that was part of the plan and we factored that into the price and we’re going back to those customers and saying, you know, we’ll keep this lousy line, but give us some new business that offsets that or let’s talk more about what the right pricing should be. Some of those customers will get to a good place and some of them will just lose. And in Turbo, yeah, I am not aware of any money losing customers at all and they have just a really great relationship with a bunch of customers and they are very profitable and it’s just a question of growing it, hiring more salespeople and filling up the tables and going out and getting more share of wallet from the existing customer base. Now they have got those marching orders and also getting new customers both Tier 1, Tier 2 as well as Tier 3 customers.

Got it. Last question I will turn it over to somebody else. You guys have started cold-starts any expedite on this quarter yet to cold-starts and freight forwarding, those other two businesses besides the Freight Brokerage where most of the growth has been concentrated. How do you think about those right now, now that you have been in them for a little while? Expedite sounds like, at least this quarter was maybe a more cyclical business than you would have thought, you are obviously growing freight forwarding just curious in terms of your growth ambitions there, how you see those evolving, whether or not you are dead set on them being core pieces of the business, Any commentary will be helpful around it?

Well truck brokerage is clearly the place we’re going to put the most resources and the most growth into. Having said that we got nice franchises in both of those other segment Express-1 is either the third or fifth depending on what survey you are the largest expedite in the United States. And we like that business, it’s a business that customers really value the services they needed and this is customers who have a real urgent need to get something picked up right away and deliver it in a time density, definite manner and are willing to pay for that, which is why the margins are typically higher there than in the regular truck brokerage. So it’s a good business. We got a good platform to grow. It’s more cyclical than truck brokerage and things do change on a dime there much more. So up until a week ago expedite was the stepchild and was having a bad quarter and demand was slow and rates were down and it wasn’t really a great quarter. Then a week ago boom, Sandy comes and supply chain disruptions and suddenly there is a huge demand for [XY] services, so that’s the great the business then. So it does move around quite a bit. The program to grow or expedite is not via a huge number of acquisitions and huge number of cold-starts like it is in truck brokerage. The idea on expedite is to go nice and steady and recruit more owner operators who are up to 450, we had less than 400 just a few months ago, get that up to a 1,000, hire more salespeople, take that from businesses doing a little under $100 million of revenue, get it to business doing over $200 million of revenue, just grow it nice and slow and steady. And on CGL, on the Freight Forwarding, again I don’t anticipate doing a lot of acquisitions in Freight Forwarding, but we’ll continue to do cold-starts of both agents and company-owned stores, maybe on the magnitude of 10 or dozen of them over the next year and half or so and just keep growing from a business that’s doing again under $100 million of revenue to something that’s approximately double its size in a couple of years that’s the plan.

Okay. Sure. Last [one I lied]. 10 you said potentially Freight Forwarding cold-starts over the next few years and then you didn’t give me a new number for what you are thinking on the brokerage side, you know, over the next year or two how many cold-starts you think you’ll be able to open up?

I deliberately didn’t give you a number, because I don’t have a number yet. Let’s go through the budgeting process that we started last week. We’ve got -- where our senior management team is having lots of meetings over the next couple of weeks, we are spreading out strategically where we want to spend our time, where we want to put our - where do we want t put our resources. To what extent we want to have more smaller cold-starts. I would say small, you are putting in less than $ million and they are building up to a business that’s going to do several million dollars in EBITDA in a few years. So they are still great, they are still wonderful, but in terms of management bandwidth, what’s the right calibration between those types of cold-starts and the more mega cold-starts that we’ve already got feet on the ground for.

Okay. Thanks a lot for the time.

Thank you.

Our next questions comes from Peter Nashville from Jefferies & Company. Please go ahead. Peter Nashville - Jefferies & Co.: Good morning guys. Good morning. So, if could maybe bigger picture look at the air in target of $500 million run rate. So if you are $71 million - or for the quarter. In the annualized that your acuity five. So that leaves about $215 million of annualized revenue to pick up. So how would you say that that roughly bridges in terms of just seasonality, you know how much of an uptick do you think is [TR] on the seasonal bump. How much do you think is coming from organic growth now that the cold-starts are out of plan and I guess that if we were to plug, the balance well how much would probably be acquired?

Well Peter, we you can’t take just the 71 for this quarter and annualize it because it doesn’t give you any credit for Turbo that we just closed. Peter Nashville - Jefferies & Co.: Fair point.

So Turbo is going to do about a hundred and - it did, it trailed in about $124 million of revenue. Then you also don’t have a full quarter of Kelron in there as well. So we think we’re very much rapidly approaching that $500 million run rate for the year. Our cold-starts are really kind of closing that gap because they are growing rapidly and so we feel good about getting that target this year and that’s really helping with what the mix will be. We might do one acquisition yet this year one or two, but it’s hard to predict those and say with certainty that we will. Peter Nashville - Jefferies & Co.: Then my follow-up question, you are doing a great job of sort of getting to your targets ahead of plan, so whether it is cold-starts or this $500 million run rate revenue number. As you look ahead to next year and I know you still go through your year-end budgeting processes, but what should we start to think about big picture in terms of kind of the next stage of targets for this business? Thanks.

Peter, thanks. We have a five-year business plan. In year one it made a lot of sense to go up to $500 million of revenue run rate to get us some scale, to get us some lean density to really get the business model moving and start to spread out some of the fixed cost investment over a larger revenue base. As we look towards the next few years is very specific plans over or five-year plan. We’ll go though our planning process, which is just starting up and then we’ll give an update on the fourth quarter call of what our goals are for next year, but it will be the goals will change over the five-year plan. Peter Nashville - Jefferies & Co.: Okay. Great. Thanks a lot guys.

Thank you.

Your next question comes from Scott Schneeberger from Oppenheimer. Please go ahead.

Thanks, good morning. I guess, for that, I recognize it’s not you are just in my position, but could you give some color around the strategy there. The integration with a new development in Charlotte. How is that growing, what end markets does it serve, will there be any specialties in that area, just a little more color on that? Thanks.

Sure. Yeah. Thanks Scott. So, BirdDog’s a great tuck-in so it’s doing $7 million in run rate revenue profitable business. We paid up to a $25 million for it and it really is being combined with that Charlotte platform and give a boost to the cold-start. So we move them on to our IT platform very quickly. They got access to Charlotte businesses, their business has increased on a revenue and a margin basis as per plan and Drew Wilkerson who has really distinguished himself as a leader in the organization is taking over the combined platforms there and scaling it up adding headcount and adding salespeople to Charlotte to match our carrier procurement, BirdDog is in [drive-in], almost all of that isn’t drive-in.

Great thanks and is, was it large was it just a few people that were involved or and how we’re [manage] going to work in there?

We got six people Scott and if you make it to the Analyst Day Thursday you’ll meet them they are right there on the floor.

Just a follow-up to the prior question with regards to the goals and objectives you’ll set. I understand you have your five-year, your long-term goals. Will there be anything unique and perhaps you are still working on it, with regards to targets you’ll set for the coming year and not necessarily what they will be but along with the metrics?

We will definitely give very specific target and will share those with you on the next quarter conference call, we are making first you know it’s given of the top priority having gone in developed very carefully to budgeting process but we will definitely share them with you when we got them.

Sure thanks and then lastly just a housekeeping, what about litigation expense again in the quarter, do you (inaudible) that’s persistent.

You never know, litigations can get resolved, if both parties want to resolve them. Litigations can go on for years if neither party or both parties don’t want to resolve them.

Very hard to predict.

Okay. Thanks guys,

Our next question comes from Kevin Sterling from BB&T Capital Markets, Please go ahead Kevin Sterling - BB&T Capital Markets: All right. Good morning, gentleman.

Good Morning Kevin Sterling - BB&T Capital Markets: Brad, let me just follow the Scott’s question kind of follow up about BirdDog acquisition and you folded that into your Charlotte cold-start. Is it a game plan you would like to adopt maybe for future cold-starts where you jump start them on small acquisition like this?

Yes that’s something that’s appealing to us because it very easy to manage and just cold drive in and you get a lot of savings on SG&A in back office ends up being higher percentage because of their small deals so if you can’t look at those as kind of lift out of employee teams and you are paying the owners for doing that, they are nice, nice little things they are not going to move beneath the hugely but they are going to go on margin improve it. It’s a nice jump start to the cold-start in Charlotte SG&A you know bring about your revenue in day one Kevin Sterling - BB&T Capital Markets: Right, right. And let me stick with a cold-start theme, you know it seems to me your cold-starts from a revenue generation are off to a better start than I initially thought, start what’s the secret sauce, is it staffing with seasoned people they can hit the ground running, is it scale that access to capacity, what are your thoughts there?

Yes to all the above, for cold-starts the it’s not a secrets sauce but our sauce is we recruit people to begin with that we think have right personalities from right drive and right life goals and clear goals, committed to one of glide with succeed in this position that’s step number one. Step number two is marine development, you train them properly you know the overly train up and waste time and before you get them on phones been productive but you do want to train them properly and adequately so when they are on phones they represent the company very professional way, so training is the big part of that and another part of this process is IT. Giving technology that makes them have a leg up over the competition both in pricing tools and been connected to technology to Charlotte, for the carrier procurement playing cover loads and find trucks were effectively. And I would say another part of the sauce is compensation, you want to have nice incentive compensation there so that when people start making money for the company they are making money for themselves as well in the end of the day about making money and I would say the final but not least important part of this the sauce is have fun place to work have real exciting culture that’s the team work and upbeat and positive in growing and successful, and success breeds success Kevin Sterling - BB&T Capital Markets: All right. Okay. Great. And maybe let me, that’s like a sets ways in my next question with a chalk capacity tightening from hurricane Sandy and shippers looking for capacity and you know turning to you for capacity and you have capacity. Do you see long term opportunities to pick up new customers and maybe make them repeat customers for next year how should we think about this opportunity for you guys?

Well, being here in the Tristate area I don’t want to crow too much about benefits of Sandy because many of us still don’t have power and lot of people don’t have houses but from a business point of view the world changes significantly in for logistics week ago because up until week ago we had capacity, demand was weak, capacity was loosening, trucks were lowering there wage, shippers were kind of lowering their wage because they weren’t stupid that they knew that prices that brokers were paying, truckers were coming down and we kind of more let downs to markets leaning towards loosening capacity which is one of the worst places in Rulebook for brokers to run their business and when Sandy came that took enormous amount of capacity and still was taking enormous amount of capacity out of market and causing lot of supply did change disruptions the port just opening this week we have drivers still sitting around in New York and New Jersey you had big asset heavy trucking companies, immediately diverted fleet to the Northeast some times adding $500 surcharges to loads, you saw FEMA out there y, you still see FEMA out there now FEMA’s come down a little bit - if emergency they were paying $5 to $7 a mile and now it’s still about $4 - $5 a mile. You see FEMA out there getting capacity at, so you’ve got - it’s really a different world. So you’ve got a broad network of small carriers around the country who have avoided the northeast and don’t want to go into the northeast and so there’s all disruption, here’s a way broker can really add value, not just XPO but other brokers, who can add a lot of value and matching together shippers with capacity. Now, this works two-ways depending on whether your portfolio is more contractual or transactional. On transactional business, which we are predominantly, it’s positive thing, on the contractual, you get caught a little bit, because you’re locked in the pricing with your shipper and now you’ve got raised pricing on the capacity side. Kevin Sterling - BB&T Capital Markets: Right. Okay. Thank you, but like you said I think it could be a long-term opportunity for you guys, as you - take good care of new customers, it’d be repeat business for you, is that fair to say?

Yes. Any time you help solve a customer’s problem in a big way, you’ve got a high likelihood that’s going to be repeat long term customer. And that’s exactly what we’re hustling to do right now, is to work with shippers who maybe a week and a half ago were keeping us on the list and giving us a load here and there But now they need us a lot more and we’re helping them and hopefully that we earned that customer’s loyalty and make him a long term customer. Kevin Sterling - BB&T Capital Markets: Right. Great. And lone last question here. You talked about 35 freight forwarding locations of those 35 what’s your goal for company-owned location versus agent locations if you see how that breakdown.

We don’t have a breakdown we do value our agents, our agents are doing great job for us in a lot of markets, they’re certain strategic markets that we made investments in that we’re growing, but there’ll be a healthy mix of both. Kevin Sterling - BB&T Capital Markets: Okay. Well that’s all I had. Thanks so much for your time this morning.

Thank you.

It’s okay.

Our next question comes from [David Tameron] from Stifel Nicolaus. Please go ahead.

Hi, good morning, gentlemen.

Good morning.

I think I caught in there that your cold-start locations to date are at an - run rate revenue about $32 million, and that’s for the seven operations that are already up and running of the additional eight?

That’s right. And the large vast majority of it coming from the first three, Phoenix was opened in the January timeframe, Ann Arbor and Dallas were in the May timeframe.

Right. How many of those seven are currently profitable?

None of them as per plan, they’re all scaling up in headcount which is part of the plan. Usually a cold-start you put in a $1 million, you can get up to $5 million to $10 million in revenue I the first year, and you turn profitable after year one. So Phoenix is certainly the furthest among, it’s been opened up the longest and it’s furthest, closet towards profitability, and just depending on how quickly we scale it up and how well things are going there. How many people you add in there, they’ll determine, exactly what month it turns profitable that’s certainly on the way.

Okay. That’s good. And then you’re on your way to exiting the year with your $500 million annual run rate. Next year you’ll set your goals and clue us on those at the end of 4Q, but just what are the - to get your understanding of where you think the company in terms of a gross revenue level, where the company turns profitable?

That all depends, that will depend on the acquisitions that we do, and if we do - we’re looking at both small then large acquisition, we’ve closed the large acquisition, in the next few months, we’d be profitable in the next few months if we do smaller acquisitions over time and stretch them out in a measured pace, like we’ve been doing, it will take longer timeframe. It will depend on the patience, speed that want to ramp up the cold-starts. The faster we ramp them up, the more investment we make in SG&A, the EBITDA comes down, that’s okay, we’re going for the big kill. We’re going forward, over 5 years to what we can maximize, the profitability of the cold-starts. But those are the factors that will go into the exact timing of profibability.

Okay. And from a long-term capital structure, perspective, obviously you have somewhat dilutive convertible debt issuance earlier in the year, have you given any guidance as to where you think your target cap structure is going to be of in 2015-2016?

Well I would respectfully disagree that it was dilutive, it was not optimal that offering, because the stock price came down during the offering and we ended up pricing the conversion price at $16.43 but nevertheless we are putting those funds to use on accretive basis, when you calculate our cost of capital even it’s $16.43, exchange ratio, as painful as that was it’s still accretive. We didn’t think it would be accretive - we would have pulled the offering. It wasn’t as accretive as we expected, but we still have accretive uses to apply that cash to.

And David in terms of our long-term capital structure, we might put some leverage on the business beyond the convert - longer term I think we’re thinking about a target of, two times EBITDA leverage when you get out into the latte years of our plan, out into ‘15 and ‘16. We wouldn’t go above that, this is a non-asset base business. Doesn’t lend itself to putting a lot of leverage on it and so that’s kind of where we’re thinking long term, we might go above that if we had a great acquisition to do, that would require us to take on a little more debt, short term, in order to do the acquisition but then we have a longer term plan of getting it back down at that two times EBITDA level, but we certainly wouldn’t want to be significantly above that on a long-term basis.

Okay. Thank you.

Thank you.

Our next question comes from Ryan Bouchard from Avondale Partners. Please go ahead.

Hey, guys good morning.

Hey, Ryan.

I was wondering if you could tell us, when those new cold-start offices were up and running? Was it early in the quarter mid or late in the quarter?

The timing on the cold-starts, the latest one was started in October, so we started up Charlotte in October, I think we gave out in last quarter the exact months, it was in August, the other three were in August. The other four, actually so you had one in Phoenix in January, you had the May timeframe were Dallas, Ann Arbor, I think we had four coming on in August.

Okay. And then on the corporate expense, in the past, you’ve given us some good guidance, is there any reason to take your assumption of the high 20s, annual rate, which includes due -diligence, any reason to take that any higher or lower in the next quarter or year?

No, think we’re going to come on exactly where we thought we would in the high 20s. Corporate expense will be a little bit higher in the fourth quarter than it was in the third, and then we go on to next year, it’s lumpy. It just depends on what acquisitions you do what kind of litigation cost, different things that get included in that, but like we said the underlying run rate is probably in the low to mid twenties and then you get ups and downs along with that.

Okay. That’s I’ve got, thank you for the time.

Thank you.

Our next question comes from Jack Atkins from Stephens, please go ahead.

Good morning, guys. Thanks for taking my questions.

Good morning, Jack. I guess first of all just to go back to the accelerated hiring that you’re doing on the cold-start front, could you maybe talk about how salaries and benefits as a percent of that revenue and brokerage should really trend in the fourth quarter? And then are you guys expecting that to be over, 100% for the next couple of quarters, given the level of hiring, you’re doing there and I guess the crux of my question is, when should you guys start to see some leverage on these new hires?

Yes. We will. The salaries and benefits are going to increase faster than net revenue as per plan. That’s because and that’s an investment we’re going to make, typical sales people become productive in roughly eight months or so. And as we scale up, that’s the investment we make in sales people.

Okay. Got you. The only thing about the [XY] business, you guys are ramping up, your owner/operator talent, you’re increasing your rate per mile for those owner/operators. Just sort of curious when you all expect to see the fundamentals of that business, excluding the impact we’ve seen in the near term from hurricane Sandy but the core fundamentals begin to improve there. And also when do you expect to see the initiatives that you’ve been doing in that segment, begin to kick in, [as business] starts to get some return for those for those investments?

Well as you said, we’ve been really focusing on adding owner/operators to our fleet and that’s really been a key area to drive growth from our business plan point of view, so we did take up the rate per mile, in march of this year. That had the intended result which was we took our owner/operator count up significantly, in fact it’s higher than it’s ever been right now. The unfortunate things we did that right as the expedite market was slowing in the third quarter, so we - we didn’t get as much revenue out of that initiative as we were hoping in terms of having more owner/operators. We really think the number of trucks in our network are really what’s going to allow us to go after more business, but it didn’t turn out with the third quarter the way it is. Now, given Sandy, we have seen an uptick in demand for expedite freight and so we’ve got a little bit more opportunity now than we did in the third quarter to take advantage of those owner-operators that we have. But that market generally is driven large degree by the manufacturing economy in the US. And if you could tell me how that’s going to trend over the next four quarters or so I could tell you, generally what the underlying momentum will be in that business.

Okay. Great. Thank you for the time.

Thank you.

And our last question comes from David Campbell from Thompson, Davis. Please go ahead.

Good morning, everybody.

Good morning, David.

Glad to hear all of your answers to your questions, it’s most of mine have been but I just wanted to get a general feel for where the gross margins in each of these divisions will be next year, compared to the third quarter. I’ve realized Sandy, the hurricane will have some impact, on the near term, on the expedited business I guess. But we don’t know, how long it will last, or the impact, well how long it’d last. But I just wanted to get some direction, I mean, in terms of gross margins. I guess it will depend on a lot of - lane density as well, I guess that’s particularly the case in the freight brokerage business. But I don’t know, maybe you could help me out a little bit?

Yeah. And we will give some idea when we go in fourth quarter and talk about direction of the business, but directionally, big picture, the Express-1 business, the expedite business, it’s a great business, and where - very needed by the customer, we provide a very important function. And we don’t think much has changed in that we are going after, longer lengths of haul to go cross border Mexico, which will have a lower margin percentage but a higher gross margin per transaction. So that’s one of the factors that will take down gross margin somewhat, that’s a great business, we can make really good profit in the cross border, Mexico is one of our target areas. On the freight brokerage, it’s going to depend on a lot of different factors, it will depend on the economy in macro, it will depend on the looseness and tightness of the market, it’ll depend on how quick we’re ramping up new business and new lanes. When we get a lane on and it’s - and we’re doing that lane for a few weeks, our margins go dramatically up as we build out the lane density and we build out the relationship with those truckers. We’ve seen our margins come up pretty significantly on those lanes, we work on them so. The percentage of business that’s coming in new lanes will play a key part in any quarter of what the gross margins is.

And David, in all of our business segments, we want to be - to borrow freights from another institution long term [greedy], we’re not short term we are long-term greedy. So when we’re doing our 2013, budgeting process right now, it’s in the context of a longer five year strategic plan, of how we build up each one of these businesses, something of very substantial and valuable, several years down the line. Now if that means sacrificing margin in the short term front for example, increasing headcount quite a bit and taking a hit to margin and profitability short term, in order to have a great pay-off long-term. No problem, we’ll do that all day long.

Okay. But I freight forwarding the gross margins would be relatively stable of the three divisions, because not so much lane density there or is it?

Well, I don’t know. I mean in the last week our margins at Express-1 were a lot better than they were two weeks ago. Because the rates we’re paying to independent fleet owners, stayed the same. And the rates we’re getting paid went up. So it does fluctuate there.

On the freight forwarding business, our company owned margins are higher than agent-owned and our company-owned are growing at faster rate so that could be one of things that come into play in mix as we look forward.

Okay. Thank you very much.

Thank you, David. Operator, is there any other questions.

We have no further questions at this time sir.

Thank you very much for participating on our call and we’ll and talk to you real soon, have a great day, bye.

Thank you, ladies and gentlemen, this concludes today’s conference. Thank you for participating you may now disconnect.