XPO First-Quarter Loss Narrows Slightly; Expeditors Profit Declines
XPO Logistics slightly reduced its first-quarter loss, excluding one-time costs, to $9.8 million, or 8 cents per share, while earnings slipped 9% to $96.6 million, or 53 cents, as airfreight and ocean forwarding results weakened.
XPO’s first-quarter 2015 loss was $9.9 million, or 13 cents, in a quarter when the brokerage, last-mile delivery and trucking company’s revenue more than quadrupled, largely from acquisitions.
XPO, of Greenwich, Connecticut, increased revenue to $3.54 billion from $703 million, reflecting the acquisitions of Con-way Inc. in October and Norbert Dentressangle in June. Combined, those companies’ annual revenue exceeded $10 billion in 2014.
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The loss including one-time costs, such as integration expenses, was $23.2 million, or 21 cents, worse than the $15.4 million, or 20 cents, in the year-earlier period.
"The addition of less-than-truckload is proving to be a major win, despite a sluggish macro environment," CEO Bradley Jacobs said in a statement, citing $58 million of operating income on an adjusted basis, compared with $37.4 million in last year’s first quarter. The LTL operating ratio improved to 92.9 on an adjusted basis and 93.6 when all costs were reflected. That 2 percentage point improvement was the only favorable year-over-year change.
XPO’s transportation business revenue reached $2.3 billion, with operating income of $75.4 million. Less-than-truckload, higher margins in brokerage and growth in last-mile delivery were credited for the results, the company statement said. Logistics revenue totaled $1.3 billion. Those results were helped by e-commerce and high-tech shipments as well as European business.
Operating income for the company was $62.4 million, compared with a $4.8 million loss in last year’s first quarter. Operating income for the company that ranks No. 14 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers includes general and administrative costs of about $45 million.
“We delivered an extremely strong quarter in both business segments,” Jacobs told TT. While noting the sluggish North American freight market, Jacobs said the company is somewhat insulated from market conditions by factors such as a large portion of revenue in contract logistics, a large presence in Europe (where market conditions are more favorable) and the ability to cross-sell products while reducing administrative costs.
The company still expects $1.25 billion of adjusted earnings before interest, taxes, depreciation and amortization after posting $249 million in the first quarter.
Expeditors, which ranks No. 5 on the Transport Topics Top 50 list of the largest North American logistics companies, reported revenue fell 15% to $1.42 billion from the first quarter of last year, when revenue reached $1.68 billion and earnings were $106.7 million, or 55 cents.
The results reflected a 3% decline in ocean freight volume and a 9% drop in airfreight business.
Net revenue, or the amount left after paying for transportation, fell nearly 30% on ocean business and almost 25% on airfreight, signaling a weaker rate environment. Net revenue from the customs brokerage business was little changed.
“We knew that comparing our 2016 results to our record year in 2015 would be challenging, especially when considering the current headwinds from slowing global trade,” CEO Jeffrey Musser said in a statement. “In Q1 2015, we delivered solutions to customers who navigated around and through issues in the U.S. West Coast ports, and Q1 2016 we worked with carriers to adjust pricing in oversupplied air and ocean markets.”
