XPO Logistics Earns $42.6 Million, First-Ever Profit
XPO Logistics Inc. posted its first-ever profit, earning $42.6 million, or 35 cents per share, as results improved in the less-than-truckload and last-mile services as well as European logistics activity.
Revenue more than tripled to $3.7 billion. The year-earlier period loss was $75.1 million, or 89 cents.
“From a profitability standpoint, North American LTL was clearly the star,” CEO Bradley Jacobs told Transport Topics, contributing $115.5 million in operating income, which excludes interest and taxes, a 66% increase. That profitability represents more than 70% of the transportation’s unit earnings. LTL was less than 40% of total transportation revenue of $2.4 billion.
The LTL operating ratio improved 5.7 percentage points to 86.7, the best mark in a decade, helped by stronger pricing and cost reductions. Tonnage fell 7%, largely because of a move to shed unprofitable freight.
“We are clearly at a positive infection point,” Jacobs said.
XPO, based in Greenwich, Connecticut, also reported it was raising its 2016 target for adjusted earnings before interest, taxes, depreciation and amortization to at least $1.265 billion from $1.25 billion.
XPO, which ranks No. 3 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, reported it would have earned $7.8 million more if transaction, rebranding and foreign exchange adjustments were excluded.
Jacobs also said more than $300 million in potential profit improvements, including an additional $60 million to $100 million in LTL, were internal to the company and not dependent on economic conditions.
Logistics revenue reached $1.3 billion. Operating income in that sector was $106.9 million, about triple the prior-year period. E-commerce and high-technology business aided logistics results.
Jacobs said European transportation volume was good, pricing was flat and businesses benefited from cost reductions.
European supply chain results were buoyed by strong e-commerce as well as food and beverage business.
Contract logistics results in North America improved due to improved productivity and cost reductions, Jacobs said.
The truck brokerage business was a tough market, he added.
The truckload unit’s results also improved despite a 2.7% drop in rates per mile and little-changed volumes.
“We are getting operating leverage now,” Jacobs said, after upfront investments in technology and new business startups. “There is more cash flowing through. This was the plan all along.”
