XPO Logistics Reports 3Q Profit, Reversing Last Year's Losses
XPO Logistics reported a profit in the third quarter compared with a loss last year, another sign that the company has rebounded from the losses it suffered from since 2013.
XPO reported $13.8 million in net income, or 11 cents per share. One year ago, it reported a $93.1 million loss, or 94 cents. Revenue increased 57% to $3.7 billion from $2.4 billion year-over-year.
"This was a phenomenal quarter," XPO Logistics CEO Brad Jacobs told Transport Topics. "We reported record third-quarter results for net income. We reported record third-quarter results for cash flows from operations."
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Net revenue, or the amount left over after purchased transportation, was up at all divisions.
The Greenwich, Connecticut-based company reported $2.4 billion in revenue from its transportation division, a 73% increase from the same period in 2015, although most of the improvement came from the acquisition of Con-way on Oct. 30, 2015, after the third quarter ended. The former Con-way Freight less-than-truckload unit generated $355 million in revenues after fuel surcharges were removed. Last-mile revenue, excluding fuel surcharges, rose 16% to $64.8 million, which Jacobs credits to the company's position on e-commerce in North America.
"Con-way has definitely been a home run, there's no doubt about it, but it's not the only thing that's going well in the company," Jacobs said. "We are the leader of e-fulfillment in Europe, and that is helping us grow. We're the leader in food and beverage in the U.K. We have a big auto presence in Europe that's showing nice growth."
However, the freight brokerage division reported revenue down 16% to $88.7 million, in part, due to the weak intermodal market and tighter margins between what XPO would get to arrange freight transportation and what it pays the truck carrier.
"Revenue per load was down 9% in our brokerage division. Margins were actually down 240 basis [or 2.4%], and that's strictly due to the lower rates and lower fuel revenue," Jacobs said. "The margins bottomed out in July and improved sequentially, although they haven't gotten back to where they were last year."
XPO's logistics unit generated $1.3 billion in revenue, or a 36% increase from the same period in 2015. Earnings before interest, taxes, depreciation and amortization in the logistics segment was $75.3 million, up from $36 million a year ago.
The less-than-truckload unit within XPO Logistics reported average weight per shipment decreased 0.2% to 1,322 pounds. Shipments per day went down 5.3% to 72,439, but gross revenue per 100 pounds of freight, excluding the fuel surcharge, rose to $17.40 from $16.65.
XPO’s overall operating ratio improved from 98.1 to 95.4 year-over-year.
The company fell 14 cents short of the consensus forecast from analysts, according to a survey by Bloomberg News. However, XPO posted adjusted earnings, and those were 3 cents higher than the forecasts.
XPO Logistics ranks No. 3 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers.
