XPO Posts Revenue Increase, Net Income Decrease in Q3

XPO said net income declined 28.2% to $84 million in the third quarter compared to a profit of $117 million in the same period a year earlier, but revenue rose 1.6% to $4.22 billion from $4.15 billion. (XPO Logistics Inc.)

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XPO Logistics Inc. saw revenue tick up and net income dip in the third quarter, and the company said business activity has bounced back from earlier downturns related to the COVID-19 pandemic.

The Greenwich, Conn.-based trucking and logistics company said Q3 net income dropped 28.2% to $84 million compared with $117 million in the same period a year earlier. Diluted earnings per share fell to 83 cents from $1.14 in the 2019 period.

XPO’s operating profit slipped 2.6% to $223 million from $229 million a year earlier. Revenue rose 1.6% to $4.22 billion from $4.15 billion in the same 2019 period.

Jacobs

“We had a remarkably good quarter. There are exciting trends in our favor, such as the growth in customer outsourcing and e-commerce, and it’s gratifying to know that our years of investments in the business, especially in technology, have put us in a strong position to support our customers through the ups and downs of the recovery,” Chairman and CEO Bradley Jacobs said in a Nov. 6 conference call with industry analysts.

Comparing Q3 to the prior quarter this year, XPO has rebounded to pre-COVID-19 pandemic levels across much of the geography it serves and in its various business lines, he said.

Jacobs said several financial metrics, including revenue, adjusted earnings per share, free cash flow and EBITDA — earnings before interest, taxes, depreciation and amortization — all came in higher than the company expected.

“Supply chain outsourcing is accelerating, and e-commerce continues to be a huge tailwind for us, particularly in contract logistics and last mile,” Jacobs said.

XPO’s last-mile revenue rose by 11% in the quarter compared with the same period a year earlier. Jacobs attributed the growth to improved utilization of the motor carrier’s North American hubs and XPO Direct network.

Truck brokerage revenue increased 27% over the same period a year earlier. That included a 13% jump in net revenue per load.

Technology is driving much of the improvement, Chief Strategy Officer Matthew Fassler said.

“Our performance was aided by XPO Connect and our other proprietary technology across brokerage. Our Drive XPO carrier app had 60,000 downloads in Q3, which was nearly double the number of Q2,” Fassler said.

Cumulative downloads of the app exceed 200,000, three times higher than the download count at this time last year, he said.

The company’s North American less-than-truckload business also is operating more efficiently, making improvements on yield, service and efficiency, he said. That translated into a Q3 operating ratio of 81.7, a record quarterly operating ratio for XPO’s less-than-truckload business, Jacobs said.

Revenue for XPO’s transportation segment came in at $2.68 billion in the quarter, level with the same period a year ago. Operating income for the transportation segment dipped 2.9% to $202 million.

The segment improved throughout Q3. Compared with the prior year, tonnage was down 6% in July, 4% in August and 2% in December, Fassler said.

“These trends in LTL reflected the ongoing strength in consumer spending, particularly e-commerce as the consumer continues to lead the U.S. economy,” Fassler said.

XPO’s logistics segment posted Q3 revenue of $1.58 billion, a 4.6% gain. The motor carrier attributed the growth to strong demand from e-commerce and other consumer-related business. But that was partially offset by COVID-19 impacts in other areas and the company scuttling a book of low-margin business. The segment’s operating income grew 26.2% to $77 million from the same period a year earlier.

The company reported corporate expenses of $56 million for the quarter compared with $40 million a year earlier. It attributed the increase to higher expenses for incentive compensation, insurance and purchased services.

XPO ended the quarter with $2 billion in cash and $1.1 billion in borrowing capacity. The company said it expects to generate EBITDA of $400 million to $410 million for the fourth quarter, and adjusted EBITDA of about $1.35 billion for the full year.

XPO ranks No. 1 on the Transport Topics Top 50 list of the largest logistics companies in North America and No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers.

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