XPO Raises Profit Targets, Reports Loss, Revenue Growth
XPO Logistics Inc. set new, higher profit targets and reported a wider net loss in the third quarter as the buyer of Con-way Inc. continued to show revenue growth from multiple acquisitions.
XPO raised its forecast for earnings before interest, taxes, depreciation and amortization to $1.25 billion next year from $1.1 billion, and set a $1.7 billion EBITDA target for 2018 after integration of the $3 billion purchase of Con-way.
XPO purchased Con-way, No. 4 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, four months after buying French firm Norbert Dentressangle, another trucking and logistics company, for $3.53 billion.
The net loss widened to $35.4 million, or 36 cents, excluding one-time costs. In the 2014 quarter, XPO lost $11.6 million, or 23 cents.
Revenue more than tripled to $2.36 billion, including Norbert Dentressangle and 2015 acquisitions other than Con-way.
CEO Brad Jacobs told TT “we see the business growing across the board” after a third quarter when EBITDA was $166 million, or $25 million above analysts’ estimate.
For the quarter, XPO posted $44.3 million of operating income, which excludes taxes and interest, improving from a $13.6 million loss in the 2014 period.
Third quarter results were stronger in every unit, he said, with the exception of intermodal that was “not shining.”
Jacobs also said “I am even more excited about the Con-way acquisition than I was before” as XPO announced the appointment of Tony Brooks, a former Sysco Corp. executive, to take over at the former Con-way Freight unit Nov. 11.
Brooks has run “three of the largest fleets in North America during a career that also has included Dean Foods, Sears Holdings, Pepsico/FritoLay and Roadway Express.
“We’re in our strongest position yet to create value through optimization of our operations,” he said.
XPO has targeted $170 million to $210 million savings at Con-way and began moving toward that target in its first week of ownership by cutting $30 million in costs.
That was done by cutting 250 jobs and eliminating some duplicate costs, he said.
Asked about further job cuts, Jacobs said “We don’t have large-scale layoff plans at the moment."
The XPO executive also gave TT a preview of Con-way earnings, which haven’t yet been announced.
Tonnage dropped 3%, in line with recent quarters, while pricing rose 4% he said, sketching a “relatively or slightly soft tonnage market and a strong pricing market.”
He didn’t disclose specifics.
In addition, Jacobs said the company plans to decide whether to sell the former Con-way Truckload unit within a month after receiving multiple offers for that business.
“We see big opportunities to not only improve profits at Con-way but also to close down unprofitable locations” there and at other locations throughout the company. Centralizing of back-office functions also is a priority, he said.
