XPO Logistics, Inc.’s (NYSE: XPO) financial performance rebounded in the third quarter, with adjusted diluted earnings per share coming in at 84 cents, down from $1.18 a share in the 2019 quarter but well above the 38 cents per share median forecast of analysts polled on Barchart.
The Greenwich, Connecticut-based transportation and logistics provider reported revenue of $4.22 billion in the third quarter, slightly higher than the year-earlier period and exceeding Wall Street top-line estimates by 9.4%. Revenue for its transportation segment reported revenue of $2.68 billion, unchanged from a year ago. Revenue for its logistics segment increased slightly to $1.58 billion from $1.51 billion.
Adjusted net income came in at $86 million, down from $121 million in the 2019 quarter. Operating income was $223 million, down from $229 million. Third-quarter EPS results were impacted by a 25 cent a share charge due to a higher income tax rate and a 7 cent per share charge due to higher interest expenses, the company said. Free cash flow came in at $247 million.
XPO posted earnings before interest, taxes, depreciation and amortization (EBITDA) of $439 million, beating estimates by $87 million, the company said. The results marked the best quarterly EBITDA performance in the company’s history.
“Our business rebounded dramatically in the third quarter,” XPO Chairman and CEO Brad Jacobs said. “Revenue, adjusted EBITDA, adjusted EPS and free cash flow were decisively higher than expected. Our growth was broad-based, spanning our service offerings and geographies.”
Jacobs said the company’s results continue to be propelled by strong e-commerce demand, which benefitted its last-mile and contract logistics operations.
XPO posted subpar second-quarter results as demand other than for last-mile deliveries was impacted by the lockdowns caused by the COVID-19 pandemic, and the company recorded significant costs to comply with continued safety and health directives. XPO incurred $9 million in COVID-related costs in the third quarter.
XPO’s North American less-than-truckload (LTL) business posted an operating ratio — the ratio of revenues over expenses — of 79.7%. This means XPO captured $1 of revenue for each 79 cents spent. That is the best operating ratio of any quarter in XPO’s history, which goes back before the company entered the LTL business in September 2015 after acquiring Con-way Inc. for $3 billion.
Third-quarter truck brokerage revenue rose 27% year-over-year, while last-mile revenue increased 11%, the company said. Brokerage net revenue per load rose 13% year-over-year, XPO said.
The company guided to adjusted EBITDA of $400 million to $410 million in the fourth quarter and about $1.35 billion for the year.
XPO broke with tradition and released its results during the trading day instead of after the market closed. Shares closed at $98.57 a share, up nearly 4%.