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XPO ends an era with strong Q2 results

Revenue and EBITDA set records in the company’s last quarter as a combined entity

XPO posts strong results in last reporting quarter as a combined company Photo: Jim Allen/FreightWaves

XPO Logistics Inc. has ended a remarkable 10-year run with a bang.

In its last reporting quarter as a consolidated entity, the Greenwich, Connecticut-based transport and logistics concern (NYSE:XPO) reported second-quarter revenue of $5.04 billion, a quarterly record. Earnings before interest, taxes, depreciation and amortization hit $507 million, nearly tripling the levels of the second quarter of 2020.

Adjusted diluted earnings per share hit $1.86, 15 to 18 cents higher than the median range estimated by analysts polled on various platforms.

The year-over-year results were like night and day due to the COVID-19 pandemic’s second-quarter 2020 toll on industrial activity that is the bulwark of LTL carriers like XPO. The company reported operating income of $246 million compared with a $141 million operating loss in the 2020 quarter. Net income swung to a $156 million profit from a $132 million loss. XPO reported a 32-cents-per-share loss, on an adjusted and diluted basis, in the 2020 second quarter.

On Monday, XPO’s logistics business, which has been spun off as GXO Logistics Inc. (NYSE:GXO), begins trading on the New York Stock Exchange. XPO’s board approved the spinoff earlier this month. From a relatively modest brokerage operation founded in 2011 by Brad Jacobs, XPO grew into a multibillion-dollar behemoth on the back of 17 acquisitions, and subsequent integrations, over a four-year period. The strategy and execution was unprecedented for an industry whose companies have historically struggled to integrate just one or two acquisitions.

XPOs last acquisition was in September 2015 when it purchased Con-way Inc., which ran an LTL and contract logistics operation, among others, for $3 billion. Both businesses became pivotal to XPOs success and the future of the enterprise.

The company’s transportation segment generated revenue of $3.2 billion in the second quarter, up more than $1 billion from 2020 levels. Operating results swung to a $255 million profit from a $15 million loss. Adjusted EBITDA nearly tripled to $391 million. The unit’s LTL business broke the $1 billion quarterly revenue barrier for the first time and posted an adjusted operating ratio of 81.1%, excluding gains on sales of real estate. The unit’s truck brokerage reported a 38% year-on-year increase in loads, a 101% increase in gross revenue, and a 47% increase in net revenue, which is gross revenue minus the cost of purchased transportation.

The logistics business posted revenue of $1.88 billion, compared with $1.4 billion in the 2020 quarter. Operating results swung to a $71 million gain from a $43 million loss. Adjusted EBITDA more than doubled to $169 million, as the company posted high revenue from contract wins and experienced lower COVID-19-related costs in the quarter.

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Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.