XPO Logistics Inc., riding a wave of strong demand, reported on Tuesday $3.27 billion in third-quarter revenue, the highest top-line number for any quarter in the company’s 10-year history.
Greenwich, Connecticut-based XPO (NYSE: XPO) said it plans to expand its LTL trailer production with the goal of doubling trailer capacity next year. The company wilI also add 900 doors to its nationwide LTL count over the next one to two years and will impose accessorial charges for detained trailers, oversized freight and shipments that require special handling. XPO said it will impose “selective embargoes” on some LTL traffic to improve network fluidity.
In its first earnings report as a reconstituted company, XPO posted 94 cents in adjusted diluted earnings per share from continuing operations. Operating income was $112 million, compared with $138 million in the year-earlier quarter. Income from continuing operations came in at $21 million, compared with $37 million in the 2020 quarter.
Last year at this time, XPO operated a large logistics operation. That business, now known as GXO Logistics Inc. (NYSE: GXO), was spun off in August as a stand-alone entity. The company said in its earnings release that its 2021 pro forma financial targets were calculated as if the spinoff took place last Jan. 1.
Adjusted earnings before interest, taxes, depreciation and amortization rose in the quarter to $307 million from $268 million last year. XPO also adjusted higher its full-year midpoint for EBITDA by $16 million to $1.23 billion.
XPO’s LTL segment posted $1.07 billion in revenue compared with $933 million in the 2020 period. Operating income declined to $149 million from $170 million as the company bore the brunt of a decision to continue insourcing its purchased transportation in the midst of driver and equipment shortages. The move also impacted the segment’s operating ratio, which is the ratio of revenues to expenses. The third-quarter ratio came in at an adjusted 83.9%. Its second-quarter ratio was 81.1%. Third-quarter adjusted EBITDA dropped to $222 million from $238 million. XPO Chairman and CEO Brad Jacobs called the LTL results “mixed.”
XPO’s other segment, comprising brokerage and its other non-LTL services, posted $2.26 billion in revenue, up from $1.78 billion in the 2020 quarter. Operating income nearly doubled to $58 million. Adjusted EBITDA rose $41 million to $131 million. Daily load count jumped 37%, with the company’s top 20 customers raising their aggregate volume with XPO by 45%. Gross and net revenue — the latter calculated after the cost of transportation — both rose 62% year-over-year, XPO said. Jacobs said the brokerage business had a “phenomenal” quarter.
XPO shares were down nearly 4% in early after-hours trading after being down fractionally during the regular trading session.