XPO Logistics is still digesting several recent acquisitions, resulting in short-term transaction costs that belie its underlying operating performance, according to CEO Bradley Jacobs.
XPO Logistics lost $9.3 million in the first quarter of 2016 as it continued to face one-time expenses associated with a spate of recent acquisitions, the third-party logistics provider announced Tuesday. The loss was down from $23 million last quarter and $9.9 million in the first quarter of 2015.
The company’s adjusted net loss excludes $16.8 million in after-tax transaction-related costs.
XPO’s acquisitions of Con-way Inc., Norbert Dentressangle and others helped raise its net revenues 510 percent to $1.6 billion and gross revenues to $3.5 billion, with organic revenue growth of 12 percent compared to 8.4 percent in the fourth quarter of 2015.
EBITDA improved to $249.3 million, compared with $29.2 million for the same period in 2015, with increases in truck brokerage profits leading the way.
XPO CEO Bradley Jacobs said that the addition of Con-way’s less-than-truckload business last fall is proving to be a success, despite the sluggish economy.
“We generated $58 million of adjusted operating income from LTL, up 54 percent from last year’s first quarter, pre-acquisition,” he said. “We’re running LTL as a more efficient organization, with a $90 million run rate of profit improvement already in hand. This puts us well on the way to achieving our target of improving annual profit by $170 million to $210 million by late next year.
“Most important, we’re delivering record results for shippers,” added Jacobs. “We’re improving on service levels that were already among the highest in the industry, including on-time performance and damage-free freight.”
Comparing XPO’s earnings remains a challenge because recent comparable periods included acquisitions. For example, fourth-quarter 2016 results only include two months of Con-way contributions. Over time, analysts expect it will become easier to determine whether the company is actually generating growth through its operating performance.
Nonetheless, XPO is hitting its targets despite the deterioration in the freight economy, according to investment bank Stifel. And it is improving LTL service at the same time it is removing costs from the operation.
XPO takes another loss, but grows pre-tax income in Q1 2016
