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XPO’s Q1 results beat estimates; new brokerage head named

EPS comes in well above projections; revenue hits quarterly record

XPO Logistics Inc. late Monday reported first-quarter results that exceeded Wall Street expectations and named Drew Wilkerson, currently president of XPO’s North American Transportation business, to become CEO of its brokerage services operation when it is spun off later this year.

Wilkerson joined XPO in 2012 to manage the company’s main brokerage hub in Charlotte, North Carolina. He was named president of North American Transportation in 2020.

XPO (NYSE: XPO) reported adjusted diluted earnings per share from continuing operations of $1.25, well above the 93 to 94 cents a share median estimates from various sites. Adjusted earnings before interest, taxes, depreciation and amortization, a measure favored by XPO, rose to $321 million from $279 million. Operating income nearly quintupled to $625 million.

Revenue rose to a record $3.47 billion from $2.99 billion, XPO said. The two data points do not include the first-quarter 2021 contributions of XPO’s former logistics business, which was spun off last summer to form GXO Logistics Inc. (NYSE: GXO)

The brokerage and other services operation, which also includes last mile, managed transportation and global freight forwarding, reported $2.43 billion in revenue, up from $2.07 billion in the year-earlier quarter. Operating income rose to $100 million from $64 million. The truck brokerage business, which has been firing on all cylinders for months, posted a 38% increase in revenue on a 23% increase in loads. The unit’s margin, which is revenue minus the cost of transportation and services, increased 21% to $134 million.

The North American LTL unit generated $1.1 billion in revenue, up from $862 million in the 2021 quarter. The revenue gains were due to a 9% year-over-year increase in yields excluding fuel, XPO said. Operating income fell $13 million to $132 million, while the adjusted operating ratio, defined as the ratio of revenues versus expenses, came in at 85.7%.

In February, XPO predicted that first-quarter LTL operating ratio would fall to 86.3% and drop to the low 80s in the second quarter as more traffic fills the trucks and operating efficiency efforts gain traction. At the time, XPO guided to an 83.3% operating ratio for the segment, which would be considered a positive outcome in light of its current performance. 

XPO shares, which fell more than 5% in the regular Monday trading session, rose more than 2% in early after-hours trading. The share price has dropped significantly from more than $78 a share at the end of March.

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The FREIGHTWAVES TOP 500 For-Hire Carriers list includes XPO Logistics (No. 8).

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.