XPO Reports Q3 Revenue Jumps to $2 Billion
Bottom Line Takes $35 Million Hit Tied to Con-way Subsidiary
Key Takeaways:
- The Greenwich, Conn.-based LTL carrier reported net income of $82 million, or 68 cents a diluted share.
- Year-over-year decreases in operating income and net income reflected a $35 million charge tied to a legal matter related to a subsidiary owned by Con-way.
- “Our intense execution is resulting in record service quality and margin expansion at the trough of the cycle,” Harik said.
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XPO Inc. posted an increase in third-quarter revenue despite taking a bottom-line hit due to legal costs tied to its 2015 acquisition of less-than-truckload carrier Con-way Freight, the company announced Oct. 30.
The Greenwich, Conn.-based LTL carrier reported net income of $82 million, or 68 cents a diluted share, for the three months ending Sept. 30. That compared with $95 million, 79 cents, the previous year. Total Q3 revenue increased by 2.8% to $2.11 billion from $2.05 billion.
“We continued to exceed expectations in the third quarter, delivering adjusted [earnings before interest, taxes, depreciation and amortization] of $342 million and adjusted diluted [earnings per share] of $1.07,” CEO Mario Harik said. “Both up year-over-year in a soft freight environment.”
The company noted that operating income decreased 6.8% to $164 million from $176 million during the same time the previous year. Year-over-year decreases in operating income and net income reflected a $35 million charge tied to a legal matter related to a subsidiary owned by Con-way prior to the company being acquired in 2015.
“In North American LTL, we grew adjusted operating income by 10% to $217 million and improved our adjusted operating ratio by 150 basis points to 82.7%, significantly outperforming seasonality,” Harik said. “Additionally, we drove meaningful year-over-year and sequential improvements in yield, and our 11th consecutive quarter of sequential growth in revenue per shipment, excluding fuel. A combination of profitable share gains in the local channel and AI-driven productivity improvements generated strong margin out-performance in the quarter.”
North American LTL segment revenue for Q3 increased 0.3% to $1.26 billion from $1.25 billion during the same time last year. The earnings report highlighted how shipments per day and tonnage per day decreased year over year, but the company still managed to increase yields for the segment. Operating income increased 10.6% to $208 million from $188 million.
European Transportation segment revenue increased 6.7% to $857 million from $803 million last year. The segment posted an operating loss $2 million, compared with operating income of $6 million last year.
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“Our intense execution is resulting in record service quality and margin expansion at the trough of the cycle,” Harik said. “We’re in the early innings of realizing our long-term margin opportunity, and we expect performance to accelerate as our strategy continues to gain traction.”
XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 35 on the TT Top 50 list of the largest global freight companies.
