First quarter earnings results for freight transportation and logistics services provider XPO Logistics, which were released late yesterday, were largely positive.
Revenue for the quarter, at $3.54 billion, was down 0.3 percent annually, although it was up $122.6 million when excluding the first quarter 2016 revenue from its former North American truckload unit (part of its late 2015 acquisition of Con-way).
And net income attributable to common shareholders was $19.5 million, with earnings at $0.16 per share, matching Wall Street estimates, compared to a net loss of $23.2 million, or $0.21 per share a year ago.
First quarter EBITDA came in at $290 million, minus $21 million in integration and rebranding costs, which marked a 16 percent annual increase. XPO said that its full-year 2017 adjusted EBITDA target is pegged at a minimum of $1.35 billion for 2017 and a minimum of $1.575 billion for 2018.
For quarterly results by business segment, XPO saw solid gains, including:
“We are on a role with sales,” said Brad Jacobs, XPO Chairman and CEO, in an interview. “XPO signed the largest contract in our company’s history on any business line with an intermodal contract with a Fortune 50 company, and we also won a large contract to manage reverse logistics in North American for a global consumer brand. We closed a record $716 million in new business for the quarter, which is up 57 percent from $429 million a year ago, and our global sales pipeline is up to about $3 billion.”
With XPO no longer having an asset-based truckload business, Jacobs said on an “apples to apples” basis, revenue for the XPO transportation segment grew 4.4 percent annually, adding its LTL segment’s performance was “stunning,” with its aforementioned 49 percent operating income increase.
And the XPO Last-Mile group, he said, led the path on revenue growth, up 16 percent annually at $207 million, due its market-leading position for last-mile delivery of heavy goods and e-commerce strength, and the overall outsourcing trend by retailers for both last-mile and heavy goods.
Globally, XPO’s European supply chain business grew 12 percent annually, with the U.K. growing fast with e-commerce wins and XPO being the largest provider of outsourced e-fulfillment services in Europe.
“If a retailer has plans to grow online sales, we are getting calls,” Jacobs said, “and we are winning more e-commerce business in North American supply chain, including customers headquartered in Europe. We are pressing our e-commerce advantage in supply chain and last-mile.”
With e-tailers growing around 20 percent annually in many cases, Jacobs said XPO is determined to be their solutions provider and looks at itself as enabling growth for customers to help navigate the evolution from bricks and mortar to e-commerce. What’s more, he said that between 2018-2020 it is expected that more than 20 percent of heavy goods will be sold online.
When asked what is needed to keep growth for XPO at current levels moving forward, Jacobs explained that XPO is outpacing end markets globally, in part due to its leading positions, with business coming to the company.
“Globally, transportation markets are lukewarm, while contract logistics is hot,” said Jacobs. “The North American truckload market appears to be loose except for normal retail spikes for produce and some other things. Industrial freight trends have been stronger than retail, and that has been a plus for LTL volumes, not just for us but our customers, too. In Europe, transportation markets are also sluggish, although we are starting to see some bright spots in France. Contract logistics have competitive dynamics with retail customers, and they have more demanding expectations from the consumer so that is driving changes in how they manage their supply chain and retailers are outsourcing more of their logistics to specialists like us. In fact, we are opening a new contract logistics site, on average, every two weeks in North America and at a similar pace in Europe. We expect organic growth in contract logistics will accelerate in the second quarter in large part to these e-commerce trends.”