XPO Logistics (XPO) releases preliminary 3Q results

XPO Logistics incoming CEO on earnings early read, company transition and outlook

Trucking company XPO Logistics on Monday said it expects to post third quarter revenue that would come in below analysts’ expectations.

But XPO also said it expects its earnings before interest, taxes, depreciation and amortization (EBITDA) to come in higher than the company expected.

“Our adjusted EBITDA will be in the range of $348 million and $352 million, which comes in higher than the top end of our guidance,” incoming CEO Mario Harik told CNBC on Monday. “Today’s numbers reflect that we’re heading into the spin from a position of strength.”

XPO said Monday that it expects to report $3.04 billion when it posts its quarterly earnings report Oct. 31. Analysts surveyed by Refinitiv were expecting $3.09 billion. 

The partial earnings release comes ahead of its first investor day under incoming CEO Harik, on Tuesday, and the Nov. 1 spinoff of its high-tech truck brokerage business into a new publicly traded company called RXO.

Shares of XPO have fallen 19% since the spinoff announcement in March, compared with the S&P 500 falling 12% over that span. During an interview on Squawk Box in March, XPO Chairman and former CEO Brad Jacobs said he hoped by turning the company into a pure-play trucker it would eliminate the so-called “conglomerate discount” for XPO shares.

For the truck brokerage segment that will become RXO, the company expects revenue to decrease 2% year over year and volume to increase 9%. Truck brokerage connects truckers with customers in the on-demand “spot market.” According to the latest data from Evercore ISI, those rates declined 22% year over year in October, but still remain 20% higher than October 2019, before the pandemic.

XPO, which has a market cap of about $5.6 billion, competes with FedEx Freight and Old Dominion. Its customers include Caterpillar and Tractor Supply.

XPO also issued goals for both XPO and RXO to reach by fiscal year 2027. The company sees the trucking operation delivering revenue growth at a compound annual rate of 6% to 8%, and it sees annual adjusted EBIDTA growth of 11% to 13%.

It expects the brokerage company to achieve adjusted EBITDA of $475 million to $525 million by then, with annual spending of about 1% of revenue. 

“The long-term guidance we issued shows that we expect continued strong performance for both XPO and RXO,” Harik said.

The RXO spinoff follows a previous spinoff of XPO’s contract logistics business into GXO, which began trading last year.

Read the full release here.

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