With no acquisition and integration costs weighing down profits, XPO Logistics has delivered net income growth for nine consecutive quarters.
XPO Logistics increased its net income attributable to common shareholders nearly 189 percent year-over-year in the second quarter of 2018 to $137.5 million, according to the company’s most recent financial statements.
The Greenwich, Conn.-based global freight brokerage, trucking services and third-party logistics provider posted diluted earnings per share of $1.03 for the quarter, up significantly from $0.38 per diluted share in Q2 2017, as revenues grew 16 percent to $4.36 billion.
Because XPO spent its early years creating a vast logistics network — and shareholder value — by acquiring other companies, it didn’t officially turn a profit until the second quarter of 2016. Since then, however, XPO’s profits have grown exponentially as acquisition and integration costs subsided and synergies with purchased companies were achieved, with net income rising in each of the last nine consecutive quarters on a year-over-year basis.
XPO Chairman and Chief Executive Officer Bradley Jacobs said the record results were driven primarily by continued growth in e-commerce demand and a combined $2.1 billion in new business secured during the first two quarters.
“Our strong second-quarter performance was highlighted by record results for revenue, net income, adjusted EBITDA, cash flow from operations and free cash flow,” he said. “We grew profitability faster than revenue, with a 178 percent increase in net income and an 18 percent increase in adjusted EBITDA on organic revenue growth of 11 percent.”
XPO’s transportation segment saw its first-quarter operating income climb 24.5 percent to $205.4 million on revenues that grew 14.5 percent to $2.89 billion compared with the same quarter a year ago, led by increases in freight brokerage and last mile in North America, as well as dedicated truckload transportation in the United Kingdom and France.
Operating income and revenues in the company’s logistics segment stood at $67.3 million and $1.51 billion, respectively, year-over-year increases of 36.2 percent and 19.1 percent. XPO attributed the earnings growth primarily to increased revenue and site productivity, which was offset in part by higher operating costs related to a record 19 new quarterly contract startups in North America and 18 in Europe.
Corporate operating expenses increased 13.7 percent year-over-year to $44.7 million for the quarter due in large part to an increase in share-based compensation expenses related to rising XPO share prices.
The company’s stock also has more than tripled in value from $27.55 at the end of 2015 to $99.95 at close of trading on Wednesday.
“In logistics, we implemented a record 37 customer start-ups in three months — and once again, the big driver was e-commerce,” said Jacobs. “In transportation, we increased freight brokerage net revenue by 46 percent with a lower headcount. North American Last Mile and European Transport were also standouts. In our North American less-than-truckload business, we achieved the best adjusted operating ratio in 30 years at 84.3 percent.
“We have innovations under way in every corner of the company,” he added. “They include the ramp-up of our XPO Direct distribution network, the build-out of our digital freight marketplace, the expansion of our Last Mile footprint and the deployment of dynamic analytics for workforce planning. These are secular growth drivers that create sustainable value for our customers and shareholders.”
For the first six months of the year, XPO reported net income attributable to common shareholders of $204.4 million ($1.53 per diluted share) on $8.56 billion in revenues, year-over-year increases of 204.6 percent and 17.2 percent, respectively.
Looking ahead to the remainder of 2018, XPO reaffirmed its full-year target for adjusted earnings before interest, taxes, depreciation and amortization of at least $1.6 billion, up from $1.37 billion in 2017, and its 2017-18 cumulative free cash flow target of approximately $1 billion.
XPO in 2017 reported $312.4 million in earnings, a sharp increase from $63.1 million the previous year, as revenues increased 5.2 percent to $15.38 billion.
XPO nearly triples Q2 earnings
