Charles J. Laurent
Trucking giant XPO (ticker: XPO) has reported better-than-expected third-quarter numbers, despite a weak economy. The company's adjusted earnings per share stood at 88 cents from sales of $2 billion. This surpasses Wall Street's expectations of a profit of 64 cents on sales of $1.9 billion, according to FactSet. It is worth noting that XPO had reported earnings of 95 cents per share from sales of $1.9 billion in the same period last year.
In response to XPO's positive earnings report, the company's stock saw an early surge on Monday. It rose by 3.3% to $69.54 during premarket trading, while S&P 500 and Dow Jones Industrial Average futures also experienced increases of 0.6% and 0.5% respectively.
XPO's stock performance over the past 12 months has been remarkable, with a staggering increase of 119%. This substantial growth far outpaces the S&P 500's gain of approximately 6%, while the Dow Jones Industrial Average has actually experienced a slight decline of about 1%.
CEO Mario Harik expressed his satisfaction with the company's strong financial performance, stating, "Our third-quarter results exceeded expectations, with solid growth in revenue and profitability, and strong forward momentum." He further highlighted the growth in revenue, which saw a year-over-year increase of 2%, as well as the growth in adjusted Ebitda (earnings before interest, taxes, depreciation, and amortization), which increased by 6%. Furthermore, XPO achieved a 0.5 percentage points expansion in adjusted Ebitda margin.
XPO reported third-quarter Ebitda of $278 million, compared to $262 million reported in the same period last year. This positive performance surpassed Wall Street's expectation of $244 million.
In conclusion, XPO's third-quarter numbers exhibit a robust financial performance and demonstrate the company's resilience in a challenging economic climate.
The company's less-than-truckload (LTL) business played a major role in driving its year-over-year growth. Shipments per day saw a significant increase of 7.8%, while tonnage per day rose by 3.1%. Pricing, excluding the impact of fuel, also experienced a considerable rise of 6.8%.
Within the logistics industry, LTL refers to shorter-haul trucking primarily aimed at industrial customers. This type of shipping involves transporting goods that do not require a full truckload. On the other hand, TL shipping involves fully loaded trucks carrying mainly consumer items over long distances.
The bankruptcy and subsequent liquidation of Yellow, one of the largest LTL players in the United States, has provided a favorable situation for the LTL business sector. This development has helped counterbalance the overall economic weakness. In the third quarter, Old Dominion Freight Line (ODFL), a leading player in the LTL industry, reported earnings per share of $3.09, exceeding Wall Street's expectations of $2.92. Year over year, pricing excluding fuel impacts spiked by 8.9%.
While Yellow's downfall has been advantageous, it's important to note that a thriving economy would have an even greater positive impact. Unfortunately, the U.S. industrial economy has witnessed 11 consecutive months of contraction.
For further insights into the company's performance and possible signs indicating an upturn in the industrial economy, XPO management will be hosting a conference call at 8:30 a.m. Eastern time.
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