XPO Logistics (XPO) releases preliminary 3Q outcomes

The XPO Logistics Inc. logo on a truck leaving the company’s distribution center in Barcelona, ​​Spain on Thursday, May 12, 2022.

Angel Garcia | Bloomberg | Getty Images

carrier XPO logistics on Monday said it expects third-quarter sales to 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 had anticipated.

“Our Adjusted EBITDA will be in the range of $348 million to $352 million, which is above the high end of our guidance,” new CEO Mario Harik told CNBC on Monday. “Today’s numbers reflect that we’re going into spin from a position of strength.”

XPO announced Monday that it is expected to report $3.04 billion when it releases its quarterly earnings report on Oct. 31. Analysts polled by Refinitiv had expected $3.09 billion.

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

Shares of XPO have fallen 19% since the spin-off announcement in March, compared to the S&P 500’s 12% decline over that timeframe. During an interview on Squawk Box in March, Brad Jacobs, XPO’s chairman and former CEO, said he hopes that by transforming the company into a pure-play trucker, the so-called “conglomerate discount” on XPO stock would be eliminated.

For the truck brokerage segment, which will become RXO, the company expects revenue to fall 2% year over year and volume to rise 9%. Truck Brokerage connects truckers with customers in the on-demand spot market. According to the latest data from Evercore ISI, these rates were down 22% year over year in October, but still remain 20% higher than in pre-pandemic October 2019.

XPO, which has a market cap of about $5.6 billion, competes with FedEx freight and Old rule. His customers include Caterpillar and tractor supply.

XPO has also issued targets for XPO and RXO to be achieved by fiscal year 2027. The company expects the trucking operation to generate revenue growth averaging 6% to 8% per year, and it sees annualized adjusted EBIDTA growth of 11% to 13%. .

The brokerage firm is expected to post Adjusted EBITDA of $475 million to $525 million by then, with annualized expenses at about 1% of revenue.

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

The spin-off of RXO follows an earlier spin-off of XPO’s contract logistics business GXOwhich started trading last year.

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