XPO Logistics increased its net income attributable to common shareholders more than 240 percent year-over-year in the first quarter of 2018 to $66.9 million, according to the company’s most recent financial statements.
The Greenwich, Conn.-based global company provides freight brokerage, less-than-truckload, last-mile, global forwarding, expedited, drayage, intermodal and managed transportation services. XPO spent the first several years after its founding creating a vast logistics network — and shareholder value — by acquiring other companies, meaning 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.
For the first quarter of 2018, XPO posted diluted earnings per share of $0.50, beating the Thomson Reuters I/B/E/S estimate by $0.01 per share and up significantly from $0.16 per diluted share in Q1 2017.
Revenues jumped 18.4 percent year-over-year to $4.19 billion, beating expectations by $270 million.
XPO Chairman and Chief Executive Officer Bradley Jacobs attributed the strong first-quarter results to a “healthy” diversification of customer verticals and service lines, continued growth in e-commerce demand and a record $972 million in new business secured in the first quarter.
During the first quarter, the company also introduced a new cloud-based, mobile warehouse management platform, and launched a shared-space distribution model for omnichannel retail and e-commerce customers dubbed XPO Direct.
It wasn’t all sunshine and rainbows for XPO, however, as the company in February was hit with a class-action lawsuit that claims the firm’s port drayage arm is misclassifying truck drivers as independent contractors. The lawsuit is the latest in a long list of complaints against transportation and logistics service providers alleging that companies have been misclassifying drivers as contractors instead of employees in order to avoid paying additional wages and benefits.
XPO’s transportation segment saw its first-quarter operating income surge 32 percent to $139.0 million on revenues that climbed 16 percent to $2.77 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 Europe and favorable foreign exchange rates.
Operating income in the company’s logistics segment stood at $47.5 million, a 44.4 percent jump from the first quarter of 2017, as revenues rose 23.2 percent to $1.45 billion. XPO attributed the growth primarily to strong global demand for e-commerce contract logistics, as well as gains from the industrial sector in North America and the fashion sector in Europe, particularly in the United Kingdom, Netherlands, Spain and Italy.
Corporate operating expenses, however, increased 32.3 percent year-over-year to $45.5 million for the quarter due in large part to an increase in share-based compensation expenses related to rising XPO share prices.
“We’re off to a strong start in 2018. We delivered record first-quarter results for revenue, net income, EPS and adjusted EBITDA,” said Jacobs. “Our 11 percent organic revenue growth reflected a healthy diversification of customer verticals and service lines. Organic growth in last mile was 15 percent, and logistics was 14 percent, both driven by e-commerce demand.
“We’re making disciplined investments in innovation and sales to propel long-term growth,” he added. “We recently introduced our digital freight marketplace, smart warehouse platform and voice integration for consumer self-service. In April, we announced XPO Direct, a shared-space distribution network of warehouses and last-mile hubs that gives customers flexible capacity.”
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.
“We remain on track to deliver at least $1.6 billion of adjusted EBITDA and approximately $625 million of free cash flow this year,” said Jacobs.
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.