Surging Online Sales Boost XPO Logistics Results

XPO notched $439 million in adjusted earnings before interest, taxes, depreciation and amortization for the quarter, nearly the same level as last year. The company had previously said it expected to generate at least $350 million in third-quarter Ebitda.

“Our business rebounded dramatically in the third quarter,” with growth in contract logistics, last-mile delivery and other segments, XPO Chief Executive Brad Jacobs said in a statement. “Supply chain outsourcing is accelerating, and e-commerce continues to be a huge tailwind for us.”

Analyst Jack Atkins at investment bank Stephens Inc. called the results ahead of estimates “impressive” but said in a Thursday research note that several of XPO’s competitors had seen stronger operating and net profits in an improving freight economy in the third quarter.

Transportation and warehousing demand is rising as U.S. businesses reopen after lockdowns early in the pandemic. Surging online sales are straining logistics and delivery networks as homebound consumers fill digital shopping carts.

XPO’s logistics business generated $1.58 billion in quarterly revenue, up 4.6% from the same period in 2019. Strong demand from e-commerce and other consumer-related customers drove growth, which the company said was partly offset by costs tied to the pandemic and XPO’s exit “from certain low-margin business.”

Transport and logistics operators are also benefiting from the rush by retailers to restock ahead of a high-stakes holiday selling season as companies seek to recover some of the business lost early in the pandemic. Tight trucking capacity is driving up shipping rates and pushing some loads into the less-than-truckload market, where carriers including XPO consolidate loads from multiple customers onto a single truck.

Last week Old Dominion Freight Line Inc., a Thomasville, N.C., trucking company that competes with XPO for less-than-truckload business, reported a 23% year-over-year jump in net profit to $201.9 million in the third quarter. Adam Satterfield, the carrier’s chief financial officer, in an investor conference call Oct. 27 pegged the growth in part to “the e-commerce trends that are pushing more retail-related freight into the system.”

XPO expects adjusted Ebitda of $400 million to $410 million in the fourth quarter, and roughly $1.35 billion for the full year.

Write to Jennifer Smith at [email protected]