E-commerce helped XPO Logistics record a 16% year-on-year revenue rise to $4.36bn in 2018’s second quarter, as the acquisitive US giant also gained $2.1bn of new business in the first six months of this year.
Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) increased to $436.7m for the second quarter, excluding integration and rebranding costs of $7.8m. This compared with $370.8m of adjusted EBITDA for the same period in 2017.
The company’s logistics segment generated revenue of $1.51bn for the quarter, a 19.1% increase on 2017.
The company said that segment revenue growth was led by “growing demand for e-commerce logistics globally, as well as by the consumer packaged goods and technology sectors” in North America and the fashion sector in Europe. A revenue benefit of 4.7% came from favorable foreign exchange rates.
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “Our strong second quarter performance was highlighted by record results for revenue, net income, adjusted EBITDA, cash flow from operations and free cash flow. We grew profitability faster than revenue, with a 178% increase in net income and an 18% increase in adjusted EBITDA on organic revenue growth of 11%.
“In logistics, we implemented a record 37 customer start-ups in three months – and once again, the big driver was e-commerce. In transportation, we increased freight brokerage net revenue by 46% 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%.”
Operating income for the logistics segment increased to $67.3m, compared with $49.4m for the same period in 2017. Adjusted EBITDA for the segment improved to $134m, an increase of 20.6% from a year ago.
The increases in operating income and adjusted EBITDA in logistics were primarily were due to revenue growth and site productivity improvements, partially offset by higher direct operating costs related to a record number of quarterly contract startups: 19 in North America and 18 in Europe.
Jacobs continued: “Our expanded sales force signed $2.1bn of new business this year through June. We have innovations underway in every corner of the company. 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.”
The company reaffirmed its full year 2018 target for adjusted EBITDA of at least $1.6bn, and 2017-2018 target for cumulative free cash flow of approximately $1bn.
XPO Logistics also announced that John Hardig will step down as chief financial officer (CFO) on August 15, 2018, to spend more time with his family.
Hardig, has served as XPO’s first CFO since February 2012 will remain available to the company in an advisory capacity through September 15, 2018. Sarah Glickman, senior vice president, corporate finance, will assume the role of acting chief financial officer.
Jacobs said, “I’m immensely grateful to John for helping us grow XPO into a $15bn company over the last six-and-a-half years. John’s legacy at XPO is one of integrity and accomplishment. We wish him the very best.”