Logo XPO Logistics Inc. on a van departing from the company’s distribution center in Barcelona, Spain, on Thursday, May 12, 2022.
Angel Garcia | Bloomberg | beautiful pictures
Road transport company XPO Logistics on Monday said it expected to post third-quarter revenue that would be below analyst expectations.
But XPO also said it expects earnings before interest, taxes, depreciation and amortization (EBITDA) to be higher than the company expected.
“Our adjusted EBITDA will be between $348 million and $352 million, well above the peaks of our guidance,” Upcoming CEO Mario Harik told CNBC on Monday. “Today’s numbers reflect that we are entering the vortex from a position of strength.”
XPO said Monday that it is expected to report $3.04 billion when it releases its quarterly earnings report on October 31. Analysts surveyed by Refinitiv had expected 3.09 billion dollars.
The partial earnings release comes ahead of the first investor day under CEO Harik, on Tuesday, and November 1 turns the high-tech truck brokerage business into a publicly traded company. The new declaration is named RXO.
Shares of XPO have fallen 19% since spinoff announcement in March, compared to the S&P 500, which fell 12% during that time period. In an interview on Squawk Box in March, XPO President and former CEO Brad Jacobs said he hoped by turning the company into a pure shipping company, it would eliminate the so-called ” group discount” for XPO shares.
For the truck brokerage segment that will become RXO, the company expects revenue to drop 2% year-on-year and output to grow 9%. Truck brokers connect truck owners with customers in the on-demand “spot market”. According to the latest data from Evercore ISI, the rate was down 22% year-on-year in October, but still 20% higher than October 2019, before the pandemic.
XPO, which has a market capitalization of about $5.6 billion, competes with FedEx Cargo and Old Dominions. Its customers include Caterpillar and Supply of tractors.
XPO also sets targets for both XPO and RXO to achieve by fiscal year 2027. The company sees trucking operations delivering revenue growth at a compound annual rate of 6% to 8% and annual adjusted EBIDTA growth from 11% to 13%. .
It expects the brokerage firm to achieve an adjusted EBITDA of $475 million to $525 million by that time, with annual spending of about 1% of revenue.
“The long-term guidance we have released shows that we expect continued strong performance for both XPO and RXO,” said Harik.
The RXO subsection follows the previous subsection of XPO’s contract logistics business on GXOstarted trading last year.
Read the full release here.
