XPO posts record Q1 2022 earnings results

Another quarterly earnings announcement brought another new company record, for Greenwich, Conn.-based truckload and less-than-truckload (LTL) services provider XPO Logistics in its fourth quarter earnings, which were issued this today.

Quarterly revenue—at $3.47 billion—increased 16% annually an 41% compared to the first quarter of 2020, representing the fifth straight quarter XPO’s revenue has set a new record. EBITDA—at $321 million—also set a new record, while posting a 15% annual gain (full-year 2022 EBITDA guidance issued by XPO now stands at $1.35 billion-to-$1.39 billion), and adjusted earnings per share—at $1.25—marked the highest for any first quarter in company history, topping Wall Street estimates, at $0.93. Operating income—at $625 million—was up 22%. XPO said that quarterly revenue included the recent sale of its intermodal business to STG Logistics.

Quarterly XPO Logistics performance metrics:

• Brokerage and other services revenue, at $2.432 billion, was up 38% annually, with XPO pointing to the gain being driven by a significant increase in North American truck brokerage loads, facilitated by its XPO Connect digital platform and also strength in other truck brokerage services; and
• North American less-than-truckload (LTL) revenue, at $1.1 billion, was up 15% annually, with XPO saying that the gain represented an increase in yield, while operating income, at $132 million, off 9%, and yield, excluding fuel, saw a 9% increase

“We delivered a record first quarter, with significant beats across revenue, net income, adjusted EBITDA and adjusted EPS,” said Brad Jacobs, chairman and chief executive officer of XPO Logistics, in a statement. “We’re executing on multiple avenues for value creation—the spin-off of our tech-enabled brokered services platform, the sale or listing of our European business, our continued deleveraging, and company-specific initiatives for the ongoing transformation of our North American LTL business.

Jacobs said XPO been investing in making its LTL network larger and more efficient, with more to follow, adding that service levels have markedly improved,

On the truck brokerage side, he said that it gained share with an annual load growth of 23%.

“Shippers increasingly want cutting-edge brokerage automation, and our XPO Connect platform gives them access to more than one and a half million carrier trucks,” he said. “We’re creating or covering 74% of our brokerage loads digitally on the platform, up four percentage points from the fourth quarter.”

XPO’s Chief Investor Relations Officer Tavio Headley said in an interview that XPO again beat quarterly expectations and issued very strong guidance, and also raised guidance, when accounting for the sakes of its intermodal business.

“We outperformed again in truck brokerage, and we are ahead of plan—or ahead of where we expected it to be—on the LTL side,” he said. “We also made significant progress, in terms of the leveraging of the balance sheet. And we saw an acceleration in organic growth in every business unit. Our $321 million in EBITDA was ahead of our guided range of $280 million-to-$285 million, so that is a very solid beat, with EBITDA up 15% year-over-year.”   

Addressing the LTL landscape, Headley described the current pricing environment as still extremely robust, calling it a great backdrop for the quarter. While LTL tonnage was down less than 1%, it came in at a more favorable end of the range, which was a low single-digit decline but was up 4% sequentially, better than typical seasonality.

“When you look at the business, typical seasonality is usually flattish, in looking at the business,” he said. “On the operating ratio side, excluding real estate, we came in at 85.7, a year-over-year degradation of 140 basis points. We came better than our guidance. We had guided to 200 basis points on our fourth quarter earnings call earlier this year. And we are committed to quality growth and improving our operating ratio. Network fluidity in the business has greatly improved over the past six months, and customer satisfaction in April was at its highest level it has been in years. On-time service performance was more than 1,000 points higher from the fourth quarter to the first quarter.

And XPO is making strong strides on the capacity side, with Headley saying it is well ahead of its plan to add 900 net new dock doors by the end of 2023, having already added 345 net new doors.

Looking at truckload brokerage, Headley called it another quarter of record results, with volume up 23%, which he called exceptionally strong, for its sixth consecutive quarter of volume growth topping 20%.  

Headley said this reflects how XPO is outperforming the market and doing so while taking share profitably, as it relates to volume. What’s more, XPO noted that this quarterly success is really a tech-based story, with XPO Connect downloads up 78% annually, to more than 700,000, with 74% of the loads it booked in the first quarter created of covered digitally, up from 70% in the fourth quarter, with that tally trending even higher this quarter. And, from 2013 to 2021, XPO’s brokerage business compound annual growth rate has increased by 27%, tripling the industry average.