XPO Logistics' profit during the second quarter was 11.7% higher than a year ago, as a separate report said the company is looking to greatly expand its business in the next year or two. In contrast, USA Truck saw its second quarter loss more than double as revenue declined.

XPO Logistics

Net income totaled $47.6 million, or 38 cents per share, compared to $42.6 million in the second quarter of 2016, or 35 cents per share. Revenue increased nearly 2.2% to $3.76 billion.

“The most notable growth came in last mile and contract logistics, two fast-growing parts of the supply chain where we hold leading positions in e-commerce,” said Bradley Jacobs, chairman and CEO. “Importantly, we're continuing to grow adjusted EBITDA faster than revenue in both transportation and logistics."

The company's transportation segment generated revenue of $2.41 billion in the quarter. This compares with $2.42 billion for the same period in 2016, which included $133.4 million of revenue from the North American truckload unit divested in October 2016.

Segment revenue was led by increases in truck brokerage and last mile, partially offset by a decrease in global forwarding revenue and unfavorable foreign exchange rates, according to the company.

Operating income for the transportation segment increased to $160 million in the quarter, compared with $153.2 million a year ago.

XPO’s Logistics segment generated revenue of $1.4 billion for the quarter, compared with $1.33 billion for the same period in 2016.

The year-over-year increase was primarily due to strong demand for contract logistics in both Europe and North America, partially offset by a decline in managed transportation revenue and unfavorable foreign exchange rates, according to XPO. In Europe, contract logistics growth was led by e-commerce and cold chain contracts in the UK and the Netherlands. In North America, the largest gains came from the e-commerce and industrial sectors.

Operating income for the logistics segment increased to $64.3 million, compared with $51.1 million a year ago.

XPO raised its full year targets for adjusted EBITDA to at least $1.365 billion in 2017 and at least $1.6 billion in 2018.

The results were released about the same time as Reuters reported that XPO is pursuing deals with up to $8 billion following its purchases of France's Norbert Dentressangle SA and trucking and logistics company Con-way Inc.

"We could easily do another deal or two in that size; that's completely feasible so now we have more bandwidth on the management team," Jacobs told Reuters on Wednesday.

According to Jacobs, such a deal is likely to be at least a year away, if not longer.

Reuters reported XPO’s market capitalization has surged to over $6 billion from $173 million in 2011.

USA Truck Reports Wider Loss

In contrast, another trucking and logistics provider saw its second quarter loss more than double as revenue declined.

USA Truck Inc. reported a net loss of $2.8 million, or 35 cents per share, compared to a net loss of $1.3 million, or 15 cents, a year earlier.

Total revenue in the most recent quarter was $107.4 million compared to $109.9 million for the prior-year period. Base revenue, which excludes fuel surcharge, was $96 million compared to $99.5 million for the 2016 period.

The company’s second quarter 2017 consolidated operating ratio was 102.8%, compared to 100.5% in the 2016 quarter.

“The entire organization is committed to returning this company to profitability and building a business that we believe will stand the test of time," said President and CEO James Reed. "The second quarter marked my first full quarter as CEO and while we are not happy with the consolidated results, we believe they show progress in the specific areas that we previously said we would focus.”

Despite the overall bad performance, Reed noted there were some improvements:

  • Base revenue per loaded mile increased 5 cents per mile, or 2.9% when compared to 2Q16, which also represented a 1.3% increase over the first quarter of 2017.
  • Base revenue per seated tractor increased $77 per week, or 2.6% when compared to a year earlier, which represented a 0.2% increase over 1Q17.
  • Miles per seated tractor per week increased 22 miles per tractor, or 1.1% when compared to a year earlier.

“Our focus on seating tractors resulted in a sequential improvement in our unseated tractor count to 8%. This remains short of our goal of 5%,” Reed said. “We believe we are on track to increase average seated tractor count by 5%-7% over the fourth quarter 2016 average of 1,547, and increasing base revenue per seated tractor per week by 3%-5% over the full year 2016 average of $2,998.”

For the second quarter 2017, USA’s trucking operating revenue declined 5.2% year-over-year, to $71.5 million. This was primarily due to 9.1% fewer seated tractors, partially offset by a 2.9% increase in base revenue per loaded mile, according to the company. Operating loss was $4.8 million for the 2017 period compared to $2.7 million for the 2016 period.

“We reiterate our expectation of returning to operating profitability in the third quarter of 2017."

USAT Logistics had operating revenue of $35.8 million, up 4.2% versus second quarter 2016 and up 14.1% over first quarter 2017. Operating income fell to $1.9 million from $2.2 million a year earlier.

Overall, Reed said results are improving and the company believes operating profits are on the near-term horizon

“Third quarter 2017 will be the first complete quarter with our new leadership team intact, and I look forward to the synergies of the team’s expertise and time in their positions as we expect to see our efforts and direction take root,” he said. “We reiterate our expectation of returning to operating profitability in the third quarter of 2017 and look forward to that as the launch point for continued improved operating results."

 

About the author
Evan Lockridge

Evan Lockridge

Former Business Contributing Editor

Trucking journalist since 1990, in the news business since early ‘80s.

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