Despite “robust organic growth” thanks to e-commerce and freight brokerage, XPO Logistics’ third-quarter earnings came in lower than analysts’ expectations, as the company cut its earnings forecast due to the collapse of a large UK customer.
The company reported adjusted earnings of 89 cents per share, compared to 59 cents for the same period a year ago, but Wall Street was expecting 98 cents per share.
The results included a 7-cent per-share charge related to its business with House of Fraser. XPO's British division shut down the distribution centers it ran for House of Fraser in the UK on August 10, as it was one in a long line of companies that say they are owed millions by the retailer.
XPO’s revenue increased 11.5% year-over-year to $4.34 billion, led by the company’s contract logistics and freight brokerage business. Net income was $100.8 million for the quarter, compared with net income attributable to common shareholders of $57.5 million for the same period in 2017. Adjusted net income was $121.3 million for the quarter, compared with $76.7 million for the same period in 2017.
“Our robust organic growth of 10.5% in the quarter was led by strong demand for e-commerce logistics and freight brokerage,” said Bradley Jacobs, chairman and CEO, in a release.
The company’s North American LTL business saw its adjusted operating ratio rise by 220 basis points from a year ago, he noted.
“Companywide, we again grew profitability faster than revenue, despite the impact of a customer bankruptcy.”
XPO closed $918 million of new business in the quarter, up 43% from last year, due in large part to an expanded sales organization and proprietary technology, according to Jacobs.
“In contract logistics, we implemented a record 90 customer contracts through September, enabled by intelligent automation. And in North American brokerage, we used dynamic freight-matching algorithms to realize 18% revenue growth and 370 basis points of margin improvement with fewer people.”