XPO, Inc. (NYSE: XPO) is starting the week off strong, with its shares trading significantly higher after the company announced impressive third-quarter results. The transportation and logistics giant exceeded analyst expectations on both revenue and earnings, demonstrating continued growth and operational efficiency.
XPO’s revenue for the quarter climbed 3.7% year-over-year to reach $2.05 billion, surpassing the consensus estimate of $2.020 billion. This growth was driven by a combination of factors, including higher yields in the North American Less-Than-Truckload (LTL) segment and increased volume in the European Transportation segment.
The company’s operating income also saw a positive bump, reaching $176 million compared to $154 million in the same period last year. This was accompanied by a significant increase in adjusted EBITDA, which jumped 19.8% to $333 million in the quarter. Notably, the adjusted EBITDA margin expanded to 16.2% from 14.0% in the previous year’s third quarter.
The North American LTL segment generated $1.25 billion in revenue, representing a 1.9% year-over-year increase. While the adjusted operating ratio rose to 84.2%, an increase of 200 basis points year-over-year, this was offset by positive performance indicators. The segment witnessed a 3.2% increase in shipments per day and a 6.7% increase in yield, excluding fuel, despite a 3.9% decline in daily tonnage.
In the European Transportation segment, revenue reached $803 million, reflecting a 6.8% year-over-year increase. The adjusted EBITDA margin for the quarter was 5.4%, down 40 basis points year-over-year.
XPO’s strong financial performance wasn’t limited to revenue and operating metrics. The company also achieved an adjusted EPS of $1.02, representing a 15.9% increase compared to the previous year and exceeding the consensus estimate of $0.91.
Beyond the impressive financial figures, XPO highlighted its progress on its linehaul insourcing strategy, noting that they are tracking three years ahead of schedule. This strategy aims to enhance network efficiency and service quality.
XPO CEO Mario Harik emphasized the company’s commitment to delivering on its promises for 2024 while positioning the business for accelerated earnings growth in the future. He emphasized that the company’s dedication to providing world-class service creates value for its customers and will continue to be a key driver of margin expansion.
Investors interested in gaining exposure to XPO can consider investing in the ProShares Trust ProShares Supply Chain Logistics ETF (SUPL) and the SPDR S&P Transportation ETF (XTN).
As of the last check on Wednesday, XPO shares were trading up 6.44% at $127.99 in premarket trading.
The strong performance and positive outlook from XPO underscore the resilience and growth potential within the transportation and logistics sector, even amidst ongoing economic uncertainties.
