XPO Logistics (XPO) releases preliminary Q3 results

Transport company Expo Logistics said on Monday that it expects third-quarter earnings to come in below analysts’ expectations.

But XPO also said it expects its earnings before interest, taxes, depreciation and amortization (EBITDA) to be higher than the company had expected.

“Our adjusted EBITDA will be in the range of $348 million to $352 million, which is above the upper end of our forecast,” new CEO Mario Harik told CNBC on Monday. “Today’s numbers reflect that we are going into the rotation from a position of strength.”

XPO said on Monday it expects to report $3.04 billion when it releases its quarterly earnings report on Oct. 31. Analysts polled by Refinitiv expected $3.09 billion.

The partial income statement comes ahead of the investor’s first day under new CEO Harik on Tuesday and the spin-off of its high-tech truck brokerage business on Nov. 1 into a new public company called RXO.

Shares of XPO have fallen 19% since the spin-off announcement in March, compared to the S&P 500’s 12% drop over that period. During an interview with Squawk Box in March, XPO chairman and former CEO Brad Jacobs said he hopes turning the company into a trucker will eliminate the so-called “conglomerate discount” on XPO stock.

For the truck brokerage segment, which will become RXO, the company expects revenue to decline 2% year-on-year and volume up 9%. Truck brokerage services connect truckers with customers in the “spot market” on demand. These figures are down 22% year-on-year in October, but are still 20% higher than in October 2019, before the pandemic, according to the latest data from Evercore ISI.

XPO, which has a market capitalization of about $5.6 billion, competes with FedEx Freight and Old Dominion. Among his clients Caterpillar as well as Supply of tractors.

XPO has also set targets for XPO and RXO to be achieved by fiscal year 2027. The company believes that trucking delivers revenue growth at a compound annual rate of 6% to 8%, with annual adjusted EBIDTA growth of 11% to 13%. .

By then, the brokerage is expected to reach an adjusted EBITDA of between $475 million and $525 million, with an annual cost of about 1% of revenue.

“The long-term outlook we have released shows that we expect continued strong performance for both XPO and RXO,” Harik said.

The spin-off of RXO follows a previous spin-off of XPO’s contract logistics business in GXOwho started trading last year.

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