In the fiercely competitive global freight and logistics market, XPO Logistics has delivered impressive third-quarter financial results. The Greenwich, Connecticut-based company reported double-digit growth in both revenue and profits while signaling strong intentions for future expansion through acquisitions.
Financial Highlights
XPO's Q3 earnings report revealed an 11.5% year-over-year revenue increase to $4.34 billion. Net income attributable to common shareholders surged to $100.8 million, significantly higher than the $57.5 million reported in the same period last year. Earnings per share reached $0.89, slightly below Wall Street's $0.98 expectation, while adjusted EBITDA grew to $414.9 million from $396.8 million in Q3 2022.
Business Segment Performance
The transportation segment saw total revenue increase by 10.5% to $2.85 billion, driven primarily by freight brokerage and last-mile operations in North America, along with dedicated truckload services in the UK and France. Operating income for this segment rose 25.7% to $195.2 million. North American less-than-truckload (LTL) operations reported net revenue growth of 5.4% to $981.7 million, with adjusted operating ratio improving by 220 basis points to 85.4%.
Logistics revenue grew 13.1% to $1.52 billion, fueled by global e-commerce demand and strong performance in consumer packaging, technology sectors in North America, and fashion industries in Europe. However, operating income declined 11.6% to $67.3 million due to a $15.6 million customer bankruptcy charge and record contract launches (46 in Europe, 44 in North America).
Strategic Growth Initiatives
Chairman and CEO Brad Jacobs highlighted several key achievements: "We delivered record third-quarter results in revenue, net income, EPS and EBITDA. Our organic revenue growth of 10.5% outpaced industry averages, and we added $918 million in new business this quarter - a 43% year-over-year increase."
XPO's last-mile business grew 12% to $271 million, with full-year 2023 revenue projected to reach $1.1 billion. The company recently completed deployment of all 85 last-mile hubs covering 90% of the U.S. population within 125 miles.
Truck brokerage revenue surged 30%, attributed to optimized dynamic freight matching algorithms through XPO Connect, which now connects with over 13,000 carriers. LTL operations saw 28% operating income growth with plans for technology projects expected to add $100 million in operating profit over two years.
Global Expansion
European transportation operations achieved record 7.3% organic growth, while global logistics revenue reached $1.5 billion (13% increase) with double-digit growth across e-commerce, technology, consumer packaged goods, and healthcare verticals.
Jacobs noted particularly strong supply chain growth in the Netherlands, UK, France and Italy, with 90 new contract implementations expected by year-end (22 in Q4 alone). The company continues deploying its 5,000-strong fleet of smart warehouse robots.
Future Outlook
Since its 2011 founding, XPO has pursued an aggressive acquisition strategy. Jacobs confirmed ongoing interest in strategic purchases: "We prioritize companies with long-term customer contracts and recurring revenue streams that maximize shareholder value."
The CEO observed increased merger activity with more rational valuations, suggesting favorable conditions for future deals. "As we enter Q4 and the new year, we have considerable momentum across all business lines," Jacobs concluded.