XPO reveals Q3 2022 preliminary results

October 18, 2022

By Transport Intelligence

XPO Logistics has released the following results in advance of its third-quarter 2022 earnings announcement and conference call.
 
For the third quarter 2022, the company expects to report:

• Revenue of approximately $3.04bn
• Operating income of $181m to $185m
• Earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), a non-GAAP financial measure, of $348m to $352m

For its North American less-than-truckload (LTL) segment, the company expects third-quarter 2022 results to include:

• A year-over-year increase in revenue per hundredweight, excluding fuel, of approximately 7%
• A year-over-year decrease in weight per day of approximately 2.9% for the full quarter, with weight per day improving each month and inflecting positive year-over-year in September
• An operating ratio of approximately 85.1%
• An adjusted operating ratio, a non-GAAP financial measure, of 82.9% or better, reflecting at least 150 basis points of improvement from the prior year’s third quarter, excluding gains on real estate sales in both periods; there were no gains on real estate recorded in the third quarter of 2022 

The company has reiterated its expectation that at least $1bn of full year 2022 adjusted EBITDA will be generated by North American LTL, including up to $50m of gains on sales of real estate in the fourth quarter.
 
The company now expects to achieve a year-over-year improvement of 50 to 100 basis points in its North American LTL adjusted operating ratio for full year 2022, excluding gains on sales of real estate; this compares with its prior target of at least 100 basis points of improvement.
 
For its North American truck brokerage business, which is reported within the Brokerage and Other Services segment, the company expects third quarter 2022 results to include:

• A year-over-year increase in volume of approximately 9%
• A year-over-year decrease in revenue of approximately 2%
• A year-over-year increase in margin dollars, a non-GAAP financial measure, of approximately 31%

Long-Term Targets for North American LTL and RXO Spin-Off
 
In conjunction with upcoming investor meetings, and in anticipation of XPO’s planned spin-off of its North American brokered transportation platform on November 1, 2022, the company issued the following long-term financial targets.
 
For its North American LTL business, encompassing the period from 2021 (the most recent reported fiscal year) through 2027, assuming gross capital expenditures of 8% to 12% of revenue, on average, over the next several years:

• Revenue growth at a compound annual growth rate of 6% to 8%
• Adjusted EBITDA growth at a compound annual growth rate of 11% to 13%
• Adjusted operating ratio improvement of at least 600 basis points

 
For the RXO spin-off of the North American brokered transportation platform, including its core truck brokerage business:

• 2027 adjusted EBITDA of $475m to $525m
• Annual capital expenditures of approximately 1% of revenue, 2023-2027
• Annual depreciation and amortization of approximately 1% of revenue, 2023-2027
• Annual interest expense of approximately $37m, 2023-2027

 As previously announced, XPO will hold its third quarter conference call and webcast on Monday, October 31, at 8:30 a.m. Eastern Time. 

Source: XPO