XPO Logistics Beat Estimates, Raised Guidance. Investors Needed Good News.

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the trucking and truck brokerage company

XPO Logistics

just might be able to help soothe investors’ frayed nerves.

Its latest quarterly results beat Wall Street estimates, and management raised its financial forecasts for the full year. And trends in the business remained positive in April—a current and favorable reading on the economy.

Monday evening, XPO (ticker: XPO) reported adjusted earnings per share of $1.25 on sales of $3.5 billion. Analysts were looking for EPS of 93 cents on sales of $3.2 billion.

It was the most revenue the company has ever recorded in a quarter. EPS and Ebitda, short for earnings before interest, taxes, depreciation and amortization were records as well.

Looking ahead, the company raised its full-year EPS guidance to a range with a midpoint of $5.40 from one with a midpoint of about $5.20. That is despite the sale of the company’s intermodal operation, which generated its own sales and earnings.

Truck brokerage’s “excellent trends continued” in April, according to a company spokesman, with solid volumes and profitability. Revenue per day in XPO’s trucking business continued to grow year over year as well.

The intermodal sale allowed the company to repay about $630 million in debt, reducing future interest expenses. That is part of the reason the full-year earnings guidance increased. The debt repayment fell after the quarter closed on April 9, while the March balance sheet shows the cash and the debt still on the books.

It looks like a clean quarter. Investors will likely breath a sign of relief. Coming into the earnings, shares were down roughly 33% year to date, worse than the 16% and 11% comparable, respective drops of the

S&P 500
and

Dow Jones Industrial Average.

It is tough to blame management for the underperformance. The company has beaten bottom-line earnings estimates for 13 consecutive quarters. Earnings are growing and the company is taking steps to create value. XPO is separating its less than truckload, or LTL, trucking business from its truck-brokerage business.

LTL generally includes shorter routes that serve industrial customers. Truckload businesses ship consumer goods over greater distances, such as from a port to a distribution center.

The spin should be completed in the fourth quarter of 2022.

It’s easier to blame the overall market. The

Dow Jones Transportation Average
is down about 20% from its November 52-week high. Still, XPO stock is down about 40% over the same span.

XPO has a little more debt than the average company, which is one reason it is paying back what it owes. Including the company’s debt and cash, the total enterprise value is down about 28% since early November, only a little worse than for other logistics companies.

Management is still focused on what it can control, which doesn’t include the daily stock price. “Over the last six months, we’ve been investing in making our LTL network larger and more efficient, with more to follow. Service levels have markedly improved, and our [pricing] was a record first quarter increase of 9% from a year ago,” said CEO Bradley Jacobs.

Management scheduled a conference call for 8:30 a.m. Eastern time Tuesday to discuss results. Analysts and investors will be eager to hear about the state of the economy from a transportation company.

Write to Al Root at [email protected]