is down even as the truck broker and shipping service provider posted record sales and profits above Wall Street estimates.
The results show that it is good to be a truck broker in today’s shipping environment. And the outlook is improving because, as XPO’s chief strategy officer said, today’s issues with supply chains will keep companies focused on improving their delivery systems for years to come.
Still, XPO shares (ticker: XPO) fell about 6% in after-hours trading to nearly $ 81 per share, shortly after the results were released. The stock fell 0.3% in regular trading, while the
Dow Jones Industrial Average
both added about 0.4%.
XPO reported Ebitda of $ 307 million, short for earnings before interest, taxes, depreciation and amortization, on revenue of $ 3.3 billion. Wall Street was looking for $ 298 million in Ebitda out of $ 3.1 billion in sales.
Adjusted for the spin-off of GXO Logistics (GXO), completed in August, sales were a quarterly record and EBITDA was a record for a third quarter.
Going forward, XPO expects to generate around $ 303 million of EBITDA in the fourth quarter. Wall Street is projecting $ 298 million in EBITDA, stable from its third-quarter projection.
Overall, this is a solid result, despite the initial reaction from stock prices. “In North American truck brokerage, every major metric has increased year over year by several digits,” CEO Brad Jacobs said in the company press release. The number of truck loads handled by XPO’s brokerage operations grew 37% year-over-year, while gross profit from truck brokerage grew by more than 60%, outpacing growth in the charged.
“Memories of this moment [in shipping] are going to be long, ”said Matthew Fassler, chief strategy officer. Barron. The current difficulties in shipping parts and goods will cause companies to reassess and invest in their supply chains for a long time, he said.
There are still concerns. Fassler called the persistence of tight labor markets a surprise. This is something investors need to watch out for. The profit margins of the company’s LTL business declined year over year, in part because wage growth outpaced sales gains.
LTL business generally includes shorter trips with trucks that are not filled to the brim.
XP runs its own driving school to help alleviate workforce issues.
In addition to its financial results, XPO showcased a number of recent strategic initiatives, including the price increase scheduled for January 2022 starting this month, the expansion of production of truck trailers owned by the company. ‘company and the investment of more capital in its LTL business.
The company also said it reduced its debt by about $ 1.5 billion in the quarter, saving some $ 100 million in annual interest charges.
Management is holding a conference call Wednesday morning at 8:30 a.m. Eastern Time to discuss the results. Investors and analysts will seek to understand the benefits of these initiatives as well as how the current environment will change the business over the long term.