XPO Logistics Inc. grew its second-quarter operating income by more than 20% from a year ago and raised its full-year profit and cash flow forecasts. The company also announced that its chief information officer and less-than-truckload leader, Mario Harik, will take over as CEO from Brad Jacobs once XPO completes the spinoff of its brokerage unit late this year.
Connecticut-based XPO’s net income for the three months ended June 30 was $141 million, down from $156 million in the prior-year period, when the company booked a $45 million gain from discontinued operations. Tonnage per day slipped 5.5% year-over-year and is likely to be down slightly in Q3 but a record new sales quarter and an average contract renewal price increase of 12% more than offset the spring's decline, which was due in part to customers in the agriculture sector pulling back. XPO is ranked No. 9 on the FleetOwner 500: For-Hire Fleets of 2022.
See also: XPO puts up record numbers in Q1
Chairman and CEO Jacobs and his team now expect XPO to earn between $5.55 and $5.90 per diluted share this year, with the midpoint of that range up 6% from their previous guidance and mostly reflecting the company’s strong Q2. Revenues are expected to come in about $400 million higher than previously thought but also benefiting the company’s revised full-year outlook is a drop of between $5 million and $10 million in expected interest spending.
On a conference call with analysts, Chief Strategy Officer Matt Fassler said XPO’s LTL adjusted operating ratio for the quarter was 80.4%, 70 basis points below that of a year earlier and more than five points better than in Q1 thanks in part to purchased transportation making up a smaller share of spending.
Harik, who has been XPO’s CIO since 2011 and its acting president of LTL since last October, told analysts his team still is adding long-term terminal capacity and looking for more, with a goal of adding a net 900 doors this year. Key markets now being targeted are Atlanta, Dallas, Houston, Kansas City, Philadelphia, and Salt Lake City.
“We've done the analysis and we're adding new terminals or new doors to existing terminals in markets with growing demand for LTL service,” Harik said. “We expect these markets to continue to grow over the long term.”
Speaking to the CEO transition planned to take place after XPO spins out what will be known as RXO, Jacobs noted Harik’s successes since taking the helm of the LTL business as well as his experience working on XPO’s growth since coming aboard.
“Appointing Mario as my successor was an easy decision for the board and me,” Jacobs said. “Mario is mission-critical to XPO. He was the third person I hired back in 2011, and we've worked side by side on every major initiative since then. He's been instrumental in the successful integration of 18 acquisitions, and he spearheaded countless innovations that have given us a tremendous commercial advantage.”
Shares of XPO (Ticker: XPO) fell about 2% to roughly $60 on Aug. 5. Over the past six months, they are down slightly, shrinking the company’s market capitalization to about $6.9 billion.
