XPO ends an era with strong Q2 results

On Monday, XPO’s logistics business, which has been spun off as GXO Logistics Inc. (NYSE:GXO), begins trading on the New York Stock Exchange. XPO’s board approved the spinoff earlier this month. From a relatively modest brokerage operation founded in 2011 by Brad Jacobs, XPO grew into a multibillion-dollar behemoth on the back of 17 acquisitions, and subsequent integrations, over a four-year period. The strategy and execution was unprecedented for an industry whose companies have historically struggled to integrate just one or two acquisitions.

XPOs last acquisition was in September 2015 when it purchased Con-way Inc., which ran an LTL and contract logistics operation, among others, for $3 billion. Both businesses became pivotal to XPOs success and the future of the enterprise.

The company’s transportation segment generated revenue of $3.2 billion in the second quarter, up more than $1 billion from 2020 levels. Operating results swung to a $255 million profit from a $15 million loss. Adjusted EBITDA nearly tripled to $391 million. The unit’s LTL business broke the $1 billion quarterly revenue barrier for the first time and posted an adjusted operating ratio of 81.1%, excluding gains on sales of real estate. The unit’s truck brokerage reported a 38% year-on-year increase in loads, a 101% increase in gross revenue, and a 47% increase in net revenue, which is gross revenue minus the cost of purchased transportation.

The logistics business posted revenue of $1.88 billion, compared with $1.4 billion in the 2020 quarter. Operating results swung to a $71 million gain from a $43 million loss. Adjusted EBITDA more than doubled to $169 million, as the company posted high revenue from contract wins and experienced lower COVID-19-related costs in the quarter.