XPO has reported its Q1 2022 earnings, stating it has reported highest revenue of any quarter in company’s history. Revenue increased to $3.5bn for the first quarter, compared with $3.0bn for the same period in 2021. Operating income was $625m for the first quarter, compared with $139m for the same period in 2021. Adjusted EBITDA increased to $321m for the first quarter.
According to the CEO Brad Jacobs: “We delivered a record first quarter, with significant beats across revenue, net income, adjusted EBITDA, and adjusted EPS. We’re executing on multiple avenues for value creation — the spin-off of our tech-enabled brokered services platform, the sale or listing of our European business, our continued deleveraging, and company-specific initiatives for the ongoing transformation of our North American LTL business.”
Jacobs also stated that XPO are creating or covering 74.0% of its brokerage loads digitally on its platform, XPO Connect.
North American Less-Than-Truckload (LTL) segment increased revenues to $1.1bn compared with $962m for the same period in 2021. According to XPO, the y-o-y increase in revenue primarily reflects an increase in yield. Operating income for the segment was $132m for the first quarter 2022, compared with $145m for the same period in 2021, and adjusted EBITDA totalled $205m.
Jacobs stated that over the last 6 months, the company has been investing in making its LTL network larger and more efficient. He commented: “Service levels have markedly improved, and our yield was a record first quarter increase of 9.0% from a year ago. We continue to expect our adjusted operating ratio to inflect to year-over-year improvement later this quarter, with an improvement of more than 100 basis points for the full year. We plan to drive hundreds of additional basis points of improvement in the coming years.”
The company’s Brokerage and Other Services segment recorded revenues of $2.4bn for the first quarter 2022, compared with $2.1bn for the same period in 2021. According to XPO, the y-o-y increase in segment revenue reflects a significant increase in North American truck brokerage loads, facilitated by the company’s XPO Connect digital platform, as well as strength in other brokerage services. Operating income for the segment was $100m for the first quarter, compared with $64m for the same period in 2021, and adjusted EBITDA totalled $164m.
On March 24, 2022, XPO sold its North American intermodal operation for cash proceeds of approximately $710m, subject to a customary post-closing purchase price adjustment. The company had previously announced its intent to divest the intermodal operation as part of its 2022 strategic plan. Furthermore, the company has also announced it will spin-off its brokerage segment and become a stand-alone trucking company. The spin-off is expected to have been completed by the end of 2022.
Looking forward, the company estimates Q2 2022 adjusted EBITDA of between $360m and $370m. XPO’s North American LTL is expected to generate at least $1bn of full year adjusted EBITDA.