XPO revenue at all-time high

XPO Logistics has turned in a “tremendous” first quarter of the year that beat expectations and gave the US-based company “a very strong start to 2021”, which included a record contract win, chairman and CEO Brad Jacobs told analysts at a conference call this week.

“On a year-over-year basis, our first quarter revenue was up 24% to $4.8 billion, which is an all-time high, not just for a first quarter, but for any quarter,” he enthused.

“Our revenue includes 22% growth from our transportation segment, where the truck brokerage market is white hot, and the LTL environment is coming back strong. In the logistics, our revenue growth was a hefty 27%.”

Company-wide, XPO Logistics set new first quarter records for both net income and adjusted EBITDA.

Jacobs continued: “In logistics, our growth is being driven by the big three tailwinds of e-commerce, outsourcing and customer demand for warehouse automation. I’m delighted to report that we recently won the largest contract in the history of our North American logistics business. It’s also the largest win for our company overall at $1.8 billion of projected revenue through 2032. This includes both an extension and an expansion with a longstanding customer.”

He did not elaborate further on the record deal but did highlight other recent contract wins, “including three major brands (Apple and UK retailers ASOS and Waitrose) that, in total, will be using over $1 billion of our logistics services over the next 5 years.”

At the end of last year, XPO Logistics announced plans to spin-off its contract logistics activities and subsequently announced the appointment of Malcolm Wilson, currently CEO of XPO Logistics Europe, to head up the new company, to be named GXO Logistics.

“We remain on track to complete the ‘spin’ (of the logistics business) in the second half of the year and our goal is to have GXO be investment-grade from day 1, followed by XPO,” Jacobs said.

“Our strategy and our spin address the consistent themes we've heard from shareholders over the last year – to simplify the company and reduce leverage.”

Putting some colour on the new contract wins, Wilson said they were “a good balance between established customers seeking longer-term contracts and new first-time customers like Apple”.

He continued: “We’ll open a massive distribution centre (for Apple) in (the US state of) Indiana with over 1 million square feet of state-of-the-art space for e-commerce fulfilment. It will be direct-to-consumer distribution that uses advanced automation to accelerate deliveries and robots to personalise products before we ship them to consumers.

He added: “All in all, year-to-date, we are executing on customer agreements with a combined value of more than $4 billion on the contract life. These agreements also give us great visibility into future revenue and margin performance in our logistics business, which is planned to be spun off as GXO.”