XPO second quarter revenue hit by coronavirus

Greenwich, Connecticut, USA: XPO Logistics’ revenue for the second quarter of 2020 was down from $4.24bn to $3.5bn.

Bradley Jacobs, chairman, XPO Logistics, said, “The ramifications of Covid-19 dominated the second quarter. Nevertheless, we beat expectations on revenue, adjusted Ebitda and adjusted EPS, and generated notably high cash flow from operations of $214m and free cash flow of $121m. Business trends improved across our segments and geographies as the quarter progressed, and continued in July.
 
“We’ve seen a recovery take hold in Europe and start in North America. E-commerce continues to be our strongest tailwind, benefitting contract logistics and last mile. Our last mile network in North America generated year-over-year revenue growth of 3% in the quarter, with a net revenue margin of 37%.”
 
“We’ve stayed intensely focused on the safety of our employees, and they’ve stayed focused on serving our customers. Based on the current market conditions, we expect to generate at least $350m of adjusted Ebitda in the third quarter.”

Second Quarter 2020 Results by Segment
Transportation: The company’s transportation segment generated revenue of $2.13 billion for the second quarter 2020, compared with $2.75 billion for the same period in 2019. The decrease in revenue primarily reflects the impact of Covid-19.Second quarter 2020 operating loss for the transportation segment was $15 million, compared with operating income of $243 million for the same period in 2019. The operating loss in 2020, compared with the operating income in 2019, is primarily related to the decrease in segment revenue and to costs related to the terminated exploration of strategic alternatives.

Adjusted Ebitda for the segment was $146 million for the quarter, compared with $362 million for the same period in 2019. Operating loss and adjusted Ebitda include the impact of $27 million of Covid-related costs.In North American less-than-truckload, yield excluding fuel improved by 1.9% year-over-year for the second quarter 2020. The second quarter operating ratio for LTL was 93.6% and the adjusted operating ratio was 90.1%, both of which include the impact of $20m of Covid-related costs. 

Logistics: The company’s logistics segment generated revenue of $1.40bn for the second quarter 2020, compared with $1.53bn for the same period in 2019. The decrease in revenue primarily reflects the impact of Covid-19 and the company’s elimination of certain low-margin business.Second quarter 2020 operating loss for the logistics segment was $43m, compared with operating income of $61m for the same period in 2019.

The operating loss in 2020, compared with the operating income in 2019, is primarily related to the decrease in segment revenue, an increase in depreciation and amortisation expense, costs related to the company’s terminated exploration of strategic alternatives, restructuring-related expenses and Covid-19-related costs, partially offset by a reduction in temporary labor costs. Adjusted Ebitda for the segment was $83m for the quarter, compared with $136m for the same period in 2019. Operating loss and adjusted Ebitda include the impact of $19m of Covid-related costs. 

Corporate: Corporate expense was $83m for the second quarter 2020, compared with $46m for the same period in 2019. The increase in corporate expense includes approximately $23m of costs primarily related to the terminated exploration of strategic alternatives and restructuring, as well as $2m of Covid-related costs.

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