XPO Logistics revenue’s up as company manages changes

XPO Logistics closed out the second quarter in the midst of change, but revenue was strong.

The company is spinning off its brokerage tech platform, which has been named RXO. The spin-off is expected to be completed in the fourth quarter. That will leave XPO Logistics as solely a LTL carrier.

Also, a new president and CEO will be taking the helm of the XPO Logistics less-than-truckload business. Mario Harik will succeed Brad Jacobs once the spin-off is finalized. Jacobs will stay with the company as executive chairman of the board. He also will be the nonexecutive chairman of the spin-off.

Drew Wilkerson, XPO’s president of North American transportation, has been tapped to become chief executive officer of RXO.

The moves were outlined in the company’s Aug. 5 second-quarter earnings call. A transcript is available from The Motley Fool.

Harik has been acting LTL president since October 2021. For 10 years, he was chief information officer for XPO and oversaw the development of the company’s network operations technology.

“Over the last nine months, we’ve made major advances in positioning XPO to become a world-class LTL carrier from every perspective. And we know exactly where we’re going from here,” Harik said during the earnings call.

Years of change

XPO has been in flux for a few years.

XPO Logistics bought its LTL business in October 2015, acquiring and rebranding Con-way Freight, according to Logistics Management.

XPO sold its truckload business to Montreal-based TransForce in 2016.

XPO reported in March it was selling its North American intermodal business to Bensenville, Ill.-based STG Logistics Inc.

Strong growth

XPO achieved record second-quarter revenue and strong year-over-year growth, Jacobs reported during the earnings call.

“I’m pleased to report that as of the end of the second quarter, our trailing 12-month companywide (return on invested capital) was 38% and significantly higher in our North American LTL and truck brokerage businesses,” Jacobs said. “It’s worth noting that since we bought the LTL business in October 2015, the business has generated net cash of over $3.8 billion.”

North American LTL revenue grew 15% year over year to $1.2 billion, the highest revenue of any quarter in the company’s history, XPO Chief Strategy Officer Matthew Fassler said during the call.

XPO’s North American truck brokerage business, which is the core business of spin-off RXO, increased brokerage loads by 16% compared to a year ago and was up 61% from two years ago, Fassler said.

Terminal expansion

XPO Logistics has added five terminals since October.

“The 345 net new doors we’ve added to date bring us over one-third of the way to our goal of adding 900 net new doors by the end of next year,” Fassler said.

The company is evaluating sites in Salt Lake City, Houston, Atlanta, Kansas City, Dallas and Philadelphia.

Headquartered in Greenwich, Conn., XPO Logistics has a network of 294 terminals, about 8,200 tractors and 27,000 trailers. It has about 22,000 employees, including 13,000 professional drivers. Founded in 1989 as Express-1 Expedited Solutions, its name changed in 2011 when Brad Jacobs acquired the company. Its stock is traded on the New York Stock Exchange. LL