News / A year of consolidation for XPO, but more acquisitions are on the cards

XPO Logistics won $2.1bn in new business in the first nine months of the year – 49% year-on-year growth – according to its third-quarter results, unveiled today.

It generated revenues of $3.88bn in the quarter, compared with $3.71bn in the same period last year.

Adjusted EBITDA for the period grew to $369.6m, from $352.7m last year.

Group revenue and profit were no longer growing at the steep rate of previous years, as a period of intense merger and acquisition activity has cooled off and the company has concentrated on integrating the variety of businesses bought over the past five years.

However, chief executive Brad Jacobs confirmed that XPO will, at some point, return to buying companies.

A detailed look at XPO revenue by geography reveals that earnings are actually concentrated in a few key countries: 60% in the US, 13% in France, 12% in the UK, 4% in Spain and the remaining 11% in other nations – but Mr Jacobs defended this.

“I like that split; they are all good countries to do business in and the economic conditions are strong,” he said, adding that that picture could change when XPO undertakes further acquisitions.

“Most of the companies we are looking at buying would further diversify our geographical mix…We continue to look at a variety of companies.”

However, this year the focus of Mr Jacobs and his team has been on managing organic growth and increasing free cash flow.

“Our investors were particularly pleased that free cash flow, forecasted in the $100-$150m range, actually came in at $183m,” he told The Loadstar.

Its transportation segment generated revenue of $2.47bn in the quarter, compared with $2.41bn last year, and posted an adjusted EBITDA of $265m, growing from $253.3m in the third quarter of last year.

Logistics earned $1.46bn, compared with $1.35bn for the same period in 2016, and generated adjusted EBITDA of $135m, compared with $125.7m last year.

Its full-year adjusted EBITDA remained at $1.365bn this year, and will be at least $1.6 billion in 2018. XPO expects to generate a free cash flow of $350m this year as it now enters the crucial peak season in its transport and e-commerce operations.

Mr Jacobs said XPO was looking to hire 25% more staff, to boost the 91,000 full-time global employees, to deal with peak season volumes, and shrugged off concerns about a growing scarcity of workers.

“The labour market is tight, we are in a classic situation of full employment. But we believe that works to our strength, because XPO has a great brand name and that helps us attract and maintain staff (compared with our competitors).”