XPO Logistics Inc (NYSE: XPO) reported record sales and better-than-expected earnings for its fiscal third quarter last night. Shares are still down about 10% on Wednesday as the freight transportation company said its EBITDA will decline slightly in the current quarter.
Stephen Weiss added to his position in XPO
The price action was a “buy the dip” moment for Stephen Weiss, who added to his position in XPO this morning. On CNBC’s “Halftime Report”, however, he clarified that it was a trading position and not a long-term investment.
I bought a little more down here to top up my core position. We’ll see how long I stay with this trading position. I’m not going to be very patient with this one, but I will be patient with the core position.
While XPO had a strong overall quarter, Weiss agreed that it was surprising that the U.S. firm lagged behind the industry at large in the LTL space, which he says will take some time to recover. Weiss, however, is happy with the recent spin-off of GXO Logistics.
Q3 financial performance and future outlook
XPO said its EBITDA printed at $307 million in Q3 on $3.3 billion in sales. In comparison, analysts had called for $298 million of quarterly EBITDA on $3.1 billion in sales.
According to CEO Brad Jacobs, XPO’s truck brokerage in North America noted a double-digit year-over-year growth in “every major metric”. Profit margin in the LTL segment, however, took a hit on labour shortage and the associated wage growth, which could remain a challenge for the company going forward.
But XPO is trying to pass on increased costs to customers, as evidenced in the recent price hike that was originally scheduled for the start of next year. It has also paid off $1.5 billion in debt, saving annual interest costs of roughly $100 million.
For the fiscal fourth quarter, the Connecticut-based company forecasts $303 million in EBITDA versus the Street consensus estimate of $298 million, as per the earnings press release.
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