XPO Inc (XPO) Reports Solid Fourth Quarter Amid Industry Headwinds
Revenue: Increased by 6.0% to $1.94 billion in Q4 2023 compared to $1.83 billion in Q4 2022.
Net Income: Swung to a profit of $58 million in Q4 2023 from a loss of $36 million in Q4 2022.
Diluted EPS: Improved to $0.49 in Q4 2023 from a loss of $0.31 per share in Q4 2022.
Adjusted EBITDA: Remained relatively stable at $264 million in Q4 2023, excluding prior year's real estate gains.
Adjusted Diluted EPS: Decreased by 21.4% to $0.77 in Q4 2023 from $0.98 in Q4 2022.
Cash Flow: Generated $251 million from operating activities in Q4 2023.
Capital Expenditures: Net capital expenditures totaled $1.03 billion, including acquisition of 28 service center locations.
On February 7, 2024, XPO Inc (NYSE:XPO) released its 8-K filing, detailing financial results for the fourth quarter of 2023. The company, known for its asset-based less-than-truckload (LTL) transportation services in North America and its European truckload and LTL operations, demonstrated resilience in a challenging freight transportation industry.
Following the spinoff of its contract logistics division (GXO) in 2021 and freight brokerage operations (RXO) in 2022, XPO has been focusing on its core LTL services, which now account for a significant portion of its revenue and an even higher percentage of its EBITDA mix. The company is also exploring the sale of its European trucking division.
The fourth quarter saw XPO Inc (NYSE:XPO) achieve a revenue increase of 6.0% year-over-year, reaching $1.94 billion. This growth was primarily driven by higher yield, excluding fuel, and an increase in tonnage per day in the North American LTL segment. Despite the positive revenue trend, the company faced a decrease in adjusted diluted EPS, which fell by 21.4% to $0.77, compared to $0.98 in the same period last year.
CEO Mario Harik highlighted the company's success in surpassing expectations, with significant improvements in service quality, pricing, and productivity. XPO's North American LTL segment saw a 10.3% yield growth, excluding fuel, and a 51% increase in adjusted operating income, alongside a 380 basis point improvement in the adjusted operating ratio. The company also reported a record-low damage claims ratio of 0.3%.
In terms of financial achievements, XPO Inc (NYSE:XPO) reported a net income of $58 million for the fourth quarter, a significant turnaround from the net loss of $36 million in the prior year's quarter. The company's operating income also saw a remarkable increase to $119 million, compared to just $4 million in the fourth quarter of 2022.
Adjusted EBITDA, excluding the impact of real estate sales, increased by 32% year-over-year to $264 million, demonstrating the company's ability to maintain profitability in a soft industry environment. The company ended the quarter with a strong cash position of $412 million after significant capital expenditures, including strategic acquisitions of service center locations.
XPO Inc (NYSE:XPO)'s financial tables reveal a detailed picture of the company's performance across various segments. The North American LTL segment, in particular, showed robust adjusted operating income growth and a steady adjusted EBITDA. The European Transportation Segment, however, experienced a decrease in adjusted EBITDA, reflecting the challenges in that market.
The company's balance sheet remains solid, with total assets of $7.492 billion as of December 31, 2023. XPO's ability to generate cash flow from operations, coupled with its strategic investments, positions it well for future growth and operational efficiency.
Value investors may find XPO Inc (NYSE:XPO)'s performance appealing, as the company continues to navigate industry challenges while maintaining a focus on profitability and operational excellence. The company's commitment to service quality and margin expansion, along with its strategic divestitures, suggest a clear vision for maximizing shareholder value.
For a more detailed analysis of XPO Inc (NYSE:XPO)'s financial results and future outlook, investors and interested parties are encouraged to join the company's conference call or access the webcast on XPO's investor relations website.
Explore the complete 8-K earnings release (here) from XPO Inc for further details.
This article first appeared on GuruFocus.
