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XPO Logistics swung to a loss as revenue declined sharply in the second quarter because of the COVID-19 pandemic, but it said business had started to rebound in some markets.
The Greenwich, Conn.-based trucking and logistics company said it lost $132 million compared with a profit of $122 million in the same period a year earlier. It posted a loss of $1.45 per diluted share compared with a profit of $1.19 in the prior year.
Revenue fell 17.4% to $3.5 billion from $4.2 billion for the same period in 2019.
The quarter played out for XPO as it did for much of the trucking industry. It experienced declines at the start of the quarter that eased as the months progressed, Chairman and CEO Bradley Jacobs said in a July 30 news release.
“We’ve seen a recovery take hold in Europe and start in North America. E-commerce continues to be our strongest tailwind, benefiting contract logistics and last mile,” Jacobs said. “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%.”
XPO operates in 30 countries and has 96,000 employees.
The company reports its financial results divided into two segments: transportation and logistics.
Revenue for the transportation segment fell 22.5% to $2.1 billion in the quarter. XPO attributed the decrease to the impact of the COVID-19 recession. The segment swung to a loss of $15 million, compared with operating income of $243 million for the same period in 2019. Much of the loss was a result of XPO terminating a plan to explore strategic alternatives, including the possible sale or spinoff of one or more business units. It also experienced $27 million of pandemic-related costs, the company said.
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Revenue for the company’s logistics segment fell 8.5% to $1.4 billion in the quarter. XPO said the decline came from the impact of the pandemic and the company’s elimination of certain low-margin business. The logistics division flipped to a loss of $43 million compared with operating income of $61 million in the same period a year earlier.
XPO also reported an important cash flow measure known as adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization. That fell 62.2% to $172 million from $455 million for the same 2019 period.
The company ended the quarter with $2.3 billion in cash and $500 million more in borrowing capacity. XPO moved to improve its balance sheet during the quarter by issuing $1.2 billion of 6.25% senior notes that mature in 2025.
The company is not providing guidance for its full-year financial performance but said that it expects to generate at least $350 million of adjusted EBITDA in the third quarter.
XPO made three key appointments during the quarter. It appointed Eduardo Pelleissone chief transformation officer. Alex Santoro was appointed executive vice president of operations. And LaQuenta Jacobs was promoted to chief diversity officer from head of human resources for the company’s last-mile business unit.
XPO ranks No. 1 on the Transport Topics Top 50 list of the largest logistics companies in North America and No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers.
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