(This story was corrected to show revenue growth in e-commerce and retail customers within North American contract logistics.)
By Eric M. Johnson
(Reuters) - XPO Logistics Inc (XPO.N) posted a record quarterly profit on Wednesday, fueled by e-commerce demand for its contract logistics and “last mile” deliveries to households, along with shipments of consumer goods and a strong truck brokerage market.
The third-largest publicly traded U.S. logistics company also reaffirmed its full-year forecasts for adjusted pre-tax earnings of at least $1.37 billion in 2017 and $1.6 billion in 2018, and its appetite for rapid-fire acquisitions.
“We generated the highest revenue, net income and cash flow of any quarter in our history,” Chief Executive Officer Brad Jacobs told Reuters in a telephone interview.
XPO is a big player in e-commerce deliveries through its contract logistics and “last-mile” services for heavy goods in North America and Europe.
XPO said it grew revenue with e-commerce and retail customers in its North American contract logistics business by 47 percent.
XPO ships items like Crate and Barrel furniture and Home Depot Inc (HD.N) appliances from warehouses directly to customer homes.
“Those types of big, heavy, bulk items just weren’t bought over the internet five, six years ago, now they are being bought increasingly so on the internet and we are the largest player in that last-mile business, and that’s helping us a lot,” he said.
Higher technology and recruitment costs drove up quarterly sales-related expenses to $35.8 million from $31.9 million a year earlier.
Tight U.S. and European labor markets pose a costly challenge for transportation companies like XPO, UPS (UPS.N) and FedEx (FDX.N) as they gear up for the crucial holiday delivery season this year. [L2N1MU1FU]
Quarterly logistics revenue rose to $1.46 billion from $1.35 billion a year ago but was partially offset by a drop in North American managed transportation sales.
Truck brokerage was “off the charts” in the quarter, Jacobs said, driven by tighter capacity and higher rates for freight not under longer-term contract.
Greenwich, Connecticut-based XPO reported quarterly profit of $57.5 million, or 44 cents per diluted share, compared to $13.8 million, or 11 cents per diluted share in the year-ago period.
Adjusted for one-time items, XPO brought home $76.7 million for the quarter, or 59 cents per share, up from $49.8 million, or 41 cents a share, a year ago. Wall Street analysts expected 57 cents per share.
XPO has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $14.7 billion behemoth last year.
While Jacobs declined to provide specifics on his M&A strategy, he did say XPO has a war chest of $8 billion to spend in the coming months and has more than a dozen targets identified.
Reporting by Eric M. Johnson in Seattle; Editing by David Gregorio and Tom Brown