GREENWICH, Conn. – November 1, 2017 – XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the third quarter 2017. Revenue was $3.89 billion for the quarter, compared with $3.71 billion for the same period in 2016. Revenue increased year-over-year by $305.1 million, excluding third quarter 2016 revenue of $131.8 million from the North American truckload unit divested in October 2016. Net income attributable to common shareholders was $57.5 million for the quarter, or earnings of $0.44 per diluted share, compared with net income attributable to common shareholders of $13.8 million, or earnings of $0.11 per diluted share, for the same period in 2016.

Adjusted net income attributable to common shareholders, a non-GAAP financial measure, was $76.7 million for the quarter, compared with $49.8 million for the same period in 2016. Adjusted earnings per diluted share, a non-GAAP financial measure, was $0.59 for the quarter, compared with $0.41 for the same period in 2016. Adjusted net income attributable to common shareholders and adjusted earnings per diluted share for the third quarter 2017 exclude: $14.2 million, or $10.6 million after-tax, of integration and rebranding costs; $9.6 million, or $7.4 million after-tax, of non-cash unrealized losses on foreign currency contracts; and a loss of $4.7 million, or $3.4 million net of tax, on debt extinguishment and conversions of convertible senior notes. Reconciliations of non-GAAP financial measures used in this release are provided in the attached financial tables.

Adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), a non-GAAP financial measure, improved to $369.6 million for the quarter, excluding $14.2 million of integration and rebranding costs. This compares with $352.7 million of adjusted EBITDA for the same period in 2016, which included the divested North American truckload unit.

For the third quarter 2017, the company generated $293.7 million of cash flow from operations and $183.2 million of free cash flow.

Reaffirms Financial Guidance

The company reaffirmed its full year targets for adjusted EBITDA of at least $1.365 billion in 2017 and at least $1.6 billion in 2018.

The company also reaffirmed its 2017-2018 cumulative free cash flow target of approximately $900 million, including at least $350 million of free cash flow generated in 2017.

CEO Comments  

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “In the third quarter, we generated the highest revenue, net income and cash flow of any quarter in our history, and our $370 million of adjusted EBITDA beat expectations. We benefited from positive market dynamics, including e-commerce demand for contract logistics and last mile, growth in intermodal, and a brokerage market that is trending in our favor. Our diversification is yielding results.”

Jacobs continued, “We’re executing major initiatives around pricing, utilization and sales productivity to capitalize on the large opportunities at hand. Our sales force has closed $2.1 billion of new business through September, up 49%, and our pipeline continues to exceed $3 billion globally. These levers, combined with our leading positions in key sectors, are fueling organic growth that continues to outpace the industry. We’re exploring acquisition opportunities that will augment this momentum.”

Third Quarter 2017 Results by Segment

• Transportation: The company’s transportation segment generated revenue of $2.47 billion in the quarter. This compares with $2.41 billion for the same period in 2016, which included $131.8 million of revenue from the North American truckload unit divested on October 27, 2016. Segment revenue was led by increases in North American freight brokerage, less-than-truckload and last mile, and European less-than-truckload.

Operating income for the transportation segment increased to $145.2 million in the quarter, compared with $125.4 million for the same period in 2016. Adjusted EBITDA for the segment was $265.0 million. This compares with adjusted EBITDA of $253.3 million for the same period in 2016, which included the divested North American truckload unit. The increases in operating income and adjusted EBITDA were primarily due to an improvement in operating income in European transportation and North American last mile and freight brokerage. Within the North American less-than-truckload unit, the adjusted operating income ratio was 87.6%, compared with 87.4% for the same period in 2016.

• Logistics: The company’s logistics segment generated revenue of $1.46 billion for the quarter, compared with $1.35 billion for the same period in 2016. The increase in revenue was led by strong demand for contract logistics both in Europe and North America, partially offset by a decline in managed transportation revenue in North America. In Europe, contract logistics growth was led by e-commerce and cold chain contracts in the United Kingdom, Spain and the Netherlands. In North America, the largest gains came from the e-commerce and industrial sectors.

Operating income for the logistics segment increased to $77.4 million, compared with $75.3 million for the same period in 2016. Adjusted EBITDA improved to $135.0 million, compared with $125.7 million for the same period in 2016. The increases in operating income and adjusted EBITDA were primarily due to net revenue growth, partially offset by higher direct operating costs related to new contract startups that impacted North America.

• Corporate: Corporate SG&A expense was $35.8 million for the quarter, compared with $31.9 million for the same period in 2016. The increase in corporate expense reflects a year-over-year increase in purchased services, including technology and recruiting.

Nine Months 2017 Financial Results

For the nine months ended September 30, 2017, the company reported total revenue of $11.19 billion, compared with $10.94 billion for the same period in 2016. Revenue increased year-over-year by $638.1 million, excluding nine-month 2016 revenue of $394.0 million from the North American truckload unit divested in October 2016. Net income attributable to common shareholders was $124.5 million, or $0.99 per diluted share, for the first nine months of 2017, compared with $35.8 million, or $0.30 per diluted share, for the same period in 2016.

Adjusted net income attributable to common shareholders was $189.3 million for the nine months ended September 30, 2017, compared with $92.6 million for the same period in 2016. Adjusted earnings per diluted share was $1.50 for the nine months ended September 30, 2017, compared with $0.76 for the same period in 2016. Adjusted net income and adjusted earnings per diluted share for the first nine months of 2017 exclude: $55.1 million, or $36.7 million after-tax, of integration and rebranding costs; $48.7 million, or $32.4 million after-tax, of non-cash unrealized losses on foreign currency contracts; and a loss of $14.1 million, or $9.4 million after-tax, on debt extinguishment and conversions of convertible senior notes.

Adjusted EBITDA for the first nine months of 2017 improved to $1.03 billion, excluding $55.1 million of integration and rebranding costs. This compares with $957.1 million of adjusted EBITDA for the same period in 2016, which included the divested North American truckload uni