Feb 7 (Reuters) - XPO Logistics, one of the largest global freight transportation and warehousing companies, reported a higher-than-expected quarterly profit on Wednesday fueled by holiday season e-commerce demand and a bump from the new U.S. tax law.
The Greenwich, Connecticut-based company reported fourth quarter profit of $188.5 million, or $1.42 cents per diluted share, compared with $27.3 million, or 22 cents per diluted share in the year-ago period.
Adjusted for one-time items, XPO earned $59.2 million for the quarter, or 45 cents per share, up from $29.8 million, or 24 cents a share, a year ago. Wall Street analysts expected 43 cents per share.
Its adjusted results excluded $169.6 million of net benefits related to recent changes to U.S. tax law and other tax-adjustments, XPO said.
XPO is a big player in e-commerce through warehousing, distribution and trucking “last-mile” deliveries to households in North America and Europe.
“Of all the different growth drivers that we have - and we have plenty of them - e-commerce is the biggest one,” XPO chief executive Brad Jacobs told Reuters by phone, adding that e-commerce business from retail and e-commerce customers has grown to “a whopping” 29 percent of total revenue.
“We expect this to grow to over a third of our revenue over the next couple of years,” Jacobs said.
XPO said it planned to open 30 new hubs in its North American network by year-end 2018, for a total of 85, to handle expected growth in e-commerce-driven business.
Higher stock-based compensation drove up quarterly sales-related expenses to $55.3 million from $48.6 million.
The company raised its 2017–2018 free cash flow target to roughly $1 billion from about $900 million, and reaffirmed its full-year 2018 target for adjusted EBITDA - or earnings before interest, taxes, depreciation and amortization - of at least $1.6 billion.
XPO said it would invest more than $450 million in 2018 in technology, including automation and robotics.
XPO has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $15.38 billion freight and logistics behemoth. Investors are eager for details on XPO’s acquisition strategy and Jacobs has said XPO has a war chest of $8 billion to spend on purchases in the coming months with more than a dozen targets identified.
XPO is eyeing “existing or complementary” business lines in North America and Europe, the company said on Wednesday. (Reporting by Eric M. Johnson in Seattle; Editing by Andrew Hay)