XPO Logistics updates 2019 financial targets

US-based logistics company, XPO Logistics, announced its financial results for Q4 and the full year 2018 last month, confirming that it missed its fourth quarter forecast.

According to XPO Logistics, Q4 revenue increased to $4.39 billion (€3.8 billion), compared with $4.19 billion (€3.7 billion) for the same period in 2017.

“For the full year, we delivered 12.3 per cent revenue growth, 9.3 per cent organic growth and $1.56 billion [€1.37 billion] of adjusted EBITDA – up 14.3 per cent over 2017. However, we missed our fourth quarter forecast for adjusted EBITDA, primarily due to headwinds in France and the UK and a loss of profit in the postal injection business with our largest customer.

“In the fourth quarter, we generated 12.4 per cent organic revenue growth in our logistics segment, driven by global demand for e-commerce. In North American transportation, we improved our less-than-truckload adjusted operating ratio by 260 basis points to a fourth quarter best of 87.3 per cent. Better working capital management allowed us to outperform on cash in the quarter and surpass our cumulative 2017-2018 free cash flow target of $1 billion [€884.4 million].

“We expect that our adjusted EBITDA growth this year will be in the range of six per cent to 10 per cent. This anticipates the impact of our largest customer substantially downsizing its business portfolio with us starting in the first quarter, as well as our more cautious view of Europe. We updated our target for free cash flow to align with our adjusted EBITDA forecast and our expectation of higher interest expense associated with our new share repurchase authorisation. As we look ahead, we’re confident in our ability to create meaningful shareholder value,” he said.

XPO Logistics updated its full-year 2019 targets as follows:

  • Revenue growth of three per cent to five per cent, which corresponds to organic revenue growth of four per cent to six per cent year-over-year;
  • Adjusted EBITDA in the range of $1.650 billion (€1.459 billion) to $1.725 billion (€1.525 billion), an increase of six per cent to 10 per cent year-over-year, versus the prior target of 12 per cent to 15 per cent;
  • Free cash flow in the range of $525 million (€464.3 million) to $625 million (€552.7 million), versus the prior target of approximately $650 million (€574.8 million;
  • Net capital expenditures in the range of $400 million (€353.7 million) to $450 million (€397.9 million);
  • Depreciation and amortisation in the range of $765 million (€676.5 million) to $785 million (€694.2 million);
  • Effective tax rate in the range of 26 per cent to 29 per cent; and
  • Cash taxes in the range of $165 million (€145.9 million) to $190 million (€168 million).

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