XPO Logistics (NYSE: XPO) reported Q3 EPS of $1.18, $0.14 better than the analyst estimate of $1.04. Revenue for the quarter came in at $4.15 billion versus the consensus estimate of $4.27 billion.

Updates 2019 Financial Targets

The company updated its full-year 2019 targets for revenue, depreciation and amortization, effective tax rate and cash taxes, and reaffirmed its targets for adjusted EBITDA, free cash flow and net capital expenditures, as follows:

• Revenue of (2.5%) to (4.0%) year-over-year, from (1%) to 1% previously; which translates to organic revenue growth, a non-GAAP financial measure, of flat to 1.0%, from 2.5% to 4.5% previously. The update to revenue reflects the company’s expectation for continued softness in the macro environment;
• Adjusted EBITDA in the range of $1.675 billion to $1.725 billion, or year-over-year growth of 7% to 10%, unchanged from prior guidance;
• Free cash flow in the range of $575 million to $675 million, unchanged;
• Net capital expenditures in the range of $400 million to $450 million, unchanged;
• Depreciation and amortization in the range of $745 million to $765 million, from $765 million to $785 million previously;
• Effective tax rate in the range of 23% to 25%, from 25% to 28% previously; and
• Cash taxes in the range of $110 million to $130 million, from $130 million to $150 million previously.

The company’s 2019 targets for free cash flow and cash taxes assume cash interest expense of $275 million to $290 million. The company continues to expect an incremental benefit to free cash flow of $125 million to $150 million from trade receivables programs in 2019.

CEO Comments

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “In the third quarter, we grew EPS by 54% and adjusted EPS by 33% year-over-year. We also delivered a solid beat on adjusted EBITDA, outpacing the macro through cost control and margin discipline. In less-than-truckload, our adjusted operating ratio was a third quarter record. We remain firmly on track to generate at least $1 billion of EBITDA from LTL in 2021.”

Jacobs continued, “Our significant investments in technology are creating tailwinds across our operations. We’re executing on 10 initiatives that represent a pool of $700 million to $1 billion of potential profit improvement over the next several years. One large opportunity is to apply our XPO Smart productivity tools to the $5 billion of annual costs related to our variable labor spend. All 10 initiatives are specific to XPO and largely independent of the operating environment. We’re very focused on the size of the prize and the meaningful potential uplift to our profitability.”

For earnings history and earnings-related data on XPO Logistics (XPO) click here.