XPO Logistics (NYSE: XPO) reported Q4 EPS of $1.12, $0.11 better than the analyst estimate of $1.01. Revenue for the quarter came in at $4.14 billion versus the consensus estimate of $4.23 billion.

• Grows EPS by 50% and adjusted EPS by 56% for the fourth quarter
• Grows net income by 18% and adjusted EBITDA by 14% for the fourth quarter
• Provides guidance for 7% to 10% growth in adjusted EBITDA for full year 2020

Review of Strategic Alternatives

On January 15, 2020, the company announced that its board of directors has authorized a review of strategic alternatives, including the possible sale or spin-off of one or more business units. The company has not determined which, if any, business units will be sold or spun off. However, the company does not intend to sell or spin off its North American less-than-truckload unit.

CEO Comments

Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “We delivered a good fourth quarter and a good year. I’m particularly pleased that we grew fourth quarter EPS by 50% year-over-year, and adjusted EPS by 56%. We also increased net income by 18% and adjusted EBITDA by 14% in the quarter.

“In our less-than-truckload unit, where we have several new technologies in place, the operating ratio was 83.9%, and the adjusted operating ratio was a fourth quarter record at 82.3%. In truck brokerage, we increased volume year-over-year with lower headcount, propelled by our XPO Connect digital platform. Our technology also helped our logistics segment generate a double-digit adjusted EBITDA margin in the quarter for the first time since 2015.”

Jacobs continued, “In 2020, we’ll continue to focus on maximizing shareholder value, while remaining intensely committed to the satisfaction of our customers and employees.”

2020 Financial Targets

The company issued the following full year 2020 targets, which do not reflect any potential impact to the company’s future financial performance from its exploration of strategic alternatives:

• Organic revenue growth of 3% to 5% year-over-year;
• Adjusted EBITDA in the range of $1.785 billion to $1.835 billion, an increase of 7% to 10% year-over-year;
• Free cash flow in the range of $600 million to $700 million;
• Net capital expenditures in the range of $475 million to $525 million;
• Depreciation and amortization in the range of $700 million to $750 million;
• Effective tax rate in the range of 24% to 27%; and
• Cash taxes in the range of $155 million to $180 million.

The company’s 2020 targets for free cash flow and cash taxes assume cash interest expense of $285 million to $305 million. The company’s 2020 target for free cash flow includes an incremental benefit to free cash flow of $50 million to $70 million from trade receivables programs.

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