XPO reports mixed earnings, reaffirms outlook

Yahoo Finance Live anchors discuss third-quarter earnings for XPO Logistics.

Video transcript

[AUDIO LOGO]

BRIAN SOZZI: Welcome back. We still have a few minutes before the opening bell on Wall Street. So let's dive into a few movers here this morning.

XPO Logistics, shares of the company are on the clock after the reported earnings for the third quarter, topping Wall Street estimates on the bottom line and posting revenue growth of 3% year-over-year. And Julie, we were just saying, this email earnings release was sent out by now-outgoing CEO Brad Jacobs. Gonna miss him. Always fun to track his career. Very curious on what he has in store next.

But in terms of XPO, one thing that stood out to me was the truck brokerage sales in North America. Down 2%. A little bit of a red flag to me. I have to read a little more into it to see what the economic message there might be.

JULIE HYMAN: Yeah, it seems like investors and analysts are kind of setting aside this quarter because it's ahead of the company spin off of RXO, which is its less-than-truckload business. And so the company didn't really give a lot of guidance because of this impending split. So it's not that folks are writing it off, but just that they're kind of waiting to see what's happening.

JPMorgan does say that the company's less-than-truckload is taking market share because volumes turned positive in September. And that continued into October. So that's a little bit of a positive commentary surrounding it.

BRAD SMITH: Yeah, the company said that they improved what is the metric of their tonnage in North America in less-than-truckload each month through the third quarter. Positive year-over-year in September. And then their truck brokerage volume year-over-year, that was only up by about 9% there. So that getting back to the point that you were making earlier, Sozz.

BRIAN SOZZI: We've pretty much now gotten all the logistics results. And again, FedEx just stands out as the outlier dealing with a lot of operational struggles. XPO was good. UPS was good. FedEx, no go.

JULIE HYMAN: Well, and it sort of backs up what we've seen on consumer spending front, right? That we got the consumer spending numbers on Friday. They came in better than estimated. And most of what we have seen is that people are still-- it goes back to that story I was talking about at the top of the show.

Excess savings means people are not pushing back that much as of yet, against pricing increases. There is a little bit of trade down, right? Particularly among lower-income consumers. But it's not widespread enough yet to really have a depressive effect overall.

BRAD SMITH: Even within that truck brokerage business within the larger kind of XPO operation, gross profit margin 19% in the third quarter. You compare that dramatically year-over-year to the 31% improvement. It's really gonna come back down to where the volumes are continuing to increase.

And especially now knowing that the consumer profile for how much is necessary for a company in XPO to actually carry. If that spending changes dramatically or even if company inventory spending has changed dramatically as a result of the demand profile of the consumer, that could have a direct impact on XPO as well.