The company increased its outlook for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to at least $490 million in the second quarter. “Stronger-than-expected performance in its transportation segment” was cited as the reason for the increase.
The expected second-quarter outperformance pushes full-year 2021 adjusted EBITDA expectations approximately 1% higher at the midpoint of the new range of $1.845 billion to $1.895 billion. The new 2021 guidance range implies year-over-year adjusted EBITDA growth of 32% to 36% in the transportation unit and 28% to 32% in the logistics segment.
XPO’s prior guidance called for second-quarter adjusted EBITDA to account for roughly 25% of the prior full-year forecast, or more than $460 million.
“GXO’s Form 10 public filing is a key step forward in our spinoff plan. The separation will create two pure-play powerhouses in the supply chain industry, XPO in transportation and GXO in logistics, each with enhanced prospects for growth,” stated Brad Jacobs, chairman and CEO of XPO Logistics, in the press release.
Guidance was also issued for the new logistics company, GXO.
Organic revenue is expected to increase by 8% to 12% year-over-year in 2022, assuming the spinoff is completed and current 2021 revenue projections hold. The forecast doesn’t include potential acquisitions.
Adjusted EBITDA is expected to be in the range of $700 million to $735 million, 14% to 20% higher year-over-year. GXO is expected to generate $1.5 billion in adjusted EBITDAR, which adds restructuring and rent expenses to EBITDA.
“GXO will have accelerated momentum out of the gate as an independent company, as reflected in the strong 2022 guidance we issued today,” said Malcolm Wilson, CEO of XPO Logistics Europe and soon-to-be CEO of GXO. “Our growth is being driven by customer demand for outsourcing and for two areas of logistics where we hold leading positions — warehouse automation and e-commerce.”
After years of executing a rollup strategy of acquiring various transportation companies, which was designed to bring about the synergies of a complete transportation and logistics provider under one roof, XPO announced the spinoff of its logistics segment at the end of 2020. The company said the spinoff provides the best means of unlocking value and shedding the “conglomerate’s discount” it believes has suppressed equity valuation.
The two companies will trade separately on the New York Stock Exchange, with Jacobs serving as chairman of both and CEO of XPO, a transportation company primarily offering less-than-truckload and truck brokerage services. GXO will be the second-largest contract logistics company in the world.
The press release also announced the unveiling of GXO.com and a July 13 investor day in New York. The company plans to hold a separate investor day in London at a future date.
Shares of XPO were off 2.4% in early trading Wednesday compared to the S&P 500, which was up 0.1%.