October 31, 2018 / 9:12 PM / a year ago

XPO customer bankruptcy dents quarterly earnings, outlook

(Reuters) - XPO Logistics Inc (XPO.N), one of the largest global freight transportation and warehousing companies, on Wednesday posted quarterly profit that missed Wall Street’s target and lowered its 2018 earnings forecast due to a customer bankruptcy.

Shares in XPO fell 3.8 percent to $86 in after-hours trade.

XPO’s British division in August shuttered the distribution centers it ran for House of Fraser after the 169-year-old U.K. department store chain entered administration - an insolvency procedure similar to U.S. bankruptcy - and was sold to Sports Direct International Plc (SPD.L).

XPO posted third quarter adjusted earnings of $121.3 million, or 89 cents per share, missing analysts’ average estimate by 9 cents, according to I/B/E/S data from Refinitiv.

The results included a 7 cent per share charge related to the customer bankruptcy. XPO Chairman and Chief Executive Bradley Jacobs declined to name the customer responsible for the charge.

The results also included higher depreciation and amortization related to investments in technology and automation, the company said.

XPO cut its 2018 target for adjusted earnings before interest, taxes, depreciation and amortization to around $1.58 billion, from its prior outlook of at least $1.6 billion, to reflect the bankruptcy-related charges.

XPO, which is North America’s largest provider of “final-mile” deliveries of heavy, bulky goods such as sofas, barbecue grills and televisions from warehouses direct to homes, said revenue grew 11.5 percent to $4.34 billion for the quarter.

Jacobs said that momentum continued into October - typically XPO’s biggest month of the year - when revenue increased in the “double-digit” percentages to more than $1.5 billion from a year earlier.

The Greenwich, Connecticut-based company’s transportation segment revenue grew 10.5 percent to $2.85 billion during the third quarter, bolstered by increases in freight brokerage services and “last-mile” deliveries in North America, as well as dedicated truckload transportation in the U.K. and France. Operating income was up 34.4 percent to $195.2 million in the quarter.

Logistics revenue rose 13.1 percent to $1.52 billion, amid robust demand for XPO’s e-commerce services for technology, food and beverage and apparel companies.

However, segment operating income fell 11.6 percent, primarily due to a $15.6 million charge related to the customer bankruptcy and a record number of contract start-ups.

Reporting by Lisa Baertlein in Los Angeles; editing by Bill Berkrot; editing by Phil Berlowitz and Bill Berkrot

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