XPO Logistics, Inc. (NYSE:XPO) Q3 2018 Earnings Conference Call - Final Transcript
Nov 01, 2018 • 08:30 am ET
Welcome to the XPO Logistics Q3 2018 Earnings Conference Call and Webcast. My name is Rob and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session (Operator Instructions).
(Forward-Looking Cautionary Statements) During this call, the company may also refer to certain non-GAAP financial measures as defined under applicable SEC rules. Reconciliations of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the related financial tables. You can find a copy of the company's earnings release, which contains additional important information regarding forward-looking statements and non-GAAP financial measures in the Investors section of the company's website.
I will now turn the call over to Brad Jacobs, Mr. Jacobs, you may begin.
Thank you, operator and good morning everybody. Thanks for joining our third quarter call. With me in Greenwich are Scott Malat, our Chief Strategy Officer and Tavio Headley, our Senior Director of Investor Relations.
As you saw yesterday, we maintained strong momentum throughout the quarter. Our revenue, net income, EPS and adjusted EBITDA were all third quarter records. We generated robust organic revenue growth of 10.5% and we signed up another $918 million of new business in the quarter, which was up a whopping 43% from a year ago. We entered October with a new business pipeline of $3.7 billion, that's up $400 million year-over-year. We again grew our profitability faster than revenue. We generated adjusted EBITDA of $415 million despite a $16 million headwind from a customer bankruptcy in Europe.
Looking at our lines of business, contract logistics was the standout once again. We grew our logistics revenue year-over-year by 13% with e-fulfillment ramping up globally. In North America, we grew our logistics business in the quarter by 18%. We implemented 26 contract logistics startups in the quarter, bringing the year-to-date count to a record 90 startups through September.
Freight brokerage was another highlight. We grew our North American brokerage revenue by 18% and notably we increased brokerage net revenue by 46%. We launched XPO Connect from scratch in April. Three months later, 6,000 of our carriers had opted-in and in the three months since then we've expanded to over 13,000 carriers. We expect the count to keep climbing fast. These are quality operators in our core network.
In North American LTL, we're continuing to create a more profitable customer mix and the investments we're making in sales and operations are showing results. We've improved adjusted operating income by 220 basis points in the third quarter and we expect our fourth quarter operating ratio to improve even more.
Company-wide, we're continuing to make investments in secular drivers such as our proprietary technology and XPO Direct our shared space distribution network. We have a collaborative sales force sharing large customer relationships across geographies. In last mile, we completed the expansion of our network to 85 hubs, ahead of plan and in contract logistics our labor planning tools