Shares of XPO Logistics Inc. plummeted in active trade Friday, as the loss of business from its largest customer and weakness in Europe led to a disappointing earnings report, and overwhelmed relatively large share buybacks.
“Well look, there’s no other way to say it, we missed the quarter,” said Chief Executive Bradley Jacobs in a post-earnings conference call with analysts before the open, according to a transcript provided by FactSet.
The stock XPO, -12.73% tumbled 13% as volume swelled to over 19.3 million shares, which was more than seven times the full-day average.
Late Thursday, the Connecticut-based company reported fourth-quarter net income that fell to $84 million, or 62 cents a share, from $189 million, or $1.42 a share, a year ago. On an adjusted basis, earnings per share rose to 72 cents from 45 cents, but was below the FactSet consensus of 84 cents.
Revenue rose 4.6% $4.39 billion, but was below the FactSet consensus of $4.57 billion, as less-than-expected transportation revenue offset a slight beat in logistics. The company updated its 2019 revenue growth target to 3% to 5%, while the current FactSet revenue consensus of $18.48 billion implies 7% growth.
“We miscalculated the weakness in France and the U.K.,” Jacobs said. “And in December, our largest customer pulled back their postal injection business which is part of last mile.”
Although the company declined to comment on who the customer might be, JPMorgan analyst Brian Ossenbeck said the pullback is likely Amazon.com Inc. AMZN, -0.91% taking capacity in-house.
“Reading between the lines, we believe the shipper that is paring down its parcel injection, brokerage, last mile and logistics activity with XPO is Amazon,” Ossenbeck wrote in a note to clients.
See also: Why your Amazon packages may soon arrive faster.
See related: FedEx and UPS stocks sink, after analyst says Amazon taking business in-house could weigh.
XPO said the customer’s pullback will reduce 2019 revenue expectations by about $600 million, or about “two-thirds” of the customer’s revenue that the business generated in 2018. That implies the customer’s business represented about 5.2% of 2018 revenue of $17.28 billion.
Meanwhile, revenue from France represented 12.5% of 2018 total revenue of $17.28 billion and the U.K. represented 12.0%.
Another disappointment for XPO investors, the stock closed Friday 7.3% below where the company spent $1 billion to buy back and retire a large chunk of its common stock.
On Dec. 14, XPO announced a $1 billion stock repurchase program. That came a day after the stock suffered its biggest-ever one-day selloff to close at a near 2-year low, after short seller Spruce Capital Management said it believed financial irregularities were covering up growth problems at the company. At that time, the company said the short seller’s report was “intentionally misleading,” and contained “significant inaccuracies.”
Late Thursday, XPO said that program was completed on Feb. 4, as the company repurchased 18 million shares, or roughly 14% of the shares outstanding, at an average price of $56.09. From Dec. 13 to Feb. 4, the stock had run up 36%, with an average closing price of $58.45.
Separately, the company announced a new $1.5 billion repurchase program, which would allow it to buyback up to about 27% of its outstanding shares.
XPO’s stock has tumbled 29.5% over the past three months, while the Dow Jones Transportation Average DJT, +0.29% has edged up 0.3% and the Dow Jones Industrial Average DJIA, +1.74% has tacked on 3.5%.
