Contract logistics provider GXO Logistics Inc. late Tuesday posted third-quarter results that exceeded analysts’ expectations and won praise for following a blueprint laid out a year ago during a different macroeconomic environment.

Adjusted diluted earnings per share came in at 75 cents, 5 cents higher than analysts’ consensus estimates and up from 56 cents in the year-earlier quarter. Revenue of $2.3 billion was 16% higher than the prior-year period. GXO’s (NYSE: GXO) adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $192 million was 19% higher year over year, the company said.

Third-quarter 2021 net income figures included a $42 million one-time tax benefit related to GXO’s August 2021 spinoff from former parent XPO Logistics Inc. (NYSE: XPO).

GXO affirmed its full-year guidance of 12% to 16% organic revenue growth, adjusted diluted EPS of $2.70 and $2.90, and adjusted EBITDA of $715 million to $750 million.

In early October, the company received U.K. regulatory clearance of its $1.3 billion acquisition of Clipper Logistics, a British firm with a strong position in reverse logistics, a segment that accounts for about 10% of GXO’s revenue but is growing faster than the rest of the company. The ensuing integration, which is underway, will result in cost synergies during 2023 and 2024, GXO said.

Of GXO’s six verticals, retail generated by far the largest amount of revenue in the quarter at $919 million. That was followed by food and beverage at $335 million. The United Kingdom, with $890 million in revenue, was GXO’s most active geographic area in the quarter, followed by the U.S. at $709 million.

As of midafternoon, shares rose about 1% to $36.89 a share.

Amit Mehrotra, analyst for Deutsche Bank, said in a note that the results were generally fine, although he noted certain adjustments that would result in a lower adjusted EBITDA figure. Mehrotra lauded GXO for being able to “deliver on its 2022 earnings set way back in the middle of 2021 in a very different macro and inflationary environment.” 

He pointed out the resilience of GXO’s model, which is rooted in the stability of long-term customer agreements with inflation pass-throughs and minimum volume commitments, has yet to be reflected in the share price. Mehrotra has a buy recommendation on GXO with a 123-month price target of $68 per share.

Jason Seidl, analyst at Cowen & Co. said GXO’s core operations “appear to be holding up better than expected” with organic revenue growth reported during the quarter in all product categories and geographies.

“We expect margins should remain strong in 4Q as some inflationary costs ease,” said Seidl, who said he was told by management that labor cost increases have “cooled significantly.”

Baris Oran, GXO’s CFO, appeared to reaffirm that position, telling analysts Wednesday morning that, unlike the 2021 peak season, the company will not need to provide financial incentives to attract and retain workers for the holiday period.

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