Core Insights - XPO has demonstrated resilience in a challenging freight environment, with stock performance quadrupling since early 2023 following the spinoff of GXO Logistics and RXO [1][2] Financial Performance - XPO reported flat revenue of $2.08 billion, exceeding estimates of $2.05 billion [4] - Revenue in the North American LTL business decreased by 2.5% to $1.24 billion, while the European Transportation segment increased by 4.1% to $841 million [5] - Tonnage declined by 6.7% per day, but yield increased by 6.1% excluding fuel [5] - Adjusted EBITDA was nearly flat, decreasing from $343 million to $340 million, and adjusted EPS fell from $1.12 to $1.05, still surpassing the consensus estimate of $0.99 [8] Strategic Initiatives - Share buybacks have resumed, with $10 million repurchased in Q2, and expectations for increased repurchases in the second half of the year due to seasonal cash flow [10][11] - Capital expenditures are expected to decline as a percentage of revenue, allowing for more cash to be allocated to share repurchases and debt reduction, which will enhance EPS [12] - Nearshoring trends may boost growth in the industrial economy, as increased U.S. manufacturing could drive demand for LTL transportation, benefiting XPO [13][14] - The local business segment is accelerating, with high single-digit growth in Q2, driven by investments in local sales and improved service quality [15][16] Long-term Goals - XPO aims to achieve a compound annual revenue growth of 6% to 8%, adjusted EBITDA growth of 11% to 13%, and a 600-basis-point decline in adjusted operating ratio by 2027 [17]

Core Insights - XPO reported Q2 2025 results that exceeded analyst expectations for adjusted diluted earnings per share and revenue, but showed a decline compared to Q2 2024 figures due to softening shipment volumes across the sector [1][5][6] - The company demonstrated margin improvement and operational efficiency despite market challenges, highlighting strong operating discipline [1][4] Financial Performance - Adjusted diluted EPS for Q2 2025 was $1.05, surpassing the $0.99 estimate but down 6.3% from $1.12 in Q2 2024 [2][5] - Revenue for Q2 2025 was $2.08 billion, slightly above the $2.05 billion forecast but down 6.3% year-over-year [2][5] - Adjusted EBITDA was $340 million, a decrease of 0.9% from Q2 2024 [2][5] Segment Performance - North American LTL revenue decreased by 2.5% year-over-year to $1.24 billion, reflecting market-wide demand trends [2][6] - The adjusted operating ratio improved to 82.9%, indicating enhanced efficiency despite lower revenue [2][6] Operational Developments - XPO's linehaul insourcing strategy significantly reduced purchased transportation expenses, cutting costs to $32 million in Q2 2025 [6] - The company achieved a 6.1% year-over-year increase in LTL yield, suggesting effective pricing strategies [6] Strategic Focus - XPO is concentrating on strengthening its North American LTL market position, investing in technology, expanding terminal capacity, maintaining sustainability, and enhancing customer service [3][4] - The company is leveraging AI tools for labor planning and route optimization, which have begun to yield productivity benefits [8] Market Trends - The industry is facing muted freight volumes, with tonnage per day down 7.5% year-over-year, influenced by tighter trade policies and slower industrial demand [9] - XPO's European transportation segment remains profitable but is experiencing slower economic conditions [7] Future Guidance - Management projects gross capital expenditures of $600 million to $700 million for full-year 2025 and aims for a 150 basis points improvement in operating ratio, even with negative shipment growth [10] - The company has a $750 million share repurchase authorization, providing flexibility for stock buybacks as conditions allow [11]

[Part I—Financial Information](index=4&type=section&id=Part%20I%E2%80%94Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=4&type=page&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents XPO, Inc.'s unaudited condensed consolidated financial statements for Q2 and YTD 2025, including balance sheets, income, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=page&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$8.13 billion** as of June 30, 2025, from **$7.71 billion** at year-end 2024, with liabilities rising to **$6.35 billion** and equity to **$1.78 billion** Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $1,623 | $1,505 | | **Total long-term assets** | $6,510 | $6,206 | | **Total assets** | **$8,133** | **$7,712** | | **Total current liabilities** | $1,599 | $1,420 | | **Total long-term liabilities** | $4,753 | $4,690 | | **Total equity** | **$1,781** | **$1,601** | | **Total liabilities and equity** | **$8,133** | **$7,712** | [Condensed Consolidated Statements of Income](index=5&type=page&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 revenue remained flat at **$2.08 billion**, but net income decreased to **$106 million** from **$150 million** year-over-year, with diluted EPS at **$0.89** Income Statement Summary (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,080 | $2,079 | $4,034 | $4,097 | | **Operating Income** | $198 | $197 | $349 | $335 | | **Net Income** | $106 | $150 | $175 | $217 | | **Diluted EPS** | $0.89 | $1.25 | $1.47 | $1.81 | [Condensed Consolidated Statements of Cash Flows](index=7&type=page&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased to **$389 million** for YTD 2025, while cash used in investing decreased to **$382 million** and financing increased to **$74 million** Cash Flow Summary - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $389 | $355 | | **Net cash used in investing activities** | $(382) | $(483) | | **Net cash used in financing activities** | $(74) | $(35) | | **Net decrease in cash** | $(65) | $(162) | [Notes to Condensed Consolidated Financial Statements](index=10&type=page&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, strategic developments like the Yellow Corporation acquisition and European divestiture, segment operations, and recent financing and share repurchase activities - In December 2023, the company acquired 28 service centers from Yellow Corporation to expand its LTL network capacity in key markets[31](index=31&type=chunk) - The Board of Directors' authorization to divest the European business remains in effect, though there is no assurance a transaction will occur[32](index=32&type=chunk) - In February 2025, the company refinanced its term loan facility, resulting in a **$5 million** debt extinguishment loss, and entered into a new **$600 million** Revolving Credit Agreement[68](index=68&type=chunk)[74](index=74&type=chunk) - A new share repurchase program of up to **$750 million** was authorized in March 2025, replacing the previous plan. In Q2 2025, **$10 million** of stock was repurchased[77](index=77&type=chunk)[78](index=78&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=page&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 performance, noting flat consolidated revenue, segment-specific trends, ongoing technology investments, and strong liquidity of **$824 million** [Consolidated Results of Operations](index=25&type=page&id=Consolidated%20Results%20of%20Operations) Consolidated revenue for Q2 2025 was flat at **$2.1 billion**, while YTD revenue decreased **1.5%** to **$4.0 billion**, with Q2 net income falling to **$106 million** due to a prior-year tax benefit Consolidated Financial Highlights (in millions) | Metric | Q2 2025 | Q2 2024 | Change % | YTD 2025 | YTD 2024 | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $2,080 | $2,079 | 0.0% | $4,034 | $4,097 | (1.5)% | | **Operating Income** | $198 | $197 | 0.5% | $349 | $335 | 4.2% | | **Net Income** | $106 | $150 | (29.3)% | $175 | $217 | (19.4)% | - The year-over-year increase in the effective tax rate was primarily driven by a one-time tax benefit of **$41 million** in Q2 2024 from a legal entity reorganization in the European business[118](index=118&type=chunk) [Segment Financial Results](index=27&type=page&id=Segment%20Financial%20Results) North American LTL Q2 revenue decreased **2.5%** due to lower tonnage, while European Transportation revenue grew **4.1%** but saw a **10.2%** decline in Adjusted EBITDA North American LTL Key Metrics (YoY Change %) | Metric | Q2 2025 vs Q2 2024 | YTD 2025 vs YTD 2024 | | :--- | :--- | :--- | | Pounds per day | (6.7)% | (7.1)% | | Shipments per day | (5.1)% | (5.5)% | | Gross revenue per hundredweight (ex-fuel) | 6.1% | 6.5% | Segment Adjusted EBITDA (in millions) | Segment | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | **North American LTL** | $300 | $297 | $550 | $551 | | **European Transportation** | $44 | $49 | $76 | $87 | [Liquidity and Capital Resources](index=29&type=page&id=Liquidity%20and%20Capital%20Resources) Total liquidity was **$824 million** as of June 30, 2025, with **$389 million** cash from operations YTD, and anticipated full-year capex between **$600 million** and **$700 million** - Total liquidity as of June 30, 2025, was approximately **$824 million**[137](index=137&type=chunk) Sources and Uses of Cash - Six Months Ended June 30 (in millions) | Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $389 | $355 | | Net cash used in investing activities | $(382) | $(483) | | Net cash used in financing activities | $(74) | $(35) | - Anticipated full-year 2025 gross capital expenditures are projected to be between **$600 million** and **$700 million**[151](index=151&type=chunk) - Subsequent to the quarter end, in July 2025, the company used cash on hand to repay **$50 million** of outstanding principal on its Term Loan B-2 Facility[87](index=87&type=chunk)[151](index=151&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=page&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in market risk disclosures concerning interest rates, foreign currency, and commodity prices since the 2024 Form 10-K - There have been no material changes to market risk disclosures concerning interest rates, foreign currency, and commodity prices since the 2024 Form 10-K[153](index=153&type=chunk) [Controls and Procedures](index=31&type=page&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[154](index=154&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[155](index=155&type=chunk) [Part II—Other Information](index=32&type=section&id=Part%20II%E2%80%94Other%20Information) [Item 1. Legal Proceedings](index=32&type=page&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the Financial Statements for detailed information on the company's legal proceedings and ongoing litigation - For information on legal proceedings, the report directs readers to Note 10—Commitments and Contingencies in the financial statements[156](index=156&type=chunk) [Item 1A. Risk Factors](index=32&type=page&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the 2024 Form 10-K have occurred - There are no material changes to the risk factors disclosed in the 2024 Form 10-K[157](index=157&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=page&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased **$10 million** of common stock under a new **$750 million** share repurchase program, with **$740 million** remaining available Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | Total Value (in millions) | | :--- | :--- | :--- | :--- | | **April 2025** | — | $— | $0 | | **May 2025** | 12,369 | $121.26 | ~$1.5 | | **June 2025** | 70,672 | $120.26 | ~$8.5 | | **Total Q2** | **83,041** | **$120.41** | **$10** | - A new share repurchase program for up to **$750 million** was authorized on March 27, 2025. As of June 30, 2025, **$740 million** remains available for repurchase[160](index=160&type=chunk)

Financial Data and Key Metrics Changes - The company reported total revenue of $2.1 billion, which is in line with last year and up 6% sequentially from the first quarter [17] - Adjusted EBITDA was $340 million, down 1% from a year ago, while adjusted EBITDA for the LTL segment grew by 1% to $300 million, expanding the margin by 90 basis points to 24.2% [20] - Net income was $106 million, equating to $0.89 of diluted earnings per share, with adjusted EPS at $1.05 compared to $1.12 a year ago [21] Business Line Data and Key Metrics Changes - In the LTL segment, revenue declined 3% year over year, largely due to a reduction in fuel surcharge revenue, but increased 6% sequentially [17] - Total shipments per day in the LTL segment declined 5.1% year over year, but local channel shipments grew by high single digits [24] - Yield excluding fuel increased by 6.1% year over year, marking the tenth consecutive quarter of sequential increase in revenue per shipment [27] Market Data and Key Metrics Changes - The European Transportation segment reported a 4% year-over-year revenue increase and a 38% sequential increase in adjusted EBITDA [29] - The company noted that tonnage per day declined 6.7%, largely in line with normal seasonal trends, but showed improvement from the first quarter [25] Company Strategy and Development Direction - The company is focused on enhancing its service levels and technology to differentiate its value proposition, with ongoing investments in network expansion and technology [8] - The grocery consolidation service is identified as a significant growth opportunity, with an estimated market size of $1 billion [36] - The company aims to improve its adjusted operating ratio by 100 basis points year on year, despite a soft freight environment [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining margin expansion and long-term value creation, even in a challenging freight market [16] - The company expects to continue improving yield and cost management, with a flat operating ratio anticipated for the third quarter [33] - Management highlighted the importance of AI initiatives in driving operational efficiency and productivity improvements [45] Other Important Information - The company ended the quarter with $225 million in cash and $824 million in total liquidity, with a net debt leverage ratio improving to 2.5 times trailing twelve months adjusted EBITDA [22] - A share buyback program was initiated, with $10 million of common stock repurchased in the second quarter [22] Q&A Session Questions and Answers Question: What is the outlook for the operating ratio in the third quarter? - Management expects a strong quarter for margin performance, with the operating ratio anticipated to be flattish on a quarter-over-quarter basis, representing significant year-on-year improvement [33] Question: What were the drivers behind the strong results in Europe? - The European segment saw organic revenue growth for the sixth consecutive quarter, with strength particularly in the UK and Central Europe [48] Question: How does the company plan to sustain pricing and yield growth in a muted freight market? - Management indicated that they have a long runway for yield improvements and are focused on bridging the gap with best-in-class carriers [53] Question: What impact does the FedEx separation have on the competitive landscape? - Management believes the separation will enhance price discipline and margin expansion across the industry [76] Question: Can the company sustain high single-digit growth in the local channel? - Management confirmed that they expect to continue growing the local channel, which is a key driver of yield improvement [82]

Financial Data and Key Metrics Changes - The company reported revenue of $2.1 billion, which is in line with the previous year and up 6% sequentially from Q1 [15] - Adjusted EBITDA was $340 million, down 1% year over year [17] - Adjusted diluted EPS was $1.05, exceeding expectations, compared to $1.12 a year ago [19] - Net income was $106 million, equating to $0.89 of diluted earnings per share [19] - The net debt leverage ratio improved to 2.5 times trailing twelve months adjusted EBITDA from 2.7 times a year ago [20] Business Line Data and Key Metrics Changes - In the LTL segment, revenue declined 3% year over year, largely due to a reduction in fuel surcharge revenue [15] - Excluding fuel, LTL revenue was down 1% year over year but increased 6% sequentially [15] - Adjusted EBITDA for the LTL segment grew by 1% to $300 million, with a margin expansion of 90 basis points to 24.2% [18] - Total shipments per day in the LTL segment declined 5.1% compared to the prior year, but local channel shipments increased by high single digits [22] Market Data and Key Metrics Changes - The European Transportation segment reported a 4% year-over-year revenue increase and a 38% sequential increase in adjusted EBITDA [26] - The company experienced strength in the UK and Central Europe, with EBITDA growth in the low to mid single-digit range [44] Company Strategy and Development Direction - The company is focused on margin expansion and long-term value creation through strategic investments in technology and network efficiency [13] - The grocery consolidation service is identified as a new growth opportunity, estimated at a $1 billion market size, with expectations for significant margin contributions [33] - The company aims to improve its local channel share from 20% to 30%, which is expected to enhance yield and revenue per shipment [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining margin performance despite a soft freight environment, expecting a flat operating ratio in Q3 compared to Q2 [31] - The company anticipates continued yield growth and cost management effectiveness, even in a challenging macroeconomic backdrop [41] - Management highlighted the importance of AI initiatives in driving operational improvements and productivity gains [42] Other Important Information - The company generated $247 million in cash flow from operating activities and deployed $191 million in net CapEx during the quarter [19] - A share buyback program was initiated, with $10 million of common stock repurchased in Q2, with plans to scale up as free cash flow increases [20] Q&A Session Summary Question: Outlook for operating ratio in Q3 and grocery market opportunity - Management expects Q3 operating ratio to be flattish compared to Q2, driven by strong yield and effective cost management [31][32] - The grocery consolidation market is estimated at $1 billion, with the company underrepresented and expecting growth in this segment [33] Question: Strong results in Europe and future expectations - Management noted strong performance in Europe, with organic revenue growth for six consecutive quarters and expects to outperform seasonal trends in Q3 [44][45] Question: Revenue environment and tonnage dynamics - Management acknowledged a steep deceleration in June but noted a snapback in July, with expectations for tonnage declines to moderate in Q3 [90][91] Question: Incremental margins in an upcycle - Management expects comfortably over 40% incremental margins in the next upcycle, driven by yield initiatives and improved productivity [67][68] Question: Competitive dynamics and pricing environment - Management believes the separation of FedEx's freight business will enhance price discipline and margin expansion across the industry [75][76] Question: Pricing expectations for the second half - Management anticipates continued sequential improvement in yield and revenue per shipment in Q3 and Q4, supported by local channel growth [80][81]

Core Viewpoint - XPO reported quarterly earnings of $1.05 per share, exceeding the Zacks Consensus Estimate of $0.99 per share, but down from $1.12 per share a year ago, indicating a +6.06% earnings surprise [1] Financial Performance - XPO's revenues for the quarter ended June 2025 were $2.08 billion, surpassing the Zacks Consensus Estimate by 1.90%, consistent with year-ago revenues [2] - Over the last four quarters, XPO has exceeded consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - XPO shares have increased by approximately 0.9% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The company's earnings outlook will be crucial for future stock movements, with current consensus EPS estimates at $1.02 for the coming quarter and $3.63 for the current fiscal year [4][7] Industry Context - The Transportation - Truck industry, to which XPO belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, which may negatively impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the current unfavorable estimate revisions trend could lead to underperformance [5][6]

Q2 2025 Performance Highlights - XPO's operating income reached $198 million, a 1% increase year-over-year[8,9] - The LTL adjusted operating ratio improved by 30 bps year-over-year to 82.9%[8,9] - LTL adjusted EBITDA increased by 1% year-over-year to $300 million[8,9] - LTL purchased transportation expense decreased by 53% year-over-year[8] - LTL linehaul miles outsourced to third-party carriers decreased by 910 bps year-over-year[8,43] - LTL yield, excluding fuel, increased by 6.1% year-over-year[8,39] Strategic Growth Plan & Targets - The company aims for a revenue CAGR of 6% to 8% and an adjusted EBITDA CAGR of 11% to 13% for LTL growth from 2021 to 2027[12,44] - The company is targeting an adjusted operating ratio improvement of at least 600 bps for LTL from 2021-2027[12] - The company plans to target capex of 8% to 12% of revenue on average through 2027[29] Industry Position - The North American LTL industry is a $53 billion industry, with the top 10 players holding over 75% market share[18] - The company's North American LTL segment has a 9% industry share, generating $4.9 billion in revenue in 2024[19] 2025 Outlook - The company anticipates total gross capex between $600 million and $700 million for the full year 2025[50] - The company expects interest expense between $220 million and $230 million for the full year 2025[50] - The company projects a diluted share count of 120 million for the full year 2025[50]

[Q2 2025 Financial Highlights](index=1&type=section&id=XPO%20Reports%20Second%20Quarter%202025%20Results) XPO reported stable Q2 2025 revenue of $2.08 billion, with net income down 29.3% to $106 million, while adjusted metrics exceeded expectations [Overall Performance](index=1&type=section&id=Second%20Quarter%202025%20Summary%20Results) XPO reported stable Q2 2025 revenue of $2.08 billion, with net income down 29.3% to $106 million, while adjusted metrics exceeded expectations Q2 2025 Consolidated Financial Summary (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $2,080M | $2,079M | 0.0% | | Operating Income | $198M | $197M | 0.5% | | Net Income | $106M | $150M | -29.3% | | Adjusted EBITDA | $340M | $343M | -0.9% | | Diluted EPS | $0.89 | $1.25 | -28.8% | | Adjusted Diluted EPS | $1.05 | $1.12 | -6.3% | - CEO Mario Harik stated that the company delivered strong results, with adjusted EBITDA of **$340 million** and adjusted diluted EPS of **$1.05** both exceeding expectations[6](index=6&type=chunk) - The company generated **$247 million** in cash flow from operating activities and ended the quarter with **$225 million** in cash and cash equivalents after **$191 million** in net capital expenditures[11](index=11&type=chunk) [Segment Performance](index=2&type=section&id=Results%20by%20Business%20Segment) The North American LTL segment saw slight revenue decline but improved operating ratio, while European Transportation grew revenue but declined in adjusted EBITDA [North American Less-Than-Truckload (LTL)](index=2&type=section&id=North%20American%20Less-Than-Truckload%20(LTL)) The North American LTL segment's revenue decreased 2.5% to $1.24 billion due to lower tonnage, yet achieved an industry-best adjusted operating ratio of 82.9% North American LTL Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $1,240M | $1,272M | -2.5% | | Adjusted Operating Income | $211M | $214M | -1.4% | | Adjusted EBITDA | $300M | $297M | 1.0% | | Adjusted Operating Ratio | 82.9% | 83.2% | -30 bps | - Key operational changes year-over-year include a **6.7% decrease** in tonnage per day and a **5.1% decrease** in shipments per day[12](index=12&type=chunk) - The company achieved strong pricing with a **6.1% increase** in yield (excluding fuel) and a **5.6% increase** in revenue per shipment, driven by a world-class service culture and share gains with local customers[7](index=7&type=chunk) - Cost management was effective, with purchased transportation expense reduced by **53%** year-over-year as the company insourced a record level of linehaul miles[7](index=7&type=chunk) [European Transportation](index=2&type=section&id=European%20Transportation) The European Transportation segment reported a 4.1% increase in revenue to $841 million, but adjusted EBITDA declined by 10.2% European Transportation Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $841M | $808M | 4.1% | | Operating Income | $11M | $10M | 10.0% | | Adjusted EBITDA | $44M | $49M | -10.2% | [Corporate](index=3&type=section&id=Corporate) The Corporate segment's operating loss improved to $11 million from $16 million, primarily due to reduced transaction and integration costs Corporate Q2 2025 Performance (vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change % | | :--- | :--- | :--- | :--- | | Operating Loss | ($11M) | ($16M) | -31.3% | | Adjusted EBITDA | ($4M) | ($3M) | 33.3% | - The improvement in operating loss was mainly due to a reduction in transaction and integration costs[14](index=14&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Financial%20Statements) This section presents XPO's consolidated statements of income, balance sheets, and cash flows for the reported periods [Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the six months ended June 30, 2025, XPO's revenue decreased 1.5% to $4.03 billion, while net income fell 19.4% to $175 million Six Months Ended June 30, 2025 vs 2024 | Metric | 6M 2025 | 6M 2024 | Change % | | :--- | :--- | :--- | :--- | | Revenue | $4,034M | $4,097M | -1.5% | | Operating Income | $349M | $335M | 4.2% | | Net Income | $175M | $217M | -19.4% | | Diluted EPS | $1.47 | $1.81 | -18.8% | - Key expense changes for the six-month period include a **5.5% decrease** in purchased transportation costs and a **76.9% decrease** in transaction and integration costs, while restructuring costs rose **42.9%**[27](index=27&type=chunk) [Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, XPO's total assets increased to $8.13 billion, driven by property and equipment, while total equity grew to $1.78 billion Balance Sheet Summary | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $225M | $246M | | Total Assets | $8,133M | $7,712M | | Long-term debt | $3,344M | $3,325M | | Total Liabilities | $6,352M | $6,110M | | Total Equity | $1,781M | $1,601M | [Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, the company generated $389 million in net cash from operating activities, with a net decrease in cash of $65 million Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $389M | $355M | | Net cash used in investing activities | ($382M) | ($483M) | | Net cash used in financing activities | ($74M) | ($35M) | | Net decrease in cash | ($65M) | ($162M) | [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) This section explains XPO's use of non-GAAP financial measures and provides reconciliations to GAAP equivalents [Explanation of Non-GAAP Measures](index=3&type=section&id=Explanation%20of%20Non-GAAP%20Measures) XPO uses non-GAAP measures like adjusted EBITDA and net income to provide a clearer analysis of core operations by excluding non-recurring items - The company uses non-GAAP measures to exclude items that may not be reflective of, or are unrelated to, core operating performance[19](index=19&type=chunk) - Key non-GAAP measures include: **adjusted EBITDA**, **adjusted net income**, **adjusted diluted EPS**, **adjusted operating income**, and **adjusted operating ratio**[18](index=18&type=chunk) - Adjustments typically include transaction and integration costs, restructuring costs, and amortization of acquisition-related intangible assets[20](index=20&type=chunk)[21](index=21&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=13&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) For Q2 2025, XPO reconciled its net income of $106 million to an adjusted EBITDA of $340 million, primarily by adding back depreciation, interest, and tax provisions Q2 2025 Reconciliation of Net Income to Adjusted EBITDA | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $106M | $150M | | Interest expense | $56M | $56M | | Income tax provision (benefit) | $37M | ($3M) | | Depreciation and amortization | $131M | $122M | | Transaction & integration costs | $3M | $12M | | Restructuring costs | $8M | $6M | | **Adjusted EBITDA** | **$340M** | **$343M** | [Reconciliation of Net Income to Adjusted Net Income and EPS](index=14&type=section&id=Reconciliation%20of%20Net%20Income%20and%20Diluted%20Earnings%20Per%20Share%20to%20Adjusted%20Net%20Income%20and%20Adjusted%20Earnings%20Per%20Share) In Q2 2025, net income of $106 million ($0.89 per diluted share) was reconciled to an adjusted net income of $125 million ($1.05 per diluted share) Q2 2025 Reconciliation to Adjusted Net Income and EPS | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income | $106M | $150M | | Amortization of acquisition-related intangible assets | $15M | $14M | | Transaction & integration costs | $3M | $12M | | Restructuring costs | $8M | $6M | | European legal entity reorganization | - | ($41M) | | **Adjusted net income** | **$125M** | **$135M** | | **Adjusted diluted EPS** | **$1.05** | **$1.12** | [Other Information](index=3&type=section&id=Other%20Information) This section provides important disclosures regarding forward-looking statements and company contact information [Forward-Looking Statements](index=4&type=section&id=Forward-looking%20Statements) The report contains forward-looking statements subject to various risks and uncertainties, and actual results may differ materially from expectations - Statements that are not historical facts are considered forward-looking and are based on management's current assumptions and analysis[22](index=22&type=chunk) - Key risks include economic impacts, supply chain issues, cost inflation, ability to implement revenue initiatives, competition, and fluctuations in currency and fuel prices[23](index=23&type=chunk) [Company Overview and Conference Call](index=3&type=section&id=About%20XPO) XPO, Inc. is a leading North American LTL freight transportation provider, with a conference call scheduled for July 31, 2025, to discuss results - XPO is a leader in asset-based LTL freight transportation in North America, serving **55,000 customers** and headquartered in Greenwich, Conn., USA[16](index=16&type=chunk) - A conference call to discuss the quarterly results is scheduled for **July 31, 2025**, at **8:30 a.m. Eastern Time**[15](index=15&type=chunk)

Core Insights - XPO reported diluted earnings per share of $0.89 for Q2 2025, down from $1.25 in Q2 2024, and adjusted diluted earnings per share of $1.05, down from $1.12 in the same period last year [1][7][8] - The company generated total revenue of $2.08 billion, unchanged from Q2 2024, with operating income slightly increasing to $198 million from $197 million [6][7][8] - Net income decreased by 29.3% to $106 million compared to $150 million in Q2 2024, primarily due to a one-time tax benefit in the previous year [7][8] Financial Performance - North American Less-Than-Truckload (LTL) segment revenue was $1.24 billion, a decrease of 2.5% from $1.27 billion in Q2 2024, with operating income at $199 million, down from $203 million [10][12] - European Transportation segment revenue increased by 4.1% to $841 million, with operating income rising to $11 million from $10 million [12][41] - Adjusted EBITDA for the total company was $340 million, slightly down from $343 million in Q2 2024, reflecting yield growth and lower transportation costs [8][11][49] Operational Highlights - In the North American LTL business, the adjusted operating ratio improved by 30 basis points to 82.9%, despite a decline in tonnage [5][10] - Yield, excluding fuel, increased by 6.1%, and revenue per shipment rose by 5.6% year-over-year [5][10] - The company achieved a 53% reduction in purchased transportation expenses by insourcing linehaul miles to a record level [5] Cash Flow and Capital Expenditures - XPO generated $247 million in cash flow from operating activities in Q2 2025, ending the quarter with $225 million in cash and cash equivalents after $191 million in net capital expenditures [9][30]

Core Viewpoint - The upcoming earnings report for XPO is expected to show a decline in both earnings per share and revenue compared to the previous year, indicating a downward trend in financial performance [1]. Financial Performance - Analysts predict quarterly earnings of $0.99 per share, reflecting an 11.6% decline year-over-year [1]. - Revenue is forecasted to be $2.04 billion, which represents a 1.8% decrease compared to the same quarter last year [1]. - The consensus EPS estimate has been revised downward by 3.9% over the past 30 days, indicating a reappraisal by analysts [1]. Segment Performance - Revenue for the European Transportation Segment is expected to reach $793.91 million, down 1.7% from the prior-year quarter [4]. - The North American Less-Than-Truckload Segment is projected to generate $1.24 billion in revenue, reflecting a year-over-year decline of 2.3% [4]. - The Adjusted Operating Ratio is anticipated to be 82.9%, slightly improved from 83.2% reported in the same quarter last year [4]. Key Metrics - The number of working days is expected to remain at 64, consistent with the previous year [5]. - Shipments per day are forecasted to be 50,737, down from 53,519 in the year-ago period [5]. - Gross revenue per hundredweight (excluding fuel surcharges) is estimated at $25.16, up from $23.56 a year ago [5]. - Gross revenue per hundredweight (including fuel surcharges) is projected to be $29.18, compared to $28.04 in the same quarter last year [6]. - The average weight per shipment is expected to be 1,343.1 pounds, down from 1,358.0 pounds in the previous year [6]. - Net revenue per shipment is estimated at $388.45, compared to $370.98 a year ago [7]. - Pounds per day are projected to be 68.15 million, down from 72.66 million in the same quarter last year [7]. EBITDA Estimates - Adjusted EBITDA for the European Transportation Segment is expected to be $36.99 million, down from $49.00 million in the same quarter last year [8]. - Adjusted EBITDA for the North American Less-Than-Truckload Segment is projected to be $300.53 million, slightly up from $297.00 million a year ago [8]. Stock Performance - XPO shares have increased by 3.9% over the past month, outperforming the Zacks S&P 500 composite's increase of 3.4% [9]. - XPO currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance relative to the overall market in the near term [9].