XPO(XPO) - 2024 Q4 - Annual Results

Executive Summary & Overall Results Fourth Quarter and Full Year 2024 Financial Highlights XPO achieved strong financial results in Q4 and full-year 2024, with significant growth in diluted and adjusted diluted EPS, driven by robust North American LTL performance and overall adjusted EBITDA growth Fourth Quarter and Full Year Key Financial Metrics: | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Change (%) | Full Year 2024 (million USD) | Full Year 2023 (million USD) | Change (%) | | :-------------------------------- | :------------- | :------------- | :--------- | :----------- | :----------- | :--------- | | Revenue | 1,921 | 1,940 | -1.0% | 8,072 | 7,744 | 4.2% | | Operating Income | 148 | 119 | 24.4% | 660 | 438 | 50.7% | | Adjusted EBITDA | 303 | 264 | 14.8% | 1,266 | 996 | 27.1% | | Net Income | 76 | 58 | 31.0% | 387 | 192 | 101.6% | | Diluted EPS | 0.63 | 0.49 | 28.6% | 3.23 | 1.62 | 99.4% | | Adjusted Diluted EPS | 0.89 | 0.77 | 15.6% | 3.83 | 2.92 | 31.2% | - The company's full-year adjusted EBITDA increased by 27% year-over-year, with adjusted diluted EPS growing by 31% year-over-year[6] CEO Commentary CEO Mario Harik highlighted strong Q4 performance and full-year earnings growth exceeding market expectations, praising North American LTL's significant improvements in operating income, operating ratio, and service levels while integrating new service centers - North American LTL business achieved a 27% increase in full-year adjusted operating income and a 260 basis point improvement in adjusted operating ratio, while integrating 25 new service centers[7] - North American LTL business delivered record service levels, driving a 7.8% increase in yield excluding fuel and a 6.8% increase in revenue per shipment[7] - The company continuously leverages proprietary technology to enhance labor productivity and reduced outsourced linehaul miles to historical best levels, further improving cost structure and service quality[7] Consolidated Financial Performance Fourth Quarter 2024 Consolidated Highlights XPO's Q4 2024 revenue slightly decreased, mainly due to lower fuel surcharge revenue, but operating income, net income, and diluted and adjusted diluted EPS all saw significant year-over-year growth, with strong adjusted EBITDA performance Fourth Quarter 2024 Consolidated Financial Highlights: | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Revenue | 1,921 | 1,940 | -1.0% | | Operating Income | 148 | 119 | 24.4% | | Net Income from Continuing Operations | 76 | 58 | 31.0% | | Diluted EPS from Continuing Operations | 0.63 | 0.49 | 28.6% | | Adjusted Net Income from Continuing Operations | 107 | 93 | 15.1% | | Adjusted Diluted EPS | 0.89 | 0.77 | 15.6% | | Adjusted EBITDA | 303 | 264 | 14.8% | - Revenue decreased by 1.0% year-over-year, primarily due to lower fuel surcharge revenue in the North American LTL business[8] - Q4 2024 adjusted EBITDA was $303 million, including $34 million in real estate gains from the sale of a service center related to relocation[11] - Cash flow from operating activities generated $189 million in Q4, with $246 million in cash and cash equivalents at quarter-end, and net capital expenditures of $108 million[12] Results by Business Segment North American Less-Than-Truckload (LTL) Segment The North American LTL segment saw a slight revenue decrease in Q4 2024, mainly due to reduced fuel surcharges and lower freight volume, but achieved significant growth in operating income and adjusted EBITDA, driven by real estate gains, yield growth excluding fuel, and lower purchased transportation costs North American Less-Than-Truckload (LTL) Segment Financial Performance North American LTL Segment Q4 2024 Financial Performance: | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Revenue | 1,156 | 1,187 | -2.6% | | Operating Income | 179 | 149 | 20.1% | | Adjusted Operating Income | 159 | 160 | -0.6% | | Adjusted Operating Ratio | 86.2% | 86.5% | -30 bps | | Adjusted EBITDA | 280 | 233 | 20.2% | - Adjusted operating ratio improved by 30 basis points year-over-year to 86.2%[13] - Adjusted EBITDA increased by 20% year-over-year, primarily driven by real estate gains, yield growth excluding fuel, and lower purchased transportation costs, partially offset by reduced fuel surcharge revenue and lower daily tonnage[14] North American Less-Than-Truckload (LTL) Segment Operational Data North American LTL Segment Q4 2024 Operational Metrics: | Metric | Q4 2024 | Q4 2023 | Change (%) | | :-------------------------------- | :------------- | :------------- | :--------- | | Daily Pounds (thousand pounds) | 65,433 | 69,357 | -5.7% | | Daily Shipments | 49,109 | 51,382 | -4.4% | | Average Weight Per Shipment (pounds) | 1,332 | 1,350 | -1.3% | | Revenue Per Shipment (including fuel surcharge) | $382.32 | $378.49 | 1.0% | | Revenue Per Shipment (excluding fuel surcharge) | $325.62 | $307.83 | 5.8% | | Revenue Per Hundredweight (excluding fuel surcharge) | $24.84 | $23.37 | 6.3% | | Average Tractor Age (years) | 4.1 | 5.0 | -18.0% | - In Q4 2024, daily shipments decreased by 4.4% year-over-year, and daily tonnage decreased by 5.7% year-over-year[13] - In Q4 2024, yield excluding fuel increased by 6.3%, and revenue per shipment excluding fuel surcharge increased by 5.8%[13][38] European Transportation Segment The European Transportation segment experienced slight revenue growth in Q4 2024, driven by pricing, but operating loss widened and adjusted EBITDA decreased year-over-year European Transportation Segment Q4 2024 Financial Performance: | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Revenue | 765 | 753 | 1.6% | | Operating Income (Loss) | (11) | (2) | 450.0% | | Adjusted EBITDA | 27 | 36 | -25.0% | - Revenue increased by 1.6% year-over-year, primarily driven by pricing growth[17] - Operating loss expanded from $2 million in Q4 2023 to $11 million in Q4 2024[17] Corporate Segment The Corporate segment significantly reduced its operating loss and adjusted EBITDA loss in Q4 2024, partly due to the absence of an $8 million litigation matter present in Q4 2023 Corporate Segment Q4 2024 Financial Performance: | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Change (%) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------- | | Operating Loss | (19) | (28) | -32.1% | | Adjusted EBITDA | (4) | (5) | -20.0% | - Operating loss decreased by 32.1% year-over-year, from $28 million to $19 million, with Q4 2023 including an $8 million litigation matter[17] Non-GAAP Financial Measures Definition and Purpose XPO uses non-GAAP financial measures like adjusted EBITDA, adjusted net income, and adjusted diluted EPS to provide a clearer view of core operating performance by excluding items such as transaction and integration costs, restructuring costs, and acquisition-related intangible asset amortization, which management believes do not reflect ongoing business operations - Non-GAAP metrics help analyze ongoing business operations by excluding items that may not reflect or be relevant to the core operating performance of XPO and its business segments, and assist investors in comparing with prior periods and evaluating underlying business trends[19] - Adjustments typically include transaction and integration costs, restructuring costs, and amortization of acquisition-related intangible assets[20][21] Reconciliation of Non-GAAP Measures The report provides detailed reconciliation tables from GAAP net income and diluted EPS to corresponding adjusted non-GAAP measures, showing specific adjustments for loss on debt extinguishment, acquisition-related intangible asset amortization, litigation matters, transaction and integration costs, restructuring costs, and tax impacts Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA (Q4 and Full Year 2024): | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Full Year 2024 (million USD) | Full Year 2023 (million USD) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------- | | Net Income from Continuing Operations | 76 | 58 | 387 | 192 | | Loss on Debt Extinguishment | - | 2 | - | 25 | | Interest Expense | 53 | 42 | 223 | 168 | | Provision for Income Taxes | 26 | 20 | 86 | 68 | | Depreciation and Amortization Expense | 124 | 114 | 490 | 432 | | Litigation Matters | - | 8 | - | 8 | | Transaction and Integration Costs | 14 | 11 | 53 | 58 | | Restructuring Costs | 10 | 9 | 27 | 44 | | Other | - | - | - | 1 | | Adjusted EBITDA | 303 | 264 | 1,266 | 996 | | Adjusted EBITDA Margin | 15.8% | 13.6% | 15.7% | 12.9% | Reconciliation of Net Income and Diluted EPS from Continuing Operations to Adjusted Net Income and Adjusted EPS (Q4 and Full Year 2024): | Metric | Q4 2024 (million USD) | Q4 2023 (million USD) | Full Year 2024 (million USD) | Full Year 2023 (million USD) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :-------------------- | | Net Income from Continuing Operations | 76 | 58 | 387 | 192 | | Loss on Debt Extinguishment | - | 2 | - | 25 | | Amortization of Acquisition-Related Intangible Assets | 14 | 13 | 57 | 55 | | Litigation Matters | - | 8 | - | 8 | | Transaction and Integration Costs | 14 | 11 | 53 | 58 | | Restructuring Costs | 10 | 9 | 27 | 44 | | Income Tax Impact of Adjustments | (6) | (8) | (24) | (36) | | Reorganization of European Legal Entities | (1) | - | (41) | - | | Adjusted Net Income from Continuing Operations | 107 | 93 | 460 | 346 | | Adjusted Diluted EPS from Continuing Operations | 0.89 | 0.77 | 3.83 | 2.92 | | Diluted Weighted-Average Common Shares Outstanding (million shares) | 120 | 120 | 120 | 118 | Forward-Looking Statements This section clarifies the forward-looking nature of certain statements in the report, emphasizing that they are based on assumptions and subject to known and unknown risks, uncertainties, and assumptions that could cause actual results to differ materially from expectations, and the company undertakes no obligation to update these statements - Forward-looking statements are identified by terms such as "anticipate," "estimate," "believe," and "expect," and are based on management's experience and perception of historical trends, current conditions, and future developments[22] - Factors that could cause actual results to differ materially include business, economic, political, legal, and regulatory influences; supply chain disruptions and shortages; the ability to match capital asset investments with customer demand; the effectiveness of cost and revenue initiatives; the effectiveness of North American LTL improvement initiatives; the anticipated impact of freight market recovery; and various operational and financial factors[23] Financial Statements Consolidated Statements of Income The Consolidated Statements of Income present XPO's revenue, expenses, and profitability for the three-month and full-year periods ended December 31, 2024 and 2023, highlighting significant year-over-year growth in net income from continuing operations and diluted EPS XPO, Inc. Consolidated Statements of Income (Unaudited) (million USD, except per share data): | Metric | Q4 2024 | Q4 2023 | Change (%) | Full Year 2024 | Full Year 2023 | Change (%) | | :-------------------------------- | :------------- | :------------- | :--------- | :----------- | :----------- | :--------- | | Revenue | 1,921 | 1,940 | -1.0% | 8,072 | 7,744 | 4.2% | | Salaries, Wages and Employee Benefits | 837 | 805 | 4.0% | 3,377 | 3,159 | 6.9% | | Purchased Transportation | 398 | 422 | -5.7% | 1,701 | 1,760 | -3.4% | | Fuel, Operating Expenses and Supplies | 376 | 400 | -6.0% | 1,589 | 1,623 | -2.1% | | Operating Income | 148 | 119 | 24.4% | 660 | 438 | 50.7% | | Interest Expense | 53 | 42 | 26.2% | 223 | 168 | 32.7% | | Provision for Income Taxes | 26 | 20 | 30.0% | 86 | 68 | 26.5% | | Net Income from Continuing Operations | 76 | 58 | 31.0% | 387 | 192 | 101.6% | | Net Income | 76 | 58 | 31.0% | 387 | 189 | 104.8% | | Diluted EPS from Continuing Operations | 0.63 | 0.49 | 28.6% | 3.23 | 1.62 | 99.4% | Consolidated Balance Sheets The Consolidated Balance Sheets present XPO's financial position as of December 31, 2024 and 2023, detailing assets, liabilities, and stockholders' equity, showing an increase in total assets and stockholders' equity year-over-year XPO, Inc. Consolidated Balance Sheets (Unaudited) (million USD, except per share data): | Item | December 31, 2024 (million USD) | December 31, 2023 (million USD) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Assets | | | | Cash and Cash Equivalents | 246 | 412 | | Accounts Receivable, Net | 977 | 973 | | Other Current Assets | 283 | 208 | | Total Current Assets | 1,505 | 1,593 | | Property and Equipment, Net | 3,402 | 3,075 | | Operating Lease Assets | 727 | 708 | | Goodwill | 1,461 | 1,498 | | Identifiable Intangible Assets, Net | 361 | 422 | | Other Long-Term Assets | 254 | 196 | | Total Long-Term Assets | 6,206 | 5,899 | | Total Assets | 7,712 | 7,492 | | Liabilities and Stockholders' Equity | | | | Accounts Payable | 477 | 532 | | Accrued Expenses | 708 | 775 | | Short-Term Borrowings and Current Portion of Long-Term Debt | 62 | 69 | | Short-Term Operating Lease Liabilities | 127 | 121 | | Other Current Liabilities | 46 | 93 | | Total Current Liabilities | 1,420 | 1,590 | | Long-Term Debt | 3,325 | 3,335 | | Deferred Tax Liabilities | 393 | 337 | | Employee Benefit Obligations | 85 | 91 | | Long-Term Operating Lease Liabilities | 603 | 588 | | Other Long-Term Liabilities | 283 | 285 | | Total Long-Term Liabilities | 4,690 | 4,636 | | Total Stockholders' Equity | 1,601 | 1,266 | | Total Liabilities and Equity | 7,712 | 7,492 | Consolidated Statements of Cash Flows The Consolidated Statements of Cash Flows provide a breakdown of XPO's cash flows from operating, investing, and financing activities for the years ended December 31, 2024 and 2023, showing strong cash flow from operating activities in 2024 XPO, Inc. Consolidated Statements of Cash Flows (Unaudited) (million USD): | Item | Full Year 2024 (million USD) | Full Year 2023 (million USD) | | :-------------------------------- | :-------------------- | :-------------------- | | Cash Flows from Continuing Operating Activities | | | | Net Income from Continuing Operations | 387 | 192 | | Depreciation and Amortization | 490 | 432 | | Share-Based Compensation Expense | 87 | 78 | | Deferred Income Tax Expense | 57 | 31 | | Gain on Disposal of Property and Equipment | (40) | (5) | | Net Cash Provided by Continuing Operating Activities | 808 | 694 | | Cash Flows from Continuing Investing Activities | | | | Purchases of Property and Equipment | (789) | (1,533) | | Proceeds from Disposal of Property and Equipment | 75 | 29 | | Net Cash Used in Continuing Investing Activities | (702) | (1,502) | | Cash Flows from Continuing Financing Activities | | | | Repayments of Debt and Finance Leases | (82) | (71) | | Payments for Tax Withholding on Restricted Stock | (129) | (19) | | Net Cash Used in Continuing Financing Activities | (226) | 761 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | (120) | (51) | | Cash, Cash Equivalents and Restricted Cash at End of Period | 298 | 419 |