XPO(XPO) - 2025 Q2 - Quarterly Results

Q2 2025 Financial Highlights 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 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] - 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] Segment Performance 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) 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] - 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] - 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] European Transportation 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 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] Consolidated Financial Statements This section presents XPO's consolidated statements of income, balance sheets, and cash flows for the reported periods Statements of Income 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] Balance Sheets 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 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 This section explains XPO's use of non-GAAP financial measures and provides reconciliations to GAAP equivalents Explanation of Non-GAAP Measures 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] - Key non-GAAP measures include: adjusted EBITDA, adjusted net income, adjusted diluted EPS, adjusted operating income, and adjusted operating ratio[18] - Adjustments typically include transaction and integration costs, restructuring costs, and amortization of acquisition-related intangible assets[20][21] Reconciliation of Net Income to Adjusted EBITDA 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 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 This section provides important disclosures regarding forward-looking statements and company contact information Forward-Looking Statements 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] - Key risks include economic impacts, supply chain issues, cost inflation, ability to implement revenue initiatives, competition, and fluctuations in currency and fuel prices[23] Company Overview and Conference Call 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] - A conference call to discuss the quarterly results is scheduled for July 31, 2025, at 8:30 a.m. Eastern Time[15]