Welcome to CNBC. com. I'm Frank Holland, anchor of Worldwide Exchange.XPO, a logistics company, reported its earnings this morning. Top and bottom line beats the stock is moving higher. To discuss the quarter and much more, I'm joined by CEO Mario Haric.Mario, thanks for joining us. Stock popping after not only the report, but after your call. Talk to me about this beat when we're talking about the top of the bottom line.What was the driver for the quarter. Well, overall Frank, our strategy is working and w ...

Financial Data and Key Metrics Changes - Overall revenue decreased by 1% year over year, while truck revenue increased year over year for the first time since 2022 [6][9] - Truck revenue per load increased by 2.6% compared to the second quarter of 2024, with a sequential increase of 3.2% from the first quarter of 2025 [15][27] - Gross profit was $109.3 million compared to $120 million in the second quarter of 2024, with a gross profit margin of 9% [23][27] Business Line Data and Key Metrics Changes - Heavy haul revenue increased by 9% year over year, driven by a 5% increase in revenue per heavy haul load and a 4% increase in heavy haul volume [7][17] - Non-truck transportation service revenue decreased by 22% or $21 million compared to the second quarter of 2024, primarily due to a 20% decrease in ocean revenue per shipment [18][19] - Transportation Logistics segment revenue was down 1% year over year on a 2% decrease in loadings, partially offset by a 1% increase in revenue per load [19] Market Data and Key Metrics Changes - The freight environment in the second quarter of 2025 was characterized by soft demand, with truck capacity readily available and market conditions favoring shippers [8][9] - Revenue hauled on behalf of other truck transportation companies was 19% below the second quarter of 2024, indicating accessible capacity in the marketplace [21] - The U.S.-Mexico and U.S.-Canada cross-border businesses underperformed compared to domestic revenue performance [19] Company Strategy and Development Direction - The company remains focused on accelerating its business model and executing strategic growth initiatives despite ongoing challenges in the freight environment [6][9] - Continuous improvement in service and support for customers, agents, BCOs, and carriers is a priority [8] - The company is committed to investing in technology solutions and refreshing its fleet of trailing equipment [10][27] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing challenges from volatile federal trade policy and inflation concerns but highlighted positive developments in heavy haul services [6][7] - The company will provide revenue commentary for the third quarter instead of formal guidance due to the uncertain economic environment [28] - Management expressed optimism about the performance of heavy haul services and the potential for recovery in the freight market [6][9] Other Important Information - The company reported an accident frequency rate of 0.67 DOT reportable accidents per million miles, below the national average [11] - Cash flow from operations for the first half of 2025 was $63 million, with significant capital returned to stockholders through dividends and share repurchases [27] Q&A Session Summary Question: Clarification on SG&A outlook for Q3 - Management confirmed that the SG&A outlook for Q3 should be adjusted based on the reclassification impact and the expected decline from the agent convention [33][34] Question: Insights on end market performance - Management indicated that automotive demand remains sluggish, while sectors like data centers and heavy haul are performing well [45][46] Question: Trends in insurance and claims costs - Management noted an increase in insurance and claims costs due to higher severity of trucking accidents and strategic cargo theft [25][92] Question: Heavy haul segment outlook - Management expressed confidence in the heavy haul segment's performance, noting broad-based demand across various industries [82][84] Question: Impact of new regulations on capacity - Management stated that they do not foresee unique exposure to new regulations affecting their BCO fleet, maintaining a disciplined approach to recruitment and retention [87][88] Question: Overall freight market trends - Management acknowledged the challenges in sustaining revenue per load increases, attributing fluctuations to unique circumstances in Q2 and tariff uncertainties [62][64] Question: Substitute line haul performance - Management indicated that demand for substitute line haul services is less diversified and influenced by a few key shippers, with expectations for a flat peak season [71][73] Question: Future of non-truck transportation services - Management noted a significant drop in non-truck transportation revenue, primarily due to tariff-related issues, with no immediate improvement expected [74]

Financial Data and Key Metrics Changes - The company reported enterprise revenues excluding fuel surcharge of $1.26 billion, an 8% increase year over year [18] - Adjusted income from operations was $44 million, a 47% increase year over year [18] - Adjusted diluted earnings per share for the first quarter was $0.16 compared to $0.11 last year [19] - The enterprise adjusted operating ratio improved by 90 basis points compared to the first quarter of 2024 [19] Business Line Data and Key Metrics Changes - Truckload revenues excluding fuel surcharge were $614 million, a 14% increase year over year, driven by the acquisition of Cowen and higher revenue per truck per week [19] - Truckload operating income was $25 million, up nearly 70% year over year [20] - Intermodal revenues excluding fuel surcharge were $260 million, a 5% increase year over year, with operating income increasing by 97% [20][21] - Logistics revenues, excluding fuel surcharge, were $332 million, a 2% increase year over year, with operating income up 50% [21] Market Data and Key Metrics Changes - The market remains highly competitive, with truck network achieving low to mid single-digit percentage increases [10] - Intermodal rates remained largely flat year over year, with increased volume allocations in certain geographies [11][12] - The company noted a potential drop in intermodal volume due to tariff uncertainty, but new business wins are expected to offset this impact [32] Company Strategy and Development Direction - The company is focused on optimizing capital allocation across dedicated truck, intermodal, and logistics [6] - A commitment to cost containment across all expense categories is critical to enhance competitive positioning and margins [13] - The company aims to transition to a more variable cost model by expanding owner-operator relationships [15] - The strategic focus includes enhancing asset efficiency and exploring inorganic growth opportunities [28] Management's Comments on Operating Environment and Future Outlook - Management expressed that the freight market remains resilient, but forward sentiment for customer freight demand is less clear due to tariff-driven uncertainty [12] - The company expects continued year-over-year improvement in results through 2025, despite moderating pricing improvements [25] - Management acknowledged the challenges posed by a competitive landscape and the need for disciplined pricing strategies [10][25] Other Important Information - The company has established targets of more than $40 million in additional cost reductions across the enterprise [13] - The updated full-year 2025 guidance for adjusted earnings per share is $0.75 to $1, reflecting current trade policy and economic uncertainty [24] Q&A Session Summary Question: What are you seeing regarding the expected deceleration of imports? - Management noted that intermodal is approximately 15% to 25% tied to imports and expects some drop-off in volume, but new business wins are anticipated to offset this [32] Question: Can you characterize the new business wins within intermodal? - New business wins are expected to start implementing in the second quarter, with strengths noted in Mexico and other areas [38] Question: How do you expect to achieve EPS growth year over year? - Management expects year-over-year growth in price and margin but does not provide quarterly guidance [45] Question: What is the outlook for dedicated growth? - Management believes there is still meaningful room for expansion in the dedicated segment, despite current competitiveness [95] Question: How is the company managing pricing conversations in the current environment? - Management emphasized the importance of stating assumptions with customers and remaining flexible in negotiations [63]