Financial Data and Key Metrics Changes - In Q2, the company achieved adjusted earnings per share of $4.82, representing a 19% year-over-year increase [27] - Consolidated revenue grew by 7%, supporting a 60 basis points adjusted margin expansion and a 17% adjusted operating income growth [27] - Adjusted operating income increased by $231 million despite headwinds from global trade policy changes and other factors [27] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue increased by 8% year-over-year, with adjusted operating income growing by 24% and adjusted operating margin expanding by 100 basis points [9][27] - FedEx Freight revenue declined by 2%, primarily due to lower average daily shipments, with adjusted operating income declining by $70 million [9][27] - B2B services contributed nearly half of the revenue growth, indicating a successful focus on high-value segments [22] Market Data and Key Metrics Changes - The company experienced high single-digit revenue growth and margin expansion despite external headwinds such as the grounding of the MD-11 fleet and weakness in the industrial economy [7] - International export volumes declined, particularly in the China to U.S. lane, but there was growth in U.S. international outbound revenue [18][19] Company Strategy and Development Direction - The company is on track to spin off FedEx Freight as a separately listed public company by June 1, 2026, with a strong belief in the value that will be unlocked from this separation [8][36] - A focus on digital transformation and AI adoption is being emphasized to enhance operational efficiency and customer service [14][15] - The company is prioritizing high-value segments such as B2B and healthcare to offset challenges from global trade policy changes [14][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges and maintain profitability, citing the resilience built into the network [7][16] - The adjusted EPS outlook for FY 2026 has been raised to $17.80-$19, reflecting strong operational execution and efficiency initiatives [30] - Management acknowledged the impact of the MD-11 groundings and other headwinds but remains optimistic about future performance [32][36] Other Important Information - The company is actively pursuing opportunities to monetize proprietary insights through strategic collaborations, such as with ServiceNow [15] - The company has closed over 150 facilities as part of its ongoing transformation efforts [14] Q&A Session Summary Question: Dynamics of capturing incremental volume share in the domestic U.S. package business - Management confirmed they are pleased with profitable market share growth and highlighted the focus on B2B strategies and rate discipline [39][40] Question: Breakdown of B2B revenue growth - Management indicated that the growth was a combination of new business acquisition and improved share of wallet, with strong performance from small business B2B [44][46] Question: Cost of service and Network 2.0 transformation - Management acknowledged that while there are additional costs associated with service improvements, they are committed to maintaining service quality and expect efficiency gains within three to six months [48][50] Question: LTL business and spin-off costs - Management clarified that a portion of the EBIT decline is due to separation costs, with ongoing costs related to the spin-off being one-time expenses [52][81] Question: MD-11 aircraft return to service - Management expects the MD-11 aircraft to return to service in Q4, with incremental costs anticipated in Q3 due to peak season demands [57][59] Question: Breakdown of the $600 million headwind in the second half - Management detailed that the headwind consists of softness in the LTL business, costs from the MD-11 grounding, and increased variable compensation [64][66] Question: Future growth prospects in the domestic parcel market - Management expressed confidence in maintaining growth in high-value segments despite potential competitive pressures from UPS [78]

Core Insights - XPO is demonstrating margin improvement in its less-than-truckload (LTL) segment despite a challenging macroeconomic environment, with an adjusted operating ratio of 82.7% in Q3, reflecting a 150 basis point year-over-year improvement [1] - The company has achieved a total of 350 basis points of margin improvement over the past two years and anticipates further gains as market conditions improve [2] Financial Performance - LTL revenue remained flat year-over-year in Q3, with a 6% increase in yields offsetting a 6% decline in volumes [3] - Tonnage per day decreased by 6% year-over-year in Q3, with a gradual easing of declines observed in the latter months of the quarter [7] Cost Management - Salaries, wages, and benefits expenses increased by only 30 basis points year-over-year, indicating effective labor efficiencies [4] - Purchased transportation expenses decreased by 230 basis points year-over-year, with third-party linehaul miles dropping to 5.9% of total miles [5] Operational Efficiency - AI-driven initiatives are enhancing productivity and reducing operating costs, contributing to better trailer utilization rates and lower maintenance costs per mile [5] - The average age of tractors has been reduced to 3.6 years from a previous average of 5 years, leading to a 10% reduction in maintenance costs per mile [5]

Core Insights - TFI International's U.S. LTL operations showed slight improvement in the third quarter, with the operating ratio (OR) remaining at 92.2%, an improvement from 94% in the previous quarter [1] - However, key metrics such as revenue per hundredweight excluding fuel decreased by 3.33% year-over-year, and total tons declined by 6.27% [2] - The overall OR for TFI's total LTL operations, including Canadian operations, increased by 150 basis points to 88.8%, while the Canadian segment's OR deteriorated to 81.2% from 76.3% [3] Financial Performance - TFI's adjusted earnings per share fell to $1.20 from $1.59 a year earlier, with significant declines in operating income across individual segments [5] - The LTL group reported operating income of $77.7 million, down from $96 million in the same quarter last year [5] - Despite the challenges, TFI announced a 4% increase in its quarterly dividend to 47 cents per share, effective January [4] Management Commentary - CEO Alain Bedard expressed optimism regarding the U.S. LTL operations, citing the unchanged OR as a sign of new segment leadership navigating a challenging freight environment [4] - Bedard highlighted the importance of average weight per shipment, which rose by 3.85%, as a key performance metric [2]