XPO Net Income Climbs 10% on Strong LTL Pricing in Q3

The company’s adjusted operating ratio for North American LTL improved by 200 basis points to 84.2, aligning with the upper end of its guidance. (XPO)

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XPO posted third-quarter results reflecting strong pricing performance in its North American less-than-truckload operations, with earnings up more than 10% year over year.

The company on Oct. 30 reported net income from continuing operations of $95 million, or 79 cents per share, up 10.5% from $86 million, 72 cents, a year earlier. Adjusted earnings per share rose to $1.02, a 16% increase over the prior year. Quarterly revenue rose 3.7% to $2.05 billion from $1.98 billion last year, driven largely by pricing gains in the LTL segment.

XPO’s North American LTL segment, its core operation, increased revenue by 1.9% to $1.25 billion from $1.23 billion last year despite declines in shipment volumes. Shipments per day fell 3.2%, and tonnage per day decreased by 3.9%, reflecting subdued demand conditions.

However, yield excluding fuel charges rose 6.7%, supporting a 3.5% increase in revenue per shipment. The segment’s operating income rose to $188 million from $161 million in Q3 2023, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 17.8% to $284 million.

“We reported strong year-over-year earnings growth in the third quarter, as we continued to improve the business in a soft freight environment,” said CEO Mario Harik. The company’s adjusted operating ratio for North American LTL improved by 200 basis points to 84.2, aligning with the upper end of its guidance. XPO has attributed these gains to its efficiency efforts, including better management of variable costs and a steady reduction in outsourced miles.

In Europe, XPO’s transportation segment saw revenue grow 6.8% to $803 million, primarily due to higher volumes. However, operating income in the segment declined to $6 million from $8 million in the previous year. Adjusted EBITDA for the region held flat at $44 million, with inflationary pressures weighing on profit margins.

The corporate division reported an $18 million operating loss, compared with a $15 million loss a year ago. Yet, adjusted EBITDA in corporate was $5 million, a notable improvement from a $7 million loss in Q3 2023, helped by a one-time $9 million gain on an earlier investment sale.

XPO generated $264 million in cash flow from operating activities and closed the quarter with $378 million in cash and equivalents. Capital expenditures were $123 million in Q3, as the company wrapped up most of its recent investments in LTL terminal expansion.

“We’re delivering on the strong results we promised for 2024, while positioning the business to accelerate earnings growth when the freight market recovers,” Harik said.

XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 3 on the LTL sector list.