XPO — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for the third quarter of 2026 was $2.373 billion, a 12.4% increase compared to $2.111 billion in the same period of 2025.
• Operating income was $288 million for the quarter, up 75.6% from $164 million in 2025.
• Net income was $181 million for the quarter, a 120.7% increase from $82 million in 2025.
• Diluted earnings per share (EPS) were $1.53 for the quarter, compared to $0.68 in 2025, representing a 125.0% increase.
• Adjusted diluted EPS was $1.70 for the quarter, up 58.9% from $1.07 in 2025.
• Adjusted EBITDA was $433 million for the quarter, an increase of 26.6% from $342 million in 2025.
• Cash flow from operating activities was $415 million for the third quarter.
• Cash and cash equivalents ended the quarter at $260 million.
• Long-term debt decreased to $2.995 billion as of September 30, 2026, from $3.253 billion as of December 31, 2025.
• Total assets were $8.308 billion as of September 30, 2026, compared to $8.194 billion as of December 31, 2025.

Guidance and Future Outlook:

• Management expressed confidence in the company's ability to continue compounding earnings growth with further upside as freight demand recovers.
• The company is accelerating free cash flow generation and capital returns to shareholders to enhance long-term value.
• Forward-looking statements indicate expectations regarding the impact of a freight market recovery, the ability to capture profitable share gains, and the potential for margin improvement.

Business Segments and Product Lines:

• North American Less-Than-Truckload (LTL):
  • Revenue grew 17.4% year-over-year to $1.473 billion.
  • Operating income increased 36.5% to $284 million.
  • Adjusted operating income rose 35.0% to $293 million.
  • Adjusted operating ratio improved 260 basis points year-over-year to 80.1%.
  • Adjusted EBITDA increased 26.3% to $389 million.
  • Yield (excluding fuel) increased 3.6%, shipments per day increased 5.8%, and tonnage per day increased 5.0%.
  • The segment reported a damage claims ratio below 0.2%.
• European Transportation:
  • Revenue increased 5.0% year-over-year to $900 million.
  • Operating income turned positive at $12 million, compared to a $2 million loss in 2025.
  • Adjusted EBITDA increased 26.3% to $48 million.
• Corporate:
  • Operating loss narrowed to $8 million from $42 million in the prior year period.
  • Adjusted EBITDA was a loss of $4 million, consistent with the prior year.

Market and Competitive Landscape:

• The company reported profitable share gains and improved revenue quality with higher-margin freight.
• Customers are increasingly valuing the company's world-class service.
• The company is expanding the use of AI across its network to improve operational efficiency.
• The company serves 55,000 customers with 575 locations and 38,000 employees in North America and Europe.

Risks and Challenges:

• Potential risks include business, economic, political, legal, and regulatory impacts; supply chain disruptions; cost inflation; and labor or equipment shortages.
• Challenges involve aligning capital asset investments with customer demand, implementing cost and revenue initiatives, and improving pricing growth.
• Risks include fluctuations in currency exchange rates, fuel prices, and fuel surcharges.
• The company faces risks related to cyber-attacks, data security breaches, and compliance with data protection and competition laws.
• Potential impacts from goodwill impairment and litigation are noted.

Management Commentary and Tone:

• Mario Harik, Chairman and CEO, described the quarter as delivering "outstanding performance" with accelerating growth in adjusted EBITDA (27%) and adjusted diluted EPS (59%).
• Management highlighted the effective conversion of business into higher earnings through revenue growth and margin expansion.
• Harik noted that the North American LTL segment significantly outperformed seasonality due to sequential improvements in yield and revenue per shipment, alongside stronger volume growth.
• The tone reflects confidence in the company's ability to capitalize on opportunities as freight demand recovers.

Other Key Points:

• The company completed $150 million of common stock repurchases during the quarter.
• The company repaid $100 million of term loans during the quarter.
• Net capital expenditures for the quarter were $123 million.
• The company generated $415 million in operating cash flow for the quarter.
• A conference call was held on October 29, 2026, to discuss results.
• The press release includes reconciliations of non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and adjusted diluted EPS.
• The third quarter 2025 results included a $35 million charge related to environmental and product liability claims involving a former Con-way subsidiary.