XPO Boasts Q4 Margin Expansion, Eyes Freight Market Recovery

XPO, Inc. XPO shares are trading higher after it reported fourth-quarter results.

• Revenue fell 1% year-over-year (Y/Y) to $1.921 billion, slightly missing the consensus of $1.922 billion.
• The revenue decline was due to a decrease in fuel surcharge revenue in the North American LTL segment.
• North American Less-Than-Truckload revenue stood at $1.16 billion (-2.6% Y/Y). The segment saw a 4.4% decrease in shipments per day, a 5.7% decline in daily tonnage, and a 6.3% increase in yield, excluding fuel.
• Operating income was $148 million, compared to $119 million a year ago.
• Adjusted EBITDA increased 14.8% Y/Y to $303 million in the quarter, and the margin expanded to 15.8% from 13.6% last year in the same quarter.
• European Transportation generated revenue of $765 million (+1.6% Y/Y), and the adjusted EBITDA fell to $27 million from $36 million a year ago quarter.
• Adjusted EPS was 89 cents, up 15.6% Y/Y, beating the consensus of 63 cents.

The freight and logistics company generated $189 million in operating cash flow for the quarter. It ended the quarter with $246 million in cash and cash equivalents on hand.

XPO CEO Mario Harik said the company’s North American LTL business outperformed full-year expectations. The segment reported adjusted operating income growth of 27% and adjusted operating ratio improvement of 260 basis points.

XPO also integrated 25 new service centers into our network. The company also reported a 7.8% increase in yield, excluding fuel, and a 6.8% increase in revenue per shipment.

"We've entered 2025 with strong momentum, following landmark network investments that strengthen our competitive position in a freight market recovery and for the long-term,” Harik said. “The intense execution you see in our results will continue to deliver years of margin expansion.”

Investors can gain exposure to the stock via The Alger ETF Trust Alger Weatherbie Enduring Growth ETF AWEG and ProShares Trust ProShares Supply Chain Logistics ETF SUPL.

Price Action: XPO shares are up 6.96% at $145.80 at the last check Thursday.

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