XPO Q2 Earnings Call Highlights

XPO NYSE: XPO reported record second-quarter results, led by growth in its North American less-than-truckload business, higher pricing and productivity gains from technology initiatives. The company said it expects further margin improvement, faster free-cash-flow growth and continued volume momentum in the second half of 2026.

Total revenue rose 13% year over year to $2.4 billion, while LTL revenue increased 15% to $1.4 billion. Adjusted EBITDA totaled $434 million; excluding $9 million of real estate gains, adjusted EBITDA increased 25% from a year earlier to $425 million. Operating income rose 37% to $271 million, and net income was $162 million, or $1.36 per diluted share. CFO Kyle Wismans said adjusted diluted earnings per share were $1.70, and excluding real estate gains, adjusted EPS increased 56% year over year.

The company’s LTL segment generated adjusted operating income of $287 million, up 36% year over year, and adjusted EBITDA of $390 million. The segment’s adjusted EBITDA margin improved 310 basis points to 27.3%. Most notably, XPO’s adjusted operating ratio in LTL improved 300 basis points from the prior-year quarter to a record 79.9%. Chairman and CEO Mario Harik said the company has improved its operating ratio by nearly 800 basis points over the last three years, despite what he characterized as a historic freight recession.

“We’re building our network for years of above-market pricing growth and profitable market share gains,” Harik said. For the third quarter, Harik said XPO expects its LTL operating ratio to remain below 81%, despite normal seasonality that would typically cause the ratio to rise 200 to 250 basis points sequentially from the second quarter. He said the outlook reflects pricing, accelerating volumes and cost efficiency. The company now expects full-year operating-ratio improvement of at least 200 basis points, compared with its prior outlook for improvement of 100 to 150 basis points.

LTL shipments per day increased 2.8% in the second quarter, while weight per shipment declined 1.8%, producing tonnage-per-day growth of 1%. Volume trends improved during the quarter: shipments per day increased 0.2% in April, 3.3% in May and 5.1% in June. Tonnage per day moved from a 1.5% decline in April to increases of 0.5% in May and 4% in June. Chief Strategy Officer Ali Faghri said July trends continued to improve, with estimated year-over-year growth above 6% in both shipments per day and tonnage per day, while weight per shipment was roughly flat. XPO expects third-quarter tonnage to increase in the mid-single-digit range year over year, assuming above-seasonal trends continue.

Yield excluding fuel rose 4.4% year over year in the second quarter, supported by faster contract-renewal pricing. Wismans said renewal pricing reached the mid- to high-single-digit range. The company expects both yield and revenue per shipment, excluding fuel, to improve sequentially in the third and fourth quarters. Harik said XPO sees a long-term opportunity to outperform market pricing by roughly two to three percentage points annually through improved service, premium offerings and growth with small and midsized customers. He said the company expects to add about one point of incremental pricing from service improvements, one point from premium services and roughly half a point from the customer mix over time.

XPO attributed part of its margin expansion to proprietary technology and network investments. The company said workforce-planning technology improved productivity by nearly 2.5 points yea...