XPO turns in strong Q2 earnings results
Greenwich, Conn.-based less-than-truckload (LTL) carrier services provider XPO reported solid second quarter earnings results amid a still-soft freight transportation environment.
Quarterly revenue, at $2.1 billion, was up 9% annually, and adjusted diluted earnings per share rose 58% annually, to $1.12, topping Wall Street’s expectations, at $1.01 per share.
North American LTL revenue, at $1.27 billion, was up 12.0% annually, with XPO’s European Transportation Segment revenue, at $808 million, up 3.5%, for the same period.
“In North American LTL, we continued to deliver service at record levels, with the best damage claims ratio in our history at 0.2%,” said Mario Harik, chief executive officer of XPO, in a statement This helped drive above-market yield growth, exfuel, of 9%, and a 3.4% increase in tonnage per day, with 4.5% more shipments per day. We also operated more cost efficiently, reducing purchased transportation and increasing labor productivity. As a result, we reported a 51% increase in adjusted operating income and improved our adjusted operating ratio by 440 basis points to 83.2%. In addition, we’ve now opened 14 of the 28 service centers we acquired in December, with another 10 expected this year. Our strong performance demonstrates the steady progress we’re making toward becoming the LTL service leader in North America. We’ll continue to build our service offering, invest in capacity ahead of demand and operate more efficiently. This strategy is creating a long runway for future margin expansion.”
On the company’s earnings call earlier today, Harik touted the progress XPO has made through its LTL 2.0 plan, including a key focus on service metrics most important to customers.
“In the second quarter, we improved one of the most important metrics, damage claims ratio, to a company record of 0.2%,” he said. “This compares with 0.3% in the first quarter and 0.7% last year. Since late 2021, when we started LTL 2.0, we've driven more than a 75% reduction in damage frequency. We also improved our on-time performance on a year-over-year basis for the ninth consecutive quarter. We already have one of the industry's fastest networks of 1- and 2-day lanes and, when coupled with our strong on-time performance, this is a key differentiator for our customers. We achieved these improvements while handling higher volume across our network by prioritizing both operational excellence and network investment.”
He also cited the company’s ongoing investment in network capacity, explaining that over the past three years, XPO has added nearly 14,000 trailers and more than 4,000 tractors to its fleet.
“This is a high return use of capital that allows us to in-source linehaul transportation, drive operational efficiencies and improve customer service levels,” he said. “So far this year, we've added over 1,900 new tractors, bringing down the average age to 4 years from 5 years at the end of 2023. These new tractors are more efficient to operate, resulting in a double-digit decline in our fleet maintenance costs in the second quarter. We've also manufactured over 2,600 trailers year-to-date at our in-house production facility in Arkansas. As the only U.S. freight transportation company to produce its own trailers, we can create capacity when our customers need it and at a lower cost. In addition, we're continuing to roll out the 28 service centers we acquired in December.”
