Record Q1 results: XPO reported adjusted EBITDA of $319 million and adjusted diluted EPS of $1.01; LTL adjusted EBITDA rose to $290 million with a 23.6% margin and an improved adjusted operating ratio (OR) of 83.9%.
Management attributed margin expansion to LTL pricing momentum, productivity gains from proprietary technology and AI (including tools that cut damage claims to below 0.2%), and capacity/fleet investments such as >30% excess door capacity and a 3.9-year average tractor age.
Outlook and capital priorities: XPO expects stronger Q2 OR improvement and a path toward a sub-80 OR driven by pricing and premium services; it generated $183 million of operating cash flow, ended the quarter with net leverage of 2.3x after $30 million of buybacks, plans to accelerate share repurchases as FCF steps up, and says the sale of its European business is a matter of “when, not if.”
XPO (NYSE:XPO) reported what management called “record first quarter earnings,” driven by margin expansion in its North American less-than-truckload (LTL) business, pricing momentum, and continued productivity initiatives supported by proprietary technology and AI tools.
First-quarter results show margin expansion and higher earnings
Chairman and CEO Mario Harik said the company delivered adjusted EBITDA of $319 million, up 13% year-over-year, and adjusted diluted EPS of $1.01, up 38%.
Chief Financial Officer Kyle Wismans said total company revenue was $2.1 billion, up 7% year-over-year. LTL segment revenue increased 5% to $1.2 billion, which Wismans attributed primarily to “higher yield and fuel surcharge revenue.” Company-wide adjusted EBITDA increased 15% to $319 million, and the adjusted EBITDA margin improved 100 basis points to 15.2%.
In LTL specifically, Wismans said adjusted operating income rose 20% to $198 million and adjusted EBITDA increased 16% to $290 million, with adjusted EBITDA margin improving 230 basis points to 23.6%. Harik said LTL produced an adjusted operating ratio (OR) of 83.9%, an improvement of 200 basis points year-over-year that he described as “well ahead of normal seasonality.”
Operating income for the quarter was $174 million, up 15% year-over-year, while net income rose 46% to $101 million, or $0.85 per diluted share. On an adjusted basis, diluted EPS was $1.01.
Service metrics, capacity investments, and AI cited as key drivers
Harik emphasized service improvements as foundational to the company’s commercial and margin performance. He said XPO reduced its damage claims ratio to below 0.2%, calling damages “a record low” and describing this as “the service metric that matters most to LTL customers.” Harik said the company developed AI-driven tools intended to reduce damages by improving trailer loading, with real-time evaluation of load quality.
Harik also highlighted network speed and coverage, saying XPO runs “one of the fastest networks in the industry with the largest number of standard one-day and two-day lanes.” He said this service profile is translating into “stronger pricing and ongoing market share gains.”
On capacity, Harik said XPO continues to operate with “more than 30% excess door capacity,” positioning the company to respond as freight volumes recover. He said the company has added door capacity in markets where it had been constrained, including Atlanta, Texas markets, Kansas City, Columbus, Indianapolis, Minneapolis, and Nashville.
Harik also pointed to fleet investments, saying the company has one of the youngest tractor fleets in the industry with an average age of 3.9 years, and that XPO has manufactured more than 20,000 trailers since the start of the freight down cycle.
Productivity was another focus. Harik said productivity improved 4% in the first quarter, above the company’s long-term 1.5% target, driven in part by AI tools for planning, freight flow optimization, and network execution. He said pickup-and-delivery (P&D) route optimization tools have been rolled out to about half the network, generating “fewer miles and more stops per hour,” with full implementation expected by year-end.
LTL volumes, pricing, and mix shift
In prepared remarks on operating performance, management said LTL shipments per day increased 3% year-over-year, while weight per shipment declined 2.8%, resulting in tonnage per day up 0.1%. Month-to-month trends in the quarter were described as mixed on tonnage, with January flat, February up 0.1%, and March down 0.4%, while shipments per day increased each month.
For April, management estimated tonnage was down about 1% year-over-year, while weight per shipment improved sequentially and compared with March, which the company said was better than typical seasonality.
On pricing, management said yield excluding fuel rose 4% year-over-year in the first quarter and indicated that pricing momentum improved through the quarter. Executives said they expect yield and revenue per shipment excluding fuel to accelerate on a year-over-year basis and improve sequentially through the balance of the year. In response to questions, Harik said contract renewals in the first quarter “accelerated” from the fourth quarter and were up “mid to high single digits.”
Management also attributed some revenue-per-shipment and weight-per-shipment dynamics to mix. Executives said growth in local customers and increased premium-service penetration tend to have lower weight per shipment profiles, but are “very accretive” to margins. Harik said local customer shipments grew “mid to high single digits” in the quarter, and later added that the company onboarded more than 2,600 new customers in the local channel during the first quarter.
Second-quarter outlook: stronger seasonal OR improvement expected
Management expressed confidence in another strong margin quarter in Q2. Harik said XPO typically sees OR improve 250 to 300 basis points sequentially from Q1 to Q2 and that the company expects to “comfortably outperform the high end of that seasonal range” in the second quarter. He added the company expects to improve OR year-over-year in Q2 by more than it did in Q1, calling it “a path for us to get to an OR with a seven handle.”
On volumes, management said it is using “normal seasonality” as the base assumption for Q2. Executives said that rolling forward seasonality would imply full-quarter tonnage roughly flat year-over-year, with improvement by month as comparisons ease later in the quarter.
When asked what could drive a sub-80 OR, Harik pointed to yield as “the biggest contributor,” describing a “double-digit pricing opportunity” over time versus a best-in-class peer. He also cited growth in premium services and local accounts, noting accessorial revenue has increased from roughly 9%-10% of revenue at the start of the company’s plan to 12%-13% currently, with a goal of reaching 15%.
Cash flow, balance sheet, and planning updates
Wismans said XPO generated $183 million of operating cash flow in the quarter and deployed $104 million of net capital expenditures. The company ended the quarter with $237 million of cash after repurchasing $30 million of common stock and paying down $30 million on its term loan facility. Total liquidity at quarter end was $837 million, and net leverage was 2.3x trailing twelve months adjusted EBITDA, down from 2.4x at year-end 2025.
Wismans said the company expects “a meaningful step-up in free cash flow generation this year,” which he said should accelerate share repurchases and deleveraging. He also updated a planning assumption for 2026, saying the company now expects its adjusted effective tax rate to be 23% to 24%, while other planning assumptions remain unchanged.
In Q&A, Harik also reiterated a longer-term portfolio intention, stating the company intends “at some point” to sell its European business and that it is “a question of when, not a matter of if.”
Looking ahead, Harik said XPO is hearing “more optimism from customers,” citing a customer survey in which “double the number of respondents” expect acceleration in the back half of the year versus the first half, and he said there were “nearly no customers that expect a deceleration.” He added that retail demand has been positive and that industrial customers have expressed increasing optimism, though he said that has not yet translated into “big tonnage swings.”
About XPO (NYSE:XPO)
XPO Logistics, Inc is a global provider of transportation and logistics services, offering a broad portfolio of solutions designed to optimize supply chains for businesses of all sizes. The company’s operations span freight brokerage, less-than-truckload (LTL) shipping, full truckload transportation, last-mile delivery, contract logistics and global forwarding. XPO aims to leverage advanced technology and operational expertise to drive efficiency, visibility and reliability across end-to-end supply-chain networks.
In its freight brokerage segment, XPO connects shippers to a network of carriers through digital platforms that facilitate rate comparisons, booking, tracking and settlement.
ContentsKey PointsFirst-quarter results show margin expansion and higher earningsService metrics, capacity investments, and AI cited as key driversLTL volumes, pricing,…
