UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
Form 10-Q
___________________________________________
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended March 31, 2025
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from____________to____________
Commission File Number: 001-32172
_______________________________________________________
(Exact name of registrant as specified in its charter)
_______________________________________________________
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(855 ) 976-6951
(Registrant’s telephone number, including area code)
______________________________________________________________________________________________________________
N/A
______________________________________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of April 25, 2025, there were 117,806,539 shares of the registrant’s common stock, par value $0.001 per share, outstanding.
XPO, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2025
Table of Contents
| Page No. | |||||
Part I—Financial Information
Item 1. Financial Statements.
XPO, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| March 31, | December 31, | |||||||||||||
| (In millions, except per share data) | 2025 | 2024 | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Accounts receivable, net of allowances of $ | ||||||||||||||
| Other current assets | ||||||||||||||
| Total current assets | ||||||||||||||
| Long-term assets | ||||||||||||||
Property and equipment, net of $ | ||||||||||||||
| Operating lease assets | ||||||||||||||
| Goodwill | ||||||||||||||
Identifiable intangible assets, net of $ | ||||||||||||||
| Total long-term assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities | ||||||||||||||
| Accounts payable | $ | $ | ||||||||||||
| Accrued expenses | ||||||||||||||
| Short-term borrowings and current maturities of long-term debt | ||||||||||||||
| Short-term operating lease liabilities | ||||||||||||||
| Other current liabilities | ||||||||||||||
| Total current liabilities | ||||||||||||||
| Long-term liabilities | ||||||||||||||
| Long-term debt | ||||||||||||||
| Deferred tax liability | ||||||||||||||
| Employee benefit obligations | ||||||||||||||
| Long-term operating lease liabilities | ||||||||||||||
| Other long-term liabilities | ||||||||||||||
| Total long-term liabilities | ||||||||||||||
| Stockholders’ equity | ||||||||||||||
Common stock, $ as of March 31, 2025 and December 31, 2024, respectively | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total equity | ||||||||||||||
| Total liabilities and equity | $ | $ | ||||||||||||
Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
1
XPO, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions, except per share data) | 2025 | 2024 | ||||||||||||
| Revenue | $ | $ | ||||||||||||
| Salaries, wages and employee benefits | ||||||||||||||
| Purchased transportation | ||||||||||||||
| Fuel, operating expenses and supplies | ||||||||||||||
| Operating taxes and licenses | ||||||||||||||
| Insurance and claims | ||||||||||||||
| Gains on sales of property and equipment | ( | ( | ||||||||||||
| Depreciation and amortization expense | ||||||||||||||
| Legal matter | ( | |||||||||||||
| Transaction and integration costs | ||||||||||||||
| Restructuring costs | ||||||||||||||
| Operating income | ||||||||||||||
| Other income | ( | ( | ||||||||||||
| Debt extinguishment loss | ||||||||||||||
| Interest expense | ||||||||||||||
| Income before income tax provision | ||||||||||||||
| Income tax provision | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Earnings per share data | ||||||||||||||
| Basic earnings per share | $ | $ | ||||||||||||
| Diluted earnings per share | $ | $ | ||||||||||||
| Weighted-average common shares outstanding | ||||||||||||||
| Basic weighted-average common shares outstanding | ||||||||||||||
| Diluted weighted-average common shares outstanding | ||||||||||||||
Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
2
XPO, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Net income | $ | $ | ||||||||||||
| Other comprehensive income (loss), net of tax | ||||||||||||||
Foreign currency translation gain (loss), net of tax effect of $ | $ | $ | ( | |||||||||||
Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $ | ( | |||||||||||||
| Other comprehensive income (loss) | ( | |||||||||||||
| Comprehensive income | $ | $ | ||||||||||||
Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
3
XPO, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash from operating activities | ||||||||||||||
| Depreciation and amortization | ||||||||||||||
| Stock compensation expense | ||||||||||||||
| Accretion of debt | ||||||||||||||
| Deferred tax expense | ||||||||||||||
| Gains on sales of property and equipment | ( | ( | ||||||||||||
| Other | ||||||||||||||
| Changes in assets and liabilities | ||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||
| Other assets | ( | |||||||||||||
| Accounts payable | ( | |||||||||||||
| Accrued expenses and other liabilities | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Payment for purchases of property and equipment | ( | ( | ||||||||||||
| Proceeds from sale of property and equipment | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Repayment of debt and finance leases | ( | ( | ||||||||||||
| Payment for debt issuance costs | ( | ( | ||||||||||||
| Change in bank overdrafts | ||||||||||||||
| Payment for tax withholdings for restricted shares | ( | ( | ||||||||||||
| Other | ||||||||||||||
| Net cash used in financing activities | ( | ( | ||||||||||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | ||||||||||||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | ||||||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||
| Leased assets obtained in exchange for new operating lease liabilities | $ | $ | ||||||||||||
| Leased assets obtained in exchange for new finance lease liabilities | ||||||||||||||
| Cash paid for interest | ||||||||||||||
| Cash paid (received) for income taxes, net of refunds | ( | |||||||||||||
Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
4
XPO, Inc.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
| Common Stock | ||||||||||||||||||||||||||||||||||||||
| (Shares in thousands, dollars in millions) | Shares | Amount | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Exercise and vesting of stock compensation awards | — | — | — | — | ||||||||||||||||||||||||||||||||||
Tax withholdings related to vesting of stock compensation awards | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Common Stock | ||||||||||||||||||||||||||||||||||||||
| (Shares in thousands, dollars in millions) | Shares | Amount | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Exercise and vesting of stock compensation awards | — | — | — | — | ||||||||||||||||||||||||||||||||||
Tax withholdings related to vesting of stock compensation awards | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Stock compensation expense | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||
Amounts may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
5
XPO, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization, Description of Business and Basis of Presentation
XPO, Inc., together with its subsidiaries (“XPO,” “we” or the “Company”), is a leading provider of freight transportation services. We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe. See Note 2—Segment Reporting for additional information on our operations.
Strategic Developments
In December 2023, we completed the acquisition of 28 service centers previously operated by Yellow Corporation, purchasing 26 less-than-truckload (“LTL”) service centers and assuming existing leases for two additional locations. This targeted expansion of our network aligns with our commitment to invest in growth capacity in key markets and operate the network more efficiently.
The previously announced authorization by our Board of Directors to divest our European business remains in effect. There can be no assurance that the divestiture will occur, or of the terms or timing of a transaction.
Basis of Presentation
We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). The interim reporting requirements of Form 10-Q allow certain information and note disclosures normally included in annual consolidated financial statements to be condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the 2024 Form 10-K.
The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
Within our Condensed Consolidated Financial Statements and the accompanying notes, certain amounts may not add due to the use of rounded numbers. Unless otherwise indicated, percentages presented are calculated from the underlying numbers in millions.
Restricted Cash
As of March 31, 2025 and December 31, 2024, our restricted cash included in on our Condensed Consolidated Balance Sheets was $9 million and $53 million, respectively. Our restricted cash balance as of December 31, 2024 included approximately $47 four new service centers that were previously leased.
Trade Receivables Securitization and Factoring Programs
We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under a securitization program for our European transportation business. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.
The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $216 million as of March 31, 2025). As of March 31, 2025, €1 million (approximately $1 million) was available under the program. The weighted average interest rate was 4.77 % as of March 31, 2025. The program expires in July 2026.
6
Information related to the trade receivables sold was as follows:
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Securitization programs | ||||||||||||||
Receivables sold in period | $ | $ | ||||||||||||
Cash consideration | ||||||||||||||
| Factoring programs | ||||||||||||||
Receivables sold in period | ||||||||||||||
Cash consideration | ||||||||||||||
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:
•Level 1—Quoted prices for identical instruments in active markets;
•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and
•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.
We base our fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of March 31, 2025 and December 31, 2024 due to their short-term nature and/or being receivable or payable on demand. The Level 1 cash equivalents include money market funds valued using quoted prices in active markets and a cash deposit for the securitization program.
The fair value hierarchy of cash equivalents was as follows:
| (In millions) | Carrying Value | Fair Value | Level 1 | |||||||||||||||||
| March 31, 2025 | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
We measure Level 1 equity investments at fair value on a recurring basis using quoted prices in active markets. We have no 0 million and $3 million, respectively, in Other income on our Condensed Consolidated Statements of Income.
For information on the fair value hierarchy of our derivative instruments and financial liabilities, see Note 5—Derivative Instruments and Note 6—Debt, respectively.
Accounting Pronouncements Issued but Not Yet Effective
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The ASU requires new tabular disclosures disaggregating prescribed expense categories within relevant income statement captions. In addition, the ASU requires disclosure of the total amount of selling expenses and, in annual periods, an entity’s definition of selling expenses, among other disclosure requirements. This ASU is effective for annual periods beginning in 2027, and for interim periods beginning January 1, 2028. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.
7
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU modifies income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliations and (ii) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements. This ASU is effective for annual periods beginning in 2025, and should be applied on a prospective basis, with the option to apply retrospectively. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures. The company expects to adopt the guidance as of the effective date.
2. Segment Reporting
We are organized into two reportable segments: North American LTL, the largest component of our business, and European Transportation.
In our North American LTL segment, we provide shippers with geographic density and day-definite domestic and cross-border services to the U.S., as well as Mexico, Canada and the Caribbean. Our North American LTL segment also includes the results of our trailer manufacturing operation.
In our European Transportation segment, we serve an extensive base of customers within the consumer, trade and industrial markets. We offer dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding, warehousing and multimodal solutions, such as road-rail and road-short sea combinations.
Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our reportable segments.
Our chief operating decision maker (“CODM”) is our chief executive officer. Our CODM regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, including corporate costs, in segment results reported to the CODM. We do not provide asset information by segment to the CODM.
Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, legal matters, transaction and integration costs, restructuring costs and other adjustments.
Our CODM uses adjusted EBITDA to allocate resources, including property and equipment and financial or capital resources, to the segments and to assess their performance by monitoring budget-to-actual and year-over-year variances.
8
The following tables present revenue and significant segment expenses that are included within adjusted EBITDA:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| (in millions) | North American LTL | European Transportation | Corporate (1) | Total | ||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Salaries, wages and employee benefits | ||||||||||||||||||||||||||
| Purchased transportation | ||||||||||||||||||||||||||
| Fuel, operating expenses and supplies | ||||||||||||||||||||||||||
| Operating taxes and licenses | ||||||||||||||||||||||||||
| Insurance and claims | ||||||||||||||||||||||||||
| Gains on sales of property and equipment | ( | ( | ||||||||||||||||||||||||
| Pension (income) expense | ( | ( | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | $ | |||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||
| (in millions) | North American LTL | European Transportation | Corporate (1) | Total | ||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
| Salaries, wages and employee benefits | ||||||||||||||||||||||||||
| Purchased transportation | ||||||||||||||||||||||||||
| Fuel, operating expenses and supplies | ||||||||||||||||||||||||||
| Operating taxes and licenses | ||||||||||||||||||||||||||
| Insurance and claims | ||||||||||||||||||||||||||
| (Gains) losses on sales of property and equipment | ( | ( | ||||||||||||||||||||||||
| Pension income | ( | ( | ||||||||||||||||||||||||
| Other (income) expense | ( | ( | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | $ | $ | ( | $ | |||||||||||||||||||||
(1) Primarily represents unallocated corporate costs, as well as investment income of approximately $3 million within Other (income) expense in the first quarter of 2024.
9
The following table presents adjusted EBITDA by segment and provides a reconciliation to consolidated net income:
| Three Months Ended March 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Adjusted EBITDA | ||||||||||||||
| North American LTL | $ | $ | ||||||||||||
| European Transportation | ||||||||||||||
| Corporate | ( | ( | ||||||||||||
| Total Adjusted EBITDA | ||||||||||||||
| Less: | ||||||||||||||
| Debt extinguishment loss | ||||||||||||||
| Interest expense | ||||||||||||||
| Income tax provision | ||||||||||||||
| Depreciation and amortization expense | ||||||||||||||
Legal matter (1) | ( | |||||||||||||
| Transaction and integration costs | ||||||||||||||
| Restructuring costs | ||||||||||||||
| Net Income | $ | $ | ||||||||||||
(1) Reflects the settlement of claims against certain truck manufacturers related to purchases by our European Transportation segment covering periods prior to our acquisition of Norbert Dentressangle SA in 2015.
The following table presents depreciation and amortization expense by segment:
| Three Months Ended March 31, | ||||||||||||||
| (in millions) | 2025 | 2024 | ||||||||||||
| Depreciation and amortization expense | ||||||||||||||
| North American LTL | $ | $ | ||||||||||||
| European Transportation | ||||||||||||||
| Corporate | ||||||||||||||
| Total | $ | $ | ||||||||||||
As of March 31, 2025 and December 31, 2024, we held long-lived tangible assets outside of the U.S., including right of use assets, of $742 million and $715 million, respectively.
10
3. Revenue Recognition
Disaggregation of Revenues
Our revenue disaggregated by geographic area based on sales office location was as follows:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||
| (In millions) | North American LTL | European Transportation | Total | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| United States | $ | $ | $ | |||||||||||||||||
| North America (excluding United States) | ||||||||||||||||||||
| France | ||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||
| Europe (excluding France and United Kingdom) | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||
| (In millions) | North American LTL | European Transportation | Total | |||||||||||||||||
| Revenue | ||||||||||||||||||||
| United States | $ | $ | $ | |||||||||||||||||
| North America (excluding United States) | ||||||||||||||||||||
| France | ||||||||||||||||||||
| United Kingdom | ||||||||||||||||||||
| Europe (excluding France and United Kingdom) | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
4. Restructuring Charges
We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. These actions generally include severance and facility-related costs, including impairment of lease assets, as well as contract termination costs, and are intended to improve our efficiency and profitability.
Our restructuring-related activity was as follows:
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| (In millions) | Reserve Balance as of December 31, 2024 | Charges Incurred | Payments | Reserve Balance as of March 31, 2025 | ||||||||||||||||||||||
| Severance | ||||||||||||||||||||||||||
| North American LTL | $ | $ | $ | ( | $ | |||||||||||||||||||||
| European Transportation | ( | |||||||||||||||||||||||||
| Corporate | ( | |||||||||||||||||||||||||
| Total | $ | $ | $ | ( | $ | |||||||||||||||||||||
In addition to the severance charges noted in the table above, we recorded non-cash charges in our European Transportation segment of $2 million during the first three months of 2025.
We expect that the majority of the cash outlays related to the severance charges incurred in the first three months of 2025 will be completed within 12 months.
11
5. Derivative Instruments
In the normal course of business, we are exposed to risks arising from business operations and economic factors, including fluctuations in interest rates and foreign currencies. We use derivative instruments to manage the volatility related to these exposures. The objective of these derivative instruments is to reduce fluctuations in our earnings and cash flows associated with changes in foreign currency exchange rates and interest rates. These financial instruments are not used for trading or other speculative purposes. Historically, we have not incurred, and do not expect to incur in the future, any losses as a result of counterparty default.
The fair value of our derivative instruments and the related notional amounts were as follows:
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||
| (In millions) | Notional Amount | Balance Sheet Caption | Fair Value | Balance Sheet Caption | Fair Value | |||||||||||||||||||||||||||
| Derivatives designated as hedges | ||||||||||||||||||||||||||||||||
| Cross-currency swap agreements | $ | Other current assets | $ | Other current liabilities | $ | ( | ||||||||||||||||||||||||||
| Cross-currency swap agreements | Other long-term assets | Other long-term liabilities | ( | |||||||||||||||||||||||||||||
| Interest rate swaps | Other current assets | Other current liabilities | ( | |||||||||||||||||||||||||||||
| Total | $ | $ | ( | |||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Derivative Assets | Derivative Liabilities | |||||||||||||||||||||||||||||||
| (In millions) | Notional Amount | Balance Sheet Caption | Fair Value | Balance Sheet Caption | Fair Value | |||||||||||||||||||||||||||
| Derivatives designated as hedges | ||||||||||||||||||||||||||||||||
| Cross-currency swap agreements | Other long-term assets | Other long-term liabilities | ( | |||||||||||||||||||||||||||||
| Interest rate swaps | Other current assets | Other current liabilities | ||||||||||||||||||||||||||||||
| Total | $ | $ | ( | |||||||||||||||||||||||||||||
The derivatives are classified as Level 2 within the fair value hierarchy. The derivatives are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves.
The effect of derivative and nonderivative instruments designated as hedges on our Condensed Consolidated Statements of Income was as follows:
| Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives | Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing) | |||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Derivatives designated as cash flow hedges | ||||||||||||||||||||||||||
| Interest rate swaps | $ | ( | $ | $ | $ | |||||||||||||||||||||
| Derivatives designated as net investment hedges | ||||||||||||||||||||||||||
| Cross-currency swap agreements | ( | |||||||||||||||||||||||||
| Total | $ | ( | $ | $ | $ | |||||||||||||||||||||
12
Cross-Currency Swap Agreements
We enter into cross-currency swap agreements to manage the foreign currency exchange risk related to our international operations by effectively converting our fixed-rate USD-denominated debt, including the associated interest payments, to fixed-rate, euro (“EUR”)-denominated debt. The risk management objective of these transactions is to manage foreign currency risk relating to net investments in subsidiaries denominated in foreign currencies and reduce the variability in the functional currency equivalent cash flows of this debt.
During the term of the swap contracts, we receive interest on a quarterly basis from the counterparties based on USD fixed interest rates, and we pay interest, also on a quarterly basis, to the counterparties based on EUR fixed interest rates. At maturity, we will repay the original principal amount in EUR and receive the principal amount in USD. These agreements expire at various dates through 2027.
We designated these cross-currency swaps as qualifying hedging instruments and account for them as net investment hedges. We apply the simplified method of assessing the effectiveness of our net investment hedging relationships. Under this method, for each reporting period, the change in the fair value of the cross-currency swaps is initially recognized in Accumulated other comprehensive income (“AOCI”). The change in the fair value due to foreign exchange remains in AOCI and the initial component excluded from effectiveness testing will initially remain in AOCI and then will be reclassified from AOCI to Interest expense each period in a systematic manner. Cash flows related to the periodic exchange of interest payments for these net investment hedges are included in Cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows.
Interest Rate Hedging
We execute short-term interest rate swaps to mitigate variability in forecasted interest payments on our Senior Secured Term Loan Credit Agreement (the “Term Loan Credit Agreement”). The interest rate swaps convert floating-rate interest payments into fixed rate interest payments. We designated the interest rate swaps as qualifying hedging instruments and account for these derivatives as cash flow hedges. The outstanding interest rate swaps mature in the first quarter of 2026.
We record gains and losses resulting from fair value adjustments to the designated portion of interest rate swaps in AOCI and reclassify them to Interest expense on the dates that interest payments accrue. Cash flows related to the interest rate swaps are included in Cash flows from operating activities on our Condensed Consolidated Statements of Cash Flows.
6. Debt
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| (In millions) | Principal Balance | Carrying Value | Principal Balance | Carrying Value | ||||||||||||||||||||||
| Term loan facility | $ | $ | $ | $ | ||||||||||||||||||||||
| Finance leases, asset financing and other | ||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||
| Short-term borrowings and current maturities of long-term debt | ||||||||||||||||||||||||||
| Long-term debt | $ | $ | $ | $ | ||||||||||||||||||||||
13
| (In millions) | Fair Value | Level 1 | Level 2 | |||||||||||||||||
| March 31, 2025 | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
We valued Level 1 debt using quoted prices in active markets. We valued Level 2 debt using bid evaluation pricing models or quoted prices of securities with similar characteristics.
Revolving Credit Facility
In February 2025, we terminated our Second Amended and Restated Revolving Credit Agreement, as amended (the “ABL Facility”), and entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for revolving credit commitments in an aggregate amount of $600 million (the “Revolving Credit Facility”), of which $200 million is available for issuances of letters of credit. The maturity date of the Revolving Credit Facility is April 30, 2030.
As of March 31, 2025, we have $599 million available to draw under our Revolving Credit Facility, after considering outstanding letters of credit of less than $1 million.
Our borrowings under the Revolving Credit Facility bear interest at a rate equal to: (a) for loans denominated in U.S. Dollars, Term Secured Overnight Financing Rate (“SOFR”) or the Base Rate and (b) for loans denominated in Canadian Dollars, Term Canadian Overnight Repo Rate (“CORRA”) or the Canadian base rate plus (i) in the case of base rate loans, an applicable rate ranging from 0.25 % to 1.00 % or, (ii) in the case of Term SOFR or Term CORRA loans, an applicable rate ranging from 1.25 2.00 0.20 % and 0.30 % on the undrawn commitments under the Revolving Credit Facility, determined based on our Consolidated Total Net Leverage Ratio.
The Revolving Credit Facility is secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions, and contains representations and warranties, affirmative and negative covenants, and events of default customary for agreements of this nature. Security interests and certain covenants under the Revolving Credit Agreement will release, terminate or be amended upon, among other things, the Company’s achievement of investment grade ratings from at least two rating agencies. As of March 31, 2025, we were in compliance with the Revolving Credit Facility’s financial covenants.
Letters of Credit Facility
As of March 31, 2025, we had issued $133 million in aggregate face amount of letters of credit under our $200 million uncommitted secured evergreen letter of credit facility.
Term Loan Facility
In February 2025, we amended our Senior Secured Term Loan Credit Agreement. Pursuant to the amendment, the lenders provided the company (a) a term loan B facility in an aggregate principal amount of $700 million, maturing on May 24, 2028 (the “Refinancing Term Loan B-2 Facility”), and (b) a term loan B facility in an aggregate principal amount of $400 million, maturing on February 1, 2031 (the “Refinancing Term Loan B-3 Facility” and together with the Refinancing Term Loan B-2 Facility, the “Refinancing Term Loan Facilities”). The proceeds of the Refinancing Term Loan Facilities were used to refinance our existing term loans. We recorded a debt extinguishment loss of $5 million due to this refinancing.
The Refinancing Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either alternate base rate (“ABR”) or Term SOFR plus (i) in the case of ABR Loans, 0.75 1.75 0.25 % upon the achievement of a Consolidated First Lien Net Leverage Ratio (as defined in the Amended Term Loan Credit Agreement) of less than or equal to 1.21 to 1.00. The Refinancing Term Loan Facilities are secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions.
14
The amended Term Loan Credit Agreement contains customary mandatory prepayment requirements, representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, dividends, repayments of junior financings and asset sales, in each case subject to a number of important exceptions and qualifications.
The weighted average interest rate of our term loans was approximately 6.07
7. Stockholders’ Equity
Share Repurchases
In March 2025, our Board of Directors authorized repurchases of up to $750 million of our common stock. Our share repurchase authorization permits us to purchase shares in both the open market and in private transactions, with the timing and number of shares dependent on a variety of factors, including price, general business and market conditions, alternative investment opportunities and funding considerations. The new share repurchase program has no expiration date and may be utilized over time, with no obligation to repurchase any specific number of shares. We may suspend or discontinue the program at any time.
This plan replaces our previous share repurchase plan, authorized in February 2019, which had $503 million remaining. There were no share repurchases during the first quarter of 2025 and our remaining share repurchase authorization as of March 31, 2025 is $750 million.
8. Earnings per Share
The computations of basic and diluted earnings per share were as follows:
| Three Months Ended March 31, | |||||||||||||||||
| (In millions, except per share data) | 2025 | 2024 | |||||||||||||||
| Net income | $ | $ | |||||||||||||||
| Basic weighted-average common shares | |||||||||||||||||
| Dilutive effect of stock-based awards | |||||||||||||||||
| Diluted weighted-average common shares | |||||||||||||||||
| Basic earnings per share | $ | $ | |||||||||||||||
| Diluted earnings per share | $ | $ | |||||||||||||||
9. Commitments and Contingencies
We are involved, and expect to continue to be involved, in numerous proceedings arising out of the conduct of our business. These proceedings may include claims for property damage or personal injury incurred in connection with the transportation of freight, cargo damage or loss, environmental liability, commercial disputes, insurance coverage disputes and employment-related claims, including claims involving asserted breaches of employee restrictive covenants.
We establish accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. We review and adjust, as appropriate, accruals for loss contingencies at least quarterly and as additional information becomes available. If a loss is not both probable and reasonably estimable, or if an exposure to loss exists in excess of the amount accrued, we assess whether there is at least a reasonable possibility that a loss, or additional loss, may have been incurred. If there is a reasonable possibility that a loss, or additional loss, may have been incurred, we disclose the estimate of the possible loss or range of loss if it is material and an estimate can be made, or disclose that such an estimate cannot be made. The determination as to whether a loss can be considered reasonably possible or probable is based on our assessment, together with legal counsel, regarding the ultimate outcome of the matter.
15
We believe that we have adequately accrued for the potential impact of loss contingencies that are probable and reasonably estimable. We do not believe that the ultimate resolution of any matters to which we are presently a party will have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows. Legal costs incurred related to these matters are expensed as incurred.
We carry liability and excess umbrella insurance policies that we deem sufficient to cover potential legal claims arising in the normal course of conducting our operations as a transportation company. In the event we are required to satisfy a legal claim outside the scope of the coverage provided by insurance, our financial condition, results of operations or cash flows could be negatively impacted.
Insurance Contribution Litigation
In April 2012, Allianz Global Risks US Insurance Company sued eighteen insurance companies in a case captioned Allianz Global Risks US Ins. Co. v. ACE Property & Casualty Ins. Co., et al., Multnomah County Circuit Court (Case No. 1204-04552). Allianz Global Risks US Ins. Co. (“Allianz”) sought contribution on environmental and product liability claims that Allianz agreed to defend and indemnify on behalf of its insured, Daimler Trucks North America (“DTNA”). Defendants had insured Freightliner’s assets, which DTNA acquired in 1981. Con-way, Freightliner’s former parent company, intervened. We acquired Con-way in 2015. Con-way and Freightliner had self-insured under fronting agreements with defendant insurers ACE, Westport, and General. Under those agreements, Con-way agreed to indemnify the fronting carriers for damages assessed under the fronting policies. Con-way’s captive insurer, Centron, was also a named defendant. After a seven-week jury trial in 2014, the jury found that Con-way and the fronting insurers never intended that the insurers defend or indemnify any claims against Freightliner. In June 2015, Allianz appealed to the Oregon Court of Appeals. In May 2019, the Oregon Court of Appeals upheld the jury verdict. In September 2019, Allianz appealed to the Oregon Supreme Court. In March 2021, the Oregon Supreme Court reversed the jury verdict, holding that it was an error to allow the jury to decide how the parties intended the fronting policies to operate, and also holding that the trial court improperly instructed the jury concerning one of the pollution exclusions at issue. In July 2021, the matter was remanded to the trial court for further proceedings consistent with the Oregon Supreme Court’s decision. In June 2023, the trial court decided the parties’ cross-motions for summary judgment, leaving open the pollution exclusion and allocation issues. The trial on the pollution exclusion issue took place in October 2024 where the jury issued a favorable verdict for the Company, finding that the pollution exclusion applied to the General policy over several years for which Allianz seeks contribution. The trial on allocation of defense and indemnity costs among the applicable insurance policies is taking place over multiple dates from March to June 2025. We have accrued an immaterial amount for the potential exposure associated with ultimate allocation to the relevant policies; however, any losses that may arise in connection with the fronting policies issued by defendant insurers ACE, Westport, and General are not reasonably estimable at this time.
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q and other written reports and oral statements we make from time to time contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual future results, levels of activity, performance or achievements to be materially different from our expected future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include those discussed below and the risks discussed in the Company’s other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements set forth in this Quarterly Report on Form 10-Q are qualified by these cautionary statements, and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The following discussion should be read in conjunction with the Company’s unaudited Condensed Consolidated Financial Statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, and with the audited consolidated financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). Forward-looking statements set forth in this Quarterly Report on Form 10-Q speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.
Executive Summary
XPO, Inc., together with its subsidiaries (“XPO,” “we” or the “Company”), is a leading provider of freight transportation services, with company-specific avenues for value creation. We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe. As of March 31, 2025, we had approximately 38,000 employees serving approximately 55,000 customers through 606 locations in 17 countries.
Our company has two reportable segments: North American Less-Than-Truckload (“LTL”), the largest component of our business, and European Transportation. Our North American LTL segment includes the results of our trailer manufacturing operation.
Within the tables presented, certain amounts may not add due to the use of rounded numbers. Unless otherwise indicated, percentages presented are calculated from the underlying numbers in millions.
North American LTL Segment
LTL in North America is a bedrock industry providing a critical service to the economy, with secular growth drivers, a favorable pricing environment and an established competitive landscape. XPO is one of the largest LTL networks in North America, with approximately 9% share of the U.S. market, estimated to be $53 billion in 2024.
We provide approximately 36,000 shippers with critical geographic density and day-definite domestic services to approximately 99% of U.S. zip codes, as well as cross-border services to Mexico, Canada and the Caribbean. Our capacity and reach give us the ability to manage large freight volumes efficiently and balance our network to leverage fixed costs. For the trailing 12 months ended March 31, 2025, our customer-focused organization of truck
17
drivers, service center teams and sales professionals worked together to move approximately 17 billion pounds of freight through our network.
Importantly, our LTL business historically has generated a high return on invested capital and robust free cash flow. This supports our ongoing investments in people, network capacity and proprietary technology. We manage the business to specific objectives, such as on-time delivery and damage-free transport of customer freight, the optimal sourcing of linehaul transportation, and the strategic expansion of our footprint in markets with long-term demand. Since implementing our growth plan in the fourth quarter of 2021, we have added more than 2,000 net new doors to our network — this includes the acquisition of service centers previously operated by Yellow Corporation (the “Yellow Asset Acquisition”), completed in December 2023. As of March 31, 2025, we had opened the majority of these acquired locations.
Additionally, we have continued to advance a host of initiatives that are specific to XPO and largely independent of the macroeconomic environment. Our in-house trailer manufacturing facility and truck driver schools are self-reliant capabilities that are competitively advantageous for us, particularly when industry conditions make it difficult to source equipment or drivers. In 2024, we produced over 4,400 trailers and continued to invest in training commercial drivers at our XPO driver schools.
Specific to our technology, we believe that we have a large opportunity to drive further growth and profitability in our LTL network through innovation. For more information, see “Technology” below.
European Transportation Segment
XPO has a unique pan-European transportation platform with leading positions in key geographies: We are the #1 full truckload broker and the #1 pallet network (LTL) provider in France; the #1 full truckload broker and the #1 LTL provider in Iberia (Spain and Portugal); and a top-tier dedicated truckload provider in the U.K., where we also have the largest single-owner LTL network. We serve an extensive base of customers in the consumer, trade and industrial markets, including many sector leaders that have long-tenured relationships with us.
Our range of freight services in Europe encompasses dedicated truckload, LTL, full truckload brokerage, warehousing, managed transportation, last mile, freight forwarding and, increasingly, multimodal solutions customized for our customers, such as road-rail and road-short sea combinations. Our operators use our proprietary technology to manage these services within our digital ecosystem in Europe.
Technology
One of the ways in which we deliver superior service to our customers is by empowering our employees with technology. Our industry is evolving, and customers want to de-risk their supply chains by forming relationships with reliable service providers that have invested in innovation.
We have built a highly scalable ecosystem on the cloud that deploys our software consistently across our operating footprint. In our North American LTL business, the caliber of our technology is mission-critical to our success; it optimizes pricing, linehaul, labor planning, pickup-and-delivery and dock operations — the main components of the service we provide. We have been investing in proprietary artificial intelligence (“AI”) technology and have identified a number of high-impact applications where intelligent automation and better decision-making can directly enhance profitability. We see artificial intelligence playing a major role in how we operate, compete, and create value over the long term.
An LTL network of our scale has hundreds of thousands of activities underway at any given time, all managed on our technology. For the trailing 12 months ended March 31, 2025, we moved approximately 17 billion pounds of freight 800 million miles, including moving linehaul freight an average of 2.6 million miles a day.
With intelligent route-building, we can reduce empty miles in our linehaul network and improve load factor. Our proprietary optimization models analyze massive amounts of data including volume, capacity, and dimensions and generate instructions to maximize trailer utilization, reduce cost, and enhance service. We use our real-time visualization tools to drive efficiencies with pickups and deliveries and developed a robust pricing platform for contractual account management.
18
Consolidated Summary Financial Table
| Three Months Ended March 31, | Percent of Revenue | Change | ||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2025 | 2024 | 2025 vs. 2024 | |||||||||||||||||||||||||||
| Revenue | $ | 1,954 | $ | 2,018 | 100.0 | % | 100.0 | % | (3.2) | % | ||||||||||||||||||||||
| Salaries, wages and employee benefits | 832 | 834 | 42.6 | % | 41.3 | % | (0.2) | % | ||||||||||||||||||||||||
| Purchased transportation | 399 | 438 | 20.4 | % | 21.7 | % | (8.9) | % | ||||||||||||||||||||||||
| Fuel, operating expenses and supplies | 393 | 413 | 20.1 | % | 20.5 | % | (4.8) | % | ||||||||||||||||||||||||
| Operating taxes and licenses | 19 | 19 | 1.0 | % | 0.9 | % | — | % | ||||||||||||||||||||||||
| Insurance and claims | 35 | 38 | 1.8 | % | 1.9 | % | (7.9) | % | ||||||||||||||||||||||||
| Gains on sales of property and equipment | (2) | (2) | (0.1) | % | (0.1) | % | — | % | ||||||||||||||||||||||||
| Depreciation and amortization expense | 123 | 117 | 6.3 | % | 5.8 | % | 5.1 | % | ||||||||||||||||||||||||
| Legal matter | (11) | — | (0.6) | % | — | % | NM | |||||||||||||||||||||||||
| Transaction and integration costs | 3 | 14 | 0.2 | % | 0.7 | % | (78.6) | % | ||||||||||||||||||||||||
| Restructuring costs | 12 | 8 | 0.6 | % | 0.4 | % | 50.0 | % | ||||||||||||||||||||||||
| Operating income | 151 | 138 | 7.7 | % | 6.8 | % | 9.4 | % | ||||||||||||||||||||||||
| Other income | (1) | (10) | (0.1) | % | (0.5) | % | (90.0) | % | ||||||||||||||||||||||||
| Debt extinguishment loss | 5 | — | 0.3 | % | — | % | NM | |||||||||||||||||||||||||
| Interest expense | 56 | 58 | 2.9 | % | 2.9 | % | (3.4) | % | ||||||||||||||||||||||||
| Income before income tax provision | 91 | 90 | 4.7 | % | 4.5 | % | 1.1 | % | ||||||||||||||||||||||||
| Income tax provision | 22 | 23 | 1.1 | % | 1.1 | % | (4.3) | % | ||||||||||||||||||||||||
| Net income | $ | 69 | $ | 67 | 3.5 | % | 3.3 | % | 3.0 | % | ||||||||||||||||||||||
NM - Not meaningful.
Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024
Our consolidated revenue for the first quarter of 2025 decreased 3.2% to $1.95 billion, compared with the same period in 2024. The decrease in revenue in the first quarter of 2025 compared to the same period in 2024 reflects declines in both of our reportable segments, further explained below. Foreign currency movement decreased revenue by approximately 1.4 percentage points in the first quarter of 2025.
Salaries, wages and employee benefits includes compensation-related costs for our employees, including salaries, wages, incentive compensation, healthcare-related costs and payroll taxes, and covers drivers and dockworkers, operations and facility workers and employees in support roles and other positions. Salaries, wages and employee benefits for the first quarter of 2025 was $832 million, or 42.6% of revenue, compared with $834 million, or 41.3% of revenue, for the same period in 2024. The year-over-year increase as a percentage of revenue primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers, partially offset by lower incentive compensation and savings from restructuring actions.
Purchased transportation includes costs of procuring third-party freight transportation. Purchased transportation for the first quarter of 2025 was $399 million, or 20.4% of revenue, compared with $438 million, or 21.7% of revenue, for the same period in 2024. The year-over-year decrease as a percentage of revenue primarily reflects the insourcing of a greater proportion of linehaul from third-party transportation providers in our North American LTL segment.
Fuel, operating expenses and supplies includes the cost of fuel purchased for use in our vehicles as well as related taxes, maintenance and lease costs for our equipment, including tractors and trailers, costs related to operating our owned and leased facilities, bad debt expense, third-party professional fees, information technology expenses and supplies expense. Fuel, operating expenses and supplies for the first quarter of 2025 was $393 million, or 20.1% of revenue, compared with $413 million, or 20.5% of revenue, for the same period in 2024. The year-over-year decrease as a percentage of revenue primarily reflects lower fuel costs.
19
Operating taxes and licenses includes tax expenses related to our vehicles and our owned and leased facilities as well as license expenses to operate our vehicles. Operating taxes and licenses for the first quarter of 2025 was $19 million, compared with $19 million for the same period in 2024.
Insurance and claims includes costs related to vehicular and cargo claims for both purchased insurance and self-insurance programs. Insurance and claims for the first quarter of 2025 was $35 million, compared with $38 million for the same period in 2024. The year-over-year decrease primarily reflects lower costs in our European Transportation segment, partially offset by higher vehicular insurance costs in our North American LTL segment.
Depreciation and amortization expense for the first quarter of 2025 was $123 million, compared with $117 million for the same period in 2024. The year-over-year increase reflects the impact of capital investments, in particular service centers acquired in the Yellow Asset Acquisition, as well as tractors and trailers.
Legal matter for the first quarter of 2025 was a gain of $11 million, which reflects the settlement of claims against certain truck manufacturers related to purchases by our European Transportation segment covering periods prior to our acquisition of Norbert Dentressangle SA in 2015.
Transaction and integration costs for the first quarter of 2025 were $3 million, compared with $14 million for the same period in 2024. The year-over-year decrease primarily relates to no further stock-based compensation costs in the current year for certain employees related to strategic initiatives.
Restructuring costs for the first quarter of 2025 were $12 million, compared with $8 million for the same period in 2024, which primarily related to restructuring actions in our European Transportation segment. We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure. For more information, see Note 4—Restructuring Charges to our Condensed Consolidated Financial Statements.
Other income for the first quarter of 2025 was $1 million, compared with $10 million for the same period in 2024. The year-over-year decrease primarily reflects a $5 million decrease in net periodic pension income and a $3 million decrease in investment income.
Debt extinguishment loss for the first quarter of 2025 was $5 million, with no comparable loss for the same period in 2024. The debt extinguishment loss in the first quarter of 2025 related to the refinancing of our term loan facility.
Interest expense decreased to $56 million for the first quarter of 2025, compared with $58 million for the same period in 2024. The decrease is primarily due to lower interest rates on our variable rate debt.
Our effective income tax rates were 24.2% and 25.2% for the first quarters of 2025 and 2024, respectively. The effective income tax rates for the first quarter of 2025 and 2024 were based on forecasted full-year effective income tax rates, adjusted for discrete items that occurred within the periods presented. The decrease in our effective income tax rate for the first quarter of 2025 compared to the same period in 2024 was primarily driven by a decrease in losses for which no tax benefit can be recognized and a decrease in forecasted non-deductible executive compensation expense. In both the first quarter of 2025 and 2024, the effective tax rates were impacted by losses for which no tax benefit can be recognized and forecasted non-deductible executive compensation expense, partially offset by a discrete tax benefit of $5 million from stock-based compensation in both periods.
20
Segment Financial Results
Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. For our North American LTL and European Transportation segments, our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income before debt extinguishment loss, interest expense, income tax provision, depreciation and amortization expense, legal matters, transaction and integration costs, restructuring costs and other adjustments. Segment adjusted EBITDA includes an allocation of corporate costs. See Note 2—Segment Reporting to our Condensed Consolidated Financial Statements for further information and a reconciliation of adjusted EBITDA to Net income.
North American Less-Than-Truckload Segment
| Three Months Ended March 31, | Percent of Revenue | Change | ||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2025 | 2024 | 2025 vs. 2024 | |||||||||||||||||||||||||||
| Revenue | $ | 1,172 | $ | 1,221 | 100.0 | % | 100.0 | % | (4.0) | % | ||||||||||||||||||||||
Adjusted EBITDA (1) | 250 | 255 | 21.3 | % | 20.9 | % | (2.0) | % | ||||||||||||||||||||||||
| Depreciation and amortization | 90 | 82 | 7.7 | % | 6.7 | % | 9.8 | % | ||||||||||||||||||||||||
(1) Percent of Revenue is calculated using the underlying unrounded amounts.
Revenue in our North American LTL segment decreased 4.0% to $1.17 billion for the first quarter of 2025, compared with $1.22 billion for the same period in 2024. Revenue included fuel surcharge revenue of $178 million and $210 million, respectively, for the first quarters of 2025 and 2024. The decrease in fuel surcharge revenue was primarily driven by lower diesel prices and lower volume.
We evaluate the revenue performance of our LTL business using several commonly used metrics, including volume (weight per day in pounds) and yield, which is a commonly used measure of LTL pricing trends. We measure yield using gross revenue per hundredweight, excluding fuel surcharges. Impacts on yield can include weight per shipment and length of haul, among other factors, while impacts on volume can include shipments per day and weight per shipment. The following table summarizes our key revenue metrics:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2025 | 2024 | Change % | ||||||||||||||||||
| Pounds per day (thousands) | 65,427 | 70,709 | (7.5) | % | ||||||||||||||||
| Shipments per day | 48,400 | 51,392 | (5.8) | % | ||||||||||||||||
| Average weight per shipment (in pounds) | 1,352 | 1,376 | (1.8) | % | ||||||||||||||||
Gross revenue per hundredweight, excluding fuel surcharges | $ | 24.73 | $ | 23.13 | 6.9 | % | ||||||||||||||
Percentages presented are calculated using the underlying unrounded amounts.
The year-over-year decrease in revenue, excluding fuel surcharge revenue, in the first quarter of 2025 reflects lower volume, driven by lower shipments per day and lower average weight per shipment. These items were partially offset by higher yield, primarily related to our improvements in service quality and the benefit of numerous pricing initiatives.
Adjusted EBITDA was $250 million for the first quarter of 2025, compared with $255 million for the same period in 2024. The decrease in adjusted EBITDA reflects lower revenue, driven by lower fuel surcharge revenue and volume, and lower pension income. These items were partially offset by higher yield and lower purchased transportation and fuel costs.
Depreciation and amortization expense increased to $90 million in the first quarter of 2025 compared with $82 million for the same period in 2024. The increase was due to the impact of capital investments, in particular service centers acquired in the Yellow Asset Acquisition, as well as tractors and trailers.
21
European Transportation Segment
| Three Months Ended March 31, | Percent of Revenue | Change | ||||||||||||||||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2025 | 2024 | 2025 vs. 2024 | |||||||||||||||||||||||||||
| Revenue | $ | 782 | $ | 797 | 100.0 | % | 100.0 | % | (1.9) | % | ||||||||||||||||||||||
Adjusted EBITDA (1) | 32 | 38 | 4.1 | % | 4.8 | % | (15.8) | % | ||||||||||||||||||||||||
| Depreciation and amortization | 32 | 34 | 4.1 | % | 4.3 | % | (5.9) | % | ||||||||||||||||||||||||
(1) Percent of Revenue is calculated using the underlying unrounded amounts.
Revenue in our European Transportation segment decreased 1.9% to $782 million for the first quarter of 2025, compared with $797 million for the same period in 2024. Foreign currency movement decreased revenue by approximately 3.4 percentage points in the first quarter of 2025. The increase in revenue during the first quarter of 2025, compared to the same period in 2024, after taking into effect the impact of foreign currency movement, primarily reflects higher yield, partially offset by lower volume.
Adjusted EBITDA was $32 million for the first quarter of 2025, compared with $38 million for the same period in 2024. The decrease in adjusted EBITDA was primarily driven by higher purchased transportation, partially offset by the increase in revenue after taking into effect the impact of foreign currency movement, described above, and lower fuel costs and insurance and claims.
Depreciation and amortization expense decreased to $32 million in the first quarter of 2025 compared with $34 million for the same period in 2024.
Liquidity and Capital Resources
Our cash and cash equivalents balance was $212 million as of March 31, 2025, compared to $246 million as of December 31, 2024. Our principal existing sources of cash are: (i) cash generated from operations; (ii) borrowings available under our Revolving Credit Facility (as defined below); and (iii) proceeds from the issuance of other debt. As of March 31, 2025, we have $599 million available to draw under our Revolving Credit Facility, after considering outstanding letters of credit of less than $1 million. Additionally, we have a $200 million uncommitted secured evergreen letter of credit facility, under which we had issued $133 million in aggregate face amount of letters of credit as of March 31, 2025.
In February 2025, we terminated our Second Amended and Restated Revolving Credit Agreement, as amended, and entered into a Revolving Credit Agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement provides for revolving credit commitments in an aggregate amount of $600 million (the “Revolving Credit Facility”). See Note 6—Debt to our Condensed Consolidated Financial Statements for further information.
As of March 31, 2025, we had approximately $811 million of total liquidity. We continually evaluate our liquidity requirements in light of our operating needs, growth initiatives and capital resources. We believe that our existing liquidity and sources of capital are sufficient to support our operations over the next 12 months.
Trade Receivables Securitization and Factoring Programs
We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under a securitization program for our European transportation business. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers. For more information, see Note 1—Organization, Description of Business and Basis of Presentation to our Condensed Consolidated Financial Statements.
The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $216 million as of March 31, 2025). As of March 31, 2025, €1 million (approximately $1 million) was available under the program. Under the securitization program, we service the receivables we sell on behalf of the purchasers. The program expires in July 2026.
22
Term Loan Facility
In February 2025, we amended our Senior Secured Term Loan Credit Agreement. Pursuant to the amendment, the lenders provided the company (a) a term loan B facility in an aggregate principal amount of $700 million, maturing on May 24, 2028 (the “Refinancing Term Loan B-2 Facility”), and (b) a term loan B facility in an aggregate principal amount of $400 million, maturing on February 1, 2031 (the “Refinancing Term Loan B-3 Facility” and together with the Refinancing Term Loan B-2 Facility, the “Refinancing Term Loan Facilities”). The proceeds of the Refinancing Term Loan Facilities were used to refinance our existing term loans. We recorded a debt extinguishment loss of $5 million due to this refinancing.
The Refinancing Term Loan Facilities bear interest at a rate per annum equal to, at the Company’s option, either alternate base rate (“ABR”) or Term Secured Overnight Financing Rate (“SOFR”) plus (i) in the case of ABR Loans, 0.75% or, (ii) in the case of Term SOFR Loans, 1.75%, which, in each case after September 30, 2025, shall be reduced by 0.25% upon the achievement of a Consolidated First Lien Net Leverage Ratio (as defined in the Amended Term Loan Credit Agreement) of less than or equal to 1.21 to 1.00. The Refinancing Term Loan Facilities are secured by a lien on substantially all of our assets and the assets of our guarantors, with certain exceptions.
The amended Term Loan Credit Agreement contains customary mandatory prepayment requirements, representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including limitations on indebtedness, liens, investments, dividends, repayments of junior financings and asset sales, in each case subject to a number of important exceptions and qualifications.
The weighted average interest rate of our term loans was approximately 6.07% as of March 31, 2025.
Loan Covenants and Compliance
As of March 31, 2025, we were in compliance with the covenants and other provisions of our debt agreements. Any failure to comply with any material provision or covenant of these agreements could have a material adverse effect on our liquidity and operations.
Sources and Uses of Cash
| Three Months Ended March 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Net cash provided by operating activities | $ | 142 | $ | 145 | ||||||||||
| Net cash used in investing activities | (191) | (299) | ||||||||||||
| Net cash used in financing activities | (30) | (29) | ||||||||||||
During the three months ended March 31, 2025, we generated cash from operating activities of $142 million. We used cash during the period primarily to: (i) purchase property and equipment of $199 million and (ii) make net payments of $47 million related to tax withholding obligations in connection with the vesting of restricted shares.
During the three months ended March 31, 2024, we generated cash from operating activities of $145 million. We used cash during this period primarily to: (i) purchase property and equipment of $306 million; (ii) make payments on debt and finance leases of $21 million; and (iii) make payments of $15 million related to tax withholding obligations in connection with the vesting of restricted shares
Cash flows from operating activities for the three months ended March 31, 2025 decreased by $3 million, compared with the same period in 2024. The decrease primarily reflects the impact of operating assets and liabilities utilizing $78 million of cash in the first three months of 2025, compared with utilizing $68 million during the same period in 2024, which was partially offset by higher non-cash depreciation and amortization of $6 million, that is added back in the determination of operating cash flows.
Investing activities used $191 million of cash in the three months ended March 31, 2025 and $299 million of cash in the three months ended March 31, 2024. During the three months ended March 31, 2025, we used $199 million to purchase property and equipment, as compared to a $306 million usage of cash in the same period in 2024. The decrease is due to the timing of capital expenditures in 2025 compared to 2024.
23
Financing activities used $30 million of cash in the three months ended March 31, 2025 and $29 million of cash in the three months ended March 31, 2024. The primary uses of cash from financing activities during the first three months of 2025 were $47 million to make net payments for tax withholdings on restricted shares and $18 million used to repay borrowings, primarily related to finance lease obligations. The primary uses of cash from financing activities during the first three months of 2024 were $21 million used to repay borrowings, primarily related to finance lease obligations, and $15 million to make payments for tax withholdings on restricted shares. The primary source of cash from financing activities during the first three months of 2025 was $38 million of proceeds from bank overdrafts, as compared to $11 million in the same period of 2024.
There were no material changes to our December 31, 2024 contractual obligations during the three months ended March 31, 2025. We anticipate full year gross capital expenditures to be between $600 million and $700 million in 2025, funded by cash on hand, cash generated from operations and available liquidity.
New Accounting Standards
Information related to new accounting standards is included in Note 1—Organization, Description of Business and Basis of Presentation to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are exposed to market risk related to changes in interest rates, foreign currency exchange rates and commodity prices. There have been no material changes to our quantitative and qualitative disclosures about market risk during the three months ended March 31, 2025, as compared with the quantitative and qualitative disclosures about market risk described in our 2024 Form 10-K.
Item 4. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of March 31, 2025. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2025, such that the information required to be included in our Securities and Exchange Commission (“SEC”) reports is: (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to the Company, including our consolidated subsidiaries; and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting during the quarter ended March 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Part II—Other Information
Item 1. Legal Proceedings.
For information related to our legal proceedings, refer to “Legal Proceedings” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Note 9—Commitments and Contingencies of Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors.
There are no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024.
24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Item 6. Exhibits.
| Exhibit Number | Description | |||||||
| 10.1 + | ||||||||
| 10.2 +* | ||||||||
| 10.3 +* | ||||||||
| 10.4 +* | ||||||||
| 10.5 +* | ||||||||
| 10.6 | ||||||||
| 10.7 | ||||||||
| 10.8* | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
25
| Exhibit Number | Description | |||||||
| 32.2** | ||||||||
| 101.INS * | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH * | XBRL Taxonomy Extension Schema. | |||||||
| 101.CAL * | XBRL Taxonomy Extension Calculation Linkbase. | |||||||
| 101.DEF * | XBRL Taxonomy Extension Definition Linkbase. | |||||||
| 101.LAB * | XBRL Taxonomy Extension Label Linkbase. | |||||||
| 101.PRE * | XBRL Taxonomy Extension Presentation Linkbase. | |||||||
| 104 * | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | |||||||
| * | Filed herewith. | |||||||
| ** | Furnished herewith. | |||||||
| + | This exhibit is a management contract or compensatory plan or arrangement. | |||||||
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| XPO, INC. | |||||
| By: | /s/ Mario Harik | ||||
| Mario Harik | |||||
| Chief Executive Officer | |||||
| (Principal Executive Officer) | |||||
| By: | /s/ Kyle Wismans | ||||
| Kyle Wismans | |||||
| Chief Financial Officer | |||||
| (Principal Financial Officer) | |||||
Date: April 30, 2025
27