XPO (XPO, Financial) reported its first-quarter revenue at $1.95 billion, slightly below market expectations of $1.98 billion. Despite this, the company showcased strong operational performance. The adjusted EBITDA reached $278 million, with adjusted diluted earnings per share at $0.73. The firm achieved a sequential enhancement in its North American less-than-truckload (LTL) segment's adjusted operating ratio, reaching 85.9%, a noteworthy achievement surpassing the typical seasonal trends. Over the past two years, the company improved its adjusted operating ratio by 370 basis points, despite operating in a challenging freight market.
Supported by outstanding service quality, XPO marked a 6.9% increase in yield growth for the quarter, excluding fuel, and sequential growth in revenue per shipment for the ninth consecutive quarter. Efficiency gains were driven by technology-enhanced labor productivity and strategic third-party linehaul insourcing, leading to a significant 53% year-over-year reduction in transportation expenses. With a long-term strategy focusing on margin expansion and high-return investments in its network, XPO remains committed to delivering top-notch service and sustaining performance, irrespective of freight market fluctuations.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 24 analysts, the average target price for XPO Inc (XPO, Financial) is $130.80 with a high estimate of $168.00 and a low estimate of $85.00. The average target implies an upside of 34.25% from the current price of $97.43. More detailed estimate data can be found on the XPO Inc (XPO) Forecast page.
Based on the consensus recommendation from 26 brokerage firms, XPO Inc's (XPO, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for XPO Inc (XPO, Financial) in one year is $80.32, suggesting a downside of 17.56% from the current price of $97.43. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the XPO Inc (XPO) Summary page.
XPO Key Business Developments
Release Date: February 06, 2025
- Full Year Revenue: $8.1 billion, a 4% increase year-over-year.
- Adjusted EBITDA: $1.3 billion, a 27% increase from the prior year.
- Adjusted Diluted EPS: $3.83, a 31% increase for the year.
- Adjusted Operating Ratio Improvement: 260 basis points.
- Fourth Quarter Revenue: $1.9 billion, 1% lower year-over-year.
- LTL Segment Revenue (Excluding Fuel): Increased by 2% year-over-year.
- Fourth Quarter Adjusted EBITDA: $303 million, a 15% increase year-over-year.
- Fourth Quarter Adjusted EBITDA Margin: 15.8%, a 220 basis points improvement.
- LTL Segment Adjusted EBITDA: $280 million, a 20% increase year-over-year.
- Net Income from Continuing Operations: $76 million, a 31% increase year-over-year.
- Adjusted Diluted EPS for Q4: $0.89, a 16% increase year-over-year.
- Cash Flow from Operating Activities (Q4): $189 million.
- Net Debt Leverage Ratio: 2.5 times trailing 12 months adjusted EBITDA.
- Yield Growth (Excluding Fuel): 7.8% year-over-year.
- Purchase Transportation Cost Reduction: 32% for 2024.
- European Segment Revenue Growth: 3% for the full year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- XPO Inc (XPO, Financial) reported a strong fourth quarter with year-over-year earnings growth and LTL margin expansion that outperformed the industry.
- The company achieved a 31% increase in adjusted diluted EPS, reaching $3.83 for the year.
- XPO Inc (XPO) seamlessly integrated 25 new service centers into its network, enhancing customer service capacity.
- The company improved its damage claims ratio to 0.2%, a significant improvement from 0.3% last year, indicating high service quality.
- XPO Inc (XPO) reduced its purchase transportation cost by 32% in 2024, driven by a reduction in linehaul miles outsourced to third parties.
Negative Points
- Total revenue for the fourth quarter was $1.9 billion, which is 1% lower than the prior year on a company-wide basis.
- In the LTL segment, revenue was down 3% year-over-year due to a 23% decline in fuel surcharge revenue tied to the price of diesel.
- The company experienced a 5.7% decline in tonnage per day, with shipments per day down 4.4% year-over-year.
- XPO Inc (XPO) faced a 3% increase in total salary and wage benefits in the fourth quarter, primarily due to inflation.
- The European transportation segment reported adjusted EBITDA of $27 million, indicating challenges in the region despite some gains.
