# XPO Inc. (XPO) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/XPO/thesis · /stocks/XPO/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: XPO
step: "04"
title: Financial Snapshot
created: 2026-05-29
---

### Step 04: Financial Snapshot

#### Three-Year P&L Summary (Continuing Operations)

All figures in USD millions. Post-spinoff continuing operations basis.

##### Income Statement

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| Revenue | ~$6,400 | ~$6,189 | ~$6,550 |
| Revenue Growth YoY | — | ~-3% | ~+6% |
| Gross Profit | ~$1,250 | ~$1,280 | ~$1,400 |
| Gross Margin | ~19.5% | ~20.7% | ~21.4% |
| Operating Income (GAAP) | ~$320 | ~$375 | ~$480 |
| Operating Margin (GAAP) | ~5.0% | ~6.1% | ~7.3% |
| Adjusted EBITDA | ~$870 | ~$980 | ~$1,100 |
| Adjusted EBITDA Margin | ~13.6% | ~15.8% | ~16.8% |
| Interest Expense | ~$(280) | ~$(290) | ~$(280) |
| Pre-Tax Income | ~$40 | ~$85 | ~$200 |
| Tax Expense | ~$(15) | ~$(25) | ~$(55) |
| Net Income (Adj.) | ~$60 | ~$165 | ~$270 |
| Adjusted EPS | ~$0.50 | ~$1.40 | ~$2.25 |

Note: GAAP net income includes transformation costs, restructuring charges, and acquisition-related amortization that management excludes in adjusted figures. The gap between GAAP and adjusted earnings is significant (~$1.00+ per share) and analysts should scrutinize the nature of these exclusions.

##### Operating Ratio (North America LTL Segment)

The operating ratio (OR) = total operating expenses / revenue — the most critical metric for LTL carriers. Lower is better (less expense per dollar of revenue).

| Period | OR (North America LTL) | YoY Change |
|--------|------------------------|------------|
| FY2021 | ~91.5% | — |
| FY2022 | ~90.1% | -140 bps |
| FY2023 | ~87.9% | -220 bps |
| H1 2024 | ~86.5% | ~-150 bps YoY |
| Q3 2024 | ~85.5% | ~-140 bps YoY |
| LTM 2024 | ~86-87% | ~-150 bps vs. PY |
| Target (3-5yr) | 80-83% | ~-400-700 bps from current |

The improvement trajectory is clear and accelerating, but the gap to ODFL (~73%) remains substantial — implying the thesis is a multi-year story, not a near-term event.

#### Margin Analysis

##### Gross Margin Drivers

North America LTL gross margins are improving due to:
1. **Revenue per hundredweight expansion** (yield improvement outpacing cost inflation)
2. **Purchased transportation reduction** (less third-party carrier usage as owned network density grows)
3. **Yellow terminal integration** (reducing costly stem miles to reach customers in new territories)

European Transportation gross margins (~7-10%) are structurally lower due to more competitive market dynamics and higher purchased transportation usage.

##### Cost Structure

| Cost Category | % of Revenue (Approx.) | Trend |
|---------------|------------------------|-------|
| Salaries, wages, benefits | ~44-46% | Increasing (labor inflation, but offset by productivity gains) |
| Purchased transportation | ~12-15% | Decreasing (network density improvement) |
| Fuel | ~6-8% | Variable (diesel price dependent) |
| Operating supplies & expenses | ~5-6% | Roughly stable |
| Depreciation & amortization | ~5-6% | Increasing (CapEx ramp) |
| Insurance & claims | ~3-4% | Improving (claims ratio improvement) |
| Rentals | ~2-3% | Decreasing (owned terminal expansion) |

**Labor is the dominant cost** — XPO is a people and asset-intensive business. Non-union driver workforce in North America provides structural cost flexibility vs. legacy unionized carriers like ABF/ArcBest.

##### EBITDA Bridge: 2022 to 2024

| Factor | Impact |
|--------|--------|
| Revenue growth (~+$150M) | +$25-30M EBITDA |
| OR improvement (~-200 bps on $5.4B) | ~+$100-110M EBITDA |
| Yellow terminal integration ramp | +$20-30M (partial year benefit) |
| European segment | ~flat |
| Interest expense | ~flat (higher debt offset by rate hedge) |
| **Net EBITDA improvement 2022→2024** | **~+$230M** |

#### Balance Sheet Summary (FY2024 Estimated)

| Item | Value |
|------|-------|
| Cash & Equivalents | ~$300-400M |
| Total Debt (gross) | ~$4.8-5.2B |
| Net Debt | ~$4.4-4.8B |
| Net Debt / Adjusted EBITDA | ~4.0-4.5x |
| Total Assets | ~$10.5-11.0B |
| Goodwill & Intangibles | ~$3.5-3.8B (legacy acquisitions) |
| Book Value of Equity | ~$2.5-3.0B |
| Shares Outstanding | ~116-118M diluted |

#### Cash Flow Summary

| Metric | FY2022 | FY2023 | FY2024E |
|--------|--------|--------|---------|
| CFO (Operating Cash Flow) | ~$500M | ~$650M | ~$800M |
| CapEx | ~$(600-650)M | ~$(700-750)M | ~$(650-700)M |
| Free Cash Flow | ~$(100-150)M | ~$(50-100)M | ~$100-150M |
| CapEx % Revenue | ~9.5-10% | ~11-12% | ~10-11% |

XPO is in a heavy investment phase — CapEx elevated from Yellow terminal purchases and network upgrades. FCF has been near breakeven or negative in recent years but should turn meaningfully positive as the investment cycle peaks and EBITDA continues to grow. Management targets $250M+ FCF in 2025 and acceleration thereafter.

#### Key Financial Ratios

| Ratio | XPO | ODFL | SAIA |
|-------|-----|------|------|
| Operating Ratio (LTL) | ~87% | ~73% | ~83-85% |
| EBITDA Margin | ~17% | ~30%+ | ~20-22% |
| Net Debt/EBITDA | ~4.2x | ~0x (net cash) | ~0.5-1x |
| CapEx/Revenue | ~10-11% | ~8-10% | ~10-12% |
| ROIC (est.) | ~6-8% | ~25-30% | ~12-15% |

The leverage is the clearest differentiator — XPO carries substantially more financial risk than ODFL or SAIA, which is appropriate given the transformation stage. The deleveraging path depends on FCF conversion, which in turn depends on OR improvement pace.

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/XPO/fundamental

## Navigation

- Overview: /stocks/XPO
- Financials (this page): /stocks/XPO/financials
- Thesis: /stocks/XPO/thesis
- Investment Memo: /stocks/XPO/memo
- Coverage universe: /stocks