XPO’s pricing, operating initiatives drive Q3 beat

XPO exceeded market expectations in the third quarter, driven by higher volumes and improved pricing coupled with operational efficiency enhancements. The company reported adjusted earnings per share of $1.70, surpassing analyst consensus and marking a 13 cent increase over the previous year. Consolidated revenue reached $2.37 billion, a 12% year-over-year rise but falling short of analysts' expectations by $10 million.

Less-than-truckload revenue surged 17% year-over-year to $1.47 billion, propelled by a 5% increase in tonnage and a 12% rise in yield per hundredweight. The company's freight mix now leans more toward shipments from smaller businesses, which generally yield better margins despite carrying lighter loads. September marked the ninth consecutive month of expansion for the U.S. manufacturing sector, a key contributor to LTL freight.

XPO's adjusted operating ratio stood at 80.1%, representing a 260 basis point increase year-over-year and aligning with management's guidance of sub-81%. The operating ratio improvement outpaced the historical second-quarter-to-third-quarter decline of 200 to 250 basis points. XPO's European transportation segment saw a 5% year-over-year revenue increase to $900 million, with adjusted EBITDA rising 26% year-over-year to $48 million. A conference call is scheduled to discuss the third-quarter results at 8:30 a.m. EDT on Thursday.