XPO Q3 2026 Earnings Call: LTL Margin Expansion and Stronger Free Cash Flow
Source Tradingkey
Key Takeaways
- XPO reported Q3 2026 revenue of $2.4 billion, up 12% year over year. Adjusted EBITDA rose 27% to $433 million, while adjusted diluted EPS increased 59% to $1.70.
- North American LTL revenue grew 17%, and adjusted operating income reached a company record of $293 million, up 35%. The segment’s adjusted operating ratio improved by 260 basis points year over year.
- LTL shipments per day increased 5.8% and tonnage per day rose 5.0%. Yield excluding fuel improved 3.6%, supported by pricing and a greater mix of local and premium-service freight.
- XPO generated $291 million of free cash flow in the quarter. Net leverage declined to 1.9x trailing 12-month adjusted EBITDA after $150 million of share repurchases and $100 million of debt repayment.
- Management expects Q4 LTL adjusted operating ratio to remain below 82%, materially outperforming normal seasonal deterioration. Full-year operating-ratio improvement is now expected to reach at least 250 basis points.
- AI-based routing, workforce planning and loading tools are improving productivity. Management targets annual productivity gains of 1.5 to 2 percentage points over the longer term.
Key Financial Data
| Metric | Q3 2026 | Year-over-year change / commentary |
|---|---|---|
| Revenue | $2.4 billion | Up 12% |
| Adjusted EBITDA | $433 million | Up 27% |
| Operating income | $288 million | Up 76% |
| Net income | $181 million | Diluted EPS of $1.53 |
| Adjusted diluted EPS | $1.70 | Up 59% |
| Free cash flow | $291 million | After $123 million of net capital expenditures |
| Quarter-end cash | $260 million | Total liquidity of approximately $860 million |
| Net leverage | 1.9x | Down from 2.1x in Q2 2026 |
| Share repurchases | $150 million | $250 million year to date |
| Q3 debt repayment | $100 million | An additional $75 million was repaid in October |
Business and Operating Performance
North American LTL
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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