XPO

XPO is a leading North American LTL and European transportation carrier, and operationally the business is holding up better than the headline earnings suggest: FY2025 operating income was essentially flat at $656M (8.0% of revenue vs 8.2%) and operating cash flow grew 22% to $986M. Revenue rose just 1.1% to $8.16B, and management notes that ~1.4 points of that came from FX, so revenue was effectively flat ex-currency. Returns on equity remain respectable at 17%. The problem is below the operating line: net income fell 18.3% to $316M and diluted EPS dropped to $2.64, as the income tax provision rose to $121M from $86M and the company absorbed higher restructuring ($59M) and a $35M Pre-Con-way environmental charge. Margins are being squeezed by wage inflation and the insourcing of linehaul (salaries/wages rose to 42.0% of revenue).

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