XPO, Inc.

Welcome to the XPO Q3 2025 Earnings Conference Call and Webcast. My name is Stacey and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you have a question, please dial star 1 on your telephone keypad. Please limit yourself to one question when you come up in the queue. If you have additional questions, you're welcome to get back in the queue and we'll take as many as we can. Please note that this conference call is being recorded. Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements and the use of non-GAAP financial measures. During this call, the company will be making certain forward-looking statements within the meetings of applicable security laws, which by their nature involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. A discussion of risk factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release. The forward-looking statements in the company's earnings release or made on this call are made only as of today, and the company has no obligation to update any of these forward-looking statements except to the extent required by law. During this call, the company may also refer to certain non-GAAP financial measures as defined under applicable SEC rules. Reconciliations of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the related financial tables are on its website. you can find a copy of the company's earning release, which contains additional important information regarding forward-looking statements and non-GAAP financial measures in the investor section on the company's website. I will now turn the call over to XPO's Chief Executive Officer, Mario Harik. Mr. Harik, you may begin.

Good morning, everyone, and thank you for joining our call. I'm here with Kyle Wismans, our Chief Financial Officer, and Ali Faghri, our Chief Strategy Officer. This morning, we reported another quarter of strong execution. Company-wide, we generated adjusted EBITDA of $342 million and adjusted diluted EPS of $1.07, both exceeding expectations. Excluding a non-recurring benefit in the third quarter last year, adjusted EBITDA grew by 6%, and adjusted diluted ETS by 11%. In our North American LTL business, we grew adjusted operating income year-over-year by 10% to $217 million and improved our adjusted operating ratio by 150 basis points to 82.7%, significantly outperforming seasonality. We've now achieved 350 basis points of margin expansion over two years in a soft-trade market, underscoring the power of our operating model. Importantly, we grew LTL-adjusted EBITDA to the highest level of any quarter in our history at $308 billion. The consistency of our performance highlights two inherent strengths of our business. First, it's our ability to drive above-market yield growth, and second, to optimize our network with high-impact proprietary AI and other technology. The foundation of our operational strength is our world-class service, and it's the most powerful catalyst of customer loyalty and margin expansion. In the third quarter, we reduced damage frequency to the best level in our history, and we improved on-time performance year-over-year for the 14th consecutive quarter. These improvements reflect the importance we place on delivering consistently for customers as a core tenet of our culture and the pride our team takes in meeting that goal. We're also optimizing our network so that our facilities, fleet, and technology work together to reduce re-handles, shorten transit times, and increase productivity. These operational gains are being supported by the investments we've made in our network and equipment, which continue to enhance service quality and drive long-term cost efficiency. Speaking specifically to our investments, we focus on high-growth freight markets, and we have one of the strongest NTL networks in the industry. We use the 30% excess door capacity in our network as a strategic tool, optimizing freight flows today while positioning to capture profitable share gains and stronger incremental margins as the cycle turns. On the equipment side, our investments have lowered the average age of our tractors to 3.6 years at quarter end, giving us one of the youngest fleets in the industry. A newer fleet, combined with the efficiency of our maintenance program, strengthens reliability, safety, and service performance. In the third quarter, it drove a 10% reduction in our maintenance cost per mile. Together, these investments are improving efficiency across line haul, dock, and pickup and delivery operations while ensuring we have the right capacity in place to support growth ahead. Turning to pricing, our service quality and focus on a more profitable mix drove another quarter of above market yield growth and margin performance. In the third quarter, we grew yield excluding fuel by 5.9% year over year and 3.1% sequentially. We also improved revenue per shipment, excluding fuel sequentially, for the 11th consecutive quarter. Underpinning this performance was the value shippers placed on our reliability and damage-free service. We're also seeing benefits from a richer mix of local accounts and premium services, both of which carry higher margins and contributed to the outperformance in the quarter. By rigorously executing our strategy, we're translating the strength of our service into industry-leading yield growth and meaningful margin extension. Turning to cost efficiency, our progress with productivity and AI continue to be a highlight in the quarter, while our reduced reliance on purchase transportation will insulate our cost structure when the cycle turns. Starting with purchase transportation, we improved outsourced miles to 5.9% of total miles, the lowest level in company history, and down from 25% a few years ago. Our lower reliance on third-party carriers gives us greater control over service quality and will support stronger incremental margins when truckload rates recover. Notably, productivity was the largest contributor to our strong cost performance in the quarter, enabled by our AI-driven optimization tools, which are generating measurable returns. In line haul, the models we deploy are driving meaningful reductions in overall miles run, as well as empty miles, and the impact of these gains accelerated throughout the quarter. More recently, we've rolled out automated mapping for door loading to streamline trailer utilization. This has already increased shipments per trailer by no single digits versus last year. Lionhalla presents our largest cost category at about $1.6 billion per year, so the efficiencies we realize here have a significant impact on our P&L. Pickup and delivery is another area where our implementation of AI solutions is showing strong potential and is in the early innings. Every local route we run is precisely optimized for time, distance, and number of stops. Collectively, these initiatives contributed to a year-over-year productivity improvement of 2.5 points in the quarter. This reinforces how quickly AI is gaining significance as a driver of our margin-out performance. And we're just beginning to unlock its potential. As these tools scale, we expect ongoing enhancements of productivity, margins, and the customer experience across our operations. In closing, I want to frame today's strong earning report within the context of the strategy that powers our model. Together, they keep us performing ahead of the market, independent of the macro. At its core, our model integrates a high performing network of capacity with key markets, advanced technology, and a culture that excels at delivering world-class service and results at scale. And our applications of AI are amplifying our strategy, creating new opportunities to meaningfully expand our margins. It's a dynamic combination, and as the cycle turns, we expect our momentum to accelerate, driving greater upside to margin and long-term value creation for our shareholders. With that, I'll turn it over to Kyle to walk through the financials. Kyle, over to you.

Thank you, Mario, and good morning, everyone. I'll take you through our key financial results, balance sheet, and liquidity. For the third quarter, total company revenue was up 3% year over year to $2.1 billion. In our LTL segment, revenue was also up to $1.3 billion. Excluding fuel, LTL revenue grew 1% year over year, supported by ongoing strength in our yield. On the cost side, our salary, wage, and benefit expense increased just 1% year over year due to productivity improvements. Our AI-driven tools helped offset the impact of inflation and the added labor costs from our insourcing initiative. We also drove additional efficiency gains across the network, including a 48% decrease in third quarter purchase transportation expense as we insource more line haul miles. Strategically, the insourcing we're doing now should significantly mitigate costs later when the cycle recovers and third-party carriers raise their rates. Depreciation expense in the LTL segment increased 11%, or $9 million, consistent with our strategy of investing in capacity and equipment to support long-term growth. Turning to profitability, company-wide adjusted EBITDA increased 3% year-over-year to $342 million. In LTL, adjusted EBITDA was up 9% to $308 million, and adjusted operating income was up 10%, to $217 million, both for company records. We also expanded our LTL adjusted EBITDA margin by 180 basis points to 24.5%, reflecting strong pricing and operational execution. In our European transportation segment, adjusted EBITDA was $38 million, and corporate adjusted EBITDA was a loss of $4 million. For the total company, Operating income was $164 million and net income was $82 million. Diluted earnings per share decreased to 68 cents, reflecting a $35 million charge related to a legal matter dating back to Conway in the 1980s before we acquired the company. On an adjusted basis, diluted EPS was $1.07, up 5% year over year. And lastly, We generated $371 million of cash flow from operating activities in the quarter and deployed $150 million of net capex. Moving to the balance sheet, we ended the quarter with $335 million of cash on hand after repurchasing $50 million of common stock and paying down $50 million on our term loan facility. Combined with available capacity under our committed borrowing facility, This gave us $935 million of total liquidity at quarter end. Our net leverage ratio was 2.4 times trailing 12 months adjusted EBITDA compared with 2.5 times in the prior quarter. Looking ahead, while we remain committed to investing in initiatives that support long-term growth, we expect our CapEx to moderate and free cash flow conversion to increase. This positions us with greater flexibility in continuing to return capital to shareholders while strengthening our balance sheet. With that, I'll hand it over to Ali to walk you through our operating results.