XPO, Inc.

Welcome to the XPO Q2 2026 earnings conference call and webcast. My name is Saatchi and I will be your operator for today's call. At this time, all participants are on 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 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 meaning of the 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 the 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 earnings release, which contains additional important information regarding forward-looking statements and non-GAAP financial measures, in the Investors section on the company's website. I will now turn the call over to XBO's Chairman and Chief Executive Officer, Mario Harik. Mr. Harik, you may begin.

Good morning, everyone, and thank you for joining us. I'm here with Kyle Wismans, our Chief Financial Officer, and Ali Faghri, our Chief Strategy Officer. This morning, we reported record second quarter results that demonstrate the increasing strength of our earnings power. Company-wide, we reported revenue, adjusted EBITDA, and adjusted diluted EPS at the highest levels in our history. Excluding real estate gains, our adjusted EBITDA was up 25% year-over-year to $425 million. And adjusted diluted EPS was $1.64, up 56%. In North American LTL, we grew adjusted operating income by 36% on a 15% increase in revenue, highlighting the scalability of our network and the operating leverage in the business. We also brought down our adjusted operating ratio below 80%, which is a new record for us. That's a 300 basis point improvement from the second quarter last year, and it significantly outperformed normal seasonality. The foundation of our outperformance continues to be the superior customer experience we deliver through disciplined execution amplified by our technology. Notably, we achieved a new service milestone with our damage claims ratio, bringing it below 0.2% for the second quarter in a row and to the best level in our history. This is a product of operational excellence, investments in capacity, and proprietary technology working together to build customer satisfaction and trust. Another example is our reputation as one of the fastest and most reliable LTL networks in the industry. With broad geographic coverage and consistently high service levels, this ties directly to our gains in market share. In short, world-class service is the gateway to expanding our business and translating customer value into shareholder value. To accomplish this, we've engineered our network to support long-term growth while running efficiently across different demand environments. Since 2021, we've increased our trailer fleet by more than 30% and tractor count by more than 20% and expanded our network capacity with 15% additional doors. We've also invested in our workforce, improving retention while maintaining the ability to scale labor hours with demand. This gives us the capacity to take on substantially more volume in the recovery while maintaining service quality. Each of these investments strengthens our operating leverage, enabling us to grow efficiently now and over time. They also reinforce our commercial performance by creating more opportunities to increase wallet share, earn price, and win new business. In the second quarter, our service quality helped us accelerate contract renewal pricing. and we're continuing to expand revenue streams with high margin local customers and premium services where we have a meaningful competitive edge. These are all structural advantages inherent to our business. We're building our network for years of above market pricing growth and profitable market share gains. Before I close, I'll spend a few minutes on our proprietary technology and its broad impact across the business. In the second quarter, we used our workforce planning technology to improve productivity by nearly 2.5 points versus last year, which outperformed our quarterly target of 1.5%. Another example is route optimization, which we discussed on our prior calls. Currently, more than two-thirds of our operations are using this technology for pickup and delivery, and we're seeing measurable results with fewer miles and more stops per hour. We're also seeing encouraging results from the pilot of our trailer loading technology. This application uses AI to assess images of freight placed inside the trailers and provide our dock workers with actionable feedback in real time. In the second quarter, at the pilot sites, load quality improved by more than 40%, while damages were reduced by 50%, contributing to both service quality and operating efficiency. As we grow the business and expand the use of our technologies, the financial, operational, and competitive advantages will increase as well. In closing, the levers we executed on in the second quarter are firmly established as a foundation for outside value creation. We'll continue to enhance our service, invest in capacity, drive above-market pricing growth, and scale our proprietary technology to operate more efficiently. Our results reinforce our confidence in the strategy and the significant value it can create. And that value creation is underpinned by two key objectives, achieving an annual LTL operating ratio in the low 70s or better, and generating billions of dollars of cumulative free cash flow in the coming years. 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. A walk through our financial results followed by our balance sheet, liquidity, and capital allocation. For the second quarter, we grew total company revenue 13% year-over-year to $2.4 billion. In our LTL segment, revenue increased 15% to $1.4 billion, reflecting an acceleration in both yield and volume growth. Referring to cost in LTL, our expense for salary, wages, and benefits increased 7% year-over-year, or $46 million. Our productivity initiatives continue to help mitigate the impact of higher inflation and freight volumes. Our costs for fuel operating expense and supplies increased 24%, or $53 million, primarily due to higher fuel prices. While NFC truckload rates trended up significantly throughout the quarter, our purchase transportation costs increased by just $8 million. This is because our insourcing strategy is performing as planned, reducing our exposure to truckload rate volatility. Our depreciation expense increased 5%, or $4 million, consistent with our continued investments in the network to support long-term growth. Moving to profitability company-wide, we delivered $434 million in adjusted EBITDA. Excluding $9 million of real estate gains in the quarter, adjusted EBITDA increased 25%. Our LTL segment generated $390 million of adjusted EBITDA and improved margin by 310 basis points to 27.3%. Excluding real estate gains, LTL adjusted EBITDA increased 27%. Lastly, in LTL, we grew adjusted operating income 36% to $287 million. In our European transportation segment, adjusted EBITDA was $48 million. And in our corporate segment, adjusted EBITDA was a $4 million loss. Returning to the company as a whole, operating income increased 37% year-over-year to $271 million. That income was $162 million, representing diluted earnings per share of $1.36. On an adjusted basis, diluted EPS was $1.70. Excluding $0.06 per share of real estate gain from the quarter, adjusted diluted EPS increased 56%. Turning to our second quarter cash performance, we generated $207 million of free cash flow, and we had $298 million of cash on hand at quarter end after completing $101 million of net capital expenditures, $70 million of common stock repurchases, and $70 million of terminal repayments. Combined with available capacity under our committed borrowing facility, total liquidity at quarter end was approximately $898 million. Our net leverage ratio improved to 2.1 times trailing 12 months adjusted EBITDA compared to 2.3 times at the end of the first quarter. We're driving meaningful increases in free cash flow generation through a combination of strong earnings growth and moderating capital expenditures. We now expect to more than double our free cash flow for the full year compared to 2025. This gives us greater flexibility in accelerating share repurchases while continuing to strengthen the balance sheet through debt pay down. In July, We paid down another $100 million on our term loan to start the third quarter, bringing our year-to-date debt pay down to $200 million. And with that, I'll hand it over to Ali to talk through our operating results.