xpo-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

Form 10-Q

___________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to____________

Commission File Number: 001-32172

_______________________________________________________

XPO, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________


Delaware		03-0450326
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Five American Lane
Greenwich,	CT	06831
(Address of principal executive offices)		(Zip Code)

(855) 976-6951

(Registrant’s telephone number, including area code)

______________________________________________________________________________________________________________

N/A

______________________________________________________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.001 per share

XPO

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2024, there were 116,330,522 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

XPO, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended March 31, 2024

Table of Contents


			Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income			2
Condensed Consolidated Statements of Comprehensive Income			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statements of Changes in Equity			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			22
Item 4. Controls and Procedures			23
Part II—Other Information
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			23
Item 4. Mine Safety Disclosures			23
Item 5. Other Information			23
Item 6. Exhibits			24
Signatures			25

Table of Contents

Part I—Financial Information

Item 1. Financial Statements.

XPO, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31,		December 31,
(In millions, except per share data)	2024		2023
ASSETS
Current assets
Cash and cash equivalents	$	229	$	412
Accounts receivable, net of allowances of $44 and $45, respectively	1,077		973
Other current assets	222		208

Total current assets	1,528		1,593
Long-term assets
Property and equipment, net of $1,892 and $1,853 in accumulated depreciation, respectively	3,257		3,075
Operating lease assets	727		708
Goodwill	1,484		1,498
Identifiable intangible assets, net of $463 and $452 in accumulated amortization, respectively	406		422
Other long-term assets	201		196

Total long-term assets	6,076		5,899
Total assets	$	7,603	$	7,492
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	570	$	532
Accrued expenses	782		775
Short-term borrowings and current maturities of long-term debt	63		69
Short-term operating lease liabilities	129		121
Other current liabilities	79		93

Total current liabilities	1,622		1,590
Long-term liabilities
Long-term debt	3,323		3,335
Deferred tax liability	342		337
Employee benefit obligations	89		91
Long-term operating lease liabilities	598		588
Other long-term liabilities	297		285

Total long-term liabilities	4,649		4,636
Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 116 shares issued and outstanding as of March 31, 2024 and December 31, 2023	—		—
Additional paid-in capital	1,302		1,298
Retained earnings	252		185
Accumulated other comprehensive loss	(222)		(217)


Total equity	1,332		1,266
Total liabilities and equity	$	7,603	$	7,492

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)		2024		2023
Revenue		$	2,018	$	1,907
Salaries, wages and employee benefits		834		762
Purchased transportation		438		457
Fuel, operating expenses and supplies		413		427
Operating taxes and licenses		19		15
Insurance and claims		38		44
Gains on sales of property and equipment		(2)		(3)
Depreciation and amortization expense		117		101

Transaction and integration costs		14		22
Restructuring costs		8		24
Operating income		138		58
Other income		(10)		(5)

Interest expense		58		42
Income from continuing operations before income tax provision		90		21
Income tax provision		23		4
Income from continuing operations		67		17
Loss from discontinued operations, net of taxes		—		(3)



Net income		$	67	$	14

Net income (loss)
Continuing operations		$	67	$	17
Discontinued operations		—		(3)
Net income		$	67	$	14

Earnings (loss) per share data
Basic earnings per share from continuing operations		$	0.58	$	0.15
Basic earnings (loss) per share from discontinued operations		—		(0.02)
Basic earnings per share		$	0.58	$	0.13
Diluted earnings per share from continuing operations		$	0.56	$	0.15
Diluted earnings (loss) per share from discontinued operations		—		(0.02)
Diluted earnings per share		$	0.56	$	0.13

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding		116		116
Diluted weighted-average common shares outstanding		120		116

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
(In millions)		2024		2023
Net income		$	67	$	14

Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $(3) and $8		$	(6)	$	13
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $— and $1		2		2

Other comprehensive income (loss)		(5)		15


Comprehensive income		$	62	$	29

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2024		2023
Cash flows from operating activities of continuing operations
Net income	$	67	$	14
Loss from discontinued operations, net of taxes	—		(3)
Income from continuing operations	67		17
Adjustments to reconcile income from continuing operations to net cash from operating activities
Depreciation and amortization	117		101
Stock compensation expense	19		22
Accretion of debt	3		3
Deferred tax expense (benefit)	8		(2)


Gains on sales of property and equipment	(2)		(3)
Other	1		17
Changes in assets and liabilities
Accounts receivable	(117)		(69)
Other assets	(20)		(24)
Accounts payable	48		(8)
Accrued expenses and other liabilities	21		22
Net cash provided by operating activities from continuing operations	145		76
Cash flows from investing activities of continuing operations

Payment for purchases of property and equipment	(306)		(224)
Proceeds from sale of property and equipment	7		8


Net cash used in investing activities from continuing operations	(299)		(216)
Cash flows from financing activities of continuing operations





Repayment of debt and finance leases	(21)		(16)
Payment for debt issuance costs	(4)		—


Change in bank overdrafts	11		19
Payment for tax withholdings for restricted shares	(15)		(12)

Other	—		(1)
Net cash used in financing activities from continuing operations	(29)		(10)

Cash flows from discontinued operations
Operating activities of discontinued operations	—		(8)
Investing activities of discontinued operations	—		1

Net cash used in discontinued operations	—		(7)
Effect of exchange rates on cash, cash equivalents and restricted cash	—		2
Net decrease in cash, cash equivalents and restricted cash	(183)		(155)
Cash, cash equivalents and restricted cash, beginning of period	419		470
Cash, cash equivalents and restricted cash, end of period	$	235	$	315


Supplemental disclosure of cash flow information

Leased assets obtained in exchange for new operating lease liabilities	$	69	$	28
Leased assets obtained in exchange for new finance lease liabilities	5		19
Cash paid for interest	25		39
Cash paid for income taxes	3		3

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2023		116,073	$	—	$	1,298	$	185	$	(217)	$	1,266
Net income		—	—		—		67		—		67
Other comprehensive loss		—	—		—		—		(5)		(5)

Exercise and vesting of stock compensation awards		239	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(15)		—		—		(15)





Stock compensation expense		—	—		19		—		—		19

Balance as of March 31, 2024		116,312	$	—	$	1,302	$	252	$	(222)	$	1,332


	Common Stock
(Shares in thousands, dollars in millions)		Shares	Amount		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Equity
Balance as of December 31, 2022		115,435	$	—	$	1,238	$	(4)	$	(222)	$	1,012
Net income		—	—		—		14		—		14
Other comprehensive income		—	—		—		—		15		15

Exercise and vesting of stock compensation awards		315	—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards		—	—		(8)		—		—		(8)





Stock compensation expense		—	—		22		—		—		22

Balance as of March 31, 2023		115,750	$	—	$	1,252	$	10	$	(207)	$	1,055

Amounts may not add due to rounding.

See accompanying notes to condensed consolidated financial statements.

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XPO, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Description of Business and Basis of Presentation

XPO, Inc., together with its subsidiaries (“XPO,” “we” or the “Company”), is a leading provider of freight transportation services. We use our proprietary technology to move goods efficiently through our customers’ supply chains in North America and Europe. See Note 2—Segment Reporting for additional information on our operations.

Strategic Developments

In December 2023, we acquired 28 LTL service centers in the U.S. previously operated by Yellow Corporation. In connection with this transaction, we purchased 26 of the service centers and assumed existing leases for the other two locations. This strategic acquisition of assets aligns with our commitment to invest in expanding our LTL network capacity.

Our Board of Directors has previously authorized the divestiture of our European business. There can be no assurance that the divestiture will occur, or of the terms or timing of a transaction.

Basis of Presentation

We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). The interim reporting requirements of Form 10-Q allow certain information and note disclosures normally included in annual consolidated financial statements to be condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the 2023 Form 10-K.

The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

The historical results of operations and financial positions of RXO, Inc., GXO Logistics, Inc. and our intermodal operation are presented as discontinued operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

Within the Condensed Consolidated Financial Statements and associated notes, certain amounts may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in millions.

Restricted Cash

As of March 31, 2024 and December 31, 2023, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $7 million.

Trade Receivables Securitization and Factoring Programs

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under a securitization program for our European transportation business. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $216 million as of March 31, 2024). As of March 31, 2024, the maximum amount available under the program was utilized. The weighted average interest rate was 5.41% as of March 31, 2024. The program expires in July 2026.

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Information related to the trade receivables sold was as follows:


	Three Months Ended March 31,
(In millions)		2024		2023
Securitization programs
Receivables sold in period		$	450	$	440
Cash consideration		450		440

Factoring programs
Receivables sold in period		21		24
Cash consideration		21		24

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:

•Level 1—Quoted prices for identical instruments in active markets;

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and

•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

We base our fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of March 31, 2024 and December 31, 2023 due to their short-term nature and/or being receivable or payable on demand. The Level 1 cash equivalents include money market funds valued using quoted prices in active markets and a cash deposit for the securitization program. For information on the fair value hierarchy of our derivative instruments, see Note 5—Derivative Instruments and for information on financial liabilities, see Note 6—Debt.

The fair value hierarchy of cash equivalents was as follows:


(In millions)	Carrying Value		Fair Value		Level 1
March 31, 2024	$	186	$	186	$	186
December 31, 2023	369		369		369

Accounting Pronouncements Issued but Not Yet Effective

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures.” The ASU modifies income tax disclosures by requiring (i) consistent categories and greater disaggregation of information in the rate reconciliations and (ii) the disclosure of income taxes paid disaggregated by jurisdiction, among other requirements. This ASU is effective for annual periods beginning in 2025, and should be applied on a prospective basis, with the option to apply retrospectively. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.

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In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” The amendments in the ASU increase reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit and loss, and provide new segment disclosure requirements for entities with a single reportable segment, among other disclosure requirements. This ASU is effective on a retrospective basis for annual periods beginning in 2024, and for interim periods beginning January 1, 2025. Early adoption is permitted. We are currently evaluating the impact of the new standard, which is limited to financial statement disclosures.

2. Segment Reporting

We are organized into two reportable segments: North American Less-Than-Truckload (“LTL”), the largest component of our business, and European Transportation.

In our North American LTL segment, we provide shippers with geographic density and day-definite domestic and cross-border services to the U.S., as well as Mexico, Canada and the Caribbean. Our North American LTL segment also includes the results of our trailer manufacturing operations.

In our European Transportation segment, we serve an extensive base of customers within the consumer, trade and industrial markets. We offer dedicated truckload, LTL, truck brokerage, managed transportation, last mile, freight forwarding and multimodal solutions, such as road-rail and road-short sea combinations.

Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our reportable segments.

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, in segment results reported to the CODM. We do not provide asset information by segment to the CODM. Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”), which we define as income from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs and other adjustments. Segment Adjusted EBITDA includes an allocation of corporate costs.

Table of Contents

Selected financial data for our segments is as follows:


	Three Months Ended March 31,
(in millions)		2024		2023
Revenue
North American LTL		$	1,221	$	1,120
European Transportation		797		787
Total		$	2,018	$	1,907

Adjusted EBITDA
North American LTL		$	255	$	182
European Transportation		38		37
Corporate		(5)		(9)
Total Adjusted EBITDA		288		210
Less:

Interest expense		58		42
Income tax provision		23		4
Depreciation and amortization expense		117		101


Transaction and integration costs (1)		14		22
Restructuring costs (2)		8		24

Income from continuing operations		$	67	$	17

Depreciation and amortization expense

SEC Form 10-Q filed by XPO Inc.