XPO Logistics (XPO) 3 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Bradley S. Jacobs	XPO Logistics, Inc.
John J. Hardig	XPO Logistics, Inc.
Scott B. Malat	XPO Logistics, Inc.
Chris Wetherbee	Citigroup Global Markets, Inc.
Brian P. Ossenbeck	JPMorgan Securities LLC
Scott Schneeberger	Oppenheimer & Co., Inc.
Ravi Shanker	Morgan Stanley & Co. LLC
Ariel Rosa	Bank of America Merrill Lynch
Jason Seidl	Cowen & Co. LLC
Amit Mehrotra	Deutsche Bank Securities, Inc.
Brandon R. Oglenski	Barclays Capital, Inc.
Matthew Reustle	Goldman Sachs & Co. LLC
Allison M. Landry	Credit Suisse Securities (NYSE:USA) LLC

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the XPO Logistics Q1 2018 Earnings Conference Call and Webcast. My name is Melissa and I will be your operator for today's call. At this timing all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

let company a the regarding non-GAAP measures. begins behalf statement use call financial the of forward-looking the me brief read on of Before statements and

cause discussion looking company laws, results security by to factors cause to extent of those SEC the made and only results and their of forward-looking number from these by making earnings in differ During actual other of a which made will in materially projected involve differ forward-looking to today risks, any call, the law. meaning materially were the the filings. certain the company this statements except is statements. has company's on release could in actual required statements are forward of of statements nature contained factors within applicable could this no call, A be The that the obligation the forward-looking as uncertainties, that update company's to

may to company's most earnings comparable at reconciliations the are company financial tables www.xpo.com. and the of to the rules, the financial call in section in the measures Investor's contained also or such SEC related financial this certain measures GAAP the defined applicable refer release During non-GAAP under as on company's non-GAAP measures website

will begin. the in Investor's the the turn You Jacobs, additional can company's of section statements may Mr. Brad measures now financial find to on a which company's I contains release, website. forward-looking earnings you non-GAAP copy call important information Jacobs, and the over regarding

Bradley S. Jacobs

Officer; are Thanks Malat, CFO; John IR. our With Good earnings in operator. our and Greenwich call. Head Headley Scott everybody. morning, of our our joining Tavio you, Thank Chief Strategy for Hardig, me

promotion the our anticipating. acquisition welcome levels, President. growth Officer I'm to organic, high Kenny Chief First his and These Troy congratulate Wagers to Operating of Cooper will appointments the team on happy support as to and to related new all, we're

million. posted a XXXX. growth XX% EBITDA record income, net of we We start EPS from mile a broad-based by and revenue last driven first the operations. The our you demand EBITDA. growth first in our organic strong and We of grew customers. revenue release, XX%. XX% from record We contract revenue, increased market, saw the grew organic our XX%, press adjusted and logistics tight brokerage adjusted to freight to we had As And quarter robust quarter across year-over-year $XXX XX% we revenues was generated e-commerce

year, Companywide picking a sites XX% XX% two keeps billion, quarter, Our first for business the year business new another been up average the XX We're innovation the a a in first XXXX least These signed our Google note, new facilities logistics after XXXX, that's ask voice-enabled of and cumulative at others the warehouse a freight deliver on brought that to record we've this that cash I'll on beyond. XXXX. billion our million, online beginning and Since week. our of XXXX year free with EBITDA quarter remain first in generation target our more quarter. of mobile on pipeline than share We and on new and and which $X tracking detail. of digital Alexa next sales review of Scott John system, the one for tools ago. distribution and $XXX in We our stands and approximately launching $X.X growth our billion investments In for track new we management propel our integrates marketplace earnings Home. our on John? And Amazon now higher customers. up describe numbers opening is at up us. driver quarterly adjusted should $X.XX steam. and will flow record network,

John J. Hardig

Brad. Thanks

of diversification Operating healthy $XXX a start less-than-truckload. reflect quarter increased and XX% income the $X.X good our revenue million, and XX% segment. customer service had EBITDA We a $XXX verticals to in increased with quarter adjusted billion. We I'll lines. by to in XX% million. to transportation results Our grew

improved was the points This basis XX-basis best XX ratio the to acceleration point quarter. in it's operating Our adjusted an first And OR fourth improvement XX.X%. the from XXX in quarter years.

X.X% the it was full and XXX XXXX. We're X.X%. fourth November, and quarter quarter on LTL added our in to We third fourth first new is XXX X.X% our network in capitalizing long-term. was including XXX We market on year compares the program. points launched Our strong our for the organization. from improve We the changes up sales mix. acceleration focusing the LTL recently in was effectiveness quarter an also since points in made a basis last the over freight quarter. matches substantial up when make X.X%, sales that quarter XXXX X.X%. to accelerated profitable renewals contract Pricing in We're adjusted track OR to investment freight Yield basis This our XXX to to year. people on the on

see accounts. national less largest a second year. shipment it with increased per the income day in acceleration expect as down Weight X.X% tonnage and was X.X%, to operating continued to local accounts, profitable of from result, meaningful in half our replace As we freight we per cull freight the growth mainly in

continued first In revenue over any a with revenue XXXX of e-commerce. last to year-over-year we last this more by the revenue back moving We growth move We by As than into years. freight conditions the by revenue X.X% accelerate by increasing in exceptionally through In utilization more quarter XX% in years. favorable costs own mile market, XX to year. market purchase in growth the our as reduced tight grown transportation other won XX% of And the delivered driven perform expect strong we the fleet. we've we local and Despite last quarter freight business last truck mile, result, continue first we our growth in as brokerage, to grew the quarter we XX% two a well. half another in XXXX.

of brokerage, is per increasing XX%, intermodal, the In an significantly. XX also which largest Our shippers grew gross we're net grew rail. load improved margin points. our freight basis domestic margin component converting freight while we of trend and and volumes seeing truck brokerage brokerage, Truck volume X%, increased from to

Europe, trend growth in and due solutions that XX% Spain. capacity. France, operations seeking performance. customers significantly saw Our tighten There's truckload with the and tight capacity grew dedicated March in brokerage through April. approximate We LTL We a a European out transport of in continued driven to dedicated generated exchange an and from solid by fuel. was revenue throughout foreign XX%, truck benefit Revenue

best We're mile our Operating this last quarter Europe $XXX increased to UK, was our to segment. exceptionally in The up strong demand increased income the last the $XX star performed of well. going revenue we're running service. France, in well increased million, America $X.X of Total Our Europe and North are XX% and practices. logistics North seeing million. in to XX% both and We American EBITDA XX% to billion. implementations Europe. Spain, logistics the and for also members We've team Ireland, to share Netherlands, mile deployed and adjusted

$X.X to a global has year Our grown nearly logistics ago. for which double billion, sales pipeline is from

had XX% benefit and also including Europe the by growth and continued foreign logistics and grew verticals, the goods, fashion. from of part goods, consumer exchange. a XX% We quarter. America, digit as packaged We services e-commerce, logistics across growth double strong demand our from strong North larger at industrial, for including packaged in on about revenue multiple We're consumer path. performance In becomes organic Looking a logistics increased revenue of seeing retail region, business. largest a reverse came The gains technology. e-commerce our e-commerce, XX%,

XX% over and by at significantly America in of labor of implementations. rates. $X planning improved billion. the new sites term logistics is the quarter up for our site at million, our Our in We loan level executing the EBITDA $XX automation expense and due XX% pay-down to debt tools. a Interest repricings quarter We pipeline of decreased to to lower new productivity large increasing implementing nearly for North while number grew

which were first the very to payments, pleased free of of primarily revenue typical was for to in flow year, Similar negative, due quarter the which quarter, equity out $XXX pickup employees. line which our incentive a of to expectations. effective accounted annual and vesting. we XX,XXX tax Working pay to in largely million, capital use cash our cash, deduction seasonal to was the our annual last March, quarter for first the approximately is use with significant the Our of was of due a for rate

a turn And quarters year expect to We XX%, in it rate XX% which be rate year. higher tax implies to I'll the now to for the over Scott. remaining full the effective

Scott B. Malat

strength as based this broad the see to although to truckload In and be continuing up we're standpoint, both in opportunities our season are are the business. what this investments long-term in growth April, of These in macro continues We're of pick a to markets earlier but America, that Produce From North excited all and by most Europe, start America late. being John. of we're quite the improved not beverage economic major Thanks, alongside signs North fueled as expecting started tight March, volumes month. season our steady market transportation Western in favorable, year. about growth. Europe. the again are In up reflecting the all positive cycle,

great Customers of space areas example trucks mile lot sales. XPO We've distribution new, XPO how customers. investments with cost is that number Tier we fraction and of of population. to up significant our at brand last signed use centers, e-commerce own retail a is are to most their the the proximity close and innovation Direct serve share warehouses, of brokered gain technology, docks, goods hubs, X distribution a XX% of Our network flexibility. customers positions capacity more U.S. already setting Direct a a in our a cross of up the innovation and and new business. and in shared

latest innovations our sites XPO. improved and WMX logistics customers. analytics sites. front, implement system. robot On at It also our gives the WMX the our security security major more is since CX management of launched rapidly, to to us which warehouse has generation proprietary XPO, for in new robotics, we've year. next automation number create the the data program start pairs more logistics with of It's integrate our well the called technology a new ability

will lowers waste, transportation Connect a from to our with rail to that such being information Drive designed B loads customers truck, is carriers is have interacts to by manage Monday, A drayage, XPO for reduce digital multi-modal road. tools. bid options in is Europe. business our optimizer across in along XPO will improves and a customer's and pricing most freight one freight If that our with our Drive with It's and which as get new introductions, XPO visibility modes the all architecture, exciting intelligence of system out platform million in $X.X approaching freight lay in cloud-based fuel revenue Connect. customer XPO. This generate The has service. refunds. investing refurbishment, miles, real-time. Drivers require brokerage through reverse use We're It's repackaging, on billion. Reverse with innovation marketplace. or be manage means fast to Many rolled Another logistics. warranty returns launched and complex, also out management. disposal inspections, mobile annually, and from We North helps the resale recent can America and over growing and app XXX point logistics app empty it

because rate learning differentiator chain major gives supports be last a like That's test national hubs big for of expanding with XX The launch out great and this should six it XX We will our online. reception in optimal are is conference salespeople from bring this to in network, LTL hubs should machine our transport, our pricing remaining freight We're place May got We've with generate to through of to schedule custom time Google In to Alexa. for offer driving us XX customers, Assistant without integration industry using Our most our return mile, major their quarter, able training in mix. in and they products we space. handling. a self-service. more by growth expansion the shipping news new buy them mile of developed recent consumers Technology more the and for this month. our million e-commerce first a this SKU include purchase opened delivery In of peak. and Consumers voice-enabled it a customers or future number. a a the the programming. new launched in third our April, We use hubs rolled our analytics be predictive to our forecast with ramp and that and deal should tools consumer next-generation is and customers the technology that in CIO the June. follow differentiates slated also delivery to Amazon's last at demonstrated of fulfillment LTL, These capability, management, pickup the and when an year. point-of-sale in recent equipped more middle which web supply the investment We're in help access new holiday electronic for them XPO planning data-driven $XX programs sales up This to force. LTL document tools, productivity. incremental of tools last

growth. pursuing in operations, flow earnings strong at up Operator? a XXXX. that, the to and we're it open same free off we're So and for in Q&A. no across momentum cash With building unturned our time, leaving let's start long-term stone We're

Operator

Thank you.

question with with Citi. question. Our your Chris proceed of Please first line Wetherbee the comes from

Chris Wetherbee

Hey, morning, thanks. guys. Good

Bradley S. Jacobs

Good morning, Chris.

Chris Wetherbee

M&A can we start maybe Brad, on front. the

you a progressing us wanted of sort that what target all point? in of to is this Just sort get timing, at I the sense of most give updated sort how looks of terms like, either your could if environment process guess thinking

Bradley S. Jacobs

It's last the It's and to it's progressing market. expected well, when returned outlined and we originally progressing as progressing. as M&A year

the want first same very we said said, way to We of smaller And last we case scenario for we're base That potential could XXXX is three of from smaller it or then selecting we we wanted have way. when till sized scenario announced from accretive targets, acquisitions did and year, that most medium amount, XXXX. December. valuable the big it That recall a end much announced in then one a could year. this net, You'll weeks that. methodical, very speak and and our we we is, on year, to that this base disciplined The funnel the a and our cast be That customers. track a by and to be up be wide months and But down that's the now. end for most three now. two lots shareholders could the acquisition from case to would acquisition do

Chris Wetherbee

interested? Okay. terms has where That's of in end changed the that looking, you're in thoughts helpful. Any terms of you're that most markets

Bradley S. Jacobs

one of in point are at still of companies, than hasn't. We're country, one a looking more usually from geographic continent. It size, view because their more than

that adjacent and headquarters America generally companies or North identical Europe are types the the that or of or very actually Western right global the So in service and companies are to now. we're lines are similar ones offering

Chris Wetherbee

Okay. in new you've revenue see to season? in growth, helpful. the revenue do initiatives playing Do nice growth. over organic and as growth initiatives, the last of you Wanted see a some follow-up you thinking on these nice very board, well. organic posted about heading recently a of that How just a first sense, And with of so or a acceleration quarter number the course lot then towards quarter. announced get out you revenue a That's so, new salespeople the peak the in

of get how to sense looks to else. that want and of relative Just your pipeline everything a kind

Bradley S. Jacobs

and I XX%. don't we thinking good predicting in to come it X% was came really because X%, two at know I'm that the between if going in at XX% it and quarters, to last were

had gotten, last of logistics and been Brokerage XX% we've XX% revenue and So, that's growth, to out XX% organic our it. mile growth; underestimating go organic obviously growth growth. organic had get there organic the amount to revenue had be ability

us full likelihood is higher revenue year to growth end doing high likely. range highly only well. the is say that And of the very range everything us X% X% chances of doing bit the than So, very, very performing for would or low. of that organic I the very, is a

Chris Wetherbee

Okay. this time Thanks Appreciate the That's morning, it. helpful. for guys.

Bradley S. Jacobs

you. Thank

Operator

you. Thank

Our the question. JPMorgan. Brian next your comes Please from of with question with line proceed Ossenbeck

Brian P. Ossenbeck

for Thanks morning. my question. taking good Hey,

Bradley S. Jacobs

morning. Good

Brian P. Ossenbeck

seen more little clearly and market, the about to pretty America. it XX% competitors accelerate fast at talk for to especially throughout into a year. of, wanted mile get North we the the space, headlines growing bit. should Big have more other quarter, transactions Just some some for but this last and growing in It's

if a you specifically competitive from just bit customers. dynamic, you're more color wonder Any then on could about I the rollout, into little retention? And So, talk what European the months seeing provide couple on it. a

Bradley S. Jacobs

Okay, great. Thank questions. you those for

So, last mile first We is quarter. the well. going grew XX% in very

professional, rather competition competitors some about quality coming headlines to same the and companies read sophisticated competition. very have market, high the in, always than is have We into which great, unsophisticated experienced, good coming

We of don't that do. in our or in of a market lines dominant all we We have share business. anything have competition monopoly

every we of So business, level to service. customers' into customers lines to most In in high there's our a day, service. demand level ingredients of deliver and lot customer go business. earn extremely other than of mile, able have excellent that More last of that being

You you of national last mile need need network you need hubs. scale, density, a

dynamic proprietary route at of satisfaction planning, do technology the need You point the the customer to delivery. scoring

You saw and Alexa Home. recently integrated an industry did with first we and Google

there's lot of pieces a to in mile. the So puzzle last

We puzzle. to have those all pieces the

quarter granted customers of think particularly running those We really there's in to Ireland, business the leading business, the we high-levels strong more trying any into business the first and who a to and now case, for all Spain about in last people position Netherlands. deliver Europe our mile great pieces the mile of the won't. service to day. and we're Last quarter for well-executed don't than our might in excellence. five take won UK, And mile with and in business question them last within get of mile demand In just customer is year, we in last some other every we respect any last are get mile last some continue France, for XPO's Europe, entered first with and up your countries, history. operational place I And

Brian P. Ossenbeck

that. Okay. Thanks detail the on for

Just follow-up you're there, and $X.X mentioned doing the logistics revenue a you clearly logistics, quick on particular, another growth reverse about contract billion in in pipeline area. big

if how and as wonder are a of what's pipeline, in the opportunity an it it's Just of current of opportunities North you America? us in in some that if those growth, big give that's if much is of fueling sense as Europe could

Bradley S. Jacobs

is which largest very we logistics, It Europe is. Europe. platform in e-fulfillment have e-commerce, in is related to for because Reverse largely us the big

a business. fast large is this growing. So It's

mentioned, Scott revenue in and As million over billion. $X.X logistics managing returns we're our approaching now XXX is annually, reverse

this of So lot a we that business that gravitate is a a It's be moving many because things business to complex parts that it's to a have has done. business.

notice businesses building, and can high that differentiate are And non-commoditized. that more theme, you and we're add. ones are are investing the are from that enabled. ones ones that competition, in types the that Ones of ourselves down doubling that we're complex. If have Ones that value we're technology

So, is logistics, differentiator. in reverse a technology big

of part You analytics. big tech a that substantial for will that of spend, is our predictive know

So helps the forecast to learning goods customers the inventory by one it to it Oh, returns likely SKU, manage other customer. data for is our them and machine them place because of you asked rate their and in and highly closer use information thing. reverse more, helps logistics, we their valuable this and

pipeline? business do The You yes. the answer reverse is logistics we have in said

Brian P. Ossenbeck

right. pipeline, the In

Bradley S. Jacobs

business. the growing our faster one of of That's parts Yeah.

Brian P. Ossenbeck

Okay. the time. Great, thanks for

Bradley S. Jacobs

Thank you.

Operator

Thank you.

& Schneeberger Scott Our Company. Please your with proceed comes line Oppenheimer the with question. from next question of

Bradley S. Jacobs

Scott. Morning,

Scott Schneeberger

and quarter. Hey, Thanks. trending yield the drivers accelerated there, please quarters? in discuss on the over good coming how anticipate the you in yield morning, everybody. LTL you The elaborate Could

Bradley S. Jacobs

you referring LTL? Scott, are to

Scott Schneeberger

Yes.

Bradley S. Jacobs

Yeah.

fourth quarter, No, accelerated Which And accelerated yield X.X%. right, was LTL, where X.X% it in from from So, X.X%. the you it third quarter, where up are the up was up. X.X%. was

up was first quarter; the third fourth at X.X% quarter. X.X%, it and at So now quarter; in X.X%

And X.X%. that. our So number to is that's market. cost accelerating, that's we good strong, and LTL healthy the was There our markets a where we year. of including rational. in sales And the expect in contract very, one in balance for two is The well quarter. yield And that's so of market. it's made is the have since are in added substantial the for up cost. two, end Number industrial it and as a inflation, We organization Also investment November, I support are competition quarter very our It's fourth LTL in renewals acceleration salespeople a remain the why XXX XXX covering and reasons. sales one, from it X.X%, organization. our reasons new to sales recover first strong

going So in LTL. lots on in sales

Scott Schneeberger

you OpEx business as expect and And this elaborate provide you that of that. How the investment this made and what for on rounding from demand on in quarters? the XXXX in over and of spending beyond investment little a year, as balance then gears obviously Thanks. then, you Thanks kind level investment you will over on bit, a shifting activity perspective this first high the of starting please a investments quarter, could of cadence far you that the out, trends Great. your based what the expect and very coming elevated And year? influence influence. might could spend of type

Bradley S. Jacobs

strategy and improvements tell the earnings, called? this that flow and So that riches? XXXX XXXX cash deliver In But investments years, have in of a really earnings what on EBITDA we for big I budget a free Embarrassment riches. Something year. million. we billion $XXX this Street extra forward for $X.X is To can it making I the made have that is of precisely the speak to of are we EBITDA, the going what year, of drags extent – now, commitment to our can't future for because that we you in done are in haven't yet. to that

embarrassment We significantly more, more EBITDA. or than and billion of even of riches have an have $X.X

invest the that into business. will We to continue

technology, last that a the on. end out contract and organization quarter the been Staffing logistics by implementations more few do planned. rolling run another do we full the of we XXX grow the So, sales summer. months, year. continue year-over-year in our Europe LTL the another, one last we've mile recent organization in up two that to support was in grow can We the Direct. so for than XX% we've hired the XX hubs the after growing first one, to Opening and sales in example, originally which did rate week, EBITDA expect is Investing XX% most after for we're the EBITDA and XPO innovation the

So where the the are to in, numbers things of The $X.X don't that higher up, in years. I will in like we delivering and terms to in numbers. go come in billion expect invest business us the the reap more but significant rewards the do rewards expect outer

Scott Schneeberger

Great. Thanks very much.

Bradley S. Jacobs

you. Thank

Operator

you. Thank

Our of next Stanley. your with proceed question Ravi Please comes from with question. Morgan the Shanker line

Ravi Shanker

follow if Brad, much, last your here. response on very Thanks I can up

essentially well, made on above this be that $X.X gets the expectations kind to in XXXX like in in growth And billion to going be that you like organic the than well is do making mean telling growth of back mean expectations levels? payback seemed XXXX that exponentially you're that Does through above when more incremental the at over business, you investments year? and of into drawing on make the – your was EBITDA organic rate plow line kind plowed of sand as just we billion EBITDA. given you're us upside? what's that that that going our $X.X your if you're I see that year higher accelerates the a going – your you're the first and of kind So quarter to in that money,

Bradley S. Jacobs

of business I Well, but Well, morning, exponential going don't I to be all, good long-term. is building Ravi. exponential, for strong we a can know are word. pretty first say the that the it's

that to And scale so that positioned our with levels make customers got many we've to business satisfaction to of the customers each up more serve one years. well for of business. better. in building build delight service customer the on our able each lines lines of of high we one our We're are We we're that

into technology invest things like to continue levels and will we So, innovation. industry-leading

So, what growth in of XXXX, will be terms the XXXX. in profit

the We to haven't haven't But budgeting haven't very that. very, is our very released healthy, through we worked that, begun that, it we even make goal strong. for

Ravi Shanker

And segment, take was this impressive. quarter much on how coming to or Can give really incremental that pipeline region, new your is you Which which growth will business Okay. that detail new where business? have a cost little us to also, on from? and investment more also make you

Bradley S. Jacobs

new – of right. you're records The was this record. $XXX customer up at wins; lot year quarter. and a a There new were, up transformation where pipeline That them. of The logistics, a we mile. year-over-year pipeline biggest increases ago. $X.XX It's was from last business So, European from billion, were million in won one ago. It was the business, XX% year XX% a

pipeline Europe. is. terms geography, in between out segments, third – where In in of two-thirds logistics, that's And terms a breaks it in And than how under a more in here and little of terms North little the of a the more little half, it's in than XX% transportation. about the a XX% America, in

Ravi Shanker

have follow-up I if comp headwinds something, Scott. it missed had for sorry incentive that or unusual this Can for Thanks maybe your in (XX:XX). prepared last Great. And remarks. may or I'm weather just you Whether you cost was quantify quarter? any John one that and or

Scott B. Malat

Sure, Ravi. within those. in good always Hey, and any it's Scott. a had There's headwinds We quarter. tailwinds quarter

in In the investments America. $XX but in From you. especially winter, weather the of have – and other That there against tough That parts and a it LTL you and France and terms the a was a of the about XPO was million quarter, million. were always things headwind, in perspective, North going you for up $XX to Direct. sales within added things European

Ravi Shanker

Great, you. thank

Bradley S. Jacobs

you. Thank

Operator

you. Thank

with from comes question question. Our with next Please the proceed of your line Bank Rosa of Ari America.

Ariel Rosa

Hey, guys. good morning,

up looked wanted from the in was it's and step real side. first continued on So, there It there, touch like and question, European of on the to transportation acceleration quarter. truckload I kind less-than-truckload a fourth

in wanted your of the just and organic guys that? So more is business growth that of to talk drawing that what's or kind way? driving kind service expanding you opportunity, kind that Is about, of offering

Bradley S. Jacobs

Good it's morning, the latter, the mainly. It's Ari. capacity – tight not

the the in capacity but over And we're at Europe, April, Europe tighter in is I even it North quarter this France, broken to a we're don't was then than North as customers in like of unlike still We to in tightness the tighter in actually record it versus less numbers truckload in truckload, record, of ever starting is actually a up. here first to levels. in but UK with mile tight seeing dedicated So, tightened May quarter. market a was year. dedicated want the to European In more it's even sound some one That the last is best little growth had the due want and it's than because to is starting more March, more word and tight, way the right result America. also and where America, shift for beginning in tightened transport. capacity put there, and

Ariel Rosa

what is growth Okay. like forward in freight XXXX view that good beyond have on do from the for about we those what terms opportunities? the set way really it's even these if cetera, incremental about looks digital opportunity marketplace, That's it's EBITDA above then initiatives? underway, a and growth we thinking really revenue not those of it XPO and going from opportunity how helpful. billion? as or $X.X contribution looks Should et think And And incremental that the some materializes, to whether there that initiatives Direct quantify of there you the like

Bradley S. Jacobs

Ari. is answer yes, The

went our over shareholders. technology the five generate and of all for innovations in to customers All our to call, two more other delight profit earlier they're for things: designed and those that major Scott

additional distribution designed to delivery so flexible end capital the so putting the our to two a goods shared customers scale reach effectively It's closer cost. out days. one shortened which population position consumer time, the XPO they Direct, can space their to that's capacity allowing and we're them XX% or is to in of customer renting to So within our U.S. network, without that give

it That's a little cloud-based self-learning. dynamic, modes is real-time. a expand So right XXX% automatically to to customers freight going our facilities loads the XPO visibility different. XX XXX automated, fully now something we're by across we have network and finds digital It's the quarter. marketplace. It's in gives and full that Connect third about bit in

throughout and is on side. with function. Alexa a talk the with on and you that mile, with order. the go industry Home. demonstrating was place lot smart integrating That here internally speakers, and the tracking company, The more in right your really Alexa Google you that's a been back can the voice-enabled transportation Amazon Google or forth you We've and that to and Home last cool first, So an to

your track can order. You

your You can order. change

transparent as the able confirm can and big visible side And deal mile, or make the exact and big, work there. nailing known from changes being amount of around last and consumer your as delivery order. window precise anything that, side, big, from our side other down to to You that the if possible, in time to that's and a

a It's contract dating lot to There carriers. two that were a other available. just you a automatically The It's I'm app interaction, say, have not where available it's is too, robot. list available. I'm with site, for of that I'm can rates, voice, confirm mobile loads and one. for they carrier our a driver one voice available, which our but going. just of app, show select It's the looks bidding. my is say where Scott say, security one, all have world's mentioned transaction. a which XPO, Drive Scott the They character. like it'll other They little offer And was CX-XPO, mentioned which a Star the can they favorite is autonomous their can All them Wars that's

state-of-the-art is this security So technology.

party suspicious, do vehicles scans thermal engine with all in around it visual, cold. parking the where moves our recorded have touch and can center. organization. to audible. it piloted the rolled cool It license broadcast parking a by compares call its to and commands. money security the Atlanta up It button. it We master it where a throughout it third finds amount of monitors If out, around out audio it warm other that's last the firms kinds a speaks in may expanding significant the reduced now of cars them does approved that detects plates pay it and from lot Employees robot lots, this to human this and stuff facilities, we we to be can imaging got year, we're XX/X, amount, the can live the a sensors, it we both emergency go vehicle test command alarms, So list, something

So bottom customers designed and line, help help to our yeah, all these they are innovations and will.

Ariel Rosa

this mile me. about for goods last kind a UPS about kind sounds network? like a this standpoint prefer like Returning just headlines provider. to mile, do yesterday sense some that Brad. XPO to And freight you Thanks from looking there's strategically that guys? it continue Would last it's a last who of question for is a to great into early stage, it partner and thinking one-off that strategic obviously, you obviously, UPS then news customers? that kind your of large of down. for partner question Or makes business, to What could make within there speculation were you That's heavy but very relationships with just for someone around of funnel that, XPO to do with the with sense amount have run

Bradley S. Jacobs

absolute firms business. cooperate sense inquiries for to with would with mile, make from don't us in absolute want sense that. together who other logistics customers lines also but last who the last have yeah, work Oh, business for have their doing other actually it other to It would us of make do mile to providers

Ariel Rosa

loss around anything of or of There's not like control that a sort? concern

Bradley S. Jacobs

then mile have a something to another that absolute Sure, customer or maybe do last and think be last last business then delivering over Well, an all transportation you're from to to they Chicago, they to us where just that example, in managing for the and last eventually intermodal distribution to off a then mile is goes a to sense the parcel the forwarder, ourselves, freight logistics you're apartment And warehouse in then and like it a to from another puts to and of center, in happens go really box in instead into from globally, may LTL DC of up basically then to for describing, not something and coming a provider a expertise. world who Asia it it hand in other day on or for mile. provider them it control losing This or mile hand and and mile they company want to off make long a last that part broker has it and a truck, trucking also would scenario has also they go needs, right warehouse, who than a in Manhattan. installed don't the of assembled. Long it logistics the it by up hand ends and somebody's to Beach, so provider the I gets because in to to and us in

Ariel Rosa

terrific. Thanks guys. Okay, the for time,

Bradley S. Jacobs

Thank you.

Operator

you. Thank

comes Our Jason next your question proceed question. with Please & of Seidl from the Cowen line with Company.

Jason Seidl

Brad, up the are their focus the Tier of who people Direct mentioned, do, e-commerce I e-commerce Direct; already Good supply the customers on some if business? XPO retail these chains operator. were believe you, you to morning, X you've for they don't over have product? again Thank signed Are sort Brad. XPO And moving of morning, business percent they team. established their that of what Wanted people. type that and Good to

Scott B. Malat

are you? how Jason, Hey, Scott. It's

Jason Seidl

Scott. Hey

Scott B. Malat

for have store-based with modern the that them we Direct do last hubs, we can – getting established not and transportation, XPO e-commerce capacity It's the only It's legacy distribution distribution the of network. that also do customers centers LTL in do we're is capacity are both mile provide automation. we additional that with can for networks. them, These deliveries What capacity. out

Jason Seidl

at of up and mistaken. are could that maybe not that people like the be smaller of players a some the established you and I'm when sounds both, look used by And network this versus coming, if some

Scott B. Malat

large It customers time, X networks, distribution things and our some network provide to have that that large network up, can Certainly, them. is. could that we We've today. players started scale with use the have players very but Tier large for smaller we requirements over filling complex

Bradley S. Jacobs

and cost, speed by problem between able air Direct, at The out tradeoff solves to there's offer generally a rates. and XPO that speed network, with it our is, renting ground we're

Jason Seidl

sense, that the organic, have said Brad. to question in makes do Europe. your e-commerce listed one maybe you be and of I them. about some you that, plans that what expansion follow-up Brad, hunt? in That you for guys be countries wanted the wondering, acquisition or would of I five a you expand were have and would targets to was

Bradley S. Jacobs

now, demand handful keep up and to is a growing last and Well, we're for a Europe in of right there's countries going in running because it. mile lot of that

big push. a that's So organic

business. decent to of not aren't in do we to last order main bought UX, scale, quickly Europe, order them we in in North to well? we give then one into high America. and We once of in in density, the one Europe. haven't we to mile in and that the the And in crack It's By brought the that bought last mile dilemma, of structure anybody Optima, allows a Europe. that fully mile got is the a we as last were whole answer of mile. buy the nut cost on get and There last us lot way, XPD, satisfaction to we companies lot And our to to a once that's levels ACL, tricky Does buy got whole question? it customer able scale your there how get companies platform. were density, and profit up need We a integrated get and extremely make tricky, biggest we is

Jason Seidl

does. it No,

try these that? way to you to go start out So organically you the read were Is a in going existing expanding like densities to it beyond. good five before countries build seems that and

Bradley S. Jacobs

on a population do France, are these radar, have but we where people Europe, we are you look we Yes, countries. our have ones. main have, in of Those we other countries three centers but biggest UK, main our our Spain. couple are the the have XPO that When

and that's So network customers. setup, we the technology. That's the have we where where have the the

started. where that's So we

Jason Seidl

time, appreciate everyone. always, as the fantastic. Okay, I

Bradley S. Jacobs

Thank sir. you,

Operator

you. Thank

proceed of your Amit with line Deutsche from Mehrotra comes Bank. question. question the Our next with Please

Amit Mehrotra

everybody, you? operator. are taking the for Thanks, how question. Hi Thanks

Bradley S. Jacobs

Good morning.

Amit Mehrotra

but Do strategically? LTL and part, work. or just economics doesn't terms then seem way by just Fulfillment about, also fulfilling a but the think wrong, you the that's with the the your renting does I'm of take accurate me kind like just XPO if one and we economics channel on maybe like network? trying direct the Amazon about scale, opportunities – you're in understand how follow-up the maybe seem potential of and broker Just the should how for order. think commission footprint and it to the It kind quick through out Amazon to I'm fulfillment just Direct. correct what doesn't if that of Is

Scott B. Malat

into Hey, home. piece, mile way you the the Amit. and those. and It's that right party Scott. From heavy hubs package, XPO providers is the final we does we it heavy use so for unique the that a of goods is home, mile mile that third last the distribution our between last do provide standpoint, forth network and We have have the the what's use we day part back small do the distribution facilities for going in last do transport goods full to distribution – network. every all last also And to which the

It fixed costs need. In variable-type component it variable customers what terms they by a then there to are contracts, are a of on is some fixed the where covered, contract and they and vary, there's generally piece. customized based

Amit Mehrotra

when ramping this in inflection would business of as to in the more And revenues America would guess of we result if let correct, – I a start business? should And then know. just North some and be North me be then American see maybe the of logistics, that's this just

Bradley S. Jacobs

There's as in it. mostly logistics, it. of well, a part explaining brokerage as there's mile was but Scott of last It's part a

see LTL Sometimes you're there's the correct. part part, profits an logistics the the of in too. of But revenues you'll it, bulk and

Amit Mehrotra

that then for XX% transportation Brad, the last is Okay, peak close but your guess, weeks are is of concerns to I cycle the the of which or I the segment kind question, on there done cycle, especially, in of not environment businesses and revenue. so couple budget within also appreciate, XXXX, second an where around like shorter we're has,

you of revenue revenue kind kind year think think kind you to mind that is of can think growth that quarter, to actually strong? last help and you're digit any but that that even new even of achieving really segment. XX% did single Not of Is context, of that growth reason of growth us look kind just you and of So business, XX.X% the just that framework the in is EBITDA the within the business provided. is any If very EBITDA you or there high type the the as reason even this that about top pipeline slows? transportation right now, because at in of especially there

Bradley S. Jacobs

do everyone thought had But is everyone in over very I like out of how to all XXXX, I that and to going how to few Sure. been argument everyone agreed it everybody, when long There's be? big than mean the and the well the so reason and well predict in was And since the decades better next recession into forth, we're of number How going very to economy's be? recession a what and, to deep kinds analysis the don't recessions long the close is know had recession say to going last that going I to going years. I the cycle position thought remember think any of it's everybody, the else over that. do XXX%, we're slow. no

it – I obviously. didn't happen, So

just than which right, that going And thinking, to know peaking our seeing X% significantly in I of X.X% recession. They're that. them Everybody's XX into none of doubt now. look So is is that. very strong. them right they're one No demand most capacity, it's GDP pricing Maybe of have are business, thinking. in oh, in is we why maybe mostly more every now All of are up. about wrong. We're single they're in we know have end maybe countries; we the a upper with lines in we everybody's of you're range, what can I don't where

Amit Mehrotra

Right.

Bradley S. Jacobs

event, looks good. So the absent future, for the life time some geopolitical foreseeable being and for

Amit Mehrotra

Okay.

Bradley S. Jacobs

and our saying. At of at what are customers looking our view, seeing customers and least doing our point from just

Amit Mehrotra

think I the it's paying under-earning. if And that disappointed I you around ask maybe of think about questions talking kind this to you're potential more potential philosophy just not about but more really the the materially, in that intensity investments for applying, the a a I philosophy CapEx, to quick and not applying I guess, changing call, your company you're so me targets then on at premium important you parameters that – how around business I'm can terms capital less multiple, get the own you least potential of its deals. didn't is okay, one, M&A of are effectively acquisition really technology leverage the as your

But so And yours. parameters your M&A kind and, clearly, those the in my has evolved not maybe when us strategy philosophical of think those about of think just you are of parameters? help parameters context about how the those aspects

Bradley S. Jacobs

The first different what the got the multiple CapEx, industry, fourth was three. I one?

Amit Mehrotra

There were just three.

CapEx relative So, your the acquisition intensity, kind own under-earning and you leverage the of when technology your be own then investments? multiple to would also

Bradley S. Jacobs

Okay.

reason capital. is, just to. respect bad use and no the we time, acquisition there's of have do philosophy an resources to reason The It's extremely with the philosophy. it's no So, same There's unless a to multiple, accretive.

compelling both to customers. do So, be any strategically our acquisition that we will

a So smile their if get they face. it, read on they

is to something our philosophy. And There's in to our that's EBITDA That accretive sacrosanct on that. our conflict per highly no earnings, share.

or CapEx at, We are open an vast of to of We a at that. as that higher of revenue mind open CapEx price. and that that right In number There's the we do. light, have have looking would our a do. at an choice. we're first It's percentage the to not keep keep than the we as mind a of the terms asset percentage we're intensity, as majority ones less looking ones of CapEx small similar revenue

there's right So, a for anything price.

an heavy we because which it something But that if we're So then extremely, we that then something a slightly But And I extremely has differently, the and to do making want company with third bought something it rest the don't has. not but would it of always enthusiasm, we set was it's be power was it, once would more of and to one-to-one coming heard enthusiasm, under-earning putting grow could own. were, asset asset-intensive doesn't accretive. you and to of Conway a with It asset quite and very, that up more be with of we be. eyes, mean bit. it's fresh the topic, I two, than set not. to in Norbert after under-earning, under-earning. compelling our and with Dentressangle, have something buy techniques that likely applied be management very like It and synergies the say records together would would that, amount was would be and of a But want be its which the synergies, terms we're new could was we to would a it price. able it company, to be the have our earnings that earnings with as bought that to I is, on something under-earning. a signal

Amit Mehrotra

my very answering helpful. very Yeah, Okay. much fair, for that's you Thank and that's questions.

Bradley S. Jacobs

you. Thank

Operator

Thank you.

Brandon the next Our Oglenski your Barclays. question comes Please from question. with of line with proceed

Brandon R. Oglenski

good Thanks taking for everyone. question. morning, Hey, the

Bradley S. Jacobs

morning. Good

Brandon R. Oglenski

EBITDA confidence this $X.X year. billion outlook, come probably above organic Brad, sound the some it did be So, going if even we above saying not you in like growth to rates, much on had

reconcile most want I normally see at So I see transports, to earnings well. because just when that we top-line upside upside as

and investments those just not right are put them now? incremental what So the budget why in

Bradley S. Jacobs

did a the sales right XX may months. we we Depending expansion Europe, have an XXX the how budgeting In is it's sales in investing evolves in had The the few we've we're summer. incremental the added over we investments been year, not of budget So the That's the in last that, by force. there, And the in hubs, people we've sales them the that business because add mile of now – The sales the have are and more. support. question. last business of end good on good force. States. the already of incremental And in over rest United

to we'll the will footprint we're vast we the invest that get of then want We few close be that just a where a population. to more There whether not. could have us or even in majority and would have see truly national closer, to

for it. than peak, staff many, contract I many them secret, up in earnings. but of more growth time we most expansion to mean, our contract to secret that we particularly goes balance down level technology to We staffed we we down. we up, of put for both going is, we push. key we advance have the to always more, let requests the so customers' our because you very that We robust so of more do. will staff lever we're even is that that to money short-term people to and long-term up want we more we always is keep want activity and have those. don't list, the amply If balance in different have. have can want into the world, essentially But peaks always a have can see logistics activity we pipeline not staffed And have our overloaded. always around can point Technology performance technology, always We be and And sauce. that I add in understand the which want up we logistics

that into Not growth year. XX% into earnings mentioned. to feel whole And nice like just things of is our excess would a kinds a the back we plow competitors the year-over-year. of company billion XX% we growing from last the So EBITDA I $X.X of lot any

Brandon R. Oglenski

higher in given then, this guess CapEx and why environment? budget you that can I Well, not the context about year, maybe that's creeping this talk

Bradley S. Jacobs

little the ways the Well, you the there's things. can can assets, have on we bit. assets. budget and that, it main two business. is we grow control And things. and CapEx Those technology Technology, expanded two it's It's are a

You or called can so you can either add the sweat assets. assets, more

yet higher but the a We've growing intermodal. what that's the utilize the to but increases improving level, assets container truckload growing OR not intermodal, XX fleet, been our You and we've not We've in volume Europe, can not We've doing. at in we LTL we've best been had been growing performance the years fleet our there. there. X% been in we've quarter fleet growing been been in

is So, more the emphasis CapEx. way, and add lot on on on undisciplined excellence utilization just an a of – operational than just

Brandon R. Oglenski

Brad. you, thank right, All

Bradley S. Jacobs

Thank you.

Operator

Thank you.

Please of Reustle with your with line from comes Matt proceed question next the question. Goldman Our Sachs.

Matthew Reustle

Thanks it's do reinvestment on question. here for have my investments opportunity say, given the a would future it to fair Not if the just taking beat accelerating that the made to given so, to do to opportunity horse planned essentially have of dead But the business. to so? is you

Bradley S. Jacobs

But technology, with our we part, most yes. seemingly the up new ideas in Matt, come every For month.

things that in future. it's anyways rolling have we're did part, the we of But And the out, done the for some ideas have not past. yes, we most accelerating things would

Matthew Reustle

share of existing the customers. think wallet growing this you you your terms over biggest to over have about do trended in customers, as do you think in release, where then wallet? share on that with time, point, you Okay, And your and context comments, with one get thanks. for any where time suite? you this in can that's broader the of your other referenced and average, And rollout you are, Where product

Bradley S. Jacobs

Yes.

them, and to you we and up Europe. billion businesses in So, $XXX a look the America similar in where are in amount that about lines at North of we're here in that just if adds

substantial even of of than a trillion total X% about market, we So the addressable have addressable amount less of $X though business, market. we're total and

small of percentage a have very market. total we the So

different have levels with customers, our at penetration Now, we you if look those specific customers. of

we of their in business. line much all a them, of business of as have as specific Some

we that. in have fraction others, of X%. average, few For X%. we have logistics instance, And customers less a like a on than we have But a

in customer What And plan. goal we but meeting Not our better we our in business and in each business? are plan? serve compensated, customer And with our the do What's the line match have sales much can over in years, they totality, account more? best our that who two we Our are last have organization by one each are of each the lines that's line to How spending them of been, to of with? identify who has customers goal? and business. in business? of that How what's salespeople closer count get how our that

Now, cross-selling up XX% two to year of which gone We secondary coming about XX% XX% from lines, from our up years well. from about is It's sales cross-selling, respect service has about ago. with ago. a had

using growth strong now. multiple So look service at XX there's and customers, lines very, very if top them that, of are XXX in you our

XX. two was back that go You years

So big increase in that.

Matthew Reustle

Great, thank very you much.

Bradley S. Jacobs

very and I you. its winded already. been on I've X:XX Thank see this long call,

to people then the one take we'll or get let and market. two back more So questions

Operator

Thank you.

in, will line of next from getting Allison question. question Suisse. Allison one. Credit the Our for ask Suisse Thanks question I'll Landry - and just Please LLC M. with Landry with my your proceed Credit come (USA) Securities

capital free of working remembering think cadence point year? the the needs? maybe past of the correctly. how terms revenue the flow, I'm for much of should I if think we the that, every within in you've specifically maybe how increase requirements proxy for for growth, working given cash balance capital And out about And In

flow with the to comments capital changes forward? any and going in should how working we free there cash think respect So modeling about

Bradley S. Jacobs

It's XX% very flow $XXX So XXXX cash up year free million, free million, we're in important it which respect this and it last million, this of year. year out of for In bonuses projecting out the always because XXXX We and to lowest of our $XXX was and cash it. big flow, some the quarterly EBITDA breakout for demand loaded frontend And we've cash CapEx quarter to this free our bonuses, million first year $X $XXX was to cash will to between pay cash usage. there the flow With paid the year is billion another quarter. is employees. deliver in our in we free XX,XXX was us. increase XX% $XXX flow this

the when that you. we So growing, of year, Allison LLC flow. that grow. Landry business, and Great, - capital the million But working of needs the are confident the working shows by Credit nature model, obviously, the sales Suisse course will (USA) thank your will capital, is growing M. business deliver business $XXX we're for free Securities of cash Okay.

Bradley S. Jacobs

Have Thanks, Thank three in months. day. the for a everyone, call, to Allison. forward we look in good to talking and participating you, you

Operator

today's Thank concludes you. This teleconference.

may You lines your at time. you disconnect your participation. Thank this for

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.