XPO - Earnings call transcript Q4 2019

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Operator

Welcome to the XPO Logistics Q4 2019 Earnings Conference Call and Webcast. My name is Kevin, and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded.

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may the measures earnings non-GAAP certain under related SEC rules. also During Reconciliations as financial release the this comparable financial may to defined such refer the call, tables. company’s measures contained measures in most applicable to of and company non-GAAP are financial GAAP

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I’ll you Jacobs. the over Mr. now turn may to Brad call Jacobs, begin.

Bradley Jacobs

and everybody. Thank by our morning Headley, this call and Chief you, Matt interest Investor our Tavio to I’m of Fassler, morning, operator. here Officer; joined thank Strategy in Good earnings Welcome Senior you XPO. Relations. for our Director your

Full-year a our up quarter prior adjusted last the adjusted up in year. EBITDA $XXX X% from quarter. $X.XX performance, by report up at points. up pleased billion. was a we full-year basis, XX%, And year, the strong $X.XX XX% was that to fourth XXX for fourth EBITDA on basis particularly margin that versus was $X.XX our to I’m million with quarter, capped EPS coming delivered solid a adjusted pleased I’m year-over-year

$XXX August. issued the fourth operating of in flow $XXX million. had Full-year we free best we was ratio the quarter LTL, free flow on at million, our in cash just In beat XX.X%. adjusted We at in guidance history, coming for midpoint higher quarter the above cash the

was this X.X%. yield, real it and up fuel, improvement X.X% remained of estate, points. an was basis XXX basis excluding of points, XXX an also excluding contract was on year-over-year. Year-over-year, at strong improvement LTL strong, renewals Pricing

in well in team the executed Our brokerage remarkably quarter. truck

continuing brokerage fewer volume productivity. and We’re to automate XX% grew the improve with fourth people. we nearly In quarter, X%,

our customer, was of downsizing the largest volume Excluding XX%. up

of exceeded Connect, We’ve goal our been of our XPO We XXX,XXX in marketplace. digital driver XPO experiencing growth app exponential freight in December. downloads our Drive

Transportation, high In single-digit in double-digit a low growth mid in single-digit growth This France. and organic UK European the Spain. revenue offset in revenue organic we decline generated

logistics margin We’ve the in contracts largest double-digit low-margin Last first XXXX. of biggest for since laser-focused EBITDA in is logistics, quarter, and Waitrose, time week, a on achieved we history. adjusted the supermarket been UK. announced the we of the customer up exited one a cost some business. our signed This new we control chains In in one fourth the also

starting hubs We’ll operating product of mid-year, to two critical cases an annually. Waitrose logistics million XXX distributing be estimated and

segment. into strong in chose into they pipeline, Based expertise signed that proud our and in contracts have XXXX omni-channel our growth revenue distribution. for significant on We’re us visibility a excellent we Logistics

of the and choppy year, and continue a pricing the a good quarter despite macro. up on initiatives. good reap we tech results, benefits a We to and cost remain disciplined sum our To we company-wide delivered

and of we flow X% XXXX, expect $XXX in of X% of to growth organic XX% range million cash robust the EBITDA to For revenue million. adjusted growth $XXX X%, free to

of XX, on know, our spin-off some sale the of we’re exploring January or announced we you business As units.

or sale of the is we’re spin maximizing As value. with of American long considering LTL. North shareholder priority consistent held process This we our said, not

shareholders, parts to is pure for peers. We’re valuation we’ve delivered share already you to we off but of no sum returns excellent continue updates our this but and of process outsized trade play proud the discount call. to to The at the start, our we on of our an to a the with have significant

completed Finally, CFO March XX-year sales, His years major I CFO is tenure. and experience acquisitions during spin-offs want companies become our his on with XX David fantastic to welcome multibillion-dollar David includes of hire. new Wyshner, who’ll career public X. a that asset

meet You’ll to our on him call. next get

With that, I’ll turn the to Matt. Matt? presentation over

Matthew Fassler

Thanks, Brad.

tech-driven mixed harnessing and macro the numbers unit our each numbers, results business by the I’ll backdrop. drive our focus review you’ll that I business start solid see fourth quarter to strategic in As unit. by through initiatives a we’re against going

year-over-year, of general. our many begin profitability, segment. results reflected declined LTL, customers. softer pricing in This U.S. the American We’ll with rational yield softer performance consistent North is Growth Transportation market we In for due we’ve demand. our improved to X.X% on sector's despite and with contracts new all Tonnage seen year. by the industrial in industrial pricing

of were to for the our steady. the volume and metrics By contrast, most customers related consumer sector

by operating points to XX.X%. improved adjusted XXX basis Our ratio

XX.X%. on gains sale by basis improved and Excluding last, XXX real adjusted points of our year this estate OR to

said, was ever. yield best Brad performance result control. OR This and it’s steady the tight cost improvement strong fourth our As of adjusted quarter

to our using labor continues and results. these proprietary also pricing contribute to technology of optimization Our

disciplined Within price. freight increased brokerage, volume we while on remaining

slight freight Our year-over-year, QX. a gross over XX% revenue brokerage improvement by declined

our the brokerage business announced Excluding fell the in X%. revenue freight underlying brokerage gross previously customer, largest from by our decrease

X%, rates truck the to specifically, XX.X%, X% Our net contractual loads stabilized. brokerage increased freight QX. in brokerage after across revenue margin In basis by declining eased and spot market XX by declined points as

our XX%. customer, with load grew our business by brokerage excluding largest counts Importantly,

discovery Connect digital share visibility, contributing XPO more Our customers our marketplace is gains. freight our to market giving enhancing and price

Turning to XX% of of the business mile last declined wind revenue down injection our our in QX. wake the year-over-year operation, postal in

network, business customers, accelerated X%. to where growth in investment brought strong full-year. heavy growth on in volumes our through new mile paid off hub goods postal through injection, in last its first Excluding our our We core particularly

injection mix we as discontinued primarily revenue almost sharply business increased for our goods increased by in Net XXX This to last year, margin postal heavy business in the we points. basis year-over-year. mile as core and our margin earlier due was

for line expect revenue in of ongoing business organic this growth XXXX. We

Europe, the and Transportation unrest revenue were softer in declined the by currency, by Europe, business In in revenue measured weighed X.X% transportation trends the quarter. France, They in FX points. as our in in quarter. were late in emerged local X excellent UK Spain. again on percentage social during about revenue

the a leader in for and in three provider LTL top LTL brokerage. dedicated European biggest the We’re France, in truckload and UK,

position we’re across for transportation and strong, Our European our in is competitive prospects excited the region.

adjusted Transportation X.X%, managed was basis EBITDA XX.X%, overall, our segment LTL, last up across driven and margin improved margins by down was rose intermodal, transportation points mile. adjusted EBITDA in XXX American by Looking to XX.X% revenue North and but

segment. In and America, by this the of declined X.X%, Logistics largest Growth reflecting business to offset sectors some which of food and Turning lower-margin impacted packaged North about decline. revenue sites. exiting revenue the and downsizing our X%, in our aerospace goods, beverage consumer customer, with the

verticals X.X%. points. negative in E-commerce declined revenue percentage logistics impact strongest chemicals X about Europe, our were European and a of logistics. had FX In

provider e-fulfillment the market-leading largest We in as outsourced Europe. continue logistics build to position of on our

recently XXXX business, the for We’re lot a well. robust this new up downsizing visibility the confident trends and during largest of lead pipeline customer, as implementation our have revenue of about the lapping reasons, signed of signed contract the into see logistics second-half contracts year the future and warehouse of Nestle ramp our our including previously the XXXX times, that excellent in longer of We like UK. of

logistics for as XX% year-over-year rose adjusted to EBITDA and XX.X%. EBITDA whole Adjusted margin rose a

results initiatives. continues to in management, XPO improved these deliver in the reflects from savings and started of recent roll from technology Our our out strong profitability productivity Smart capabilities strong including Europe. U.S. we and restructurings more to cost positive gains

growth. discipline, loss-making platform our pricing during model. as that executed increasing deliver is and one profit the to the XX seek our in of exercised and our we delivering reduced line is well levers. number given profitable Also, chain XPO profitability, peak Europe scale of haul Direct distribution margins shared We supply of better European sites. our optimization more We Recall

We’re from with new compelling growth we’re discussions in a customers. business and we’re enthusiastic It active opportunities Direct. enormous offer to of XPO for list continues seeing about the

with XXXX sales company-wide pipeline $X ended that a We surpassed billion.

It In year-over-year fact, XXXX. our was of double billion up rose logistics. pipeline in digits every in XX% quarter exceeded $X and and transportation both

X% declined year-over-year. wins business New

business lower forward. Cyclically dollar Supply Brexit our associated market and get more in clarity on we’re year-over-year about customers as up, value path the UK the increased brokerage truckload won business logjam pricing of starting the clear see new new to chain with the put won pressure

a for the new LTL increased Our year-on-year eighth row. in business quarter won

year earlier million from $XX our expense Moving year to down share income This issuance program. million statement. buyback the the ago. fund debt reflects rose to our Interest $XX a in

to a XX% XX% Our year GAAP effective from rate tax ago. fell

diluted shares average count decrease change quarter-to-quarter, QX. weighted at year million we compared year-end, reflects XXX share with Our share shares no in buyback million meaningful repurchase our year-over-year There The a as ago. XXX was activity. didn’t was any

Our up from $X.XX, diluted a earnings XX% per share was $X.XX ago. year

year EPS up diluted from rose $X.XX a adjusted XX% ago. to Our $X.XX,

EPS was to activity accretive XXXX. $X.XX QX adjusted buyback for for full-year $X.XX and Our accretive

quarter, year million, expenditures capital million ago, free flow cash timing a in, versus compared Net capital was $XXX reflecting million million the for $XXX million to between quarters. All increased ago. a $XX gross $XXX the $XXX QX ago. were year with a increase from year $XXX expenditures million with

was to $XXX year For ago. cash million, $XXX flow the free compared a year, million

benefit equipment. $XX a of gain from quarter, in sales to free In receivables the in real $XX QX, programs trade $XX asset million estate. including the had we flow sequential cash the had quarter. of of booked from from million, We on We million a real related $XX and $XX estate of million sale remainder million which of to assets

full-year, $XXX benefit provided free the to flow cash programs incremental million. an For these of

Detailing guidance. XXXX our

revenue is gradual X%. the in organic expect on based of growth markets improvement year. to transportation second-half the of This in X% We

to EBITDA said Brad earlier, XX%. we X% in As growth adjusted expect of

$XXX million includes sales million, We million million of to million of flow $XXX $XXX to $XXX $XXX of CapEx $XXX expect and million. This the net asset cash range gross $XXX CapEx implying of free $XXX in to million. million to

We and the in million interest to of of $XXX range expect cash taxes million the million million. $XXX to cash range $XXX $XXX in

range of of effective full-year an to We for the in expect rate XX% XXXX XX%. tax

the of our impact transaction-related expenses. of potential exclude forecasts All

We progress that of $X by year-end million XX continue are driving the make billion improvement EBITDA XXXX. on operating initiatives to $XXX significant potential to

of some Speaking to specific the initiatives.

Smart tech Our across platform continued our In QX. momentum. we to LTL, the out planning network rolled workforce our during full company streams work gain to

seeing results. We are great

improved to terminals. all new out and it a For operations We X%. P&D launched of instance, rolled productivity dock planning route our for

We course XXXX. will start of seeing results through the

opportunities new to tool including all new We to more in manage automated RFP in times monitoring determine line a the many an fully in close local account introduced pricing. full of and automated, launched We for a haul, quicker that dock trailer were is, ability how our supervisors leading quarter local platform so helps they business. turnaround the advances channel XX% the aiding efficiently. can visual

freight gains we as it brokerage, enables to with In competitive XPO XXXX. fair a work to in negotiate and us has Connect within since capability it counteroffer share price, to launched contributing our carriers our

relationships While our delivering our service, carrier customers. gateway that a are our service technology to to critical is to fantastic our

North have revenue. with we’re a source carriers in contracted of thousands We significant and which for freight strategic of relationships America,

capability using brokerage growth the business. users, book are to we’re line developed And experiencing in of in we we North our share dramatic Overall, Pay European bids in Dynamic America Max and drive loads.

contracts In speed contract chip with them winning customers. blue and to leadership. It with solutions with ability us is a customer's assess cost supply recommend tech optimal efficient logistics, long-term implement our high-quality, starts chain,

backed data a that Our to solution sales large amounts made to a of ability platform of analytics. to is data by data, in marketplace. in us customized create big the customer comes exceeds we’ve that our investments with When else anyone deploy

omni-channel warehouse broader and retail We automation is we accelerating to verticals warehouses. in industrial management to integrate across of are order This to management robotics with many to have our and defense, ranging consumer our and aerospace pace technology, well resonating and the own more. from platforms. These

year Campaign named the named I’m of proud straight one and that third logistics. the in to Most to top top by category FORTUNE We the Most by our for to on our and Human transportation commitment say number Responsible Corporate community. in five we Rights XXX and ranked Admired trucking, LGBTQ the Equality category the Companies America’s the in of were were Companies Index ranked List underscoring Newsweek the the Foundation, to

your take it that, we’ll and back the With operator, I’ll questions. turn to

Operator

Instructions] [Operator Our a Thank you. question be question-and-answer first We’ll is Citi. Chris conducting from from now Wetherbee session. coming

Your line is now live.

Chris Wetherbee

morning, thanks. guys. Hey, Good

Bradley Jacobs

Good morning.

Chris Wetherbee

you bit and can – the it looked happening I in attrition what customer sort about as maybe sense I you step a there? I that, seen a tonnage like sense was year? the to guess, from go that decline through of want side just we little Where saw specifics, of a the had you in of quarter? to the down you get want it’s think repricing. LTL on earlier get the talk starting a what it what’s maybe

Bradley Jacobs

Hi, is Brad. the for for don’t I specific us Chris, or this morning. it’s think Good the better worse. to

just market. the I think it’s

the quarter. soft time for quite in the was been soft now and think industrial fourth economy long I has it a

And is than less quarter. it yield where the was We LTL, encouraging was the quarter. and do but see more fourth by some year-to-date same tonnage the numbers, in potentially in up in definitely up in down, fourth still down January is token, it’s it and signs than

think with have definitive are about encouraging but too to there it’s what’s the bottom conviction I signs in some high So a call early industrial going economy. that, on and

Chris Wetherbee

I to when give you a the talk of a much too appreciate about expect then the of And about, if what little standpoint. divestiture maybe here helpful. either want or But probably you in that’s of or terms from bit process process think don’t I the you that. process. of sort to roadmap timing know M&A could us a Okay,

over think XXXX? up it’d happen is kind helpful you out think what to if be play of I to going just you frame

Bradley Jacobs

an We we’ll publicly. off process expected. do, There’s you to to excellent updates at time. The than a And share do good more we don’t momentum have start. lot any had further when it of this we is with

Chris Wetherbee

appreciate I If could more I Okay, squeeze in. one it.

Just is do the savings when Is as we $X $XXX much about over relative million think should you about couple you in that how you’ve aside that? think that in still of cost putting set, it, how billion do outlined of the and process to opportunity potential guidance, that divestiture the next think about much the you think years, included maybe you course about or think to XXXX? the how

Bradley Jacobs

workforce tools, attacking of Smart main billion forth. robotics, line front like automation, center LTL through what the projects lever our productivity the enhancements, is haul, So process The working still the year throughout automated XX many pricing, on major we like and and including we’re focus on. a company. of It’s $X.X especially planning spend in forms labor that so

strategic can big off in not demonstrable These those by results. four we’re process technology and levers driven are ticket items. still These independent are very that units. for all Six competitive have our foot the that the at advantage. ones improvement that, of and taking of of investing to technology, And pedal in our are alternatives evaluate developing XX we’re still business on

years, XX% chain, that half over is bit Again, versus bit couple America When of Europe. about look profit is you North next in at and in North $X potential About $XXX of little more more supply billion a business about million LTL look at you improvement Europe. the is in the in split, transportation. it to little with in XX% and a America in than of

team on of So with moving speed because them. as all full XX on of we’re that’s we’re a we And and still focus them. have intense ahead management track the on levers those

Chris Wetherbee

period? to throughout – you Okay. How be it’s sort that’s sort back-end - looking I That’s linear that of I of XXXX. guess, do the Do what’s of sort loaded? – what sort think but actually any going for? no sense of of is was in

Bradley Jacobs

started from. see to those we’ve some of already benefits Some

time. with and investment in XXXX and a from on more embedded in of are field, longer-term the and benefit tying those nature Some is all their guidance, from bottoms-up some those basis results. them budget and the require more There more to compensation those were people created the

each how quarter, already don’t that quantify giving year-after-year. we quarter-after-quarter, while of much there’s coming feel So I’m each specific a a hits beginning dollars levers to and the of that and want increases in one I you results hope in

Chris Wetherbee

I time. it. much Got very the it. Thanks appreciate for

Bradley Jacobs

you. Thank

Operator

you. Thank

is from Bank. Amit question from next coming Mehrotra Our Deutsche

Your line now live. is

Amit Mehrotra

it just you pricing I Thanks, completely are operator. fully But Hi, the I Thanks depends not characterized given as in it’s and the of or on on the question. I get control. about or my circle the Sale the marketplace, to businesses spin not have it. the Board little the appreciate, Brad, a wanted alternatives. spin. different for control, bit wanting it a comes of question to sale in a company Board’s or out guess taking back from the everybody. talk obviously strategic you Board’s your is – perspective, control you but in because a the

I you LTL what control? separating pursue circumstances the and completely that to So non-LTL And really, to a businesses? in committed are how don’t in given the Board’s just from context, the the the management is businesses actually avenue want understand you are spin-off, whereby

Bradley Jacobs

is, Well, see in tell And our I and to we’re XXX% is committed been good still Amit. create to plan. run estimation, a that’s value terms are shareholder What plan those. four back our units, you in shareholder morning, can value. creating our the process from but those of today, is comes valuation way LTL And for our always best of substantial that business what options not and to

because not process now sales We’re right into in huge gear. the is a full effort the putting amount spin, of

and So it then we’ll step-by-step. let’s that goes see take how

Amit Mehrotra

more, these also reaction logistics, And are with you, in the would the an What management? one, sell. controller what XX,XXX-plus Okay. they to are process you And mean, And related multi-year? obviously, has then don’t talk respect I customer customer I the just And potential on spin-off you contracts even about the mindset this have employees know, I changes imagine just businesses, of that can particular, given has disruption business? in or then some has there in maybe to doing are it looking that retain been, you impact the them? to with to had

Bradley Jacobs

kept we’ve goodwill in XPO the XXX,XXX, of one have have Yes. employees, our large of goodwill we very been that they terms them of the with appreciate with that are built and that family. Street the of loop we’ve we everything doing. very the as straightforward that And Logistics and years members and immense that very of amount just appreciate is people the base, communicative, Well, that. employee in kept always we’ve we’re over reasons a And our what we’ve plans transparent our up that,

revenue Nobody is likes, All organization That’s and billion billion years the and organically of over order we don’t $X I the it’s process. change. nobody. shouldn’t used major dynamic that ambiguity, of years. employees projects were like who we’ve succeed say people the last people agile, change. because it's had over in grow EBITDA to last major like and a thousands dealing to well, Most don’t grow had contribute with flexible, it's motivated transformation our highly to few $X.X rapid few but tens tens Most and to to

global some are a about frankly, if could end or, selling because it, So, that but more these will created excited spinning great family many they we’ve we mixed people of focused part business actually smaller, people units, go. four that are atmosphere. up And a be unit,

we’ve at And obviously I feel, team retention, compensation what about groups on time spent an in the the of of incentivization done retention on that. – and programs. done job question care excellent we’ve for lot your of terms taking in But HR a we’ve have the and

get want of They job open customers just done. terms communication. customers, also In appreciate to the

supply from be nothing’s they’re part that here of on with business, And of So goods walls the that transportation the there. if maximum the goes productivity. done they that respect. part the in in want chain efficiency they the of in business, to everything to want If four moved they’re changed warehouse and

Europe. another in levels supermarket chain won contracts. which contract big new been our large supply UK. is chain And business. over in having Waitrose, We’ve winning the Mercedes-Benz, very got we we We’re in still execution We high won recently the of recently

winning alternatives process. we’re strategic after even So announced we’ve the contracts

Amit Mehrotra

Okay.

keep luck I much. Okay, very I’ll the appreciate you two. it process. at Thank it. Good in

Bradley Jacobs

Thank you.

Operator

Thank you.

Our Schneeberger Scott next Oppenheimer. coming question from from is

now is live. Your line

Scott Schneeberger

morning, Thanks everyone. the Good guess on very I much. guide…

Bradley Jacobs

Good morning.

Scott Schneeberger

revenue guess, …on guidance you. kind and it you could versus look EBITDA, segment I to and XXXX, the how for at macro Thank speak, of and internal? organic by you cadence

Matthew Fassler

Sure.

you we’re year. recovery the the cadence, of of as one economy the expecting So, premises about of some the second-half guide industrial think transportation the is and show the that, markets in

So X% X% the in of year. over course to the the embedded revenue would momentum that build

think XXX relatively then approximately expect – improvement XXX adjusted so our think basis segments. OR least points you If and OR logistics improvement EBITDA basis And can growth about we points. LTL, or about you more, of at among transportation even

Scott Schneeberger

And speak that. then for big I bit a year-over-year how into the on how going, to Thanks not influence much to plans you’re and Could there? that’s the the to alternatives budget? Thanks. over may swing what strategic little that pick I planning lot of or what potentially spend. just presume want given be up could a Great. spent, a And that CapEx, IT are may you to that where

Matthew Fassler

on structure. business and CapEx as perspective it’s usual. the based the budget So a company investment And from and perspective, its is current CapEx

of all in businesses. our investing We’re

of slightly at million embedded had $XXX $XXX $XXX the million high-end. the the is XXXX $XXX to XXXX. is level The at the in CapEx low-end the to that lower bit Now number because in number than million bigger, are and of million the a of we net gross guide asset number kind at sales above the

of the that million. asset Recall in with a of CapEx big sold net in excess XXXX, office proceeds delta That’s the number. we and in property delta $XX in really sales that’s the piece the an

Scott Schneeberger

it much. very turn I’ll Thanks over.

Bradley Jacobs

you. Thank

Operator

you. Thank

next Credit Allison coming from Landry is from question Our Suisse.

now Your line live. is

Allison Landry

Thanks. morning. Good

improvement If this in you should to LTL. And versus by $X how XXXX, year? bridging expect a if pace of just terms or of billion XXXX, loaded? faster utilization, the question the profits next there? line just think – year would EBIT whether left the opportunity of So we haul, the buckets, think on most have do about P&D, price, grow of more different back-end sort then think in it’s where you you you about And to

Matthew Fassler

Sure.

So you model. specifics of your you and I let growth about EBITDA, as think I’ll do mean, the

give environment year a and the better premises Let a progresses, the and tonnage to industrial both guidance. me that you as just economy based on that expect grow. back of begins couple do our our expectation the stabilizes We comps

We more. sized our OR points expected XXX adjusted improvement, at improvement OR basis or

You get can to EBITDA an number. that to use certainly

You should at something years, probably but, look own. details your you close to even pacing on between again, the out the work

strategic of degree terms four LTL, both in from In our that seeing also specific that’s market yield the driving some within manifested, earliest we’re and levers initiatives the and share. are in pricing to benefits

Our expect increase we efforts, us our quicker, to for local it to automated example, helps get conversion. pricing accounts

said we the to finished terminals. all as Also, out the of we roll of earlier call, Smart on LTL our

in pound the we that number the But through it’s pound, that network impact of in a short have fourth really So today, that’s very been is on time. period quarter. dock starting productivity an cited per place only to for

line We roll P&D loaded of about spoke are during initiatives among more Those the back-end initiatives. our the the four. also out and two call the haul

some this year, and are So beyond. but benefits you’ll for see those more XXXX implementations and stories

Allison Landry

Okay, thanks.

So I wanted the other ask. question to

noticed looking strategic and that to of use with of signed because couple more also trying the a But than customers a XPO business shippers a big that willingness that been point. contracts. been use of conversations to you’re less have them with you of past, the just to in in are contracts your more the there any sign that’s has service I sort exploration? you’ve one and that So, number one that new key know, than for get highlighted selling you service,

Bradley Jacobs

A A in bit little we a not a and lot. customers, make bit, high delays customer in a service we'll People levels some of have little of confidence but not trend. but Allison, execution. maintain not big whatever decision

within On Actually, North still would transportation say, and I of growing momentum see of North American significant within American within a the increasing. transportation cross-selling, is the amount transportation. cross-selling cross-selling and European we

had was about transportation year-over-year. previous as cross-selling about as cross-selling much XX% That over $XXX it within Europe, after started up XXXX. not XX% up the European in transportation from up €XXX but of we million was We was about from XXXX. in was had was quite about, about up €XX it that a of That American North North XXXX. within little America, million America, million which in North year, And

look when two business $X just organically about $XXX those from it we XXXX of all was within to increase cross-selling, that XXXX, from you So nearly billion at the that and of was drove that in of revenue million I mentioned. units

Allison Landry

Okay. guys. really That’s helpful. Thank you,

Bradley Jacobs

Thank you.

Operator

Thank you.

Our next Ossenbeck question Brian is from JPMorgan. coming from

Your now live. line is

Brian Ossenbeck

competitors, you of brokerage, more morning. would the scale and want point launch in region – out taking on you Europe, this at well held truckload time? for more discipline the in like good up that in price especially it Hey, then ask margin. in specifically where business But where specifically? maybe market. you’ve seen Thanks competition a broadly And about to I has just than softer Are roll more expect lines any freight additional anything have Freight, question. to pretty started you seeing slipping indications looks across Uber it in of in terms few the

Bradley Jacobs

Brokerage range their being strength, being more are always, which in less every depending on depending part wide the cycle, of which some of of of competitors, on disciplined and some a disciplined price when has exclude in the brokerage, largest XX% on I’m volumes excited stand year-over-year grew fourth in marketplace. customer you their the – the truck What is very they we by in about downsizing where quarter. are

take downsizing out of largest both XX% that if Our customers year-over-year volumes periods. were you up

on X% up. Even about if still you volumes heads. are They’re include that downsizing, XX% nearly fewer

in enormous headcount. opportunity X those have Tier so about technology with that dramatically where we’ve been the been in target has the main fifth So been our brokerage And and Tier automation on smaller volumes we be on, X customers. can X, an focusing growing improved that and company Tier to we a midsize on here the productivity, less focus customers, because we’ve has focusing sized

by soft stay technology Pricing the I’m can’t even brokerage grow, to soft brokerage. external encouraged but on continue the in for vibrant, despite using is say what environment. pricing, focused well what our So It’s the market able that weak healthy. or with to freight applications to is been I freight we’ve very and we’re loose. doing and we we’re do volumes

Now Europe. and you asked about Uber

a that really things importance amount think bring the for of They enviable of respect there. that’s a ourselves the have and think have dynamism to – a in it’s that to understand And fast. a lot cultural tech. tremendous We a as We these just industry well. we big tremendous a on lot move energy of ability of are just really competitor Uber. have to value the going They got exciting they and

they’ve Europe, begun. In just

So really from business But effect Uber. effect haven’t on there. our seen lot any frankly, a here we whole seen haven’t of on business we our

they another have big into we like wish for have competitor coming the we plans market best. and So years the have very we and them

Brian Ossenbeck

in XXX,XXX with in big the Is it sense can into it? the you Connect to it terms who connect run critical downloading as the mass anything of around the grow? are got you of some download increasing just retention with basis Okay. they the to or platform? What’s continues for you us people give I using a XPO context on size just a know about then more stickiness highlighted platform your either the rate Are And you context that technology. or And and is? of shippers? this how Can reaching What’s follow-up to drivers give the on app it. growth

Bradley Jacobs

I a most That’s have anybody way, telephone a for with long throughout the not by part, the that. for sure, brokerage by of in don't majority with done There enabled, mass huge think we are - still trend, made The and to over right the human We vast has. digitally beings, is forefront is more and industry. the for shot changing. the of be it We’ve reached shippers. critical

than Our strategy has some been competitors. of a little our different bit

downloaded our of is core reached XX,XXX drivers. business. focused we Our phase that different have particularly, XPO, handle on XXX,XXX There companies who represents critical two go phases, the intensely call our strategy in about first what having trucking to carriers carriers we has have been Drive most and we and mass. There where

want So community. we had base. the with critical with platform We we digital have mass did that go to the carrier the community not a carrier very to until strong shipper

We have that now.

phase with so market will to worked begin, fully capacity. to universe, large and with amounts shipper aggressively of where And the access very we two very system the out

XPO. target also We you saw of of end we – and our download XXX,XXX by December exceeded Drive that the

also Spain. published last carriers We consistent. and and the Connect. also that UK, launched plugs went similar there Europe, now LTL our digitally. But And and customers strategy to special in XXX% right rolling our And France very a they’re are, Connect live app for will mile out of in now loads be into we’re Connect

market gain We technology. capacity. the tremendous carriers. it perfect We We to access to

on the customers, So put they than roll when very the last customer calling on system, is telephone. and in we the The to somebody to to bids. go slower competitive freight we just system out get on a thing the it’s they world want

I made I’m optimistic like Connect. the very So very on future. methodical XPO its in we’ve and It’s progress

Brian Ossenbeck

for thanks Brad, the right, details. All

Bradley Jacobs

Thank you.

Operator

you. Thank

Our next question Oglenski from Brandon today Barclays. is from coming

now is line Your live.

Brandon Oglenski

Hey, are of in it’s strategic in some want couple XX% ask I for to at question. I of here, the years. hearing improvement common good lot overhead, about narratives procurement, to taking But the guess, the my I’m break thanks Brad, A those of on of because call platform, same you wants up time, opportunities. cross-selling. about morning, kind talking through and dual the tech the everyone, potentially review next guys earnings

why isn’t just of potentially talk you of breaking up opposed away that those improvement EBITDA as $XXX can billion to $X some opportunities? the best and million the taking forward to pursuing path So about

Bradley Jacobs

adapted focused been decade And that’s been in to creating seventh reasons tremendous always why, circumstances we We’ve logistics. We’ve both why, The of the on of evolving one shareholder value best agile they performing as strategy were the the stock the XXX. consistent. and we’ve of change. Fortune been has always and transportation

the continue $X B, Plan intact And very improvement a more frankly. Plan an up an get with B. billion excellent The significant our as call now, that’s as we we because our reality and of of the attractive, valuation company sum not the value has in a given to conglomerate very possibility here creation what us to in is discount that the discount A the of to to is and shareholder parts, to bad opportunities well actually a at an it’s is profit market But the plan trade peers.

exceed we always sales, the we’re so by fight multiples market as that business a to for the there’s because reach, as the chance market us a And with love what that. the solution reality, for a speak. substantial we global goes, and reality conglomerate, good we’re while reward amount with four trade And And get not to going wins. and them therefore, does that these in multimodal in take very saying if units don’t

The now, EBITDA. we’ve eight about company even about love, put only EBITDA, this what is announcement, employees great a that is, here with nine-and-a-bit reality customers together times appreciate, times and that gets

by to a we is create So way served now shareholder the options. and opportunity think It's value best math. here the in exploring strictly these significant in

Brandon Oglenski

follow time, guess, range from at outlook, I if but profitability. moment I that projecting, valuation this likely shareholders a most would only amount earnings are earnings improved of like also on level guys you have would think I in to not of that benefit tremendous upside But that Well, Brad. an confidence the in you you at that

comes guess, I to back So dual narrative. just it this again,

could breakup, what earnings in confidence the of shock, be cultural very employees that organization? potentially lot a even have a potential why the future you uncertain for If losing expansion, risk the over,

Bradley Jacobs

much Brandon. with as yourselves sentences consistent haven’t whether great – a really I or including of company is it on So seen give your one market to I phrases agree of disagree it, us rooftops many that saying one seen profit is. the multiple I how our recognize higher they despite improvement. to your down likely it, the comes haven’t analysts

we big customers. a I and multiple accept market resolved situations employees feel there’s don’t that up us reality. any are that. that the shock The These about a come you and mentioned, to EBITDA have reality will has is, high issues given very that on cultural single-digits get risk easily, temporary to and things the

contract is in second The basic North largest very, logistics very company got America. the We’ve business strong.

customer logistics list. We’re got a We’ve reverse unmatched chip leader omni-channel. in in fast-growing an blue

leader the in robotics. automation We’re and

Europe in look our supply got there positions chain And we’ve of you leading then logistics. if parts business, too, in in the fastest-growing

logistics largest the in We’re contract Europe. second provider

number most the platform We’re European in e-fulfillment markets. one

We’re the click-and-collect. leader in

We’re logistics a France. top company three in

logistics foods biggest Spain. in for the fresh managing network We’re

top a five industrial Europe. in We’re tenant

position, in number look transportation where the Europe you extremely and if we’re in company France an in strong one transportation, And Spain.

biggest provider the LTL We’re France. in

We’re blue a UK, truck top broker list customers. dedicated in three truck transport one three two top of top truckload France, in in long full rate in Spain, broker LTL chip top UK, in France, three number

over count come America, fourth I where, transportation you North you we’re our if American And North the or look third at depending in broker on to truck know, largest unit, I North America. how it, don’t

have that’s technology We proven.

in brokerage. We very have for function years quarters that’s held been leadership stable, every together management our truck has brokerage job is truck three and of single and

in in brokerage. in long how money to in truck tooth the expertise very We’re and make

one number mile We’re goods. for in last heavy

transportation managed five company. top a We’re

third company. We’re intermodal largest the

the United We in drayage one of networks networks. have the largest

one number in expedite. We’re

on we’ve get value company. you. can we that. value So for the a sale, think a that Thank wouldn’t the you public you with strong we markets that If sale. built same But don’t consider to up extent us hours. on I very for and agreed I for we’ll And have I a given in go get would

Brandon Oglenski

All Brad. right. you, Thank

Bradley Jacobs

you. Thank

Operator

you. Thank

question next from SunTrust. is Stephanie coming Benjamin from Our

now Your line live. is

Stephanie Benjamin

morning. good the for Thank you question. Hi,

Bradley Jacobs

morning. Good

Stephanie Benjamin

understand just us fourth bit little I XXXX? wanted contract expansion quarter. labor in switch Can the went saw maybe into logistics lot initiatives that productivity the we a you place there’s to segment think and towards margin the should of in you how of and of very and strong to color Logistics that the and the tools give XXXX. about the I end a opportunity

So the Thank forward in rate maybe run That’d be you. going how we improvement. margin terms should think helpful. about of

Matthew Fassler

morning, Stephanie. Good Sure.

EBITDA logistics, We strong quarter a across tools, the franchise. So some was really pricing. this generated margin businesses, the Smart looking we that adjusted year rolled loss-maker year control sites in out a where exited at business. spoke a cost we productivity addressing exercised our about across in in workforce low-margin excellent made the progress We Europe, contract

single contract to logistics in our bit bullet us profitability XXXX. that There’s in or well in magic executed spoke We you chart some which improved We helped helped and no SG&A Direct rethink benefits a benefited from there. very QX, restructuring optimize XPO and at peak. about We drove there. us profitability really

segments, transportation, similar neighborhood EBITDA As X% between overall growth look our as about logistics earlier, I adjusted at major the the same XX% within levels roughly said think, the and EBITDA growth XXXX. two we at breakout I contract in to in

We number payout. have have of a initiatives long-term that excellent

profit from three-year from effort include the and highlighted a to from are Direct, a logistics Thinking ones, our XX% here. levers seven automation In of XPO levers. some the fact, they our ago, as units two contributors contract represent biggest benefit the larger the business Brad moment of of they overall. ultimate among specifically that’s XX obviously about to And

Stephanie Benjamin

bit update if Direct a an XPO just little of provide platform. lastly, on And Great. you could your

business business around the fourth particularly XXXX, that this said are saw Any could believe season. quarter, how you’ve today you. think, performing be kind Thank the of or you we billion-dollar I color, there the ultimately where great. after be you a additional holiday would in

Bradley Jacobs

is the We North a started distribution So and our manufacturing and This in in space XPO Europe. startup, serve network e-com omni-channel, about a roughly retail and have XPO Direct where Direct ago. shared we we customers don’t year was America.

do, lost its XPO first money. they lose fair form Direct startups money true and at to all share of As

to it significant way the it the of improved great, expect because break-even I’m profitability revenue pleased which we’ve a first quarter, is growing in want recently that we to grow. profitability here in and and is

the on will is That of be we that we’re on. rate confident path end by glide are We billion-dollar revenue XXXX. a the run that

well, peak, And how well. XPO performed working are over because Direct holiday. from You very over It that’s and performed it. it why is customers asked results working getting good about

Stephanie Benjamin

And that’s so much. you for it Thank me.

Bradley Jacobs

Thank you.

Matthew Fassler

Thanks

Operator

Thank you.

Rosa America. Our next of question is Ari from coming Bank from

now Your line is live.

Ari Rosa

face a Nice the macro. morning, quarter good tough of in Hey, guys.

first. outlook the on touch to wanted Just

I the on in to renewals in the a contract against lapping growth, the X% getting that X% of LTL loss customer saying, X% to large contextualize you hear for XXXX. I revenue So, outlook wanted range. obviously,

guess would expected pricing What be stronger the X% a of I volume the are of that bit have about assuming picture, context I because in you gains. kind terms of to growth little against

you there the volume is I’m something one that of there is in expect missing, side? headwinds So that on more a terms kind segment maybe continuing little of contract bit or facing to

Bradley Jacobs

thing. let I’ll just but I majority to say want of answer one the Matt that,

from had when that a That a we largest is recall where about year lost said rebuild happy, to a we happy started the resume regrow, year roughly there will then our we ago, produce rebuild. the I’m business XXXX replace we fantastic numbers we and were in growth hole that from did we still in there. we and $XXX afterwards be million I’m You of able lousy customer year million going the $XXX that. in-source business, market. with to

that. I’m So happy very about

economy, one second-half not X% the this revenue year, one. It mile it industrial assume organic recovery assume we consumer we been for still our a guidance a big the to of the bulky had the huge terms in stay In continues incredibly of been. reasons slight that reasonably but in has and the is is business. last and resilient, has in growth strong, which which We

getting now It humongously. starting somewhat, the We’re assuming that not and little take because cycle a that rebalancing you're a does to see place. mechanisms in but truck second-half, brokerage is bit recover recovers old

the from impact any alternatives assuming not strategic We’re process.

We’re shocks. major geopolitical not assuming any

gave. So that that’s guidance we our overview of the

Matt, do add to to you that? want

Matthew Fassler

Yes.

very level stable Just at is high really a extremely that an LTL consider business.

volatility in there’s line. don’t of revenue You ton not have – a the

revenue. to LTL So in some expect we recovery do see

to see We gradually. expect improve tonnage

growth areas from more X% a other probably bit little get the levels. strong of the business swing there’s in expect hold yield X% us But that of to that some improve guidance We level. the a current or to to

Ari Rosa

color. Okay, great. That’s terrific

that. for you thank So

tech ask, about efficiency lot about across a like tech initiatives teams second the have understand platform. as of seems efforts the my by do across how better, you how it those kind to just to divestitures, wanted wanted of I around looking initiatives that, the think IT I question, you spreading driven team and tech think savings the of And Just been does the divisions?

nature lot But XPO work resources thinks how implementing team? the look for does great technology. tech these have to XPO of you spin-offs? how subsequent change Who the allocating division that spin-offs? a done how around the that some that Obviously, case in stays Does its does about has of – of

Bradley Jacobs

structured in tech two ways. organization our is So

cross robust planting We Mario’s strategic the transplanting, that’s business things within embedded professionals work over group have leading have area each tech area. unit. And that, to vision we and in that another one

genesis Smart labor our business logistics showing high-single So, Smart. to the digits, out mid productivity of the gate. in in for was was Smart, North it example, America, and of

So, is this wow, really invention. a good

into that transplanted We we into are so And LTL. that going transplanted and Europe underway. those processes

really of top best the done on the practices So is side. cross-fertilization

into going that have we five if companies. forward split won’t different you So

tech organization, You with extraordinarily which substantial team business mature, effective. is and very a leader, great will of has of leadership unit a which each each has each have still a

where haul, the The continue. P&D, go. where does kinds technology They doc. pricing, got of about in is your the technology goes that continue belongs. the it LTL going part will just the initiatives And the question as The will of line we’ve last all cross

the So, of Europe, need we for to business need Smart the if or up because ago. talking contract form about non-asset in be minute don’t also example, more in Smart licensed it’ll we were logistics there Smart well. another and parts it we businesses will business. off, them spinning or the divesting be the in in a We as one end here. And LTL

The designed, for have different is algorithms specific different are the business because business So there. specifically part, algorithms. to the really unit, to apply pricing most that and so doesn’t

to which been So using that part using, already is the they’ll that. appropriate continue them, they’ve

it we careful needs the end be. So companies, worked very team a the if be Mario have to through these and will plan, that where technology four divesting up

Operator

you. Thank

comments. for turn question-and-answer We to any have of the or Brad to end over back session. like further closing the floor I’d our reached

Bradley Jacobs

EPS that justified We we well-positioned going in into good you, do had We a Okay. up say Well, feel and is up XX% is going EPS thank to that. everybody. adjusted and quarter. be we’re have good Anytime a XX%, saying quarter XXXX. we’re

guidance and up $XXX X% of to to free cash flow You our adjusted EBITDA, saw of million million. XX% $XXX

In we’re LTL, of record OR. proud the

We’re year. track we’ve of to that completely billion-dollars EBITDA the for on next for committed

the to do much no is the for alternatives CFO, what speak very, search, shareholders. to final matter what match culmination well. think, what’s you count you found for attention and you your process very, in for is us perfect situation best And few we Thank the On the we and point a very on is, can strategic CFO need months. going the the of I the very

Operator

teleconference. you. does today’s That conclude Thank

wonderful time participation You may for thank disconnect today. your We and your lines at have a you this day.

XPO Logistics (XPO) 11 Feb 202019 Q4 Earnings call transcript