XPO - Earnings call transcript Q4 2020

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Operator

Welcome to the XPO Logistics fourth quarter 2012 Earnings Conference Call and Webcast. My name is Melissa, and I will be your operator for today's call. [Operator Instructions] Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements and the use of non-GAAP financial measures.

During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements.

For instance, there can be no assurance that the company's planned spin-off of its Logistics business will occur as currently contemplated or at all. that in actual the factors materially to of contained is company's discussion could results cause differ A SEC filings.

the made today as to in this any of no statements company's extent statements or update release Forward-looking except forward-looking made obligation call to are the required only and of the these as company has earnings on by law.

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

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

Brad Jacobs

and calls. good Thank fourth earnings XXXX everybody you, quarter And year welcome Melissa. to full our morning and

today EPS Officer. Joining transportation. Strategy strengthened XPO reported than unit flow. across and adjusted Chief me and our results. on the fourth with Matt revenue Fassler, quarter XX% cash adjusted our expected are Malcolm David up our better Wyshner, Europe; logistics EBITDA, and We our very CFO; and pleased of I'm free in much CEO Wilson, Year-over-year revenue, call was business every

EBITDA was quarter revenue segments the fourth both digits. showed a in fact, Adjusted in In increases record. double

$X.X effective the both for value expected strategies capital XX%. believe significant customers, tailor expect operating segments We the of to markets. catch QX. real end in that our to accelerated than our being and the impressive a these generate We're completion growth both to been ranks growth planned We're prospects planned volumes the higher start this the were We're up. half EBITDA America both to excited we're to record. flexibility simply lines regions, greater the spin-off economy We unlock in $X.X year. is robots. Across our and logistics, transportation, employees a to business, outsourcing, our And increasingly Within We of EBITDA brokerage our strong team by and of quarter robust our to we're in spin-off about LTL from also We've logistics LTL a our and full-year talent Europe the also spin, an stellar. would good we also cash Within full ratio, completed guidance in starting by progress to are the to is range of billion. for off allocations momentum estate, generated results and billion interest in our on issued Logistics, targeting growth for brought planned, X.XXX technology. to excluding never way free that adjusted our over the as was that solid customer adjusted largest flow expertise named second recruiting. and the industrial of recovery We own and greater, companies, seeing our handled us fourth has driven higher them segment. in confident remain making year-over-year North led date three world-class the if truck still shift and in year. remains of a key business; brokerage, enhance Demand great shareholders. e-commerce, the growth for of giving We're XX consumer management and our our truck

the Malcolm of has business. you completion Malcolm upon our European of planned CEO will Malcolm European managing in us Wilson to into update ideally North Dentressangle XPLs our Global on over joined Asia. we in unit. logistics and call acquired spin, grew the He he been unprecedented where and the Norbert for Logistics operations, and to growth efficiencies. He multinational become the turn opportunity. business its when division will to suited for our Malcolm three this I largest Europe, business. is led came decades logistics net runs XXXX Now, to XPO America revenue producing and the Malcolm?

Malcolm Wilson

our I'm and very you, good Thank in Europe. Brian, morning momentum everyone. excited about

business Our most Logistics from recovered back. transportation business way and our the is has COVID fully of

a XX in countries important in many European logistics Our and are verticals. leader business operates we

where adoption our are European helping of the technology. first all Across our accelerate provider and among Foremost verticals e-commerce, new these their of is customers e-commerce we're we outsourced of logistics.

We have between a [Phonetics]. you our of productivity customer give the have X of our years. large of XX see when our productivity logistics utilized bluest operating tools. We benefit customer in sides idea we is basis, of the upside of we'll our and warehouses Europe, and believe Smart of landscape Smart To in growing population with all an large an and average of XPO fully rollouts chip in relationship blue XPO

Some years or of back XX relationships these more. go

our quite more infuse now. Ten tenure year normal technology into is contracts operations, growing. we the As are becoming

case the a COVID supply US, As has of in importance real chains for created critical Europe. the the appreciation is for

team We has while UK tackling The management During variety through of deliver the time an while company resilient years, the in started automated measures. our Nestle pandemic. very past gross brought projects online peak of safety during facility excellent been the This delivered four the a maintaining COVID season stringent to logistics big facility our XX% have year margin, in highly in last the environments. market performance. height senior CAGAR in

brand omnichannel [Phonetic] in new we also automated including a carrying several Italy, where peak launched warehouses, luxury started large campus also of of operations the COVID. Northern the retailers for We

been our The they countries the there were business. were lockdowns measures. about much to impact new these in Brexit, as quarter, to have moving. we've the minimal well. restrictions more Although commerce only implemented seen thoughtful We've no At impact governments material how keep in apply latest many designed fourth experienced

the sites who customers the in relationship UK been has as sell the unaffected business, consumers. by to our the trading worked UK business with our are Logistics our UK favor. rest largely Transportation in has And Brexit actually Europe with of changes Our in UK

been lanes our have have record to to into delays the U.K, of going share. the costs exited related we competitors up some border able and We so picked

BT. the in acquisition. many blue and We've are facility three have very and e-commerce, on-boarded will gave Europe, to tech colleagues we starting particular chip already new forward, industry in customers key Virgin opportunity many as all service us the retained. This The products have verticals; several high-profile a food is high-quality and to across the One also business, new Netherlands. such relationships. business The in healthcare have contract employees projects transition fully logistics seeing the of which are Nagel's January Looking and Media new include them. welcome gone acquisition These we customers with on done And strategic UK business. smoothly leaders notable All customers tech are and finally, the excited the on closed with Nutritia, we brands transaction the be automated X,XXX completed new been serving and & of Kuhne opportunities majority beverages. XXXX. nearly customers with has X,

a prior to are synergy We these have of and the process. significant already acquisition identified benefits number in

have drive more All annual revenue in in front of enormous we and more $XXX us, significant months synergies our more spending to even million add We expect than XXXX. ahead. during in, acquisition a with as and opportunity of an pleasure I'm time I looking the company. had of this to have you you of so separate the meeting and some to forward

cover will the David Now, results.

David Wyshner

Thanks, gained and discuss year In the the fourth revenue pandemic generated reflect $XXX our outlook during we quarter, quarter some the pandemic, are everyone. year-over-year Both and billion our our quarter. for morning balance of than good EBITDA we XXXX. I'd like higher and increases results, Today, of expected $X.X sheet Malcolm, the and insights at and beginning liquidity, to they and fourth full million. figures we the adjusted of despite

the and six fourth strong Our our and last is all-time momentum months. adjusted record EBITDA commercial continued an recovery a quarter over reflects

Brad estate in year. were million quarter. related versus grew incurred COVID $X last our million million XX XX% We and the year-over-year sales As costs of $XX gains real LTL revenue mentioned, fourth direct on

items, industrial activity. in grew and The saw XX%. by peak We was those continuing holiday a EBITDA two strong. long quarter rebound adjusted and in the robust Excluding consumer demand

As our we in -- to began began revenue business. Matt increased, segment detail inherent see our benefit to we few from leverage minutes. operating review in a will the

year-over-year of share diluted million spent flow Our asset the the adjusted generated increased on from received sales. higher We million $X.XX in of $XX cash per $XXX interest and $XXX and fourth quarter, million proceeds in from expense. despite operations capex, were gross quarter earnings

quarter, in share capacity. $XXX of $XX flow any a generated to quarter. we so result, didn't have continued stock buyback in we cash fourth repurchase authorized of common We free As million the the million

For the billion full revenue billion. generated of and adjusted EBITDA year, of we $XX.X $X.X

adjusted Our diluted share. $X.XX were per earnings

analysts amortization of note For year to for purposes, comparison related our results include assets amortization $X.XX intangible of acquisition-related XXXX that exclude I'll full intangibles. who expense

comparable going asset our that $X.XX spoken a XXXX our this and with, adjusted many metric. and diluted we've in intangible add of think investors are we're more calculations forward, to Going back produces adjusted per modification, We share. amortization EPS. meaningful earnings With

priority our asset initiatives. the resume Maintaining the expenditures a second capital free in continues top made was million organization. to were $XXX capital of sales, expenditures our in in And net regular to key XXXX, spending $XXX full-year importantly, XXXX cash reflects of considering strong After our in as liquidity $XXX flow course million XXXX. gross capital which an support Our decisions of million. we half be us for year were

gave was billion debt cash than committed capacity $X.X year-end. available Our XX us at December more under with cash total balance $X This liquidity borrowing billion. combined facility at of

times reduced debt in X.X% by net XXXX due balances was Our an amount. January, We equivalent X.X EBITDA. which cash senior redeemed and LTM adjusted leverage notes our our

position significant takeaways. of The but is no strong. over long is September until the liquidity year. learned debt last the few our XXXX a of lot We've a have a are maturities mile list course insights here We and key

people, both incredibly segments e-commerce, have by is changes working outsourcing to the of and our see strong they ability their on covid also were on impact even partners transportation many our lastly, firms the automation, towards saw business retaining that from level, though to the like quick Transportation new at circumstances XPO. investing In than to and associated once and XXXX, we recovery, sizes saw has securing we rebound take proved our actions in shape, strengthened do. in all and changes expenses retrench an have of were markets of an with we customers which demand, are cases, agility resilient even our adjusting have position We all end grow right benefiting the most opportunity unpredictable. don't logistics macro in and move. be risks technology. to the also advantages operate, prosper business accelerated. proven And And Our that to resources our with scope like rather trends relying the logistics a it On we're the and the of in the sharp took and challenging.

the reflects outlook, to well guidance improved environment in of expectations as fourth quarter, our our in as Turning operating XXXX. continue to the the effects covid will moderate our we that saw

of our Logistics planned from of impacts All exclude our spin-off projections our segment.

logistics to adjusted and in segments. XXXX of generate XX% As to in XX% with $X.X we each expect to $X.XXX EBITDA highlighted, billion our of of growth transportation Brad

for from Our LTL outlook year-over-year sales. six COVID the at related of cost months estate and least assumes real gains lower year ongoing the first

industrial are In solid, will to be opportunities recover to new will will that is will which business continue adjusted our seasonality. demand will as demand base and continue e-commerce the we consistent our scenario case continue full-year emerge. will percentage that adjusted the We is consumer to our That the of expect grow, low typical with that continue be optimistic in to prevail. quarter, our first XXs EBITDA EBITDA,

capital million flow free On estimates $XXX $XXX of expenditures $XXX opportunities vary both be the gross and in million although based cash in capex, roughly flow to these We're cash the business of full targeting year range. $XXX million our estimate will that on our logistics new front, could we net of segment.

$XX to in senior $X.X million be to we year million amortization December, been we'll be $XXX depreciation And we outstanding to converted our expense for $XXX common expect is in into nearly notes that will rate common year. having in of estimate $XXX our us. million nearly intangibles excluding shares interest which with our outstanding convertible have represents stock the to the all of XX XXXX in range, this effective to $XXX standard stock With diluted XX% slightly January, reduction. are billion of tax XXX repayment preferred which up forecasting million We year-over-year a this

As position strength. in believe representing $X.XX both over enthusiastic spin-off of with the of planned and again results of move business, adjusted a growth our each of things despite we're back about with In amortization as the in share, solid logistics all a back turn of in mentioned. strong now both Matt. result, own. our year-over-year at towards earnings remain midpoint. we revenues, XXXX of at intangibles to results I diluted last we're expectations the we XX% and projecting prospects These serve two our $X.XX to and our business a EBITDA adjusted into street the segments robust I'll our add sum, the leader delivered this our figures record per the proceeding quarter, markets pandemic. liquidity, We ahead growing we quarters that expense wind from We

Matt Fassler

David, operating results with in the fourth trends review North American showed the Thanks, quarter. throughout revenue I'll starting solid our segment. progression quarter a LTL, we transportation In

quarter X.X% to the the accelerated which an from was Tonnage positive six third percentage day in every points. was almost growth, of of per tonnage month Our quarter. improvement

We percentage were the together to fourth through excluding Weight The in accelerated saw That's which in points trend points X.X day, also our X.X% in rate per X.X day down shipments quarter third the revenue compares X.X% of verticals QX. verticals, per improved year-over-year, in twice per year-over-year. to also backdrop pickup remained of X.X%, the top rose than which Consumer Growth throughput. saw industrial. percentage Tonnage quarter. picked flattish growth comprise shipment better a QX. shipment, X.X% to pricing quarter per Yield, quarter, Underlying QX the Growth trends our up seven excluding from weight impact with quarter. in offset is to through year-over-year, in than per shipment, the excluding fuel, the LTL to our increase. we by improved and which for it remains reported which trends in rose of quarter yield tends which X.X%. increase more yield improved That third rational. fuel, the all numbers. than stronger fuel, revenue accelerated XX% consistent

economy and is for any will improvement in the You industrial recall our that in we're business. overweight LTL, good industrial

to XX% compared adjusted XX.X% Our ago. operating ratio of a year

basis improved operating gains, metric improved estate estate operating points XX.X%, related than impact real for XX%. six a adjusted covid increased Excluding to include was point fourth better quarter Both years. income, XXX our ago. Adjusted the OR which a XX year We've costs. basis ratios quarter this ex-real by consecutive from fourth

in improvements We in also ongoing productivity saw LTL.

we this see and labor technology as over the than efficiency, Our labor becomes Contributing XXXX. load utilized. year-over-year to our year. XX% quarter in upside by last delivery more big fully factor quarter facilities it increased and LTL we X.X% from in by of were the increased to Internal fourth X.X% first our from XPO were we Smart tools in adoption efficient our pickup management

to American XX.X%. truck XXX revenue a Net a tremendous increased revenue North We margin increase results. by Our generated delivered increased basis year-over-year in per rate and XX% net by XX%, outpacing in day points XXX% business XX%. load by increased year-on-year sharply Loads revenue the revenue. market. per Net brokerage increase

year. We of to by you the is As decision generated rose great people and growth half story a making volume strong the of truck at behind second in train the this drove several might the hire for we've of market. for bottom There a our growth the imagine, that brokerage. strategic quarters substantially. a the marked business continuation It earnings in past performance

were exceptionally the strong a capacity. rebounded As position help customers to we demand environment and became tight, our in procure

recent profits continue our touchless This by API capture quarter-over-quarter, a of loads seeing XPO real-time XX% margin. to in loads twice also teams tools. to We're led our [Phonetic] drive using digital us. we of number for to these in API the some relatively channel number about pricing pricing brokerage efficient is leverage improvements to brokerage issued way tandem negotiated quotes we our which tools. fourth quarter, year-over-year revenue shippers. Connect quotes through the Our It's head. maintain to platform an tools We're generate delivered with in the and per quarterly for increased nearly

to Even a We've trajectory. XX% as strong we count, adoption is platform last we're carrier than We of or months, up, XX,XXX climbing. brokerage on downloads for over of a stack these seen end the in growing taking another year-end. XXX,XXX and approximately the quarter XPO Europe, in increase again, Connect. on carrier cumulative in North the keep carriers XPO head the volume XX,XXX faster XXX,XXX of from in and app numbers Drive third the because XPO upward registered Connect at the our have And America total now so at

overall, increased EBITDA costs in increased two lower our at and and it revenue percentage X%. year-over-year real from by by Looking by by eight the impacted LTL our quarter EBITDA growth adjusted transportation impacted points. Covid estate gains percentage points XX% segment

XXXX, are robotic as we sites surging prior is returns existing to increased continues both for Turning in Logistics and the our the lot written been we year. Europe many we the be a about XX% commercial for about fourth growth and in omni-channel times first shipped automation it The segment, new driver our year-over-year. seeing and spurring logistics we its biggest to In e-commerce, Demand There's using contract units secular e-fulfillment America. North shift at hand. quarter to and revenue five in expertise online did and than management opportunities.

Logistics has excellent business European Our momentum.

e-commerce seek or these We see out a our rose lot revenue year-over-year logistics in automation and Europe, natural XX% the the FX. outsourced a capabilities excluding As impact business of our ahead place the customers XX% e-fulfillment quarter the customers in turn. scale new as for we're to largest European of fourth platform

generated year, X% of full goods XX% Logistics. accelerated. and in In consumer over North importantly it European revenue the For year-over-year grew the American Logistics, revenue our

a strongest also saw quarter. growth goods. the retail, increase While challenges some in our from consumer also big emanated we omnichannel in are packaged There

As compensation peak, wages in led sudden course seasonal X% alone. increase rose December seasonal over The in an labor. spiked. sharp and was This warehouse of over a with pop employment to month e-commerce extended for higher hourly and surged volumes December the month costs, particularly X%

covid launching projects, issues Seasonal temporary. to profit versus into We and ten These constraints our year about fourth these many delays XX launching completed added a the the technology are addition, for of new are the required shared network will start-ups recent of ran as well. lot We which created These a special equipment North asked new five This get In customer costs installations well in but the ago. projects. contracts and America. and significant as are some to years. covid. startups testing, our permit inspections quarter from revenue eight abating generate of running complex and next distribution cost over labor in

in growth XX% in beginning the are close that and Direct of driving to brands patterns had who focused year. the and for gains would January. quarter much remains on with their fulfillment its fully dock of XPO inventory retailers business. in for terrific is this most shift the X% warehouses, our global and quarter the benefits the it a for strong These logistics roughly double of business vertical strongly deliver Direct improving a XX% logistics least to first to they is logistics pretty own it innovation. shortened us in were with our was plan our X to continue of XX efficiency While XPO productivity in end Consumer the company consumers. times the change. of provide that's in e-commerce to pricing improvement. customers which And fastest and productivity labor off XPO to remain to services regain the Returning growing XPO growth guidance firms when consecutive of our year-over-year the XX% persisting improvement expect In consistent to year-on-year we helping and have to in and can profit received. to for We position mid-sized network productivity growth our business. full use across Direct automated lines their industrial line to us RFPs the emerging that XXXX contract over is on The resonating well. with QX with If been it's spending its profit Xth to were Smart boarding demand momentum. theme in this numerous drive in trust quarter we place Also overall vertical, LTL overall, business robots responses distribution will our to of at of the strong, LTL, course through economy share driving all start They and number critical improvements. all as are year, we algorithms reposition

pricing a is executed our January, color We revenue pricing the automated you and backdrop see tonnage little and can growth a up Both to accelerate. you picked annual segment. continued growth yield our transportation give constructive. further levels. is To LTL, ex-fuel GRI consistent successfully theme QX on from growth As in throughout

improvement ports with driver loosening volume shortage. remains a truck and for ongoing from strong very been some customers. has peak, full tightness major the capacity adjusted QX, in helps tight OR brokerage at the capacity largely in year-over-year with supply expect market. our We for procuring seasonal suggestion year. with improvement us driven a There the our is significant This of by some the growth which side, in In

close was we in positive. solidly segment a Logistics our I'll quarter. earnings with the accolades in the growth logistics outlook quarter consistent fourth of growth in levels. January Our again, organic QX revenue for few And with received in our is

collaborator and transportation customer Global of the in On for we the named front, Dallas we received the road LTL year. were trends Sustainability XXXX Award

Chain Chain Supply Supply a magazine. won Award also Demand from Green Executive and We

With Admired I'll named Fortune a your magazine straight for Company that, for to over by the Most year. we Xth questions. it Finally, the operator turn World's were

End of Q&A

conference. today's concludes This

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

XPO Logistics (XPO) 11 Feb 212020 Q4 Earnings call transcript