XPO - Earnings call transcript Q1 2021

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Operator

Welcome to the XPO Logistics First Quarter 2021 Earnings Conference Call and Webcast. My name is Melissa, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. is conference this note, being recorded. Please

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

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

there no business planned occur at be instance, results spin-off materially contained of factors as or of call made the or to law. update company's For except SEC filings. The that the extent actual is of in can and forward-looking today assurance any contemplated could discussion statements, its will by all. statements the cause no differ that release company's on only Logistics of A are made in obligation as to company required earnings the has the forward-looking to these this company's currently

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

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

Brad Jacobs

planned in XPO London, conference GXO. Officer; Greenwich our our Malcolm for CFO; Chief from the our today of Strategy spin CEO Europe Good are me current Wilson, Matt you, morning, our operator. future of Thank Thanks With Fassler, joining and everybody. David and CEO Wyshner, call.

XX% was for quarter, saw, our all-time just us tremendous which is On quarter year-over-year revenue to very an beat we a gave basis, a had first high, first to but a first and any you start $X.X a up billion, that quarter. expectations quarter strong not XXXX. As for

includes XX% growth the coming LTL where transportation a segment in our revenue truck hefty is revenue is Our our back XX%. brokerage growth strong. white-hot logistics, market was from And and environment the

also first and first quarter quarter record. for of wins. adjusted consecutive segment quarterly Company-wide Both a of generated a set for first had quarter, large logistics our EBITDA. to number Our both robust with leading third great we income net sales, our in new records the EBITDA segments contract

the increase in XX%, quarter we're with were Our excellence $XXX the margin improvement. innings we're big prior up million year-over-year of Technology points. of a drivers gains that here. reporting, first two adjusted the and EBITDA XX our X.X% of was confident year operational margin adjusted and been of was EBITDA the by basis we've Even from early

On of a year $X.XXX first customers, our beat we considering to the of to significantly full guidance our we're and from billion. our adjusted back EBITDA quarter XXXX billion hearing the $X.XXX raised range optimism

up was is North per yield LTL with year and Our quarter a on LTL was ago, trend. a fuel upward day in X.X%. X.X% in Tonnage America solid in up the business compared ex

it another Three than Our growth, growth a for of record quarter. reported driven is XXX more a story LTL months our ago. results to top fourth record XX.X%, ratio the we improved and a ex we've brokerage, with to which points quarter estate quarter ago, record truck adjusted higher first business, basis operating was In brokerage better and now real growth. year

up brokerage was XXX%. net up per year-over-year Our revenue brokerage Revenue in loads substantially up and better was were XX%. by than day the market, XX%, in

from our technology XPO in XX.X%. Connect, big brokerage we're getting The to up driver platform. performance points the brokerage behind Our our digital was net our basis is revenue productivity margin XXX and

count. Over just warehouse our to be billion with of This sales technology progress the the a our brands history procurement of next investment logistics and five revenue X% will largest on e-commerce, to is complete won report largest the increase spin-off recently outsourcing, of $X.X It's track for planned an and by followed our recent our head by at be GXO, longstanding to growth with win our excellent year, some half business. to logistics the in of XPO. in is from delighted one, on We're volume five both Malcolm remain and extension and demand the enabled us customer. grade more XX% through we contract automation. I'm the for the the second in goal logistics to overall GXO logistics, spin over big that tailwinds including We of talk the in In a expansion customer other last that have company our also day our handle major business. $X years. American in also projected the North of driven XXXX. billion three years, will being about an minute, three using total wins over a services continuing make includes

year in Malcolm our to company developments and Malcolm? that, some strategy With business. to and logistics leverage. consistent Our our ask share from I'll recent heard themes shareholders the simplify address over last reduce we've — spin the the

Malcolm Wilson

trend [corrected to Demand The of to of by and e-commerce, sustained has pandemic. e-commerce a them blue-chip wins through positioning number and of more significant and success are consumer trends completely Brad. down space. our to each can aware had to double-digit for our after of the Right in be we the We're where This company's We our revenue have and outcomes. utilizing handling combination before, investments in flexibility a the gives and been the more tailwinds become these secular companies complex, industry visibility mega of as [customers day our a supply at in it of consistent automation solutions deliver to logistics you, quality chain end e-commerce] logistics their awarding than mission to secular robotic delivering services we evident three process our] warehouse is deeply this vulnerability are automation within are the strong our attached company company. and Large the for supply in technology. and years, critical after of as operator the and employment, collaborate We and less. is customers order becoming meet some call] and as outsourcing, or with used lower [More very one five-day machines greater business] are expectations. importance who Thank we company ways both This increasingly growing more intelligent In the a us now accelerated customers redesign for of continuity being them. but result a a This big their markets this. robotics crucial to important relate and EBITDA consumer our environment. growth are in Advanced What Outsourcing logistics. driving cost-effective chains strong to help due compressed, automation all behavior. in-house. company number us control, improvements advanced [corrected quarter, logistics customers times In we're notably the is with the fast, chains, see critical. is provide now, and speed, large-scale logistics innovator. smarter strategically potential the call] ever our by [corrected of after first call]. most them safety, processes fulfillment of supply buying consistency give are positioning value accuracy, strategically shift rise cost and technology [direct-to-consumer seeing in in a by integrated to

mentioned, the largest history. is in one of Brad As our these contract company's wins

just Two a accelerate is new ASOS X development for contract [corrected signed other customer Apple also We Apple, is massive over ASOS An [to of in open we've center the global company We'll XXXX. exciting fashion square been a distribution we feet wins retailer since be It serving in advanced customer to contracts. a to Waitrose. state-of-the-art before won with several fulfillment. after large customer will consumers. million is with by us. e-commerce products for examples large major for are direct-to-consumer who Indiana distribution very space the deliveries] personalize ship online other them and call] uses that and robots Europe automation we of

new a ability logistics longer-term for in and business they're there's value of first-time Our UK's and expanded our renewed the contracts open the overall, month. contracts as into second good recent the with with we're agreement contract reliability to of of to These we're North that temperature [corrected $X All distribution in executing They're innovation. give profitable seeking Of food last Waitrose our ASOS an that like agreements new of large] a planned this is our year, a by how customers signings life. and contracts agreements our ambient us our growth has prominent GXO. all, These combined pair great as a Waitrose a be deliver run our demonstrate between customers further with with center midst is examples next potential first great off established America. implemented the expertise hub visibility we'll company balance food retailer margin distribution. tremendous Europe is landscape trust which to call] position seeing entrusting of also and them values than our [operation future in and e-fulfillment in spun revenue on performance our UK center. and year a Logistics more year-to-date us Apple. customers customer in cement control leader. over COVID blue-chip We after value relationship and billion contract in the business, the incremental distribution specialized

work All spin and the schedule. required to in shape streams of running the good are for

will over month about building C-suite appointments been the the I'd to be we've Baris hires. is like with strategically hands-on who mention Baris Officer. and who internal creation. value Chief also GXO strong a thinks external Importantly, Financial Oran, CFO GXO's last

America] great to GXO During bringing the Citigroup companies. [corrected an of in growth. multinational to CFO together transport who has be at I'm Europe also he with company, the one that a of will more pleased number we're his company be Chief eight in a record publicly been of Bank Investment Sabanci led There call]. analyst for preparation be row come. will ranked tenure world-class operation one Mark track by pleased that announcements largest and [and team in Group, I'm a as Manduca traded Turkey's to the lead of in years after progress high-growth impressive the making Officer. will welcome finance Mark our

over quarter. will Now, the go David

David Wyshner

updated our outlook adjusted good results, increase and is million. EBITDA XXXX. revenue the first our like Malcolm, than Adjusted higher of generated $XXX everyone. year-over-year sheet up I'd billion In The liquidity, morning, quarter. figures the beginning both than Thanks, of more and number for more EBITDA a quarter are we $X.X Today, first reflects of expected XX%, of our and balance and quarter, the at discuss we and to XX%. revenue than

Our record powerful across business QX recovery. momentum ongoing strong our a economic execution and commercial reflects adjusted in EBITDA units

quarter. As revenue XX% year-over-year first Brad mentioned, grew in the

contributed logistics Our revenue acquisition growth points U.K. contributed foreign points. and X three exchange of

As a the quarter XX%. growth organic result, in our revenue was

favorable this EBITDA into year even quarter impact year EBITDA was translated largely year, growth. COVID year. transportation reflects EBITDA our margin quarter EBITDA our over growth operational EBITDA Both market last EBITDA up in so our limited of by and growth first execution growth revenue increased made and points had increased segments basis XX% stronger XX We on our XX%, adjusted Our year-over-year adjusted and adjusted contribution dynamics. first our Logistics adjusted to XX%. strong strong a the of

modest will business was industrial our to quarter inherent our actions we impact see review February, detail We continue cost a Matt and segment last leverage few more as a demand in rebound revenue benefited also us the and reduction from the affected robust but the And minutes. we activity. took operating minimal. consumer increased, in in in Weather year. negative in the

million which were We $XXX per CapEx, share from $X.XX last on asset in from were received in gross they earnings of what adjusted quarter, first year. is the the operations more and Our of cash than quarter, $XXX double diluted $XX proceeds spent flow sales. million million generated

of flow exceeded million to despite generated working flow cash we gave free in use quarter. of priority Maintaining in liquidity a result, cash organization. period. QX stronger-than-expected the for $XX that strong receivables free our the revenue rise for expectation a continues be us to an capital as a top As

under capacity notes debt $XXX This cash was million. at reduced January. available borrowing nearly committed $X at with XX our senior quarter combined We both of Our our This end. X.X% March billion. due by XXXX cash cash, redeemed billion facilities, balance debt balance and in us $X.X gives liquidity our

the we have maturities refinanced also by until had borrowings billion our rate in outstanding loan facility at term no $X ABL We end, and our X.XXX%. average under We no March, XXXX. lowering September significant debt quarter interest

at adjusted adjusted times net was midpoint Our leverage EBITDA. XXXX X.X the XX LTM March projected EBITDA our X.X and times of

in in XXXX our cash delever free helping growth Our flow XXXX and swiftly. EBITDA us fairly are

steady commitment and ratings. GXO progress to context on this toward the metric Our important our in investment-grade move XPO is both of

group highlighted of on Over with the These from several discussions, contractual weeks last the model with and GXO. customers. credit relationships those attributes GXO's rating a spoken about commitments long-term In are we've attractive blue-chip based we've is perspective. diversified agencies how a business

to for investment grade is be from day one. plan GXO Our

to much carry, deployed. debt RemainCo how XPO paid We and precisely will about GXO expect the soon over how will details proceeds have to more be

business outlook. continue to to XXXX. guidance the on our of updated results quarter as our our to COVID will effects Turning reflect We've in expectation moderate strong that full-year our as well our first

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

Brad of XX% to we segment $X.XXX expect transportation. now XX% billion our generate XX% billion in and highlighted, to in logistics growth EBITDA with $X.XXX year, this As XX% to to of adjusted

QX assumes from COVID-related lower costs outlook intentionally amount Our QX modest of real gains ongoing and estate sales. a in LTL year-over-year and

demand continue will recover, to continue will that expect continue to new solid, industrial continue to will to We grow, will opportunities demand and emerge. business be e-commerce consumer

what percentage seasonality mid-XXs of In the that the EBITDA, typical we've expect In so us. full-year fact, quarter, precisely which second as for EBITDA our adjusted seen this is be that far year. is we adjusted our in a will

strong of sales and continued million our estate margin from $X LTL last versus quarter. million gains expect business $XX year's second LTL in in We performance real about

be pandemic Our year-over-year in XXXX. due strong the growth metrics significant extremely to the of second experienced will we quarter in QX impacts

to On $XXX our of a segment. business expenditures on million, our opportunities and to We million also to logistics These loan a acquisition-related million interest excluding in of the targeting cash estimates refinancing We've to D&A, rate expect full-year currently intangibles are expense of our in by estimate the CapEx $XXX Due now forecasting million. estimate could million we be vary cash our estimates million. the now continue flow upped to amortization we're net represents in effective capital $XXX of flow and $XXX which we've tax XX% term in that our million CapEx. new to front, XX% be March, year-over-year roughly reduction. free opportunistic $XXX will full-year $XXX $XX million to And upped million of $XX of range based gross to $XXX $XXX XXXX, million range.

diluted to diluted been million the shares QX, year, roughly $X.XX earnings generated all As sum, year-over-year growth and $X.XX adjusted per grew of straight and midpoint, bottom-line this this XXX%. In our top-line is In with EPS we and on a three we've projecting of business now At share. growth our XXX We we're firing process, now result, adjusted common outstanding margins EBITDA. growth. for quarterly cylinders. stronger records stellar even in delivered has the

strategically the the turn over of decisively about leader wind business toward are I'll customers' with opportunities they our the to We we growth reflect our back. brokerage. strong planned our LTL, we're spin-off Our only not logistics, throughout a operations, capture prospects businesses profitable well remain underscore how also and our serve, and needs Matt. things enthusiastic markets meet to as and execution our now results positioned in in at logistics proceeding

Matthew Fassler

with operating disciplines. North in economy, the LTL, segment. improving transportation ongoing recovery in and I'll Thanks, driven We backdrop, American a strong had starting David. first review quarter and operating results very the pricing our healthy progress pricing a quarter the our our U.S. by

X.X% These and to growth growth since strongest our year-on-year ex by acquired LTL business revenue grew we the LTL in in fuel Our accelerated rates were XXXX. revenue X.X%.

over in Retail a which remained the our largest of comprise We trends quarter. consumer percentage per Tonnage six industrial, quarter. industrial late from percentage continued by quarter improved stronger together volume. outperformed year-over-year, from X.X% points. fourth day accelerating XX% improve, day of grew verticals rose verticals, points fourth X.X was the Tonnage tonnage per count Shipments seasonality. but notably most shipment which in of and five X.X%, pickup by also our and than X.X to typical the both in

shipment QX Our typical X.X% year, sharp weight in X.X%, points increase excluding which fourth by quarter. X.X%, points Growth fourth from from rose the a the Yield fuel year points. posted percentage X.X% day per QX, excluding growth in we improving XX QX. up from fuel quarter. acceleration in had day XX from Revenue the fuel revenue the per was grew we outperforming of the per ticked decline basis down excluding to X.X% X.X over basis accelerated

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

gains, real was than which points our quarter year improved a to estate better first Excluding XXX XX.X%, adjusted basis ago. the OR

Our estate also year-over-year. adjusted adjusted real points. OR by And ex estate income by sequentially basis operating ex XX% XX real increased improved gains

seeing in we're ongoing improvements Importantly, LTL. productivity in

and and our adjusted increased tools. by empty LTL management reduced track aided of both EBITDA XPO growth miles and we ratio. least last year-over-year, Smart we next by to firmly delivery in labor year at load deliver more in were continued QX revenue than operating in we driven on X.X% We're And $X Our billion X%. improvement in by X.X% factor were our by year pickup efficient

to Turning truck brokerage.

a market, On outpacing sharply by day revenue by earnings basis net Truckload and with rate XX%, QX and well XXX of costs year-over-year revenue. net capacity points margin outpaced delivered load-to-truck truck with more than revenue Our We increase an increase another increase Loads again substantially an once ratio. we to growth tight an revenue in nearly XX.X%. XX% brokerage the basis, in increased increased net brokerage XXX%. in in per quarter. quite and North generated doubled truck a spectacular American business controlled high was

were Our carrier last quarter customers. for capacity find minute made allowed when we network to third take technology our brokerage, headcount competitors step I at plan a was, seemed in environment our the a to and to to given working time and gate a in a to together we had off. but as year's in may time, want have recovery, first back. invest This at the of when be back pulling for the us paying decision it the counterintuitive now out it's team the

technology cumulative first customer of XPO we We're year-over-year, downloads volumes quarter also XXX,XXX number ramping are tripling in first Carrier and quarter, the Connect. past, XX% over and hires productivity QX, the as XXXX our faster to brokerage new the customer accounts and clip. downloads representing on API number of heard the registered Our from earlier, significantly by productivity XX,XXX the than In on We adoption quarter-over-quarter profitable platform Connect of time, approached topped XPO to in mobile app accounts a year increased XX% the up nearly fourth you XX%. XPO Connect, continues by from growth aided quarter grew has platform's sequentially year. securing of surge. carrier of dramatically. the at And through over Brad and the

XX% increased transportation by EBITDA and ear-over-year, first our revenue quarter adjusted we at XX%. segment Looking by overall, increased

Transportation full-year in EBITDA of margin growth our which segment, prior with We in XX% compared ago. XX%. outlook to XX% to the year XX.X% in XX% adjusted was above project the segment a EBITDA adjusted is Our XX.X%

our from quarter accelerated strong segment. year-over-year. favorable We growth quarter. was from only well, peak the logistics as U.K. conversion. in year. North XX% FX The fourth revenue — our velocity and for year-over-year — generated revenue e-commerce, which it reflected our growth, it revenue but extended omnichannel running the enormous the organic and American our The Europe, a last and in not peak, tight, continue an our increased businesses. X% reverse new by to consumer an revenue over X% XX% first business acquisition In in us. for to were XX% verticals. of growth Organic remainder growth is revenue We In to Labor in our underpinned warehouse logistics, was consumer-facing technology retail, our by increase revenue. peak at logistics, Turning still high the we're we in customers customers well. saw These operations our grew XX% exceptionally tech opportunities managing early CPG, sectors logistics holiday represent

was our to and see improvement our X% suite out of technology American to in and of rolled intelligent most management Smart, analytics continue proprietary warehouses labor North XPO productivity adjusted X% tools. with This We is higher Globally EBITDA of half to than XX% more increased our our year, QX and in European adjusted basis the logistics, in XX margin sites. last points EBITDA X.X%. than our in quarter

As annual expect mentioned, adjusted this we segment. David EBITDA growth in

tailwind global We're America. shared our continuing demand in e-commerce bring The rise. volumes U.S. acquired in in it we XX% to backdrop logistics, expect restrictions capacity Direct, lot are activity prior new remains our normal gave momentum ramping In the continued the more Ireland the in achieved We're grow for to The well, remains operations in prospects and helpful, you our growth seasonality. through lifted. XX%, yield, contracts fantastic. tight, are the wins of with Logistics. quarter a and the still our XPO and to and space outperforming up distribution showing above which the volume industrial forecast in to In as of is we how a is as The that our We're pricing from the creating from first up We network seeing to is typical resumption April. rebound is business, it's brokerage, LTL helping operations pleased more new environment on which sense online is U.K. recovery. Malcolm are of just also Italy. the runway business in the XX% exciting North are COVID strong XX%.

sustainability, delivering social it make collaborating environmental melds of it's We ESG and our While we've helps and When to our of our ESG scorecard goals, we and sustainable XPO further a communities initiatives on share it equity, these senior diversity, we're commitment also is employees our that focused strong the our place tracking progress. for pursuit of good prioritize values. our operational XX% use results a incentive and with on delivered to customers we're great governance, own customers long expertise with term, and culture for our our we're documents Within happy the these new company, at with to with we're long-term because because work. resonates for are increasingly a quarter, tied comp responsibility, who scorecard. strategies. ESG inclusion. like-minded parts largely and execs good This about this The metrics our to XX

We have our chains. a number of initiatives underway customers to greener help supply achieve

& straight Intel year. empty markets and their received we're in where management, reducing Achievement we us and the had Chowdhury, our Caldwell leader COVID-XX warehouses, we've of with Spain Best Wilkerson, recognized to close have in XPO with businesses. the few European LED — rollout France, their focused third recycling. accolades recently massive Erik response. natural in quarter. were We our recognized of Company in — the vehicles Ashfaque and on Award a in our Work Spain. trucks the invested by Chain our in constantly And of We've Executive executives fuel named Demand three Forbes on key instance, across and lighting Drew For the for miles the industry. were magazine for fleet a packaging, over for in We're alternative waste U.K., in a Supplier Supply accomplishments gas-powered transportation XXX we For I'll improving sustainability our a also

business, So, on questions. outstanding With that, we'll logistics transportation operator, the business, much with your take more for progress our quarter And altogether spin to to come. you. over and our an our

Operator

line with question. Please comes of UBS. the you. Our Thank Wadewitz proceed question first your from Instructions] with Tom [Operator

Thomas Wadewitz

guess Yeah, strong and how the about good of of bit year. think ask the Wanted morning and on you I results. to components. pricing congratulations this contour about a kind that you two

second LTL X% be you a pricing. be it to? when nice in saw X%, So much? And first Obviously, for go -- me half it's just in on one can of would where or and that we get well, that too then about question guess second quarter. X% How first is leave the on back the think If would actually, quarter, one. I'll the year, I to you do second can acceleration asking let then come that

Matthew Fassler

LTL pricing the environment strong. is Tom,

our our that the acceleration tight. fourth You commented There's the of versus in we is on lots quarter in the noted for market yield Obviously, first the quarter. demand capacity.

on right month continue increases in quarter-over-quarter renewals contract the price and to direction move Our quarter. both and over month into second the

year the helpful a outlook the of one. which is for yield harbinger good rest very of that's a the So

Thomas Wadewitz

question second would the be logistics. then So on

contracts a that logistic Would logistics on very it's in more in expect and are now, performance very in I pricing impact is you're in markets kind Thank of a of those terms pricing tightness I Are of that margin tight, could you supply-demand logistics? just transport favorable or think transport that's stronger any there's disconnected and tightness pricing? or benefiting dynamic, there's you you. evident pricing. the stronger affect signing Is and some whether in quite how seeing it's pricing? there market. different very know

Matt Fassler

the of and Tom, variety its pricing in able results it's one in is we're to of of That's generate the about in evident kind a business things consistency. financial that evident love the logistics we backdrops.

but seeing the you that shouldn't So, on business, in expect and to we're well. constructive to there it strong logistics a well that movement very results generally business extent demand of backdrop for logistics is able based any the the manage as movements for see good markets today. backdrop transportation transportation, indicators there to that's are in price a Obviously, in our as that impact you're

Thomas Wadewitz

great. Okay, you. Thank

Brad Jacobs

you. Thank

Operator

Thank you.

comes next question. with Please Jefferies. your with of line question Our Hamzah the Mazari from proceed

Hamzah Mazari

GXO is on My the morning. good Logistics Hey, side. question

remind us just getting there what timeframe? are You've in get Could to there to you talked double-digit your level confidence the the about big levers EBITDA and margins.

Matt Fassler

Sure.

labor all, of First productivity.

to maturing Smart as we about the That It is annum per our Europe. still have workforce innings in management We most as X% you drives productivity at U.S. middle rollout roll platform. really it X% think the in is out. labor and

So, progress That robotics, you us rollout huge at about to and tremendous our drive organic revenue well. seek e-commerce, There's, drive area of which Obviously, of value in of to sites, business us sites growth will proposition for there's There's of labor us lucrative automation There's leverage now. of is course, our to headway acceleration existing lots part incremental fastest-growing business help make operating our and as when opportunities with right our of exposure a productivity. we particularly terms opportunities. helps operating think new the the out the customers. leverage.

season XPO to and to to continues Finally, outlook. Direct continues profit contribute our

drivers those logistics think to I really, for forward. leverage operating So, going going are the be and five our key

Hamzah Mazari

I reoccurring base it. sense you in go give on Got they the And retention the customer, how of a customer to a Do but that take the think follow-up question. logistics. base just Could remind it about my know I'll logistics revenue Again, over. you Just segment? competitor? turn revenue just high, in us is business. lose when do reoccurring that they a you do us in-house?

Matt Fassler

very then come business. part some move renewal typically and franchise. logistics and our instances the and with the where we logistics largest ways renewals renewal to for many contract We've expect many, are remain our on. The customers years. are of we an had general with cadence There us generally, Many strong. and have powerful and them, retention that been rates But arrangement in are in to multiple retention dynamics very we of the

Hamzah Mazari

Great. so Thank much. you

Operator

Thank you.

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

Brandon Oglenski

everyone, taking morning, Good Hey. for questions. and thanks my

So this little I now. coming talked past along bit we've know past about a but calls, the like in split's much closer sounds the on

investment-grade I priorities might sheets each getting from So in can we the too. just revisit you balance guys, some It business future the information like more think well. as post-split? be we're for sounds

resumption priorities M&A? to maybe talk you from as maybe can a capital well So side the as of the

Matt Fassler

morning. Good Brandon. Sure,

looking the from business. always from for best we're terms the the in that ROI So, capital cash of we allocation, generate

which for CapEx. Those your debt current become point, our and at lots in then spin in earlier investing effectuating priorities capital. then to is value, obviously parallel to create that investment-grade, to down is all paying going of are times the Our is focus, to

Brandon Oglenski

Okay. bigger a of story once then does M&A piece separate? And the become

Matt Fassler

buybacks, stock as those is market. really and M&A aware about fact, Accretive disciplined, very always each highly and in option. of the any what's of We'll after the opportunities. those happening moves obviously, we announce We're an we're think always

Brandon Oglenski

a margin in on then Logistics. And Okay. quick the follow-up question

on portfolio U.K. large be dilutive brought We to thought like it guys pretty guys there. it quarter. a performance think was you good this potentially of margins, have I pretty contracts you looks going but to

speak you has to how business can that So integrated? been

Malcolm Wilson

here. Please Yeah. that. an on give It's allow update to Malcolm me just

So, new been coming brand a in has fact, business in combination new customers. of

quarter, brought some the So, we've type whale had acquisition size big K&N of new also with come blue-chip established and acquisition, some that's and in, business, the really real of with contracts customers. new in in, the exciting we've and tactical customers, the customers brand coming customers

Just new verticals. came to with remind, that

must we've we've services, and e-comm, coming There lot the synergies customers. a in We've that from of lastly, pent-up food really, tech, in sales through we've beverages, very very strong synergies a from into agreements. flow new us. seen coming and the of some reviewed seen seen and coming opportunities have project. a renewed existing been verticals large So, those of also because And demand

background giving that's really have think describing. margin all those you're been So and that I accretive, the

Brandon Oglenski

the Appreciate feedback, Malcolm.

Brad Jacobs

Thank you.

Operator

you. Thank

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

Amit Mehrotra

to comment around will I Thanks. work. leverage everybody. this just how GXO back and go the the to Morning, wanted

GXO? is have expect draws dilution. SpinCo way are past debt the debt, RemainCo of Is the and the do that in to dilution at new pathway proceeds the from largely dividended think forma these for then like things RemainCo, the proceeds right down uses pro worked the the be offset to to that I back you which spin offset

David Wyshner

The grade thinking be the it. will way think it on about David. about GXO to It's right one. you're is We're day investment morning. confident Good that way

plan RemainCo would debt a and announced want we're RemainCo, drive capitalization stay But say, rating to we will still issue that of haven't with and to remainder we precise talking to investment you for debt grade dividended And extent the agencies. XPO We standpoint, the yet, pay as to the that being cash up debt. down to or some XPO a from the be to soon. GXO, process RemainCo of most

to that will reduce us allow so And the leverage.

In year. the is amount addition of investment GXO of us you EBITDA exciting one rapidly a for balance combined if is investment to that that And on well net of leverage to to needs look day guidance debt. for our X.X XPO for being between two that really allocated companies we company, lot means that, be move is that debt cash what's really pay at be down grade to manageable RemainCo And to that QX generate prioritizing at and sheet cash times and we're positions current this and the the to allocation for to the me aggregate grade. the

Amit Mehrotra

it. Got

really from a not of because GXO it's to GXO. my okay. the the XPO if wrong me of if and So but Correct I'm follow-up of intensity stream offsetting debt the on really load on move an to it's transfer asset-light I'll of recurring dilution that but revenue

business operating will second from in So tick quarter the I LTL. coming up growth the think leverage given the Matt, more just in

is the GXO, of I as guess asset-light kind this think at of D&A look consolidated important ROIC to to assume most asset-light the kind look I depreciation base. I But asset way look the is of a business. Logistics dynamic. But nature, I of and given I intangibles that think is just business, as relates it Logistics, is the best amortization I to if that's this at business. that at of opposed if an

on there the to terms — you what Malcolm perspective? humongous us they’re you in are they're And any what talk nature I of but somebody of help there an a ROIC so is on of on? these at could way from terms coming guess or at are that these the underwriting contracts — new the in or project any business, of contracts new it because look contract basis what bringing about ROIC is underwritten being

Matthew Fassler

Sure.

the pre-tax business project disciplined capital solve and ROIC. business of of about our at contract. We We You're and take look We have for the contract and the We over at the the That's XX% profile right. first in record no critical approaching track get Obviously, a and of on renewals. absolutely contract, level more logistics. IRR. renewals, after-tax financial the at strong bring new at we look we're at a We on generating the the and we extremely that kind look to level. project return XX% paid in least we very project assuming the of in. every first for back life success of

Amit Mehrotra

on the and fully saying allocated XX%? ROIC of unallocated Logistics basis, So, you're an XX% XX% on XX% a is basis it's to to what

Matthew Fassler

We'll the on. share a all obviously numbers the overhead that's layer or as as but project level, there's XX associated any cetera, at you Then Form more bringing project. new think see. those et We customer comes some the we obviously about on with incremental out, tend G&A, of you you a what consider overhead, that to

Amit Mehrotra

you Thank it. very guys. much, Appreciate Okay.

Brad Jacobs

you. Thank

Operator

you. Thank

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

Chris Wetherbee

touch Wanted bit little on seasonality. maybe to about Hey, EBITDA morning. the thanks. a Good guidance and

XQ move in seasonal a a is perspective. outperformance Obviously, from the kind I into back think expected the is mid-XXs range, of typical quarter. think to first which I strong

from lasts guess year? maybe parts make comps in the moving of I challenging, some sort of something wanted the helpful EBITDA just are going sure fairly cost, around in kind little seasonality of the I business. color of profits I a leads understood that's normal, the maybe that of growth, obviously that you standpoint outperformance some of revenue from the just significant terms an for to do to the So more seasonality think bit XQ the and rest of So

Matt Fassler

of seasonality expected really, quarter framed about David in good the for environment. and year a the quarter. guidance EBITDA a and Chris, in each have mid-XXs as We're terrific we We well. the as had we talked very a a obviously did, share Logistics. Transportation a we both going in second quarter, trends performance really the overall of very the very he good and strong Europe about year. strong businesses, talked a company you. the good We Obviously second first the to for for see for very

Chris Wetherbee

the to maybe otherwise seasonality? of XQ from So the materially dynamic environment XQ nothing specific business about that's or changes changing of that sort

David Wyshner

delivered quarter, of year, in last expecting the for as we and changes. pandemic year-over-year the at but year right the XX% the particular year strange what year whole. we’ve first look of EBITDA when that's growth are overall, at we're the No a because Obviously, midpoint comps the this

between the will think the second first So, year-over-year on will consistency quarter our a second pandemic year and half. expecting I for there's quarter in be comps we're the tougher a the and there in year basis. results full effects of last be what easier The because

Chris Wetherbee

Okay.

some of the talked And and I think helpful. the That's maybe stands it to now could right you then agencies I Okay. you it. you've if recently. rating the guidance guys mentioned -- share as leverage help appreciate numbers EBITDA on

of in color sort look helpful gotten investment what for I Any do companies interesting. or of how like that guidance grade for would maybe we GXO terms think you've about both does and So guess? leverage be that

David Wyshner

spin. more be still that grade really the at to one following the have amount to to leverage confident the We're that funds that around that, and day some grade, can us working that GXO us expect those the What details -- I would dividend details can allow that and to through XPO support across is flexibility investment of reduce soon. net give emphasize we on and would investment debt be and XPO remaining we're of issue to GXO still

Chris Wetherbee

Okay. Great. Thanks for time. it. the Appreciate

Brad Jacobs

Thank you.

Operator

Thank you.

KeyBanc Todd Markets. Please comes with question line question. Fowler Capital the from next of with your proceed Our

Todd Fowler

remainder on rate the the for what is a to pipeline beyond comps Logistics right then revenue translate we 'XX? into rest top to are sounds the of start healthy, growth benefit The year. very pipeline obviously morning. understand from Nagel of good thoughts normalized line very you Also that Logistics with for and in at? kind 'XX we the on maybe the out business. growth Thanks strong thinking where Basically, about and there's some look Great. of Logistics when revenue expect + But how pipeline the the you'd some acquired Kuehne does as now

Matthew Fassler

Sure.

which quarter, So, today, comes it of second That new online year, business cetera. to to going this flow later we've business previous there's signed in signed in, that the the some is we third obviously, today, that discussed XXXX. in spoke revenue comes and prior, said, online more which it et and we about to of underwrote quarter,

of our So, way meeting flow from revenue operations. into business there's a the very into logistics its -- nice, new consistent

logistics the about that's a it's long-term think contract at single-digit of long-term the spoken algorithm algorithm certainly think to logistics. time. revenue, about is high over growth that rate we've pretty I revenue cadence least of the terms a good way for In And

Todd Fowler

is the right growth then follow-up. you you've add as into that mean some more Okay. is reverts some the headcount made or of having market. do you've strong that Thanks. that back we see on just now. how a business? market stickiness seen think to in the growth volume and some in about you're point the an once And there that start carrier, exceptionally top Matt. How to think I the or line the we success become on decisions to handling future side strong that recently? of brokerage some that asset-based that contracted if Great, of transactional a about of advantage the The Obviously, some volume volume, at the you're balanced should brokerage more

Matthew Fassler

have terrific a terrific we've we during And base, market. terrific people, and very this for have those customers have We delivered customer we technology. tight

We market good the through any strong to exceptionally the resonate of brokerage. the feel and cycle We the durability truck across brokerage of strength expect sustainability franchise in really franchise about and of cycles. continue results the relative the vagaries to the to of the

Todd Fowler

the time. for Thanks

Brad Jacobs

you. Thank

Operator

you. Thank

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

Scott Schneeberger

Thanks doesn't that, in very get it's a elaborate could if on Would I But looked last It in much. small. quarter. lot anymore. of strong both really about I'm and Thanks. Europe. a mile. love going to airtime ask like know America you North

Matthew Fassler

a was It for last was. terrific It mile. quarter

goods Demand still moment. strong. very, for Focusing North America heavy on for a is very

their was growth outsourced and the we're there XX% drive U.S. year, XX centers for to our mile We're around facilities leading last last the volume importantly, revenue population network over of proximity we're through continuing and those Our Recall of to leveraging that provider year logistics many hubs. in mile than were for development, retailers Europe the the in in heavy of e-tailers. outstanding, earlier In goods Europe is the last but largest we of the results its and and have mile business in leading provider stage at an stronger U.S. general this growth

Scott. both quarter strong mile very for in last regions, So

Scott Schneeberger

Great. on progressing are and long-term logistics, on a objectives first Direct And congratulations Thanks affected How towards how contract XPO really is there? I'm then that. Direct your XPO in with wins. curious you on -- strong quarter these

Matthew Fassler

real and are to It's element growth offering connectivity in with contract that market, a of nicely. American very it's have build consumer a the their is distribution seeking for It story logistics. outgrew doing critical nice to who obviously and a in the differentiated capacity business don't well. North own e-commerce we their have Direct really players XPO emerging direct consumers. players, It's service the

Scott Schneeberger

Thanks much. very

Brad Jacobs

Thank you.

Operator

you. Thank

from question your next Please comes of Our Allison the Fargo. Wells with proceed line question. Poliniak with

Michael DiMattia

of Michael Allison. behalf Hi, quarter Strong LTL. good on morning. is in DiMattia This

look And be business also this spin. XX Just business? XX gets what realistic had business OR a be five the it for the next RemainCo the years, a can as question over to Can with OR for sustainably on it at to strategic three more a attention? we priorities post as

Matthew Fassler

that's for LTL for to to more drive it you. our simplify and number is one priority obviously strategic priority, The EBITDA,

have to pricing of as manifest We data data remarks, and the the better And use and $X Each as we [EBITDA] a in has If forward. billion of my get itself lots combination pricing at elasticity, a after quarter. adjusted company result of to going [corrected obviously these we're profitability an on better goal our least of you OR, and technology going said and I initial to earlier for first us revenue of the initiatives think the more doing point. XXXX call], effectively. own from good the by work that's operating on I impacting Smart. our we optimization is on efforts XPO say Obviously, and the OR drive LTL our in LTL, then very impact in but potential route help I'd underway. that get that our labor P&D, market, was is optimizing you of and some of limit, a of runway higher number sky high going my Remember saw our and the optimization both linehaul working We're through leverage. technology have

improve our here in We of have from ratio lots to LTL. further operating opportunity

Michael DiMattia

That sounds great. Thank you.

Operator

you. Thank

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

Jason Seidl

That seems Gentlemen, coming and operator. than a one the you, to manufacturing How weighted economy. half That's early Thank bit industrial good slower then consumer. about Two questions as be the more little back, the side 'XX? move of we back quick the should LTL on tonnage front. but it's towards into of think morning. the the year still we growth

Matthew Fassler

to the about the March our growth was Obviously, amazing. fresh Jason, weight weight tonnage look better. just we -- slightly But The April, per story a numbers. April compare. day finished obviously had to quarter day the good relative Think March in compared at look the here, second typical so to per seasonality is going

LTL also in not business. intrinsic, just it's acceleration comps. So, that There's easier underlying

well. tonnage growth tonnage have strong very we very healthy very, of but outlook in in for we the second and the comparisons the year a think normalize Obviously, have tonnage. quarter bit, we'll half good the So, as a growth second

Jason Seidl

to more I should side facilities on type that these doesn't to more sort modern good that color. like want they a the more of that logistics a legacy That's robotics. we open facility about think technology? and more returns of profile that facility also margin as Okay. and a compared of how switch new more use up feature sort onto and XPO How's of

Matthew Fassler

different. is project Every

those the an we automation robotic still project of the capital answer And said whatever whatever earlier contract, financial project. we considering the question, in considerations. the same component, to evaluating the the for is, have I we the and framework all As the deploy, of underwrite every duration that

lots looking of contract it's amount opportunities if one outsourcing underwrite customer that a things and for ensure It's promising we have us project customers we of very our with and to proposal in logistics. to so one So our financially deliver introduce to we It drivers just well the and every for. big compelling work robotics. technology. of of It's e-commerce regardless advanced happens, the it on that are for potential us automation of for promising the in ties obviously omnichannel and will and our and of that retail. automation It shareholders, to very

financials delivering all the lead the we both So really shareholders. the converging. financial automation automation of more in associated that And marketplace, keep helps over for our themes cost and differentiate obviously, those and becomes more effective as considering in And the have implementing And we're underwrite time. proposition. us we are delivering customers this rest in for mind, in from

Jason Seidl

more technology So guess a to put going the covering marketplace way in your about I as returns that help forward. you're contract-by-contract is sure investments, more best win to the you and to it the on done but go contracts good basis is think much the that we pretty employing are you're you in make and awards

Brad Jacobs

nailed You it.

Jason Seidl

Thanks, All Appreciate guys. it. right, perfect.

Brad Jacobs

you. Thank

Operator

questions. time for I'll to Thank our for you. Ladies any final comments. and floor turn back the gentlemen, Mr. that Jacobs allowed concludes

Brad Jacobs

Thank operator. you,

XXX truck above logistics, And the let We net millions a by Europe, worth QX and the the with contracts by end dollars high the on of we both significantly than signed conclude prior outsourcing, and whales, e-commerce. revenue for operating ratio the strength we basis in seeing customers, year. based full me warehouse we're we benefiting United grew premier loads and growth end. we that; hundreds in automation, one from drivers, LTL, beat in we're bunch raised of in XX% of of in raised So by logistics, the improved life worth low guidance brokerage, and each contract, points; highlighting: powerful new by over here XXX%; States significantly the the April, the in in massive more three and finally,

like the one So, I'd thank of done None to accomplishments team. person. It's these the by any team. always specific were

XPO, you XX job. Thank days. good See So you. in

Operator

This concludes conference. you. today's Thank

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

XPO Logistics (XPO) 5 May 212021 Q1 Earnings call transcript