XPO Logistics (XPO) 9 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Brad Jacobs	Chief Executive Officer
Ravi Tulsyan	Chief Financial Officer
Matt Fassler	Chief Strategy Officer
Mario Harik	Chief Information Officer & Acting President of LTL
Drew Wilkerson	President of North American Transportation
Chris Wetherbee	Citigroup
Scott Group	Wolfe Research
Brandon Oglenski	Barclays
Hamzah Mazari	Jefferies
Allison Poliniak	Wells Fargo
Brian Ossenbeck	JPMorgan
Jack Atkins	Stephens
Amit Mehrotra	Deutsche Bank
Tom Wadewitz	UBS

Call transcript

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Operator

Welcome to the XPO Logistics Fourth Quarter 2021 Earnings Conference Call and Webcast. My name is Rob 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 this conference is being recorded.

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Brad Jacobs

a Fassler, our quarter our well. was and whole of quarter LTL; in full Drew that Ravi company highest a revenue The Greenwich results. a of With billion, call. Officer; Acting President any reported which me we by Transportation. Mario of Tulsyan, delivered was fourth as President well. and Harik, We joining beat EBITDA a quarter in generated CIO morning, the as Good to for adjusted year-over-year revenue beat Strategy everybody. $X.X Wilkerson, American guidance We our we that on Matt performed fourth our CFO; versus Chief Thanks Yesterday, EBITDA grew number history. record are XX% of year North and our our solid today

reported We than quarter our EPS also of adjusted higher highest history, in the diluted any significantly expectations. again,

Our American LTL truck brokerage. growth largest record North LTL, growth quarter yield. was In year-over-year we by our led and revenue businesses: two fourth record delivered in and

ratio degraded within when plan expected, our which trend in adjusted quarter bottomed negative Our helm. quarter challenges out the our network. year-over-year, in But the Mario the at LTL was operating some October, with action third given launched we

our an impact quarter performance. as volume progressed. plan We ratio immediate and erosion our the operating Our our reduced the had year-over-year on trend in improved

is XPO positive operating year-over-year count and In brokerage, XXX estate our another generate tailwind consecutive ratio driving Connect, brokerage is XX%. our load was carrier In year-over-year we adjusted to we which with Importantly, the platform. many The the mobile fast. third because to in usage XXXX. good points levels digital over digital they exceeded is quarter. Connect news basis up expect on mid-year quarter of customers, driver as carrier In by to want truck cumulative XPO inflect volume Connect possible. as extremely we platform's for outstanding carriers biggest record ex-real of Shipper XXX,XXX growth adoption of of increasing weekly the fourth our had app, downloads growing for and access December, quarter, improvement

midpoint XX% we earnings our XXXX growth range in full our EBITDA year. the into sum, expectation diluted adjusted guidance for issued reflects fourth EPS for a The So, strong going of reflects of and XX% The guidance adjusted growth. quarter with XXXX. this reflects good great growth traction midpoint versus year XXXX yesterday

LTL Our brokerage than at our of still generate that's three $X the in industry times expect moving at growing adjusted direction. growth. billion faster We ratio revenue is is pace our to And operating this least truck year. right a adjusted EBITDA action plan in LTL

toward to Finally, leverage on shareholder best-in-class the value. to we of remain ratio our We're investment-grade we're half a committed of by next to a This and one first in times achieving will an be business aspect every in deliver deleveraging rating. two superior being confident net of continuing of milestone year. intent key

it I'll and results our hand balance Ravi? Ravi our over discuss Now, to sheet. to

Ravi Tulsyan

year grew Thank billion, growth other $X.X fuel and to you, execution was in I'll impact balance for full quarter This adjusted in fourth our and quarter and with discuss revenue, a and XX% points delivered Brad $XXX diluted by three and start outlook contributed segment. fourth Organic year-over-year. brokerage and this growth morning of will QX record we and year-over-year FX up our growth the The We EBITDA XXXX. the Revenue sheet adjusted quarter EPS. the quarter, I liquidity net adjusted XX% our our Today, EBITDA services strong a was of results, where million. reflects record everyone. good and strong prices to in revenue XX%. growth. for

a pro Looking basis. was a stack, XX% two-year adjusted forma at up EBITDA on

was a for over cash driven $XXX million from and of continuing by tax million primarily increase This which earnings We a of CapEx the $XX expense up adjusted share adjusted XXX%. $X.XX of from $X.XX, received $XX flow proceeds was was increase Our an year per and lower operations, asset higher ago, million diluted interest lower spent from rate. gross sales. from quarter, on EBITDA, generated

end cash our high million, result, which the $XX flow free a expectations. was of at was our As

net of $X.XX revenue of XX%. we quadrupled $XX.X free over of billion, delivered increase than For XX%. million to for an from continuing free year compared increase growth of Adjusted year more year $X.XX representing from earnings the on We of year-over-year operations $XXX a a of generated to diluted $X.XX $XXX a We XX%. full rate conversion our share flow reflecting XXXX, cash per income was year-over-year, million, adjusted ago. EBITDA the billion, cash

facility. combined This available liquidity under us year-end. outstanding reduced XX us. cash, no by maturities debt borrowings balance under borrowing Maintaining XXXX. $XXX cash at of capacity our gross remains strong was no gave ABL in with for Our our significant billion We have priority facilities, $X We year debt $X.X top we liquidity billion approximately had at million. debt a December committed the and until

times XXXX, Our X.X adjusted year-end at leverage EBITDA. net was

is through to cash plan balance our continue adjusted generation and delever free Our flow EBITDA growth. to sheet

in commitment our the Our of progress achieve rating. an important deleveraging to investment-grade context on is

after yesterday Turning to the guidance closed. we issued market

EBITDA $X.XX billion $X.X estate real versus million billion. adjusted of million for guidance assumes gains This to $XX sales guide XXXX. year is full Our $XX from approximately in

second long-term in sales sales Our is to current needs. fit will and consist excess of not these execute half year real the of does plan our land primarily estate the that

front, On $XXX free is full for flow the year to our flow million million. $XXX cash cash outlook of

full $XXX plan in year expect to We investments year-over-year million million This million $XXX growth to $XXX net CapEx our business. CapEx significant to $XXX be be to make increase million. and CapEx our reflects growth LTL growth to in

million million and Our full and for depreciation of to amortization million. year $XXX expect is we expense $XXX approximately expense interest guidance $XXX

be XX%. expect tax XX% to rate our We year to full

common outlook to EPS for $X.XX. year is count be full for our diluted Our $X average and the to year approximately is million adjusted expected share XXX

For prospects EBITDA guidance be in million. estate versus $XXX million year same the assumes ago. we in the $XX real our driving strategy continuing value to the adjusted no expect we Matt. over $XXX first about of our sales execute shareholder are conclusion to quarter, now quarter a we million This period our to pure-play a will to on In turn XXXX. and for I transportation company are excited things as

Matt Fassler

with North revenue quarter by of American LTL our operating year-over-year results billion. review I'll segment. a XX% grew our fourth Ravi. $X quarter starting Thanks fourth to record We

place had X% a reflecting we per we fuel in the typical and despite year-over-year with utilized network impact X.X% the embargoes optimize typical in tonnage Omicron grew and the headwinds November flow. our seasonality in revenue we October December day When January Excluding lagged embargoes were trends and decline by weather. short-term in outperformed We from of to seasonality tonnage then the lifted year-over-year. embargoes

we regaining quarter industrial the During of momentum. saw verticals evidence

LTL month firm This demand record grew nearly our our was increase typical whole fuel, in pricing shipment quarter. industrial this fuel for year-over-year, driving in services LTL XX%. XXXX. own excluding yield environment of company-specific amount our initiatives. increased with of we're excluding per outperformed the for Revenue as yield and pricing previous twice mix set quarter each the a for And the quarter. remains the Given bodes XX%. seasonality well Yield, The quarter third in our also and the for

was XX%. operating LTL-adjusted the Our quarter ratio for

higher impacted points and operating Excluding ratio degradation embargoes real of which quarter were biggest The XX.X% than year fourth transportation. OR was volume higher basis adjusted ago. a purchase our drivers mentioned I was the estate of earlier which cost the the XXX the gains,

increased basis. brokerage business brokerage the On We XX% which our in North a million. services a to tough a EBITDA XX% into an XX% quarter XX% our or we continues realize two-year for our basis. The EBITDA by X% our per in to two-year our organization. XX% prior a X.X% record XXX% profit segment on margin rose driver ratio were and year-over-year and fourth a trend In we day is segment We loads and network drivers improve a favorable expect higher revenue margin two-year segment, versus to efficiency operating to a against our new Margin or as bring on in revenue this year equipment brokerage truck had other and adjusted sequential XX% QX. in expanded year. quarter rose by XX a largest quarter. record Fourth basis. the to American $XXX and by from on a revenue fourth XX% $X.X basis, billion points ago Adjusted dollars the than rose basis by outstanding increased XX% and comp grew dollars

customers. growth brokerage a reflects speak and key a these about our Our will in technology market, with ties proposition, drivers our Drew more enterprise truck strong close minute. unique

by one to by in the Disability Responsible Index were the notable XXXX Work a Place Finally, transportation a was a share Employers Forbes Company by For in on of XPO named Association. to Women one Top Equality America's Best I Best To Trucking Women and want Companies and Most also America's for for couple We of Work of awards. Newsweek.

Now, I'll North to his it comments turn American Mario LTL. over on for

Mario Harik

the of lot progress major since and third end November, action started call. network our to Matt made good morning has By the the One third on-time executing other and had selective everyone. of of with cleared along our we the This has immediate October. better impact. was fourth Thanks, at the quarter backlog. objective, service quarter began I'll to quarter, achieve network. we out LTL a third our improved We the with end plan to in the sharply flow of strategic with an start five trends rebalance points embargoes our plan quarter from metrics.

value our customers that equipment for technology. Second fair pricing single charge is handling. our freight report that developed tools of X.X% The increased XX% pricing then yield. to is pricing increase biggest added This have make proprietary timing detention we making typical also were and yield in We've reported We fuel like the a to services opportunity early sure And and price. multiple special drive require as January yield. we but from initiatives we there's that a our underway. get and result generate forward sure year-over-year November, give record paid

we third The XXXX. last the the more graduated of driver than is huge plan, twice shortage. number is XXX in-house in a which approximately advantage had driver We drivers This year, our graduates is new schools. in of our part

increase in on is side, to goal double trailer this to to to of manufacturing in XXX doors doors about our plan. the track our the XXXX. year. do double has by facility drivers. from network trailer we about to X,XXX added our drive to of the We're net new to second expanding start part This network equates on production to our our efficiencies. footprint add plan, plan to number Our X% equipment output that year-end this a year with again We Fourth, line fifth The growth Arkansas. and

in So We're October and far maintenance this in Arkansas quarter. fleet opening new shops in four January. we've Heights Chicago Wisconsin in opened and also terminals

inroads pricing deeper a take our rolling new And are technology, tools just pricing to deployed. mentioned, the of platform in them automated developments we're to platform want into customer part launched the mine process forward. The I for us I new incentivize sales. out. pricing, a continue time, business the We've we rates dive have lead Now we processing contract enhance and platform we the that to to LTL RFP heavy an This tool And dynamic as lifting generation also We'll negotiation by have historical negotiations. much in the immediately XX%. real made update ability as be which to this data experts does data certain allows our much going data, analyzing as seamless shortens now customers LTL shipping the us. productive cycle. more with which can pricing, onboards loads so on to to to give manual These in reduced pricing tools contract dynamic

new more trips, our which launches, innovation in for delivery mid-year start and and easy help In be trucks are our visibility productivity. dispatch tools dock new do tools now multi-pallet customer These and LTL new a XPO. efficiently customers other The dock and to we launching on our platform optimize linehaul rollout to and we'll other drivers areas We're to and to digital shipments. software trailers. make operations. for pick-up it tech business mid-year, new with we'll we rollout recent improve designed and our ripe the and utilize tech into tools new of tools are how continuing complete direct further planning for load self-service of then deploying Between completed increase our we'll by

for we So well technology a see, we as more as a front you forward, happening can the going on opportunity tangible the goals lot set as, and have lot XXXX.

LTL billion this to generate in of EBITDA $X least expect at year. adjusted We

team committed is on to entire this goal. delivering Our

full-year real We expect ratio to basis in excluding more our improvement adjusted deliver than of also points gains. operating XXX estate

improvement this in more estate With point operating first quarter, real between operating ex project In erosion Here's us goal we track year-over-year. dots mid-year. adjusted basis From on comprehensive year. plan what our going marks. The the revenue how degradation growth will when our and to there where In for more we're executing exactly should hit LTL the return full-year. know company-wide action takes unlock the connect, reach it margin the of continue reduce these We forward. on this track cash our engine. improved business invested inflection our adjusted today and it's capital in year since was for on are LTL acquiring to this we XXX nearly the basis we'll putting XXX from our was even adjusted XXXX. higher. our in about XX% and EBITDA ratio to points of half AutoIC a ratio the And We're triple XXXX points second than

we've of alone. generated last years, the cash LTL billion Over more than from net six $X

and CapEx drive many That X% covering technology. to and revenue high-level fleet, Now we're be of X% year business to into cash our of LTL accelerate to January growth typical fourth than going sequential ratio. operating taking to improvement off investments in growth. our to We generated operating customer In along operating improvements strongly December ratio employee strongest quarter year-over-year growth satisfaction the and return believe service We're being metrics We're through strong seeing this a remained start. improvements month. business. in with to our tonnage in and revenue the invest This flow year. more LTL a That will last the to revenue We seasonality. of our facilities its margin gives improvement with view the stronger major X% satisfaction. compares actions you of in we're tactical in

track and plan our are on We right the working. is

Q&A. going Now and brokerage we'll cover Drew go to is then truck to Drew?

Drew Wilkerson

outperforming long American history the North had market. phenomenal the a latest quarter Mario. brokerage another in Thanks truck of

Xx trends a our years underpinning which Over were of XXXX XXXX growth XXXX. is X%. CAGR from CAGR compelling revenue There the industry nine XX% some in of through delivered the last we

of the who overall, generated our top we over million by XX% We of increased the customer in the our relationships year full grew customers year. sticky of revenue not For served prior a the with earlier. who base us year customers $X And base. over number customer XX by These bedrock large XX%. XXXX versus customers are our were with volume

is Another our digital reason outsized we're getting growth platform. Connect XPO

in dating back service of quarter Connect the transportation the when of growth within That's was customers XX%. proprietary This registered registered to it's we for advantage continuing automated up the who our platform have inception first-mover to up when XPO XPO the which industry were Connect Connect is and is year-over-year In customers advantage demand powerful a returned technology. have XPO technology critical for of only the is automation the to with and first is tight. we fully envisioned to not the is platform grow a super business fourth brokerage proprietary XX% with attract on great us engine, We fast. XXXX. number procurement. XX% XX the a lever with carriers and also do days. retain carriers XPO market but on carriers

created we're total in addressable technology, our is These integrations the the America it in in realized this saw higher was is, take for dynamic towards other business. quarter capture pricing capacity algorithms sizes fourth any opportunity to due leverage and because again or equipment machine In of the in significant strong their experience covered generate increases our positioned million lane capacity driver strong growth. current doing to all day and continue bottom volume over tools. and January. demand is headcount quarter with to in at customers of truckload runway lane environment, time. every real-time were That the and we at in shortages and during business lot chains have it scale and XX% we capacity our with XXXX North learning increasingly lower want any shortages. carriers. with We given a expanding are The digitally. we best-in-class the APIs shifting In the rethinking Customers are market of combination when The in supply by We flexible line also to in pricing and a and transportation and to loads created The that for of added access trucks automation X.Xx profitably. access number offer market in driven constrained, our share and and $XXX growth primarily use brokers to algorithms point part transactions January density, cycle. we year-over-year to pricing the want pandemic of was is truckload we true advantages our We companies year-over-year again risk. billion

We expect XXXX and your growth that With in questions. to generate forward. double-digit take volume go Operator? going to Q&A we'll and

Operator

comes the Chris [Operator your Instructions] question line Please from Our Citigroup. Wetherbee proceed with with first of question.

Chris Wetherbee

morning, we on start curious we and Thanks, Maybe could Hey. side. XXXX. the as think good LTL everybody. about ratio operating about Was progression the

do So in maybe you I in half. back positive about in sort out? back the XXX quarter comps a easier are know think of first How that of half and the cadence kind of XQ the down how the the plays year. little and Clearly

on But will then. you the supported be that I shape guess think first will the a be? by to improvement getting sense to So a basis get half what full year XXX% I again of of wanted

Mario Harik

thanks, Sure, This is Chris. Yeah. Mario.

quarter. we a degradation starting the think by XXX to with we So -- And which drive basis basis with our that the had improvement about sequentially is XXX fourth XXX first points points in better so the from quarter we our we'll volume. that when degradation expect first point to starting in the cadence, quarter,

first about fourth a volume, despite the X.X% we January, when weather single-digit And and run both in the the think Omicron decline from and quarter expect December quarter. the exit typical both the on the in we quarter we here. part volume seasonality of outpaced quarter low we the in had fourth first in and So decline rate

the Now the on next step from there cost would be side.

continue already the the least we higher backlog first of that going PE the with have clear year. seen and will offset the through year was labor time that we frame. in our improvement expect And of the because typically we're the in embargoes half course as So spring to at quarter reset the through transportation however, that to efficiencies, we purchase first carry the in costs costs with

from very to expect we Now the to be with for starting a strong yield year the quarter. yield first continue standpoint,

environment, be by higher quarter. for up is still actions the taking, but first being expect in weight per the So are shipment the offset which to in also quarter, reflecting we the first the for single-digits, we us yield high specifically obviously underlying

point So deterioration. that's a dynamic of QX of XXX the

increasing, as full basis there more Now get back the OR get softer into OR we year, by we year. on headwinds yield obviously QX expect positive an where the the get -- full get to for some quarter net-net, than And in the points then into if costs year think of would the with basis total through half remain you one normalize high to year. cost how inflection of the keep in would improvement on for back the the and turn back we midyear given of half of we single-digit, slightly tailwinds the strong XXX of would for year. a volume we as QX in then course to on go But last being improvement were a we where

Chris Wetherbee

Okay.

type cadence? reasonable of assume, like think to XQ of kind that that in of sort the about of flattish part or So is Is it how range. sounds you that is

Mario Harik

Yeah.

in that's ZIP the code, Chris. So

Chris Wetherbee

I it Okay. playing you're I facilities. a the get quick XXXX. to I OR you just targeting to we opened how sense talked about? of terms then a know you context in that capacity? That's up growth start out the count I that. want do progression in you've I of to some want helpful. ramping know guess how two-year that quickly I maybe door sense see get see follow-up And of a X% in just appreciate of of over the a basis.

Mario Harik

about volume a freight certain linehaul customers what we ramp both our or in efficiency in -- is But where our real process Overall, also typically business for be break in freight dynamic. case, six-month network. the the time frame. a adding centers certain of and -- doors markets, flows think of the about call ramp from once six-month from in getting But think but we adding the freight markets capacity, we getting for roughly around to there's add combination also, that's frame. terms When we we the door as trailers -- we time assembly through a freight

Now from add from we to to worth adding X% doors. or the have these $XX revenue of And XXXX on of obviously we into expect and in doors terminals stores. additional as roughly XXXX million about revenue that would going accelerate keep

Chris Wetherbee

That’s this much the Appreciate helpful. Okay. for it. very Thanks very time morning.

Mario Harik

Thank you.

Brad Jacobs

you. Thank

Operator

question next proceed line your The with comes Scott question. the from of Research. Wolfe with Group Please

Scott Group

another Hey. I ask Thanks. just I think want on LTL to more morning, sequentially. Good margin. the to guys. want

something So, second the sharply? cost And pretty changes accelerating the the year. I there? we the what quarter quarter so to XQ seasonality turning along was those in PT you didn't pricing Are in in thinking you rest into meaningfully about maybe you see when back guess half? fourth get starting becomes guidance any outperformed implies that a tailwind mentioned that just guess I headwinds and why this of lines, of in And the tailwinds.

Mario Harik

Yes.

the first got with Let QX – it, me you yes start Scott.

the first start let's fourth quarter. with So

in time. November And obviously, these the is flow. beyond network stabilized. network pain substantially One we up quarter, to for increases we and through improve saw And improve in and we're So embargoes the linehaul of amount back for there short-term extended in the because half that flow. rates were discussed of which numbers that And since embargoes getting obviously strategic implemented two network lower the decline volume benefit the also we of our last was either we went network have QX long-term flow. drivers costs third-party better having they volume, the the

internal network in think improvements. you jumped has obviously – benefits third-party to has the for target satisfaction Customer down improvements sharply reducing precursor the backlog and improvements levels. well quarter. Service we from include when and improved or as improved as the the the that typically reduced third our both versus flow, network they are surveys about Now

Now, December point affecting the was quarter, was we that see And and again, more kind the importantly about through low month for get when you the quarter. best our of fourth the think October the progression, we mid-year. for degradation the as of

Now, course are of year, for through the when drivers the we OR. think main there three

backed is capacity. by the first So typically is one volume, which

ties year. is course is I of And volume, And in the efficiency to both And of that typical to pricing. through accelerate starting then outpaced January. that cost mentioned to volume volume and as we've now we seasonality operational Second third which expect earlier, seen December continue with acceleration the

our our As we allow mentioned in we're progressively first graduating we're we're sales capacity our handle hiring in in year. from X-point force. add We're to discussions more doubled to plan, with the also great to our investing more in-house doors the us more drivers our through And manufacturing quarter, action the network And in adding facility. building OEMs. to more schools. and We've capacity volume. also production We're adding more here tractors having starting the trailer

to some enter our LTL of business network well. and return our dedicating So setters we're we're or either seeing more as strategic to

the we volume the as the accelerate through year of going forward. to is course So go

a accounts side, other for also say, OR headwinds But record in pricing side, a I back single-digit basis for environment. I is mean on the earlier, into to increase local build slip first be more happening because we similar dynamic labor the the cycling the contemplating be as lower would in And in we the high half additional we the efficiency year and a perspective And in depending back cost full obviously, half for of in all for we as tailwinds back costs said the that would GRI being the range the the point the net-net strong On would than for from but through purchase transportation a it will half. what's terms improvement year. potential turn then finally I'd full categories on pricing pricing are also what so in staying expect. year, that XXX the

Scott Group

operating Okay. question. Thank just QX. in this were really The other look continues. the you. doesn't then guidance strong brokerage second implies It that And like margins

So op here? maybe long margins – the on margin asset maybe Brad any year. just as brokerage some thoughts potential this And as Thank brokerage guys. on update and talking op on other this sales you, segment we're

Brad Jacobs

kick – trends January as it we taking in saw off. said, strong We of extremely I'll we volume. So

to was our years back If saw you two day basis. year-over-year quarter, look loads up we volume XX% the also on was XX%. per up the a over But fourth last

doubled. our Our net revenue and XX% than revenue more per up net load was

So to we're main technology. confident is three take be to we're our we'll do continuing reasons. still that for share One and that able

the our that Connect we delay. carrier look at focused little we you on XX% should does there's we to with days. to customers, with we're shipping. our we're alert what helps should within technology, The because an very give us things side they them on It and of sticky. be make it's be work they that our of with helps people. any when decisions our also continuing employees. XX carriers shipping, XPO And them mode work carriers technology the of sort It then within working updates it's see it customers If transportation on that even returned on on see the that And

As you years, up look up XX%. over loads and the XX% our five is last are headcount our

piece second is our customers. The

growth. top has And country. lot have of relationships drive the in helped companies We a the strong this with

of is see at customers top XX%. same a look customers, on up and got strong growth point. reference our last million do piece momentum. new as volume our business serve our our customers brought up that XX% Those you The We've is a who you $X with with customers XX top people. as our us for sales we And If force customers. is in X,XXX lot us a and

Our the They've people average. level proven us years ear eight operators track got their have the for been to above ground. the in got They've some a record. with Director business. of has on best and

relationships that to allows got us with our – So we've strong customers. sticky create

take because share to and to I'm that, we're to market So confident three continue do it of we're things, those profitably. going going

Matt Fassler

any on you not you possible we're we strategic initiatives question sale going asset on. the comment the question. have on had, going to But for Scott thank

Scott Group

you for time it. guys. the Appreciate Thank Okay.

Matt Fassler

welcome. You’re

Operator

with the Brandon from is Barclays. question line with Please question. your proceed of Next Oglenski

Brandon Oglenski

morning, everyone. Good Hey.

think, last you few be – understand the ability to maybe has of been So CapEx million Thank $XXX the I name the price And showing up I think. improvement shrinking network can about getting the on million $XXX better, very better quite Because a business this I to or fit $XXX us stepping of for a here what I'm in budget? that mix seems obviously I if here and LTL. to better worse to talk years you wanted million margin in Because customers those look to the to historically context CapEx through I year? and the game growth grow focusing $XXX now, the to expanded in million bit talk

Matt Fassler

Scott. Sure,

revenue X% Sorry, in Sure, we substantially. CapEx ramp-up going to of XXXX going in XXXX. roughly to of Brandon. We're be to Brandon. X% Yes, LTL to revenue from X% are going

XXX new over Some fact the opening next of facilities. end We spoke for of XXXX. about two that is in years by the doors

equipment continue exceptional replenish generate is We in fleet. to as Some we our LTL. of returns on it for capital

get strong was company-wide we that, than know capital Our to decision capital that. We is on this hence a allocate level higher of that the to business. investment return return can more on XX%. LTL

have estate areas spending the line on of equipment. and real So all we confident, of both sight we're

Brandon Oglenski

few direct. Well, reinvestment growth in past rephrase limited can capital I Was if the the be years guess, Matt, lack maybe segment? the of a it I question that more in

Mario Harik

Yes. it of was strategy. a more Overall,

focus So this the XXX on a in higher to expanding that ROIC. profits. Conway EBITDA been get And with nearly when us business margins we tripled think $X we in basis bought bought business allowed and this XXXX has OR But billion we year, we points. back since improved by about to and our that since

size of of the able more just the inflecting growth more the both in we're goes Matt production it and dock it also to freight by the adding to doors to to fleet facility drivers adding move that, that, and our mentioned towards is strategy, workers. the doubling trailer back more Now manufacturing obviously and and the expanding network people tractors, adding be part doors XXX our

top leaning and adding the now – so we're capacity line from network, to more So it's a more can towards volume we grow so a perspective.

Brandon Oglenski

it. Mario. Okay. Thank you, Appreciate

Mario Harik

Thank you.

Operator

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

Hamzah Mazari

two much. over. I'll it wanted and very Great. just ask I turn Thank you Brad, to questions then

sale. Just the see recent Thank to leave given from I'll And sell questions stock should planning two you. shares to investors we've more there. been future? hearing you we your in it more frequently One, And guess, you are I exit XPO? expect then

Brad Jacobs

They're fair questions.

for super own to the I about But a I more in very me of said, about opportunities what highly the we many no these shares and about foreseeable here, I the and I'm clear significant Does plans asking? stock it. and about in still extremely XX% answer And leave sell some I'm plans have I proud to future. strategically. many, no we're have you're very XPO. some at and company's tactically I'm prospects. over in accomplishing I'm of company time the value To what both future. and excited focused. regarding shareholder all sales, will contrary, company that have owned that the the I've But probably bullish shares that to decade, Let very much leave the create be the

Hamzah Mazari

it. Yeah, turn you it perfect. Thank Appreciate much. so I'll over.

Brad Jacobs

you. Thank

Operator

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

Allison Poliniak

Hi. Good morning.

you forward? growth about XXXX. going you share before? help Could you for that it First, on confident maybe that articulate market the us pretty double-digit seem think Is algorithm persist after growth that trying were will to brokerage, mainly

Brad Jacobs

share. the $XX And billion. take brokerage the has and the Yes, continuing about Brokerage that, are $XXX it space – to billion trucking space is is share. brokers of market

at on Our they've if based a to going customers that or flexible And can up use capacity in because record on you track got scale what's want they got down we've brokers the market. on deliver X% a result. XX% track that to rate at being years the able growth proven industry being being CAGR the of of and we've record got at last nine look our proven

earlier, a going great got As we've I pipeline team and strong sales for a mentioned forward.

Allison Poliniak

to Just technology from from or for initiatives? customer whether contribution just some And being efficiencies any on think there? price or that of of Great. productivity color of a place you're there. it's share a way the LTL, initiatives those lot there Is in initiatives put then drive these expecting the to and

Ravi Tulsyan

Yeah.

You got it Allison.

of the combination all a it's above. of So

it So, obviously, my when in data we said think processing about pricing where technology, us reduce new by us performance it's And along negotiating the use spend sales. as XX%, account enables to I to remarks prepared time more announced tool historical RFPs about platform enabling with improving And on manual to and yield. experts lead-gen our sales. pricing also analyzing as for a

able us need volume driving to to level by more and we thing we allows again network So dynamic more flex adding on be get volume can yield pricing the and of that combination a deals. where Similar the that versus yield. more to volume ties on that want where based the where to we

I more technology new piece trailers On call all dock the way customer destination, areas building experience our across linehaul around And to all back side, the It to the in I That mentioned and three ops productivity to that used we hauls. mentioned efficiency back to efficiency improves visibility also all our docks. efficiency. by it It operation head for our experience. customers which dock the level. and better better direct technically goes handle web for down there. this linehaul goes case and

being to size all shipment way pallet the to down level satisfaction. you back if customer more multi-skill So the customer able to the have visibility a or give

combination So volume customer improvement improvement yield it's of and efficiency in set. and improvement a and

Allison Poliniak

Great. Thank you.

Ravi Tulsyan

Thank you.

Operator

of proceed is question. question next Brian JPMorgan. from Please the your line Ossenbeck with The with

Brian Ossenbeck

the good Hey Thanks time. for morning.

split OR from that And pricing just and they're you think any mentioned would XPO just contributions was market? in Just way visibility wanted things is terms coming the there you forward of line cadence to in back and got more that year. come in the between the you to GRI market can within specifically of the sight. the terms throughout that you the context are pulling And some in more of you of handled give how can

Matt Fassler

harken the that I'll to part do color the back And gave. I'll first just Brian. Mario

I'll and we over of the the improvement to OR expect positive. XPO year being going and idiosyncratic we're where also GRI. are of a To the recycling a the those cost on for forward with in the half last with pricing through improvement volume relatively extent to that front issues we to at both some the a looking second as it experienced at are of course give Mario year combination And that the We improvement discussion volume constant from improve year. opportunities the for due progress to cost of

Mario Harik

Yeah. I Overall to it's LTL. it when on comes mean, environment a the GRI side, firm pricing

overall from we've market. feedback -- been hasn't gotten any the frame from the pushback typical good to feedback we And haven't been January time we our So November. seen from pulled customer in has But back the GRI customers.

course in GRI but Now of the how progresses when year through go first doing for depending local accounts second our a of market the this the are to we half the we the which XX% XX% year contemplating local but customers, year. which the account is customers, our segment all our roughly is to And not usually one business. GRIs for of our us, they around business of impact -- on

Brian Ossenbeck

We no what's what's on a and A Mario. about for Thanks and side. digitally. hear question brokerage created Drew Okay. automation the then lot touch

stands don't types know abilities attracting you some can your with So where competition XX% capabilities? if Thanks. to really add context retaining And I are you those what in the versus and that your and view? think of customers

Drew Wilkerson

Yeah.

So the covered we're a digitally. extremely or of. created That's that XX% are number proud

that on sticky the this the customers. to customers. basis. Connect transportation logging using that when API types load of if of but API make is what and year-over-year our are all them If customers types a be X.X is you tell on on again times see basis. are look smaller that helps They up The they -- they're with you large shipping, It's a customers we should with them XPO that shipping. our very our at attracted be using possible; integrations our offer, should customers And also are best daily they decisions integrations

base. all So customer of we're seeing it across our

Brian Ossenbeck

Thanks Great. Drew.

Drew Wilkerson

Thank you.

Operator

your Atkins question. of is Stephens. question the Jack Please with next with from proceed The line

Jack Atkins

basis one this for I I'm you're points guess I that of question. easier much my surprised are a OR the years. is given so in a the And taking bit year. given probably going than lag the for comps over that's to or you Mario. performance more expecting underperformance guess little not Thank two improvement Great. this arguably XXX peers XXXX, your your last Okay.

you back So months to picture more a I feel Do enough really ago, improvement like to assets? in LTL more business a that you feel get going your year? you you operating the substantial within on guess, ratio And see was track? this question. be structural plan, do bigger on there's can't three something Mario Why going like maybe outlined X-point

Mario Harik

Jack. Thanks

our So, talk structural of about first me piece LTL the business. let

pounds XX,XXX have people, all ZIP more freight terminals in than XXXX. codes. with has fantastic who We XXX XX moved billion XX,XXX that of of And for cover XX% team customers

acquisition, triple cash of we this structurally nearly said $X business there's track our So Con-way with what from asset a billion. to and net Since the points earlier. XXX to by this back basis by are And LTL business. wrong I generating the went nothing we Con-way I improve and year or acquired OR EBITDA on

nothing make there's the here. linehaul. mistake of last in-source year We wrong structurally third-party the So quarter to in third did there's -- again,

temporarily Our network flows deteriorated.

And more network of It's phenomenon. EBITDA delivering something much off customer we're embargoes. pricing is planning year. to network would having This to allow costs X-point backlogs strategic allow improved with to up tonnage this in on where and we're Our on our this due action and get efficiencies service associated with we that -- the effectively billion on believe us back that And lower give flow. went us to starting the on tonnage execution. not and we $X We implemented a repeat. to the temporary plan focused

pivoting that a growth the hopefully servicing more and towards overall, XX,XXX then So capacity when think to it's a more and business ties it about fantastic more back strong plan plan. It's customers. we in future investing the in adding

Jack Atkins

And then intermodal intermodal. you your some on forward? as the How again kind heard my Thanks number about a rail partners we're containers for additional interesting we of time. look about and position your business businesses in adding and that are to shifting their thoughts competitors Okay. much of follow-up market. market of a that investing you talk and IMC thinking It's moves love in get intermodal would but it. Got within not for question, terms the we XPO's I seeing making with the

Drew Wilkerson

was market intermodal The strong.

the We basis. organic continue congestions year-over-year we if a look continued equipment -- you up our to take shortage, at our And the and on recovery was there. XX% revenue

our per GM skyrocket. saw You load

our you but as look into side. We we grow in to continue are containers also investing intermodal drayage on able on to XXXX. And to expect be

they at Our every side about that US it reasons we drayage the of one single have marry intermodal. complements because well And a is, when so presence you together think port. major

So fourth we're for very excited in a about performer us was strong the intermodal it the quarter. and market

Operator

you. Thank

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

Amit Mehrotra

the it OR implies looks first the just that for or we at operating the want Mario, quarter, in the the adjusted just XX.X of the that like you go we're Hi, page I in on make everyone. guys flattish to quarter, operator. Thanks there's a couple ratios want OR jump to back the XX.X. I in guiding of ratio. kind numbers in And operating a sure second to terms -- OR cadence you're If Hey. the quarter. on questions an are unadjusted. of look first of if an I of the lot same first And the improvement because to to

improvement in think it you're want ratio calibrated. talking make that So is but well about, just a operating the quarter is the which a first point I number numbers support of basis the over lot are second I would of implies that those an huge expectation sure to correct? initiatives that XXX Second,

Mario Harik

points odd us the first the cadence Amit, when XXX the would so for take XX.X. So XX.X overall we and for that think expect to quarter about we year, from deterioration a the

or expecting of midyear. the by quarter, we're positive second terms be in to Now, inflection up the

about be improvement the the the the going half mentioned. given But think obviously kind in specific Now, then we we cadence what how back but the to for you that's guidance and quarter, would in it over of second of haven't year. ZIP of code

Amit Mehrotra

Okay.

against full on year XXX guidance the and -- XX.X. points basis an So is just

you're just in which So really forecasting the starting make outcome or XX.X obviously a we're but to on page the I the of OR XX.X, an is terms numbers. that given point full same of for want sure year, better the great

Mario Harik

more midpoint OR the the improvement, That's a going basis basis first with from inflection points full XXX year than which deterioration points. obviously for in XXX full sequential the quarter, more than the to is year, of XXX correct improvement of

Amit Mehrotra

helpful. capacity. I goes I you. then, think question And on Okay. Brandon's it That's the very Thank back had, other to question

XXXX, more XPO XXXX, So I you X,XXX very need LTL guys did it back in Because all if why footprint. day capacity? the per than did at with fewer look simply, guess, operating shipments the basically the do metrics way in I same

Why -- wondering, kind do just as of some shipments more so. of more just the of need I'm doors doors why these capacity to release the they so trended the context part in of And just sense the over maybe it's last us you doors? pressure. simple or why need of how you have a decade targeted of more solution? And the are give Why of are more part as problem? But

Brad Jacobs

We've a improved really succeeded by at improvement. for It's We've this in We've Brad. now ROIC high running points. It's been We're Amit. very We in OR OR. top the overall. question, going we're XXX more the it invest that, grow more people. OR in going on going trucks. basis order for invest We're invest simple. to Thanks got to business. to But in doors. to We're in focus more to the grow line, to In line. addition top continue going that to

Amit Mehrotra

that. Yeah. shipments have than X,XXX day did per I you XXXX. question fewer But back understand you in is, like, the

capacity So something not doors issue. else, the is mistaken. It's maybe and unless I'm

Matt Fassler

it's points points Matt. -- to make. additional two two There's Amit,

additional them coverage have putting in doors. earlier, are Mario the have markets across of we while we incremental we as is, cover the where there do said country, One the know XX% entire for by opportunity country, volume selected of we

ongoing not linehaul think, also we're our has we I additional the linehaul those but opportunity on put to optimize network. to network. smooth out doors, an Mario, that. have the business, where opportunity we that, is we thinking point second incremental think And comment our about only P&D The when and side about And opportunity that for

Mario Harik

of And goes since of one -- lot California, Yes. with to you, a example, met customers, with immediate I over you feedback. lot time there, to feedback terminal my markets line recently And going of be up it I'll back tell time taken as role. open And also one with of is we capacity. as customers. also, the want a their our in that up I've for spend customers to of first Southern number soon to to we're doors sign into large Amit, -- tap the as I customer expand was, new in the soon but And us with want we

markets more in certain we're demand seeing capacity, bench are the So where demand all to there be doors for where enough to able although we're we network across XX% the we extra don't there. support customer points us, have seeing have

our and as the And is for market like So -- those South Florida the these from a so into those example standpoint. the of Atlanta, side, of one the by customers better gateway we it's region volume as also well the get said the major linehaul areas take and more effectively which the linehaul lot specific in network can markets. in service a expanding on of Matt markets,

it about us steady local capacity So linehaul the in you operation think that as well. both market gives expanding capacity the and

Amit Mehrotra

the And I've some But Brad, businesses you the one quarter to within asking XPO at I it. word XX here non-core over don't additional when use Got more question. quarter I know with I'm the non-core to. allow last XPO. heard you years. transcript, any used word think ever in last me hopefully the describe describing third you business

And don't that a deliberate distinction. know so, I if was

that's think they're can huge you you businesses non-core? expand the been spun obviously, company GXO, non-core, off If just Because, you success. think why a on are what

happy terms to as -- non-core? XPO characterizing businesses trying if today, read should understand in some into way if actually something we is or with Just the of calling you're

Brad Jacobs

stock mission with happy I'm is always is value and a but market. that. is looking times our stuff, stock to more always life times ways great EBITDA and and today, on be quite create but basis, accomplishing -- we're a to XPO in which what that's I'm X-point-something PE lot open-minded significant The the at trading also shareholder very about for discounts of we'll XX-point-something the

strategic a make pure-play, also lines and rationale We comment on our various alternatives take we've The grade of could of So the to rationale keeping more suggestions We you've some And for of our investors divesting of this up investment proceeds. heard which There's a spin and lines the we're become right. could for all that business. businesses. and pure-plays. They're pay numbers not asset We any to publicly. of for the like with good of there's down debt. are We business. sales going a seen faster.

shareholder alternatives have I'm multiple value. So create numerous to very that happy we

Amit Mehrotra

Great.

of I much. best guys Very good. you the the Thank Okay. time. you very luck. wish Appreciate

Brad Jacobs

you. Thank

Operator

of next The your the question Wadewitz proceed with line Please from UBS. question. with Tom is

Tom Wadewitz

topic. lot on guess know LTL, a I morning. Good an had I important but you've that's Yes.

So and wrong drivers key way or that trailers path. guess, additional a know talked key really that about that Is capacity at I for wanted about I the is efficiency to you of in is some factor it? Do ask terms add I driver fluidity productivity, doors. a think the to the -- you a little bit builds? improving more look network

Mario Harik

or for It's more a combination the most it's for of getting getting positioning share volume. more capacity market both. part But

real from with estate So, let's overall talk a if you perspective. capacity think about --

So roughly XX% across around excess the have today of we capacity network.

Southern markets the well. market pinch at demand capacity outdoors. have high see mentioned the where a points But market earlier, some time example, have However, high imports. same California don't it's or obviously on enough we for we I as in consumer both where

more forward. to a we doors from more the avidity need more of in to but network that doors freight, a about handle adding handle it's where combination when and also So moving breaking capacity think of doors it more more we adding points perspective, linehaul

you mostly can volume. more have, have, side effectively equipment more have, side, people more trucks the more it's people you for obviously, trailers the getting the move on customers. the focused freight and The you more you On

the have lot a planting we of in side, of Now that real terms there's into six-month doors of ramp the for or that as also the through you a to any plan I volume. side on real think estate add any estate, said,

in we through year. stores lot through course be the a the had the and the get XXXX of margin adding And So would we the beyond, think obviously, of the from of ones as benefit year we'll as well to about benefits then, the this those year. course

Tom Wadewitz

tonnage is talked about heard don't comment for think fair for how call of on a what expect growth I this that ballpark more would lever the important year. a I've You've that's you. much growth bit the become tonnage right you

Because that to I the more lever if you and for tonnage key really helps So on is models shift some line a tonnage margin or another margin, or margin it growth top shifting could but guess, then, growth, I just growth? don't line guess improvement, to a that tonnage know is stronger top growth obviously, you is the have at on if a gear gears seem a the be thought key LTL look And that. it that driver? I be it could does and to

Mario Harik

of combination It's it. of -- a both. combination a got you It's

by So when margin improvements, operational delivering we the it's volume, pricing on efficiency and or think about again driven cost.

the course the through So includes volume the plan our of growth year.

the the of we full in improvement would for year first the than obviously course the which in better assumption the a volume. is ramp for through with quarter down full fourth being were single-digits low obviously year low volume year single-digit single-digit However, the starts in it's quarter, low growth where seasonally and then that

margin Now pricing efficiency also only also the that that. and get combination there's volume not by but think you you from held improvement, it's volume, cost the to drive EBITDA -- when about volume so fixed of to But network. adding more a volume there's flow-through a itself, of the operational leverage

Tom Wadewitz

Great.

the time. Thanks Okay. for

Brad Jacobs

you. Thank

by went but it's over. we fast, Now

of me a we ton start. year a conclude to LTL. in saying, very let momentum have off by So The is good

Our action is working. plan

XXX at truck been and In best-in-class points basis eight three to XX%. billion this to last OR LTL of brokerage, We growth perform we And expect significantly generate truck than over outperform In years, at at industries, forward. and EBITDA improvement. loans to our the grew levels. rate least continue year more brokerage $X the has times to QX, we expect we continue going

year, versus On our peers. close the balance sheet, half to by track one of to and the the we're stock valuation we're gap to two our times significant reduce on of determined first next to leverage

we seeing to you a conferences. day. you So, great upcoming thank and forward look the Have at

Operator

conference. today's concludes This

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

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