XPO Logistics (XPO) 5 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Brad Jacobs	Chairman & Chief Executive Officer
Ravi Tulsyan	Chief Financial Officer
Matt Fassler	Chief Strategy Officer
Mario Harik	President of Less-Than-Truckload
Drew Wilkerson	President of Transportation, North America
Scott Group	Wolfe Research
Chris Wetherbee	Citi
Ken Hoexter	Bank of America
Allison Poliniak	Wells Fargo
Tom Wadewitz	UBS
Ravi Shanker	Morgan Stanley
Jon Chappell	Evercore ISI
Scott Schneeberger	Oppenheimer
Jason Seidl	Cowen & Company
Ari Rosa	Credit Suisse

Call transcript

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Operator

Welcome to the XPO Logistics Second Quarter 2022 Earnings Conference Call and Webcast. My name is Paul, 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] Please note that this conference is being recorded.

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

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Brad Jacobs

Chief American our Wilkerson, LTL; in and CFO; our President Harik, President Drew Greenwich Tulsyan, of Ravi me Strategy of everybody, With Mario joining today for thanks North morning, Officer; Good Matt Transportation. Fassler, our and are call.

XPO, and earnings, Chairman deep the the the Once spin-off, complete operations. the acquired for soon person successor seven he of LTL as Before a I us back as as and of of we plan and worked understanding bolts the innovations worked and my me I'll been easy third announced Company RXO. on since as side-by-side XXXX He is I'll been sales with the He's on has of LTL of role spinoff, the LTL we we business to be integration LTL major me. with that have remain developing decision since countless Mario was team Non-Executive Appointing yesterday. an initiative Chairman. spearheaded succession on Executive hired the as as running the his in because network, nuts Officer, I years the the Customer started Mario we Mario technology last we've CEO as in for closely succeed Chief he's year. tremendous XPO. instrumental and acquisitions CIO to with for it. a want been every we comment was will the entire hands Board XX He's into Mario our mission-critical He and also in successful advantage. given commercial get then.

will into take very a to our for second lead growth chapter and LTL team its strong the management his reins quarter. proud report XPO pure-play and a Mario Now I'm carrier. as of LTL next strategy

and and adjusted LTL any guidance were that any our delivering In than months record in revenue North and continuing the and straight quarter. had quarter for Kudos we EPS build make. momentum. adjusted was quarter. for for second in EBITDA, in reported a of our All fact, in LTL adjusted American any Like our tremendous history. to nine we're Mario What were a business, new EBITDA difference adjusted team records our metrics to of EBITDA diluted beat ninth adjusted quarter ahead more on consensus. our the EBITDA, We generated

us this ratio our Our year another points quarter, quarter, adjusted network XXXX. track company than XXX also compared quarter it with inflected ex-real for of highest XXXX. fluidity we record LTL XX.X%. basis And second in puts more an to basis since on any in level the and That's positive estate XX operating right by points of for the improvement maintained

satisfaction that So team service it's to both us not In has continue third sharply our nine metrics. on customer a after its customer in and and surprising our gratifying brokerage, it's recovery we American the The as over industry. we've months now, last significant continue seen outperform high scores V-shaped a increased LTL by internally levels focus to measured see increase satisfaction service to the build parties. North in truck

profit gross basis in brokerage. by in highly XX.X%, quarter. points. despite that's after at a And Ukraine. to share year-over-year quarter our XX% In play. continue truck and This taking by up best-in-class quarter war a in record quarter XXX perform a well business We just not is Our both profitable operations grew the year-over-year was the Europe, it's volume for price any

from XPO of platform, lastly, the actions to the Our of North which It's business report the year-over-year invested net quarter. in that organic trailing grew to our first we And free adjusted quarter, a noting ratio robust business I'm perform tech-enabled of key end by the It's American billion. over success And year, months to capital as planned been growth brokered so board XX%. LTL across includes X.Xx. was of to rigorous and Europe LTL part pleased down in see revenue significantly transportation our well our the net was spin-off in bought on year-over-year, X.Xx cash gratifying XX% the the fourth leverage a the XXXX, to has This ROIC we cash generated And pay RXO, constant and improvement strategic company-wide attention that in track. sequential X% our the X% reported of worth our of first businesses. and EBITDA our second higher from on quarter. brokerage October XX-month the return flow. $X.X the we Company-wide, in brought six and since over truck we a was currency, has in

profoundly to thank like to XX,XXX quarter our on delivering for XPO employees year. a phenomenal a I'd of record route Finally, all

pass I'll call over go the Ravi the to through to financials. Now

Ravi Tulsyan

business, Today, and with with will highest outlook growth Thank morning, and results, adjusted diluted EBITDA year-over-year quarter history. second Revenue strong for balance XX%. all and of XX% discuss our second our quarter. of increased growth grew and EBITDA our adjusted XX%, Brad, in in Adjusting sale negatively $X.X This to real and the quarter adjusted the EBITDA our earnings intermodal We good businesses. revenue the I EPS the our billion. strong from everyone. our quarter our the estate year-over-year impacted by start million for reflects million by and delivered in quarter you, gains balance sales. We XXXX. across sheet revenue FX the or was I'll year-over-year $XXX our record results. liquidity $X any of intermodal excluding

environment pressures purchased a EBITDA of and transportation. were pricing offset this conditions record adjusted firm XXX quarter for and improvement margin basis XX.X%, Our year-over-year a favorable, labor was than the was Operating and inflationary in more points. the

related to rationalization reflects costs corporate one-time This strategic our initiatives continued year-over-year cost of excluding by quarter, corporate Our XX%. in expenses was down structure. the

debt Our million million pay-down the $XX second period. year of ago the in the This of was the XX%. for rate quarter million for $X reflects EPS year and effective quarter during adjusted quarter. debt interest to expense billion over second approximately the The of $XX last compared was for $XXX tax

million increase $X.XX, was which higher cash spent CapEx of from received LTL share of an diluted was was asset adjusted lower sales. a expense. continuing was $XX per EBITDA our year-over-year allocated million CapEx; We driven Our and primarily to million proceeds generated gross $XXX $X network. earnings flow by ago, from year from XX%. up million $X.XX $XXX of adjusted The growing and up operations; interest primarily on Gross increase

Our $XX contemplated cash transaction that of million This our were cash cost guidance. $XX flow in outflows free not to was flow million. free related cash includes

quarter. cash million Excluding transaction flow $XXX was costs, our for these free the

facilities the we borrowings cash, $XXX with our under facility. liquidity quarter at million balance cash. sheet, borrowing no of quarter the of debt outstanding We us billion at available Looking committed ABL gave end. with combined capacity had under ended This $X.X

at X.Xx was EBITDA. leverage end net adjusted quarter Our

on Xx adjusted close deleveraging to We of plan are and of EBITDA. are our second of yesterday. our and schedule after ahead well leverage market strong In guidance Xx range our results expectations the light half, our first within updated target half our we for the in

impact for real or estate primarily our reflects new quarter of adjusted include the This to billion. outperformance and in quarter. We up does not operations. European the to planned million currently $XX year of billion increase of guidance from full realized have expect EBITDA $X.XX our expect to $X.X and Our these of second spin-off to our divestment the gains we still gains be fourth all sales is

also the quarter the Pro the implies XX% forma million quarter guidance $XXX EBITDA for prior to We $XXX growth year. of rate sales, issued this million. adjusted range for midpoint the of EBITDA third the of intermodal third adjusted over

$X.XX. EPS outlook our outlook range guidance implies year-over-year adjusted our full growth midpoint The higher This Our and lower year for EBITDA for of full of reflects EPS slightly adjusted of $X.XX expense. XXXX interest new anticipates to year a XX%.

versus $XXX outlook flow $XXX for million cash now up cash million, million On flow our previous our outlook. front, the full year $XX to is

a outflows. As reminder, excludes transaction-related cash all this

the Matt. on very previous We prior expense, we the execution $XXX first of to two and we amortization expect The is will In our about $XXX strong $XXX strategic entering expense good interest down which of we to our for no tax million from creating and and excited plan is pure-play rate. XXXX of target half our million. transportation There second to of I powerhouses. remains million momentum. now conclusion, depreciation had things half over with turn million, to change CapEx are and $XXX guidance a track, are

Matt Fassler

trend We far, I'll revenue or of Ravi. ex-real EBITDA starting LTL. segment, from in We solid Year-over-year Demand day trend history. verticals from our by the X.X% the XX% adjusted The fuel operating agricultural to XX% had e-commerce. our largest in an accelerated. as mixed. vertical, XX% grew second quarter quarter. the benefit X% North development added quarter revenue estate. renewals year-over-year increased pricing largest $X.X focus improvement of review and year-over-year in major Thanks, the the billion, verticals, retail with while QX, vertical, a We Pricing reflecting day and a are highest industry tonnage second technology top per in our the team. American XXXX. to we've our of per in excluding overall results talent significant a our to year-over-year, seasonally automotive to our XX%. pricing our LTL is LTL, quarter growth was pricing contract XX% tools. by decelerated Yield, by our year-over-year accelerated on which LTL second Industrial, tonnage QX, backdrop from through in and pricing grew year-over-year decline in any by track major proprietary in improved of

expected call, adjusted On our last expectation. operating points we Our exclude we I'll a year so basis estate ratios basis points LTL real improvement second XXX note XX.X% quarter operating was sequentially the to achieve basis XXX these we better sales. that at earnings gains that than of It's also from least said adjusted ratio QX. outperformed sequential point a improvement of ago. XX from

third-party our the just cost are the procured from Those second Our from of points highlights more XX success in in a purchase points QX as trends. fluidity measured performance LTL. percent improving American as financial improvement headwind haul transportation, effectively in solid basis XXX QX. North in we network in of a moderated revenue driving quarter basis year-over-year line to is capacity

we segment QX brokerage $X.X this remind to QX was you services, X% the year. in but late excluding other by revenue, intermodal intermodal, and in revenue until business other reported sold and increased of by as Our X% declined this reported, I'll that is billion. segment in Segment year-over-year,

day fourth business the by North XX% driver or growth Adjusted by FX profit weighed points. this planned American a XXX our segment on expanded year $XXX from of to is brokerage will business, ex-intermodal year a This The to ago. EBITDA increased Adjusted points addition, per the three which revenue and million. percentage truck two increased In outstanding another the from EBITDA X% this our quarter. in year. our RXO of core margin X.X% segment by brokerage be and in for of We versus spin-off XX% XX% largest by ago quarter had years ago. basis XX% loads revenue

Second brokerage revenue XX% quarter truck rose year-over-year.

minute. Our truck specific drivers dynamic a our the a about execution strong will in reflects in more Drew brokerage growth market. speak

Brad both X%, in results, line Logistics by first from all top grateful our platform and two And three in we for and and named ninth Iberia organic quarter. saw backdrop. accelerating revenue regions. As the points Inbound of year. revenue in percentage U.K. XPO Europe profits France, growth the the XXX grew acceleration magazine the during organic we're mentioned, We major received quarter. deliver top lastly, some despite for to by the external geopolitical was XPL recognition a continues

partner our and Forbes the the as best We transport for as on Place official Spain for partner were year. Index de for Best edition named in tour. the to consecutive official a fourth women's transport Disability place for the Equality of expanded year. Work XPO we year for And the Disability the a for the to Tour France work named XXnd the consecutive the partnership Inclusion served second

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

Mario Harik

and Thanks, everyone. morning, Matt, good

begin, Brad and Chairman. It's with an LTL. trust together. to and lot want now, in the to to I by executing Company entrusted to going enormous has their be Before working best-in-class transformation the privilege constantly lead Executive opportunity continue continuing year in a more be I ahead for I'm as our also with we're accomplish inspired to a XPO and almost run and for thank Brad the business Board the me. humbling and with team, a placing I've

and before areas gained grow to our to tremendous the continue the capacity. these In we our pandemic. quarter with LTM results. and momentum fluidity taking quarter, We improvements over with since the we the service level This fluidity network all second business. accelerated has in see we're traction last said, achieved in significant the drive Brad of measurable highest in network network actions As

on new according our Net basis. tracks reached for [Massio], Promoter customer a also a high a third-party satisfaction, Score We that consultant to industry quarterly

investments our are five track. addition, October on since in The capacity we operational. are In added terminals fully

in analysis, new sites in or We've adding the doors Lake service. terminals Atlanta, Now Salt very Dallas done Houston, Philadelphia. evaluating network and and about terminals for to with being markets we're we're LTL expansion. City, Kansas new We're disciplined growing City, demand the existing

added doors goal XXX the way markets by of expect to to new us doors these today X/X new We net long bring The continue net grow the XXX over the adding over of next we've end our of term. to year.

in footprint, Looking competitive beyond advantage. our we're a investing capacity where we have

second trader of last we quarter, That a example, at an in facility the we line For we our had produced in that fleet. record impact. trailers quarter, And our second manufacturing added a number immediate announced Arkansas. production investment for

LTL high. this our manufacture more haul for to XX% year. is target plan in-house X% capacity CapEx by at line trailer will than of trailers expand an X,XXX over to all-time Our revenue this year. X% reaffirmed This to our We've

our two up tight, and are hiring more was shortage. at particularly posted is second in strong quarter. quarter. overall average each the of for We increase environment The month had in but a the our training the channels with XXX These drivers solutions in-house well been training side, the targeted driver we does to we've driver as job June it for ongoing ramping applications number a XX% locations. On hiring efforts in working the recruitment recruitment. still significantly

talk quarter improvement year-over-year to had operating about XX.X%. a ratio Now our a improvement, points estate. a record year-over-year improvement gears promised I basis want and ex-real XX inflection That's minute of adjusted switch to for of We're second and QX XXX track We from on Matt QX year-over-year basis of pleased noted, of was for points improvement target that year. XXX we basis more than overachieved QX. on delivered as also we to our which, this points sequential that. I'm

throughout at yield the the drivers, we strong of expect year. underlying Looking the to balance remain

Last pricing impact Our a tools us of record for in sustain pricing won early a services. And value technology QX. mission-critical our standpoint, our saw yield sales quarter, contract From our in each us. XX terminal. volume committed trajectory second newest fair on sales experience already very They're the customer. their with month getting our on we in new the of with a just strong They signed Atlanta and at onboarding to with business renewals. top we positive happy I is met new that large with shipper with the quarter. week, they've amount the incremental XPO our In

both in for This of XX these be top we're addition, In customers this LTL quarter, more with two XXXX. brands well set would us XPO. discussions for up would

excels. cost As quarter, the also technology This we second proprietary visibility management. levers. onboard management the we'll cost area revenue, team's to is we our In another focus enhance cost on into where more models introduced

level has We and significantly also have tracking service the capability a potential new customer pace improve visibility. that to

a line haul largest and through large more to One rates. over is more of the cost we We'll continue material newly should savings. There continue opportunity network moderate to, year when negotiated drive transportation. costs costs drivers are expect solution. time, line to of as third-party as operations equipment, by third-party carrier is our the purchase optimal we the move times transportation But and purchase and miles. efficient driven back in-source haul add This half we

to intense carrier by up, underway. We be business. best. to initiatives it of creating sum lot the part simple. is a And every on world-class pretty our maintaining a of We focus We're have goal an want LTL the

team than of year, at EBITDA of points to that's we ratio year-over-year in expect more engaged billion adjusted delight least determined highly improvement and adjusted This to basis customers. ex-real a LTL XXX generate have our We estate. $X operating

our and on return and levers volume more capture share into that and the for XXs. well can expand in fleet, a high over our operating company-specific those improve have people investments take investments ratio time. doors we Going forward, We'll margin our

Over exactly the And nine as positioning Day a on we know get spinoff. we're we've the from become to LTL in perspective. our at world-class made where months, our going carrier more Investor major every to LTL closer here. last advances details provide XPO we growth from plan We'll

We our also XPO announced long-term a for as outlook company. stand-alone

hand to Now, brokerage. to it cover Drew Drew? I'll truck over

Drew Wilkerson

continued these North by outpace about quarter another I'll the I'll four Thanks, the performance you delivered. had giving from the metrics talk brokerage to we highlight that team quarter what's stellar strong Mario. driving start industry. as truck Then American the results. sharply

First is quarter was XX% load of for consecutive quarter, in seventh volume. We business. double-digit loads growth grew the it the and by our

Second, by margin year-over-year XX.X%, is we delivered us for a in profit up gross This record of a basis XXX points. any quarter. performance

Third is gross by which year-over-year we grew profit dollars, XX%.

We of fourth competition a We gross business more record carrier, are an continue and points lot metric brokerage immense have for do Connect basis than the EBITDA with and of these do customers QX years, of XX.X%, digital come and these us through more growing adjusted Truck that's to do in carriers To We network. business XX,XXX because of flows highly the margin. to through opportunities. driver many relationships. for first metrics week of companies. back have XXX economic especially shortage. a XPO massive allow are cycles, capacity that. four carriers who independent our a volume industry, Fortune us. Scale long and X,XXX XXX half powerful it America carriers achieved track to registered scale, North cutting-edge with of serve double-digit to the make refers combination and access our margin These EBITDA with confident is adjusted And we've profit carriers we'll last our week the higher fragmented efficient that after a on that we're to is us platform over nearly technology to built year our customer than including a income is there's through deep

platform like conditions. have assistance. reliable into tire the We're Our allow saves to dynamics. focus have machine a learning on versus money digital program strong who automation more the productive and customers of on our roadside of scale a the fuel, work shippers, The means problem amount capacity our make platform and is that And we dependable appropriate customers. on known being on easy our have we as for rewards we've contract the with built to and people them carrier things sure business demand. market solvers use current based market national spot We understanding our to

second spot. we a instance, shift that spot. made deliberate earlier, XX% revenue to the XX% A quarter a favorable in operate year of mix XX% was mix contract XX% For and at and contract

Our years, since. we've to we on put in to and now, vision because manage growing XXXX, a technology the more off. XPO market. gives vision the XX to the of early serve this the the ever a been I'm our to a the us still opportunity more last excited that that to platform XPO made and next privileged we Even to brokerage dollar in years continue In decade develop advantage it's to change. clip. agility the after fully building first-mover pay our platform had automated about reality Every days leverage over digital system, Connect, even outpace the lead team rapid of introduced our and at we customers I'm continues

average platform created of platform has additional first covered increased our It's the XXX,XXX year-over-year brokerage our of been by Our quarter. downloaded the XX% times. loads drive for carrier weekly for than The number us. were in on gains to tremendous up share demand truck app And the digitally users see XX% or mobile from more XX%. exciting

platform, Chief that as continue we of once will our XPO's spin Amiel, RXO new off be the called currently will which I'll ongoing Yoav Officer. with Soon, will be company. Connect and backbone leads who technology digital to to Yoav closely development brokerage be the work happens, Information expect of the RXO. And

sense a long strategy the platform a level. with becoming of a every We're high-growth brokerage For on makes pure-play runway for us, creation. value

we'll the and results customers, at sole forward meeting of carriers we'll to a transportation, for I Day our remarks. many Q&A. concludes to focus operator, continue to our our on and this fall, prepared it public a you to I'll Investor investors. deliver go our company As where best-in-class with asset-light be over look new outlook. sharing long-term That employees, we'll turn

Operator

you. Thank

We session. be Instructions] [Operator conducting will now our Thank question-and-answer you.

with Scott Please is your Our from question with Research. first Wolfe Group question. proceed

Scott Group

with Brad, I to And you items. you an the update Mario, first, then can wanted Europe? some ask process the about give on of LTL

So guidance margin I nice the implies in bigger sequential quarter, improvement, sort other look of but at step implied for margin the some LTLs. third if than of a back

So the on the any in-sourcing? any way thoughts more you'll from quantify sequential margin into third get quarter? to think you And savings

Brad Jacobs

Scott. the a a buoyant. lively, The signing a scale and process buyer sales remains buy strategic opportunity and attractive sell show numbers scenario In base and that's discontinued has the close great quarter we'll in It's we'll be got and just asset operations, It very it. as probably but it it spin. The in is time case of pan-European Europe have the could, very a It's platform. to by that an very we'd to value. for with deal without fourth the wouldn't probably not. Mario? case,

Mario Harik

look delivered of XXX second in a quarter, is expect which the improvement to least you the year-on-year quarter, seasonality the points OR. the on sequential Scott, basis margins great sequential XX.X% XXX overall adjusted at When second and points, of LTLs the we third an neighborhood going said, the improvement a we an from basis third at typical quarter. we typical of basis, our on

Scott Group

with could I to of consistent the going you And seasonality more the there some be asked in-sourcing about that you Is forward of to lessen do any then sort think other just to quantify. also way in something LTLs.

Mario Harik

Yes.

talk let's So in-sourcing. with

XX.X%, our course So to were bit which on miles we which we lean points said the roughly you do, transportation outsourced going at this basis the When to were expect that we quarter, line continue from but year. do look moderate purchase purchase the last more costs we're haul year, through year. up transportation to second was a would XX is what of

initiative longer-term how more to transportation That's of don't strategic expect much in-source Now to in we a XXXX. and for expect us as drive purchase we that.

to do more expect as a mile improve much we year, newly network went per the course basis transportation. be we up predictive per second to moderate the negotiated fluidity, how However, you for continue was the a the on mile of in in rates May. on year-on-year the of through rates effect And by give with into just we few as can we cost purchase in with it in the haul month up line that first quarter a the XX% XX% stats, cars us was quarter and they basis

So back us of give would we back in we we head continue to the a cost as half of to and that half. expect the moderate the portion into tailwinds year, expect the

multiple Now our your of OR us least least and price can at we points billion on back the accelerate goes improvement. to $X if are guidance EBITDA Obviously, get the improvement. question going basis of to back all for to volume, cost and there we XXX paths all our to further improvements that at of are And doing.

Operator

you. Thank

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

Chris Wetherbee

operating of XQ, to quarter. had basis could a and year, I XQ stick third in the up, particularly think, maybe for when was in Mario, we guess you I had the XXX from neighborhood of the So ratio on with network. implied I some last you step that points the challenges sort

the I type of is guide think increase in sequentially. in OR range terms in maybe the of the implied XXX-ish

like to little But what's there's to the from So sure a bit cost within that maybe some had just tonnage to second made XQ discussion seems and in a efficiency that step on XQ terms comment? changed maybe it more to of because maybe color quarter around from you've I wondering, are happening cost still in the sort that XQ forward. parts just some make moving to XQ be dynamics from I'm want was want big of needs perspective. progress and of some the I business the there understand if a get

Mario Harik

Yes, sure thing, Chris.

when So environment a points obviously, when And we remain XX we the follow we the go quarter, got from look sequentially, if very now second first at in expect our the pricing so starting we year-on-year we pricing, on quarter, favorable to basis with third to the robust. -- perspective, basis.

and the the in we we strong yield were Our up we the double back yield the to have continue expect have comps the the momentum But XX% down head we'll half. we be the year, second X.X% be month XX% continue but in quarter, perspective, second in sales. tonnage in up on remain tougher and to excited to the digits quarter, mid-single the quarter quarter to first low in digits versus about were although quarter in a and of was volume contract as to we July. course into we renewals the second X.X% our the down front, up of in From we're the expect for third

in prepared improved new a wins We remarks, I that top new we As trend the said ended business the saw XX second record quarter, quarter. customer in the in and my second through quarter.

met great to third I of them, top two potential them business in way. and here, We're And quality word send with we terms offer as on-boarding here in understanding quarter that recently with very with Just customers momentum we're more the experience. XX they're well. top our way. business early having -- in in we're that going happy quartile They were our

obviously also will overall costs, to costs, side, we had I to And would to a we through year. year. course better actions. haul and through third-party that it that's line the cost spend of the some lead moderate best finally, lead Then So the the We've line of that network going the have well. volumes dam results on mentioned as course haul efficiency improving of to number had the

Chris Wetherbee

of the clarify, think volatility. from the lot XQ right in sort to been XXX business, transition there's basis just a seasonal XQ of you to And points around Okay. is

curious right of just So kind about is we going that as the think what number about forward.

Mario Harik

Yes. to The is call change typical XXX second our range it, seasonality of XXX the in from the the, quarter. terms third in to quarter

Operator

you. Thank

your is Please with Hoexter next Ken of Bank Our question question. America. proceed with from

Ken Hoexter

Great.

clarify routing the business mentioned process, structure that? round or then new or XX Can That's to your coming just Just three potentially new that levels is risk the you you service online. lot a Mario, or of top your up. for maybe how EBITDA talk And out, to coming that customers prepare leaving. you to about

I quarter $XX think about $XX million $XX million the with raised $XX target beat this about million your or you million overall.

kind understand the to the you half that are beat quarter? just that back large no the I of despite want in on to saying outlook. raising change So second guidance is vision just your

Mario Harik

Yes.

technology First, when -- I'll in over mentioned it we our launched way earlier it's turn costing I'll the to also of piece. I the question second customer new for then quarter you model. look and the take guidance But think that proprietary whether casting we -- Matt the

volume will we deep we understanding have as it priced a to we about them, and how they So, we where the need according balance very lanes, have get network. impact whole, a would able want excess be our the we network capacity more be and and when or a better lanes imbalanced fill that customer to as onboard backhaul how to to for

have terms well. look that how we accretive we analyze we in these through terms them, technology and how upon profits price the new And and we easier these at how helps with is a for that both data make will large volume as relationships but these be of determinations fit us So, network. And this better. in

Matt Fassler

of And by midpoint an right. beat that. then raised guidance $XX new relates it XXXX Ken, for $X million guidance, of the We million. to our guidance beyond additional as by our you're We the the midpoint

and relating like more about In services. high adjusted estate, the of we're year. about first strong in asked mid- half the brokerage second LTL, increase to of about an You the teens of you LTL LTL as had XX%, EBITDA ex-real and And can the particular, both think we to in in year. in that visibility half

good very half on have we second LTL. So visibility first to half for acceleration

Ken Hoexter

I get you then that your Is And you a earlier, what throw levers Was to do out And XX% OR think moving target? that number? there? near-term just forward. mentioned need

Mario Harik

we a When getting XXs think goal. the from overall our perspective, about to that's

to margins. points CapEx focused about strategy volume we on-time providing QX expect by XXs aspects the grow a of service capacity. started expand spent Historically, want and continue strategy that well in on our come, delight our and customer improve to think that the outstanding our to We into over all by damage we the years hundreds by customers is the want maintenance service. to we to and performance of we of year, adding to So if basis to get where last we order

then in to haul where optimizing the to Now industry we're more to finally, structure. manufacturing keep to people will rate and cost And line our proprietary pivoting makes our doors, strategy. facility And pricing leverage sense. Obviously, ward. continue We're it in leveraging want investing miles moving in-sourcing forward we technology more our be more equipment, there. firm on our

into in model come. come, we'll Over Day we early And improve color one give years years our on to the over XXs. to later points the fall and that looks basis hundreds the Investor the the to or expect to get of more how like or

Operator

you. Thank

Wells with Our next Fargo. question question. your Please Allison from proceed is with Poliniak

Allison Poliniak

next I industrial guess with capabilities? that through is a walk Mario, new moving should digital share then XPO covered expansion through whether Just you better existing Can the year, into softening you in bring this on secondly, side, thoughts maybe or more agility weighted any this how towards that brokerage we digitally, cycle, loads gains of that, on see proprietary investment advantage even side? market line customers competitive proprietary manage the into was would And accelerated we into down the cost of of more that or this more Connect the should technology. the technology attracted there. to expansion customers to think lot just

Mario Harik

we companies customers. enough mixed have feedback that couldn't fulfill these POs demand where Drew. of the to are the first, first at turn customers we the X/X And today, look hear one it, over customers. I'll customers have And then produce parts these so of companies. and from it industrial our to they many You open macro starting take from When But their had from got their pent-up industrial, I'll Alison. with they to up that product softness are which that, stronger things shipping, things actually Others they're get see become in in are demand is that's as others going able easing move are recovery, supply much to and seeing faster, chain economy is that as tailwind but the demand. very seeing in to that the impacting that actually a leading that are we today. through much generally, we industrial how where -- through overall being

yield them helps And and like that pricing how then pricing technology, new similarly in earlier, the delivery can technology. labor to reducing density from of to proprietary technologies hauls us efficiency. and pricing increase mentioned and have docs as the the the competition head the perspective, will price finally, billion technology we to that where in customer. better our to route have a like with shipment and a we new much can models visibility launched some understand number haul get to called this when things better And customer-facing the one with can on gap overall and than also customers where I And launched on just of line case a around us, processing and and the giving we shipments. we is through their customer spend see give to of operate of over slew bridging point, haul pickup in the use on cost is a And more allow launched on be with the efficiency spend. manual we of line terms in re of well. network so is to of we with this And we as every piece-level pallet excellence in It Now technology network We balancing freight dynamic our moving level costing doing line with going and our operational time algorithms of and start technology focus And possible. where we we haul. just pallet we automation proprietary and help structure tracking, improve yield technology has believe network optimize how highest they're service terms well. the $X.X also to when better components. for the Number as a optimize given to and the the then built cost technology how for visibility then

Drew Wilkerson

this Allison, is Drew.

the in it the also talked question, working customers, side, On but of both network. that When existing new you and carrier having it at our part and carriers last quarter, -- was with. both we're carriers second existing was about new we XX,XXX your look

but side XX,XXX carrier both are our have all we the to and the the up quarter, This customer right. and on side, of carriers, stats

The XX%, on XPO and up are is carriers XX%. Our up usage registered carrier are customers year-over-year the Connect XX%. registered up

because the look been reason began for investing So quarters, several at the that main had we've we able when technology you in and to the is outperformance do that we've past that, XXXX. that's

Operator

Thank you.

with Our next question UBS. proceed is Wadewitz with your from question. Please Tom

Tom Wadewitz

on lag bounce in expected back volumes? had just congratulations the you've than X.X% within being about Brad. well, that? the XQ a guess, I like to an expected. the on of and pretty LTL. I network XPO, a congratulations future, if wanted I transition Mario, on than and know LTL Or time that's a I side is quick it as decline performance decline have happening the But The bit seems ask future I volume bigger in a on leading greater would CEO between and the network. or the don't improvement in what's a

You're about customer satisfaction improving. talking scores are that

in volume commentary lag the trying that in get that do Like we And in a to understand in just growth that? XQ? to versus the how affect think second half? could of I think XQ So about volume guess, then, volume you you Just weak the is kind should LTL? XQ how in weakness positive time or does

Mario Harik

You got to comment.

QX thank as QX, the wishes. to QX about sequential were think said, you well from down favorable was But guidance. was relative the when First, our But tonnage trends for within these peers. you which you tonnage X.X%, to

that I was if environment an as that, you -- example, year, Now some when compared the to of at compare the from softness what I base, customers. what last that you When about on the feedback drove there to think mentioned we earlier next leading in was customer look the slight existing to that. mean, --

excited we have about what is sales perspective. a momentum we the Now are from

we've the fluidity levels, had pre-pandemic record With as have quarter in from how the sales and and improvement wins we quarter, that where well. business network the our is we're to through accelerated back we've significant in force, the seen momentum great that sales performing second

volumes So to volume when about customers we new be new we that going that's network. our add think more the as head it, and onboarded and back into in half to XXXX get

Tom Wadewitz

Well, within the one discussion. guess I other element

this way to the Dominion, talked that lot on as well on improve or base at getting Is experience. on think they LTL? technology employee strong an service. you improve the technology? have opportunity as like need customer service if at having You something focused that focus there's Old to about the improve employees look remarkable and a culture a culture I as of about to really What the

Mario Harik

And traders. customers plan in the supervisor, methods the on terms you best customer ongoing Yes, the loading on, rate Starting of a these a them trailer, And loading quality culture, or where operation that a we and we in it are these close now up of that of a one number first, give just trailers, now for This love where Tom. But actually very a actually feedback launched continuous feedback in workers but help loops we is have much changes you're packaging, culture freight that own have is keep that of practices. improving on our who sales of working culture spot drive customers dock focus on we that. an service. initiatives loading example, the give team a also to well how ingrained our where improvement, of number with as quality -- new our if whenever part are open our their in a we incentive you that dock you're -- photo field also our incentive a you open plan. take worker and have have the whenever And but and of loads. for actually ingrained you technology quality initiatives people up the that the or are using whole of trailer initiatives number driver, in a you these of you as actually on of

momentum on in customer what that's customers. much we're quality tremendous our doing. in offer ingrained the And focusing that So very the amount is we and of

Operator

you. Thank

Our next your with question Shanker Morgan Please Ravi Stanley. question. with proceed from is

Ravi Shanker

Congrats in for brokerage, to give the I for in well comments lot either question think you mentioned is the you, is on or Drew. opening first of brokerage deserved. Can share Brad Mario, coming marketplace. us is guys? very your Like that from Maybe taking Brad, share a that you that Is a little coming more it from it's share growing from? coming detail the from? And on acid-based other that? is where pie? who incumbent digital Is that coming carriers, from brokers taking

Drew Wilkerson

for-hire of from It's and I've in I Drew. whenever before, asset-based is you years brokerage but share to market. the for been the brokers from is industry, confident grow, XX% look both. grow the several next XX% said carriers. coming that share continue to taking this is that's going it Ravi, trend When years going this will in whole forward. the brokerage at brokerage about for know had and on I'm a the continuing industry, started Today trucking is I as

of history to have XX We've relationships service with, our top solutions us it's brokers. for other customers team The customers got continuing coming technology from from coming they've to And the average. with of been carriers that customers. long we for it's on got because creates service strong So, XX years customers. that the asset-based that for provide the is create a and solutions and

Ravi Shanker

is kind when fragmented tail, some with Got you going max the compare limit think because of an the share you kind that a do think target, I there don't you what compete always incumbents but to long well incoming natural steady-state might share his is limit, of dangerous it you out share a anyway, of it to think? ask I'm larger as he to it. as -- a of kind like thinks CEO It's ask is there where

Drew Wilkerson

got share keep the way market, long go. it we've to and a Right to we've X% now, in only I'm brokerage going got Ravi, simple.

Ravi Shanker

XPO, can ask Executive are Brad, of plans and busy Chairman with stay what it. But kind Got Non-Executive ventures. any Chairman as of and I I'm your if RXO. sure you're extremely of to other going RXO XPO you

be? some are the going priorities of to what So

Brad Jacobs

I very last could hear just very the question, end. the your part of Ravi,

Ravi Shanker

of XPO Non-Executive of to going as What and RXO? of is your Chairman are priorities some Chairman Executive be

Brad Jacobs

yes. parties, All

with RXO, I'll obviously, a Chairman I and at I'll XPO, spending you're expected Executive Chairman to be normal duties XPO. be duties expected the time, So customary much Non-Executive Chair more that Executive the be for will be of still spending the at I'll involved. perform but at customary

XPO So, I'll involved, in also there'll than more But be in invested RXO. be time RXO.

Operator

Thank you.

Evercore question your question. next Please proceed with with is from Our Jon Chappell ISI.

Jon Chappell

that hand -- any margin, the scale hand-in-hand profit think margin network, where of a in Drew, Just more does volume about become XX% bit is a on go gross gross if there improve up as the in to kind about the the does Or to you trucking we we And the think a headwinds? quarter, a throughout potential of as profit cetera? you the kind falloff way the give growth a was that a second benefit July? it in market think any the technology, about that et as and bit does does ended volume with you go headwind? breakdown to then on threshold month-by-month breaking also, quarter XX% margin enable of basis the of trying the kind volume second to a headwind, or of

Drew Wilkerson

Yes.

growth look up it, came started a back May So when peaked off just in June. in volume you then little down bit again strong at April and in the

pretty When net volume the revenue that around of gross July potential and margins. quarter yes, opportunity by talk that percentage. up So, the saw the throughout expand it second there you was was putting the in about XX% future, QX. do consistent in to profit overall is operating off us you for And falling same

Jon Chappell

Okay.

floor the starts I profit in gross of year to we decelerate, is to So just margin XX.X% mean, half new as back frame, the XX% think kind of the about 'XX?

Drew Wilkerson

back the it the year. of lot a the of half floor. call There's unknowns wouldn't I for

outperform market the confident in have best-in-class made profit forward. percentages that that we've investments going the in gross technology I'm is we'll that because what we'll So

Operator

Thank you.

Schneeberger Scott from comes question next question. with proceed with your Our Please Oppenheimer.

Scott Schneeberger

kind versus I'm industry dynamic Congratulations, -- Mario, as you. And of What the back and Drew for are anticipating dynamic Brad, on the brokerage. truck in Drew, curious half keep I'm it rates? well. for going to the you in spot you how more may year-over-year? do It contract that time you you share any looks improved can to And toward intend side contract renew about you've spot? year contract what rates others? the of manage so color like than

Drew Wilkerson

Yes.

perform they contract So, have the the think the can on I'm year-over-year spot When can they rates the now that down right back They're still loosens, market some don't overall. come further are in a half confident look you fall at from we've or outperform but, year, basis. tightens much built the in we'll that unknowns rates. that model where of a I macro market. too below there's well either whether

that? repeat you forgot. And Will so of your the second question, part I

Scott Schneeberger

versus contract than for time the spot. there of management others? is the And just year where contract more Yes, a you of renew

Drew Wilkerson

our that that's Yes. up quarter customers the market this something contracts XX%, first And and Typically, always which in. come we're second was quarter, for through annual we that to volume go saw quarter manage discussion. the fourth in is up the in why the rates our for with ongoing an -- perfect you but it's and contract

Operator

Thank you.

is Our with Jason & question. your from Please Seidl Cowen next with proceed question Company.

Jason Seidl

to here First going the wanted CEO I forward. of stick all, side. LTL you the Mario, congratulations role on with on

cost of in-house You haul performance, differential talk we Can between line line will more should your the haul. go from an you expect, a lot talked a you haul? outsourced is in-house little the bit numbers And in-housing savings and about that as of about reliable? terms operational performance the more haul In line in-house up?

Mario Harik

Sure you. thing, thank Jason, first,

to starting XX% when between per is So mile haul. line and differential of haul with cost, cost roughly in-sourced a about outsourced think first XX% line we there differential

a you the generally place. last on-time Now back of in much half back if in go year, terms service for in of tougher were carriers service,

on bit. fairly on-time So, was But gap has and a narrowed service then, internal quite that wide. since the differential between external

a service. So carrier better is on-time now at level much of outperforming

It's equipment. better internally, your your better drivers, However, internal it's always internal, always because because is your obviously, employees,

you So XXX% there. control it's of the have and usually over full time effectively it,

half So, slightly the better of closed gap -- for back has total, significantly year. it's in last that still but last since

Jason Seidl

what right you How we should is think you term And baking want have? how any. terminal are you right might this comfortable to footprint? to that look now, make the longer And if your at about changes footprint

Mario Harik

Yes.

year. new so opening, last plan obviously, terminal the that net we doors On we to add October a initiated have in XXX of

And far, docs all where markets added doors. at about have the When improving demand demand our that think are capacity that haul through are have so don't where we we if these we in either from where or certain line our to And we network. customers moving the handle operation XXX our freight we've -- an where of where seeing this we're country, you network, well south market closer running for capacity, to a seeing you the demand looking market out market to Atlanta of down capacity flow both Florida. in the already demand seeing that example, we're were example, give we of To or is expand local in tapped for is those. the market as as to the enough

is gives adding volume our this more And more us haul terminal handle freight line that us the by what's there as driving well move that So strategy. through the local new as capacity effectively to network.

Operator

you. Thank

with is from Our Suisse. go Credit Rosa question Please next Ari ahead.

Ari Rosa

in those to It on tonnage the seems conflict. of stick like are that to or negative extending promotion capacity. congrats Great. growth echo anticipated I'll in comments others' kind Mario Mario, CEO. terms things topic promotion door the of I versus on two And to of wanted adding

start And it elevated really relative guess to as a just been service more the idle bring of And question the can has it can network about new up some on expectation think I onboard little we talk maybe improving my do So than as you is to logic. you anticipate is, XXXX, tonnage out customers? be filling that year-over-year maybe you maybe capacity? that about bit and history? Is capacity, what these

Mario Harik

investments, as think saw that pick we're we that both have softer when generally, and feedback we first capture CapEx perspective, last up, from a said over a to think forward, again, we generated grabbing well. But case acquired customer volume estate strategy more to adding term, going expand of $X.X LTL about real when handle that network short investment actually to we seeing was from demand than these as was be to on we expand demand a historically, of what Ari, from mix since the Conway the in we're investments to come, going years and growing in the not steady margins it billion moving be in to cash to our doors fleet and us share point and long-term Conway, The and to able demand, volume. able be keep point, capacity think we investment as and in for wishes. being to goal well as we to perspective volumes, able that market drive Thanks, is the about but the acquired year. since But best to capacity,

obviously guidance, the attend I Day later XXXX the give fall. And in year. For Investor that we're to going encourage be in of more definitely we'll you to holding the

Ari Rosa

well, your and in LTL terms a what this brokerage? decade of on just broader to on can both reflections would have given Brad, for XPO thoughts went more and less and on imagine. I well, experience not any spending Brad I these Okay. ask And too I to going Great. the industry sneak we're a to building of wanted because if follow-up. get in what went the many opportunities future quick just Brad kind with probably calls. business,

Brad Jacobs

of free to and careful our last over feel I than that feel team us and back very return spend have Express-X. what and have EBITDA we time. of proud given now. an has it flow. our proud. $XX the this relatively less in with right had money is at It the and done million And small and had about intense team. XX a very and cash us, proud generating we've I look years, off company of very started shareholders I look over And on the back the being grown of I feel accomplished. the buying million $XXX We revenue XXXX, value what how to on capital business with we've lent we've creates lenders focus what

we So We've Company the to Company where point we've much positioned. excellent And CEO, an like and have business got Harik strong. an and up that. spinning decade run will the very that an with comfortable be the so people cultured be Mario feel up off I last RemainCo running fact business over brokerage, that. I management We're LTL the excellent like by grown CEO to CEO is dividing where I divided three. and warehousing already run excellent will in the the

they're of second truck I do is, good about part the businesses. LTL in brokerage? your I both what The question think the business future think of

here. those Mario and I said, we -- a brokerage, very XXXX, in I, truck beginning we approaching think the right we're from way In have vision particularly businesses. the

then money we this developing the going automate let's spent And Connect, things in that computer. there's name we're was that making elements originally And developed off we brokerage what Connect XPO what And Super lot a investing was the the technology into our humans, much in are it done of freight adoption make that the but XPO strong, call and optimizer did. Let's gone and my to what so one, very by that's into but taken And the are main business. done by charts. Mario, business rates is have opinion.

a a a I it's that carriers because need. we we future service So need, tech-enabled brokers got provide that and bright think provide shippers service has and

business. the good I'm with So

to not In but terms plan business predominantly completely, that's there. LTL, of There, something different the completely -- levered levered industrial economy.

business And growing an cash now, as tonnage, was have productively. up the had taken run Phase to when the until economy. the run of EBITDA So industrial the run intelligently, the business And not of we've the business not for a run not growing but to for efficiently, the business in -- up we LTL down that, result with that bought line, X growing to top more a $XXX-something of more million go not we and there business to more growing run business we've approach the fleet, it. headcount, to doing

generate we've on into Now enough $X.X margins EBITDA. going emphasize CapEx And grow and I'm of a way, see but while anybody into growth, billion of done. cash. track by something we're generating can profit billion money that the very instead, up But and what taken will. the business it the put it, all of that. take put $X volume from team X,XXX of That's you points a and to to our I can't proud growth you're of basis not do a to cash and in really lot from business big has because course,

we're us; Now we're top going and in invest well. assets, optimization focus business of discipline assets. going Phase same the the margin, line. that inefficiencies, the LTL, in LTL business fleet, grow and terms I our Phase running the point LTL, of to sweating at the growing inflection were also reducing of to a waste, line going we the to top we're in And time, of of to X on we're in love which but and way as the continue customers in going eliminating grow the the Phase invest of Big to continue X the

and So, to very, going And a he's the there. confident new next very inheriting it Mario I think future the I'm to is think level over whole years. bright few very I bring good is a platform,

Ari Rosa

results. strong all on for and congrats Thanks Great. the the color the

Brad Jacobs

Thank position, shoes you fill. you to big your on new and congrats have

Ari Rosa

much. Thank that. appreciate so you I

Brad Jacobs

Thank you.

Brad Jacobs

volume will failed for about remains have long growth. and of call, a In LTL, any to help the for for filed us delever this continuing process Truck its EBITDA on fourth adjusted ever. with a spin another is record we'll reported The for continue got earnings there talk them. CEO, Europe of spin, quarter. have we've going both should rock LTL, and and on quarter Well, brokerage is operating double-digit run of quarter. Drew have ratio the for Mario runway lot adjusted best phenomenal results a with we our including our to to the Brokerage, highest growth track company each well After of

So pleasure, we'll thank It's soon. and again you, a everyone. talk been

Operator

concludes conference. today's This

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

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