Earnings call transcript Q1 2023

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Operator

Welcome to the XPO Q1 2023 Earnings Conference Call and Webcast. My name is John, 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 limit yourself to one question when you come up in the queue.

questions, we’ll to we take additional the back can. have and queue, as you you’re get welcome into If many as Please recorded. conference this note is that being

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

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

A required earnings discussion company's no law. statements, differ SEC to could of made are call release statements earnings as actual the materially well any these as forward-looking results forward-looking as its on today, has this of to by company factors only and that the filings release. extent obligation made in company's is of except update the contained to The cause in the

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

the of the find company's a measures contains can information section Investors statements earnings important regarding additional website. You forward-looking copy company's of the which release, financial and in non-GAAP

Mario Harik. you I will Harik, Officer, now turn to Mr. Executive the call begin. Chief over may XPO's

Mario Harik

solid soft challenging by Company-wide, you revenue saw XX%. $X.X EPS our year-over-year I'm Officer. morning, Chief and report billion, our in adjusted we a generated Good market. a Ali Strategy in Thanks morning, Greenwich with our everyone. grew CFO; we quarter Carl macro Anderson, joining growth here of for a And call. This reflecting environment. despite us Faghri,

range. our We was low XX%, LTL X%, trends growth. the tonnage March. within adjusted than adjusted by driven for EBITDA segment, growth was EBITDA down outlook primarily North This double-digit which weaker our also guided of in better our in was In American industry delivered

focus making for morning to X.X. four comments we're want this plan our pillars the on progress LTL my the I with of

pillar to service of service. compensation quality profits. to their incentive levels. XXXX, to early thousands employees to in of customer LTL plan implemented the provide This is The for tie addition multiple first service In one we elevate was initiatives we industry-leading our to changed

claims considerable decade. was performance our in Our X.X% more in is a was a lot for levels. best first having on the ratios than ratio a the one And impact progress We've pre-COVID This quarter to our claims can time, short made and quarter, was is service excellence last there's tangible X.X%, year. on of relatively on-time damages metrics track. customers in our more we from improvement which a our focus do. back an the In

Our entire organization providing is best on laser-focused the service. industry's

pillar the second our network plan invest is to of our The long-term. in for

Now a LTL, that complete, driving on more that to generates spin-offs in in opportunity growth long-term return capital. invested the have a high we invest are business

to higher to all with optimize opportunities now visibility plan Our our streamlined business model into network. invest the is of We continue more to cycle. parts in

to we we several mid-single anticipate percentage XXXX years. over on forward, Our of average going the XX% plan the in was in revenue revenue And year. launched X.X. as That digits LTL each next of LTL changed of CapEx typically for when CapEx a X% our

the tractors, which our The more brought than mostly investments average to we to we're the the at tied making In fleet quarter, down years of age from year-end. XXX first X.X X.X are added years fleet.

And in-house over manufacturing year. X,XXX target we're trailers this trailers facility in to new X,XXX track nearly for meet produced produced also on our Arkansas. We at our

and capacity in we these expect doors new use XXXX, capitalize in total volumes over that more digits. highly time. These In When growth a help long-term. sustain improve the count on percentage to rebound, Our adding plan our we'll fluidity density targeted calls industry the network for low single market and over grow a additions are can turned door investments. that by

pillar third In headwind mix, of fuel, grew last with We quarter. had plan we The was X.X% yield, first the is quarter, yield our our excluding outlook. described accelerate we as still to from That line by year-over-year. growth. a in

digits. mid-single stronger key and we yield pricing of a and time. service However, operating focus This and growth over area with for leverage multiple our pricing the up contract trends gains have new will underlying renewal remained Yield making solid we’re underway quality excellence. to by us, remains to initiatives lead

utilizing a the revenue drive third-party same fourth capitalize accelerating have as carriers line-haul nearly we a pulled reduced forward capacity we're our on we X.X to two on when with capitalize this purchase here used market to reduction points conditions. weak transportation cost LTL miles to opportunities third-party first the cost purchased efficiencies. purchase year. structure transportation, by the is overhead the of field three by more the are The we macro percent proactively And and The expense. of first, the year costs and quarter quarter, in last by have We're main percentage final XX% we At favorable available. in XX% XXXX. time, versus in bid in levers; targeting continue In versus to cycle by the pillar transportation last

cost on closely plan side, the salaried current labor some executing environment the more structure a with On field our to demand headcount. reduce align our and we're of

these of run the full the third see in You'll benefit quarter. actions starting rate

delivering business to seeing our single-digit in we're of overall, Despite macro mid perform Europe, revenue pricing growth. strong the Europe, to sales quarter, be to uncertainty environment in continues of ahead parts the continued organic a robust. pipeline expectations Turning and our

generating us levels Customers priority, of what summarizing up wrap being we've X.X by over years. this share profitable and a stronger the grow executing gain some over it's it's to by the to best multiple as date share long-term. to our market and LTL initiatives continuing seeing, service I'll plan. wallet. on made progress allowing to they're accelerate like will proactive yield service on to remarks This of my time. translate our We're elevate yield top growth and in We're

investments our to also capitalize demand network make to We're recovers. in strategic when continuing

We level reducing have cost field. and a the executing our long purchase track record we're transportation business. of returns use delivering in in high this by investments of at the rationalizing cost structure corporate and And efficiencies on on our

near-term of track improvement adjusted long-term operational as through for superior business. XXXX. value in outlook shareholder ratio we the basis for conditions challenging we industry, XPO, least to to and excellence confident XXX operating deliver our We're points ability on increasingly drive expect financial While to on our the the be remain in operating we at deliver at

close, our to every want business. in I class aspect thousands Before our of thank dedicated I world of be for employees XPO helping

our execution XPO. great at is help and significant of people now are to who Officer. see Operating Frye Wes a the level every veterans These continue and differentiator, attract This Chief member top potential our talent. the Our Bates will our the Dave LTL best of we Board, plan. accelerate is new in two includes talents our

Carl, to call the results. over going to quarter I'm you. the hand to to over Now first discuss Carl

Carl Anderson

day total and and billion, year-over-year balance quarter X% offset I'll quarter. while in our from for liquidity. up were you, X% was business, North the the higher was Thank sequentially up American good and up the company everyone. morning, take excluding through hundred per Revenue you first sequentially. In X% Mario, fourth and by our per shipments $X.X X% sheet up LTL X.X%, quarter weight, results, revenue Revenue was year-over-year tonnage. lower fuel,

were employees year. LTL salaries, and wage a higher wages due X.X% to year employee than primarily granted increases benefits to last ago,

more action point quarter productivity move as reduce Purchased also from basis year. expense the miles XXX million drive at and quarter labor in We $XX approximately the of costs we we down quarter through outsourced, as was last third-party which linehaul. the to ended are same improvement XX% the We was a linehaul XX% or transportation year. in-source taking

rates benefited also significantly contract We the implementing quarter. lower with in carriers from

and we compared reducing our levels. for down costs year. with brought progress first as our great claims make to elevate the In in addition, service continuing last quarter insurance we damage expense We're claims

continuing and XX% we of we and increased reinvest part the first through bring LTL quarter The tractors in plan, year depreciation in quarter. increase As business back trailers. as on expense the this new million of to in are or resulted X.X level $XX XXXX this our of investment a in

following whole. spin-off. driven expense by corporate by a Now as I'll cost a This was in EBITDA, adjusted EBITDA to the million we $XX $XXX primarily year-over-year XX% the starting We as reduction structure with adjusted of grew corporate our RXO turn million. company rationalize to year-over-year

XXX of improvement adjusted margin EBITDA a year-over-year was representing XX%, points. Our basis

year our revenue For of efficiencies was and million wage income. to from administrative $XXX and LTL growth lower segment, lower impact restructuring downsizing the $X ago, inflation office. down our of aggregate of adjusted excludes LTL X% offset costs pension as were million, cost EBITDA tonnage, EBITDA adjusted by relating the a

per we year income of reported roughly and share year. LTL versus income per the our representing of last in adjusted $X.XX. last finally, to impact million, from with Company-wide, million quarter, of net $XX This $X.XX in continuing have $XX X% compares million the earnings in a operations EBITDA of income, diluted year. ago. from line $XX pension up earnings Excluding share would EBITDA adjusted And was European been segment, Transportation

from The costs. in all restructuring to of transaction first operations is attributable that $XX and restructuring we and income million charges In integration year-over-year our segments. impacted the decline continuing of had primarily higher quarter,

$XX spin-off year. costs we integration million of transaction and the related addition, had In to last

materially these year. expect we the as We forward move down that step will in costs

this approximately ago. $XXX per an discrete from benefit million a we on million is quarter. was $XX share continuing deployed our from of earnings of of Our for up cash diluted the due tax items adjusted XX% operations year the rate tax quarter was some And flow to $X.XX, CapEx. and adjusted basis, generated which And XX%

cash gave no combined and EBITDA. committed $XXX at times with borrowings of quarter This balance the Moving liquidity our we quarter net on facility, ended outstanding ABL cash, under our adjusted us leverage million trailing facilities, $XXX under was the the XX-month of We available capacity quarter the X.X end of hand. to with at had end. sheet, million debt borrowing

And XXXX. currently to of securitization refinance in debt. Earlier this €XXX our loan to in extended week, Europe secured opportunities we term and/or evaluating new XXXX we're with million our unsecured July maturing facility

results. to turn operating it over Ali, who an overview of provide Now, will our I'll

Ali Faghri

segment. Thank stayed X.X% review below decline you, for of Carl. historical in quarter, the LTL I'll for results demand the LTL the as throughout of with North impact our American a evident shipment. The weight economy driving operating was our start a levels, first quarter per

our in a growth a We partially with shipment service the of in count, X.X% reflection led X% channel. improvements this This network. in local is offset increase by direct

to we a As tonnage result, were X.X%. per able decline in day limit to the

X.X%, January On a XXXX, X% up down compared was basis, March tonnage monthly February and down was X.X%. with was

Looking just and X.X% count, was at X%, shipment up February was X.X%. down was January up March

held line improvement basis increased a the with ex-fuel, outlook. by relatively Yield, year-over-year steady our on The X.X%, in quarter. monthly throughout

be X.X% last in the As solid, underlying Mario continued has remain mix but renewal headwind to with quarter yield, versus our trends up a contract year. mentioned, to pricing

up In shipment On X%, compared year, March typical a tonnage with outperforming both and count was our up X%. was April, count sequential down X% was tonnage basis, was shipment X% while last seasonality. April up versus

number the approximately the elevating ex-fuel, being at we continue able And to levers focused up time. service over that, quarter same quarter we're other improvement. yield more the pulling and first second of to accelerate on to there We're growth driving yield, beyond value yield, we're increasing by naturally expect providing to Regarding This growth. will translate price a as very year-over-year level yield based are on to be customers.

our taking pricing getting accessorials, we're expectations. that we're accounts additional growing also providing. example, ensuring value-added for compensated on the we're meeting services aren't For We're

by was had a a Turning to higher We a basis business. XX to operating of capital quarter expense, which year depreciation the investment performance, points XX.X%, first points in headwind our from our is adjusted basis compared margin driven XXX ago. by ratio unfavorable

which have On headwind, outperformance basis, year. improved points typical is by last this an adjusted seasonality. improved would basis sequential XX versus basis quarter, versus we compared XXX OR OR points to of fourth adjusted Excluding a the

wins soft outperforming another growth organic of the performance was European were both of and generated and and propelled business, despite delivered revenue higher customer by respectively, XX% two to quarterly and our digits. a in revenue growth by of year-ago than This a X%, European low renewals. the Europe solid key Volume our X% markets, And period Moving with currency the constant single business UK pricing of Spain macro backdrop. mix contract new we overall.

positive On the year-over-year. was basis, same France slightly

mention reporting. wrap includes a the Before performance. want to which measure we claims tonnage the released current recasting service some up, last metrics I outlined It data as financial and to disclosure as I also of make damage more our X-K industry ratio monthly our Starting into key reporting updates peers. month, with visibility numbers give be new we'll our comparable greater you well. performance quarter, changes the and our These The with business. reporting improve should our

With your that, we'll questions. open now the take please Operator, line.

Operator

you. Thank

question-and-answer session. first with Chamoun Instructions] question BMO. Please the [Operator We with question. the will now line proceed comes be of And conducting a your from Fadi

Fadi Chamoun

should just how wanted purpose couple Mario, investors forward companies we about committee Yes, get in as good maybe a committee for years? and the Operating thoughts I of Excellence role Board think your taking move next not question. many about Committee. this to the this the of form morning. of Thanks my

Mario Harik

for Fadi. He's to Thanks legend. Wes an obviously our LTL we question, recently first, the added And Well, LTL fantastic operator. is Frye a Wes Board.

the sit meaningfully we focused on Frye what expand of to effectively on and as Allison the Landry big needle-movers, myself. years So on levers it's operationally both as would we're improve committee X.X well our on to the do over as plan. to it's ratio that execute how And LTL it is going our operating come Wes focused big

the the operational So goal committee that's the Board. purpose the on of excellence

Fadi Chamoun

you. Thank Okay.

Operator

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

Scott Group

morning. Hey, thanks. Good

So maybe just follow-up there. a

operating It's of or margin Dave been you timeline and is and Do where other And about? more the talking and recent you've So to very focused expectations talk the sound more additions typically improvement these as how with others. Wes? either engaged we Dave, has start? been you near-term from think like get just then the ratio near-term, the act just magnitude LTLs, try change some

there thoughts any ratio? on QX operating So

Mario Harik

it, got Scott. You

a the of when X.X been he has with joined over a improve come. So best our he's -- fantastic us operators LTL bit our And quite employees. see, time Dave and our years spent Dave, industry, has is opportunity the to plan. already so to will the addition in He accelerate just our and what field frontline operating massive one see both help of He's to we obviously, in the team, and the ratio the which Wes a team.

culture of from we've have by service early opportunities the technology we how and unlock our obviously, the very which Now feedback he's and will a to Dave, that operations, us we across and with in the our short impressed quality progress in further our our by impressed He's period made team in people winning very time. enable and sales service the customers. momentum platform, improving

we run areas He's for of already how terms many well identified the improvement as in business.

field align compensation sales we including operate organizational our ops, it organize we programs, our OR and as you emphasis many an enhancing to capabilities and examples, Just greater expansion how other how structure, and give Scott, of business. couple the of or items how part example, a a of on is we

both Overall, have of to freight to service both in efficiency finding We're and on network improving board. impact our excited Wes the great improving and have our a add optimal incredibly and quality, Dave on our network. density will to the operational them

Ali Faghri

just the your quarter, quarter And so a tonnage be starting we're data sequentially. Scott, second about second quarter. be low to sequential seeing about this perspective, this And morning. normal going we'd up seasonality in second the mind, monthly question to expect in Ali. tonnage from keep And providing improvement we're X% Good a quarter. single-digits On first is what about currently, is based versus the on that

should visibility that inter-quarter So into give you trends. more

of seasonality. a softer And environment. by improvement XXX an OR point versus than second first tonnage a perspective, We'd less from then driven that that's typical be expect half quarter. the the about typical is seasonality again, sequential little basis And quarter to

Scott Group

Thank Helpful. you, guys. Okay.

Mario Harik

you. Thank

Operator

the proceed the from question. Please line with with Jon And Chappell ISI. your question comes of next Evercore

Jon Chappell

saying come side, are trying from. Ali, where on think headcount productivity I'm understand morning. you. the productivity to the Thank drive just I Good savings to there. to you're trying going

down being a doors? fair kind the trending kind helpful margin. while of this the But labor to which initiatives? just a You've are heads really amount X.X PT amid LTL taken been Is negotiating Is so you cutting already we How of out, attrition? of of with has growing something function about cost contract growth terms? it think important do

Ali Faghri

Jon. Thanks question, for the

talked more of be today, annualized Europe the about and those of specifically. LTL savings starting to those corporate. So that's headcount-related we than savings, plan cost to and And going across run of in million the savings the that cost $XX you'll represents LTL, greater But cost current are third that spread than full start benefit quarter. rate two-thirds benefit see to going

beyond And network. that, to further we LTL cost in in reduce invest opportunities look, continuing even while the to see

labor while If at holding a you done on we've variable hours, our job drivers. look to great there

if So of XX see the labor expect we'd second hours then hours labor sequential count the quarter, look were And for improvement you basis down and into at up the a quarter year-over-year, half in second while was year. in points those our to X.X%. first the example, shipment

Jon Chappell

employee? coming item out LTL, kind or down But that to coming amid how I'm attrition, is trying model just to figure Okay. is technology, savings just productivity through be per line of just, those, going forward? it the of, to clear, headcount two-thirds within cost important

Ali Faghri

actually So it's both. Jon,

step you half announced, at should of look then example, if cost in about headcount second the headcount, and And quarter sequentially. you bigger down first year. actions reductions the second headcount further in in the X% So should the we was see see for we quarter, down in the a that given

Jon Chappell

really Thanks That’s it. Got helpful. Ali.

Operator

next the comes Please line from with Citigroup. question proceed Chris your of with And the Wetherbee question.

Chris Wetherbee

Maybe a pricing. about we Hey, thanks. bit little morning Good guys. talk

at couple at the guys we we'll of acceleration absolute piece it we revenue like as as quarters. revenue digits. per look hundred sequential the some still I hundredweight, of guess, up the guidance, seen last we've contracted And trending you reporting the course dollars deceleration of over like but into when look maybe what on ex-fuel maybe per XQ. growth the seems it core in So there, have see is business mid-single been weight sounds the forward of

get if could break a going us what's to as wanted side help you how you're well as maybe perspective the looking what Just down contracted dynamic from plus pricing. doing with mix on at you're

to through get a if of of the increases year? forward want as stands this pricing more we environment we sense maybe where see move consistent can sequential the Just quarter-to-quarter rest

Ali Faghri

Thanks is for Chris. Ali. question, the This

the the to So that into we quarter quarter. continued channel headwind the last related local mix that first described

in the macro count while the So local growing remained per channel, impact. weight under we're pressure shipment to due shipment

that And headwind a this greater in hundred so relative in headwind local was the and few tonnage yielding actually higher points reported less fourth resulted to basis was to the about Take -- channel, yield. in and our that that quarter. first quarter

implementing initiatives over mid-single drive time. Now the you pointed as back, to of a Contract if side on was pricing we're expect number a up stronger growth pricing strong. underlying trends would take digits. remained yield renewal we yield step that And you out,

Chris Wetherbee

is that year? does about the continue mix to sequential, expect the rest you But begin through be or as the from that we the abate move of into XQ, clear to headwind just to

Ali Faghri

stabilized year-over-year So has April, continued forward, mix as into a basis. we headwind but that on has look

pulling macro as about over So to challenged. that and excited growth mitigate side levers on us stronger we're the time. that the continue help But we'd some in should of the mix yield near-term again, expect that impact the we're drive remains

Chris Wetherbee

Thank you very much.

Operator

JPMorgan. question with the line comes next from of And with Please question. the proceed your Brian Ossenbeck

Brian Ossenbeck

Hey good morning. Thanks for taking the question.

expected really have of in back impact and from or these have leaning so think customer a strategy, it's the channels last you've you Do you thought density a and go bit of into retention and a that on the been bit might working So past. in more some working just little far you year? would stepping out macro force to quarters, differently shipment the rest couple maybe you perspective? getting looking the at the a have of than how through this the a bit challenging on Is there's you

Mario Harik

And we hear And or us that from our to strategy when is strategy with a share plan. And a our pick have those what it see we the first focusing wallet. part the our on Well, a And freight have give LTL is of higher customers we improvements, actually providing on working. is of service. a we our strong bigger service excitement you X.X get into network. bigger best-in-class

example with and scorecards, Just of South, I improving us see could some the freight that where and and to they bigger to service feedback customers hear the in an their give our meeting you the they us product here our you recently, giving access have. was are they

of The look trucks that our it, We've progress. tremendous more added second investing portion And made piece on fleet. our to is that we've when network. in you

Our age to down X.X helps us with insourcing maintenance efficiency, third-party with which also years, with it cost, our helps line but haul. helps fleet is lower

stronger And right time mentioned then initiatives it, have to we're over on where demand the we yield Ali well. the as performance improve customer. need And can driving that where we see then the our we side, that capacity the from places in just yield

our us local all growing business account shipment So in of as count high-quality here well. the freight. We're quarter. leading channel first these grown to that X% are We've in having things

Brian Ossenbeck

bit more you're a market, are additional into you these And or kind yield, into be forward sounds elaborate like something in a just up catching bigger this to that? year? as to going forward to on here. Is you're step accessorials you clarify that this digging part of of just the on opportunities just are moving little Can it the

Ali Faghri

Hey, Brian, this Ali. is

bit So both. it's a of

we're getting we're and providing. that for the paid sure make premium to want services we consistently So fairly

wants we to a get time a that. for during wants for if appointment-based delivery. a if certain now revenue. customer customer a them roughly noon, a them an guaranteed double a charge before are about examples low would window, Or right of we digits overall delivery So few charge are, delivery Accessorials

so, time. great to opportunity we And see over improve a that

Brian Ossenbeck

Very you. Thank helpful. Okay.

Mario Harik

you. Thank

Operator

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

Brandon Oglenski

and guys guess, taking maybe you morning about haul network also can question. good my improvement line better for to you might both talk both I drive thanks Hey, productivity? in cost what local changes affecting and service but operations, be

Mario Harik

Yes.

So network expanding first, starting side, our a for the on investments those about more in need physical in the network we more capacity or where having have doors space. are markets

here, an we Salt City freight where you month, terminal give were handling net needed another the To doors XX new because we example of just given that space last additional just added amount there. our this we we expanded Lake

well. are other Florida markets, Phoenix, in other in as few Atlanta, Arizona, we like expanding include And a Texas process further in Georgia, which the expansion of areas expansion and includes

able we have seeing of So being markets all additional where are us have terms will space demand from -- increasing capacity. these customers long-term give in tailwinds are stronger of this our to and will

one terms of line line in-source haul, is goals In to our of haul. big third-party

our want getting for the a how rates from on percent half haul in-sourcing more from here reasons XXXX, of well and and revenue in moving as freight the seeing the movement in cost which cut freight, own drivers own to line we network our and line But truckload assets optimize we we're both well, as there. the markets. a our for and good as that of benefit having additional haul miles we're time, over short service our -- as our by improvements is in these of So that term, by

Brandon Oglenski

Mario. you, Thank

Mario Harik

Thank you.

Operator

the Tom Wadewitz question. of And UBS. your Please with from the next with question line proceed comes

Tom Wadewitz

I of, we those kind making you to in pretty operational that how responsibilities, some call How or or is changes the Dave, do on focused that split that well. the then obviously, Good think and Yeah. of to wanted you'll about pricing made clearly change on as about who's with big you're board? Mario, on, morning. capacity with interesting ask -- is bit the and a as Dave that of think Dave on decisions? comes hires the you, Wes as what about some in to Board you addition, should collaborate decisions Is off -- or something -- in particular, handing --

Mario Harik

overseeing Operating is North LTL. American Dave Tom, Well, our Officer, Chief

teams So and our on our and report top I the I sales the decisions. he's Dave our closely in him. operations, But LTL these is very up in all to organization, pricing, obviously leaders of of field work -- one

these a our obviously, Generally, main areas network, of why discipline. when one Again, improvement, why there there's and driving exists. OR was plan that our to we all yield service you play come. on a critical and our reason focused X.X strategy, the investing goals come. LTL joined to where rate in at on look strategy the these together reasons our be how on And, opportunity a And the of in the Dave our part again, for very growth our and team. him of strengthening to it's to Dave seven-handle is working on in over our and cost us And the is accelerate no them. improve to years are closely goal front deliver I And this massive over shouldn't the is years going

Tom Wadewitz

that but like at way is should the it? the makes much or he broader we control things just look plan, to that of has sense, or wrong how I that discretion of in within terms changing guess think

Mario Harik

Chief team, closely of LTL an again, years together operational experience. over mean, to He empowered as years accelerate do come. our what business he execute very fully I working But perspective. has is we're Officer, plan and best more Dave to the than from Operating think for the the is as to XX a

Tom Wadewitz

seems you're which certainly great. is metric, Okay. the you. sense. Thank That seeing quality in the like Yeah, makes it improvement

Mario Harik

Thanks Tom.

Operator

the from question Ken proceed the Please question. Hoexter of next comes America. your with And of line with Bank

Ken Hoexter

morning, Hey, great. Mario. Good

I year-over-year as seeing a is seeing parse we on don't Ali I to you the backdrop, from then trying Should maybe or almost guess to parse tonnage mid-single on know, share? of you if the versus thoughts way Is larger commentary digits change sequentially, and there Just in low more this, economic to single and share? your are declines up the a winning economic digits. we're just some read April, impacts

you then, ratio impact. operating Ali, half points XXX And mentioned the basis

XQ, mean XXX how that year-over-year? want deterioration targeting XXs should so you're parse does comments? two just to upper OR I Thanks. we point those for So basis understand a

Mario Harik

get I'll April, started When Yeah, to look And you they seasonality our shipment April. X% sequentially both month year-on-year, month down of was typical to X% Ken. these from compare at to the got you Ali. it, March then it of but the tonnage and March, you up outperformed year-on-year. over our was when I'll count turn

a of existing very to able the we're these we customers. seeing onboard are or things Now a pipeline, said being with in customers for either service us quality. from exit improvements more new the We're lot business robust and growing

As first Ali X% grown count local the in shipment have mentioned earlier, our by quarter. accounts

there's at of are We're from look uncertainty of today, our industrial When at customers. you the bit in a seeing ISM, two-thirds more of April. look that in environment. the a macro when still lot a Now month perspective, which you the strength customers

by So that's up for versus us. picked It March index in X point. April has important an roughly

So we're there. demand stronger seeing a bit

levels the but are a in slightly they side side, lot than used we these things retail have. better month that we're of the worked to -- April again, is consumer we though retailers March. company-specific, But see The softer in have in did that a the demand environment of inventory higher On we've seen seeing flip March. through

Ali Faghri

about typical than this to question versus on points again, little of XXX expect be for improvement of is basis so Ken, bit then, sequential a that on Ali, sequential OR, the would second We part a QX QX. seasonality, And your half less basis.

So in would that that perspective. you an to get OR XX% range adjusted somewhere from

Ken Hoexter

the Appreciate Thanks. guys. and Perfect. time thoughts,

Ali Faghri

you. Thank

Operator

[ph] the of Please question. And the next question comes proceed Stephanie from your with with Miller Jefferies. line

Joe Hafling

Thanks is on Joe morning. Hafling for questions. taking This Thanks. Good Stephanie our Moore. for

if at like, to be heading quarter, down, we least, to get was I wanted in but first the was It your that through not April. the the have think been but maybe the quarter my questions comps I progress sure I'm lot thoughts of. into the of going a aware there looks something through on monthly tonnage asked, need

wanted local lot but to in pressure is X% like thoughts get outsized the accounts. It looks still coming should the then, how your just from a I on local And growth national maybe accounts, put accounts. of we in those growth there

Ali Faghri

mentioned. your first, we're as in the on question channel the basis, seeing So second with shipment count maybe local X% about starting you growth

been flat. On the national shipment side, counts have relatively

more and that related that we're shipment channel. weight due that macro the mixed specifically seeing that's channel local headwind that in So we're pressure the describing, to local per more to

In trends, terms decelerate quarter. of the the did through intra-quarter a on they basis, tonnage year-over-year

mid-single about in tonnage down was March digits. So

in said single low a April. April, we about we seen in have digits as improvement. down However, modest is Tonnage

network. we've mentioned, is of Mario driven in on our seen a As that and specifically the by improvement driven but the bit we've a side, tick of the improvements the being service industrial up majority more initiatives

Mario Harik

from to add to March. April seasonality did also Ali's And outpace comments,

and So when you shipments, outplacement have or from an both seen April. coming we there March at look tonnage

Joe Hafling

Earlier prepared cost a you PT quick the of taking remarks, percentage, as in And your mentioned sales then as a XX%. down a clarification. percentage

clarify, we company-wide specifically rough And a about from is roughly a to are XX% number? to metric, talking the XX% LTL? are number if talking or company-wide, that number numbers, Just it's just coming you a

Ali Faghri

LTL referring specifically. to We're

that apply would XXXX. roughly miles, it line which so, haul we by from would both range it And XX% around XX% take to to

as our cost on also transportation to of it look also in revenue. by XXXX. could percentage half at cut that expect You would a a purchased get We as P&L

Operator

question the line with with Wells James Please of from And the proceed comes your Monigan Fargo. question. next

James Monigan

in you essentially, the if softness? ability touch Ali, point down and might down flex understand CapEx this consider that sort of flex just the appetite to what what point And the back you in XXXX in that at impact need and on Hey to the that wanted of the to investment the what's investments. OR. that. terms or on of, was And like guys. either one, do ongoing a wanted the you macro Thanks. just slowness in might see year and to and I where ability there at to also, half

Ali Faghri

both levels, maintenance been as that's best-in-class has CapEx the more of Historically, view these investments a playbook in the been at historically LTL So digits we cycle, percentage times long-term. invest call And and we've it, and CapEx to through really really good mid-single revenue. softer as times.

eventual XX% years targeting And the X% those to are to recovery. we're really, forward, in investments in to going and capitalize long-term us to come. allow And freight on much capacity are the more going

that reduce reduce us James, only tractors costs, CapEx but that trailers our it. that expansion supports in of haul allows the age line it Just part about that is XX% equipment of growth as CapEx of not well. spend our implies fleet a like our maintenance majority spend, CapEx It's keep about is low and on also this to year. mind, and The in-sourcing our only door much initiative single-digit smaller plan part door and total of

question our the about the quarter. of XXX for terms headwind, In OR second basis was about to it depreciation point your headwind

So year-over-year excluding on have that depreciation headwind, our a improved would OR basis.

for as forward, that as OR years ultimately start And to these we'll improvement will see continue on us headwind. depreciation that to but meaningful headwind we long-term in look in be we that's to returns offset we're drive As making network, going able come. the what's to our stronger investments, investments

James Monigan

quickly, expansions drag productivity though, Got there of have? it. on And just any that -- the investments is you real from sort or

Ali Faghri

become a we time, to pretty investments on drag. some. we're and So returns modest it's smaller forward, network -- start making in flip and see move service. are time, and, over That a to us. there should positive our near-term, these to going as both for the over again, the But we we're in But

Mario Harik

And this Mario. James, for -- is

particular estate the to we expansions City, terminals. and adding For Lake earlier the example, this goal making some year, same grade for mentioned yard to then that projects we're enough additional handle of Salt real doors additional where can the have that doing add, dozen larger land have where that XX I are we freight. on, dozen that doors just of existing most to be to this we is XX, follow a able facility. case, And a in half to of these terminals

Operator

line Please the with Oppenheimer. Scott of question. question proceed Schneeberger with the comes from And next your

Scott Schneeberger

wanted much. morning, about inquire I wins business all. quarter. new to in very Good the Thanks

XXXX, You in had large, some large some accounts. national

contract could address single-digit that versus course Thanks. Mario, Just and national local curious, how maybe out were pricing versus that of the you should how how year? -- the contract sounds business solid. a quarter, still wins over in mid play will new and But the mix local of

Mario Harik

driven impact grew said, share making local across our on weight When that the of accounts, is channels Today service. considerably. the counts first from where having per But shipment. we in shipment Thank are you. are an -- market overall by Ali here we quarter all we improved profitable as the seeing more now macro growth our there come

So in up But gains of are quality. a we're good overall, seeing pressure. lot some shipment counts tonnage backed by the that service

usually XX% continues to a from of mix we are business, be and consistent LTL XX% which accounts of national local Now the the is Typically, to are case. be perspective, the roughly fairly flat, mix expect it the business, providers. across

meet walk it's from perspective. expectations. business, if And it a to all based our we're not onboard away they we from business OR when performed on how doesn't But margin afraid

we're look then So offering up that service and at channels customers. the our on when backed we're product growing again, growth, across by service based you

Scott Schneeberger

like you Do whom in more more share? national you're local? the Thanks. account, it to And take it share. you Is you're continuing seeing looks are know taking that from -- on

Ali Faghri

the was the basis year-over-year the by on shipping in the gains are flattish up was So count Local which shipment first in share quarter. quarter. the channel national local count, a That's relatively channel. relative X% driven being to

that most local by improvement, you it if service our we're where look driven So channel. at seeing gains the share really is

Mario Harik

all taking share across a of it's of from, we're specific that who just combination carrier. There's no there. carriers. It's footprint terms the In

Operator

line next Jordan the question. your Alliger question And with Goldman comes of proceed Sachs. the with Please from

Jordan Alliger

how plan Don't morning. et just on that the for of morning. some forward cetera? much about part some of tech make, of you've Good and and far service Hi. going been improvements to around Thanks. Yes. initiatives this really that curious Network thus as yield, been X.X the has I'm making hear as instance, impactful

Mario Harik

us technology our Jordan, one big Overall, for more absolutely. of is our the enabling to achieve objectives. platform drivers And XXXX Yes, to efficiently. run us it's

field. If our spoke with doing platform EBITDA will to recall, to when and of from plan XX% efficiency, improvement the technology profit by changes we X points the XX% come that our other CAGR, X about you process we're driven in

way in labor points, XX and roughly those at count hours here we you identify were driven the quarter, where while X.X labor we efficiencies first platform the points. was the by shipment flex is there. technology basis when And up down look our it, Now, hours our

anywhere stops And improving environment, our line continues of our network. routes. we and more organize technology on our routes we driver density, It how hour terms we performance also delivery add what to and in these and on we per be focus more includes our per on delivery pickup how how pickup haul loads and move optimize in focusing optimize

the how be our part advantage come. with years smart us docks us us, to the us in in a and to continues quality of big helping customers And, labor to course, and pricing with we plays technology our optimizing then And a expect manage big as case with we'd helping platform and helping how we be our for the with integrate with and well. That that competitive over that.

Jordan Alliger

you. Thank

Operator

from And the Please comes next your of line question Alper Elliot Company. Cowen proceed with the and question. with

Elliot Alper

changed and on weaker Maybe your I does second maybe cautiously are just you Great. around a recovery, maybe commentary are retail slightly all? that maybe Thank you. at following what about stronger still you the previous and you Can right mean, talk about half customers the question. telling up dynamic industrial optimistic now?

Mario Harik

Yeah.

generally, we've there's when look macro in uncertainty the than it's what So it's still the seen. we -- And, at environment. macro still a softer obviously,

industrial from are pickup, a mixed things demand as hearing lower more in softness are are we space the others and Now where some seeing customers while well. customers seeing

the So in environment as there still see it. is we softness

again, Now up ISM pick in did the April.

that shows which in XX, softer below still demand industrial it's However, the economy.

selling, that we're their they're how the of On product also and chain the also type side, done The that good it's depending mixed a seeing mix. operate have feedback retailers they on job a there. retail supply in

it are product customers others selling. that on demand flat softer of or slightly depends year-on-year seeing they some seeing cases, and are in Some up type the while demand are

type that these on on the discretionary spending softness. a But retail are focus see from generally the see shift space services, can you items evident where customers the you do that in consumer seeing more more again and

point. April, seen that But the Again again seasonality we've is accelerate. in March this month to feedback typical April. for us from outpace of mixed the the from at customer month We of the trends

Elliot Alper

you. Thank

Mario Harik

you. Thank

Operator

question Please comes proceed Partners. And from our the next Kauffman with Jeff question. Research with your line of Vertical

Jeff Kauffman

up we you to Thank where and get I just age you does ramp fleet ramp to wanted trailer spending continue idea let's age are much, that age, everyone. the XXXX, that and down as to? XXXX, you capital and up question Where very by this the average morning an address say, good average that of target years X.X your bringing where is output, go end XXXX? is the

Mario Harik

between fuel be somewhere then, long-term four the us average our considerably trucks, to to obviously, we be runs. age. is haul usually below the LTL, would our city, the years five goal run And Well, ideal Thanks, in Jeff. five, for runs efficiency on those and be the Obviously, line newer in on the longer. these we to trucks in tractors younger get capitalize fleet

quarter. first front-load of trucks end amount the years years Now we at the we here got the course a the quarter. the took to XXX good through CapEx this But of X.X our of in we end last at new the quarter of down first from year X.X did where first

the think all what OEMs of us. do depends end the on the Now when year, we can about for it

they're it so We to at trucks keep us same expect coming getting all but to have down see get higher is want we'd more the fleet. half, units get these giving terms you how will to time, we out But as it's back can the where on trucks But play allocation the we'll in better the tight of to get. age. newer of that in a add fleet that you still seen that

Jeff Kauffman

to point, you. just thank that And follow-up on

to kick are of EPA rules out trucks, new for in be Resource at you of XXXX? least, But are like zero-emission in have nothing electric I cell coming to rules California the California right needs gas done the at the week. know that with start Board out to came vehicles, We switching going that, last mandate, terms XX away. looking where fuel things trucks, to nat their

Mario Harik

Yeah.

look order at here we have we electric California. truck going trucks when do for So that, XXXX pilots in for on, any

lot get infrastructure is the both larger trucks the today, to them to them environment. it's trucks are of use Now, to and Class a be line We to able get to have the those as -- what A so on charging the we're of seeing environment tough of P&D some these amount in as well need mileage. charge haul

from of the American obviously these the year. helping lot to state regulations these. is However, very with we're for close all fleet lot obviously we mandates the deliveries. how a locally in also we in to Association, working obviously trucks of of drive these as but straight of Trucking of we drive California, meet terms meet our which operate do how ordered have there of are well trucks the And a number a to for the -- all steady city here And of on these

Operator

comments. closing like At now have I floor we to the And the this of Harik end Mario turn question-and-answer would any time, to reached the over session. back for

Mario Harik

end driving cost key And impact view the on within you heights, are four earnings for potential doesn't term, can plan, yield We'll today. growth for as efficiencies. our execution give on to avenues elevating but customer the the can progress investing a time see, you you the Operator, of Thank XPO. call. the of in to all our you. next forward we're capacity with long our it moving Thank new realistic massive the an our and which These accelerating your now over is macro, further unlocking call. service time you update

Operator

participation, have teleconference, everyone. great and Thank conclude today's you, does a sir. Thank for day. your you This

XPO Logistics (XPO) 4 May 232023 Q1 Earnings call transcript