XPO - Earnings call 3 2023 | XPO Logistics, Inc.

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Operator

Welcome to the XPO Third Quarter 2023 Earnings Conference Call and Webcast. My name is Rob, and I will be your operator for today's call. [Operator Instructions]. Please note that this conference is being recorded.

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

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

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

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

Mario Harik

and Good I'm This morning, for market Ali Kyle Financial our expectations financial everyone. profitability Faghri, transportation. Thanks for freight growth were we and morning, here Wismans, despite joining call. that a Officer; Officer. with in above results Greenwich soft Strategy reported our Chief well our for

segments a an $X.XX, was $X to to and It company-wide. us which third of quarter. company adjusted for higher expected. Adjusted increase was revenue EPS X% the $XXX strong We for adjusted was than diluted year-over-year grew Both the EBITDA in improved of EBITDA million, business the our also grew billion quarter year-over-year.

plan with on great comments want a LTL report I to of quarter. the this for progress customer starting our give X my morning X.X, service, progress but pillars made you to this use we've

ago, nearly years To prior claims in ratio X Our for claims context, LTL damages improvement X.X%. from put that quarter. X.X we was in the ratio an X.X% X.X%, when was launched our

good service. been steadily elevate making So our on to promise we've

in we our best with exited the claims And of quarter damage our September, in the is ratio ever. quarter result history. third Our frequency level best the month

last in compared performance. metric X This service percentage with points is the better was Another on-time quarter year. key

steps volume third that We're more our remain the field equipping next programs as investments service. our as taking the same service on count service and we're very ensuring new in our network, meaningful we our with time, we at shipment And improvements. forward was grow. we This took our with higher into while includes operations already In the procedures delivered service training loading tools. enhancing quarter, significantly high our focused standards and

and high-caliber rolling in out, period of returns short a generating systems, are positive straps time. The we're airbag

the For the XX% we're airbag service systems, in example, centers improvement with seeing new damage a already frequency. in

we've commitment strong progress, while we Our service runway our clearly have And made see can is for for further customers. to critical we improvement. the significant

coming is service priority Our to in the LTL provider top best-in-class be years. the

LTL pillar second in The of network. X.X to is our invest

we've invested than being is allowed our for of our has historically fleet. take Since a has capital. X,XXX new net launch on more the business deployed More strong to high CapEx our of X/X us of LTL generated over XXXX network the trailers, on customers fluidity. increase tractors This return to Our doors. X.X, added and XXX maintaining freight while XX,XXX capacity

new trailers Year-to-date, on more than XXXX. Year-to-date, tractor target exceed X,XXX trailers of brought age over at this track X.X down added manufactured of year. from to our the in-house X,XXX we've years years And facility end which X.X to at in the we're X,XXX production Arkansas. tractors our we've average

remainder ground doors a key in the time. To investments These for by was XXX of we return date, introduced where with touch we and plan primarily in our we exceeding revenue early I adding are our capacity to that growth net X% us. is to Atlanta our for which new targets doors market XX% on This new at on And average we've new In the of Florida, to can and over sustain center X on more areas markets Central doors XXXX. in outlined we Dallas hurdles. And expect added the through which metro in we're LTL against July. service terminals. and allocation long-term addition, CapEx want is X.X. in existing and of performing a target with we XXX, facility broke expansions the targeted of growth well XXXX, expanded a consistent open

market opportunity pace accelerating Given dynamics at the and recent with spend. the that hand of the

As range will result, our a our likely revenue near year exceed XX% CapEx to term. of to this XX% be the would continue target and in

Yield pricing the to of release pillar for in renewal other this price and single as you opportunity contract growth. to is quarter, In number strengthening plan and our third we The saw focused improvement, initiatives of align third biggest yield a the pricing is this executed underlying the morning. deliver. margin our we accelerate impact on earnings value trends we with our receive such our

for fuel yield, the service, half price We excluding opportunity over are customers deliver. value and X a seeing renewals expect grew to primary from business. X.X% with as representing first contract year-over-year, our We to acceleration we the premium year. a improve We're pay years willing through by double-digit significant coming continue levers: we both capture a that see the new this of the we pricing First, to

for on these to see accessorials customers a are revenue, are the for. And also services range opportunity lastly grow sales a local opportunity. We including shipment retail which to double-digit reflect scale quarter, us. such rollouts our grow this services we're higher-margin of sales force business our and achieved growing local we're customer channel, our and significant third site asking the expanding that we store as our In focused value-added a is of in consolidations, growth base, global our

we'll growth yield improve it forward. our going the momentum the So that indicates while we in continue the quarter, coming years. yield confident We're strong to key is in the point had

cost of reduction even year-over-year overhead. basis purchase we The miles though XX.X% quarter linehaul transportation ended more final short-term cover the with purchased the to in third by volume. basis while miles contract efficiency, to X.X in-house on inflection was XXX which for the lower transportation also specifically parties, costs miles our LTL outsourced is linehaul purchase year-over-year, we points quarter, a recent transportation, third of covering outsource. pillar and cost a the We more XX% with by rates we paying reduced variable In

Our bringing in-house plan line to accelerate miles to tailored our more network. haul with is initiatives

we're trucks and in We're our the by in of of which for long-distance of the example, the XXXX, hundreds teams increase For operation be driver a sleeper these hauls. more to process and few targeting efficiency service. adding flexibility of teams end will

third-party targeting XXXX We're as in linehaul percent a with by of XX% XXXX. a compared least miles total at reduction

we effectively have with opportunity third this quarter. labor. manage the We margin in Another costs variable is

while single digits. labor was up high per our Our were headcount day by count hours flat and shipment roughly year-over-year

technology. touches more realize also reflects the third follow. our on operational to while teams key to gains, quarter, points strength productivity plan and our service That our execution ability our Our of these of the made metrics, improving the proprietary of the the with strong progress in and we

service in record the profitable our and levels, generating LTL These higher. business. We're gaining driving are of margin yield share market expansion critical levers

efficient to in on to into We the same cost our operations, our market continuing strategic more capitalize remain of ratio the we're growth have revenue rate. improvement earnings deliver on we higher XXXX. a on to network adjusted points track investments solidly agility translate and time, We're basis least our at through operating becoming XXX outlook make can in so of at we conditions. with changes At

with well XPO. to to in [ build continue of X-year We're want XXXX as as full America. underway the couldn't marks realize I progress close, organization I provider at in stand-alone a we've of anniversary to be the proud that on LTL I mention this customer-loving were momentum. continue of our made potential ] and focused, and we make week more on initiated a will North our high-energy, strategy the we the end we'll Before to executing

to XPO. for world-class to of this thank our take want dedicated thousands I of opportunity support their employees

to We be driving best phenomenal the have team the in a industry. strategy our

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

Kyle Wismans

balance and the and sequentially X% up key second financial through $X Revenue X% our Mario, and In year-over-year the up take X% was was billion, company sequentially. and you up from liquidity. segment, our you, Thank everyone. morning, revenue sheet year-over-year X% LTL good results, I'll total quarter. for up

year-over-year ago. wages benefits quarter in LTL revenue up and a for were higher was Excluding X% the Salary, and year LTL fuel, X% than sequentially. XX% up

The performance as to quarter strong primarily higher as well related for the was incentive third wage impact increase team's compensation inflation. of to the account

with Our shipments improvements in the ago. handled productivity quarter fewer partially offset in these lower third headcount costs. hours year a than labor We more and

faster labor shipment count count X%. our with that by the quarter at the a per increased X% than less than and while consecutive grew widened year-over-year, sequentially third spread labor the shipping by third quarter, has hours In each hours, pace period. grew was day it Importantly,

with rate through efficient in-sourcing cost negotiation. purchase more were We combination of also a and transportation

reinvesting the the This the our purchasing carriers or was for which increased allocated in-house. tractors year-over-year new from XX%. quarter, top manufacturing CapEx priority was expense our in quarter, expense down Our in reflecting by by more $XX for in quarter OEMs allocation. In the million, commitment the to third-party XX% to third million $XX capital trailers remains business. was primarily our and Depreciation

a EBITDA, ago, business. whole. increase American adjusted was both of up and European North some quarter, reflecting as adjusted the from year-over-year the a the $XXX starting million details a in add year company We I'll Next, X% generated with to which in EBITDA LTL

XX of corporate points Our cost continue XX%, And rationalize was business. quarter basis corporate third our to we a of for savings year-over-year $XX improvement to company-wide. million, was the year-over-year stand-alone expense This million. adjusted EBITDA a $X or XX% reduced as we margin representing structure

segment, year-over-year the EBITDA LTL grew just $XXX at Looking million. we adjusted to

surcharge XX% increased efficiencies Company-wide, growth the from revenue $XX million European reported headwinds and segment, fuel operating we of year-over-year. nonoperational offset income $XXX pension Transportation than adjusted our cost quarter. income. revenue for million EBITDA the up quarter, Our In for more and to lower

$XX per $XX from the quarter, to continuing diluted of million share compares $X.XX a $X.XX. income ago. net of of Our This representing diluted income operations year earnings million EPS was and in

quarter primarily a net expense The this pension an income interest million due $X year. increase decrease million to was $XX year-over-year decline in in in income and third

a cash down EPS quarter had and from the an half X% in is integration $X was operations million $X of lower and and to flow costs ago, we the generated down first our and another spin-off the of deployed $XXX million restructuring net year from expense. year. On of stepped interest also of And costs the $X.XX, million higher transaction lastly, from materially basis, related across also income of the the segments. for impact million We adjusted quarter pension which charges continuing CapEx. These $XXX our reflecting RXO of

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

gives structure execute at flexibility have capital growth us significant we to the on opportunities Our the XPO. financial

expense to effective million, to long-term in to Before I tax the in now have network growth. range million XX%. want $XXX $XXX highlight wrap and up, million given updates pension CapEx drive to year gross million XX% year $XXX of I of of to also our to XXXX be full an $XXX invest the expect planning $XX this we We're to interest that capacity assumptions. will $XX income million We rate of million projecting some opportunities to

year. for unchanged Our count full the share million at shares remains diluted assumption XXX for

cover turn it I'll operating over results. who will Now Ali, to our

Ali-Ahmad Faghri

Thank operating led had sales in in I'll a our our third the local In channel. year-over-year with count we you, XX% shipment the quarter, Kyle. increase X.X% segment. by results growth of for LTL start

offset industry. increased to than As of more a by on result, X.X%. per day macro pressure which our the our conditions, tonnage This continue impact put

than declined quarter. year second weight with ago, quarter better was in Our slightly per in shipment compared the X.X% which the a

are key we solid drivers reported. behind X growth the There

our to First, the market, making market service well that share continuing gain freight exited since we're LTL we're network of we to positioned incremental we've onboard been network. expanding yellow improvements the in XXXX. were the significant given investing And in because when second,

tonnage demonstrated X.X%. also on our July discipline while was volume September more was at was take and X.X% we We same per up the August to continuing to levels. our the up up that day a service On X.X% time, monthly have year-over-year, improve operational basis,

up Looking was per was September up X.X% day. and X.X% just was shipments X.X%. August at July year-over-year, up

every X.X% and shipment per day seasonality. shipment September. from shipment than down count and approximately shipment July sequentially each quarter more tonnage X.X% is month preliminary both X-year increased a On per Our improved our stack count outperforming month the up is from complete, year-over-year October a shipments basis by On count monthly the also count quarter. basis, are X,XXX sequential almost up October throughout tonnage With of with day third to September, tonnage X%. and

grew in yield increased relationships yield which our outperforming yield the by the fuel growth basis, we typical by quarter. at second Looking is third an year-over-year, by importantly, X.X% acceleration yield, as ex points. progressed, seasonality sequential quarter, supported accelerated On XXX quarter-over-quarter, initiatives. basis strong quarter fuel we customer we from the pricing excluding And and a

ago. Our trends contract in compared quarter underlying also a X% strengthened with pricing pricing year up renewal the with

yield to profitability. long-term accelerate the our impact that excited about further fourth initiatives in on We ex quarter fuel year-over-year and have expect growth will yield the we're

margin Turning performance. to

points than higher improved seasonality by quarter. basis quarter a ago. Our was with was a the adjusted outperformed operating basis basis, OR XXX points. we year On points which XXX third ratio adjusted compared basis second by This sequential XX.X%, XX

European of as Moving EBITDA a was ago. compared another as financial with cost to supported well which delivered adjusted solid This discipline. pricing, year our We with business. quarter outpaced by inflation X% strong growth

macro pipeline robust in sales continues is positive our While U.K., where remain we especially to in soft the drove team well overall, the growth execute Europe in organic quarter. the conditions and

I'll drivers ratio. quarter third close including our the our strong behind outperformance with operating momentum, of the

continue we results. across significant service board First, make improvements in and the record delivered to

growth also it in the and We quarter. current again quarter accelerated in yield accelerate will the

technology productively managing continue will XXXX. to labor as our North focused and execution reflect a leveraging in operated strategy is And expect summary, costs. In robust We performance our effectively results company our America to into more our by XPO working. LTL that. yield is far continue stronger we and with our stand-alone

we'll please Q&A. for take Now questions. your open Operator, the line

Operator

with our [Operator Wetherbee today the first Citigroup. question of from is Chris Instructions] And line

Chris Wetherbee

next ratio move about Maybe maybe picture can and as bigger opportunity start fourth operating year. on the think how first, the might for if then you through you and quarter

think us So what view I sort help you seasonality you normal you do with could normal maybe in guess, and you little bit a can to seasonality what as relative XQ? of

Mario Harik

usually ultimately, we Mario. with fourth then like outlook XXXX. Chris, Starting the for OR -- first with would we do some give do colors and tonnage, is given you can this and what on quarter, yield

QX the up on quarter, fourth be share line quarter, the tonnage On a year-on-year side, in in tonnage to following with being we low digits third basis. market seasonality our gains in the expect single which implies

this for decline. by on give QX given Now carrier. the we'll and on month, December. in in in the QX cyber tonnage seasonality earlier better the tonnage and us, side, increase to seasonality, a was November And October normal is also early driven a another but attack update LTL sequential small than another was volume X%

seasonally, to yield third in on be traction yield yield we gain expect the see to points basis seasonality growth do to improvement. our in expect XXX see we we outperform of On front, for year-on-year single-digit QX OR basis range that QX through the QX typically the as range. in the from improved we of a And initiatives, we XXX somewhere high and point QX by OR ex basis a and versus -- and deterioration quarter, fourth quarter, in accelerate ultimately, fuel the to

and OR outperformance tonnage roughly points half the basis, back this in a year-on-year on does an of on in what the of XXX basis around depend will the the of the implies improvement quarter. So magnitude environment

holidays. is As a know, tough the predict you usually to with quarter QX

in-sourcing expect heading yield labor and including improve, make accelerating yield a that swing of and as XXXX. the does said, we the a and our in linehaul strong have of course be XXXX, opening expect efficiencies macro we continue our initiatives, But to remarks, a in is in we company product through will fourth in The mentioned for as lot And well. cost XXXX. strong for records, expect the company-specific service progress accelerating great as we here our we driving biggest quarter, what factor productivity year. Now have year macro and improvements to the do continues to

perspective the over we'll we from us So OR year, takes the macro to a an come. here do strong but what see expect for quarters XXXX,

Chris Wetherbee

appreciate That's XXXX. And all I one on that very helpful. just follow-up color.

the that think about of ratio guys XXXX. you you through laid operating sort longer-term As targets out

cadence with kind sense about Given Yellow particularly side, or and the it we're reasonable currently? [ give market Any should significant seeing seen OR around the post improvements a to what can you've itself, cadence given the assume that pricing that front-end world, ] us Is what of you you're thoughts improvement look opportunity it of it the making like? in of service is the present some loaded? of overall might how back-end what Is loaded? the

Mario Harik

Yes.

obviously, least we think XXX, here. keep and itself, that term, we we're faster. not short obviously, it's what basis fair from what does at bit, numbers there. And starting So obviously, going XXXX. we're first, and on can a on strong cadence But But to improvement based a points get I short in by not as from we're going these outlook XXXX. there's it assume we it's the on will there seeing always said we've the term, expect, number But at And depend of XXXX. XXX in to stopping posting going execute, macro a we're

Operator

Research. line Our next Scott question of comes Group with from Wolfe the

Scott Group

opportunity want I bit. into pricing the a little dig to

that next opportunity. value-added know incremental? Are that us a view up touch or yet? the -- we sustainable a the So you Is don't And on seeing GRI. as over you're what announced planning is all GRI about X%. I of any number Or accessorial on benefit that guys still I maybe think is then the you Help few you if think said contract that renewal quarters?

Kyle Wismans

Kyle. it's Scott,

renewals that most what impact renewal in And clarification, QX. business. the the rates one that to contract GRI, too, relative getting of said, So X% you contract we're about is just is the seeing will

we'll go an through So anal increase. cycle

the going think So our we us,, we're our be the single-digit through expect line. for annual to high when range. time in process we'll about you GRI And go those to follow normal then and

accessorials target to increases XX% today some question of accessorial, new we are live a did I combination and And worked many your the fourth initiatives helped we on in offerings. So more as quarter And QX. are we here service with XX%. in one of out have accessorials. excited communicate as second Scott. That's us yield about. rolling that. We closer Currently, of capture accessorials think go that was about tools. from then started then seeing customers revenue, really our and we're time-based well begin to offerings That get then QX, impact new location-based in

have service on offering. that's also our a growing We premium team working

So XXXX. should as high really single-digit help well those as in positive us in drive impact yield QX that

Scott Group

Okay. think actually price? talking any quickly you about up there nice the then guys to better showing do we model? And help benefit Is some claims of lot how And cost claims, model? about mean are mean for Does improvement. does lower a what lower lower the and claims way it any the sort seeing us in of see

Mario Harik

are to class would willing the and to a a service keep there. our be claims, that to the and we claims ratio. focus core industry, in When of This goal pay better we Customers service look for areas trajectory, one premium and improving you best offer for is our as whenever Mario. higher the our And is it's at customers. that company to provide get we on is in X.X% of value eventually,

an would here pricing. So that seeing quarter. impact third what we on in see the is are And you already

load way X.X%. to contract a renewals our we've Scott, through initiatives damage how And launching to to with our incentive call moving here forward, As higher driven and to we incentivize programs started on out rate been up supervisors combination that improvements are Kyle this we our of these take service to of price was we're X.X, would new by in mind, comp all in And the all claims most higher-quality and quality as test and the from airbags were comp third for, Gladiator multitude to just rolling quarter technology traders of able the need at the straps our premium to also of all and when in lead these to keep improvements accompany X%, local in centers, we over board, LTL service. incentive time. across the to mentioned,

the improvement -- to So that's years the that's the would Obviously, continued [indiscernible] P&L. and term what is out long pricing in how look down, it the in on we of at a our when we come. medium go service. claims up impact comparison improvements benefit see pick the versus quarters in small on that and over There but to you can

Operator

Our line Bank next with America. question Ken the of Hoexter is of from

Ken Hoexter

better Just seasonality delve is you takes about just step versus seasonality did think see from the the or target maybe yield outperforming accelerating talk XXX basis you just versus we when opportunity Maybe kind into you you the what back posted? outperform a points you yet can why about to only it to what why points. basis of XXX should

Ali-Ahmad Faghri

Ali. Sure, Ken. This is

So stronger to XXX we basis driven primarily That's by going to points. yield our do by growth. seasonality outperform be expect

seasonality the XXX points in basis off versus are nearly we in keep third of outperformance mind, coming Just quarter.

the delivered So that that top of we're third quarter. XXX on basis delivering in XXX points we

and I'd also point points the XX% basis LTL few from short-term improvement to seasonality There investments that of out ex a making. estate. year-over-year outperformance on our EBITDA a basis, growth consider that about versus of XXX basis OR we're XXX points in year-over-year also real are imply impacts segment would

will expect points next have year-over-year And the local our over modest for also over to expect us investing impact force. we would As but the sales they to strong investments generate returns incremental in cost overall, and XXX few We a was to these the do we third capacity medium with to comes quarters. growing term, long headwind depreciation. We're quarter. similar a continue higher in in impact invest OR basis about that That QX.

seasonality OR. to And feel with versus is dynamic roughly that points ultimately, outperformance quarter. rest depend the for a through progresses very still outperformance early how we XXX of the going on of environment. is this So It in basis of tonnage comfortable magnitude

Ken Hoexter

That's stuff. the on Great. progress great far. detail great so And

I quarter. on two Can you talk congratulations yellow, a XXX So guess things. about the guess, I on, you on a One, bit great thoughts service your centers. have

And how different So this? positioning ability want of expand sector? have Are impact on are does may pricing? you the process you on? come? can think And how into about more Do that about pricing, the there do think thinking locations still you goes? what that it to you versus you brings then get into renewed talk How -- that to you capacity is much to than needed already

Mario Harik

This Sure, Mario. Yes. Ken. is

the an for potentially our us to centers, is On growth. accelerate opportunity it yellow service capacity

in process, out the few things we'll We months. see are and participating play how over next the

don't next markets we Now from where demand of it freight well. will these demand have of network but years at the over customers our XX-plus things time grow over next the to terms where a And higher capacity as the markets network we in in look more see at over in be. perspective we focus physical our them years, We'll been the has look time. from couple for

than up far XXX mentioned earlier, we've so more net as doors. opened I new So

I will to in plan. we'll executing rolls to service quarter, in that the Central a the into broke we're Atlanta center centers expanded going help years and and come. But just on in get Florida these and us where we areas, Dallas X continue it that out, and process see the accelerate over out plan service yellow centers, service Here Metro we

what the would centers carriers. be roughly it other applications. coming LTL the terms it to of locations these estimate capacity We hands but in service for around or of depend [ it's back for to ], these XX% into users back the other land in on will of industrial-type network, Now tough percent be estimate

they that get then operator. get the lot Keep the centers centers the to out. that standards Now for of carriers. priced back a in to of That time. And to back they be it range go back come for to play mind process hands get back operations, back in into different plus of take will -- service we year estimate as up a of will the lot service to into take the into be service the centers these more these to LTL, has And to into time the it industry. them get premium could will

So you'd the tide -- industry. And a the carriers. have industry our where I'll for went the rising time capacity across shipment thing entire last also XX% that all is is a [indiscernible] different at in count again, down out say pricing demand down across

the freight. capacity again, tightens you that whenever So LTL it macro handle of to have enough I'll over all to turn don't in to Kyle discuss yield.

Kyle Wismans

for contract level pretty year. across Yes. From the renewals a renewal the cadence is Ken, standpoint,

the that QX here But in across amount will higher cycle slightly fairly in year. disproportionately quarter. from even it's a have the We

Operator

is the Fadi question of Markets. Capital next line from Our BMO with Chamoun

Fadi Chamoun

question Just yield. a on

local you're having base local where look accessorial pricing? seeing X levers kind spread more fairly the contribution penetration greater like You And years year? getting side? from and decent of in success? the coming mentioned you at in some of the areas you base double-digit third customer where Accessorials, customer quarter, of kind to what's of or local the this sounds across service, kind customer pricing you're past is It are When opportunity quarter, base.

Mario Harik

as renewals be them service investing to amount coming network, the This and those because you improvement quarter customers look So is where time higher at I and gains. and success that that's third that right well. and improvement relationships and customers our we're to X was to the in look are able in, service investing customers think Fadi, our with price support understand over when the people them, keep of in X.X%, leading in the we're trend impact most we are of seeing improving biggest way, when ratio, the at the of and contract of on these claims to you seeing the the yield

side, to the still accessorials new premium over these and and them happen we that's come going as accessorial as services early to we years the gap. customers, quarters to mentioned believe bridge we're the customers over we innings, to again we On come launch we the see existing sell to quarters that and and

we're a count I the side, by basis. shipment mean, in in local the a third channel here making our year-on-year the progress. quarter, on lot increased of we XX% local On

is macro. the impacted this more channel However, by softer

seeing yield, the impact on making you still tailwind weight because per come over the channel, tonnage the well. market we're that but and [indiscernible] see would although as improved progress as gaining in we're channel local seeing years a shipment So so to start is on share, the we for still down becoming that we're not significantly in it, quarters

Operator

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

Thomas Wadewitz

Congratulations that on OR Wanted kind things progress to on trend lighter numbers in? and if service kind think you and view pricing, freight end you quarter. on I monthly all stabilizing it, could the you of the the I tonnage the comment don't are they're bit or see, how are positive. know if a the the underlying how but and Mario, strong those little It really in of guess, a weave little of it's I like at bit of maybe that the, kind to seems want

is could So offer that. I know freight some you think thoughts on if market you trends, some don't if underlying or stable

continuing Does per become that looking about do in per weight in more 'XX into bit neutral? maybe we reduction how think that that's that Or change even should forward? that a of a shipment shipment? you also, think about And weight

Mario Harik

to not Ali cadence by can year. our this half comps Thanks, the the back Tom. I'll quarter carriers other similar covering compared well the year are the first to in because the demand in last and as start side, through of walk

demand are call can a there it's So we into with on environment, do the if a few But it step more it at we hard things is what drill details. take customer look will to when demand back macro fluid the environment. side, the a and you

underlying of More April of bouncing year. along bottom since month recently, been the the this environment the has

for So it's demand been softer overall LTLs.

customers. were top our last our even last And quarterly more survey week, in a customers the quarter, terms our fourth customers of on balanced. the outlook, Now we do survey basis, for

others seeing were was in demand, were balanced we But demand. some were some generally, in customers terms earlier in the where of seeing in softer strength So while it year.

customers more it's up. number, expect softness XXXX, optimism a into a it's more -- But more flat. that not demand or hearing still about again, that big expect is are versus customers pickup picking Heading but demand from that we customers

that pick up indices And are of slightly bit still It's Now And on it our than accelerate XX% look up index same September. we also but X.X% month-over-month retail X/X XX%, when at companies well, to side, did pick last bit. was thing to look sales month. good and manufacturing some proxy customers in retail the ISM a under expected. at, the a a is of that the industrial saw we you better

at to more this So going first we're seeing lot the things signals of bit very remain with point. soft, call here. macro it's a of year, improving the but cross slightly tough a to There's still optimism half next

Ali-Ahmad Faghri

Tom, Ali. this is

terms last In accelerating. year of mentioned, the tougher through gains quarter, half share as as cadence compares second year did the the we have in were our Mario the of market

So of and both our if tonnage you counts continued and it third on shipment X-year a quarter stack basis, that into acceleration the accelerated X-year October. look the throughout at month

shipment we shipment counts of we noted, September. October, July improve And if the on just than October a basis, of saw third September. quarter as the month into as then by you Also, our more each month from moved to shipments to seasonality relative it count X,XXX look we outperformed at

Thomas Wadewitz

follow-up. offer linehaul making that further gains? on bit quite You've a in-sourcing. quick Do you of going can you're and kind you in with of any the One improved miles where terms thoughts have

Just going how think about you is the Do think like said you lot outsourced. a opportunity that? forward. wondering you XX.X% improve I from

Mario Harik

Yes.

third on the XX.X%, quarter, roughly for basis. were So we XXX in-sourced a basis year-on-year where outsourced points we

bit linehaul mind, quickly more QX Now invest third-party miles given Tom, to to the moving we in get keep volume. did on in-sourcing. QX. in it's a in something But on We move we expect sequential forward, a basis, did inflection

have mentioned trucks freight longer Road we we're across drivers It's where and called program we cap program hauls. Flex I that about are excited earlier, move a the sleeper teams As operation. of launching the

miles expect come over be new enable given And us to in-source and XXXX. faster that We to accelerate on program, quarters of process. the But we we're move at -- this this will in-sourcing by do expect the years to to launching, XX% to least the here.

Operator

Next question comes Shanker from Morgan the Ravi with of line Stanley.

Ravi Shanker

trying So low-hanging up? of improvement traction higher sense I'm quarters? from good of trying versus are get this get to we coming a little just to to traction the bit get Or of it expect fruit an in what tree continue with a the incrementally on here? the percentage service whether of does just improvements. can understanding the I'm harder

Mario Harik

Yes.

improve So class ratio the to for priority, is our one and our X.X% Ravi, customers. continue perspective, to goal over of claims top be a to from and time. is improve our service in And priorities our to service our best get top

progress. Now we've made tremendous

through end claims to from year, down damage look You ratio from QX X.X%. we of this XXXX of went X.X%

However, It's that something the going we're take X.X% every X.X%. from it to a improvement improvement from post here won't be quarter, time. will to and a linear, not X.X%

to that just these enhancing systems we're have of of of we from new we an And launching damages are straps, coming with we've the that out team we reduction we're here board new that training than well. centers, load excited initiatives of programs trailers across heading airbag service including you Now more we into I'll a as initiatives, next level taking higher-quality seen Ravi, service with it implementing multiple the how XX% also rolled our operating very couple launched, tools and Dave all about. centers launch we've first new are and our on tell and number of programs incremental and the XXXX

That's because having XX freight it I them. equipment. effectively trailers When today, feet we [indiscernible] And X don't they measure improvement We haul to bars in another earlier freight. have SaveStack service line the call of carrier, use separate our from system have that mentioned in-sourcing. third-party a the we typically when have that in

progress we will the in-sourcing as a damage improvements was September frequency. out. haul, to these service record we again, in company progress continue third-party in is these well we So on as all fantastic. make line But things as see

many got month October move. of cause we September. versus the And So the do shipments we damages than how even that better

be it come. over So great and to again, years trajectory But the linear won't ahead. quarters

Ravi Shanker

that it. Mario. kind contract Is a service Is does of helpful, look Got What trajectory had kind you immediate? of earlier years? does of longer-term And looks that X same take? like? Again, better to pricing that Does better take said the cycle? this that that trying as Maybe How process begets couple Very out of just figure better just what a the follow-up on share. like. conversion and improvement that topic.

Kyle Wismans

Ravi, it's Kyle.

think go a our the really of going we're about -- you standard about are by of that to when again, XX% all our get So it, tariff impacted GRI. will through using customers

a the The XX% renegotiations. in for improvements several contract we're quarter. cycle now consistent, improvement meaning next basically That higher. quarter slightly fourth see will quarters capture contracts right But that almost other cover the same seeing lot network. progress is service to the is fairly that of go we we'll through the every of The number

Operator

of Jason from next is line TD question Seidl Cowen. with Our the

Jason Seidl

bit you decreases progress little system Congrats about the shipment into airbag wanted per the we throughout rolling the of should a in cost increases How or XXXX, network. the shipment. roll on especially rest I think we cost as on X.X. LTL your around the to focus in that per out the the

Kyle Wismans

Kyle. It's

about per So saw and some higher let when of little cost bit with shipment, quarter. a me then slightly were you the the QX costs in start think we

standpoint, That about progress almost X%. XX% down a the in talked in the per down shipment lot overall, about claims. areas. Mario from was There's So cost made we're a quarter. of insurance and

a we saw There's drop also expense. of purchased the of costs of kind the areas include where in couple That's going to third quarter. transitory a saw higher We fuel. some transportation in

the about for in were the can $XX to ramp linehaul in effort make million to sure network. that's as sequentially, we into we and really both So that QX come and continue needed up service to the the 'XX. we and We'd shipments sourcing expect reflecting down additional

Jason Seidl

trend down cost shipment expect to would you into 'XX. per overall, So

clarify that. Just wanted to

Kyle Wismans

I No, more productivity into expecting think and into we're cost QX 'XX.

Jason Seidl

a to as been brought know back market we really then a you then And little on that maybe Europe. an focus, haven't update enough. follow-up, do be because up year, bring I bit up Fair roll think the into a of as but enough And it Okay. new might again? hasn't we favorable M&A it the

Mario Harik

we [ term, our results, to on continues to a at quarters, fighting a team great I'm the on over our But carrier. really Well, to play look growing last company. EBITDA in are here just you couple all European be American the We're the our well. But be long was well. pure-play the LTL European North efficient goal cylinders. getting it's business basis. North our a is continues year-on-year and performing cost last team American in pure plan just European economy, the remains to sort but deliver perform of onboarding more softer customers, LTL meantime, able ] of When more business, been

Operator

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

Brian Ossenbeck

know comment, about needing I the talked see what's the now. and available to capacity you limitation in could wanted you actually bottleneck if last Mario, add Just more. quarter, some on the to network of

that about conditions capital expenditure, the need you're you're that new rather midpoint pretty target bit the of adding, you just into -- that fourth midyear You little ground how raised? in broke target up you're especially like to here doors center point to boosting the service up more the talked a you quarter increase big when this on. the any limitations do And stand? running does you a see Where that at looks get

Mario Harik

thus expand in rating capacity in the contemplate run available we're many teens. we a from capacity. our where markets, distributed center we excess perspective. were But physical limits, know, we In but expansion But this markets service you that markets, capacity And demand network In the across see many, doors against doors physical network. have high from higher a our those plan quarter, customers, bumping going evenly we where of have. third capacity in perspective, as had our are in not we so high-teens from how many some to is terms we

we Our like longer-term a in be to basis. XX% on where would the range goal is to be XX% is to

of X.X. terms LTL tremendous had have Now in since beginning the stock of capacity, rolling we progress

than XX,XXX more the fleet, our last take customers, be new X.X this added X,XXX enabling to We've is traders X tractors over more on to run us efficiently. able We've and to years. more added also but years,

to more help year-on-year see versus third it the while X% I And shipments headcount quarter, staffed in increase us down and an current have up hours manage into. side, do well. here as much demand but people to mean, volumes, are for productivity, basis, for a shipments, And we X% increase, the equipment ] slightly continues were the to we're if on paper and we easier headroom markets our was on The handle step able in our were You that. gaining that. up we current labor hire [ can

our have We well. driver as schools

freight. back, on we perspective. people if the to a great a a we're we positioned you well capacity and So But capitalize generally, upswings any we good feel from to perspective, step network, and from in take feel invest continue in

Brian Ossenbeck

Great. Okay.

starting a you've you pieces in from buckets lay terms able pricing of where of to gap some terms like peers. follow-up. performance about -- come we're longer can of buckets some with sort could bridge yield going you in all are here of those things looking Maybe out to term, the if them et and the cetera? narrow thoughts and I of those you're your to different accessorials of as quick productivity just in able productivity, yields, the to of been talking quantify So wondered some accessorials, if

Mario Harik

from biggest yield. is to The going come component

price remarks, understand we're levers in to the in one main mentioned incremental investing a X is around who double-digit the is mentioned, higher continuing from which coming years see opportunity over my the I we and through customers yield I get network As this we service of investing from and roughly of the percent to implementing. roughly accessorials is expect premium services the XX-plus go range opportunity for half based revenue business, the to in the other half XX% yield bridge the revenue are on that's we the the And prepared gap.

like this that are for. program, about services I our are these customers What asking

bridge year, higher customer, channel and yield by far the So we're end sales our finally, increased channel us goal and come XX% the of local to that a overall that then headcount opportunity more so making and so by higher here force. from get growing this our our sales local gap. on market And than far. is a to would we've sales And that's XX% help margin. by does of enabling share in also year, next in side, XX% But gain price. local team increase share the the we're the to to And linehaul's taking care account of

and and ] is and efficiency category higher And get cost, is good. also second [ The we continue in-sourcing and linehaul, as to program we with really around are well. third-party accelerating going which for our improve will we're that Road new service lower our to drivers, key out team Flex

that running when again, things, shot, all yield are #X a these long all then well. other of making the areas and will combine as we by So sure you more efficiently help is

Operator

question line next of the is Jefferies. with Stephanie Our Moore from

Stephanie Benjamin Moore

disruption added? today, just bankruptcy, we bit just have adequately to of kind kind the given through post were you and positioned a little on just bit about think previous the little a you bit needs. from bit of on on What labor kind hiring touched of where but kind maybe then sales had XXXX little you've go in you view you are a make, question, force as you Can talk more. guess of of I incremental Maybe this the the that double-click noted a additions to it your and little yellow areas staffed? the you

Ali-Ahmad Faghri

is Ali. This Stephanie. Sure,

year-over-year down counts if basis, shipment was So quarter, look our the single a headcount at relative you third high slightly up digits. on to that's and

less to labor labor through digits relative headcount managing and quarter. year look single year-over-year. than from versus X% hours up year-over-year, X% network. the hours Also, first digits in if it spread up the low between high that the And third labor in job importantly, volumes great a the more in perspective, quarter you counts at the were did shipment a we shipment counts at accelerated single again, to hours So

we the be to think fourth for done the as XQ expect Now about We've good as quarter-over-quarter basis. we third quarter quarter. productivity on again the labor the hours year-over-year would third in in a job same a and managing headcount and total roughly both quarter, really

well. into into as XXXX that XQ and We to continue expect then

does want we're are for we staffed have sure and for we demand well. we increase, that staffed volumes, headroom. as some So make current to If

than side been positive has is recent the think market in is labor I the it years. looser

to the as in going to labor confident we're So the up volumes effectively network. through we're continue flex relative ability headcount manage to needed. we're to our And moving

Stephanie Benjamin Moore

and Can you kind follow-up. for little metrics prepare you about you XXXX. align kind think in from looking of of into terms talk it. both Got just And of going to changes then thoughts incentive top then compensation, level terminal as there the of if new down a a as in about XXXX, you're bit philosophy to maybe all Any the way with targets? kind the your

Mario Harik

This is Mario.

in the growth were EBITDA why last the was in also well, good the to to one since course on-time on based we to year-on-year of improvement on and incentive year this that part year portion service. X.X. these a here only as of through the of we quality started both change switch focus the on incentive we meaningful And categories XXXX structure. LTL had be our So comp It did able reason of drive plan basis, we used comp prior but and a

if improvement EBITDA center field this the operations regional you at a having level to moving the forward, And for service driver. contemplating change are using at is we as being look from Now to switch compensation being and one level the program. the months contemplating [indiscernible]. compensation as We're that's a early but OR metric profit for saw few XXXX, still year. change the expansion here we next are before still for for key There's we

Operator

is the with next The Oppenheimer. from Scott question of line Schneeberger

Scott Schneeberger

could Mario, I CapEx. was on hoping touch you

year for long-term -- sounds to year. this heard of guidance year end it in the it's going you positioned that again be it I be way here next elevated the mentioned was You And going your to in range the it. above

kind new Just of your shares it is if tractor predominantly curious that's or doors. And anticipation?

will if could you spending an just not of is forever, anything it's And you're area in on be? with asset you're curious up. spending that, -- bit to I that know kind may well. if a in the that's but hone be having little Europe that's an Just that if where CapEx you excess curious because increase picking where as

Kyle Wismans

Scott, it's Kyle.

range. be mentioned disruption. gains And if trailers, we as XX% year, XX think we you and the So enable in this earlier, last recent the to made that months, really going X,XXX the includes that's over think we're in XX,XXX in about tractors investments we helped share to XX% that

to. going can to to thinking we're what X,XXX So not we're in range, really XX% produce going We're about we're about year, things thing earlier more second if mentioned on X,XXX. us we call, the investing -- in think more what's now right Initially trailers cab you that sleeper above our the specifically put trailers, Searcy two produce the facility. is our initiative. I more at and point One, something

to bring about that. we're do So tractors in going the XXX network to

pull investments we investments our for these couple LTL both It a you efforts expect For obviously returns in-sourcing, make we upwards us, going are it's benefit cost total, service forward benefit things. to of do of about high very us. if investments capacity And the in help really of a a us XX%. there. think of general, in But linehaul there's from in will and accelerate

thing to to So for we touch think us was place Europe. in going was I the this company. Yes, be is question investing the from on your only say, right the to

the general. our pretty in gross CapEx is Europe there. about That's So XX% and been for consistent business of will remain

Scott Schneeberger

quick. All follow-up that. Appreciate right. real My

percentage of you business impressive. your of sales call, interact helping points at new goes sounds on year-over-year. you in Just folks that on-time the That wins. mentioned sure the X top for into I'm improvement the

into perspective, see first that Is curious bit that going year? to continue trending Is if something month through could seen put you the how the more that of fourth that you've here is now of to the you're very that quarter? end a that's the something trending? little well Just that

Mario Harik

the improvement that. example, it's do were of the third Yes. which a of and Absolutely. in our our all been in best And seen mentioned time metrics at see. When appreciate frequency, service was continues fluidity And a network to well. step-up great on as we've and terms here month long, I October, of further the I quarter than in from our well we side you for earlier, company look we've mean, from where while, seen dating similarly September damages back even to better is long September. in record, damage to customers XXXX, a on October a was really

Operator

of end call remarks. the over session. the Mario closing Harik for I'll reached to the now We've question-and-answer turn

Mario Harik

for Thank operator, today. you joining you, all and us thank

we As we begin America. second North reported from this you in a position year our saw morning, a as strong in LTL as business we're what stand-alone

here, expands revenue, driven operating is LTL market look and to in achieve. growth you forward our a entire and all call. our with plan we'll gains. there's lot significant early momentum to solid the innings yield more We're share business and X.X Our of still on Thank from execution you. and service next our by earnings efficiencies speaking improvements, continued We

Operator

concludes conference. This you. today's Thank

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

XPO Logistics (XPO) 30 Oct 232023 Q3 Earnings call transcript