XPO - Earnings call 4 2023 | XPO Logistics, Inc.

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Operator

Welcome to the XPO Q4 2023 Earnings Conference Call and Webcast. My name is Sherry, 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.

During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which, by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the forward-looking statements. that in actual as the in earnings factors materially to well of its contained is company's release. discussion could results cause differ as A SEC filings

on company's today, required of the by the these company to release the forward-looking only obligation and in no law. any statements are made forward-looking or The extent made update this has statements, call as to earnings of except

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

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

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

Mario Harik

joining Wismans, everyone. in morning, Strategy Officer. here Thanks Financial for Faghri, Chief our Ali Chief and our call. I'm our Good Kyle with Greenwich Officer;

billion, year-over-year. report expectations, adjusted for that exceeded year is to the quarter strong in for we reported into increase of a an higher grew XX%, $XXX Company-wide, XXXX. kept that fourth revenue $X.X to estate of that X% gains we we've quarter XXXX. And carried and real we pleased momentum million, which EBITDA I'm excluding

I the want EPS diluted a delivering for environment. was than in company our to great thank $X.XX, also team expected. freight adjusted soft Our results was these which better for

satisfaction. X.X%, XX.X%. in damage excluding we year-over-year X.X grew We to strongest our North operating improved delivered growth, fuel, we our And since level progress we adjusted by plan LTL as employee our and XXXX. LTL significantly by points. segment, of adjusted history in our at at basis XX% ratio We best American operating income claims our accelerated yield as a Looking record launched reported year-over-year well XXX ratio the our

deploy as the into productivity business. fourth further reinvest And efficiently capital for increases efficiency cost improved to consecutive in with labor back in-sourcing. we linehaul continue and also We quarter the we

these our for be build All market the traction. growth support in into is once-in-a-generation and points locations network momentum. will we yield and margin XX the Network on our prime to has opportunity strong and of customers to plan years acquisition When to position come. serve stronger recently this tightens, to capacity are acquired profitable expansion. service Yellow our a growth This we'll a drive the industry integrate recovers And proof from centers that

starting major including details Now XX% want than to of of with share I in our rating, quality plan: more the has satisfaction of customer the risen pillar quarter, our service by which component improved XXXX. improvements. service We every some quarter, X.X customer since the LTL first

percentage was when put mentioned X.X% vast our performance than is better claims ratio To the in damage a quarter. us. our points a on-time prior that plan. improvement X.X% launched record Our for in fourth new it's we from X And context, that I of

an as service closely indicator metrics watch are These of customers our quality.

industry. is reality. make in priority top this tools the And leader Our the to with to a to service customer team continuing our our equip become we're

The our XX% than now installed the spoke doors. is over on solution airbags damages our well, more new by about at our been of and locations, benefit those will reduced call. is example spread have network. freight The One going this airbags I last has across and at the rollout XX%

the this by middle installations the of finish year. to expect We

more and XPO's both than fleet. supported trailers year refresh record of network resulted insource The more any This second invest linehaul to LTL grow in added to history, in is our to pillar growth. and miles. in in our network to fluidity X.X We long-term drive XXXX our tractors strategy and

years the than side, year-end, we to more with average X years tractor X.X our This at XXXX. fleet compared age units On XXXX. in in X,XXX reduced purchased

target. trailer Arkansas, over the production in side, On we manufactured X,XXX in-house our at our exceeding units facility

we in primarily For the to expect level as a and revenue, our percent LTL to of teens be allocated our low CapEx again, fleet. XXXX,

of terms service investments to real Yellow, we forward centers acquired on impact several In from make XX we our years. put dozens next is timing. of plan the the capital strategy over the estate largest We've that

service important some to come. to add my on benefits business earlier centers strategic I'll These deliver the comments for the color years to acquisition. will

metro line us cost First, closer should substantial pickup-and-delivery areas. and across they'll get dock customers, drive to major and our facilities haul, efficiencies This in larger us give operations.

growth April our with performance. reduce don't further markets in our us we on-time because metros give where turning the like and Columbus damages, yield Indianapolis, And operational within Vegas. of that'll third, and freight we all locations Second, they'll are handles, better enough to Las months. These these start capacity bringing XX improving profitable currently next have in and fewer service We enhance customers are plan away have more XX by [indiscernible] online capacity. key them to door

the in our XXXX. our accretive assumes operating upside an volumes. expect underlying LTL forecast. transaction to This represent market ratio no would baseline We industry be to to and rebound Any recovery EPS in

biggest growth, to for is improvement. yield The lever third is which pillar of drive single our our above-market plan margin

fuel, the us operating adjusted in when drove fourth improvement. ratio year-over-year higher XXX see points This nearly we dynamic deliver excluding of yield, this XX.X%. can by basis You helped quarter

service within by executing are our growth and base. customer on accessorials We These the got there pricing for volume local X levers our improvements, long-term opportunity.

succeed. a contract for we Increasingly, as a translate see price the quarter. XPO second for customers our metrics them our consecutive service earn. our high-value with value our pricing, year-over-year partner business This by the to resources the help in up trends with customers, which to exciting reflected in was X% direct correlation The was to renewal

with impact critical this product retailers. introduction of of We our range rollout offering. another are our a services. store grow to more We distribute already customers to yield, retail dozen an by quarter through launches offerings Accessorials this using year. early premium for to opportunity expand delivering fourth have over the plan We service the saw our value in

And with the grew third digits we for by double local channel, lever, third consecutive shipment quarter. the our counts

sales margin-accretive was this Our year-end we place than on over business. high-yielding importance XXXX, team larger the XX% at in reflecting local

we value a have align lot of So to forward avenues yield deliver. to each leading step the and pricing helps with growth, our we

transportation, less X.X our miles in-sourcing In and basis year-over-year outsourced, The for of efficiency. ended more fourth basis XXX we and pillar our reduction here rates linehaul purchase by with LTL main a by on The overhead. cost than final of purchase XX% the costs XX% with fourth the are miles reduced and quarter, cost contract opportunities transportation year-over-year variable points. lower basis, On paying to outsourcing sequential providers. third-party points. XXX reduced We reliance by we quarter of a is

we of percentage We've beginning way about of XXXX Today when linehaul come XXXX. to way teens were XX% outsourcing by the the since the we're miles down our on bringing low that well long a to

teams network. and these and a initiative goal to teams operation. driver our update teams last in quick on quarter, started we efficiency here putting The for increase Lastly, and add the our XX trucks in to We of sleeper long is have linehaul flexibility over place currently cab hauls.

have This our should teams in-sourcing to by help hundred year. few expect plan. a this long-haul road to the on of accelerate the We end

our by for manage And than spread count head to effectively, the continuing also our the variable labor fourth costs volume more the our growing in was substantial. consecutive We're year-over-year quarter. quarter

the credit just planning. Our to This was count shipment team's operational proprietary X.X%, our labor by up while up is X.X%. technology count was a our discipline, supported head for

efficiently. we XXXX by future. improved generating the across in foundation in operating investments progress network, strategic record made in significant more while laying operations X quarters all accelerating our plan a service We levels, year, the and growth, further the board, summary, In yield for on solid of the making our cost

robust a earnings result, expansion expectations, and the momentum. above business As with strong forward and performed growth margin

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

Kyle Wismans

our and morning, you sheet everyone. take and Mario, you, financial good results, Thank balance liquidity. I'll through key

Revenue overall. total was was increase the for This LTL X% $X.X segment. company a It billion, fourth includes in our X% up strong a year-over-year. quarter

up was revenue XX% year-over-year. LTL fuel, Excluding

year the on our well XXXX. productivity a incentive primarily our our for LTL benefit as as strong wages mitigated higher now and Salary, increase inflation, basis and reflects fourth by than gains. XX% with wage aligned in benefits improved were were compensation, for shipment X throughout This ago. quarters impacts per quarter quarter We've hours straight a These performance. labor year-over-year

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

Our down which quarter, carriers the XX%. by third-party million was in expense year-over-year for $XX was

fourth purchased trailers our capital quarter, the more top in-house. as to or Depreciation year-over-year continued our allocation new million LTL. In CapEx tractors in as manufacturers expense the This by from we we primarily XX% business. build was and increased for the fleet, priority remains allocated to our reinvest in $XX

Next, in by of no to exclude estate gains million XXX the basis I'll We you and of from adjusted our the improved points. real adjusted of the XXXX. quarter EBITDA, We in EBITDA fourth had up estate with $XXX comparison. gains impact the year give margin add quarter generated XXXX, EBITDA metrics These real like-to-like detail the company a in quarter, a fourth of as some ago a starting adjusted XX% whole. to

the continuing $X savings Our and business stand-alone for was We're expect report a reductions quarter corporate for year-over-year expense to our further fourth or $X this structure rationalize million, of year. corporate XX% to million.

The growth grew at offset operating surcharge $XXX adjusted pension by million. cost And revenue to and fuel income we lower XX% and gains headwinds revenue EBITDA solely efficiencies our from year-over-year segment, Looking income. LTL achieved more nonoperational we through grew than the million. the adjusted we to $XXX

the European In million $XX adjusted segment, EBITDA our quarter. was for transportation

of income million the quarter, Company-wide, $XXX prior reported to for $X in year. we million the operating compared

represents and in operations $XX or net improvement $X.XX a from in for EPS of restructuring was with ago. million, diluted continuing integration loss earnings compared share income costs by a year of charges. reductions from of $X.XX, $X.XX Our continuing per operations, significant driven an transaction and This diluted year-over-year $XX million

from impact is ago. EPS XXXX year expense XXXX. real of adjusted well basis, lower estate as reflects an $X.XX, down quarter was gains as higher a in primarily On This the income our interest for in and the which pension XX%

centers the XX XX acquisition did December statement. the on results closed impact operating our material in income have on Our a of and service not

the of of flow million $XXX operations spend cash related million deployed to generated the we net CapEx, in from and excluding lastly, continuing quarter And $XXX acquisition.

ended quarter-end. Combined committed outstanding sheet. million liquidity. had hand. balance We We the the gave this under million no borrowings quarter cash ABL of facility at $XXX under our $XXX to with with us of capacity facilities, available on Moving borrowing

XX through loans. of we LTL service $XXX million $XXX and debt $XXX notes of million In term no notes proceeds combination December, in of we maturities million our a to funded senior of complete until due existing senior used $XXX and XXXX. million our centers, XXXX. raised have We acquisition refinanced of We now

credit maintained all issue-level also We and ratings. corporate

XX leverage adjusted net was Our EBITDA. months at debt Xx year-end trailing

The investments investment-grade an consistent profile. the will we're in our goal long-term a making trajectory earnings high achieving for with return our on of capital, enhance business

to count expense Interest diluted shares. of summarize provided million And million $XXX to to $XX investor Before I of $XXX XXXX share as close, They XX% of tax I'll $XXX million. models. you approximately CapEx your million. are effective the year adjusted in million Pension help our $XXX to we million. income follows. XX%. rate An XXX presentation Gross with full assumptions of of a

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

Ali-Ahmad Faghri

segment, growth. Thank you, I'll reported profitable another Kyle. LTL our with quarter start which of

by quarter, growth channel. in tonnage On growth led in in increased we This by our a per day shipments X.X% year-over-year day XX% sales resulted per our local basis, X%. in of the

notably consecutive X.X% was shipment which per the for second down was a Our less weight year-over-year, decline of quarter.

On per X.X%, up basis, and was our X.X%. was day up November monthly tonnage October X.X% year-over-year. was December a down

year-over-year, tonnage X.X%. October X.X%, volumes. X.X% day, December X.X% November was And was The January, up year-over-year, outperforming in more per from and shipments and events to while December the per saw was count In we both at just month day was transportation up a Looking up X.X%. our up down tonnage our shipment shipment with was January, weather count increased and sequentially, January, by stronger ended rebound industry seasonality. disrupted but recently was

in compared the strong by yield a delivering on quarter consecutive acceleration. XX.X% fuel, year. We quarter, We grew excluding outperformed second fourth of yield, with a also prior the

strong we our align pricing better underlying are as pricing our we're trends the continue Importantly, with service to providing.

up X% was a contract renewal with pricing ago. Our compared the quarter in year

Turning to margin.

operating adjusted ratio points XXX quarter fourth an year-over-year. which improvement XX.X%, was Our basis was of

by productivity initiatives gains. by XXX basis Our XX performance was OR seasonality strong growth by basis driven cost yield Sequentially, and adjusted margin and points. increased primarily our outperformed points, by underpinned our which

ongoing environment. like reflecting our we revenue challenges This to year-over-year, year, was in of by versus inflation. macro which supported the And EBITDA X% despite adjusted pricing, Moving growth the prior control. outpaced We strong the in U.K., regions growth disciplined delivered cost business. some European grew

While declined the as progressed. wins mitigated January. year-over-year, we trend industry and new improved volume the And our customer slightly we decline outperformed in this the with quarter

team business should of the continue momentum, growth from earning our new The sales executing together and customers. with pipeline, is well to European position in key regions. This our strengthen high-caliber

with close this for to achievements morning, main relate X they heard summary us a XXXX. I'll our of the as a expectations from you strong

metrics in record more continuing value levels. customers for at an quality trajectory. on of we're deliver to form we're with First, the And our service excellent

expect deliver digits growth exited a we're to benefit direct showing robust cost as to operate to another XXXX, more profitability. with we to that can year by technology this and yield productively leveraging accelerated And and our Second, serve. we we our third, improving we performance yield double

we've our short, taken In we're still improving and early major innings in significantly ratio. of strides operating network our operations, the with

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

Operator

Scott first Wolfe Instructions] Group Research. is Our question [Operator from with

Scott Group

and this full how think it And on as additive I be that about but some and picture, year you maybe QX margin all comment OR to bigger why yields on actually a for to terminal made well. thoughts thoughts the should to yield from helps is QX growth Any how it good Mario, volume, margin maybe guess, margins. and then, improvement?

Mario Harik

thing, Scott. Sure

do QX starting we First, outperform in tonnage and give tonnage, Typically, to would the QX. quarter what us, look expect the flattish QX, like. normal tonnage and a OR that. Starting the fourth had we following outlook. with from typically than we We expect call yield better it, do seasonality seasonality with sequentially first to gains in for to quarter,

where tonnage the same a ZIP in the QX expect code up we single low we So on fourth quarter be basis. as should in somewhat digit, were year-on-year

the as end Now specifically, compared despite the January. better, Ali your mentioned look month tonnage And a we January well, earlier when at had of you do as forward did the December earlier, seasonality on into it old weather in month. to strong

basis standpoint, code basis be as OR we the On we year-on-year. front, on usually, the this the seasonality better fourth a We a up across year. yield do to same ultimately, quarter, in were quarter yield yield than And first the us, for to in performance typical expect and QX board from we strong for our expect year-on-year the QX, to points, do in somewhere expect see that. deteriorate about XX we ZIP

quarter quarter. improvement know, better you basis Now March month will out. the rest of is roughly Usually plays implies how that how on the the of the QX, as But depend OR of big much points XXX year-on-year.

strong For year terms expect full a also we XXXX, for improvement. OR of in the year us

and efficiency for XXX tonnage the doing OR up be things than points cost year. us to the a in here and to for depending there's all the improvement out. And path basis improvement, and we expect do plays end the how range, Given top year and range to better of on XXX we're yield the the full in service

a how impact on the your taking and they yield. question step Now service back on centers

and from with dock-handling break and also see having closer savings bulks centers that having benefit we to D&D lead haul, first, ] to that cost and leads to bigger lower that and cost costs that. efficiency cost a the comes So associated service higher big cost lowering customer benefit [ line

service improve yield. product product is because way service in service and yield centers the Now help your tight larger they help

yield about margin And when some a we're you market, on in new Las think like Vegas, at we also an shows we're to now biggest the premium higher well. able as services be mentioned the having also and trade premium launch capacity. markets like comes by service in And higher But to tapped services. largest center this example, offerings, as and going

Operator

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

Ken Hoexter

up the Congrats with How Talk facilities. on drag we here ramp though. forecast? the guess that, And digging I XX of anticipate about get XXX bumping the Maybe should on that just the which now start -- targets against that, changing the in some of with shift How it you're basis like you performance long-term seems versus there OR. -- solid point thought process? into of does or your speed improvement. kind can your the your

Mario Harik

and over service Ken. dozen or months, getting starting it, to do to centers. -- X the months, of centers, terms the XX Well, so remaining expect XX X next the next live them over the dozen next Thanks, ramp we or X with get then running of up up to will year, the the months. service to them first Well, XX and next running, go X and in the X call in

Now we material them our are to don't numbers. And reason why, service where operate. that already centers anticipate markets from in we of majority the an the the OR because drag would be

it, team, about center per on low there a savings from. and think having larger basis, you our service center. with we larger existing associated estate the if a smaller case to operate get to we efficiencies cost cost is door service cost The immediate fairly carrying from one move So benefit a of of where is real but a team, our facility

centers In there only markets we in we one, keeping case, inflection have step based and the service volume, volume volumes. we incremental are on is where between particular we team the service a if up center that adding split and existing in and an the X

We to them by be the on there. the them year. don't all expect be a accretive do on on accretive debt have for drag these centers expect we XXXX we incremental and beyond. So KPIs to to drag driven in service EBITDA. And the a expect We do anticipate EPS this OR

do of about there's And terms basis to said get magical into here an with pricing, I time all service outperform, all magical long-term points, hold points, the at XXXX. service always well points. mean, from the With we centers, expect XXX new the XXs least the perspective. over the targets, nothing that I have and In with basis basis improvements, to we the and we've momentum -- XXs XXX to the OR nothing XXX and would about us

Operator

Our ISI. next Chappell question Jon from is Evercore with

Jonathan Chappell

or in you to that renewal Mario high do marking more renewal but now mid-single if it I'm moderates to kind you that straight close not business to Where where up contract the market X%. to bit pricing you kind with line have more it think and Do Or is as maybe the think a kind service? take second this, relates on still wants to is with kind you agenda? market couple of quarter book of levels? sure GRI stand quarters single-digit to Ali the marking a of for contract this are the kind the of on digits, you of new maybe little of

Kyle Wismans

Jon, it's Kyle.

about from in half heavily So right to X% the did back think we if accelerate renewals you contract now, X%.

And half, so of far the -- in XX% negotiated back book. the in the or year we

and in some momentum through. more XXXX. still expect positive still a here market for renewals, we're there's in I we So think favorable forward carry to to should work

Jonathan Chappell

the kind or reacceleration half you Just what XX%, the done the normalized last back you lead towards you've range, of back kind of basis? higher months as that improve service, you've over think level done a kind percentage in though, in is more last of to a then of what so of to of you're 'XX, as continue do you be similar months, clear, and to first X the more if X half? the that Or this half done like it's end with

Kyle Wismans

I see probably going to the think follow renewals yields we where for are half. first

strong yield to expecting we're So continue.

saw If QX. to what start in our is forward QX the single carry in renewals we think of yield with into should digit, going guide, high That year. QX the you line at up our contract we think yield be

Operator

question Wetherbee from Chris next Citigroup. Our is with

Chris Wetherbee

are about some thinking talk guess little maybe initiatives about XXXX. I of to want that a for bit the you I guys

kind detail about in-sourcing the be of those about volume? much a would how bit what maybe the of Curious you talked pricing of So if drivers, adding up team inflation can we've sort points the I haul. and can any in basis that about on sort us context you start you cost get talked from XXX to give versus of improvement, you of above the think maybe of of core that, unpack to leverage be line as kind you great. XXX little OR the don't would know of, but

Mario Harik

drive mean, in I'll momentum. goal it substantial the continuing drive or I talk be expect efficiencies, initiatives. it Tonnage involves our but you we does involve more yield the to look our service single do to plan year, great yield mentioned. to see ZIP up it, product code goal on the of service we same low tonnage up, the fourth digit, It is our full it, the we because And way as Chris, going for call cost is do improvement. in improvement were improvement, Similarly, at so our is quarter, to where we volume. than drive momentum

a the give I'll update initiatives. on So quick

space, feet safe we stack us gives [ the trailers which the when can third-party miles the go a and more a both at time as linehaul drivers plan, ], also time. As continue separate up XX XXX% in-source from benefit that on a to with it X versus the is comes a more cost comes third-party part service because to physically, We pops show of trailer in XX-feet freight of carrier using to our gives that where but having we benefit, us our product. service improve -- can

versus think be for a third-party what truckload will would us an spending that's with the in what from basis longer-term when carriers. to we on rates in for XXXX, of cost some inflection savings you we're internally spending also at come per but that mile cost here going come be material Now obviously savings point, savings

fourth continue -- the year-on-year. to our here XXX basis is we points to in insource So quarter expectation

We drive are that the that to and point, the teens up at at going sub-XX% low teams we're and in as well. this And to those down phase XX as change. we're we amp first beyond

Operator

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

Fadi Chamoun

is this been you Is double-digit guess. penetration? I'm are growth of first I question of we a this obviously Where there density thinking and, in decent my in seeing per the has So that? account ultimately, pretty opportunity innings that yield. tailwind the that in in kind still account, you you're mentioned an and front of cost trajectory local shipment the of the improving local Are is of significant for size you?

Mario Harik

come When you are growing segment look strategy, it a at the planning we the to account Fadi, on local over years is that here.

look generated you we revenue is from of at our roughly and run-rating XX% that at if Now were XXXX, volume channel. back

have goal add of Now And the year sellers the XX% the course accounts. than through XX%. size through local we what that more We the to we of XXXX. is of done is roughly the course increased here through more local another hired XXXX our

So all in overall to that selling that channel. size force sales be XX% on the to is higher

usually we imagine, can and and people, new for running. you productive take fully to does months, as Now onboard them X fully up be it a whenever about ramp,

rest if did rate year, higher our Now a look the our improve higher the than at local -- you book. run full on we of accounts

XX% gains we we that expect fourth continue since to do the shipments basis. really in to local we strong those onboarded year-on-year channel in more see sellers. that quarter, XX% channel grew in on And our Here by a

being we're XXXX and Now quarters them in in early very the and team underway couple terms having terms I a but here of terms results, having say, of of innings still the in well beyond. in are inning, seen productive in we of the would ramp pretty of

Fadi Chamoun

that. And results. Appreciate strong on congrats the

Operator

Moore is Stephanie Our question next from with Jefferies.

Stephanie Benjamin Moore

I guess, to the, pricing maybe on the I touch here. continuing discussion a wanted on bit

in over quarter. accelerated pricing XX% think I here the

you actually single further through maybe drivers guided your if XXXX view pricing think think high seeing acceleration, digits. for and can of happen you're What about as what we thoughts macro walk the your the to I more of of upside? does the kind especially you turn. Can

Ali-Ahmad Faghri

Ali. is This Stephanie. Sure,

seeing we're trends as enter we pricing XXXX. So very strong

would be first the yield fourth an the just we as up to somewhere quarter expect particular, on the For in delivered in fuel our in basis we quarter. similar ex here range

about roughly XX% it call So growth.

basis, a in we path expect It's the Now range. somewhere add year. I than year that. on do high full in a that still certainly better mid- would very to to would that up yield to early single-digit be there's

update we'll year the So you as progresses.

A that versus industry the driven being lot internal outperformance of yield our growth by and is initiatives. the

We out If we're in about quarter. you into more the to our fourth improvement, think lean at record store premium continuing We're levels service quarter. here services. rolled fourth here the retail rollout in

We have well, Mario as there. the as just on And of this lot traction of a momentum lot side is too, and and a local noted, higher yielding margin-accretive business.

be overall. a yield outlook and XXXX to us for strong expect So overall, about year here we feel it the in good very

Stephanie Benjamin Moore

bit based have the major margins, incentive organization, a follow-up should what's changes but about XXXX? just that organization, comp incentive metrics we as interest focused maybe just across the been about realigned be Maybe talk you on the bigger what EBIT, a a little to that, think on bit little yield, possibly in align metrics to picture, comp across

Mario Harik

Stephanie, is Mario. that. this take I'll

So we growth plan But comp in performance. EBITDA XXXX to used XXXX, service quality. field a first, compensate and the added EBITDA based we of and focused be good portion have to on our predominantly on

group comp and had they that. a good on incentive their they centers of quality and -- based service as on-time is chunk effectively So service, service

improvement. from first EBITDA we on where field the be and from focused EBITDA switching be our will XXXX growth are in year Now it compensating OR and have

that to level which the service how center network on yields know, at we you want over to now managing our So expand the higher as we and Because can to it's focused lead level ultimately would well. yield, at that as service effectively, expansion margins better effectively costs product OR while time. incentivize driving

Operator

Our from Tom next is UBS. question Wadewitz with

Thomas Wadewitz

I a are how had, of we given on just ramp-up think D&A quick I guess, CapEx. in kind the and one of good spending that about you the one maybe level

broader bring terminals, door a capacity sit guess you a network. where think you you would -- perspective? what's question guess I a But that. on the And from terminal what's about and as like I on your excess on terminal So how be today,

excess bring do that And where at kind then of to of think on to wanted you to, have on you'd modeling. get want as more But we've right? a specific you're model, where kind service terminal you capacity, one do to kind decent some on get excess of I where capacity. of a like just amount capacity? D&A to see And seen today, I high you

Mario Harik

start additive we're XX% net Thanks, adding would and look with XX at done in turn would the from When for Tom. X,XXX roughly we to capacity capacity. Kyle to them other today, before of you over a with about acquisition, half ones network which the doors, X,XXX smaller are is our center network D&A. the expansion the acquired side service and we service and run-rating of capacity it in we call it we a a we net, we all and environment. if roll terms to roughly the service a XX high said in the of And and center. were would be the XX%, after are mid- half forward, doors, adding integration, And call these, current relocating out I'll teens centers, be where be larger center service it a in excess

excess the to in capacity these get be online, XX% will XX% So our centers we once network. we service in

And place to especially a as that's an freight network, soft in be market. LTL a great

up that with demand, whenever carrying capacity market demand sort to us way, would recovery cost low a see this a constrained, this higher of flex enable freight and has there's our estate So industry comes real whenever back. comes and the been very you

how are where centers as service perspective. currently at this open and be we look a those So up capacity where is we we we'll adding

Kyle Wismans

Yes, And think the the Tom. so are to CapEx segment. increased about going within LTL you see if ramp, we D&A

we'd the to for a So million about spend. million increased $XX CapEx LTL, expect reflecting quarter $XX

Operator

Stifel. Chan question next is Our Bruce from with

J. Bruce Chan

any business. you But with potentially the these what start, quarters you I to new Maybe of urgency now? need back And is your commentary the European Kyle, sell range pay-down best the target of just can is? in know there facilities, the that more then to us around with for business sale previous more leverage pulled on some of remind

Kyle Wismans

Mario. and Kyle, start, to it's to it then Bruce, hand over I'm I'll going

when months we're next And spot investments lot progress Xx XX years. So couple can is a of our we of made a that we think in on and to long-term about outlook, think leverage we great in the really the X make to here trailing with intention EBITDA. generate EBITDA you our the

Mario Harik

business is of our and a our the strategic But on plan be pure-play And to the Bruce, carrier, North American to sale, going European one European long-term remains patient. we're priorities. LTL selling be

#X, maximize in to value either in or business. the is We're we of brokerage business many geographies a is goal return U.K., Portugal. but X not Our think has to Western Spain, it. that get X matter Europe, scarcity a matter less-than-truckload, that And a asset-light of It on a if truckload, France, in when. it's

soft up economy a tiers, quarter. month is business improved was and take volume further the meanwhile, back, well. with the Despite January. a the quarter performing month the outperforming in of if We've of in every improved Europe And in our revenue step you the

And to so team's execution. the credit strong

if and back, point there. of it's So at a get we'll some matter again, time you a take step

Operator

Our next with Seidl is from Cowen. question Jason

Jason Seidl

we things to impact you understand talked help sort Mario, XX accessorial should and XPO the and drive Can ability and higher. of us the them about there's to that of accessorials I timing -- think your was about sort these ability the expect? implement you different that doing

Mario Harik

step take premium what when predominantly they services. on we accessorials, So a call back you are these

services pick go a destination. get beyond up are a that and your of freight delivered them for, customers that typical to few are these skids our asking So

that retail shipments, can mentioned to of that leads the a to time are, in where So Kyle could launch, obviously if a higher ship many, it offering, a store product coordinate rollouts price happier hundreds think, to the have offerings. be new customer a some and you needs case, need. all shipments short And of that window, in is they particular to of us imagine a service they're getting need a customer earlier, because holiday or they somebody examples you sort those and many

that number others that that. Working a a must shows quarters. launching -- they be them expect all good here. do offering, we year few other to of with example offerings. We through of is Trade and a date of launched within get have many do won't the retailers course type by arrive We are the launched

over them will these, Some we of accretive a to service that time. take a can launch them expect be expedite bit longer, as example. to as an we yield But

revenue come. is we our accessorial digits. today, over years programs the call around magnitude, a the And that of -- in mid-teens roughly is these low terms to of grow as to In it as double percent the launch roughly goal to our

Jason Seidl

pricing That's great up quarter been this LTL to also overall the color. has very I on pricing follow discussion. wanted strong.

and at all very ] ArcBest they've almost X%, sluggish renewals at demand in [ is 'XX. since backdrop are a X. Saio super cheap reported ] quarter TL [ in is the pricing. is this best Your And

think it recovers double-digit As economy about is you tightens the forward guys? and crazy for capacity to going overall, pricing

Mario Harik

and here We of year is environment. quarter, well. in there we do half a the had very up the as mean fourth expect double-digit first strong I an pricing

the If look out you you we go enough capacity our before have there. didn't industry, it's that When capacity Yellow operations, historically demand been ceased back was versus constrained. at

environment went We where are it call the is from low double-digit down, is away capacity in freight and currently a this demand roughly, teens, when that sluggish market.

inflection of and enough coming that is LTL, any be capacity into form in centers some there with even whenever there any industry. doors demand, there's -- our wouldn't whenever of sort So service in back

accordingly. see you would So accelerate pricing

driving expansion company-specific local driving which service, the we also driving specifically, also at have our comes between between we're channels. of initiatives a us better premium premium, driving between For services, all

to these would as well. be All of accretive yield

is of So question. double-digit out the pricing not

Operator

Bascome with Majors Our is from next question Susquehanna.

Bascome Majors

I long-term over how might all a have has wanted and Can how few this evolved different incentivizing changed separately, to specifically has go you're business from about the focused the And if they back approach, XX that evolved the months? from last talk salespeople your and have than year your specifically as tactically priorities last earlier. at senior years? the to executive more look incentives management those over you incentive

Mario Harik

Bascome. Thanks,

with first, sales compensation. the So starting

of in organization. the are We So type accordingly. you what plan it the changed salary depends comp on

to in specific example, for grow your you're if on they profitability book more. you're different the OR focus if a theme is So to, are at compensated of channel, goal based as the you're that opposed going generally, accounts, for that, local types look into service on you service improvement is But if the center. center, to to the have

If a your executive, local compensation account is component of and ratio to driven operating you're a you're well. grow incentivized by book, your as

then is share handling compensation you're and well around If your with lion's profit the associated that. improvement as of accounts, OR larger

more network are compensated, opposed So your it this whole. business driven as is is book to as how sales or your but of a typically by region the

of terms a exec part executives EBITDA that's of combination growth, as value proxy. our based on and holder in associate Now senior senior OR well. creation compensation, we incentivize the But our of typically growth, TSR

Bascome Majors

other targets period? this expect the for don't you X-year change the than And long-term formula to really incentive

Mario Harik

what to similar we very be past. would framework the The in had

Operator

from Alliger Sachs. is Our Goldman next Jordan question with

Jordan Alliger

on question. think In and et your potential new thanks for the the of sort or would timing, context it cetera. expect of the of the year, is through ramp Just or terms year-over-year you be a in up? That way of growth the like layout door door economy about thoughts tonnage how openings, go as to volume sort trajectory there of sort the the first we curious, opening to

Ali-Ahmad Faghri

is This then I'll Mario. Jordan. pass to Sure, it Ali.

on the continue you to of we yield noted, through that expect type we're year, onboarding a and volume. expect contribution volume the disciplined very onto We're network, So the full as year. much we for higher from being should and this

we'd low full full yield mid- year up better. high the for range expect and that single-digit somewhere then the for single or in digits be to in tonnage overall, year, So somewhere that to

in year. keep a can comps do is factor. mind, the the the year be It second Now the in tougher obviously, we of have still and macro in half early swing

the In number X% volume contribution expect new would contribution overall. a we from of sort service of not be terms volume meaningful incremental from any of don't volumes, so year. expect to sub this meaningful centers, We

Mario Harik

the largest from the if it we whenever about think ahead you bought we get some service we centers. as comes, facilities. having cost in near savings, Yellow benefit of Network, And there service centers big going mentioned to larger any think the I macro on, about When the earlier we're infection a of from term, by is bought type of what

market. a now XXX like than facility XX, west with off Nashville. land We with XXX-door and a that any of center you I-XX, we more I-XX Nashville, in than XXX at [ it. Same look You Carlisle], acres get have service site a thing where more doors in XX-acre can't got of right

your you to when more to So that soon about into you think dock efficiently, line them. moving cost to your operations, facilities those we larger as start going as lead enable haul, that's D&D, run your savings

capacity some look out Brooklyn, is New a at today. Vegas, market or like or benefit Columbus we're tapped or markets, you other on The York Las Indianapolis when

we incremental service So go open we onboard up to already as don't centers. we customers that where ready we have enough markets. this capacity, doors having in by have can those are those And them

adds Nogales, we net one One where where And we up Eau in are -- or centers. have based But existing centers small are on have X small we we customer these these is markets. service Claire, Arizona, service have demand is well. Wisconsin, already relationships as new lined

Jordan Alliger

terminal curious, And Or to certain strategically or then you're to just other a that what amount some manage is otherwise? is? economy to it. no be there matter So words, going dependency sort how Got going good is on economic open just the going of in it, there you're the opening? how

Mario Harik

service the we rollout capacity constrained about those centers, think we we are When markets where prioritize those timing, today.

second that a centers create freight environment we see on And the capacity. the the will don't is so service based most efficiency. where softer cost in amount we efficiency, So priority enough have that of cost

of next opening to we these I'll be it things those schedule, over And through freight it, the doing we're and the running. them up drive the would going kind XX about are get standards what terms months, rebranding the will up This be of think terminals doing. call and to X in bringing to time regardless markets our of the and to it a reasonable when frame

then for need this there's to I for -- ahead you mentioned us if you think people about if on, And we hire volume. us, no -- the headcount, earlier of

with facility, are cost a we team existing different into associated a from in up market do where able service to inflection the an facility volume. we an support into better, team volume there's getting or markets centers, relocate that. do incremental what If then see be no So either where that larger so existing the step existing an to a we we we to is facility split add that X we

if the efficiency And XXXX, at every year able improve importantly, in we you were year. to our single Jordan, look quarter of

be we are So the have to to to between efficiently the proprietary Dave great the bringing standpoint. discipline our and supported technology, network very able ability team run our from operational table, by a that labor

Operator

is Brandon Oglenski with question next from Our Barclays.

Brandon Oglenski

and scheduled just efficiency, efficiencies years what you're delivery ] other. one transports be can when up XX pick the new open of isn't now, better, that new get covering like even on know in new about in instantly I for it if maybe like going network, [ match we you're we capacity to not sounds to haul that the spill-up can Mario, there. a it But I staff there these like on line time nodes you're anticipating? one cost Because that you on guiding to, network, you the [indiscernible] network. terminals up from And move follow potentially talking opening should efficiencies, sounds especially facilities. especially like with and guess

Mario Harik

headwind XX cost those headwind whenever be cost I you're mind a XX small predominantly, percent us door comes mean would to cost, in is you total. facility. a move incremental have X% do into from the up carrying our a in talking of shortlived. And I cost of a keep that a of it of days but sub mean open doors. Brandon, as the that very larger P&L But the for as you sites, you in

So a it's cost with incremental that. associated small

It in on of think network this, gain meaningful immediate is you where delivery the that when doesn't you drag see whole. the again, have linehaul, efficiency and a and we those as in But all about a pickup impact is this that short-lived. pieces,

you And couple them centers, one was one to well. years them the we've of as our over opened of is an accretive to each a of here, example, Each dozen return and within service up XX last days. exceeding give XX hurdles

OR about perspective our any So ability to why don't with from get very very drag from And feel onboarded an expect we good those center. we minimal reason the drag. the that's service

an accretive And experience finally, terms in pretty it's team, network with making I'd quickly. amount having also he of has say the sure of incredible on a adding and Dave capacity to

Operator

Our with next Fargo. Wells question is James from Monigan

James Monigan

Just bit. service little pricing wanted here. service, a fit attributable you've And is to differences? good sort come that back And pricing to a improved pricing of to of much of to the gap level how gap peers,

sort much how given of gap, is accessible that to service of So today? is where you

Ali-Ahmad Faghri

Ali. Sure, James. is This

mid-teens the overall, a opportunity years by come. see we roughly in And X primarily upside it's So pricing driven levers. to about

foremost, it's and driven by service. First

to yield XXX realizing that able damage half growth to we're it ratio basis so our the pricing price points that So quantify quarter, claims as our quality, we continue improve about of gap, double pricing better about to And XXX, opportunity now. as with third value improve We going delivering. we're digits. record mid-teens call we the we're In service we to align of delivered the that be to continue right service. a and company accelerated

So realizing the innings that early we're opportunity. in of

that's pricing specifically Then basis tied premium points XXX you have or another services. of more and to accessorials upside X% about

earlier, to as And want overall over percent roughly grow percentage pricing of to Mario right upside. revenue that's that X XX% XX-plus from now time. accessorials we our a As noted of points about range

that's percent that's pricing for to roughly margin perspective. XX% And XXX XX-plus the pricing higher our is opportunity and And we basis an XXX of over channel upside. a us. then about lastly, about revenue, also to want yielding local for that us of roughly points from Currently, business time. and to grow another higher That's

And those to for So growth we grow pricing. pull strong overall, we to there's XXXX, move us. expect multiple yield would different levers to very we through can as translate

James Monigan

service like to get given repricing? XXX accessible to improve to that in But it. is price fully today, is move to basis you Got service, service Or XXX for further as of where through is that you? does XXX to tied that points XXX contract need you full order to the

Mario Harik

that been give already I But yield strong quarter It like product, where, renewals. improvement it's those you customers have look seeing contract out when seen a premium the -- immediately. play does XXXX we're in it service your quarter your we've you after course very you we take time. the mean in as not improve at seeing in of having switch will

damage a at if that. you We about We're mean customer want think which our it a a And from of years time, down the loving it, to continues currently, we earns you a organization. deliver take So back on our claims X.X%. goal I had time. single is But deliver to look ratio improving X.X%, you it We're that X customers, go company premium. every to damage-free care keep record. perspective, ago, on time time, up you of pick on that if freight over

is when care going that's we by we our think pricing think So to X-point our years take of differential, number when of a on that get to look to this through continued of it's market driven to plow we ability focus why and continued X above going But customers. be to of taking forward, us improvement this it.

Operator

Brian Ossenbeck with JPMorgan.

Brian Ossenbeck

assuming? price, from a Kyle Mario, primarily to reasonably know it's well? it but you And while well, as component sounds was component a on terminals for it real margins of what as door that big this isn't for the accounting incremental overall before, but to big obviously about like that us point Can like they're to purchase counts. back any out, a give the dilution. So And not just sense a sounded takes settle expecting purchase OR additional I there price and D&A talked CapEx. come you're high

little a about So it hopeful would that. be hear to bit

some PMIs, your on seeing to up maybe the little customers you're to bit but much demand what haven't restocking talked too what curious about of improvement environment, can maybe start from the year. seeing will hearing be in with that, finish you see just you're a If ahead,

Mario Harik

Thanks, Brian.

to we in to expect So with be on shortly And return the the to the -- in turn I'll start here of to XX% over I'll that XX% first discuss the And to the that. service centers. the details long be it run, Kyle range. on

fluid customer one perspective, it when Now are the balance year. environment, the the going mixed [indiscernible] think demand a do of From environment. It different is where a tough about We're see rates signals. to from seeing you they through macro you perspective. the is what call the is to

slightly customers the we And demand. year, the or basis. do X/X our roughly first expecting half flat are regular survey a either the for Now of on customers of improving

the the where of back there's of did So a half even there say than is expect what But half year. the pickup demand of in optimism for in back majority the half first XXXX. a bit back more the optimism we've in seen customers the that half last more they in

cautiously call point. to we're it's So optimistic, tough but at macro this the

X/X And fourth -- you Now it ISM of look index was we near our manufacturing quarter, you look given watch the industrial do the course through here customers of you the look at term, at when companies. more are the trough when it seeing in environment. typically XX, ISM get to where close you which posted is it even better XX very point further change, an December, saw January, in which inflationary we and here in is your improved, October, the start November, and

seeing back and of We're the with we're slightly improve, demand half towards hold. optimism So the seeing year. again, demand more

Kyle Wismans

question $X Yellow. XX expecting million then think And per to with just site. you service million CapEx centers, to CapEx we're incremental about the $X When about address associated the

to So in $XX about million total. $XX million

largely and bring Now sites, that's not the refreshing spread evenly and across up that's centers, standard. really all service to tied XX to refurbishing

So cover construction those is overall our And guide the CapEx sites to for it's rebranding. year. painting, going included for that in

already work some sites started on to of these locations. of the Some

we comments, earlier in here to to something QX. back online come going Mario's expect So

Operator

of like to to back our We have remarks. would I question-and-answer turn for the closing end session. over reached the Mario Harik call

Mario Harik

today. Thank our all joining call and you, thanks operator, for

are results, earnings see you improvements from can growth. and growth, expansion margin As is plan and working, revenue delivering our our our service

start is we're our cost integrating more Soon which acquired into efficient. now going centers service more to to network, and productive

the we to Thank of lot Operator, the look a XXXX, forward momentum call. you can quarter. and end here have you. on as next you updating start We strong we now

Operator

will today's Thank you. conclude This conference.

You and your may disconnect for at lines time, your you thank this participation.

XPO Logistics (XPO) 7 Feb 242023 Q4 Earnings call transcript