XPO Logistics (XPO) 30 Oct 242024 Q3 Earnings call transcript

Company Profile

Participants

Mario Harik	executive
Kyle Wismans	executive
Ali-Ahmad Faghri	executive
Ken Hoexter	analyst
Scott Group	analyst
Fadi Chamoun	analyst
Christian Wetherbee	analyst
Jonathan Chappell	analyst
Thomas Wadewitz	analyst
Brian Ossenbeck	analyst
Scott Schneeberger	analyst
J. Bruce Chan	analyst
Ravi Shanker	analyst
Jason Seidl	analyst
Stephanie Benjamin Moore	analyst
Ariel Rosa	analyst
Jordan Alliger	analyst

Call transcript

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Operator

Welcome to the XPO Third Quarter 2024 Earnings Conference Call and Webcast. My name is Paul, 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 financial related its GAAP Reconciliations tables the are non-GAAP such website. to the earnings financial to in 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, and This everyone. reported in backdrop morning, Strategy Officer. third here morning, Thanks Financial for Faghri, for Chief soft our Ali results quarter significant to Chief and our transportation strong billion, call. I'm we our grew to $XXX X% Good expansion. above-market and earnings Company-wide, a freight Kyle year-over-year that by we a in growth we margin revenue with growth on [indiscernible] adjusted EBITDA with and operating achieved delivering increase leverage $X.X XX% million. Officer;

each basis year the are investments has range. from levers improvement points. a a XXX role What adjusted end at The which strong Our increase service our driving year-over-year and levers aligned operating efficiency, with X in a distinct result high a the expansion these in cost quality, a was and performance. closely of yield are adjusted our improvement drives our in ratio ago. our one strategy, target results $X.XX, of growth, network of diluted EPS the quarter margin was standout This XX% LTL the of was is

delivered an a of last We X.X%, Quality. Service to damage which ratio is X.X% from improvement start I'll claims year.

month each the levels. Importantly, damage to record in quarter improve continued frequency to

on-time consecutive their also basis. reasons these network tenth the and our customers us a benefits with are they The improved and We of on performance experience speed for our the trust primary freight why reliability year-over-year our quarter. daily

is of investments Our targeted are second making recovery. These of the service lever market we capacity strong the the anticipate cycle. in market demand designed ahead we're freight world-class every to freight stage investments at ongoing deliver the in

to our years, line benefit Over with added nearly tractors rolling traders fleet, we're the network. X,XXX to XX,XXX X using accelerate stock more our service across past a our we've our to broad than and in-sourcing haul

This December, we've year. up by of XX X the plan. efficiently. early opened density leverage service The we next are service sites existing teams, addition, track expect more markets acquired open we on our and want operate with center now majority of where and new our centers sites In our network the XX in last we helps these to last to is build each

yield and improvement. primary in with our the capacity reporting Strategically, as up driver share to profitable is been the When align We've an this quickly the pricing lever our Yield value they're of our capitalize above-market network. operating year deliver. gains. market third in and margin throughout we growth substantial we door roughly driving XX% positions have all this we'll leverage excess online, us cycle,

service pricing our achieved we quarter we customers reported. the for excluding quarter, of renewal consecutive We digits OR fifth under increased by third we single accretive. this year-over-year. basis we're the underpinned on X.X% the supported In grew and multiple making. XXX contract, initiatives margin executing are high improvement by year-over-year fuel that by the This yield points by yield, With improvements

from XX% to share quarter, with local made market the by we more shipments our a investments over third force. due from customers in customers In compared increased And we we're the year sales local earning ago.

revenue Our we new yield, revenue transportation mix to high-margin purchase expect cost premium primarily from is services to strategy our we've X in-sourcing initiative. XX% quarter, areas of have time. grow reduced this final increase and [indiscernible] we where of efficiency overhead. our year-over-year, another variable benefit third line services, we our are haul stream by The In driven to focus: substantially continued costs over our and transportation, the by purchase cost lever

We the points haul reduction basis of with ended level outsourced a and to our XXXX, This meet parties, was outsourcing ahead XX.X% our XXXX of company's target line quarter track of X we by the plan. history, is of lowest year-over-year. which XXX are nearly year-end miles years to in third on

continuing our and expect using the teams this XX% runs. our steeper We service now outsourced volume can to to be we're support that more center year. driver in realign and quickly We next to costs trucks at labor to manage proprietary we're deploying labor changes miles do below trajectory, hours effectively for long-distance haul And And technology. line address [indiscernible] level.

It up The transportation year-over-year Turning organic revenue XXXX, in outperform since the performance with the for soft continue our in to countries, most the we where industry. strongest volume increased strongest basis, quarter mid-teens. On was was quarter. quarterly revenue consecutive by year-over-year revenue to segment accelerating Europe, remains third was revenue growth U.K. we growth fifth X%. a where our

geographies. and our the new highlights of the growing sales new our close This the In macro. growth replenish effectiveness company-specific strategy record at above-market near our we Europe third pipeline in as should summary, delivered our support strong we ongoing of initiatives regardless Importantly, levels leads. business quarter and is across key

our control. creates The us industry margin It enables and we expansion. our for outpace is growth within service and yield provide with world-class customers value the to

our those the operational in market in In addition, cost the on financial becoming investments and rebounds. strategy progress will robust our with Even results, in our accelerate we've current efficient more freight driving operations. made significant capacity environment, is and results

runway a earnings and additional well We opportunity. we're growth, for to long positioned that share capture market have and

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

Kyle Wismans

and good morning, $X.X Thank We across This segment. to you quarter sheet third take and of financial key through our the strong up results, balance our with company reported X% top line you, I'll LTL year-over-year a includes liquidity. billion. in Mario, revenue everyone. X% growth

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

side in the made in cost reduction purchase On LTL, another significant we transportation.

in-sourcing improving per X% was by third-party continue effectively labor And more savings to for down XX%, of due we runs. Our our the $XX expense equated of largely to quarter. to This in manage sequentially. by haul line million year-over-year carriers shipment with hours a

to salary to X%, and year-over-year inflation. total in This the benefits mitigate increase helped of wages primarily due

mile priority Additionally, more brought the business. This allocation by LTL. top continues we with down our cost by million, XX% our in which year-over-year. increased or maintenance, expense Depreciation be reflecting the making $XX efficient to cost per for XX% were investments in fleet we're capital

Next, EBITDA, generated starting as from $XXX We adjusted up a I'll of in cover adjusted quarter, year with the XX% a ago. EBITDA the million company whole.

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

at increase underpinned adjusted to adjusted income. by in XX% just approximately an of EBITDA segment, the Looking operating we XX% by $XXX million, grew LTL

unchanged year corporate ago. EBITDA was In from loss our our adjusted $X adjusted EBITDA was compared $XX million, million transportation million segment, a of and ago a a European at to year $X

private EBITDA quarter, $X which company, Excluding million in million. investment gain adjusted $X corporate in a approximately loss past a a a sold was the was from of

quarter by Returning deployed company diluted net XX% basis, from to to earnings XX% to income EPS operating income year-over-year of the operating CapEx. million a whole. reported $X.XX. of net generated up We an approximately the grew of $XXX $XXX increased quarter operations in continuing year-over-year, as we share flow On million million, third from diluted million by $XX lastly, representing of adjusted and $XXX we And $X.XX. XX% cash activities and per

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

This XX months Xx end an at adjusted last EBITDA. year. of was from Our improvement net of ratio the the quarter of the the and debt quarter second X.Xx at end leverage was the at trailing end X.Xx

our that our We'll goal continue to enhance and make of profile. long-term investment-grade earnings an support trajectory growth investments

to be in share will million. wrap want million to I count the highlight to to I before We're XX% XXXX expense also to million range diluted XXX rate the $XXX and effective narrowing $XXX tax range our up, year full planning to adjusted be interest updates expected of our expect some Now full we the shares. now expect year, We XX% of for assumptions.

year other assumptions this Our unchanged. planning remain

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

Ali-Ahmad Faghri

shipments margin of were by well executed freight year-over-year start they third the On another basis, LTL, day up soft but I'll by quarter. quarter our accelerating growth. improvement overall, deliver with we Kyle. channel market were you, per and down Thank our quarter second double in in digits, from a to local a earnings where X.X%

a a at to favorable are margin. accounts our share of key and Local market strategy an earn part opportunity

the was shipment the per and tonnage moderate a largely X.X%. resulted weight a this per Our Collectively, tracks continued which outperformed to down industry dynamics in and X.X% seasonality day, quarter in whole. as these decline

July was X.X% per August down On day X.X%. September tonnage a was our X.X%. monthly and basis, was down down

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

roughly in be will the year. line from a seasonality, impact excluding down tonnage tracking that of estimate we with a October, attack year, X% cyber prior For peer last at the

to as a by recognize the we and premium year-over-year us enabled shipment our trends of growth. ex X.X%. service deliver grew continue offerings. pricing revenue yield and Our On remain strong above-market X.X% by This another quarter pricing quality to of customers fuel per value basis,

year Importantly, per the basis. quarter also increased both second a this sequentially from stack and X-year shipment on yield revenue and

these with initiatives. reflecting to the for ongoing trends expect continue momentum fourth our quarter We pricing

at OR Turning by points adjusted our ratio XX.X%. points basis guided in margin. our operating our XXX of XXX by improved to Sequentially, range. quarter adjusted year-over-year third the to top coming increased We basis

growth driven Our was initiatives and robust productivity yield by cost gains. primarily and bolstered our margin performance by

all significant we historically X expand in were the soft notable margin only We've third now quarter. it's that environment. consecutive delivered carrier freight year-over-year improvement to for quarters, public a OR And LTL in the

Our points full we range. or expect and XXX basis adjusted OR that to is of year end be to of above high the XXX an outlook improvement at for

well in quarter industry in transportation. executed the challenging the We to to European a freight the outperform market business. for Moving

on inflation, outpaced to mitigate we pricing and cost the managed Our impact earnings.

generated the adjusted we EBITDA for U.K., segment a key was market the with last year, us. compared Third flat and double-digit growth for in quarter is which

we and in margins the major propel made in the reporting drivers years this of service significant will making accelerate behind for with expect close cycle. we're trough the business to Europe of record I'll improvements summary The progress come. a We're with results recovers. quality, the when we've expansion macro to the margin in the freight

Our we're our pricing the continues effectively and of us reducing massive outpacing line and yield variable more believe is third-party lows by managing historic the far to just beginning market ahead haul we're operating productively capture We gain traction. costs. miles to and opportunity to

the accelerate momentum innings all recover. early with begins demand are in initiatives strong to impact when their These will and

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

Operator

first Our America. Ken is Instructions] question [Operator from Hoexter of Bank with

Ken Hoexter

the improvement. continued on job Nice margin

So guess, then in where Mario, potential down X.X, volumes ultimately, with think the versus and you I is the the on path October. margin gap you pricing about the margin X% started about that, now on as the thinking sticking Network

is underlying now? normalize [indiscernible] you how If market the progressing

Mario Harik

Thanks, Ken.

so margin gap call what pricing was best-in-class the First, the mid-teens us on at side, pricing we and thought between a if that roughly opportunity. out the pricing on look it plan you

customers we and And market. And versus claw that so were year, out of to yield in couple of are more one points investing of we service improve and far given able that that, we from product. great our accolades was to Continues the combination tremendously, network. the outperformance get our our a this our understand

come revenue. we're half onboarding. the We dozen quarter. grew premium higher new as about third we're than more comes a these segment premium our XX%, higher higher in count a are at in a that shipment a also premium are And We account segment and that and and or services here great yield a we investing yield expanded margin services either also stock also and seeing well. higher local from growing in We comes that at at rolling and launched that but contributions

we And accounts. expect half roughly as that price comes on by bridging then gap and or the [indiscernible] for as driven is over other from the years keep come, half both gap. local And premium service, to premium services to revenue well that

to was look versus you in was what of sub-seasonal October about compared below seasonality few beginning we the And month, roughly points of that was September at seeing we was was started days better trends, ultimately, around that first, the were But point and quarters, month. the volume July. end by with the versus a with October, in than that's was of -- roughly line terms seasonality in August. In X%, roughly here impacted here we're down around, but third if It where in down -- the quarter, roughly couple most X.X%, we a below were that are hurricane. go, the a the which of seasonality. is to -- month August

to one of our of year-on-year as in X to demand delta October here last So the cyber we're the attack estimate year year. peers, said, of happened this and October cyber you at October. the comp sub-seasonal the seeing attack year-on-year of look when month been the the a have normalized at is on compared And the portion we points impact you that of

Operator

is Our question Scott Group next with from Wolfe Research.

Scott Group

with I in upside near about Mario, know And quarter it in any if pricing Ali, margin doesn't on it's take down the is to I margin improvement just maybe LTL it pricing the I a thoughts fourth know, about year-over-year renewals? a 'XX. think implied imply term, don't guide, lot of talk So limiting the tonnage then, how early, lot, improvement. early but

Mario Harik

report pricing a to lot continue over environment, contract if play a Ali start market. to strong in week. I'll take I a XXX overall, you and the price that on. ago, the environment year discuss pricing to ahead cost typically typically there. we that side, pricing we see I'll seeing constructive to we and back step significant to And here be out vitamin But on Yes. and can pricing industry, our given peers week the inflation, amount basis see mentioned and you a Kyle if [ at I out mean XXX here. very turn last pricing what capacity backdrop constructive. continue of And you earlier all a on heard outperforming our industry overall And And points this outlook. the leans renewal toward a commentary pricing Scott, and we're are exited it we look of discuss ] Now

have is service freight awarded higher are incremental product So asking of we customers. But revenue customers being are avenues local from accounts from one that perspective, we these for from terms in and yielding our the our launching also we incremental the that that better for. coming services generating and margin are higher accessorial

revenue absolute outcome were accelerating well. benefit basis, from great great number stack the we yield it's a for as service the The a gets X-year of up basis. you the they obviously, win-win, yield So up. and is from deliver that to the on get us, weight a get shipment a where new in on service to per XXX accelerating here experience quarter-over-quarter the yield quarter, a And able we a look if customer third is

here So for all right KPIs go of of the we are the these year. direction as back in moving half towards the us

Kyle Wismans

when you renewals. about And think

renewals were single in So high up QX. digit

range. that So be consecutive note strong another lot improvements. fifth It's quarter to of our our in driven a to again, is by important service performance

here The thing other flowing through. I it's is think important

the seventh So consecutive of revenue quarter per growth. up our we're sequential quarter in seeing shipment X.X%. That's

our deliver renewals year. strong in and both we're ability So confident in above-market QX next to

Ali-Ahmad Faghri

quarter, do just Typically, and in a range on driven volume just holidays management. of cost the OR quarter trends be a a can QX And yield by in here outcomes. is expect which the quarter more impacted give wider continued weather. by We And strong Scott, volatile strength fourth and side. the

expect the if than range, into we we trend QX, and roll X-year better normal to the would seasonal been a step at from for back basis sequential and fourth take the QX that However, as to points do OR you you change average in quarter. it's look that XXX

now we strong more XXX expect improvement for the point OR at the And range, of basis when that high end year or to a full the cycle. of performance the at to into importantly, I XXXX is XXX very be trough think our roll you which above

Operator

Inc. from is on next Daniel. for is Our Stephens with question Daniel Imbro [indiscernible] This Reed

Unknown Analyst

you remained solid, services this gains and pretty potentially see that customers? remaining for could survey on Other Mastio talk Miro can points service you opportunities the for than haul, I in-sourcing you where think about held in be pain the still year. line some

Mario Harik

Yes.

improvement. on service a of overall, trajectory we're So great

at claims compared third started claims If you X.X%. were the what at we X.X% here a quarter, we our few our we in ago, look strategy at years a damage that's went damage -- ratio

reduction that more tremendous than of a our of customers network, appreciate XX% damages and tremendously. in our So

are tenth improvement. a On lot of reliability the speed up comes the time -- network of the on-time this and freight of when side, the customers the is and we delivering to consecutive quarter on it accolades picking We our well. freight on from as got

of Now [indiscernible] us level that technology implemented to far down airbags, shift so initiatives with having a to the out all that more damages incentive the level. comp having the changing person plans, enables capacity, have we lot launching

we to and saw new over record come. the we of better has change few completely in opening mentioned and freight how upside. trailers this years, quarters the the every month here only us And see quarter, than prior to last enabled a we the frequency reached continue to remarks, load trend my and here continue the years of and month all over of in the that damage I quarter we that the

fantastic all the that. teams of in executing doing on field just Our operationally a job are

as will first, have are starting initiatives line the number of in-sourcing of a more equipment, that third-party haul, at you we doing typically, service with to move on improve when said, Now our we when we continue look freight our you forward, it. efficient

in trailers. more get space We the

better we -- much performance. have on-time are We

the in-source on-time terms more and higher. gets third in flex performance being And Here our to month on-time continue party Road continue as and time. we're our higher on operation of in of line to to was see nearly October, XXX% haul, going we

destination, the to network that our these And XX% damages build of Similarly, that will here. in even more all completed. pure we continuing high are and further things can rehandling damaged the better a footprint as we our trailers when work that goal our years come claims place to improving be and on take a the obviously, get reduces damage is network of locations, which is the expand to to X.X% of are performance quarters ratio our we over in to in some to goal in

again, the very strong. trajectory overall, is So

executing great very making. of I'm have and progress We that a plan proud the we're of on, we're team the

Operator

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

Fadi Chamoun

I to us see XXXX. just some maybe you if wanted give feedback can on

as these bit some has your this per have seems year local what and ultimately, more tonnage Just channels able which into thinking year? go you're this about the like of flat overall levers been a day doing from to likely the side, little PT as use the you on Like accessorial, or we to XXXX. go

about quarters, does of improvement give see macro XXXX over macro material XXXX of be look If Like great. to high-level kind without improvement us think environment? we you kind room the if cyclical can kind any there will for don't more what next like? Is way the of few

Mario Harik

current is only in but look in at And obviously, macro soft any our both and this earnings year, perspective backdrop improvement demand further. perspective. growth results we improvement accelerate from XXXX, the you a And an the expect an even Fadi, environment. When even strong

our range market. and you be above look guided to at oil freight going soft XXXX at for it's or the fairly If improvement, we're

year. our We'll -- and the year we heading the talk service being freight of the we belt, price quarter next able of under XXXX that more once great next with year But said, you having about that into specifics if levers, accordingly. close at to to the another us out look leads are

here dozen or our in a customers We half sales expanded year are XXXX. services those about launched incredibly services. team so also or call in a premium premium have And excited services and

so a momentum. trucks a building that of customer low converting the on next We're than And shipments have to a service higher higher next that being our the We're at into and down building more revenue effectively more it's more yield. be able a margin and that sellers customers. in XX%, were comes look head our pipeline. continue customers are to We're our count you despite here added at that's accelerate year and to shipment new that team more local into runway to we local the year-to-date, this more and local than far last asking for. When added X,XXX And the customers, quarter, will convert longer mid-single-digit as our to customers local XX% up we to to going we those of build have have book year. range,

outsourced at haul that's of of end to be XXXX QX them of to We're year look a XX year, we where you on side. -- And of far. are many the of by another next by next third get and ultimately, to adding we centers opened single to the remaining reach Then end expect And be to miles that the terms up going digit so down target service our we going line of parties. cost year. XX in tailwind going to how insourcing, this

head these XXXX. making EPS us and we accretive as will more And into efficient are accretive and they be

wins stable that improvement margin as well. So for

to initiatives and expect were and down XXs stopping to the excited So driving again, beyond. next come a the or have And cycle all think the investments eventually capacity, we the about and up in we're about the you we we not XXXX. strong When quite years year in with there.

Operator

Wetherbee Fargo. Our question Chris from is next with Wells

Christian Wetherbee

on commentary, new to wanted the I particularly guess up I facilities. around that Mario, pick

There's these not of about opportunity I'm the of I to you at facilities. necessarily I guess network efficiency this lot But how a density expansion. guess, the I to relative XX So their from think pure do new profitability point. sort you core perspective? performance about relative within how they're XX the and know of OR opened for curious centers. think an

think about incremental potentially environment? that potential profitability And to environment of as facilities positive did want Kind play neutral or push towards margins for in either maybe you the I move XXs as guess those to how you incremental that a forward as you better? or into a

Mario Harik

Yes.

Chris, up So centers the we if you at opened look so far. service

we and So up net of XX these XX opened the out of X ads. were

are or into are they adding sites, in location XX new So and a incremental to a to a we market were larger market a expanding we smaller are from relocations location.

be these in here do we expect XXXX. Now sites neutral to a

And so expect next be far, this the we and has to accretive out been Way by playing year. expected them

centers Now we're people XX in with opening XX so added the them. headcount XX gaining efficiency improvements only to we've opened to from these of support service our keep mind, at And we sites. up, staff,

when So pickup you in we and are look efficiency. sites, delivery an improvement at these seeing

in to larger head as us and next mid-single to that call mid-single percentage to more low our into ramp efficient has here the our in is, those near in term, sites, given gives improvement well, that's on what as a we the operations basis low increased is efficiency which efficiency digit it, similarly, digits, markets, year. So and city going the haul line

since have we this from incremental operating them sites margins above up. look opened so site, plus are far of all XX% at seeing our we're it's and you the at expectations the When or

near the gets an year, to higher see you cost the we're when efficiency into forward help freight and overall continue to drive that standpoint excited. us really market to us in grow whenever margins going again, turns, So this term, that from is what improvement next

in low volume starts between as free high forward called the move position high capacity the industry to we incremental end to are when I turning an in mean able as incremental be more cut down teens well. get demand to a as that prime when end teens with to on low is high the use compared that LTL XXXX pre-COVID on or today, so we either margins levels, market to compare the anywhere you

Operator

with Our Evercore next from Chappell is question Jon ISI.

Jonathan Chappell

on focus Not accessorials sequentially, I in revenue about some some accelerated know improvement you actually of But as want to the the going as last over of trends. about it were a I the we X% well. up I the some opportunity volume but sequential only quarters. they talked it don't challenges several as shipment biggest think and that lot when we do forward, know want tailwinds the fruit, but about low-hanging call you great if next in you feel do behind. to that kind plucked. has -- think downturn you of get at Or this reaccelerating year per like lot point a do of of been

Kyle Wismans

the Hey lot opportunity when mentioned already. still hear. opportunities, you to per renewals think about I the shipment a I revenue Jon, think there's of

continue So been renewals have strong and to be strong.

the the I think of accessorial is other thing to there some think about pieces.

mentioned, there north of made to the can is revenue, get have more we lot though progress, some But there's now. still Mario to XX% we as goal XX% and even of we're do there. So a

we upside. traction. in We're And to X That's still front a about of which that's the are gain points backlog. some of again, can pricing So capitalize us, starting on. building services of

some Mexico rate the date retail show. including by Our that of ] the rollouts, store premium cross So includes the offerings, must [ boarder recently arrive expanded services.

a lot can So we do there.

think we're as in up, accounts improve be continuing mentioned top and moves, local tailwind that's go to to mix. growth to shipment continues I yield. the on a going that to of the Mario And that, that

there, and innings to through one revenue, to last on get XX% about point bringing it. And to more a I it's X accessorials. here just do. we're early X-year of So more still lot To path get think probably a

there. So to a still lot more go

Operator

UBS. with is Wadewitz question Tom next from Our

Thomas Wadewitz

Yes.

continuing few pricing you've and see. Let's price. the to had And the a in it's nice on questions of I'm quite the momentum results margin. see wondering,

what of kind to for I a, I XXXX. that pricing should very we think normalized we guess, think if is continue clear levers like the do Mario, you've on you at been look expect,

with that. freight X% you normal for you're a think it pricing I everything depends maybe the loan I know agree know would be to than LTL thought to on is on or given higher be X% And then the it don't appropriate better expect backdrop. you I mentioning. that, a players, if

that So X year to if you range. normal X X% X% in or stay is

Just wanted toward and of to of just frame to of how for numbers, about it think bringing but on you of kind see more and kind obviously a if you little get guidance, terms give what it pricing could bit looking normal? what's not in it

Ali-Ahmad Faghri

Sure, is This Ali. Tom.

And higher going over a innings, initiatives earn as you and us mix the growth to services. So still customers. our that's you've think which yield seen and our We're both service in very services, in our are strong deliver last quarters. to our several yield noted, of the growing the yield local case improvements, of business of about us margin price very Kyle accretive also the ongoing many with are premium continue to at early premium

are industry that continue our favorable services pricing for. trends as are customers a These we expect And also asking to well.

from a us overall last the constructive. continue -- seen amount And a industry XX exited of expectation is, that's industry very pricing the last we're market as the going pricing you've months. seen to You've And backdrop do significant the over to XX backdrop over year. standpoint, outperforming capacity the remains Tom,

would the into a initiatives expect we that XXXX lot and well. executing quarter on, of momentum to into here as and have We we're that pricing continue fourth

Mario Harik

outperform incremental on, you Kyle of you expect LTL, effectively XXX local and points from from earlier and a mean, continue I mix roughly versus we the look it at into and is from to call how And point basis you both mentioned it, to when market opportunities, Ali cost incremental perspective, versus that point revenue as beyond. to typically in market look and the And these we at add would top above account X X.X outperformance what market. assessorial price, XXX that, on inflation 'XX

saw and play expect out that 'XX We XXXX, continue to as and and that he beyond. Ali in mentioned, 'XX

depend doing the you does as being what In on can well macro Now the pricing the higher obviously, than as macro well. depends recovery, see on the actual concentration what we macro. gave, as -- but numbers could is the the number it

Thomas Wadewitz

market, look that better X%, if on in normal the though, kind kind at players characterization LTL? So you market especially do be of you agree might with of X% the to

Mario Harik

exactly That's next assumption year. reason for

Thomas Wadewitz

Okay. Great.

Operator

Ossenbeck Our Brian is from next question JPMorgan. with

Brian Ossenbeck

impacted a month. October. first follow-up but all way hurricane the of a Obviously, the just maybe lot in the the through quarter, freight quick the on markets So

Just wanted there's to weakness from if any that. see

You're it down of would you that seeing attack quarter X% I next noise and year. going cyber Mario, out the be think the called it there? And is just, the fourth then into this part helpful

of customers markets national a of customer and can then across you of retail year conversations If as and year? different this us terms you're into getting you of give industrial just local next types sense some end end the also and in the the look of

Mario Harik

Yes.

we at from you year-on-year attack last that of the one when October, peers. month As cyber the impact right, said, year you at look have our the impact, seen of

cyber the that a impacted was of So basis much it, when the obviously at on you half month look back month than the by the first half was attack. of year-on-year better the

the tonnage. shipments per what X% of But this on October roughly year, of cyber month, call X,XXX is let's when look a we entire shipments you day it, said attack at impact last you roughly around around it, incremental average the when for last is the which impact

So normalize of X%. that, to got you've when you that take out obviously, the for

being see in you ship country, markets September October those impact, the some impact overall go regions in end by and beginning weeks. few and Now southeast when of both a they also able for of of the given impacted product of you go -- the the obviously at the at of to that volume would trend, out hurricane the we the impacted the did at

proud our our obviously, were Although of to up very employees were we and hours safe, was I same and impacted. the able running that market all of we needed and support customers was the team, but quickly, were time, at very the XX within where

lower as in normalized is mentioned a line at September, it you -- the softer, on, lower when the you look in earlier a look August, October. of to look roughly been at when -- than in points with it customer I around Now has sub-seasonal. trends, been few you than month was seasonality has at point over roughly When the normalized demand seasonality it seasonality summer,

the the twice more than at was industrials customers we quarter be the Now in saw the down what impacted of quarter. industrial of We shipments course that through the being retail. saw rate corresponding retail

that XX%, the see the And which earlier obviously, year. index, you in was ISM howard quarter, from XX% at the in deceleration in a

bullish equipment spent I know, or you in when about customers economy, the the from field. more manufacturing forward. As customers a is of they subsectors much industrial lot time we've outlook of machinery are the with look so And what some electrical heard

they demand industrial softness at seeing But or bearish. look if construction They in agriculture, you are more forward. more looking are for

On they inventories sector industrial less retail less but parts. content year-on-year a than holding so that but were -- constructive, down Consumer on but than down was still, saw is seeing still we're side, industrial demand are retail the down that we mostly a corresponding the basis, normalized. side,

growing. large In versus us, local terms of for local is customers,

in sales local more new quarter, grow than segment count company-specific of in more in customers. outcomes. improvements new we more saw X,XXX those and onboarded an to are that service that's able Our XX% than and sales we doing logos on execution force, the deliver here the is the impeccable onboarding job given third our channel team Year-to-date, and and have we that in shipment

overhang tough continue election to the of predict. end see behind rates if the next year again, the the of will seeing the us. down to in next to first or forward, you But start affection it's half things look an the at early rest of quarter from come there's we through where But first mean or where if and scenario QX a very is I go we'll tough of predict here year.

the outlook There's how the mixed in of in near a here we lot term. do of signals terms

Operator

question Company. Our Oppenheimer next Scott from with is & Schneeberger

Scott Schneeberger

half then that Mario, a premium anecdote sales investment dozen is that, And please on force? at to so the in little continuing what rate elaborate there build? out. just pause on could a Is the how you is maybe done that Or about you've to of services there more the far? rolled top Are here? And you come? something that you're

Mario Harik

Yes.

with services, examples, something a give few Scott. the So you I'll premium

side, retail store For example, in the we called service launched new rollout. a retail

to, So send that certain whenever company goods this holiday wants up have lot a simultaneously. for they can to to product a coming a packaged like Halloween you a stores imagine, you want of lot of or consumer week,

of we all they project it making effectively the desk getting tracked called have in that dealing launched sure a and a with XXX end a for to different or consolidated where So of is being at think shipments Solutions them within when shipping freight that shipments you are certain that a as to X,XXX delivered they programs into have a supplier of that time window product goods. -- of a or as charge back the of retailer, that by the obviously arrive of again, retailer, shipper shipping get so must large value a back typically, percent you Similarly, unit. can locations product bill all one conjunction a support the a charge or as a company we Retail date

we destination needs of can freight Las time freight taking it offer for last the the customer. we window, through new it again massive, customers tremendous here opened happen the Vegas -- on look in service that few can Similarly our delivered a a service And time quarters, all the city. all one make given a where when center now be improvements largest way stored tracking certain up that of So make before the we in gets for you period in product, the we in to shows, of sure at for we're is actually we're destination. the service that that over

a to show want desk to coordinate product they the the things storage. a show, get floor delivered and free X to into And [indiscernible] offer you picked it when our can to floor. the of imagine from We days X again people service ship trade getting location. up We offer

them So we all for these our of customers. things hand

And Mexico customers we've that Mexico We're years. for well. resonating of or service, been locations doing XX finally, on that's the crossing expanded expanded within as in carriers Mexico We're and added offering. we oldest and more more the we've one our Mexico, our but now reach -- doing with than

customer. to all offering So are or services that we the of these extra

but cost for important a at smaller come up on these our delivered side, usually with getting importantly, customers our of freight requirements picked but extra a with They along the very terms cost, and a it. in more

of launch customer are is ship we an Security of for well. where forward, terms so them. of bit we In divider book -- use as a looking a can one incremental of we trailer. exclusive trailers, but entire to moving as do, Today, services you example,

to posture failures, But you do protect. you in products high-value the want you can have future, also if

others We a our and like working through services are looking within with expedited customers at of as and intra-network as too. number services the well on network

local the XX%, grow terms sales investment In to that are of so investment had local and now. we or force -- we a or effectively reached where sales by plan sales team in the our local plan we

local feeling incremental we where about sales roles, grow we're have adding team to At but we force sales want to we development but going of new good are. for if whether still the we size force. going roles still into are to this we further sales as adding next headcount our sales are feel budget local our We force point, about define we year, force to or the incrementally -- good XXXX. the still business finalize the we'll her including see We're that on beyond expand whether

Operator

Chan question next Bruce is Stifel. Our from with

J. Bruce Chan

you about alter great. process any of And those that update allocation use how what would have Kyle, top those capital maybe on potential you sale the would you I'm And that proceeds? your would the And won be planned be for the talked if if priority European think wondering, for priorities? about of here. business,

Kyle Wismans

Sure.

achieve our me of what now. that, said, outside help overall when you can an our in Obviously, profile. at allocation. say investment-grade meaningful But think European so to we've the continue business So start a first our And it, with X.Xx. I year. far this is that. want about priority we're that let But transaction Obviously, progress looking capital to reinvest leverage meaningfully at we reduce made leverage on would now to

X.Xx and last at quarter it this end year X.Xx You of quarter. about were Xx, last think the

we're making lot a progress. So of

And both to the we're profile And maintaining through as leverage again, again, those how or EBIT a think efforts. as business. some just And other cash increase think when achieve European transaction it flow well and well the to I I'd in one accelerate there's like an about you really the piece can of investment-grade can CapEx. pursuing we And that mention committed progresses, generation. for as obviously is

think of Because the in future, for LTL for to revenue if about you here come and us, is to CapEx XX.X% down. percent XX% a on somewhere is the going that's

think have ratchet that you 'XX, we'll to the if ability about down. So

help down about centers a service per centers bringing million think comes $X so that probably were You service site of us that year, will the online. number, next XX drop CapEx Those point. about that

is And then line the outside likely the we've been down. year of come next to haul, doing insourcing with the also fleet the need to increase that, all

So that about XX% of when you think points. comes a XX.X%, couple probably down

moving flexibility without going the to So give I capital sale I'll Mario or of to a allocation think us Europe, about is to with outlook lot the standpoint Europe. a talk from turn more forward then

Mario Harik

Yes.

patient asset dedicated European we're when U.K., the LTL you X to Portugal or right #X, Spain, it. getting make you brokerage again, sale, many countries. It I North you sale our for business that want carrier continues look And trucking we're X on to France, European including solutions we going look high and it. mean, And because at to value has make in American we're -- in and a are LTL we in strategy at value. we're for Europe either a be geographies, want of the be scarcity the patient warehousing Western by to the time. it, to if other getting So over is sure and be sure the right value and

revenue third on we revenue a here, Meanwhile, quarter since the performing Bruce, quarterly XXXX when post North capitalize really to fifth grew And basis. in pure year-on-year LTL I a you to play we're volume the X% market and mean we over at growth we're look strongest Europe. it, and volume of term, are you accelerating It's at look pandemic. the again, long American consecutive well positioned It's going quarter year-on-year on growth, there. the be well carrier.

value just at avenue our another think it, creation Kyle our compounding. overall, look mentioned, you that's shareholders Now earnings are when because for when you about for what

to inflect only it when going just and our Kyle compound look you faster mentioned, above whether earnings As improvement a going the of starting starts margin here and growth, or X XXXX, to growth is at conversion. to either our we in couple cycle in upside at year for point it's I next at see market range of when great call for or we're whether flow our to that that mentioned we're year, some free the happening, CapEx to target next point be results, earlier going normalizing the on, expand and all expect us XXXX, here that's a LTL what so from quarters, it's cash our

proceeds larger at avenue conversion go can time, some from to to will cash with accretion for of that that back going that be couple value another shareholders, which returning point as flow well. start You Europe in shareholders we're

Operator

Morgan Shanker from is question Ravi next Our with Stanley.

Ravi Shanker

Two on if parts may. I service,

from your the penetrate Does running in to start also X.X returns And service place that diminishing Does what's You kind to on that of on claims progress ranking survey, have are X into now? that you maybe years maybe kind held overall of time that And take mentioned made ranking and two X.X. your in the national into target much national ranking? damage the that for call the Matthew ranking. of kind here? better the top getting part kind guys of

Mario Harik

new So damage no quarter again, to the is comes company of reduced at it with looking be the XX% last best-in-class few on and there. month And years, claims, going our be when keep more over damages quarter network. improving here to every goal I'd by our in we damages to first than when each we're in record

until to in to chain disruption freight we keep going a it they care us causes because price pay and on is best-in-class less we more the also willing when service. very take we're to that higher view so working freight simple. that of comes Our for they're the When customer, give that supply become

to satisfaction more X-year to it satisfaction we as performs. in most one outperformance. a look service, basis. importantly, are how we us. see when and the Now of we shipping get But stack said, [ there's a overall were we get terms survey data who for our with customers Ravi, of improved on We NPS it And ] that at point do effectively you comes measure on a customers If of in weekly scores. the to actually Mastio terms

that years, by growth we're that numbers time. improvements are few of XX% their yield, ultimately, of margin than up the in with our more vote growth rooted And and last we're wallet, and the making. Over by seeing period seeing customers in service that's driven over we effectively all and in

Operator

question next is Cowen. Our Jason from TD with Seidel

Jason Seidl

nice question. the improvements operational a the job on Really quarter. to in ask I wanted

in recovers? could of Some to think your LTL of market multi-stop the I parts. guess, the freight that you'd to call once LTL about talked truckload market out whatever that that have peers till market how continuing shift place it. the or to X seeing like do you quickly LTL with to One, with truckload a are lot there? guys jump back And weakness consolidation, the two, in you 'XX still

Mario Harik

and compare and customers seeing environment. the or they're on requirements something been want portion have do, to quickly PMS in much they mean time. systems much it, at the has that of between estimate consolidation compare have because new that usually, it's the PMS also most requirement here. not a And generally, not how automatically have they around fairly it they of it. per shippers service moved But they First, on I based are Jason, whether seeing who for move freight -- don't that we truckload visibility consolidate service of we're into what [indiscernible] as what have, that's truckload that systems to on been look they move rates tough to freight. long But to and in LTL terms have typically usually shipment based the

will percentage rates see of EMS computation not out you back whenever the get that it's with shipment to estimate. better expect the truckload to up we that do and move effect but system go So is again, figure actually a to

our is to there look TL, Now that quarter, just the -- our LTL of call one trough the we a -- network, to is a $X for case, haul average miles. what last is about efficient and responding was you particular move which would XXX shipment also truckload of market, that that. it's length you truckload about conversion in between be mode more where apply if cost at in direct that, to When because $X,XXX shipments rate it's

that revenue compare was average to an per for shipment You $XXX. us

a dislocation in shipment between $X,XXX per $XXX and versus revenue truck that's NPL. So

point less so Now X.X% sometimes are that the about breakeven what shipments Mario on our shipments over for I the get heavy had XX,XXX -- the point shipments heavy. question, well, and I team of and than breakeven that pounds today,

point, maybe to it point. assume there. a So We be to back LTL there than well. come as X.X go truckloads is once conversion But less up, a small again, we'll

Jason Seidl

That's fantastic color.

Operator

You got it.

is Our Stephanie next from question with Jefferies. Moore

Stephanie Benjamin Moore

bit upswing service strong strain some Maybe about there's of confidence side. a the a bit tightens on of service sticking and even of couple on keeping you on your level Can in of the talk these questions levels the an as last network? your more environment

Mario Harik

it damages adding on driven big training employees person from and you service shift that to by supervisor done of these plans change between to effectively service action people the lower a level level service doing by down us our the compensation specifically They to for incentivizes cultural all the if driven and improve improvements Stephanie, track between and accountable. level improving technology were by were holding look that at and perspective, Well, our were incentive Yes. not volumes. enables

And our employees holding each for other accountable the customers. service to great provide

improve these we've of service. all are in So foundational to what changes done

you in proof look When bankrupt couple year yellow from we count you when last QX at increase QX saw plus give to shipment X%. I'll above of a points. went Now seasonality of

think in recovery, is higher points recovery the is macro than of X volume about massive. increase seasonality So cycle think the

improved period of service in of in of and we trend time our continued last summer year, that that last month on XXXX product, the during QX year, every of through and last year, time damages saw QX here. our our And

our already one it peers. of effectively, in So of cycle an have through we done up once the bankruptcy

forward, Now a having of at capacity. moving when to lot you goes look also it

have more position stock rolling a So of because we in we're far, the we have XX% than to the in year, rolling X,XXX are are excess capacity incremental for loving and we've the in to going next lot than to QX in real estate, we lot invested that a be on more our freight XX,XXX handle able side, than network added trailers and trucks. customer stock more by similarly,

So that to to capitalize when going demand it us of position prime the all the able capacity provide put on be a customers upswing and of in to comes. great service for is

Operator

Rosa Ari Citi. from is question next Our with

Ariel Rosa

guys. on here strong the Congrats results

willing also XX% capacity? wanted excess Mario, If quite excess stay of bit It are your structure peers about of to of tighten, I on the guess, industry perspective, what like market you an lot are on that From capacity. line capacity. talking that I seems a long So sit gives how doesn't excess on to a you the confidence? thinking, sitting

that, And what a there start confidence what you any Is of cutting happen. also of chase your gives kind by of gives that little doesn't risk start peers you rates. Or to bit to of confidence maybe that don't that? some volume

Mario Harik

in see estate revenue. percent as an LTL is don't a cost I a in for simple a mid-single is digit real that as usually to risk which low Ari. the Thanks, a of network, a footprint reason,

that carrier other earnings cost than you're low of justify rest profile harder and going P&L. for that freight category we're going or going work you're or is you're onboarding at otherwise, to to -- your the freight the down an doesn't operate LTL cost to network take on take to in that to margins, to terms, move the not better very So your down because that going as your use

is mentioned as when pre-COVID think was industry earlier XXXX, So XXXX/'XX if when it from was all the teens. capacity industry traded I 'XX/'XX publicly you as it than the end, whole, on or where slightly at in COVID, on, low in shipment the though LTL at are end still low down about post down to demand our which teens XXXX on the in compared a the carriers, as it's and high and counts you in we a the look shipment look high you lower

depressed. a time it went was Now last demand where bankrupt was when at yellow year,

them they've LTL centers the half roughly took that back through of of service XX% industry operation. ceasing these call about you out So sold service Since centers carrier. went hands capacity into then, about, the of XX% of it, --

have So ago. that XX% even going in you're year now, the XX%, capacity year existed a a to from of industry

up And So next just I'll give anecdotal examples. you some what us that's gives of cycle. in confidence lot a the

grow be make in period customers last to Minneapolis week, next and I we in time. able that to enough cycle, capacity the during concern some based happen they Here was our sure on with I that area. the was actually with visiting those to going And wanted of have main them, meetings, was what's up them to of

see So to currently, that the companies. do that of LTL, And is of when our going be they back cycles for you that but it back, have customers' depressed. very gone capacity see LTL fact also the come seeing mind came some understand that into out. demand they start They that demand all cycle it's

Operator

question Goldman with is from next Sachs. Alliger Jordan Our

Jordan Alliger

quick couple of a So just things.

your of about with Or it? you First, back versus they what, know service how great the I'm say, left I'm -- curious work of Do et price, elasticity do demand curious, they it's of X find at is sort customers just you the price? points just price, cetera. the is do sort better. talking

stick pushing price. are So though we're you going to guys even

as And if will just the of sort about December October the that elasticity. track quarter? line And on know I'm normal a quick you November just mean and expectation that works so, for mentioned tonnage Is curious does I follow-up. seasonality? interplay what then was seasonality. with for normal

Kyle Wismans

start I'll here. Jordan,

doing price service customers. us premium to our understand value at with better look we And our a strategy, aligning need you our there's if for business, with our customers that. what to is providing we're that increased pricing provide in our we're we're So invest and the associated

for move Mario better few over a them service a as seen well through the improvements And And to in goods means cost as lower chain. total product our service years. noted, last their supply significant

improving You think about improved on a our from damage for has to year-over-year consecutive years claims ratio basis. performance X.X% XX ago few a quarters X.X% on-time

And to and for us our with improvements beyond contract customers, pricing price. translating I'd renewals and higher other growth. ways out our earning that's point those that service just us a also improve to price are above-market yield there's

premium of for mix think of margin and You the accretive services both which local in growing raising to yield are just the the channel beyond prices customer. about us go and revenue end both

a to disciplined our we're market continue take grow share. so going to And approach to

noted, the Mario for than that example, and the in by local we're shipments XX%, channel, accelerated As more growing from second quarter.

to So overall, improvement. priority continue top is drive to OR our

going main be the margin to For expansion. lever us, that for yield is

expansion the we're tonnage quarter going range somewhere You plus if from tonnage seasonality we're imply to likely margin, public full as a October, that margin noted, in would about overall. year-over-year quality for going and for the quarter carrier roll and being that forward to forward. to as well, revenue quarter you down third LTL Mario continue from for look continue you the mid-single-digit And only the be that as to year the drive in optimize to going perspective, fourth the think full outlook here

But Now macro somewhere biggest and if just to forward you that range.. mid-single-digit you'll decline November normal factor. December, get that seasonality will be the swing into roll in

Operator

CEO, closing you. would to Mario any for for the over is floor I questions Thank we hand all comments. today. have the That like to Harik, back time

Mario Harik

everyone, thanks, joining Thank operator, and you, today. us for

and deliver executing transportation. margin market behind saw have the our soft you improvement it. it team working, strong As we is a from we results, to are able And in strategy on for our freight right

keeps and has better service been on never improving. Our

and yield our terms market those Our above growth, is improvements launching. of in are customers for service seeing

momentum. Our gaining premium services are

the than and haul of very more Our the local And to X,XXX efficiently local side, a enabling technology phase far accounts our X at us years so on cost is ahead business line accounts year-to-date. added run growing. We've of in-sourcing plan. are

the to really in look the capacity well market can us the importantly, we're to all forward as getting the call. updating quarter. investments freight next be business. recovery positioning We you the operator, fantastic able over do margins to grow end you. now And we incremental And are and Thank you eventual making in

Operator

This concludes conference. today's

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

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