XPO Logistics (XPO) 2 Aug 182018 Q2 Earnings call transcript

Welcome to the XPO Logistics Second Quarter 2018 Earnings Conference Call and Webcast. My name is Robin and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

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the track logistics to XX. in our our our June adjusted organic a last we bringing revenue through Tavio The company earnings our revenue to In Head had quarter. earnings Investor With basis, our second John our strong transportation revenue. freight our to XX%, the at EBITDA EBITDA we operating year-over-year Hardig, We In rate an you, On pleased underscoring net Officer; in up to delivered brokerage a Chief a that Malat, XX%, than fact, all faster for across expected of operator. XX quarter, hubs of the growth XX%. everybody. are logistics segment, is a XX.X%, organic an growth and by to and, increased we the Headley, income, in quarter Greenwich by Revenue, total and our holiday in was of records America, fueled by higher were that for of opened operating revenue Thank mile LTL, the acceleration was e-commerce across network of mile, in revenue the again, growth last of quarter year-to-date We grew achieved e-commerce record contract segment, bringing which was last peak. XX start-ups North implemented ahead our hubs start-ups a operating driver XX%. we e-commerce. XX performance years. me increased revenue CFO; all grow a second XX the American in generated XX%, big North joining our mile ratio morning, In and than outstanding We in quarter, In operations. I'm best for we once growth we phenomenon. and quarter. call. were global Good Relations. continued report an adjusted Thanks XX, And, ratio Scott in our on Strategy broad-based brokerage mile our XX%. last another of

new and up from and sales $X.X macro year from business, logistics stands continue our is generating strong pipeline a billion, $X.X Company-wide, a $X.X billion due pipeline, markets, to conditions and billion $X.X sales benefiting XX% up positive this also year momentum. XX% expect we're we we're June, transportation all global our for healthy at Through signed own combined ago. of logistics company-specific a our billion across to growth our We ago. which from

success for his X.X stepping Now John, the of Corporate your we Acting tremendous came wish running lucky finance June, We're that that, over stepping her CFO announced that release in Senior always from complete search since great during joining in with to growth. And finance helm publicly the CFO pleased financial personally up will stands history John, been before many her to to organizations. place last XPO's Honeywell the be John like us years review of will this to I'd on more be onboard contributions press CFO, that He'll want Sarah our I family at She our Sarah friend and August a CFO. quarter to family. and his me the he's organization And John and optimizing to take she time a other built John? John night. for I'll Glickman, large numbers We I days We as pass to known you've brings while more to opportunity to over down spend a detail. the of and have thank our experience our with years. in I've the ready ask Finance, it our and very, XXXX. continue process. second I'm as good to at best. first organization have very last mention number a in XX President Novartis. you Vice in as

company. you I'm CFO of are very a the ahead. and I'm for build certain kind still leaving best Thank words, friends but we that highlight be has Brad. work years my been into sad of to did to proud such colleagues, career. the strong my XPO's I'm XPO's together the XPO Being

tight spot We The quarter. freight operating adjusted $XXX the increased second quarter. we numbers. million, the in billion. with walk $XXX of was transportation our in let We segment, Now very our truck drive margins. the the XX% brokerage revenue market of Starting a revenue you XX% amount to $X.X net points. revenue basis, million. with higher and to On had income Freight by quarter. strong brokerage, star revenue, the to last freight margin through to basis a business year-over-year upward improved and sequentially XX% second margin EBITDA XXX me revenue trend, significant margin started business year grew that to we continued growth by by Within brokerage net year-over-year increasing revenue, steady achieve results extraordinary grew and a through expansion at net half of the continued

pricing fire tightness capacity revenue and remained double-digit shipments. as our quarter at X.X% expedited quarter revenue higher coverage more demand for and market, X.X% delivery. profit achieved business growth length investments made of intermodal the cylinders to continued XX% and a revenue and renewal X.X% by another In tight technology was expansion market X%. while in more operation In we the improving year-over-year renewed X.X% geographic cost fourth Contract Similarly, This last increased a attractive tight, in achieved weight in continue own customers operating alternative terms annual we less-than-truckload, fuel, Despite the sales, metric growth North by we per significant XX% of American a demand record the our and of to ratio. a growth our and This mile hundred freight exceptional mile, we've the led for over by and growth, weight, haul. mid-teens Our more and by first quarter Revenue the transportation increased specifically versus last mix, as rates. and decreased revenue truckload shorter per on costs improved affected was in contracts to year. training last fleet. in improvement per excluding purchase net footprint, shifting and expedite drove it e-commerce strength margins. all shipment truckload of delivered of making strong net still

basis of made year benefit points are quarters investments X% XXX in to organic of basis our XX%, solid improvement with performance points. will we've and to XX% our solid the the operating operations. grew a in growth confident We and accelerate and fuel. over had growth the few half, in transport exchange estimate a are for foreign full revenue from raising we the We LTL European OR XXX We income second last midpoint

organic European in Revenue through we third Our throughout in France we by Europe dedicated in truckload two was service. expect the growth to this revenue mile as in led brokerage expand Spain. and quarter. Last and LTL highest was in region, years, the transport grow growth the this to carry continues

organic adjusted Our EBITDA or million logistics logistics to billion, We of well. increased growth and performed approximate consumer million, $X.X XX% to revenue XX%, had a organic multiple grew XX%. revenue from We exceptionally segment including increased XX% beverage. verticals, foreign global year-over-year global to our double-digit $XXX income up of We and Operating pipeline we our sales Europe, driven and by of food growth, up In packaged increase $X.X our XX%. exchange. increase an was goods, an increase logistics X% XX%. $XX benefit billion, and fashion, across was

was fastest North customer our us gain largest exceptional quarter pension accelerated our especially due to for million expense. our Our into hedge We're to in high our $XX million The or gear, and a as quarter. mark-to-market services we It at revenue return was plans, used consumer where in by seeing Reverse network piece become the e-fulfillment have versus Spain, initiatives first second packaged growth of stream in from verticals, management and also e-commerce, Netherlands, $XX to foreign growth all this Other returns American record logistics technology. goods XX%. levels. and asset our well-funded a derivative accelerating consumers in came items largest an logistics, e-commerce. debt. included the revenue income was returns for year-over-year UK. high gains The demand across outpaced In unwanted to sales the into our exposure a back of but growth quarter country the strong has kicked

XX% repricings the down loan be $XX to primarily was months total second of million income a year. expense versus a other of year. the term of CapEx Interest expect the our first for half the decreased lower pay at the year, due We six in for to of quarter and rates. $XXX quarter debt last million Net

to We million. from of for timing costs purchases, million ramp as million. free new CapEx million, of well year flow due expect implementation flow the logistics CapEx net $XXX half We're the in and the second our to cash maintaining $XXX operations was guidance as net replacement Cash facilities. $XXX year was of up $XXX full tractor to

again free track to the improve third Scott. in this We sequentially historical our that, to on seasonal over approximately of quarter, And in quarter, flow generate flow We're to I'll cash expect free cash and million. with in the year pattern. fourth $XXX it improve with turn line

year-over-year a basis, Starting and with average quarter truckload into markets John. the macro, In transportation XX%. cost America, the of Thanks, our quarter in up global the was through July. on capacity tight North remain

is share While be use typically July accelerating for slower seeing revenue, spikes best We several market volumes. projects transportation the quarter access our into to ahead to the so capacity we're tight guarantee middle new especially seasonally support far to demand dedicated the EBITDA. revenue in automation is of the brokerage more to European labor Spain. market and and our We a That's current tightness, best of holidays. better experiencing increasingly the in plays by year, UK global tap shippers net dedicated truckload our ask Europe channel. in leading resources also to about technology, across in scale for In The more this strengths. as revenue, to over companies it XX%. out turned services month, The in similar this We're to capacity. core brokered customers month grew truckload

out error approximately tandem by XX% competitive cobots retail expertise currently of we're and of XX%. our rolling working advantages. reduce significant efficiency to with number our deliver our e-tail greater which, XX% recruiting of And instance, biggest in is For one people, a key and some our sites, to rates

the strong we're XXX,XXX applicants a on year. have pace in year, We marketplace. about We applications to process labor job this last and brand job attracted XXX,XXX

been has to While invest no macro their our expect they customers plan supply the certainty, more with they one In and conversations growth general, positive. in to chains. continue, can predict with

all shared Our in of invest launched investment distribution points cycle. is through market good A strategy XPO we areas example earlier Direct, growing us is kind will in our that of keep faster space network year. this the to that this than the

our mobile of this standpoint, end the APIs an in From the The rapidly. integrating volume, XXX are customers our adopters and pipeline cross-dock customers rolled footprint systems. the XPO new up the ramping that updated from facilities and first out XX Direct and of year. technology to use to We'll growing tools app. is with we a We added about queue grow integrate by

We this and growth. is capabilities our logistics on xpo.com. where an tracking With also our our area are management expanded order propelling investments overall,

implementations were may the and the we you at we've As three a recall, year, of to averaging accelerated start now a around two week. week

to discipline recruiters with with infrastructure this Nestlé June, quickly grow future million XPO to will logistics site. and in automation, beta innovations. a partnership warehouse professionals. test This of to estate into software, additional the management brands in next-generation our and warehouse innovation through that about to We investments have in $XX In real for place we their laboratory We're facility the an new also investing create and exciting the house cutting-edge growth tools, announced manage operational an site UK.

both increased middle national dynamic These tools our order identifies largest half. carriers. productivity That in quality from large is flow freight sites has for focus is In in training three our digital real-time that sites. day's employee continually since beginning accelerating zero We and marketplace, roll-out approximately for and the of planning savings opportunities and of analyze labor by hiring Connect our In with the across and salespeople growth business and our our the in scale The scale, big improving of the shippers of improve our efficiency accelerating XPO quarter. LTL, facilities. and are shipping our efficiency signups consistency X% Another forecasting in XPO a tools labor in to shifts X,XXX for efficiency. also went second and investments mix. we're carrier We're the immediately metrics. our of Connect, technology We're generating adjusting just transportation, roll-out to software In to local gaining Local the deployments, logistics first the data-driven wave the at alerts to us managers. months. the first second been speaks network freight traction.

into to addition, the of by the new quarter long the improve LTL income has hundred route We more LTL. in roll-out have second We've come saw opportunity savings. still way points. ratio translate our July. several We a to In in tools efficiency in acceleration more in basis operating started operating

in Our proud years. reach France of be full-year of the the XXth goal And, for the in one low kilometers. next official equipment few was consecutive ratio is year. sporting lastly, of the Throughout we the were over We XXX our and supplies the partner de to XXX,XXX tons the again, moved world. a brand events race, XXs to over at on the transport Tour display biggest

a So our environment we're picture, big in strong all macro across markets. operating

XPO the the faster training, investments continue business all expect service customer data-driven automation, advantages back with of customers. to is to has the up growing chain. parts brand we're in in fast-growing than increasing open tools, XXXX. lot heading let's Importantly, the and global and other that, this of growth And have in With track, parts sales, wind and XXXX we'll are it and on Q&A. the we're a for economy, Operator? throughout do The technology our supply and e-commerce making cycle. our into productivity of traction we

We'll question-and-answer you. be session. Thank now a conducting

Our your Citi. comes line with of Chris Please from proceed the questions. first with Wetherbee question

of phase career. your John, Thanks. the best in life Hey. luck And, next morning, guys. of Good and

Chris. Thanks,

could. of start that sense, I of see I I wanted side half the costs to that were the you wanted first to of the dropping the if guess, a on away. LTL in sort I get year

operating of from the freight obviously the operating give in kind for been leverage of in of curious market. holding of the the getting a through back improvement what's sense and business. a sort of tailwind to run There's better some half? catalyst leverage back can you good Kind us If the them of better what's sort ration that

to It's Chris. morning Good Hi, Brad. you.

board, graduated driver up different LTL. the even many time investment sales takes a we schools, half XXX driver short-term support and up technology dock we a ramp expense schools And they as added So across it the we've pay-off up. And they sales of good but which think programs long-term they new out are we we right the to the did as finally, we an well. about training we October. take investments that's are workers. investments up. is away And, and the throughout LTL places but a but We And had X,XXX follows. Again, as last the And business really ramped more put while, ramp-up, drivers of the in year. in We year in people obviously ramping the first hired since were rolled ramping than well. all

investments to years. It in might old So, records be were we that, lots generate XX than able XX business. we XX our into Con-way more years, get the of ratio still despite but the operating past files years. best And can't from

Okay. volume, think a better. volume enough. Do the That's has When a how tonnage looking half? from we part does play I move Fair you been in more about much know we towards So the a bit back pivot side? July a was said growth that that? acceleration, helpful. light you on have little a as perspective, Scott, into bit little

sense how Just looks. a that kind get of of

focus is on Well, growth. not our tonnage

matches service focus right and the that right premium network is on our freight to that network provide. match Our selecting we and for price, the that right get the yield tonnage doesn't our deselecting the

increase do. of we're We're expecting get mix you to to guide would what because I tonnage the trying So, tonnage. right some big to trying not it's not

the last organic about so the revenue in to do the the the right. All of here, despite we're we growth fair say so then freight a to we're in half And at that then just outlook, continue of in helpful. context back invested, look thinking environment That's excess assuming Okay. think profit How the environment? the that now? the XX% quarters. fact pretty follow-up, right decent couple a have roughly is And EBITDA about gets backdrop remains we it strong pretty revenue same

changed Nothing's on our that correct. absolutely in That's respect. strategy

All of year here, We've it's our that. plow going above year seeds business growth into it's sales amazing company that. chain. of billion the whether some to part excess of profits, the and going And every in back company, next and got for on going the got over keep planting after future. EBITDA, capitalizing the to in And excess Europe, it's we're for whether we're $X.X the in the it's in transportation, supply that everywhere, to whether whether in we're in to extent invest we've profit

of back about that feel to half, of run of the think revenue, kind terms does In a how looks? this decent sense for the like to rate just

this all guidance. in low-double-digits, always Yeah, last months and We've terms saying at nothing's of in slowed been range. the for down high-single-digits, few that

Perfect. Thanks for it. Appreciate the time this morning.

you, Thank sir.

Please is the with your question of Mehrotra question. with next line Amit from Our Deutsche proceed Bank.

Hey, question. for guys. the taking Thanks

to of on free cash and that, just flow. on organic to drop-through want in EBITDA follow-up the growth quickly So terms

amount growth view sales all? should accelerating? year a Does you're the year. the think we actually down then want focusing grow? X.X% the XX% I like You're through expect of obviously you're of the given as to I you. out that significant Or of sales at this sustainable business business? the up of that in look about EBITDA change that intensity in you is given initiatives your investing move XXXX Thank running some just that does you're this CapEx kind accelerating the And type and go XXXX projects, mid-teens that. as book understand or to things

Sure.

So, lines. do three all let's

let's do Let's related growth, as EBITDA do flow/CapEx they're to cash free organic growth, each let's other. go revenue

buoyant. cylinders, probably customers a the economy. in sales side, of growth all That's greater good operational very that share of a than on eight partly a are because their lot of revenue wallet. because hitting we're It's a On maybe good us doing It's things the in excellence, side, on fair it's company-specific with terms rewarding of terms market.

for going yet basis, starting. But to at is see the assume continued for that think, on So a bottoms-up preliminary very growth any level, the foreseeable range that. I I this in future. to done for all. yeah, That haven't revenue EBITDA, a something EBITDA is slowing growth XX% stay organic the XX% on high expect reasonable future. to is in high-single-digits, I just budget foreseeable don't process we low-double-digits down

free were confident happy days of are year, cash flow, their customers that it's quarterly year their had to logistic free so There's don't be generated The week, XX have know opportunities where a free of now more, in. we'll so terms this. growth this invest we in XX% week I by tap will that In I People's to in things the too operating year. so, we are year XX-something-percent more because year amount investing there's that about were business. really logistics even out in review. of for to business. contract go same we contract substantial to cash that XX three year. up cash But but lot this and flow far probably proud we've more there. CapEx mile And for of we'll a the Last start-ups hubs in last think flow have I We're doing specific People September guidance be been than this last think for this then Like opportunities year. installations a though going in than a next be flow really, about next tell can it's CapEx, week year. there's big for going past two we'll a this quarter. very we'll confident done in hubs more we cash to of did free generate I don't year. executives three last giving way deploying you we top for early this our we

many know to spend technology have to that. on more being and customers customers big innovation, efficiently. on growth... will what put year. leader industry that want our next us delight hope enough remain is I the get a have we spend all of close mile won't Technology, our technology business terms run projects into board more we'll more with to so the to we'll think last we of our and that on drawing Sales to don't CapEx commitment technology. of to our part We I in that. I

Okay.

...if invest growth will salespeople, don't opportunities. continues, that miss this top-line more we so in we sales

That's you sites. Right. helpful. those already just me, sites sites XPO specifically my XX Scott, existing are It's on mentioned for that there. follow-up Direct. then of And understanding one vast sites XXX majority going to the were actually that

meat So, when that. you provide was we opportunity XPO I think about guys if little more revenue around could the a bit Direct, wondering around

company, I the think then point billion on blended existing what that XX% just overall could the – fact to we structural the is future. be that the And right should the that? company How highlighted think contribution kind the a some you've cost margin $X base basis? that relative plus given in at for XX% about near of relative leveraging you're business of it

that, at years. fast with. as contract We from the logistics. when of demand seeing demand, their right. and Things fulfillment, a a we're order one-stop for not also our partner Hey, signing the the about from suppliers. have time-definite revenue shop work can in own Thanks. from What selling pool up websites, next margins now talked for stage. Direct, we're lot their for this seeing investment looking where business report it's than store It Right likely replenishment, They they're this to e-tailers. that from four $X is opportunity They're is retailers but of where they manufacturers, only This is they're like inventory. roughly is will a margin exactly up. selling channels. that annually can On fulfill their retailers opportunity like they Things an goods. in billion $X three all in Scott. This average it's higher lot billion ramping to over you're XPO

it. Got

let else I I'll time. Okay. That's it. ask Thank about the you. M&A. someone appreciate

Thanks, Amit.

Next questions. question line proceed your Schneeberger with the Please comes of Oppenheimer. from Scott with

morning. you. I Good Thanks. with John, really enjoyed congratulations. working wishes. Best Hey,

Scott. you, Thank

M&A What in of of seeing You ripe I'll pipeline lead-off as for Could guess far size targets otherwise? the you thoughts to related speak you're the jump bet. what ask are the as or your and and timing much. very question. I with Thanks guys any of (XX:XX)? just prior just valuation that other looking trends

morning, Good Scott.

it you started off a of with them, XXX this earlier are concentrating discussions we've So, a to on as of we're every year, of a we dozen about all pared We different one, year as know, of contacted now almost few we almost levels down targets. a them. in them. universe and ago of single mainly about all And and ones, about dozen with but not

We are patient.

We are disciplined.

the that we likely in EBITDA grow deal that the only shareholder continue We XX%, to are a feel we patience that if XX%, we going create And that to immense do reason XX% when value. have value. a paying free then We'll deal in down range, mid-XXs, XX%, multiple the will sheet, we have balance equity expansion. without taking with each even we creates $X $X pay down the leverage appreciation cash and and the on share of have flow is a debt,

not And So, we of the it's M&A. pressure it end any that's do don't if end prospects in like We year, M&A. later do got that's do great. feel to the month, right the the of to the If We next the great. to past We want that's If slips want M&A. world. the business do right year, we've now.

of the there? productivity was it and much the future of automation of a to of speak like how Great. reps? driver. Thanks automation I please as process It that, kind in Could following your progression of see you up, it is right. guess, sounds what much big for All really Brad. was the you growth. truck impressive brokerage, How guys the Thanks. years

hot. also So, outperforming. brokerage, outperforming? ago. a core because brokerage we years, is appreciate grew very are It's that outperforming basis in XX.X%, relationships we quarter. improvement on proprietary were about last up a clearly the part it that last obviously performed are we underwater. freight were XX%. XX,XXX large contracts of market XXX the carriers our which grew in amazing XX%. point that Revenue seven margins We're have technology. The to for shippers an also we And revenue with we've is powerful to but been we're Why outperforming even really day. we was We Net from year favorable when every revenue year, freight developing because, Net give

able we people. year were a to that's than we did ago So revenue why with a more generate net X% X.X times fewer

the we people are partly tenured, it's is technology. seasoned have X% fewer and longer our people So, more because because also but more

you rolled had days gone out one mean April. products If they're we're XX great the to we technology well. being platform Connect They're And in at that's adopted carriers Connect, the They're example. with momentum X,XXX. from have designed look I we XPO on the zero rolling with resonating customers. XPO with we just that excitement. later, out,

Great. Thanks very much.

you. Thank

the Ravi proceed Our questions. comes next Morgan question with with your of Shanker Stanley. Please line from

to ideal been the thought compare reaction would gave a What's customers for us roll-out the some or are so of facilities, Brad You can that everyone. I if up the but on what's gotten elaborate customer like? to Scott, ask little bit that? initial And more the you morning, Good on Thanks. just kind you does far? been how who Direct. sign numbers you've like? XPO And the people

has its call weight. I very It strong. been would Hey, Ravi, been It's above hitting Scott. it's what

interest one so of fact been is of their in. the customer appealing. in go fairway it's delivery goods We significant, conversation. and they're been into they manufacturers if use We really e-tailers. the their for preferred any from fact retailers be to that been to distribution that's store-based and to right country of the reach get things to them allow partners the of e-tailers. topics like suppliers' The marketplaces, and the very can has XX% something two do they they within and it interested fast days, conversations, marketplace, one that our that can it and you use of that the definitely though. expected has The into can retailers So, This down main

Understood.

automated? gears a count. transactions able versus in talk your revenue of you percentage achieve it how do shifting number you this? you're you what see head there Do this growth what with terms to Just trajectories a pretty point where guys count, brokerage, kind that are do those revenue growth XX% or of And guys of you are of was over Can about at to to have you automation head lower just impressive doing time? see going two

Scott. it's Ravi, Hey,

and are there's So, more parts and of less different the transaction, some automated.

has for the where adds time. It trace and carrier automated gone our reps freight used track track have That shipment calling a checking people can They and of trucking at customers. trace, have see We any is visibility. companies, great automated. which is rooms become We where is. our to and to full that

XPO connect platform on bidding to at those the network, looking doing loads. loads, With the they're like on going adding X,XXX carriers things and

in right load can We that procure have and where moment. buy a on that it feature it bid now actually they

rapid a becoming even more But We the bit. the work quite automated. still more So, that and with that's last is been the customer of three months. over growth

customers. of While with of reps on a amount the sales are volume service we side, lot still increased that the working have our have we customer

do on resolution. capacity that And issue, have we of there to more problem to up become customer, Now help, our more are that but needs will those and that we're some we problem, most something in able are the XX% contact more has the was help we freight the that start of reps directly carriers can differentiated more our the some and doing in in to and expect it'll for automated, be the growing that we marketplace, on those our carriers differentiated network, ramp and X,XXX network, shippers and and network.

it. quality Got it. does pursuing M&A. you And problem lastly, cash likelihood that just on investor the having timing leaves about think Brad, But a decent kind pushed I the of to complain any of with balance a with of a management or of extent deal amount the that on another high get sheet out, a disciplined team being don't can

probably So, think with? in even. X turns are the is leverage you have what you comfortable indicated of is may the too level that low, I past

of long-term leverage here? of, kind So, the what's level

XXXX EBITDA. too about projected we're That's X.X Well, low. times

the to a business to X be create even or putting for should between the times estimate return downturn. order by X range in of base any shareholders if most Our we into risk without common our and a amount went our downturn deep

but want it's do our deal. a to leverage to be real underleveraged are use don't deal, long period now, of good good for got we a I but real So, right a to stay here We'd ability to time. like

And, Thank team wishes John, Great. best Stanley. again, from Morgan you.

Thank Ravi. you,

with of from questions. The line proceed is next the with Chan question Stifel. Please your Bruce

Do And, the if peak career questions a any terms light around of any the stocking us some wish the early can here the congratulations on want customers, share any that best recent of the have you to logistics gentlemen, peak Yes. with I year of just or Good John had you maybe in for this very A inventory Wondering tariff you you've of of there? for commentary given the contract season. successful have indication conversations side. expectations couple to of in especially ordering luck. discussions, some morning. echo you and

month that's are around that world. our XX,XXX that customers doing. They're applicants job what speculating. customers going applicants and recruiting to And be They us telling a to before, know big with be we're peak? don't. happen. what machine. the and have our And believe that all them. Do expect big They to inferring. big technology big they They're for mentioned there's big a peak. a up will now, support And are us prepared we're to recruiting They're is peak. they our prepared geared us But a getting think I We've to Scott hoping. want got telling Our be they

we're in we've ready talent customers peak. So, invested substantial organization. acquisition And really our to support for a our

tariff Great. of And ordering there? or any as early then stocking discussions, indication as far the

trade it's bad for it's themselves a of time, period from have We long time, of trade have any but think resolve seen wars. going don't to I for not be noticed in short difference If on the a days it. early wars period go in we'll that, everybody. If they

just Great. Scott. Thanks. from one And one then me, last

and that the there? that seeing implemented stuff. an you're facilities have Do How cobots many some And insofar? other the customer-driven out for you pretty some you there, benefits those have maybe of XPO-driven timeline a in a roll-out cool some is definitely facilities mentioned is decision? Or decision? You the of

more It variable type not variable versus Sure. the On fixed depending cost whether a contract on it's an XPO making customer. ourselves work we're ourselves. on decision contracts decision depending is as of decision especially with drive or lot decision, cost On fixed generally a customer, plus. the or possible. customer the the work contract, We'll plus much making a the with the to we'll as productivity contract,

of almost our all automation We of type have some in facilities.

the In retailer-type going several terms large over cobots, it's our that companies as months. the we those several out e-commerce, few over of round we're cobot, the of specific speak of next e-tailers, largest facilities of

drones We're artificial rolling Cobots are out and that out robotic arms. out semiautonomous-guided out automation we're We're out swarm-bots. We're rolling intelligence of glasses. rolling We're out one kinds for counts. rolling rolling of We're robots. type rolling rolling out. We're smart all inventory picking automated. goal And models, endeavor major learning our for doing. all we're that's the doing XXX a predictive single to program. of and be That's logistics goal. And the kinds every machine that investment the art facilities contract plus analytics. one is state-of-the of That's

you. Thank Great.

you. Thank

your Susquehanna. line question Majors Please question. Bascome of the next is with with The from proceed

this was about some longer-term disclosure you that process XPO on needs period. and morning. morning for share double interim XX% shareholders? to and it its you Good Brad, the the to CFO. be Yeah. Sarah's board's a what award your that X-K incentive compound The color would expectations basically years, equity over as can The gave and which return holder $XXX over the restricted again next stock thought X of behind says stock about you filed

Yes.

we We are fervent that if not our a believers owners. if our money shareholder that talent, believers paid of and our we to value in compensation. lot That management superior a that's attract is should lot paid management shareowners, team what then really delivers well. great fervent And us are our allows get of get should to they philosophy value deliver don't equally for

earlier of terms take the stock multiple, of flow the And if and In if that is grow look per EBITDA question cash on year. we same to mid-XXs expansion a number, teens it $XX, the we the is have, math. expansion every pay about at $XX high call, the to we multiple calculated generate go debt, back up get the to multiple and the you then which mid how down just free the you goes should keep turn in then leverage we it's continue percent, the we then we share. If in and

made well, worth it's and $X.X we Sarah, price, at grant shareholders. that today's that, the in it with about we're other dependent $XXX. So, she it be so gets but that conditions as for a And all at obviously million twice of that on there's would

that. want simple compensation appreciation. our geared as shareholder plan we as It's So be to towards

appreciate we're is I free share years current cash that flow think of for pretty into plan senior I that incentive of management, I company. about believe Brad. long-term improving Thanks, extending squarely response X.X tied the thoughtful there. And which the discussion, kind maybe per to

business through we How add Now it long-term Thank here. some the before future that the you round sounds the expect do at get next about acquisitions to we're like incentive of maybe you. as not-too-distant to portfolio change here?

as us EBITDA following organization following, lot it CapEx minus EBITDA compensation year. have to to king. free that But the cash have to at to people free compensation We of get EBITDA. whole we the And year, to flow. makes flow is a over minus field tie to cash we down and don't And the just throughout But compensation year day, the the into Well, and in that. tie don't next EBITDA and it tying of cash do towards charges that plans sense. to and people end different other control And a lot the we what of of $X.X the the company. closer usually tie billion the the amounts contribute field can group and the like higher go closer that to in this many you that person of or customers,

from senior it's So we should compensation towards we that financial feel to perspective, be cash. their that the And level, create primarily compensation KPIs. their try to have value. tied At things do shareholder tied

Great.

like So, it focus at the level sounds is unlikely change? cash to senior management on flow free the

It's unlikely change. to

incentives of variations and best if shareholder they value is fine-tune of a basic not tying to But We part reasonable, but get to long-term only deliver with our adopt it core input, salary. always management pay we if base see Otherwise, could they great concept a it of well, as value You people equity but the our take. shareholders. culture. our shareholder we practices, senior and we which superior

you. Thank

you. Thank

Landry The Credit is your questions. next with of Allison line Suisse. from the with question Please proceed

Good Thanks. morning.

Good morning.

I also ask questions wanted to Direct. of XPO a couple on follow-up

in you BXC then, we $X about whether to need talk mile you order contract of or maybe the is fulfillment, longer-term XPO are of talking meaningfully that parcel support these freight, longer-term? exclusively last growth handling expand transportation, And brokerage, when will both? billion capacity the about carriers? First, And in modes it's or to or LTL, any

for for transportation that's their to is and goods, small with but using. want carriers. their where goods We have an questions. end the predictable, to primarily one heavy needs. the parcel they and get through who competitive arrangements is partner from Okay. vendors is selected People all five but solutions, for we RFP, Customers had it's for want The parcel that, world going towards. Great we're solutions different network don't fast, the end-to-end integrated that's to are where customer. also That

we'll business revenue to more add with the We're that. component, part because to $X component, to that's grows? shop. each Yes, But Will business the this So, have the integrated a as warehouse within the we have, it. we this we billion opportunity LTL from that be we're have component, giving be it's years. business what the last giving of it's expect will mile grow And whether returns business them few an there an great whether or them. capacity one-stop

Okay.

weight the selective picking LTL, helpful. was one. or growth mentioned Scott, in being I either, which then you sure Brad think given That I'm not And But freight, the itself at pricing in been And which was about that Okay. seen. per has Dominion least earlier, it freight but heavy right to out sounds it been more a was we've market, know similar the of strategy, to shipment following prior second it's quarter, Old extent. I some recently that like

portion curious, weight heavier continue negative profit of So you increasing a the the guys per also expect have weight shipments profile from of or seen some shift in should mix we shipment? to

the target do necessarily don't industry. Allison. weight heavier weight our most that sense Hey, We not network. per heaviest We We have the shipments. target shipment in shipments make in the

parts In that, note around well you pounds ours of X,XXX. is industry, X,XXX certain over the If per it's shipment.

that of right than found have the some and fit more in the We attractively heavier portfolio network within shipments are what priced now. is existing our

things increased plan shipments as heavier and on not Southeast It's shipments. could time, to less found after were make has to after changed instances So, weight expect change go seeing time. a weight we necessarily it's and that it where over for network. in things other profitable there's certain the as in a our That weights, plan that we that heavier most heavy. not are that sense some But we last the are that we year some some found go

guys. Thanks, helpful. definitely That's Okay.

Thank you, Allison.

your with the The questions. is America. next proceed Rosa question Bank with from line of of Ari Please

the on Hey. Good morning, guys, retirement, and John. congrats

kind sustainability they can with maybe expect you talk of in front. of brokerage, forward, the expect progress you margin continue about make what if could on going you where regard margins, are really lot won't question have about a I ask market. calls to the seeing There been you earnings quarter first of And concerns throughout but we're peak, obviously about specifically So, ask about I brokerage peak. second tight of the to kind this to you a was want

guaranteed, very perform customers best are getting having that focused hot, opposed that the can quarter. more Brokerage is to customers. the so you really real volatile, good particular definitely receptivity our and that month going doing predict, price. and that the And on we're the specific I as But hardest what very, are to it's because so that and from particular tell reputable who to it's possible getting market's in suppliers one market's to

at and going and elsewhere inside plateaued it a are on Wall customers telling inside be any is of are a going we don't peak, we've to I lot good. the telling continue pretty business the are so peak. a voices don't consideration had this get don't we're peak, trends don't to do and what margins know who what's and out what so to reason But what With thinking paid if part just and of Street customers to the not. us, seriously were on or it people see. years, chorus saying. not talking We be In to we we and at about peak. whether peak. what we to words, predicting seems are business external And know strong our all folks think respect have if indication would a is going many Or question at a other have we into to the We So, decelerate whether to from about took how see attention your we're to main we are But that us, from good peak. we it's the it's worse. wise are a going are so we going of be that the that might a take voices be be peak. we're we the take for That company that hear long, saying

a maybe about not Maybe kind are addressable towards or it to customers receptivity clients. your what gap Direct, was And asking people a why that's an gotten customers, you. or for. of for it lot but then you you if market to touch seems kind Thank that creates maybe just useful I opportunity a could you filling thought talk about mid-sized questions know And customers. this, whether then from it. again, about was Got solution XPO and if in you've like expand asked talk it could of true this on have of

absolutely. Oh, yeah,

want our by understand getting them As to want, here. they they're to for from our we to trying we us major customers, is invent pay for. input scale don't of customers money to can them, endeavors, what service all can of what invent what value, the them rent out that how one how be them. to We And things them, customers willing we help

scale. have We

XXX warehouse facilities. We plus have

got We September. have going mile cross-dock plus network We've a that's last by XXX hub to be XX facilities.

the that and customers lots through represent They it. have to little network. the lots chain, of assets whole We capacity to want just move goods crowdsource supply don't want of and a

So, to volumes smaller or we're in to And large can one place their our in to consumers of that Direct out our customers. one that's having sense in costs, it predictive analytics of scale in about them inventory country, a to all across two U.S. suggest their based country their closer XPO customer, with where days. orders. XX% we history, reduces And in use renting allows because to reach places our to work few the going inventory a make customers the we previous on makes just are volume and to the them think, inventory instead

around it advantages in is, to inventory So, reduce allows big that has the customers. of the One which And is to for our aggregate them, them country. to a delivery, amount couple have allows they it these days. quicker

color. I Great. that for time, Okay. Thanks guys. the appreciate

Thank you, Ari.

coming the questions. Please line next your from The of proceed with question Goldman with Reustle Sachs. is Matt

for question. Thanks my Morning. Hey. taking

acceleration trends guidance a into per how outlook terms a that have three as implementations you business of week you that there. you've have XXXX back question, mix touch any more in on right you referenced to? logistics to the of where half continuing pace into that of inherent there from that the is is wanted the then Just into related bit the a that the guide and revenue in solid in you Any growth would Brad, Is top-line year? XXXX? that now, see And coming shift

growth very board. the the across Well, revenue is much

segments. revenue growth out organic XX% X.X%. at two transportation and company-wide, you is it by growing break XX%, You is our at Logistics business growing and have

Now, the expect X.X%? business those we're share not. growing and are taking No, both markets still about market. to our us the to We're good and XX% growing the that. and markets than persist, question But they're conditions faster we No outperform market. of obviously

in in chain organic growth about question had new e-com, seen your well. logistics in XX% retail, business food growth. we've and, strong and Europe, to in of in business, specifically in And, in business, July, as fashion, continuing beverage revenue course, supply and Now, our we sales general

low actually XX% last up revenue there's versus every July the year, almost fashion, unemployment booming In almost So was X% in in Netherlands, country. organic growth unemployment.

the France growth GDP see in still North in so if lower about Spain North You X.X%, States, is at supply America, you about the in And X.X%, positive here in about look business then than the here but growth. chain UK in XX% America. X.X%,

business the XX%, much market. chain So, globally, faster supply is than growing

XX%. Now, That's year-over-year. we up square million warehouse added of feet space XX

many grew So, size the of amount in our the competitors. is logistics of our about we smaller year-over-year business

new there. operational of X,XXX paced, high we're marks So really added our business, lots getting just customers and We logistics from for fast and jobs momentum that's excellence. in

that it $X.X year globally year our about If pipeline logistics billion the $X.X a is you just It's which absorb pipeline is logistics a times billion, ago. – what had a for look pipeline, X.X We ago. second. at logistics was a

We have $X.X today. backlog logistics billion a

the our lot that's is see to Last see or positioning I your have I that XX%, it's good like grow grew That's growth of feels fast. in So XX%, be about answer XX%, a That also going mile to here. businesses. just we to going that question to another place quarter. the or XX.X% percent growing is one mid-teens don't stronger to it'll short very of be I market. in the XX%, or grow. continue whether but a going know

helpful. one point. detail. your And Okay. very on CapEx follow-up Thanks That's then for that

XXXX. You outlook you XXXX differentiating When that vast where are, again would think be the about opportunities see what technology there going biggest how more assets, mentioned around and out opportunities reference for context to versus giving opportunities? you there's those in you

setting areas is investments. logistics CapEx. Scott. very up of and new Technology service, support their facilities are growth This up supply customers It's contract Hey. rapid automatically. customer two freight technology also digital that is biggest investments to freight about to our growth information where growth demand The robotics, given in the marketplace, versus more time, on any enabling so automation, more visibility, get at more CapEx matching more more

Thanks. Great.

Thank you.

with with questions. JPMorgan. of your is Brian The the go Please from ahead next Ossenbeck question line

morning. question. Good for Hey. my Thanks taking

Brian. Morning,

Morning.

comment, your size Brad, on the estate, just So a small competitor real you're sounds on adding like on a basis. in regular

the you or So Do to that? automation, a seems out do we heard place like earlier you commercial about this something right the real space warehouses, how team getting building it's harder but the is to you're get right approach when increasingly do you in-house market for that in it pipeline have outsource? inside labor the how the estate

warehouse owners direct well We do brokers landlords space. the that have in-house. do use of Obviously we as major and with we because relationships they listings. have all But

good landlords very Prologis's because we're close biggest we're we're fourth credit think a long-term And tenant. customer. our to I and

factor is labor ourselves labor, quality in the of gating with that leases. to bigger and and factor. will A of globally. in labor, think real within our organization, continue in have relationships savvy capitalize high we're we procuring sure price And So gating inflation on I expertise don't customers the the that protecting estate our big our those making that's and case the the we contracts professional increased

Okay.

the you like the tight So, some along probably that's something to through it negotiations? side, market to customer real estate if areas, on contract were get the the sounds pass could in

tight. we And I expect there's the any It it's the estate get been a time present kind to tense. for don't market untight is it real future for actually, Real demand. the soon, lot while. not because of estate tight use in a tense, has And that Yes. of

One quick leverage sheet. Okay. balance follow-up on in the

So, ago. help million few the $XXX used pay down revolver of you equity days the to debt a

And interest cash for, So, use more geared evaluate savings could M&A update get where you as what growth of are leverage sort continue John? you you if and that? Or stands you pipeline? across is to going and free be cash something you just from And the to the the expect us towards now, organic business? right investments to this

and last arrangement that did cash year, forward we when the is is still Well, equity M&A. earmarked for

do year that we debt basis, down a from of pay down perspective, So – were not because short-term year, whole did intent paid from north that's we the If just save raised. a the for $XX which you'd with to that – capital that some plan obviously we about is a in of thing that million interest savings. a a a acquisitions debt, treasury smart purpose ultimate it's do cash On to cash management perspective.

Appreciate Okay. Thanks. context there. the

you. Thank

question comes of Seaport next The questions. Global. from proceed Sterling Please the with your with Kevin line

morning, Good you. gentlemen. Thank

Good morning.

How Good you? are morning.

my enjoyed bit hey. you. congratulations endeavors. a with John, let hobby. if best to advice, really you little just echo of your years these for I Yeah, of And future luck and me find can all I've working a in just give you

You to more. wife at don't being too home crazy drive want your

That's it. take I'll good Kevin. advice. Thanks,

experience. I've learned from

So, of questions. have just my Brad, answered one. most really you've I

really end across say you five XXX, XXX? three kind hubs you it more dive to of give to to you year. world Is there last an continue last your and the said how by Longer-term, of mile need? hubs of do Is into years, you'll think mile out offering, the the at the you this last be XX game next mile As country? many I penetration end build deeper e-commerce, there

see if I don't customers are their to importantly, We to our and XX, to good then time. customer. how going a happy see do we're pause and end more know it's please If delivery they if is and, not, get want and what with are, see does XX yet. that necessary customers and pause And looks. that then that enough. then we'll that's the After the trick to if take

Got you.

market think case actually caught Europe quarter there Do I the Europe, the freight still Scott, progressed? mentioned maybe North than as quarter's America America. And, North that's Okay. think road bit you last little the you'd stronger or with has over up a being

some others. in case and not It's the in places

as other So, big as tight the well. very France, has very three strong two. been and been as Spain our Those in much transportation are it's UK, markets. not strong. the

a at Kevin, of It's dedicated EBITDA look North my seeing in if than more a brokerage, at LTL. conservative opposed business, continent our as is seeing, And you're being from America, in spot. three bigger you you're European from migration to things. dedicated, towards transport least, opinion and XX% Europe,

So, It That quarterly our had good. growing transport, the quarter. of for European history gangbusters record but like Norbert that's may best the pretty there. EBITDA. growth. lot, Dentressangle We former ever had the organic over XPO dedicated a not We second in is was in business and sound the X% growth

you tight environment. is have and capacity a So, strong over there pricing

you. Got all appreciate I the time and, Yep. all you. had. that's luck best this to Well, morning, really John, I of

Kevin. Thanks,

Thank floor you. to management the I back will now for closing turn remarks.

you all the We us appreciate the forward you good a opportunity and giving Thank hour. for to day. seeing soon. Have look

concludes This teleconference. today's

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