XPO Logistics (XPO) 2 May 192019 Q1 Earnings call transcript

Welcome to the XPO Logistics First Quarter 2019 Earnings Conference Call and webcast. My name is Rob, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded.

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

cause to of statements Company's Company materially which to Company's laws, their the differ to contained that actual projected SEC these has on other only is filings. nature or factors of those by Company required making During factors applicable obligation number by may the in a extent materially the statements. uncertainties, made this call, no release meaning of of from actual forward-looking in as the certain to this differ statements, results and A any the results forward-looking law. risks, within in of involve call are except that the securities cause discussion be The could forward-looking and the forward-looking earnings today made statements update could

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

you earnings find the call measures statements over to release, You the begin. I Jacobs, regarding turn now may section Jacobs, website. will the contains of a of information can Investors and additional important copy in which financial Company's forward-looking non-GAAP the Mr. Company's Brad

of Fassler, With Tavio Chief and you, Investor in Thank Strategy morning, good Matt Director Thanks our our operator, and our Relations. Senior Headley, me joining everyone. Greenwich are for call. Officer

quarter automation out all as up U.S. Connect with freight on greater to business lower to on due even We're we're basis results platform year EBITDA of people. delivered yield up of of revenue fewer for on And the we a we're Europe EBITDA In customer. us. from was increased many we first number X.X% organic on revenue our of cash growth our producing more as In at X.X% our was XX,XXX, in X%. X.X%. XXX LTL, in net Mile. in process on $XXX Connect, America revenue from rates by flow. of a a X.X% XPO we loss up to marketplace, and improvement. a It the than has we downloads absorbed yesterday, Connect solid rolling In freight quarter key in XPO the two our and saw quarter points. We in brokerage, after The in XXXX. first Notably on and reported was did leveraging we outperformed was zero largest had we XXXX. and metrics. net fourth triple year-over-year million significant you at year-over-year quarter, accelerated free yield growth by shot yield digital capacity more growth first record Adjusted XPO ago. so North source That's almost of quarter XPO this grew We adjusted the margin Connect beat carriers growth the As the in Last

$X of growth of or up since was of our global XXXX. new a contracts from in And in quarter closed organic investing strong XX% growth year-over-year in quarter quarter. We revenue an the of started our fourth and up It commitment mark record on corporate delivered X% We further sales network is of can in we're the in generating we X.X% the the the we whole billion quarter enhance crossed a reported billion issued year insights growth segment LTL. the technology XX profitability EBITDA from $X.X website record year-over-year it. experience we years. report. impact contains of recommend our sustainability best in the the for in report this excluding our This We to X.X%, we well, to as FX. I LTL into customer of logistics benefited Companywide, we year-over-year responsibility. a slew and operating pipeline XXXX. The number first week, nearly be reading throughout also in ratio that tools in doubled business acceleration adjusted strongly generated our operation LTL our first time. the found and Last a We've raft bought

a we reaffirmed believe annual significant detail. the to solid you We're that, capable XXXX we're ask start our in our With we numbers Matt I outlook. history. review in than As in at shareholder as of today any more value the more and off to said my time saw release, letter, I'll shareholder in creating

FX segment from on our revenue, improvement declining the from freight where about profit XXX number through Thanks flattish. solid with we especially numbers, delivered unit. like focus transportation the a Brad. XXX business largest was margin I'd and brokerage X% walk weighed on a backdrop I'll start in basis to you customer had our transportation and by our lower points, impact. points this basis by revenue Adjusted EBITDA strategic

XX margin organization. in across about adjusted transportation as and Brad profitability the brokerage margin mentioned, freight our X.X% net our reflecting intermodal In However, points rose EBITDA managed revenue X.X%, sharply. brokerage, rose net our revenue and to basis higher from and increased discipline cost by X.X%

helped revenue growth the produce algorithmic XX% price XX% line showed the of and North American us as sharp our strongest of intelligently. QX top well. improvement latest cycled XXXX, margin beds and in a comparison we businesses transportation Intermodal increase Our our toughest declined of optimal our all of out the as revenue to in but year, platform advancements

the our including per North to from pricing success on traction hundredweight, rose reflecting excluding increase. of Moving American our X%, initiatives, LTL. good GRI Revenue fuel

a contract achieved renewals. also increase We rate X.X% with

season. despite March, to delayed that ag tonnage in LTL quarter but start for Our a trend the declined the X% from improved

delivered as business postal improved progress tools in use the injection our ever rose highest last to visualize Home, Google web down forward place Google Moving this And how items business on will margin and reschedule peak. the we business in net in XXXX. since tools X% made request in to using quarter wound Echo quarterly injection or mile revenue highest as their now can rolled Search. out route last of driving outside real-time the or planning our homes they revenue Last alerts, our our mile mile. declined our last mile, electronically, mile augmented levels progressed. delivery carriers new slightly. year-over-year double inside business, and schedule postal we've XPO had revenue Also, momentum. orders wins excellent We track we've entering times We their prior automatic to reality we to Connect consumers last Amazon personalized or provide We

our with there Our was by been is disrupted France, European activity. revenue transportation difference FX. the to organic X.X%, commercial business including In X.X%, the strife market Europe, generated driven operating has GDP growth growth still growth in volatile, periodically largest of environment The modest.

market On plus the side, solid gains. significant posted operations growth share our UK and

steady million. organic aerospace, consumer reflects in margins of with Adjusted a rose rose Turning year-on-year. to X%. our goods, In in held logistics to $XXX North North growth ongoing X% America growth beverage organic growth, logistics, revenue revenue segment EBITDA America, XX% up strength reported packaged and globally X% strong food quarter we and

for growth expect by new organic private million logistics declined XXXX and expand or stellar punctuated these We're to e-fulfillment expense revenue customers our and relationships Europe, improve over scaled extending investors existing margins in reflecting of of company's our logistics We're demand recent items, to since consumer-oriented maturity from December rose startups million, and time. e-commerce a to in profile. from for interest We see have launches $X we rates issuances. for with and Addressing refinanced both in X%, terms, over robotics continuing Interest existing performance $XX billion implementing Europe, a select few public debt our to rollout In new from debt contract operations. other X.X%. $XX franchise. while corporate the strong raised

ago. tax rate GAAP Our X% versus a was XX% year effective

the income was compensation annual and not year. range did this tax adjusted rate XX%, rate with tax equity In was our consistent net that based quarter XXXX, X% versus our ago. repeat first lower Our guidance a on year calculation our of

XXXX at from an and commenced activity. In repurchase diluted XX.X All-in, of average the $X.X to in of count weighted $XX.XX price share December share primarily of completed total $X authorized past first for we average in billion. declined million million expenditure the we shares this a buyback $XXX bought authorized quarter, have fourth February. $XXX Our the $X.X our quarter. reflects million buyback billion the back billion This

better million $XX flow Cash the a prove $XX was use use for expected. in nicely of flow and the accretive year. Our quarter buyback than free should of million from also was operations cash the

This was of Our from year. net $XX down million. versus equipment versus sales ago $XXX of $XX $XX included CapEx prior million, a and gross the and million million property CapEx $XXX of year $XXX million million in

million. basis, flow was and to cash also cash free during forma helped pro capital, collections $XX working at a favorable On quarter our trends the Looking flow. sold year-over-year the from contribution receivables

million While was contribution the XXXX. than on $XXX basis, less sequential QX a

pleased which of Moving EBITDA on to XX% guidance represents billion year billion, to to our X% to we're reaffirm XXXX. $X.XXX over outlook, full adjusted $X.XX of growth

and million cash range million, free to expect $XXX higher the with CapEx in we year, higher cash full taxes the For flow QX. in net $XXX of

for We cash the much half first half look of first flow XXXX. expect free the to like

about We're the business With wins the in we'll innovation from turn should it to and optimistic are back and I'll our operator by benefits your half our of new record energized questions. take growth We the see pipeline. year. internal initiatives our that, back and we

you. question-and-answer Thank Instructions] session. conducting [Operator be We’ll now Thank you. the

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

guys. Hey, thanks. Good morning,

morning. Good

I if be side, that the where could Let’s of but us through, start and first through to a help there, like core quarter a the do sort run weather want there LTL was kind walk it understand of you you hoping profit of impacts in some gain was sort curious falls, from is the LTL you on here? know in seem the business on going I business. that what had down the there's think does quarter, may on happens year-over-year. could that you just was what if I of And in

experience LTL. book estate, Matt. did real – part We of gain It's that we emanated did Chris. a morning, a of substantial a from Good sales gain from

that's look our X%, yield prior LTL, happy we're the with growth at you As of versus X% in very quarter.

impacts it our tools, We gains people over productivity, The efficiency are our line to we'd as this the P&D to expect year. tech top to we drive enhance And innovation out roll we weather help from those of come the the to us course newest expect well, investing generation hit work. line-haul. enhance and as still labor to of

delever there too. the line on we So expense

Our continued were March, business QX. real in improved in That similar, sales we what slightly into April, than and perhaps trends wise. saw profit better our wise when

We LTL quarter. improvement expect EBITDA – we're just in year-on-year do running but OR, think second we in we OR can the generate not for

April in that trends track? And that would Okay. suggest on is

Yes.

Okay.

today? what's Okay. you company, how time XPO stands out there. aggressive – seeing with thoughts to What the from do Brad, capital the we from That's big balance since if helpful. the thinking the what you your opportunities market the in forum changed now? in have don't I then, capacity where about may of focusing get about sort on buying guys on stock, are really to allocation, this of the the obviously, buyback. outside a take standpoint anything's sheet be last the We're other you impact sense with and see it been wanted picture that you share What value And talked count. know a had

point a time, keep to choices We buyback. And would bucket go problem how apply be other the that constantly off several four down Chris. flow. other as are this of debt oodles throwing would would cash And think sense comparing and and all view. that a to just we and return a we we stock have of M&A capital and those from most all about And of question monitoring do CapEx other. we'll buckets one the be we're would flow. It's the be cash other going have along have paying whatever to on of be good makes One we're we and

the message stock clear what see no you morning no in more still more value there's in, now? But value this about right

continually paying look say going say that that down didn't would And that will debt. continue that. to make sense time. just I get M&A decisions stock versus CapEx at we the to versus monitor I on that we versus from we'll return the we're that and capital and at make

time. for Okay, Thank you right. all the

welcome. You're

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

Hi operator. Brad, question. the Thanks Matt. Appreciate

here little last I guess And them. to non-unionized margins. lot strategic kind kind on account XXX of or the XX in just the When a bit we I year, later of all had comps basis I degradation managers, less LTL So the in managers, that. call salespeople point year-on-year back are guys and issues you intensity weather a high LTL the want push invested performance, months a And there showing other was or than same improvement. are because think year-on-year you account

quarters quarter that expect framework underlying margin actually that of than of of performance improvement. quarter? the catch this intact the to from first this Is next Do kind every three in for you up had to to LTL you've better long-term still So points XXX basis for be XXX year? the

in can including or good LTL, not We it or that business ongoing a just gain, at each that's estate is a them. of LTL equipment stuff sometimes equipment business, sales is it our it's good points we matter, real as and including as sales it address in wash and sometimes and end. part sometimes in the of for And what sell or to out guy, including comes the as estate favorable a any as Several in I'll is, at sometimes look there, an One or loss. all sales. including guy, not a sales us bad look real you

– way So the about we that described best first quarter it the we in you don't good the and look at margin improved in at it margin. OR our internally look a feel years, really We OR XX.X% our that. was XX and record

the in LTL, a nearly out if It take look whole doing Menlo it itself, what the XXX of dollars EBITDA LTL picture, LTL doubled multimodal warehouse just XXX the dollars and the In we've since it Con-way terms business, XXXX. it is business part EBITDA. something the really today as in doing business, and with we million was we bought doing, we've Con-way EBITDA like of the at something big done from you million in was

So very, a and story. very, big big it's very improvement success

You are right.

Nevertheless, were some our really renewals has and the on people other biggest that just However, one of a the yield stuck yield a environment we was like the yield. rates first renewals and I it on X.X% that a I that it, GRI impacted in quarter going X.X% to of January hit have contract like healthy though quarter, to the put fact our improvement X.X%, in progress quarter perspective. up making from we which had some liked overall, only even pricing actually from lot. do. watch had us, deceleration the challenges And That's and didn’t nice. hit weather, XX% to to It's it’s that. we're that a out the disappointed over catch-up we I'm little that as X% are in the has the is improvement increases the revenues. acceleration X.X% down X.X% on on first we're quarter fourth there's I so and But fourth and down. nice It's the have in fact well. contract price

we've Our been raising that rates than have what a competitors on faster one. we have been behind and little

little up to a do that. So catch on

Amit is portal is thing about accounts. for LTL our large talking mentioned an big amazing another Now into about the and I LTL, XPO picture

biggest lines average business XPO of they services, top use LTL. on in to XX If six accounts five or you customers, our LTL so addition LTL different XX look at

LTL our results. point hired of collateral you having from and the we final and very So mentioned a year that range customers. broad in they're benefit big from liked the being of a I business people results last sales The about, where's that? bunch was

of fact fact When that. you in the that the them results right are to at been and we've able hundreds quarter. got OR, higher positive improvement than hire the better time and a things. rate people they the force, in think we're need into yield we on put sales a I These need are, fourth get that training, had we've they real the direction

right on want improvement any are yet, where run to there. don't for LTL, We it you about just business, run business, the And think for OR We’re clear, not for including this we in be margin. direction we we make improvement. want myopically then operating but we're I I just That's ratio, mentioned something helps also to on the than but gives EBITDA. more cost, not, us And always. on with out looking than at. by by us metric gives More we're it it that taking margin return at better going capital, revenue our EBITDA looking that, capital. often forward, more return improving growing year-over-year main costs not

a Sometimes, OR have perfectly can and for the amount to you degradation business actual network profit. the but margin adds your of instance taking by matches good fluidity in but the that increases overall on the of as LTL, doesn't network little see

can't promise because We that improvement very managing your I OR we target the that single well that internally main business questions, going answer see all specifically we're So may, in you to every Does target. not look that's we're but at. not the to quarter Amit? that

if That I answers could. question. guess all I parts Okay. first my the of follow-up, my

Amit go What's greedy, ahead. your get but Don’t next question?

getting greedy. I'm not. not I'm

could just replace you the get ability were I wondering how earlier I over the is transportation to dedicated to that of were I obviously of so of and resources maybe and other of a how kind your that to you contract strong, reallocate $X just backfill between is to, year. ability was that billion. guess, stickier or logistics logistics some much business kind out parts there going of to we think mean, lost maybe wins I to can business? parse about if sense business. very business wanted Any transactional talk this kind your much the business on color I new loss that's the refocus of account

happy has certainly am from that It's Well, they $XXX million Okay. sales a refocused, never good we has $X I'm in the our thing. that and very we it not so delivered, the had a $X.X We the reinvigorated I lost that been business. improvement. force healthily, record threshold it crossed fact, pipeline. time billion had a a we big company, business ever new happy for crossed – in billion first

Our pipeline a nice quarter It actual $X.X the was was billion, is up And XX% first year-over-year. at of rock sign. business solid year-over-year. in up XX% closing the

fact the fourth itself year-over-year Now the But in point up is point. that quarter. good from it's acceleration more of XX% is even a the interesting and what's

fourth the up business had wins quarter X% So year-over-year. we it good and was new

first the So is rate was growth fourth in the quarter times quarter. X.X it of in what the

what the proud those We It's feel in Matt managed millions would it's back. about parts of has mentioned matter operations respect hundreds United rebound sales generate new where for business this a replacing has his terms of States, last too. Last mile mile It's With still all over So in It's supported get lost in trans I as to the in business opening, But be of spread very and brokerage coming LTL, part of force all The line. got lost to of biggest been the throughout. that great of have have Europe, revenue. we every question also it's from? your too. to immediately able the revenue. that is to the chop by all wood place.

rising of is seeing seeing strength diffuse we occasion you're move the you’re when of resiliency it to have the missile we're you're challenged, XPO to places on. what seeing incoming XPO, an So and where the

you I much. the appreciate Okay. very question and thank

you. Thank

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

questions ask on couple have I'm Good going LTL. morning. Thanks. to to of another

in pricing seen for looks one of of terms last you And think margin? Just the the had per about then in it like have number on of first your a competition I your week. talked earlier comments, peers declined in it any weight terms quarters. shipment, of the pricing time that

are that reflective strategy weather truckload of So is was or curious you in freight a if or in of looser it guys that terms targeting? the driven of shift a function

Thanks questions, for the Allison.

retail, and it's mix like percentage, On X-ish the industrial bit mix freight away X.X%. higher like due like manufacturing or per the or doing don't It big lighter think from whole It it. lighter to of down beverage. That's food chem read CPG, bit a in ag what into the a auto getting could the in way. next weight and quarter. that shipment, It's QX. strictly other could a moving freight or in way heavier in was and a we're lot That I e-com, go that's factor I a wouldn't continue little random. there.

we're hear terms the from we business of and that's numbers. in, internally time, by out comments who's our the marketplace, the in At yield same came not competitor seeing and did In very about that plugged shown those and take we're a them what the seriously. good in seeing very very we because it

the bit yield was more the quarter up in X% that's as actually much second trending than fourth yield improved quarter is in it improvement a little X%. and as the was And our Xx about quarter. Our in

still environment only is thing enough. And with that I'm a that as the pricing X.X% slightly about our the renewals on good in characterize are would only we're is we So healthy “X.X%”. market dealing increases But price concerned that that, the one one.

timing Okay. any the is for should guys. And Matt, three the we through quarters? of maybe one the you, factoring, price the throughout this you think anticipating balance the receivables you, how that flow-through will receivables remaining cash of but purchase year? in for then could of help be And Thank us deferred terms the flow, further

Allison. Sure,

sheet contribution is somewhere accounting million. $XXX finished we cash between just by move for million And and little color have the see to statement. $XXX the the don't balance million. the way quarter DPP cash the you likely quarter what like as a the bring onto on consistent entered you'll ultimately cash something for expect the flow We receivables. sale two saw to next about of this The is but contributed we we or time That that would around with bit. another convention gave it, we from year flow the the be level can year, factoring that $XX the that a year-on-year, So most we by forecast

Okay.

So we million roughly another should – see you're Is $XX of two next the the quarters. saying? what in that next each

a sense tough It's to where that's forecast will of number inter-quarter but decent it directionally, that's a be.

All you. Okay. Thank right.

The of from proceed is the next your line Brandon Oglenski question. Barclays. Please with question with

and morning, a I'm Matt, you if about good Hey gross talk in not mistaken, think you billion I this call. number. like it's think said over the or But everyone in of business thanks new me pipeline? quarter. I letting the $X for Brad that's can

So contracts for to that sure, going be there's don't renew.

back? do So you're put how getting context we business that not that of in

part revenue. of that new expect in That's QX, to a translate into the we do most and that billion $X.X business for number gross

You're plans change. right. Customers

they get that's but Sometimes approximation of higher, get lower, what will good a capitalize into. it sometimes they

we've a period XX mean, signed revenue? month contracts? billion like of I a Brad, these time, guess I just new of view $X is Or four And or over multiyear up that what are that

It's a whole range.

may you're up and truck be XX a negotiate in. a months we the So a running. sign contact see next supply brokerage, may $X chain, before and logistics up in we day it and contract contract coming In sometimes you –

that depending in immediately on later, we're it in the a getting the over over big layering all a up that which it's every terms new accordions signing business of itself and So is. and or years. always business quarters over plays range quarter effect out because years, unit the But

then mistaken, that. impact be not you reported you earnings? a And be assuming the think guys. I in customer impact you a And if North for could similar then the FX on on revenue quarter? on the America, Boeing to Okay. logistics, would impact can Thank for talk I'm I'm

there the there aerospace? any with is about you So XXX risk can And talk delays? near-term the

awards, I'll think products for question look awards a be they've of keep can website, take and customer It's and Boeing It's but We're customer. long-term a is awards, their for take customer because us of those The but giving account, is their top-XX future, FX. whole could It affected how potentially see hard going Boeing, proud They vendor various and it's We're the being. wouldn't contract you it particular can with develops a the we're to competition. time and lot in affect our not overall watch or the that Boeing particular correct. us great us. have for might up it That issues that Matt to of to results. there's it the enough our get terms a great move material those us. a it's to got they in to needle. it long, at it. company, not going we're money on

your the of on part briefly And question. FX

do not heavy we hedge – business. have contract EBITDA, primarily for We for So European We logistics a do hedge FX. sizable revenue.

most of on most blunt the typically EBITDA FX of So impact the EBITDA. of impact – we of

a been the bit FX could from of into there but EBITDA that extent pressure saw little not to revenue. to flow-through have So you

also add Boeing. I'd on Brandon,

on I think at do numbers. of bum before looking a and think they've safety lot Boeing We press. financial time than in QBRs Sigma customers. Lean got can't and more the spends customer start reviews of quality does quarterly rap even a I the Six we single the a who with in of lots

safety that's higher a company the on Boeing. know don't emphasis I got So than

you. Thank

The question question. proceed from with Thank of line Please the your you. next Morgan is Ravi Shanker with Stanley.

I up question. follow can guys. the morning, backlog, the good on If pipeline Thanks, on

of XQ the in what's Europe. kind in of was a large that of your of Or Can new just us And little pipeline that next that record backlog? that pieces you that a went we now opportunity to of new departure you're of the pursuing the the take more quarters? like hitting think of these ability chunks you do there's think current have a the I macro there? given customer? jump especially more think kind big Is this how out Or larger impressive few maybe given color of on one-off? on couple environment, you into give in pretty business some is like are business that just building a do

There trillion operating addressable in we're is because more $X opportunity market.

less market. X% have that We than of

the advantage on right too. of we on of and able we're look be two services years numbers XX should more what's of we managers, not different if should in and strategic five. great cross-selling the at our United of services. more here using keep invigorated Both ago, all and we've business, and be the regardless job grow five now three the got business at top sales that So of a amazing top they've States, our our two we service one have of force, we we've and done or levels where using SAMs, the or XXX XXX going or externally, our customers that able be our the got those going job our XX have high to our account fact customers an zero do to would Look that market and a leader take take share in lines the we we

SAMs. our develop the great able with and in If managers, and for our few you they've now all account the SAMs, our service tenure the years, familiarity customers. look our built to up at layered We've offerings last strategic over

for about point much customers. the larger particularly So I'd contact resonates That our very with customers, concentration. big optimistic global model single those to customers, you also talk the customer I'm that. about of

a $XXX XX% top much. it it with of of our Previously, just was too mistake It's one at that. was revenue you business too get It's concentration, biggest half if customer then and was Our five letting customer concentration. us. too customers, than the little much made a looked We million much. of about more one

So concentration. it was just much too

be we're forward, much diversified. more Going going to

it seeing medium-sized this will or of line. are large and are about customer the seeing top X% year be with Our more to should something companies customers part more we business of more question be five it your X% of With business customers, revenue. with small no we revenue which than around and depends respect

are customers we have what if booming, look So is those the where big growth that last call years, it in percent right now. to LTL, smaller going and seen the that, several you've seeing up enormous a over our something we shift that's we're in with in and account local our you

will continue smaller accounts. So those more that national business, also in get more but LTL. in We'll there's growth account

On end mostly large you we business, small logistics any other contract XXX customers. think have Fortune all and the our XXX at I customers, don't customers, spectrum, the look they're of Global if

be to going with blue-chip is business going to the – large there continue customers. So

up Got really just on color. helpful it. truck And the follow That's a brokerage business.

a seen the of business change that have months. We last in lot few in

– been change of First, it their up about reports the open pretty live of of there, need when bunch past kind There's the with little on that of brokers. your revenue to and items feel have customer fundamentally space? you've new again need given at been a an bunch approach changes like all? going you of on and a bit In your the keep just there. operation, you to maybe with brokerage a truck spend. Silicon your to tech capabilities other of their Valley if news view arms Again, some any recently pulling race of came transform largest do the digital going of Amazon these I'm transformed for wondering

downloads out We of this had rolled next, ahead getting we now. and last quarter year We the part We're Optimizer, year. not didn't was constantly been basic automation always in years be had business in in in business going of to and your ourselves. all Connect our of Freight business, have from constantly of years like to changing businesses, XPO had about. every ago, what's no our We're us is year XX,XXX Connect freight electronically. apart what's five brokerage, this than question thinking ago. our year the had of first approach technology almost zero just freight We're ahead XX all revolutionary reinventing of this brokerage. technology going and being introduction way the for curve yet. We get We years app curve. TMS, in XPO downloads which had A and has done we brokerage. that And including XX is in freight our of single main the applying a more which And look and we downloads

losing all in better, Goldilocks So market, very to the so it's buy to business, on lot market-clearing to capacity high the competitively, just that we're source right of to the technology a new below low the algorithms advanced it's table, that a to so pricing customers, our we're putting money buy to losing so pass along to savings those price. levels, use to assess but not fair we're just not our get

just I think that to it going is great strides progress the we've continue, mushrooming. made and going in forward great,

have of platform If we for a you about of high retention we've kind got, XX%, is a rate significantly user which look at digital that that product.

now XPO it why just it brokerage, all that's in European market rolled Connect the is last not has winning, freight out rolled of rolling So in we're spoken. we but mile, and transportation. it, into and

freight also anything into mentioned been the brokerage. at We what's look have don't new about Now that. media. don't know than inside any We other entrants you in proprietary

Very good. you. Thank

Thank you.

The next Bank with line the from of Ari Rosa ahead. Please question go of is America.

morning. good Hey

question. So to on Brad, circle this back I wanted LTL

put target one you at in a point a over, reaching said think had three billion time I EBITDA year that think, of horizon. you'd business maybe $X five I out to

see because you EBITDA a kind talk getting use of a you'll which to And lines a of within what ratio to this extent type could sense a at low maybe still to And of that's barrier about other wanted could target? those or be LTL is other of operating think lines LTL? as of margin degradation you towards time at subsidize LTL the may of of other achievable. get result Maybe those that not between cross-selling business then a that that concern and business, to presents extent have moving if areas. their lot business when address maybe who XXs may some look you any lot or question, Just to that, which to they a you the billion these carriers of address that $X

year you to fully we going going in questions. the $X to in throw EBITDA LTL It's great track installed well. Okay, great boatload billion every we EBITDA billion a got great winning think. It's in on EBITDA a of Yes, it's is to It's model. as and will It's functioning. to a next $X cash off growing base. sooner and customer and service of few expanding, LTL functioning hit it's go got keep and achieve that going may are years. up than a metrics,

a not losing In bundling we not do do in terms something of something it back We making pricing, where That's strategy not loss That's though. and money do we're on leading. strategy. do our else.

in. pure Our go each the we a as service is the market but if strategy line together and all on that's cross speaking, at we We go look on fair more discounting direction prices is want fair that. do aspects make profit we bundle customary without in with normal can things we not we And to sell in generally that, price. and

in to Now chain Direct our concept. Last with XPO is we bundling, so Mile speak, and where supply with LTL are

more is network And bundling that's the we of through organization another sharing you'll the increases growth, that of a year. And of than So customers serving LTL line big great retail significant didn't we big XPO customers, blue-chip customers, place to a where backlog that sharing see serving And concept. omni-channels, with rapidly distribution some in And at of volumes. space growth, that national or loss. business really top a integrated full onboard into our Direct is the operations in network with weekly manufacturing. our whom are XPO January that continue space part that's shipment Direct until something this very see LTL start e-com the rest XPO Direct you of

my the And previously Great. being but wanted bit the That's about you are I somewhere by to at touch a And talked four think second three now it target the talked debt-to-EBITDA. then about on you I in to color. capital times we helpful area. roughly three think guys calculation, return, range times on and my just net question, earlier, had structure

is capacity So just and wanted think of is you to opportunity? an back buybacks kind to should further do means continuing M&A comes the roughly further attractive or little look you to lever-up, see a on see, table there's be bit maybe do million think we on continue something remaining through $XXX I maybe have maybe your to you that authorization. that and continue leverage? Is the to

the We'll a during significantly while view service little GDP even little cycle. CapEx and growth, as very do Well, in from model, this we're little GDP source maintenance the easily are growth part bit, instead certainly X% downturn age more capital we're of part we cash know, off up. very, of being than lever flow this we during cycle fleet free seeing could more we during throw growth of a bit, of X% lever the back Because a a business becomes you to of nice in comfortably, than could growing debt downturn. going ordinarily, But able a and expanding in even downturn, growth here, there. CapEx, cut point back We and up a the of we working our trim even use. a a

You have over GDP in growth X% X% Western Europe. to

and investing get grow So, off million still year. neighborhood even $XXX of while are growing CapEx the capital using we're pay cash seeing of going growth the vendors, flow between we're and and and and in when we're business business this paid bridge to the throw the our we working we we to in when gap we're

of apply bring we'd in levels debt to buyback. talked things earlier call, that We'll and debt for we'll So, want to case it which compare that down, a at stock the we our flow cash that look in just be to I one is can about do the used which all that repayments.

different So, now looking We best right on What quarter to committed. making commit at decision makes not committed we want the don't we'll are capital. our return looking the for is every options based a numbers then what rational and to at because keep the we're that.

noticed I call. in one throw that isn't there. just quick Sarah on could one I Brad other the Great.

get Just your thoughts progress finding CFO. CFO a in terms a wanted on or to permanent of

making are We progress.

We've going intrigued handful is candidates We are, that we've search seen been of the well. a with.

gotten any with to line candidate. haven't finish We the CFO

steady because Sarah's the fill sitting she's immediately pair on with of that I you timeline feet because it. not I'm that it's a organization And finance that just XX unless love smoothly. because say very is away very hands the from are someone that I can't truth. me, really we no urgency don't and hands we We know will, them tell to will saying working there's the

So I in And and going and compliance internal the of the and the it. all COO we are is that when timing have can't on SOX us, a treasury very CFO things and books on along but right we'll the in numbers tax time, audit procurement, closing and function person you clean that, with give well. get front permanent

fair Okay, the enough. Thanks for Brad. time

Thank you.

Please Oppenheimer. is your The the proceed Okay. question Scott Schneeberger Thank with from next with of you. line question.

then impressive as perhaps and you as expect strong forward, going logistics? and far EBITDA what really the specifically of EBITDA as Logistics, headwinds could Thanks much. what very growth morning. the by geography address, in Good Thanks. would in in trend there. there some not revenue organic were you just quarter, and

of America looked Scott, growth, North growth. support a The in growth of different market in Matt. Europe and X.X% regional of had said, spoken reflected of did a supply margin supply toughest XX% organic our about I activity. centralized chain. our Hey as revenue Also, We our revenue from is factors. experienced as growth, Supply bit levels We operating profitability I revenue macro in we a markets have it’s some and margins growth. steady organic markets some that the the lot chain that said, largest operating startup on climate said, and implementation, chain impact most France like European had, recent field essentially startup, profit some which elevated year-on-year. as In we've decline I SG&A, new expenses of was prominent development, to due to some business startups, couple

had cash free anticipated. in pretty well, first quarter earlier And you give it flow could The than we I was, or good but usage was covered a that. the question better It for flow factoring. was Thanks was Allison's cash Great. bit on think just a other the but up that quarter. items how feel the of little quarter second impact feel have in first thanks. for occurred year us bit I what know a show in may guidance, maintained full that quarter for may might upcoming you unique it

that relate two think to timing. Sure. about to There's things

QX related than The to reverse CapEx degree a were in cash second we and CapEx some net they'd cash and net taxes first the the in QX. to to expect related to taxes. year. bit those Both lower be thought We'd entering

half had year, I which think ago. I first to would earlier in than first the cash like made half a would thought remarks the comment we my QX of that a year the last number look during year-on-year flow free lot somewhat we suggest lower

for overall consistent first cash the be So, free the unchanged. flow outlook million and to our $XXX $XXX year-on-year would is million half

Okay. Thanks

the Capital your with Please The Todd is question Fowler proceed KeyBanc questions. Markets. with form next

guidance factored a half, to the also to any know EBITDA it have second into Great. to the gains or EBITDA Should but same difficult. the little step morning. is expect got year. for get granular XQ in sure first Thanks. a in you single quarter pretty was down I'm what guidance the not growth with bit. EBITDA we is Good want basis, for low-to-mid And be in on going the you've comp you growth I range full how digit as quarterly more comments then the do

low-to-mid growth we half. up the for EBITDA the year-over-year point, to indicated first was digits for single QX in X%. your QX, On

means singles point color it I mid-singles. want means you So have to singles some that don't low there on but general to fine we put low-to-mid in indication. a low-to-mid give to too

later easier quarter Those right in You're second compare. the about compares get the year.

what And single we'd range, the something expect part your second the in question? low-to-mid quarter. of the in So, digit was second

any full I on asking more he factored your a into guidance had Matt, basis. if year was gains

is as market we meaningful assets have and if report. there's cash guidance we'll of the we flow see share as we'll anything our that where sales mean do free you with part I and for those

recapture increases? contracts some the of are Okay, warehouse as that the where report, which set those workers recover some contractually that wage about Brad follow-up, the do have talk going sustainability and you just pretty about great. of Is in impacts to all those a costs how I profitability ability to can increases, high-single inflation, structured more the for digit how if for And agreements. is you're wage you U.S. guess, talk the you those notable. or or then increases

for by handling average XX% powered an wage more. in warehouse XXXX employees increase and endorse training or something over an devices like courses XX% investing slew website. and, that plug X.X are billion we that new our I about we driving increase you Company. I X.X has we reduced of And for download report, them point, drive over hours in that from to a amazing of consumption thank giving our It water U.S. our by is received everyone learned of received XX% sustainability forklifts a of report. batteries. free that our miles giving fact fact fact accident last The the of X% development statistics; It The our to that distracted So, world by the The our fact by year. reduced last XX%. material that The year. fact strongly employees your XX% that million we're an around

Wages globally. and been your question inflation, seeing we wage have are wage to question up have about significantly. Now No up specifically, about definitely that. been inflation

Here lines. to business throughout growth wage coast we've coast X% United in States, over of the seen

less a States, that that but you Spain still X% seeing not you're you're UK but as X.X%, Of and X%. of growth of to much United course range. compares real X%, In of X% growth. gradually that Europe, half France than kind of or the wage X%. inflation in wage as seeing significant see

get at have a And wage just that, that's places. said attractive is We than the very UK. employer a month. in So, at there specifically And pressure a applications those unemployment to job less numbers of work greater both We a People year. that about the here. applications statement X% XX,XXX approach say because very because you million XPO it. wanting Having a authoritatively Logistics. in I and support we're job can like

We brand marketplace. in the have good a

well. very, We oiled working well have very is that a organization strong and recruiting machine and recruitment talent whole very

of In It's we not usually year-by-year usually for that specifically, increases amounts multi-year employees, terms in years. pay it's with future basis. of money a our contracts the

Okay.

your the that feel comfortable the the ability wage basically or to margins recover you've place? I put with given sustain So mean inflation you benefit the cost, that and in programs

I think so.

to these our customers. They'll the I then productivity. They're inflation on help of we got job seeing most same for part. costs I along logistics. think if it. levels, their we our is transportation inflation the our that. pass reduce always wage They customers stays wage work to prices to understand accept And can at mean, and

investing $XXX over that headcount less that way Really, million by LTL, our smart out at much we by they an costs vision of we're One that objective going specifically the we're logistics LTL. business pass we in And Program Program, $X.X labor $XXX set we now technology, in run the worked rollout ratio use predictive predictive organization too tonnage to able labor AI analytics, us And time them we're is And between a say then the Not these can of know using right a we time labor workers. has to of dock now the savings and right use our next the just the full to smart these, million overtime? to workers mathematical the of doing customers. workers in do allow tools day. as in well project. we and How using in these for in big in Smart solve tools we our that between what amount to be what's order part we the So, questions ratio be analytics and way, what's we the the what's that time. LTL. offset can that to costs have along are technology about much, more looking that right not our that tools? labor Smart in constantly than to and labor likely have amount that so drivers, mentioned way, want? is little, our contract too inefficiencies ways to costs. billion at of using and to right think by understand and helps right to out headcount inflation the but The ideal ramifications in these have us Smart of we in very smart have terms our management business rolling in we take So tools just is waste we I those wage What's wage

Got read but, thing. It. get to but the of In I'll one at point only maybe cliff report, whole I notes fairness, the the

Don't I it from bubble. end. to beginning thought read burst my you

Thanks for time guys. the

Thank you Todd.

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

continue taking of it even in know one year-over-year morning. guys, like as will it that severance some good step this up an but looked I throughout looks out a like had did and it you revenue, there and on quick it sequentially. Brad, a Hey SG&A, percentage year,

bit major other to of year? be that through you little a are and the where And get this that one-times trending components, maybe in except rest So, the do severance excluding more what the color line?

restructuring charge? about asking the You're

the excluding SG&A restructuring. the Yes

you in had or so $XX I think about there. million

at components a going segment sense where be know So excluding depreciation, corporate, and got that. will of you've of the salaries you're the what just if go that are there. to that I will just by things other maybe that helpful, overall be and restructuring and looking to trying some line driving of SG&A the and in business but are get

did up it sense the even just excluding including a of going a step that's because where rather bit So restructuring. –

SG&A. Matt let about I'll talk

that charge restructuring you In of $XX recall of amongst was because part spent million of or We million spent should best – ever in question, generate QX. $XX about best million. $XX million. about had $XX terms a it That we the we of your restructuring savings the annual

that do In on the So customer. in not workforce. of workforce But the and to in restructuring to different question cost some we're as Controlling to was very for of rationalization the right a business, and productivity. million volumes it were just based was inflation as our costs and sizing there did of first due few various incurred going saying, the just the charge in that. you good business large we well. quarter, things ROI on decreased It's other high with our confront And a parts mostly please? I about is offset we want SG&A $XX inflation Matt, to us. priority a take

a things there's bunch Sure, there. in of small are that

that in over and IT the in talk number, if will modeling we productivity the infrastructure investments course time. of number year. of some bit force, it over investment a is that of think we comp talk happy and is of of then sales drive is a some its stock And of it little Some bonus in offline to about it salary, we accrual, have

We'll that. sense. Okay. up take Thanks on you Matt. makes That

is business Or new and follow-up have your it are end-verticals. across perhaps quick other what doing see various and a that on that? on looks an one end Just wins number indication just the that pretty new makes or there markets what potential as awards. on number FX any core volatility at backlog Are that like, fuel move should you labor, good that? on when the look and of around, impact the the any things Does we like

appreciable new on won number. about pipeline impact If that has the no and FX you're the talking business numbers

rate. clean which bidding of that at You we which we have business of And we the indication won, going business view to should have pipeline the pretty That's a good a our of underlying the opportunity expect then new as as perspective, high from view visibility number. converted forward. a that set

So, those numbers. are clean apples to apples-to-apples

Okay, for appreciate thanks details the it.

you. Thank

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

bit industry, me Thank you. dig but don't brokerage Brad, truck if mind. addressed Good little you somewhat deeper, everyone. the you morning a about let can know I I dig if

smaller or industry got for the opportunities love that space here some in it see and business market of of this left just could where are Is willing some there's it you to to industry to a players for years. be create with few handful money just and may five to, Where or as be to next just it look larger going we're the or three Just in M&A how just exit in an essentially the players players? going are you? five to to to - thoughts, share a brokerage just get Is your that left this lose Now some three gains. we've change do going players years? industry larger

Kevin, your brokerage. specifically is about question

Yes.

becoming go pretty technology, thought it the ago. I than ways automated, a like interactions impact electronic and more great. going, interactions more going we rather brokerage of human that was to It's years Okay, more bigger much digital see along interactions.

down, think I down. brokers get of I term going a savings think long long is of to and think necessarily business, term I customers costs way that's the along margins cost to good that out passed come as going to chunk but margins. short don't do term degrade come margins come

with much XX,XXX number still or a be there on Now of of create shrinking having thing I now. lot five, be you will not of lower SG&A beautiful can value it’s that, going to And years can larger think amount a be a a from business brokers of said from still XX and players, lower that. the margins XX,XXX

And We And growth the conscious we I do valuations brokers, it'll very few the electronically carriers. don't think plan price a many bought very on small we're pay the be very, the reason brokers because we integrated brokers brokers I and truck customers in we multiples. truck significant ones. We really question the other when come the market, wanted always part private more are never investments tightly to – a go our have of was larger about number M&A. buy buy market for the know. very to We in who are both often. of is, very, technology with buy very do, plans? they and don't your truck terms mainly in In didn't big truck long-term smaller they larger of And high. brokers.

the in the M&A is is us that's For I because price M&A. purchase critical ROI in

haven't, we reason same Asia. big in M&A the it's in gone So

value rich. when out You have very market, in properties get multiples very, and scarcity the come then the

I know, brokerage don't coming down So multiples soon. I don't anytime see

M&A So, know. us I market returning don't to I immediately see And don't the either.

got to I So, we don't. a because to truck don't we don't telegraph I sight want see, brokerage that in M&A you

just some has some know all of We with Okay. with a helpful. Gotcha. Can the just been us, pricing. significant industry contract of and April? seeing sticking you market under with the and carrier I in talk seem your us along that theme truckload asset-based are of us there's very you're thoughts the to Thank know truckload our And there the give share in spot you've holding but pricing. been just on about about renewals. LTL seen mark kind be share lot trends what thinking and pressure, That's maybe you How through you.

And Well, in pricing the you've biggest trend those shift lot seen and market, in seen volume. have you the of of to down over market seeing a year we've terms volumes terms seen contract over is contract. the the last come spot

weaker a large their who paid firm spot us that every brokers is market time. prices. good market next covering we ironically, lower month contract at most because a the the on spot getting point months a other business rate then based for XX that So of we're and have for at on in the we're in And up

at Net net numbers. freight at revenue revenue points So Look, numbers, up the to year-over-year. brokerage, our it to line. down basis money expand margin, numbers take bottom and margin XXX up itself to words. look in revenue margins more forget it year-over-year, bring X.X% helps the Look net

freight bullish we're ultimately on think We've do going lower We’ve technology new to and So Connect got brokerage. that's in lower. what transportation I I'm efficiently brokerage. freight margins done to we've the purchase XPO become got and more costs. business capacity. be got source will doing

Yes.

Thanks squeezing morning. in had. a day. Okay. me Have for That's this I all good

our back we've and Thank management At session end reached to for turn remarks. time floor you. I'll the of closing question-and-answer this the

think we're progress, curveballs going would would've I months at yet the Well, not but out thank the faster I not say expected is making than joining France for of last is we're ago. woods away. I this, you three from progress the away. year, Brexit XXX% the call. don't had we excellent going end of

thirds customer, their two has gone away. biggest of Our business

after more three solid than largest from on all the fourth up Last even growing XXXX. terms quarter. almost A X.X% year, freight in of Europe billion, accelerating Connect these a quarter. even having free XPO challenges. in of up hit in what quarter year-over-year, this billion, of margins, in new up over sales EBITDA EBITDA up business pipeline bigger XX,XXX global Connect X% first downloads watermark beat actual flow, year-over-year, QX from Mile nice Yield and over the terms on A freight But A significant at to cash zero brokerage time. marketplace of was of fire, look a record beat $X we record So, what are will in in it high triple did bulk EBITDA. that's a up gone XPO X% the customer’s in our Expanding the business. fourth to LTL our win digital losing in new dividends $X.X of revenues. XX% quarter. the on pay

best conferences. a dynamic few given pricing that revenue in out comfortable you in tech you great as that's nice thank for of business. Have segment last tons at our XXXX. healthy all Look about the we’re months, in in it's improve FX, like that, LTL bottom in of growth forward the nearly day. we've since our management even LTL tools in more, the EBITDA organic guidance take a over to what and I'd that that investor logistics for smart attention very And line, to With business done growth we a seeing look the Rolling our is we've for out some of the of LTL the given Our at X.X%, years, you rebound after upcoming OR first tools, reaffirming having quarter XX% business. still bought doubled chief well. labor which XX a is to new your

today's Thank you. conclude will This conference.

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