XPO Logistics (XPO) 4 Aug 232023 Q2 Earnings call transcript

Welcome to the XPO Q2 2023 Earnings Conference Call and Webcast. My name is Sherry, 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. [Operator Instructions] Please note that this conference is being recorded.

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

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

soft Company-wide, report you $X.XX. despite quarter generated of operating of adjusted saw revenue morning, solid a billion, and $X.X This environment. EPS we us a

adjusted this for X.X. on to of expectation. we EBITDA the my in comments are making million, was American our In North four adjusted above morning pillars LTL focus delivered above LTL I plan coming million, want our expectations. with EBITDA the $XXX segment, $XXX also We also progress of

is we We've second to the first our of the the impact at that new quarter for our our our including industry June, XXXX, the claims the it XXXX. of per structure our in provide customer field. the came customer clear leading is month over initiatives shipment levels, damage customer multiple ratio a X.X% to top was Last service and year, The improvement in years. X.X%, team damages service metrics. in for compared elevate end made pillar with incentive service we're of And to service. priority the key is claims that compensation implemented in an which at X.X% In and in seven best seeing

percentage metric this the points year-over-year. XX key time quarter improved we by is performance, Another on in

up we're as higher forward, including the storage begin service momentum service we've quality centers. racks out straps, in keeping new improve acceleration for volumes, Going metrics. to recently key with systems, to More our field, we roll the the new in and continued airbag July tools

existing our for and into what we on capacity protecting freight customers bring we're disruption, network. disciplined industry of period being this During in our

made can we've we do. more in progress a there's a lot While relatively short with time, considerable service

service in focused organization best entire Our providing is on the laser LTL the industry.

pillar long the to second network is term. The our for of our in invest plan

over of several X% to know, the on years. of you As we CapEx average next XX% revenue anticipate allocating

deployed also a fleet. We've business of to capacity years the our that has new down in opportunities in at generates we the years on fleet X.X completed two this new we're produced facility is to to from spin And high of LTL, over which a X,XXX long trailers invested increase our targets added invest X.X meet have at our of driving our this average track we've capital. age tractors Most for brought that the year more on our XXXX nearly Arkansas. our in manufacturing XXXX. return XXX trailers term end Now of We've growth more CapEx offs, to being than year.

to service growth In to density addition, we by in new half Georgia with existing terminals. net and XXXX, our centers new this primarily doors markets aligns early we've and City. by and targeted At open capacity long doors than we Salt expanded can the time. more Lake Norcross, over in of XXX These fluidity expansions help remainder term. our capacity sustain improve at the in our This expect plan network more added plan contemplated point, and add where expanding more the over will

range the the percent recent our term. in if investments market a to high our the our a want our to of capacity. target we're end revenue exceed There pace network near we of evaluating see is for in annual as of the plan dynamics, CapEx Given CapEx to potential accelerate

We is a yields line our had We mix pillar the quarter. fuel The described from in plan our last excluding year-over-year, second we accelerate of headwind for X.X% outlook quarter. still to by growth. third grew yield with as

the this the quality to impact improvement see underlying solid the we're is grow have these and multiple and in to with to digits. quarter underway excellence. going forward. trends renewal mid-single acceleration gains in contract remained operating pricing initiatives pricing Yield service by continue. we our single our We second lever for initiatives And biggest leverage However, started up margin of making we expect

and by variable the utilizing second pillar by levers. two transportation transportation, final to year-over-year XX% drive cost to reduced in costs and LTL continue structure is cost X.X opportunities we our main purchased In quarter, fourth The expense. The purchased efficiencies. are overhead of our here

reduction a contracts revenue XX% in basis a with party conditions. last the XXXX. time, of third quarter linehaul with market by party First, miles costs capitalize transportation to by This the to purchased aligns versus third as to XXX continue reprice favorable reduced we we on carriers plan points same year. At our achieve in percent

control costs operation. another the our quarter. variable that in in We to second field effectively Labor opportunity is did

count headcount year-over-year, down Our our up. hours and labor while were was shipment

to corporate after the our as reducing rationalize off. in we structure continue progress significant overhead cost made also latest spin our We

to cost new set While for This expansion significant becoming our sales company for we're in improve the term local continuously careful includes up investments and more also field growth. to to the efficient, the long tools quality committed we're service further of force.

environment, soft and the our the we to a Turning in uncertainty Despite continue perform business sales operating continued unchanged. Europe, Europe, see pipeline is organic largely our revenue well parts segments environment to in of macro across to a pricing strong with robust.

We're enabling to share. summarizing to value business on the plan. customers. X.X we're we've based has generate on and providing service on make our made price in our the remarks in continuing LTL path continuing gain This capitalize wrap us best by strategic a levels date I'll market with the up progress to on this upturns stronger put my quarter We're to to profitable years of to the in investments our increasing able is to growth yield we're also demand. as network some

XXX cost variable have more And our in long of on transportation, reducing to our adjusted improvement investments on our labor investments high for managing momentum effectively, level. deliver at term costs efficient our ratio becoming least cost rationalizing points returns We and corporate through operating of delivering outlook basis we structure use operational and the track With on by long we're this purchased disciplined in at of track XXXX. business. a growth, remain record

closing, in announced I want to July. CFO on the In comment transition we

Management companies Financial to for where our CFO who seamless I know Revenue of a already Finance finance where career General continued take Head Kyle, for LTL. for you senior his four will confident Chief colleague recently been a he decade, our an most in over for of I'm including outgoing a be been with has team. This success. as business with years, he's he'll former will years, past thank of public Carl a Officer Electric. leader as over our leadership over rejoining the our want Carl, and And XX in worked industry week. also is Kyle transition. in Some next immersed long have a finance our

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

I'm Thank into step morning, everyone. and excited you, the to CFO role. good Mario,

more I’m looking And a execute of momentum ahead to have opportunity a goals. on plan. us our to to as on significant with value clear our even building shareholder X.X the create We forward sight to of continue LTL we line

X% sequentially was down was surcharge the Revenue was billion, Now first X% from our related year-over-year quarter. up the sequentially. segment, the revenue. revenue Almost fuel second In all year-over-year, $X.X turning X% to up of and down and total for X% LTL company decline to quarter. the

salaries, LTL was revenue higher increases. due up year year-over-year, than to in fuel, wages were benefits primarily X% sequentially. down X.X% total a just and X% ago, and wage Excluding

labor our than the quarter. we As Mario fewer did field more lower shipments second costs managing hours noted, job in a the a We and quarter good day, ago. in headcount with per year handled of

XX% reduce which Purchased XX.X% use we insourced miles million, linehaul miles XXX last point year. at $XX was linehaul down same by of basis our the We a year-over-year carriers. quarter or from as was transportation outsourced, third-party expense to more of ended improvement the quarter

in We renegotiated also as the carriers. cycled the paid our significantly in with rates contracts lower contract quarter

million, in network. driven the Depreciation investments quarter or expense LTL XX% in $XX increased by by the our

from primarily the spend and CapEx related Our bringing OEMs manufacturing tractors more in in-house. new was trailers to

detail of add adjusted expenses by some the as the XX% whole. million, $XXX EBITDA, savings following spinoff. with We structure reduced quarter, $XX year-over-year. corporate RXO a in which adjusted cost down generated We EBITDA I'll XX% we our of for corporate achieved Next, to by rationalizing the starting company million

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

was EBITDA down ago. just the segment, at XX% LTL year Looking million, a adjusted $XXX from

cost segment, of were operating wage fuel lower tonnage, by the European was $XX Our EBITDA revenue, million million, the and $X efficiency pension environment. our In inflation, adjusted gains surcharge income. current offset aggregate down year-over-year. Transportation impact Namely, and lower

diluted income restructuring the transaction the another and in $X.XX. operations The we of RXO integration share This costs diluted compares year-over-year spin-off to share of to of and integration operations continuing and related higher continuing per $XX quarter, Company-wide, charges. and decline due earnings of million $XX of income reported segments. the from in costs transaction million year of to partially restructuring per million across charges $X.XX earnings $XX representing million was $XX We had ago. and a income net from

adjusted year CapEx. for step materially this by We down priority categories an top Reinvesting XX% capital costs $X.XX, cash flow for and deployed we year. generated lastly, On of is from of the operations the expect And both end that million remains down which in basis, was in allocation. our ago. $XXX million our continuing business from a $XXX net of the EPS will quarter

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

refinancing In And May, interest loan. maturity secured and expense we our timeline weighted approximately our while completed our upgrades from S&P. debt doubled this year. This received $X years, is average Moody’s the billion of notably, our we six on term to unchanged effectively

have investment-grade two secured our debt. We also ratings now on

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

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

our I’ll review LTL start with for results Kyle. second of quarter the you, Thank segment. the operating

sales stayed we're LTL share drove XX% by During this service gains quarter. X.X% our historical shipment in of for shipment reflection decline direct in count, in the the with of led offset quarter, per levels. channel. X.X% in network. in some increase growth We demand below the weight a local These improvements This a are our making a the

per As to day decline were able the X.X%. a limit tonnage result, in we to

basis, monthly X.X%, year-over-year, per was X% May On was April down tonnage and X%. down day June was down a

network In stack July, was April we each was a basis X.X%. was the tonnage On shipments tonnage Looking up up throughout up X.X%. basis, year-over-year count with X.X% year-over-year, up more improved a through freight X.X%. and On just at shipment even up up moved two-year the second June, X.X%, July per X.X% X.X% up June from month monthly count shipment day, and and sequential tonnage was quarter. May was

increased On versus outperforming basis, an outlook. our on ex-fuel ex-fuel last seasonality. in by yield, basis, line we year, X.X% yield with a increased quarter-over-quarter, sequential at typical Looking

as headwind the resulted last traction a be and to renewal remain growth X% to yield continued has trends with mix underlying are While the yield, up quarter July. in stronger in contract year. our our pricing gain yield quarter to progressed, Also, initiatives solid, continuing versus into

third are we our we term. ahead, for in outlook long the about and as trends yield As the as excited well look we quarter, the see

year-over-year quarter our to We accelerate further QX. expect ex-fuel, third yield in the versus growth,

second was second Turning compared quarter ratio adjusted unfavorable to points a operating with basis is quarter performance, ago. XXX year our margin XX.X%, by which

our As our depreciation investments the there In we the capital impacts margins X.X our headwind been If of increasing as long-term depreciation higher the points from adjusted the as to of This exclude by have these is outperformed part expectations. growth. LTL strategy, to we our ramp. sequential on with a near basis OR investments have a drive quarter as compared term, well basis. adjusted our quarter. basis, On ratio improved XXX fuel, operating year-over-year would in we improved a first

UK mix macro organic and was a quarter financial soft Moving key Europe the business, outperformed new European to customer same as Two backdrop. than our revenue despite and And last our higher down in This European renewals. solid whole. slightly period outpacing by another the a of supported a Central wins inflation. our contract Europe, delivered pricing the of we was with markets, segment year,

becoming want I new making Q&A, highlight further improvements. significant we're improved meaningfully service LTL toward provider. to and are We've our world-class to out drive a go we rolling Before to initiatives progress

are more As accept disciplined strong like into as July, and we're variable managing building did service up. while costs, half of expect network. freight on an yield also strategic investments we ramp to continuing importantly, network. levels growth We're year maintaining And being volume, make and take about our acceleration in to our we carefully the the in in continue the initiatives we second this we

towards our long-term For targets. all our these and momentum trajectory reasons, we're excited about our achieving

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

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

but seems post-Yellow. freight targeting a also in Great. about It July to accelerate. the maybe more Good yet you talk like the Mario, bit morning. ramp were little in discussion, adding on guarded you're

we on are it an think your more adding? you're those over should CapEx moved grow quickly the how growth to volumes? you that then and maybe with see maybe Thanks. it's absorb of realigning freight comments So that time? want we average and now about contrast itself to above-industry as And yield on selective the fast freight you really Is some how

at the the Well, when in so for of first year-on-year thanks was month starting July the our up with up tonnage, it count tonnage, and and Ken, of month the X.X% morning, Good question. July was you look shipment in X.X% July.

that we X.X%, we And go typical we seasonality, higher. seasonality. so you we up July July down side, tonnage when to count on call July, it X% us, July this June X.X%, swing typical for shipment usually see Now same down go thing a went that seasonality X% to but while this saw the it X% usually so to up June also see above compare be to X.X%, X.X%,

of at the of the beginning the beginning shipments the at that the had already month and of we the month. in look till accelerated July, the high-single-digit you seen count we saw range positive and -- of month accelerate beginning versus when the tonnage end month, the shipment Now, of the the from end

numbers obviously Now, how and situation for to shakeout of what is is beyond. point a we'll the it's going this August to these tough rest fluid and do. at tell very see It quarter here the

you out would And the year, give seeing. we we per these X.X capacity have an have the industry, we're trailers here Searcy ability be we're investing of of adds. And of what tractors, produce X,XXX to to been as have looking at expand much capacity. production we and more our year. to And On example, part with the to in accelerate this could capital initially, add our trailers to capacity this doors, the we trailers north side, given trailers. so in And slightly facility the into planned X,XXX produce our just but that for capital plan more business LTL coming year, for X,XXX to

a revenue. X% high-end guide the we'd the above be as the of term at of in or of long expect the of as the And Our near-term high-end XX% the CapEx add more we range percent to is capacity. to range

Wadewitz is Please next UBS. Tom Our from proceed. with question

two if perspective. have little could I us know, been Wanted time. don't morning. how for terms day, good count it shipment what weeks Yes, you're the in like ago, to of like you put at see give seeing would just additional that, maybe like shipments that per something a And in present in, to terms many

well related talked is to those big you on pretty shipments have guess think it get to those? I of strong step-up. percentage you you And where a terms. you terms how that, to handle margins maybe then, something do handle stretch in incremental I in Or

margin I do about So the you. impact, How that the maybe margin kind -- that? not of don't know. impact we Thank on think

Tom. morning, This Ali. Good is

So noted, counts part and At our the of did that early end count month. digit of end basis on the July, of we a roughly positive the in beginning see increase as but single about shipment high month. shipment the see a of the towards we year-over-year July, Mario did tonnage in the versus we saw accelerate

shipments pass So, I'll to somewhere day per that call in Mario. it, increase. X,XXX

the flow-through. terms of In

a bit half. So it, we of the last have and adding we when about think capacity been quite year a over

expanded half. two Last over first than where we've new more up capacity. centers, so-far opened also year added, a service six we trailers We've markets year doors than the the last service more needed we more on more X,XXX we we've added perspective, rolling this year tractors, stock added So and centers. X,XXX in

are. good stock on capacity, physical and we're the about rolling we feeling actual where So

but some at makes capacity we more the headroom more higher additions time, side, adding, shorter-term do And flow-through on purchased time have lean the a so but demand, if where we with into we're selective. do it sense as we're business locations same them, additional of adding and side, additional expect the associated had on impact being in going --these we're be good the flow-through people well. seeing at headcount headcount the The cost same very potentially have on transportation

Our next with Wolfe Group Please question is proceed. from Research. Scott

good I Can to -- maybe just don't intra-month Hey, different wanted morning you way. know thanks, try because we guys. really one seasonality.

so, tracking any or on but X%, what or like shipments year-over-year something last than last better just week the guessing color so. X% in week is year-over-year. and in that or tonnage I'm Just the up the

just then And -- on sense run-rate about the into wanted how to any the Thank you. then we be get to QX. a sort think of OR sequentially QX to would helpful. color That August. in And

is Good Scott. Ali. This morning,

So in shipment we counts terms up tonnage July of just the X%. of year-over-year about count, in as X% tonnage and the month mentioned, up shipment was and over were

towards see growth did month. we thought year-over-year counts the acceleration for the end were tonnage you the more rates for full of up can we than the Given assume the both that shipment month, and

of month of we month, up shipment about high counts single the mentioned, to beginning As the end were the from sequentially. the digits

Now, the I'll when pieces you quarter, through here. you think moving the third about walk

So normal is QX. QX tonnage a sequential a in versus from X% seasonality about decline tonnage perspective,

that tonnage Now, difficult get X%, up low outperformed with September, more that digit tonnage would point down year-over-year saw as on quarter inflect monthly compares progresses. that would a better range but do imply to the slightly year-over-year. than I positive would expect over in July do we clearly QX that. out We to Last basis. tonnage the mid-single

and give early the August expect year-over-year So positive on we'll we would update in in another September. overall, quarter third tonnage

into before and the even through recent industry did continued On the second side, accelerated Yield we strong July. momentum that disruption. yield the quarter growth have

on year-over-year current will yield somewhere XQ basis, X% Our is a forecast range. QX that accelerate ex-fuel call it, growth in that baseline versus year-over-year

basis And QX. then QX points ratio XXX versus operating lastly, an perspective, typical a from is seasonality about deterioration

month to XXX least played by we outperform for seasonality Given OR how at July expect the out, basis would points. of

as to that's that to versus uptick going tonnage Now the how are driven there Mario consider related And some noted, cost in the the of magnitude seasonality, through to that incremental quarter. rest performs outperformance be of volume. by

a increase example, may to purchased into basis. supplemental and For labor need we source also capacity of field as tap short-term transportation on a

basis outperform overall, the would idea better to we'll But seasonality at a expect as on quarter we least and by have points magnitude progresses. the XXX

real your Okay. want the in of like, that does low getting ratio quick that Helpful. timeline And to? Yellow then XXs, leaving, it XX% you change how just, Mario, mind to operating get just to

look beyond at to disruption target, likelihood you the volume Scott, price there us a our When original long-term accelerate that targets. and market would current good growth enable the is

the it Now, how with few it's bit itself term. long kind weeks, what's manifests early last happened the tell for too over a of to

to basis continues always Our at the XXXX. said focus we in lower there's And come. drive we've OR with to very points feel meaningfully that. that's years least still by And why comfortable XXX

Thank you, guys.

you. Thank

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

Yes, good morning. Thank you.

in So, being Mario, given of strategic in kind and on focus network making July kind of the obviously for is priority And the -- back like maintain are of, in uptick just digit a QX? of handling the in environment seen service that long-term, perspective, kind the that versus now? you that, is accelerate that, the the sure how the this an year, pricing half the we’re And volume this from maybe momentum service there opportunity related to to given side? you on mid-single how

see claims the of about when July, think you our June. service, seen year-on-year, in July. about to think it improved relative Thanks, is you I’ll that continue fees priority. per and count great month up handle job, the able give of team metrics to example, additional for start in we Dave the a in up top freight to Well, we’ve service filed top Kyle shipment, to pick and doing month be to Fadi. yield will our with an it priority yet, influx and seeing over turn just go Fadi, we’re And X% our you on-time that service and are service here. being shipment the And continue those pricing. When to

recently mentioned we added last there’s half where One a few I that, is markets doors, to investing the in for our to capacity in and trailers than reasons We've a X.X. we've Norcross, well. Georgia. have We've Now, we Lake X,XXX doors added those since more in been rolling added we as needed have Salt year more X,XXX City more initiated over that. since the been we LTL earlier, than where more program stock, and tractors adding initiated we’ve as

And Also, we including technology, changes, now on we a lot and -- changes service. these launching, tools of are forward, through we how momentum what improving initiatives. part the that comp service people programs driving that as of overall in field well of launching, that's moving lot we are training cultural, implemented trailers, new on-board the we Dave day, including building have around our a we do we're incentive recognition is load now new programs every including new

We adding seeing of are as labor lean well. if where also headcount it where sites more volume, near we're purchased need in labor need need the some side, transportation it. On as the term if we more in we we the more Ali could the we mentioned, into

the And that at in that time. pallets business OR our four on-board or from same focused skids finally, LTL by well we're margin-accretive feet down looking that take customers over on fits for network. on the we to We will A time, our want we very being freight. improve Then picky lot the selective goes of on. we're being it on freight four

priority be we disciplined top service move as very from continues to being here. and product our our we're forward So

Hey, Fadi, it's Kyle.

are We our implemented mentioned, growth on providing July we've a into yield our business given with customers. taking strengthened continues up with mentioned, in But contract initiatives for capacity, Ali there action gained is to of target second as excellent less moved our focus be XPL renewals. quarter traction. we service. the And internal lot GRI as a and near-term transactional So our as Mario and pricing also our

understand, move you more Now actions to these hold our time realize. it's of as when could But out said, going quickly But GRI. annual of take to But very too us expectation early And later take the and you we'll contracts help XX% to to is will range. customers year-over-year it's cost initiatives of these Others the like look that's X% move like will update growth. on. what we with baseline market, freight. that our some above take going to capacity tell

Thank you.

Thank you.

Morgan Shanker is Stanley. proceed. Please question next Our from with Ravi

you Thank path you. just of for obviously growth everyone. on morning, the kind while. have guys been Mario, a Good

So tide out up it investments. over time? XX% makes that you you how natural to high rising that that much of goes would the there of so and backstop to stays the say capacity sense for industry you're everyone. add think or believe, backfills take that But that made But point to is do your this a capacity who stepping those that will do kind was think industry just you that the up mean, just you I of reference market what pricing capacity

the tight Ravi. industry long Thanks, for at a time. has capacity, you look overall fairly it When been

big But now industry at hole there the in these the are but is of service happen of in added take taking when overnight. a a adds available. will us that our And materialize the These capacity -- network. service number more included, Over and few of that's the to XX% out has of that carriers centers capacity, last when across decade, doors amount stayed terms time won't adding centers you about obviously the you flat. capacity, to be look think

a so time to be over add few you see be other longer-term to will able and absorbed gets the we that process us -- then to first think over it's carriers So there. time, that freight and going a get do capacity, but

tell is you shortage look dynamic to there growth. amount head what said, tailwinds at this going demand capacity, pricing always very as early well. and when as yield expect in been capacity still couple you that of And take versus recovery disciplined, potential it's As from going here. into we Kyle to see to When XXXX, impact pricing of and given the we freight the to be. LTL, has that's the out quarters would accelerate of with And the to you come on years

it. what's bit think me Got on from follow-up a gears cycle really that. calling the squeezing geek. going shifting quick don't little guess you I and I tech in kind a of you kind a mind you Obviously, are away of LTL.

you of you of excite Kind you're obviously, out for that of help long-time, LTL the can us disposal? within [technology] has seeing what of just with some side kind two (ph) really everything on kind there things understanding at are about a XPO ML? if but been leveraging kind your or AI, So the new of, one

an Well, Ravi, been of first, that of the the we network much we systems you technology LTL the a more since points about has onset data XX,XXX business, as And move those in day move because our you the and on how business, data in all we LTL think part shipments lot have than the we're very DNA network. of shipments when across proprietary. and are a of company our know, operate

and things the of centers in ML the similar and network, to linehaul loading, our operate run and do example, how how service models we and give how how are delivery how we field, optimize manage routes. to use and to bypass each hub trailers pickup to directed as many examples Similar we we and efficiency. on on technology But labor do like in labor how our a our an we launching just build improve improve we plan in new you technology building how network, we couple we're AI loads thing

bottom better on the of basis, net-net day, results the line. the of And a all lead these end to things at to

but enable give roughly quarter, these build down operation. tools our hours shipment the to these headcount an efficiencies labor was up Just our and us X%, in into count to was X%. example, And you second the

Our Brian Please is next with question from JPMorgan. Ossenbeck proceed.

Hey, good for question. morning. Thanks the taking

there at is What So to implemented Kyle, do that for that can in I you'd wanted how pricing here just little on network, a you that timing back, bit there you new on expect or I touch maybe trying before get and some little of leverage what -- really cost, for, the GRI additional a -- of to you of you the bit whether and it's the of get terms the terms can guess, in come negotiations? rest I'm GRIs new some those contract be by is a the maybe of in a was volumes of already through year. gains is, that offset the additional just mentioned operating lag to reflected think of

Brian. thanks, Yes,

So XPL that business. when transactional about took, the we GRI was you the in think

broker the later expected So in was the that's year. really There an GRI business.

pull-forward So that's slightly. steady-state kind of maybe

our We're this are profitability to there. when contractual at So expect GRIs and think progress half. initiatives too back other some we renewals immediate as you differences those we'll be point time like GRI the continue in yield impact again, many But not we others with as anticipating of wouldn't realize. initiatives, to will drive-up work take through going you and the a about to

Great. Then if I one Mario. just for can quick a ask

Is you feel is the on something out market. the network might that comes there? are be the them. capacity available like as mentioned you Thanks. evaluating Maybe of rather the accelerating some out opportunities? comes sure up internally You do this versus I'm you'd stuff or based what current do market any that to your pick there CapEx

Thanks, we definitely at Brian. to our an for accelerate opportunity us is there capacity If look would growth, it.

execute a plan. which in capacity, expand is continue on to -- pillar been to Now long-term to our has our LTL plan pillar our core X.X a focus

our so especially number markets, where, for mentioned Texas we dozen Florida key so so and so earlier, available, and centers Arizona, in I and Now, have the at projects centers service other area expanding year regardless this capacity we this are of expansion another of two if in we also or far in expanded service a looking becomes continuing far markets.

Now, if facilities well. these market, again, as look them then the go at we'll on definitely

with question is next Stephanie proceed. Our from Jefferies. Please Moore

you touch Thank strategy could on in good which on And of your here? if little the a volume initial morning. focus to bit you do just reaction a dislocation opportunity longer-term talk and kind opportunity little more of the manage and strategy about with volume capturing kind of the little on bit managing a wanted this bit so more the you. I if is kind touch Hi, immediate maybe flow. maybe in market. how a So the to kind of of maybe and pricing that you're

is, existing with Step had that bring and a from we opportunities commitments basis, influx a of number honoring think capacity Thanks, and them. But Stephanie. one about capacity approach. to on freight it case-by-case keep very the when you the Well, at volume, the new customers. we customers are both balanced on existing those we sure incremental from assessing are safeguard making looking to we in we

improve as We whole an our as that a customers. are to using the for opportunity mix

we're that we in that adding. we're feet I And an and skids it customers margin-accretive LTL two type main business we in network. also that looking as perspective are making sure looking earlier, on-boarding at is, from criteria. sure onboarding have well freight an are at fits mentioned it we're four-by-four for One And OR the as that making

our bringing So we're very network. into on the disciplined and being we're shipments to tonnage

in on now, want And Kyle it to move over out, of to the fair the mentioned improvements our our service make as customers XX% customers price capacity we freight are take you we your well also as pricing charging sure product more offering we're in earlier, the does seeing and for with when market, cost value the well. as the we're given time that side, a

price in volume, as onto the looking disciplined we're So add it of in how terms at lever while balanced a way being well. leaning very we

your you where Thanks. and that's and on we today? stand Great. maybe could business European business selling kind And any No, that might switching strategic clear. have gears us changes of an then entirely, give update you very

goal be process our the announced continues long-term term American Thank being stopping December. company. to North we a of that you. the in Well, LTL -- a pure-play month But in near

operating really well. that said, is business this Now

As you Europe. heard macroeconomic from Ali despite and in Kyle, softer the really we're doing environment well

is doing on basis the unchanged year-on-year servicing and a team job there a revenue largely organic customers. is fantastic Our

proceed. from Citi. is question Please with next Chris Our Wetherbee

I and potential I the peers. was to maybe basis. with But the guys for about pricing there closing we you what's Mario, opportunity obviously talked on pricing is back think opportunities. in May, multi-year improvement over yield gap you and for accelerating guess, double-digit talked going a And when the I think

operating sort way as that, of over the couple quarters. maybe ratio? how that you I particularly return couple wanted much of of -- of to it the longer-term to pulled your on pricing dynamic -- relates years of that's to operating next targets, to the is sense of think XX% about being about the much is next get what think what opportunity As of nearer-term sort there a and how a ratio that forward

Yes.

think is a that it, in the happened the So when still situation you fluid market. about this given I disruption very think here

go tough it's it's But we're things to picture weeks you acceleration. the But and the quickly to where of going yield months, and have Chris, term. near So going see on here improvement the a that is over pace overall assume an how evaluate to shaking better would to are out. fair price next in

our And customers. that these offering it, for excited and you progress about also teams fair are When the are improving the product. doing keep service the operating price we on the Dave at the charging incredibly team a it's all on our way we having service I'm on look look that improvements, about all at service

we adding systems, I higher-quality as field airbag As centers. new straps, are tools remarks, in opening in such service mentioned my racks to the

training better And time all will to We would of yield. service, lead these a that. how higher instructions lead the we with to associated are improving of load also trailers over which and

new of we're weeks. pace at look this the it's point to last would it's tough that fairly accelerate, predict the what here given the but like all again, it's going few seeing over disruption Now to

We you August, talked to share or shift July, that here? run exiting in rate the that's the And for largely you come entering there's but over done of one helpful. incremental that room think share go Okay, about point very is clarification. do more to Do from expect coming weeks?

This Good point is our at to know share how this is morning, Chris. much come Ali. going hard to way. It's incremental

disciplined bringing with we're mentioned, Mario being that we're As into the network. very freight the

is priority freight sure to fits Our that margin-accretive. make importantly good most our that network, it's is and

of the in that's And our strategy in terms early as so, it incremental another to update then And trends relates you give August we'll September. volumes.

proceed. next Our Evercore Jon is question from ISI. Chappell with Please

sell piecemeal of and quick an market kind to market Europe. sale off mostly off equipment you Are the still update also that good to as there conducive? morning. or are in improve? And or is when for this on big you sales mean, I the on you I but the Ali, to Thank get there maybe update, on gain when even that there sales. and do is you is a for looking opportunities, holding the process continues desire one ask any

Good morning, Jon.

in sale And So in that American carrier. macro as we said continues not going beyond European that the that, to plan December last that near year, what won't term address further business the in of did fourth in a a we pure-play had the Mario remains we filing. That noted, being selling Having North LTL long well said backdrop. to soft business announce to said, perform our be quarter be term. the potential we're

our as And our as we business growth currency Central was saw revenue constant slightly. revenue well. UK as well organic down business Our both in Europe

did to? what gains So relate the then

Jon, turn-in, process, related so asset normal it's to The a in of equipment the turning out there. gains part are for

normal part So, business. of

Okay. Thanks, Kyle. Thanks, Ali.

you. Thank

next question Jordan is from Please with Goldman Our Alliger Sachs. proceed.

X%, to. When go with thinking that, today. quarter Yeah. you capacity you and I I differently you terminals, is last mean, not right memory might can perspective, feel given given we about Where capacity talked that's maybe from demand volumes Hi, think, network sort going soft a XX% the that if Maybe about given but on spare I conditions. comfortable morning. drawing of Yellow think at Thanks. to where your just curious. good I X%, be the on down all serves,

roughly side. the a from excess capacity on first quarter Well, perspective. XX% at capacity Jordan. Thanks, ended the capacity We physical second

in So that to the call it, seen down, think moderated the mid-teens here doors July And as that in volumes. higher and month centers. we've impact of service

on usually be of Now, want excess range longer-term XX% a to to that in basis, we XX% capacity.

not an as it's LTL linear. Now, you in know, network,

we where at other goal markets doors excess capacity. need we we have already -- these and And additional add markets had then we where are the is capacity. So -- have extra the capacity you in we to these some those are markets where physical

are over where year we based we On the side, feeling the are and rolling now very half. stock good last on a

X,XXX more As we've and added more new X,XXX earlier, mentioned I than than tractors trailers. we've added

So is are the here these for the we And some planning accelerating very us. near in good side investments of rolling stock feeling term. on

side. people. but an the had there news very good we second The people year-on-year markets and potentially also staffed quarter to example, purchased third hiring add to volumes for some you and more on into transportation The labor in basis. is we is also that headroom, of Today, on we some are needed if to looking part the have headcount capacity Jordan, up went we give applicants current that req we are three-folds lean And open markets well. just ripe the as in a the per are

aspects we of add to but for can XX% on So excess And it's these a that free capacity adding to very XX%, the doors market the people, to growth. we're get be leverage on able door longer-term again, good to side, to different that continue are capacity. going

further, a near-term but as excess least, get the XX%, capacity at XX%, stock, at in between just near-term So headcount, et if rolling need probably the that could cetera, I least -- be? the you drawdown

markets And Yes, the obviously, capacity. depend where in we correct. well. add are again, on need these, it near we the to as will some Then at more of will that's term

you. Thank

You bet.

Please Our with next Morgan Barclays. question is from Eric proceed.

morning. to in Obviously, at level. a specifically you've timeframe Thanks best question congrats to back just ratio. maybe higher and for progress and come Kyle. I just short good the wanted good Hey, to a looking to luck my made some here claims Carl pretty taking from service, of

next improvement longer in you the that sight if wondering line bps Have you a number of have going fruit from of here? bps kind pace forward? just bit so, little of improving the at it runway have most the or on similar and any tougher, captured maybe XX thoughts the do than a And XX is takes to you first low-hanging

there. still of the but time get long-term and the a us better Dave number allow take won't improvement team number of X.X% get be there of will And -- to But is claims now will the Our a it a for to and a to the to goal experience having it service us take years and years to going is of over get timeline. on ratio us driving there. product faster him get on linear,

service every quality load load. launched in of we've the that having to and when the improvements center earlier, also across at a half we've Now technology we far, that we and trailer look so done at what every the recognition rating year night tied rate to tied particular that you particular improvements level I a last at and of network enables plans to mentioned incentive for compensation single us the service loading service. the over in -- We that programs

to claims see per way here, and expectation product our I how tools, mentioned centers, that across the years of And our higher-quality again, appointment Again, training X.X%, goal shipment new was racks continue reload our you freight, the help also storage on down to over the and is come. service as service. how launching seven be keep operating in we June new our But to we procedures best system all loading for to further is service moving the straps. for the earlier, airbag all improve improvement field, years are unload forward, won't dockworkers from and linear to are with improving it including improving. but to We're that

Thanks the color. for

with Please proceed. is Chan next Our from Stifel. Bruce question

you relative in on where Any your stand maybe to pressure, new done rest morning, And maybe see just back you probably Mario, through you've and about union. annual the recently work just on wage contracts comments side. your engagement but about of talk achievement comments employee then peers to could and whether that given people, industry? anticipate of climate, if perhaps to had increase. more a any the decertify you have some the voted wage That's come of everyone. the come to to the given some cost you that had the Thanks current good that an of even you the terminal wanted

Bruce. Thanks,

measuring -- in is numbers Conway company our the So employees engagement satisfaction of organization. the and frontline here did engagement recently, the lot latest to started a here and that it those for all that, another dockworkers of survey satisfaction was spending in across we very service And field. we've July of record for been survey quarterly this is in is a And time back us. achieve organization the record is in XXXX. terms of able a had And employee our our month employee entire topic way drivers latest and engagement employee important of since

I to to visited Just service you idea, XX me an personally, year, XX give centers. last for

we're our getting and and spending feedback from out to employees the improve two field entire per this field our one we run with east -- been all us where now in for – is leadership doing every and them. west with is So has three how who he Dave can applies Same in for week with the -- what the And thing the folks divisions. week. team time months, single we

be them. the that it we -- And as listen to work, and see of be And it action, we take could some of service around you of compensation, workforce some a when customers growing be wants company around manage of be great and could providing offer part some well. that the could for these you your company how tools

So lot to see we're employee record doing here things of we these and engagement. are that continue

year, those given increases April. typically in -- also we've beginning the April the we do we field wage the have folks our taken increases, of wage in X on On their and of this all

Our Scott Please Company. proceed. next Schneeberger and question from with is Oppenheimer

where into back are cycle? general Thanks. half what you are happens could a peak environment season, far the are post-Yellow, much. we what but focus seeing, in just you the to on of see Kyle. just heading and lot on how back-to-school the environment the your about morning of Thank congrats, feeling the holiday, Obviously, you you as markets? end there across you what just as Good out demand Mario, very speak the

perspective and the the trough of May I'll the and half the seeing in year first pre-disruption Thank weaker of what of the got in improved post-disruption. with a again start and April modestly volumes March first and the what in and the from demand freight month half June. of saw in month we we're we first you. year then saw Well, then

July ahead count seen our of tonnage the flip half of disruption, the Now, freight month, demand shipment and in first we to had a signaling the improved positive, environment. slightly

mixed what if Now, industrial for we customers date, an you seeing look it index has from at customers, which the And nine hearing did we're companies and months, we're below our that, feedback. is of the break is modestly been trailing down the improve ISM, past of is for month in July June. that to it are manufacturing, XX our versus there there two-thirds

industrial well, demand softer in Some are back economy portions doing of seeing half. the are others the

strongly are very, here. very industrials doing the automotive and So it's fairly Namely, mixed.

On inventory up the they to Most levels. and holiday that see in have a continue through also inventory we season half side, decent of in elevated expect do do demand improvements here. back expect worked retail customers and our retail stronger managing coming the

we'll freight have does markets quarters. next from it forward couple the perspective, here look the So like over things demand how but troughed a of see roll

overall is charges that help know of back quickly, you this half you're the moving, could now. Thanks. digits right long-term of curious, but the then that just Appreciate yours. revenue think into don't going I progress it? see on much Where you a initiative, jumpstart the to situation how and double that where and really was Yellow just about a year is? delve you're report I an of low initiative Thanks. do accessorial that's too overview. until And I

the for Thanks Sure. question.

we're also We're and certainly doing, updates we enable recently, when sure will pricing think tariffs, make about our get our to disruption we're and we're more for accessorials. services process you we So many we've in just paid ensure think place When not fairly consistently about us pricing to location-based improvements one you most drive the initiatives some consistently to actions of provide. accessorials, technology to excited it's about making quickly. this capturing what put

certain and We the help opportunities back also all services around accelerate these really things now, don't half. services in really value-added we us have see can

would for conference like question-and-answer Mr. We have over back Harik comments. session. our reached the end the closing I turn to of to

massive One a network thanks our in the questions. and by This and have great lot this and is quarter our investments our We all a making to focused joining for to look great the more we in you again call company continuing for provide in November. us into momentum. remain and yield Thanks, environment Thank have all. of month and you, driving on further seeing we potential capacity. industry in moving unlocking to dynamic operator, freight today all We're very we're your our customers. service higher We're forward in in growth. guys we

conference. today's concludes This

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