Q4 2021 XPO Logistics Inc Earnings Call

Speaker 1: Welcome to the XPO Logistics fourth quarter 2021 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 listen only mode.

Welcome to the extra logistics fourth quarter 2021 earnings conference call and webcast my.

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 if.

Speaker 1: If you have a question, please dial star one on your telephone keypad. Please note this conference is being recorded.

If you have a question please dial star one on your telephone keypad.

Please note this conference is being recorded.

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

Speaker 1: Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements and the use of non-GAAP financial measures.

Speaker 1: During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which by their nature involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those projected in the forward-looking statement.

During this call the company will be making certain forward looking statements within the meaning of applicable securities laws, which by their nature involve a number of risks uncertainties and other factors that could cause actual results to differ materially from those projected in the forward looking statements.

Speaker 1: A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release.

A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release.

Speaker 1: The forward looking statements in the company's earnings release were made on this call are made only as of today and the company has no obligation to update any of these forward looking statements except to the extent.

The forward looking statements in the company's earnings release.

Made on this call are made only as of today and the company has no obligation to update any of these forward looking statements except to the extent required by law.

Speaker 1: During this call, the company also may refer to certain non-GAAP financial measures as defined under applicable SEC rule.

During this call. The company also may refer to certain non-GAAP financial measures as defined under applicable SEC rules.

Speaker 1: reconciliation of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the related financial tables are on its website.

A reconciliation of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the related financial tables on its web site.

Speaker 1: find a copy of the company's earnings release which contains additional important information regarding forward-looking statements and non-GAAP financial measures in the investor section on the company's website. I will now turn the call over to Brad Jacobs. Mr. Jacobs, you may now begin.

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

I will now turn the call over to Brad Jacobs, Mr. Jacobs you may now begin.

Good morning, everybody, thanks for joining our call.

Speaker 2: With me today in Greenwich are Robbie Tulsi and our CFO , Matt Fassler, our Chief Strategy Officer.

With me today in Greenwich are Ravi till CNR, CFO , Matt Fassler, our chief strategy Officer.

Speaker 2: Mario Harek, our CIO and Acting President of LTL, and Drew Wilkerson, President of North American Transportation.

Mario <unk>, our CIO and acting president of LCL, and drew Wilkerson President of North American transportation.

Speaker 2: Yesterday we reported a fourth quarter that delivered a number of record results. The company has a

Yesterday, we reported a fourth quarter that delivered a number of record results the.

The company as a whole performed well.

Speaker 2: grew revenue by 14% year over year to $3.4 billion, which was the highest revenue of any quarter in our history.

We grew revenue by 14% year over year to $3 $4 billion, which was the highest revenue of any quarter in our history.

Speaker 2: generated adjusted EBITDA that was a solid D versus our fourth quarter guidance and we'd be on full year EBITDA as well

We generated adjusted EBITDA, there was a solid beat versus our fourth quarter guidance and we beat on full year EBITDA as well.

Speaker 2: We also reported the highest adjusted diluted EPS of any quarter in our history, again significantly higher than expectations.

We also reported the highest adjusted diluted EPS of any quarter in our history again significantly higher than expectations.

Our growth was led by our two largest businesses North American LCL in truck brokerage.

Speaker 2: Our growth was led by our two largest businesses, North American LTL and Truck Brokers.

Speaker 2: In LCL, we delivered record fourth quarter revenue and record year-over-year growth in yield.

And LCL, we delivered record fourth quarter revenue and record year over year growth in yield.

Speaker 2: Our adjusted operating ratio in the quarter degraded year over year, which was expected, given some third quarter challenges within our network.

Our adjusted operating ratio in the quarter degraded year over year, which was expected given some third quarter challenges within our network.

Speaker 2: But the negative trend bottomed out in October , when we launched our LTL action plan with Mario at the helm.

But the negative trend bottomed out in October when we launched our L. T O action plan with Mario at the helm.

Speaker 2: Our plan had an immediate impact on our year-over-year performance.

Our plan had an immediate impact on our year over year performance.

Speaker 2: We reduced the erosion in our operating ratio and improved our volume trend as the quarter progressed.

We reduced the erosion in our operating ratio and improved our volume trends as the quarter progressed.

Speaker 2: Importantly, we expect our year-over-year adjusted operating ratio, x real estate, to inflect positive mid-year and generate over 100 basis points of improvement in 2022.

Importantly, we expect our year over year adjusted operating ratio ex real estate to inflect positive mid year and generate over 100 basis points of improvement in 2022.

Speaker 2: In truck brokerage, we had another quarter of outstanding growth, with load count increasing to record levels for the third consecutive quarter.

In truck brokerage, we had another quarter of outstanding growth with low count increasing to record levels for the third consecutive quarter.

Speaker 2: The biggest tailwind driving our volume is XPO Connect, our digital brokerage platform.

The biggest tailwind driving our volume is X P O connect our digital brokerage platform.

Speaker 2: Shipper and carrier adoption of Connect is growing extremely fast.

Shipper and carrier adoption of connect is growing extremely fast.

Speaker 2: In December , we exceeded 600,000 cumulative driver downloads of the platform's mobile app, which is good news for customers because they want digital access to as many carriers as possible.

In December we exceeded 600000 cumulative driver downloads of the platforms mobile App, which is good news for customers because they want digital access to as many carriers as possible.

Speaker 2: In the fourth quarter, weekly carrier usage on XPO Connect was up year over year by 74 percent.

In the fourth quarter weekly carrier usage on X deal connect was up year over year by 74%.

Speaker 2: So in sum, a good fourth quarter with great traction going into 2022.

So it's a good fourth quarter with great traction going into 2022.

Speaker 2: The full year guidance we issued yesterday reflects our expectation of strong earnings growth this year.

Our full year guidance, we issued yesterday reflects our expectation of strong earnings growth this year.

Speaker 2: The midpoint of our guidance range for 2022, adjusted EBITDA reflects 11% growth versus 2021.

The midpoint of our guidance range for 2022, adjusted EBITDA reflects 11% growth versus 2021.

Speaker 2: and the midpoint for adjusted diluted EPS reflects 22% growth.

And the midpoint for adjusted diluted EPS reflects 22% growth.

Our L. T. L action plan is moving our adjusted operating ratio in the right direction.

Speaker 2: Our LTL Action Plan is moving our adjusted operating ratio in the right direction.

Speaker 2: You still expect to generate at least $1 billion of adjusted EBITDA in LTL this year.

We still expect to generate at least $1 billion of adjusted EBITDA in L. T. L. This year.

Speaker 2: And our truck brokerage revenue is growing at a pace that's three times faster than industry growth.

And our truck brokerage revenue is growing at a pace, that's three times faster than the industry growth.

Speaker 2: Finally, we remain committed to deleveraging toward a net leverage ratio of one to two times by the first half of next year.

Finally, we remain committed to deleveraging toward a net leverage ratio of one to two times by the first half of next year.

Speaker 2: This will be a key milestone in achieving an investment grade rating.

This will be a key milestone in achieving an investment grade rating.

Speaker 2: We're intent on being best in class in every aspect of our business, and we're confident of continuing to deliver superior shareholder value.

We're intent on being best in class in every aspect of our business and we're confident of continuing to deliver superior shareholder value.

Speaker 2: Now I'll hand it over to Robbie to discuss our results and our balance sheets. Robbie?

Now I'll hand, it over to Ravi to discuss our results and our balance sheet Robby.

Speaker 3: Thank you Brad and good morning everyone. Today I will discuss our fourth quarter and fully a results our balance sheet and liquidity and our outlook for 2022.

Thank you Brad and good morning, everyone today, I would get stuff out fourth quarter and full year results, our balance sheet and liquidity and our outlook for 2022.

Speaker 3: I'll start with the fourth quarter where we delivered strong year-over-year growth in revenue, adjusted EBITDA and adjusted diluted EPS.

I'll start with the fourth quarter.

We delivered strong year over year growth in revenue.

EBITDA and adjusted diluted EPS.

Speaker 3: Revenue in the quarter was a record $3.4 billion, up 14% year over year.

Revenue in the quarter was a record $3 $4 billion up 14% year over year.

Speaker 3: the net impact of fuel prices and FX contributed three points to this growth. Organic revenue growth for the poor...

The net impact of fuel prices and FX contributed three points of this growth.

Organic revenue growth for the quarter was 11%.

Speaker 3: We grew adjusted EBITDA by 12% to a Q4 record of $323 million.

We grew adjusted EBITDA by 12% with Q4 record of $323 million. This reflects strong growth in <unk>.

Speaker 3: This reflects strong growth and execution in our growth rate and other services segments.

We will send you know brokerage and other services segment.

Speaker 3: Looking at a two-year stack, adjusted EBITDA was up 25% on a performance base.

Looking at the two year stack adjusted EBITDA was up 25% on a pro forma basis.

Speaker 3: Our adjusted earnings per day to share for the quarter was $1.34, which was up from 53 cents from a year ago, an increase of over 150%.

Our adjusted earnings per diluted share for the quarter was one dollar and 34 fence, which was up from 53 cents from a year ago, an increase of over 150%.

Speaker 3: This increase was primarily driven by higher adjusted de-bita, lower interest expense, and lower tax rate.

This increase was primarily driven by higher adjusted EBITDA lower interest expense and a lower tax rate.

Speaker 3: We generated $98 million of cash flow from continuing operations spent $101 million on gross capex and received $60 million of proceeds from asset sales.

We generated $98 million of cash flow from continuing operations and spent $101 million on growth Capex.

Received $60 million of proceeds from asset sales.

Speaker 3: As a result, our free cash flow was $57 million, which was at the high end of our expectation.

As a result.

Free cash flow was $57 million.

Was at the high end of our expectations.

Speaker 3: For the full year 2021, we delivered revenue of $12.8 billion a year over year increase of 26%. I just a debita for the year was $1.24 billion reflecting growth of 46%.

For the full year 2021, we delivered revenue of $12 $8 billion, a year over year increase of 26% I.

Adjusted EBITDA for the year was one way to $4 billion, reflecting growth of 46%.

Speaker 3: We more than quadrupled our adjusted earnings per-directed share from continuing operations to $4.30 compared to $1.01 from a year ago.

We more than quadrupled.

Earnings per diluted share from continuing operations grew $4 30, compared to $1 one thing from a year ago.

Speaker 3: We generated free cash flow of $425 million and increase of over $200 million year over year, representing a free cash conversion rate on net income of 97%.

We generated free cash flow of $475 million, an increase of over $100 million year over year.

Spending our free cash conversion rate on net income of 97%.

Speaker 3: Our gas balance at December 31st was $260 million.

Our cash balance at December 30, <unk> was $260 million.

Speaker 3: This cash, combined with available debt capacity under committed borrowing facilities, gave us $1.3 billion of liquidity at year end. We had no borrowings outstanding.

This cash combined with available debt capacity under our committed borrowing facilities gave us $1 $3 billion of liquidity at year that.

We had no borrowings outstanding under our ABL facility.

Speaker 3: maintaining strong liquidity remains a top priority for us.

Maintaining strong liquidity remains a top priority for us.

Speaker 3: We reduce our growth debt by approximately $3 billion in the year. And we have no significant debt maturity until 2025.

We reduced our gross debt by approximately $3 billion in the year and we have no significant debt maturities until 2025.

Speaker 3: Our 2021 net leverage at year end was 2.7 times adjusted EBITDA.

Our 221 net leverage at year end was two seven times adjusted EBITDA.

Speaker 3: Our plan is to continue to deliver our balance sheet through free cash flow generation and adjust it to be double.

Our plan is to continue to Delever, our balance sheet through free cash flow generation and adjusted EBITDA growth.

Speaker 3: Our progress on deleveraging is important in the context of our commitment to achieve an investment-grade rating. Turning to the guidance we...

Chris on deleveraging is important in the context of our commitment to achieve an investment grade rating.

Turning to the guidance, we issued yesterday after market close.

Speaker 3: Our full year guidance for adjusted EBITDA is 1.36 billion to 1.4 billion dollars.

Our full year guidance for adjusted EBITDA is 126 billion to $1 $4 billion.

Speaker 3: This guy assumes gained from real estate sales of approximately $50 million, but is 62 million in 2021.

This guidance assumes gain from real estate sales of approximately $50 million versus $62 million in 2021.

Speaker 3: Our current plan is to execute real estate sales in the second half of the year and this sales will primarily consist of excess land that does not fit our long term needs.

Our current plan is to execute real estate sales in the second half of the year and this is will primarily consist of excess land that does not fit our long term needs.

Speaker 3: On the cash flow front, our outlook is for a full year free cash flow of 400 million to 450 million dollars.

On the Gaslog front.

Outlook for full year free cash flow of 400 million to $450 million.

Speaker 3: We expect full year growth capex to be 500 million to $550 million and net capex to be 425 to 425 million dollars.

We expect full year gross capex to be 500 million to $550 million and net capex to be $425 million to $475 million.

Speaker 3: This significant year over year increase in growth cap ex reflects our plan to make growth investments in our LPL business.

This significant year over year increase in gross Capex.

Our plan to make growth investments in our NGL business.

Speaker 3: Our full year guidance for depreciation and abotization expense is approximately $400 million and we expect interest expense of $170 million to $180 million.

Our full year guidance for depreciation and amortization expense is approximately $400 million and we expect interest expense of $170 million $280 million.

Speaker 3: We expect our fully-attached rate to be 24% to 25%.

We expect our full year tax rate was 24% 25%.

Our average diluted common share count for the year is expected to be approximately $117 million.

Speaker 3: Our average diluted common share count for the year is expected to be approximately 117 million.

Speaker 3: And our outlook for fully adjusted EPS is $5 to $5.45.

And our outlook for full year, adjusted EPS is $5 to $5 and 45 <unk> for.

Speaker 3: For the first quarter, we expect our adjusted EBITDA to be 280 million to 285 million dollars.

For the first quarter, we expect our adjusted EBITDA with 280 million to $285 million.

Speaker 3: This guidance assumes no real estate sales in the quarter versus $17 million in the same period a year ago.

This guidance assumes no DSD sales in the quarter versus $17 million in the same period a year ago.

In conclusion, we are continuing to execute on our strategy of driving shareholder value as a pure play transportation company and we are excited about our prospects for 2022, I will now turn things over to Matt.

Speaker 3: In conclusion, we are continuing to execute on a strategy of driving shareholder value as a pure plate transportation company and we are excited about our prospects for 2022. I will now turn things over to Matt.

Speaker 2: Thanks, Ravi. All review our fourth quarter operating results, starting with our North American LTL.

Thanks, Ravi I'll review, our fourth quarter operating results, starting with our North American <unk> segment, we grew revenue by 10% year over year to a fourth quarter record of $1 billion. Excluding fuel we grew revenue by 4% year over year.

Speaker 2: We grew revenue by 10% year over year to a fourth quarter record of $1 billion. Excluding fuel, we grew revenue by 4% year over.

Speaker 2: We had a 4.9% year over year decline in townage per day. Reflecting the impact of the short-term embargoes we utilized to optimize network flow.

We had a four 9% year over year decline in tonnage per day.

Reflecting the impact of the short term embargoes, we utilized to optimize network flow.

Speaker 2: When the embargoes were in place in October and November , our tonnage trends lagged typical seasonality. Then with the embargoes lifted, we outperformed typical seasonality in December and January , despite headwinds from Omicron and weather.

When the embargoes were in place in October and November our tonnage trends lagged typical seasonality than with the embargo is lifted we outperformed typical seasonality in December and January despite headwinds from a crime and weather.

Speaker 2: During the quarter, we saw evidence of industrial verticals regaining momentum. Given the amount of industrial and our LTL mix, this boasts well for demand for our services in 2022.

During the quarter, we saw evidence of industrial verticals regaining momentum given the amount of industrial and our <unk> mix. This bodes well for demand for our services in 2022.

Speaker 2: yields excluding fuel, out-perform typical seasonality in each month of the quarter. And for the quarter as a whole year over year, yields increased 11%. This was nearly twice our previous record increase set in the third quarter.

Yield excluding fuel outperformed typical seasonality in each month of the quarter.

And for the quarter as a whole year over year yield increased 11%. This was nearly twice our previous record increase set in the third quarter.

Speaker 2: Revenue for shipment for the quarter, excluding fuel, also grew a lep-

Revenue per shipment for the quarter, excluding fuel also grew 11%.

Speaker 2: The LTL pricing environment remains firm, and we're driving yield with our own company-specific pricing.

The <unk> pricing environment remains firm and we're driving yield with our own company specific pricing initiatives.

Speaker 2: Our LTL adjusted operating ratio for the quarter was 84%. Excluding real estate gains, our adjusted operating ratio was 87.5.

<unk> adjusted operating ratio for the quarter was 84% excluding real estate gains our adjusted operating ratio was 87, 5%, which was 300 basis points higher than the fourth quarter a year ago. The.

Speaker 2: which was 300 basis points higher than the fourth quarter a year ago. The biggest drivers of the OR degradation, where the embargoes I mentioned earlier, which impacted volume and the higher cost of purchase transportation.

The biggest drivers of EUR degradation, where the embargoes, I mentioned earlier, which impacted volume and the higher cost of purchase transportation.

Speaker 2: We expect to realize a favorable trend in our operating ratio as our network efficiency continues to improve and we bring new equipment and drivers into our organization.

We expect to realize a favorable trend in our operating ratio as our network efficiency continues to improve and we bring new equipment and drivers into our organization.

Speaker 2: In our brokerage and other services segment, we grew revenue by 17% to a record $2.4 billion and increased the just TV bidat by 29% to a record $161 million. A just TV bidat margin for the segment expanded by 70 basis.

In our brokerage and other services segment, we grew revenue by 17% to a record $2 $4 billion and increased adjusted EBITDA by 29% to a record $161 million adjusted EBITDA margin for the segment expanded by 70 basis points to six 7%.

Speaker 2: to 6.7% from 6% the priority.

<unk> from 6% the prior year.

Speaker 2: The largest revenue and profit driver in the segment is our North American truck brokerage business, which had an outstanding fourth quarter. We increased our brokerage loads per day by 22% versus a year ago, or 50% on a two year basis.

The largest revenue and profit driver in this segment is our north American truck brokerage business, which had an outstanding fourth quarter.

We increased our brokerage loads per day by 22% versus a year ago or 50% on a two year basis fourth quarter revenue rose, 36% year over year or 136% on a two year basis.

Speaker 2: Fourth quarter revenue rose 36% year over year, or 136% on a two year.

Speaker 2: Margin dollars rose 10% against the tough comp and rose 86% on a two-year basis. On a sequential basis, Margin dollars in the fourth quarter were 29% higher than in Q3.

Margin dollars rose, 10% against the tough comp and rose 86% on a two year basis on a sequential basis margin dollars in the fourth quarter were 29% higher than in Q3.

Speaker 2: Our truck brokerage growth reflects a strong market, our unique technology proposition, and our close ties with key enterprise customers. Drew will speak more about these drivers in a minute. Finally,

Our truck brokerage growth reflects a strong market our unique technology proposition and our close ties with key enterprise customers drew will speak more about these drivers in a minute.

Finally, I want to share a couple of notable awards.

Speaker 2: XPO was named one of America's best employers for 2022 by Forbes. And one of America's most responsible companies by news.

<unk> was named one of America's Best employers for 2022 by Forbes and one of America's most responsible companies by Newsweek. We were also a best place to work on the disability equality index and a top company for women to work for in transportation by the women in trucking Association now.

Speaker 2: We were also a best place to work on the disability equality index and a top company for women to work for in transportation by the Women in Trucking Association. Now, I'll turn it over to Mario for his comments on North American outlets.

Now I'll turn it over to Mario for his comments on North American <unk>.

Speaker 4: Thanks, Math, and good morning, everyone. LDL has made a lot of progress since our third quarter calls.

Thanks, Matt and good morning, everyone.

<unk> has made a lot of progress since our third quarter call.

Speaker 4: I'll start with the five points of our action plan. We begin executing in October .

I'll start with the five points of our action plan, we began executing in October .

Speaker 4: One major objective was to achieve better network flow, and our plan had an immediate impact.

One major objective was to achieve better network flow and our plan has an immediate impact.

Speaker 4: We started with selective strategic embargoes to rebalance the network. Final November , we had cleared out the tour.

We started with selective strategic embargoes to rebalance the network by.

By November we had closed out the third quarter backlog.

Speaker 4: This improved our on-time transit sharply from the end of the third quarter to the end of the fourth quarter. Along with other service metrics.

This improved our online trends that shortly from the end of the third quarter to the end of the fourth quarter.

Along with other service metrics.

Speaker 4: Second, it's pricing at yield. The record 11% year over year increase in yield x fuel were reported as the results of multiple initiatives we have underway.

Second is pricing and yield.

The record 11% year over year increase in yield ex fuel we reported the results of multiple initiatives we have underway.

Speaker 4: Before our 5.9% generate increased forward from the typical January timing to early November .

Before our five 9% general rate increase forward from the typical January timing to early November .

Speaker 4: We're also making sure we get paid for services that give customers added value, like equipment and attention, and paid that requires special handling. And then,

But also making sure we get paid for services that give customers added value like equipment in detention and freight that require special handling.

And then our pricing technology. This is our single biggest opportunity to drive yield.

Speaker 4: This is our single biggest opportunity to drive heels. We've developed proprietary pricing tools that make sure we charge a fair price. The third part of our plan is our in-house driver schools.

We've developed proprietary pricing tools that make should we charge a fair price.

The third part of our plan, it's our in house driver schools. This is a huge advantage in the driver shortage.

Speaker 4: We graduated approximately 900 new drivers last year, which is more than twice the number of graduates we had in 2019.

We graduated approximately 900, new drivers last year, which was more than twice the number of graduates we had in 2019.

Speaker 4: I would go to double that number again this year to about 1800 drivers.

Our goal is to double that number again this year to about 1800 drivers.

Speaker 4: Forth on the equipment side, we added a second production line to our trader manufacturing facility in Arkansas. We'd interact with doubles our trader output this year.

Fourth on the equipment side, we added a second production line our trailer manufacturing facility in Arkansas, we are on track to double our trailer output this year.

Speaker 4: The fifth part of our plan has to do with expanding our footprint to drive growth and network addition.

Is this part of our plan has to do with expanding our footprint to drive growth and network efficiencies.

Speaker 4: We plan to add 900 net new doors to our network by year and 2023. This equates to about 6% increase in doors from the start of the plan.

We plan to add 900, net new doors, our network by year end 2023.

Equates to about 6% increase in doors from the start of the plan.

Speaker 4: So far, we've opened Turmouth in Chicago, Heizen, October , and in Wisconsin and Arkansas in January . But also opening 40-year-old fleet maintenance.

So far we've opened sawmills in Chicago Heights in October and in Wisconsin in Arkansas in January .

But also opening 40, you fleet maintenance shops this quarter.

Now I want to take a deeper dive into our <unk> technology and the new developments, we are rolling out.

Speaker 4: Now I want to take a deeper dive into our LTS technology and the new developments we're rolling out.

Speaker 4: The pricing tools I mentioned are part of the new pricing platform we just deployed.

The pricing tools I mentioned are part of the new pricing platform, we just deployed.

Speaker 4: This platform does the heavy lifting and analyzing shipping data. So our LTF pricing experts can be much more productive with contact negotiation.

This platform that's the heavy lifting in analyzing shipping detail solid lts pricing experts can be much more productive with contract negotiations.

Speaker 4: It tools have reduced manual data processing by as much as 80%.

These tools have reduced manual data processing by as much as 80%.

And we now have the ability to mind historical RFP detail as a seamless lead generation tool for sales.

Speaker 4: And we now have the ability to mine historical RST data as a seamless lead generation tool for sales. We'll continue to enhance this.

We will continue to enhance this platform going forward.

Speaker 4: We've also made inroads in dynamic pricing, which allows us to update customer rates on certain loads in real time to incentivize them to give the business to us.

We've also made inroads in dynamic pricing, which allows us to update customer rates on certain loads in real time to incentivize them to give the business to us.

Speaker 4: And we launch an automated process that onboards customers immediately to dynamic pricing, which shortens the contact negotiations.

And we launched an automated process that onboard customers immediately to dynamic pricing, which shortens the contract negotiation cycle.

Speaker 4: The other areas right for tech innovation in LTL are our line haul and dock operations.

The other area is ripe for tech innovation in MTL, our line haul and dock operations.

Speaker 4: Between now and mid-year, we'll be launching new tools to help further optimize how we load our trailer.

We know in mid year, we'll be launching new tools to help further optimize how we load our trailers.

Speaker 4: These tools are designed to increase the red thrips, which utilize our trough and drivers more efficiently, and then improve dog productivity.

These tools are designed to increase the rest rips, which utilized our trucks and drivers more efficiently and they'll improve dock productivity.

Speaker 4: In other recent tech launches, we completed the rollout of new planning software on our pickup and delivery platform. And we'll complete a rollout of new dispatch to...

In other recent tech launches, we completed the rollout of new planning software on our pickup and delivery platform and will compete at all out of new dispatch tools by mid year.

Speaker 4: And we'll start deploying new digital tools for customer self-service and new visibility into multi-palored shipment.

And we will start deploying new digital tools for customer self service and your visibility into multi pallet shipments.

Speaker 4: We're continuing to make it easy for our customers to do business with XBO.

We're continuing to make it easy for our customers to do business with ex vivo.

Speaker 4: So as you can see, we have a lot happening on the technology front and a lot more of opportunity going forward as well as the tangible goals we set for 2020.

So as you can see we have a lot happening all the technology front and a lot more opportunity going forward as well as the tangible goals, we set for 2022.

Speaker 4: We expect to generate at least one billion dollars of adjusted EBITDA and LTL this year. Our entire team is committed.

We expect to generate at least $1 billion of adjusted EBITDA and <unk>. This year, our entire team is committed to delivering on this call.

We also expect to deliver more than 100 basis points full year improvements in our adjusted operating ratio excluding real estate gains.

Speaker 4: We also expect to deliver more than a hundred basis points of full year improvements in our adjusted operating ratio, excluding real estate gain.

Speaker 4: Here's how the dots will connect between where we are today and our goal is.

Here's how the adults will connect between where we are today and our goal this year.

Speaker 4: In the first quarter, we project about 200 basis points of degradation, and I would adjust the operating ratio X to the state year-over-year.

In the first quarter, we project about 200 basis points of degradation in our adjusted operating ratio X C. The state year over year.

Speaker 4: From there, we continue to reduce the erosion and reach the inflection point mid-year.

From there, we'll continue to reduce the erosion and reached inflection point midyear.

Speaker 4: We'd improve our adjusted operating ratio in the second half, putting us on track for more than a hundred basis points of improvement for the full year. We know it's

We'll improve our adjusted operating ratio in the second half putting us on track for more than 100 basis points of improvement for the full year.

We know exactly what it takes to hit these marks.

Speaker 4: The comprehensive action plan with executing should unlock more LTL revenue and margin growth calling forward.

The comprehensive action plan with executing should unlock more MTL revenue and margin growth going forward.

Speaker 4: In 2021, when our company Y3Cearned on invested capital was 32%, our ROIC from LCL was even higher.

In 2021, when our company wide return on invested capital was 32% our rois keep from LPL was even higher.

Speaker 4: With on track to nearly triple our adjusted evitat this year since acquiring this business in 2015.

We are on track to nearly triple our adjusted EBITDA. This year since acquiring this business in 2015.

Speaker 4: And it's a cash engine. Over the last six years, we've generated more than $3 billion of net cash from LTL.

And it's a cash engine over the last six years, we've generated more than $3 billion of net cash from LPL alone.

Speaker 4: Now we're going to invest more of our LCL operating cash flow into the business to accelerate its growth.

Now, we're going to invest more of our STL operating cash flow into the business accelerates its growth.

Speaker 4: This year, our LPL gross catfish will be 8-9% of revenue, covering investments in fleet, facilities, and technology. That compares to 5%

This year, our STL gross capex will be 8% to 9% of revenue covenant investments in fleet facilities and technology that compares to 5% of revenue last year.

Speaker 4: That gives you a high level of view of the many tactical actions we're taking to drive revenue and margin growth and return to year-over-year improvement in our operating creation.

That gives you a high level view of the many tactical actions, we're taking to drive revenue and margin growth and return to year over year improvements in our operating ratio.

Speaker 4: We're off to its strong start. We generate a sequential operating ratio improvement through the fourth quarter, with December being the strongest month.

We're off to a strong start we generated.

The sequential operating ratio improvement through the fourth quarter with December being the strongest month.

Speaker 4: In January , college remains stronger than typical seasonally.

In January tonnage remained stronger than typical seasonality.

Speaker 4: We're seeing major improvements in our service metrics, along with improvements in customer satisfaction and employee satisfaction.

We're seeing major improvements in our service metrics, along with improvements in customer satisfaction and employee satisfaction.

Speaker 4: We believe strongly in this business. We're on the right track and our plan is working. Now the rules going to cover truck brokerage and then we'll go to QNA. Through.

We believe strongly in this business we're on the right track and our plan is working now.

Now with that who is going to cover truck brokerage and then we'll go into Q&A through.

Speaker 5: Thanks Mario, North American truck brokerage had another phenomenal quarter. The latest in a long history of outperforming the market.

Thanks, Mario North American truck brokerage had another phenomenal quarter the latest in a long history of outperforming the market over.

Speaker 5: Over the last nine years, from 2013 through 2021, we delivered a revenue kegger of 27%, which is three times the industry kegger of 9%.

Over the last nine years from 2013 through 2021, we delivered a revenue CAGR of 27%, which is three times the industry CAGR of 9%.

Speaker 5: There were some compelling trends underpinning our growth in 2021.

There were some compelling trends underpinning our growth in 2021.

Speaker 5: For the full year, the number of customers who generated over a million dollars of revenue with us increased about 48% versus the prior year. We grew volume with our top 20 customers about 35%. These large sticky relationships are the bedrock of our customer base.

For the full year, the number of customers, who generated over $1 billion of revenue with us increased by 48% versus the prior year. We grew volume with our top 20 customers about 35%. These large sticky relationships are the bedrock of our customer base.

Speaker 5: And overall, we served over 2,200 customers who were not in our customer base a year earlier.

Overall, we served over 2200 customers, who were not in our customer base a year earlier.

Speaker 5: Another reason we're getting outsized growth is our XBO Connect digital platform. We have first mover advantage with proprietary brokerage automation dating back to the inception of XBO in 2011. That's when we first envisioned industry demand for a fully automated service for transportation procurement. XBO Connect is continuing to grow super fast.

Another reason, we're getting outsized growth because our ex fuel conduct digital platform. We have first mover advantage with proprietary brokerage automation dating back to the inception of <unk> in 2011, that's when we first envisioned industry demand for a fully automated service for transportation procurement.

<unk> will conduct is continuing to grow super fast in the fourth quarter. The number of customers registered on the platform was up 41% year over year and registered carriers were up 38%.

Speaker 5: In the fourth quarter, the number of customers registered on the platform was up 41% year over year. And registered carriers were up 38%.

Speaker 5: This technology is a great lever to attract and retain customers and also carriers, which is critical when the market is tight. 79% of the carriers who do business with us on XBO Connect return to the platform within 30 days. XBO Connect.

This technology is a great lever to attract and retain customers and also carriers, which is critical when the market is tight.

79% of the carriers, who do business with us on <unk> connect returned to the platform within 30 days.

<unk> connect is a powerful growth engine, but.

Speaker 5: But it's not the only advantage we have with our proprietary technology. We also created dynamic pricing algorithms that we use with customers and carriers.

But it's not the only advantage we have with our proprietary technology. We also created dynamic pricing algorithms that we use with customers and carriers.

Speaker 5: The algorithms leverage automation and machine learning to generate real-time pricing for every transportation lane at any given day and time.

The algorithms leverage automation and machine learning to generate real time pricing for every transportation lanes at any given day and time.

Speaker 5: Customers of all sizes increasingly won't access to our price.

Customers of all sizes increasingly want access to our pricing tools.

Speaker 5: In the fourth quarter, the number of transactions driven by APIs and other integrations was 2.7 times higher year over year. And 70% of our loads in the quarter were created or covered digital.

In the fourth quarter, the number of transactions driven by Aps and other integrations was two seven times higher year over year.

And 70% of our loads in the quarter were created or covered digitally.

Speaker 5: The bottom line is we have a lot of runway to continue to take market share and we're doing it properly.

The bottom line is we have a lot of runway to continue to take market share and we're doing it profitably.

Speaker 5: The $440 billion total addressable truckload market in North America is shifting towards brokers. In part, because companies are rethinking their supply chains, it won't flexible capacity with lower risk.

The $440 billion total addressable truckload market in North America is shifting towards brokers in part because companies are rethinking their supply chains and won't flexible capacity with lower risk.

Speaker 5: We've positioned our business to capture this opportunity at any point in the site.

We positioned our business to capture this opportunity at any point in the cycle.

Speaker 5: In the current environment, truckload demand is strong and capacity is constrained, primarily due to equipment shortages and driver shortages.

In the current environment truckload demand is strong and capacity is constrained primarily due to equipment shortages and driver shortages. We offer best in class combination of lane density technology experience and scale with access to over 1 million trucks and the <unk>.

Speaker 5: We offer best-in-class combination of lane density, technology, experience, and scale with access to over a million trucks. And the headcount we added during the pandemic increases our capacity for growth. These are significant advantages.

Head count we added during the pandemic increases our capacity for growth.

These are significant advantages and expanding our business.

Speaker 5: That was true in 2021 and we saw it again in January when we realized strong year-over-year volume growth again in January .

That was true in 2021, and we saw it again in January when we realized strong year over year volume growth again in January .

Speaker 5: We expect to generate double digit volume growth in 2022 and going forward. With that, we'll go to Q&A and take your questions. Operator.

We expect to generate double digit volume growth in 2022 and going forward.

With that we'll go to Q&A and take your questions operator.

Speaker 1: Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one from your telephone keypad and the confirmation tone will indicate your lines in the question queue. You may press star two if you would like to remove your question from the queue.

Thank you.

This time, we'll be conducting a question and answer session.

Do you like to ask a question. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue you.

You May press star two if he would like to remove your question from the queue.

Speaker 1: Distance using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One more please, I'll leave.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment. Please so we pull for questions once again Thats star one.

Speaker 1: Our first question comes from the line of Chris Weatherby with City Group. Please see you with your question.

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

Hey, Thanks, and good morning, everybody.

Speaker 6: Maybe we could start on the LPL side. It was curious about the operating ratio progression as we think about 2022. So I know down to 100 in the first quarter and positive in the back half. How do you think about 2Q and maybe sort of how that cadence kind of plays out? Clearly the comms are a little easier in the back half of the year, so getting to that 100 on a full year.

Maybe we could start on the L. P. L side I was curious about the operating ratio progression as we think about 2022. So I know, it's down 200 in the first quarter and positive in the back half how do you think about <unk> and maybe sort of how that cadence kind of plays out clearly the comps are a little easier in the back half of the year, so getting to it.

On a full year basis will be supported by improvement in but I guess I wanted to get a sense of what you think the shape of the first half will be.

Speaker 6: by improvement then, but I guess I'm one that gonna get a sense of what you think the shape of the person.

Speaker 4: Yes, sure thing Chris, this is that, this is Mario. So when we think about the cadence, so first starting with the first quarter, we expect a 200 basis point or our degradation in that quarter, which is sequentially better by a 100 basis point from the 300 point degradation we had in the fourth quarter.

Yeah sure. Thanks, Chris. This is that this is mario so so when we think about the cadence. So first starting with the first quarter, we expect a 200 basis points degradation in that quarter, which was sequentially better by 100 basis points from the 300 points degradation, we head into the fourth quarter and we'll drive that order improvements starting with volume. So we had four 9%.

Speaker 4: And we drive that all our improvements, starting with volume. So we had 4.9% volume decline in the fourth quarter. And we expect a low single digit decline in the first quarter. And both when we think about the exit run rate from the fourth quarter, both in the sender and January , we outpace difficulties andality on volume despite the on the crown and weather in the first part of the quarter here.

Volume decline in the fourth quarter, and we expect a low single digit decline in the first quarter and both when we think about the exit run rate from the fourth quarter. Both in December and January we outpaced typical seasonality and volume despite the omicron and weather in the first part of the quarter here.

Speaker 4: Now, the next step from there would be on the past side. So we already have seen improvement in labor efficiency. So as we clear the backlogs with embargoes, and we're going to expect that to continue through the course of the year.

The next step from there would be on the cost side. So we already have seen improvement in labor efficiencies as we cleared the backlogs with the embargoes and we're going to expect that to continue through the course of the year.

Speaker 4: And however, that was offset in the first quarter, at least with higher first-estransportation costs that will carry through the first half of the year. Because we typically reset our PTE costs in the spring timeframe.

And however, this was offset in the first quarter, but at least with higher purchase transportation costs that carried through the first half of the year, because we typically reset our wood cost.

Costs in the spring timeframe.

Speaker 4: Now from yield standpoint, we continue to expect yield to be very strong for the year, starting with the first quarter. So for the first quarter, we expect yield to be up in the high single digits, which is still reflecting obviously the song on the underlying environment, but also the actions we are taking, offset by weight-per-shipment being higher for us specifically in the first quarter. So that's a dynamic of Q1 of the 200-point deterioration.

Now from a yield standpoint, we continue to expect yields to be very strong for the year, starting with the first quarter. So we for the first quarter, we expect yields to be up into high single digits, which is soon reflecting obviously the underlying environment, but also the actions we are taken.

Offset by a by week with shipments being being higher for us typically in the first quarter. So thats. The dynamic of Q1 of the 200 point deterioration now as we go through the year, we expect to to get to an inflection by by mid year on <unk> and then get back to a positive improvement on a full quarter basis in the back half for a total.

Speaker 4: Now as we go through the year, we expect to get through an inflection by mid-year on OR, and then get back to positive improvement on a full quarter basis in the back half for a total OR improvement of more than 100 basis points for the full year. But net net, if you think how we get there, one volume would keep on increasing, year for the remains strong for the course of the year and the high single digits, obviously, with Q4 being slightly softer, given the where we were in Q4 of last year.

Or improvement of more than 100 basis points for the full year, but net net if you think how we get there one volume will keep on increasing yields with remain strong for the course of the year in the high single digit obviously with Q4 being slightly softer given that given to where we were in Q4 of last year, and then costs with normalized where some of the costs are heading.

Speaker 4: And then cars would normalize where some of the cost headwinds would turn into tailwinds as we get into that half of the year.

<unk> I will turn into a tailwind as we get into the back half of the year.

Speaker 6: Okay, so something like 2Q is kind of in that flatter type of range. Is that reasonable to assume or is that sort of part of anything about the case?

Okay. So it sounds like <unk> was kind of in that flattish type of range is that reasonable to assume or is that sort of part of how you think about the cadence.

Yes, so that's in the ZIP code of course, okay.

Speaker 6: that's helpful, appreciate that. And then there's quick follow up in terms of the growth of the door count.

That's helpful. I appreciate that and then just quick follow up in terms of the growth of the the door count.

Speaker 6: 2022 I know you're targeting 6% over a two-year basis want to get a sense of how quickly do you start to see ramping up that capacity and know you've opened some facilities that get to want to get a sense of maybe how you see it playing out in the context of that OR progression We just talked

In 2022, I know you're targeting 6% over a two year basis wanted to get a sense of how quickly do you start to see ramping up that capacity I know you've opened some facilities I guess I want to get a sense of maybe how you see it playing out in the context of that progression, we just talked about.

Speaker 4: Overall, from adding capacity, we think about the ramp from what we added to be roughly in the six month time frame. But also, there's a dynamic where we need, when we think about adding doors as a combination of both getting volume in certain markets, but also getting line hall efficiency in certain markets in terms of what we call freight assembly centers.

Overall for me from adding capacity, we think about the ramp from once we added doors to be roughly in the six.

Six month timeframe, but also there's a dynamic where do we need when we think about adding doors as a combination of both getting volume in certain markets, but also getting line haul efficiency in certain markets in terms of our fleet, what we called freight Assembly centers, where we break freight and rebuild failures for customers as it flows through the network, but typically from the business case, we are our.

Speaker 4: or where we break freight and we rebuild trailers for customers as freight flows for the network. But typically from the business case, we, our ramp processes are around the six month timeframe.

Processes that six month timeframe that we expect from the doors to add in 2022.

Speaker 4: Now we expect from the doors to add in 2022 to roughly have about 1% of revenue of 40 million dollars worth of additional revenue from these doors. And obviously that would accelerate coming to 2023 as we keep on adding terminals and doors. Okay, that's very helpful. Thanks.

Roughly have about 1% of revenue were $40 million worth of additional revenue from esports, and obviously that could accelerate going into 2023, as we keep on adding Tor minerals indoors.

Okay. That's very helpful. Thank you very much for the time. This is more I appreciate it.

Thank you you got it thank you.

Yeah.

Speaker 1: Next question comes to an alignment scout group with full research.

Next question comes from the line of Scott Group with Wolfe Research. Please proceed with your questions.

Speaker 2: Hey, thanks. Good morning, guys. I want to ask another on the LPL margin. I just want to think more sequentially. So the guidance implies that you outperform seasonality, pretty meaningfully, in second quarter and the rest of the year. I guess why didn't we see any of this in the fourth quarter when pricing was accelerating so sharply? And I guess what change is starting in too cute to get there, and maybe just along those lines. You mentioned something about

Hey, Thanks, good morning, guys.

Wanted to ask another one on the <unk> margin I just want to think more sequentially. So the guidance implies that you outperform seasonality pretty meaningfully in the second quarter and the rest of the year I guess why didn't we see any of this in the fourth quarter when when pricing was accelerating so sharply and again.

What changes starting in <unk> to get there and maybe just along those lines you mentioned something about.

Speaker 2: Tail, cross-tide winds turning into tail winds. Are you thinking that PT becomes a tailwind in the back half? Yes.

Cost headwinds turning into <unk> or are you thinking that that PT becomes a tailwind in the back half.

Yeah, Let me start first with the.

Yeah.

Speaker 4: You got it. So let's start first with the with the fourth quarter. So there were two drivers for the Q4 decline beyond the numbers We've got class time. One was that we obviously implemented our Strategic embargoes to meet our demand of volume with getting in the network to improve network flow And we extended these embargo through November because they substantially improved network flow and obviously that increases cost and lower Volume which is short term pain for long term benefit of having better network flow

Yeah, you got it Scott So lets talk first with the fourth quarter. So there were two drivers for the Q4 decline beyond the numbers. We discussed last time, one was that we obviously implemented our strategic embargoes to meter them out of volume with getting into the network. So improved network flow and we extended these embargoes through November because they substantially improve network flow and obvious.

That increases costs, and lower volume, which is short term pain for long term benefit of having better network flow and also in the back half of the quarter. We saw the third party line haul rates went up and have since stabilized and when you think about the improvements or the benefits from improved network flow. They include obviously, reducing the backlog and reduce debt down to target levels.

Speaker 4: And also in the back half of the quarter, we saw the third-party line halt rates went up and have since stabilized. Now, when you think about the improvements or the benefits from improved network flow, they include obviously reducing the backlog and reduce that to the down-to-target levels. Servants has improved sharply versus the third quarter. Customer satisfaction has jumped in both internal and third-party surveys as well as and typically network improvements are the precursor for a R and through.

Service has improved sharply versus the third quarter customer satisfaction has jumped in both internal and third party surveys as well as typically network improvements are the precursor fourth quarter order improvements now, but more importantly for the fourth quarter. When you think about the progression October was the low point of our degradation in December was the best month for.

Speaker 4: Now, more importantly, for the fourth quarter, when you think about the progression, October was the low point of our degradation, and December was the best month for the court.

For the quarter and again, we see that kind of expecting as we get through the midyear. When we think through the course of the year and there are three main drivers for the wall. So the first one is volume, which typically backed by capacity second this pricing and then third is operational efficiency. The types of costs and are starting with volume as I mentioned earlier, we have seen that acceleration of volume, which.

Speaker 4: And again, we see that kind of effecting as we get through the mid year. Now, when we think through the course of the year, there are three main drivers for O.R. So the first one is volume, which is typically backed by capacity. Second is pricing, and third is operational efficiency that ties to cost.

Speaker 4: And I'm starting with volume, as I mentioned earlier, we've seen that acceleration of volume, which outpaced the local seasonality in both December and January .

Outpace critical seasonality in both December and January and we expect volume to continue to accelerate through the course of the year as we mentioned in our five point action plan.

Speaker 4: And we expect volumes to continue to accelerate through the course of the year. As we mentioned in our five point action plan, we're building to add more capacities. So the next work to allow us to handle more volume. We're graduating and hiring more drivers from our schools. We've doubled the trailer production capacity in our enhanced manufacturing facility. We're adding more tractors, starting to get in the first quarter, having great discussions with our OEM.

Buildings add more capacity to the network to allow us to handle more volume.

Graduating and hiring more drivers from our schools.

The Taylor production capacity in our in house manufacturing facility, adding more track towards starting to get into first quarter, having great discussions with our Oems and we're also adding more doors progressively through the year I would also investing in our sales force. So we're dedicating some of our strategic setters, So LPL and we're seeing more business either enter or return it to our network as well.

Speaker 4: And we're also adding more doors progressively through the year. We're also investing in our sales force. So we're dedicating some of our strategic centers to LPL and we're seeing more business either entered or returned to our network as well. So the volume is going to accelerate through the course of the year as we go forward.

So the volume is going to accelerate through the course of the year as we as we go forward on the pricing side. So I see a similar dynamic in terms of fighting seeing strong for the full year being in that high single digit range as what we expect and we are also contemplating a potential additional <unk> for local accounts in the first half depending on what's happening in the pricing environment.

Speaker 4: On the pricing side, so it's the similar dynamic as there's a pricing staying strong for the full year, being in that high single digit range is what we expect. We are also constantly seeing if a potential additional GRI for local accounts in the first half, depending on what's happening in the pricing environment.

Speaker 4: And then finally on the cost side, as I said earlier, the headwinds were split into tailwinds because we would be cycling through a busHA transportation cost of the back half. But also as we build efficiency back from a labor perspective and all the other cost categories, that would turn to a lower increase in the back.

And then finally on the cost side as I said earlier, the headwinds was flipped into a tailwind because we would be cycling through bushes transportation costs in the back half, but also as we build efficiency back from a labor perspective, and all the other cost categories that would turn into a lower increase in the back half.

Speaker 4: But that's not, I mean, obviously, it would be more than a hundred-bisit point improvements for the full year for the record or the last one.

I mean, obviously it would be more than 100 basis point improvement for the full year put it echoed go off of the year.

Speaker 2: Okay, thank you. And then just second question, the brokerage other operating margins were really strong in Q4. It doesn't look like the guidance implies that this continues. So maybe just some thoughts on the brokerage, op margin, brokerage and other op margins this year. And maybe as long as we're talking on this segment, any update, Brad, on potential asset sales.

Okay. Thank you and then just second question the brokerage other operating margins, where we're really strong in Q4. It doesn't look like the guidance implies that this continues so maybe just some thoughts on the the brokerage.

In brokerage and other op margins this year and maybe as long as we're talking on this segment any update Brad on potential asset sales here.

Speaker 5: So I'll check it out. As we said, we've solved extremely strong trends in January of taking volume.

Thank you guys, so I'll kick it off.

As we said we saw extremely strong trends in January of taking volume.

Speaker 5: If you look back to the fourth quarter, volume was up 22% on a year of year basis. But we also saw over the last two years our loads per night was up 50% our net revenue per load was up 50% and our net revenue more than double.

Look back to the fourth quarter volume was up 22% on a year over year basis, but we also saw over the last two years, our loads per day was up 50%. Our net revenue per load was up 50% on a net revenue more than double so we're continuing to take share and we're confident that we will still be able to do that for three main reasons. One is our technology.

Speaker 5: So we're continuing to take share and we're confident that we'll still be able to do that for three main reasons.

Speaker 5: One is our technology. If you look at our technology, it's focused on customers, the carriers we work with and our people. The customers that we work with, our technology helps them make transportation decisions on what mode they should be shipping, when they should be shipping. It even does little things of give them updates that there's an alert on any sort of delay. It also helps on the carrier side that we're working with. It's very sticky and we see that because 79% of the carriers return to us on XBO Connect within 30 days.

If you look at our technology is focused on customers the carriers, we work with and our people with customers that we work with our technology helps them make transportation decisions on what they should be shipping when they should be shipping it even those little things of gives them updates of theirs and alert on any sort of delay. It also helps on the carrier side.

We're working with is very sticky and we see that because 79% of the carriers returned to us an extra year connect within 30 days and then we're continuing to see it within our within our employees as you looked over the last five years, our head count is up 38% at our loads were up 66%. The second piece is our customers.

Speaker 5: And then we're continuing to see it within our employees, as you look over the last five years, our head count is up 38% and our loads are up 66%.

Speaker 5: We have strong relationships with a lot of the top companies in the country.

We have strong relationships with a lot of the top companies in the country and this has helped drive group. If you look at our volume growth with our top customers was up our top 20 customers is up 35% both same customer serve as a reference point and you see that for us as our customers would do $1 billion in business with us was up 48%.

Speaker 5: And this has helped drive growth. If you look at our volume growth with our top customers, it's up, our top 20 customers, it's up 35%. Those same customers serve as a reference point. And you see that for us as our customers who do a million dollars in business with us, it's up 48% and we brought on 2,200 new customers.

And we brought on 2200, new customers, we've got a strong sales force and a lot of momentum the last pieces of our people our people have their ear to the ground. We've got some of the best operators in the business they've got a proven track record director level and above has been with us for eight years on average. So we've got that allows us to create strong sticky really.

Speaker 5: We've got a strong sales horse and a lot of momentum. The last piece is our people.

Speaker 5: Our people have their ear to the ground. We've got some of the best operators in the business.

Speaker 5: They've got a proven track record. Director-level and above has been with us for eight years on average.

Speaker 5: So we've got that allows us to create strong, sticky relationships with our customers.

And so its with our customers so because of those three things I'm confident that we're going to continue to take market share and we're going to do it profitably.

Speaker 5: So because of those three things, I'm confident that we're going to continue to take markets here and we're going to do it properly.

Speaker 6: Scott, on the answer to the question you had, we're not going to comment on any possible strategic initiatives we have going on, but thank you for the question.

Scott on the.

The asset sale question, you had we're not going to comment on any possible strategic initiatives, we have going on but thank you for the question.

Okay. Thank you for the time guys appreciate it.

You're welcome.

Speaker 1: Make questions from the line of Brandon Oglinski with Parklase. Pleasers you.

Next question is from the line of Brendan Glinski with Barclays. Please proceed with your question.

Speaker 2: Hey, good morning everyone. So I wanted to talk about the ability to grow in LTL, because I think if I look historically here, the name of the game has been margin improvement through, for better or worse, shrinking the business, getting better, making, focusing on price, and those customers that fit the network better, I think.

Hey, good morning, everyone. So I wanted to talk about the ability to grow in L. T. L. Because I think if I look historically here you know that the name of the game has been margin improvement through.

For better or worse shrinking the business getting better mix focusing on price and those customers that fit the network better I think.

Speaker 2: And I understand now, you know, can you talk to this in the context of, you know, what seems to be a very expanded CAPEX budget? Because I'm showing gross CAPEX here the last few years, maybe 300 to 330. And obviously stepping up quite a bit to 550 this year. Thank you.

And I understand now.

Can you talk to us in the context of you know.

What seems to be a very expanded capex budget, because I'm showing gross capex here in the last few years, maybe 300 to 330, and obviously stepping up quite a bit to 500 to $5 50. This year. Thank you.

Sure Scott.

Brendan sure Brian Yes.

Speaker 7: Yeah, we are going to wrap up LCL Cupback substantially. We're going to be going from roughly 5% of revenue in 2021 to 8 to 9% of revenue in 2022. Some of that is in fact for new facilities. We spoke about opening 900 doors.

Yes, we are going to wrap up LTM capex substantially we're going to be going from roughly 5%.

Revenue in 2021 to 8% to 9% of revenue in 2022. Some of that is in fact for new facilities, who spoke about opening 900 doors over the next two years by the end of 2023. Some of it is for equipment and as we continue to replenish our fleet, we generate exceptional returns on capital.

Speaker 7: over the next two years by the end of 2023, some of it is for equipment as we continue to replenish our fleet. We generate exceptional returns on capital in LTO. Our company, why we return on capital is 32%. LTO is higher than that. We know that we can get a strong return on that level of investment. Hence the decision to allocate more capital to this business. So we're confident we have a line of sight on all of the spending areas, both real estate and-

And <unk> our company wide return on capital was 32% <unk> was higher than that we know that we can get a strong return on that level of investment hence the decision to allocate more capital to this business and we're confident we have line of sight on all of the spending areas, both real estate and equipment.

Speaker 2: Well, I guess Matt Mayes, I can rephrase the question to be more direct. Was it a lack of capital reinvestment in the past few years that limited growth in the segment?

Well I guess, Matt maybe if I can rephrase. The question would be more direct was it a lack of capital reinvestment in the past few years that limited growth in this segment.

Speaker 4: Overall, it was more of a strategy. So when we think about our focus, since we have gone way back in 2015, has been on expanding margins and the process. And this allowed us to get to a higher ROIC. But in that business, we nearly tripled EBTA with the one billion in this year, since we bought that business and improved our by 910 basis points.

Overall it was it was more of a strategy. So when we think about our focus since via bulk con way back in 2015 has them on expanding margins in the process and this allows us to get to a higher ROIC, but in that business, we nearly tripled EBITA.

The $1 billion. This year since we bought that business in <unk> by 910 basis points now, let's be inflicting towards the growth strategy. It goes back to part of it is obviously, adding more doors to the network the 900 doors at that Matt.

Speaker 4: Now that we're inflecting towards a growth strategy, it goes back to a part of it is obviously adding more doors to the network, the 900 doors that Matt just mentioned.

The just mentioned expanding the size of our fleet by doubling the trailer production.

Speaker 4: Extending the size of our fleet by doubling the trailer production and our manufacturing facility and adding more tractors

Packaging facility and adding more tractors and also adding more people to be able to move the freight both in drivers and dock workers. So I'd say, so we're leaning more towards now adding more capacity to the network. So we can grow from a volume at a top line perspective.

Speaker 4: and also adding more people to be able to move the freight, both in drivers and dock workers. So we're leaning more towards now adding more capacity to the network so we can grow from a volume and top-mind perspective.

Okay. Thank you Mario I appreciate it.

Thank you.

Speaker 1: The next question comes from the line of Hamza Mazar with Jeffries. Pleasure.

The next question is coming from the line of Hamzah Mazar with Jefferies. Please proceed with your question.

Speaker 8: Great, thank you very much. Brad, I just wanted to ask two questions, and then I'll turn it over. Just questions we've been hearing more frequently from investors, given your recent stock sale. One, I guess, are you planning to exit XBO and then two, should we expect to see you sell more shares in the future? I'll leave it there. Thank you.

Great. Thank you very much Brad I just wanted to ask two questions and then I'll turn it over.

Just questions we've been hearing more frequently from investors given your recent stocks.

Stock sale, one I guess are you planning to exit Xtra meal, and then two should we expect to see you sell more shares in the future I'll leave it there. Thank you.

Speaker 7: The fair questions, let me be very clear about it. I have no plans to leave X-Fio. I'm extremely proud of what we're accomplishing here and I'm super excited about the many, many opportunities that we have.

That's the fair questions, let me be very clear about it I have no plans to leave <unk> I'm.

Im extremely proud of what we're accomplishing here and I'm Super excited about the many many opportunities that we have to create significant shareholder value, both tactically and strategically.

Speaker 7: to create significant shareholder value, both tactically and strategically. And regarding the stock sales, I still own by 11% of the company.

And regarding the stock sales I still own about 11% of the company and I'm very bullish about the company's prospects, but that said I've only shares for over a decade and I probably will sell some more shares at some time in the future.

Speaker 6: and I'm very bullish about the company's prospects. But that said, I've only shares for over a decade and I probably won't fail some more shares at some time.

Speaker 7: But I have no plans to leave the company in the foreseeable future to the contrary. I'm very much all in and highly focused. Does that answer what you asked me? Yeah, yeah, perfect. Thank you so much. Appreciate it. I'll turn it over.

No plans to leave the company in the foreseeable future to the contrary I'm very much all in and highly focus does that does that answer what you're asking.

Yeah, Yeah perfect. Thank you so much appreciate it I'll turn it over.

Thank you.

Speaker 1: Our next question comes from a line of Alps in Palliac with Wells Fargo. Please...

Our next question comes from the line of Allison Pontiac with Wells Fargo. Please proceed with your question Hi.

Speaker 9: Hi, good morning. First, on brokerage, you seem pretty confident that double digit growth will persist after 22. Could you help us maybe think of that growth algorithm for that going forward? Is it mainly the market share that you were trying to articulate before?

Good morning.

First time brokerage you seem pretty confident you know that double digit growth well you know.

Persist after 'twenty two could you help us maybe think of that growth algorithm I, let him for that going forward is it mainly the market share that you were trying to articulate before.

Speaker 5: Yes, it is the market share. And the brokerage space out of the trucking space is $440 billion. brokerage has about $80 billion of that.

Yes. It is the market share is in the brokerage space out of the trucking space was 440 billion brokerage has about $80 billion of that and brokers are continuing to take share of customers want to use brokers because they've got flexible capacity that can scale up or down based on what's going on in the market and we have.

Speaker 5: And brokers are continuing to take share. Customers want to use brokers because they've got flexible capacity. They can scale up or down based on what's going on in the market.

Speaker 5: And we've got a proven track record of you looking at the last nine years of the industry, Tagger, being at 9% at our growth rate being at 27%. We've got a proven track record of being able to deliver on that results. You know, as I mentioned earlier, we've got a strong sales team and a great pipeline for going forward.

Got a proven track record if you look at the last nine years of the industry CAGR being at 9% at our growth rate being a 27%. We've got a proven track record of being able to deliver on that results as I mentioned earlier, we've got a strong sales team and a great pipeline for going forward.

Speaker 9: Great. And then just on the technology for LTR, you know, a lot of initiatives being put in place there, is there a way to think of the contribution from those initiatives, whether it's, you know, praise our customer share or productivity and efficiencies that you're expecting to drive from some of these initiatives? Just any color there?

Great and then just on the technology for LTE. All you know a lot of initiatives being put in place. There is there a way to think of the contribution from those initiatives, whether it's you know price or our customer share or productivity and efficiencies that you were expecting to drive from some of these initiatives just any color there.

Speaker 4: You got it, Alison. So it's a combination of all of the above. So obviously when we think about pricing technology, it's about improving on yield. And as I said, in my prepared remarks, where the U platform allows us to reduce manual data processing by 80% enabling our pricing experts spend more time analyzing account performance and negotiating along with sales. And it also enables us to use historical RFPs as a lead gen tour for sales. So that's ties to adding more volume to the network by driving again more teeds.

You got it Allison so let's say, it's a combination of all of the above so obviously when we think about pricing technology, it's about improving on yields and as I said in my prepared remarks.

Our platform allows us to reduce men, who will be the processing by 80%, enabling outpacing expert to spend more time analyzing account departments and negotiating along with sales.

Also enables us to use historical rfps as the lead Gen tool for sales. So that's nice to have adding more volume to the network, thereby driving by driving more and more leads.

Speaker 4: similar to on dynamic pricing that allows us to be able to get a combination of yields and volume where we can flex that lever based on where we need the volume versus where we want the yield. On the efficiency side, you know, I mentioned areas around line hall and dock are

Similar thing on dynamic pricing that allows us to be able to get the combination of yield and volume, where we can flex that level based on where do we need the volume versus but we want the yield on the efficiency side I mentioned areas that out our line haul and dock ops and this all goes back to the efficiency the efficiency in that case by building more direct sales to destination, which we call. It that I think the head halls.

Speaker 4: This all goes back to efficiency. That efficiency in that case, by building more direct traders to that donation, which we call it the technically headhalls, it's a used three-handle for better dog productivity across our dogs, it also improves our line haul of operation there. And all the technology goes back to customer experience. I mentioned I would knew what experience for customers and better visibility all the way down to the piece level. So if you have a multi-skid shipment being able to give customer sustainability all the way down to the pallet level, that's the price back, more to customer satisfaction. So it's a combination of...

It used to be handled for better productivity across our dogs. It also improves our line haul operation there and all the technology goes back to customer experience I mentioned I wouldn't you.

<unk> for customers and better better visibility all the way down to the piece levels. If you have a multi skilled shipment being able to give customers visibility all the way down to the pallet level.

The size that both the customer satisfaction. So it's a combination of improvement in yield improvement in volume and efficiency and customer sat.

Speaker 4: improvement in yield, and put in volume, and put in efficiency, and customer service.

Great. Thank you.

Thank you.

Speaker 1: The next question is from the light of Brian Austin, back with JP Morgan. Please.

The next question is from the line of Brian <unk> with Jpmorgan. Please proceed with your questions.

Speaker 10: Hey, good morning, thanks for the time. Just want to come back to the cadence of the OR throughout the year. And is there any way you can kind of split that between contributions you would think they're coming from the market and pricing and things you just mentioned in terms of that are more expio specific that you got more visibility in line of sight. And within that, you just give some context in terms of how cool and forward the GRI was handled in the market.

Hey, good morning, Thanks for the time.

Just wanted to come back to the.

The cadence of the Oh are throughout the year and is there any way you can kind of split that between contributions you would think they are coming from the market and pricing and things that you just mentioned in terms of it or more <unk> specific that you got more visibility and minus site and then within that could you just give some context in terms of how going forward. The G. R. I.

Was it was handled in the market.

Speaker 7: I'll do the first part, Brian , and I'll just harken back to the color.

I'll do the first part Brian and I will just harking back to the color that Mario gave we expect VR improvement to progress through the year due to a combination of volume improvement and over the course of the year improvement on the cost front with pricing being a relatively constant positive to the extent that we're looking at volume.

Speaker 7: that Mario gave. We expect the R improvement to progress through the year due to a combination of volume improvement and over the course of the year improvement on the cost front with pricing being a relatively constant positive to the extent that we're looking at volume and cost. Those are idiosyncratic opportunities for XBO both to improve from where we are going forward and also for cycling some of the issues that we experienced in the second half of last year. And I'll give it to Mario for discussion of the GRI.

Cost those are idiosyncratic opportunities for <unk>, both to improve from where we are going forward and also as we're cycling some of the issues that we experienced in the second half of last year and all.

Give it tomorrow for a discussion of the genre.

Speaker 4: Overall, on the GRI side, I mean, it's a firm pricing environment when it comes to NPL. So the feedback we've gotten from customer hasn't been we haven't seen any pushback in the market. And we pulled back our GRI from typical January time frame to November .

Overall on the on the <unk> side I mean, it's a current pricing environment. When it comes to when it comes to NPL. So the feedback I've gotten from customer Hasnt been we havent seen any any pushback in the market and we pulled back our jihad iPhone typical January timeframe to a to November .

Speaker 4: but overall the feedback has been has been good from customers. Now, when we go to this year, we are concentrating doing a second GRI for our local accounts on the first half of the year, but depending on how the market progresses through the course of the year. And you should EGRI's for us to impact our one segment of our customers, which is our local account business, but not all customers, which is roughly around 20 to 25% of the business.

But overall the feedback has been has been good from customers that when we go through this year and we are contemplating doing a second <unk> will open accounts in the first half of the year, but depending on how the market progresses through the course of the year and usually GRS, what I'll say impact our one segment of our customers, which is our local account business, but not all and not all customers.

Lafayette on 20% to 25% of the business.

Okay.

Speaker 10: Okay, thanks Mario. Question for Drew then on the broker side. We hear a lot about automation and what's known to touch and what's created digitally. So I don't think you can add some context to your 70% where you think that stands versus the competition in your view and what sort of customers are really attracting and retaining with those types of abilities and capabilities. Thanks.

Okay. Thanks Mario.

For you then on the brokerage side.

We hear a lot about automation and what's what's no touch and was created digitally so that you can add some context to your to your 70%, where you think that stands out versus the competition and in your view and you know what what sort of customers are really attracting and retaining a wheel.

So with those types of abilities capabilities. Thanks.

Speaker 5: Yeah, so the 70% are created or covered digitally. That's the number that we're extremely proud of. If you look at our API integrations with our customers, that is up 2.7 times on a year over a year basis.

Yes.

70% are created or covered digitally that's a number that we're extremely proud of.

If you look at our API integrations with our customers that is up three seven times on a year over year basis.

Speaker 5: the types of customers that are used, and this is all types of customers, but very sticky with our large customers, they are attracted to an API.

The types of customers that are using this as all types of customers, but it's very sticky with our large customers. They are attracted to the API integrations that we offer but also our smaller customers are logging on and they're using ex vivo connect.

Speaker 5: integrations that we offer, but also our smaller customers are logging on and they're using XBO Connect on a daily basis. And again, that helps them make the best transportation decisions possible. Tell them what mode they should be shipping, when they should be shipping. So we're seeing it across all of our customer base. Great, thanks.

Daily basis, and again that helps them make the best transportation decisions possible tell them, what motivation would be suffering when they should be shipping. So we're seeing that across all of our customer base.

Great. Thanks, Jim.

Thank you.

Yeah.

The next question is from the line of Jack Atkins with Stephens. Please proceed with your question.

Speaker 11: Okay, great. Thank you for taking my question. I guess this one's from Mario. I guess I'm a little surprised.

Great. Thank you for taking my question I guess this one is for Mario I guess I'm a little surprised.

Speaker 11: that you're not expecting a bit more than the 100 basis points or so of OR improvement in 2022. Given that's probably going to lag your peers.

That.

Not expecting a bit more than 100 basis points or so of our improvement in 2022, given that's probably going to lag your peers.

Speaker 11: uh... performance this year and your comms are arguably much easier given the underperformance of the last two years so i guess mario bigger picture question you feel like maybe there's something more structural going on within your health you'll ask that uh... why can't you see a more substantial improvement operating ratio this year and you feel like you know that five point plan yet line three months ago was really going to be enough to get the business back on track

Our performance this year and your comps are arguably much easier given the underperformance over the last two years. So I guess Mario a bigger picture question do you feel like maybe there is something more structural going on within.

That's why can't you see a more substantial improvement in operating ratio. This year and do you feel like you know that five point plan you outlined three months ago was really going to be enough to get the business back on track.

Speaker 4: Thanks, thanks, Jeff. So let me first talk about the structural piece about the end business. We have more than 290 terminals with 21,000 fantastic people who cover 99% of all zip codes.

Thanks, Ed things, Jeff So, let me sort of start to talk about the structural piece about LTM business, we have more than 290 terminals with 21000 fantastic people, who cover 99% of all ZIP codes and that team has moved 18 billion pounds of freight for 25000 customers in 2021, So there's nothing.

Speaker 4: And that team has moved 18 billion pounds of rate for 25,000 customers in 2021. So there's nothing structurally wrong with this business. And I went back to what I said earlier, since we acquired the LPL business from Conway through we or the Conway acquisition, we nearly are on track to triple EBTAS by this year. And improve our OR by 910 basis points and as of generating an S cash of $3 billion.

Really wrong with this business and I went back to what I said earlier with since we acquired LCL business from Conway.

We or the cost of acquisition. When you usually are on track to Triple EV power by this year and improve our or by 910 basis points and asset generating net cash of $3 billion. So there is again there is nothing structurally wrong here, but we didn't make the mistake in the third quarter of last year to in source third party.

Speaker 4: So there's, you know, again, there's nothing structurally wrong here. We just make the mistake into the third quarter of last year to ensure third party line haul. Our network flows temporarily, the theory array.

Line haul network flows.

But I really deteriorated our costs went up due to the efficiencies associated with that and we implemented a five point action plan, starting with strategic embargoes.

Speaker 4: Our costs went up due to the efficiencies associated with that. And we implemented the five point action plans following with strategic embargoes. This allowed us to, where we effectively lower.

Allow us to effectively lower tonnage to allow us to give the backlogs in our network and get back to having much more improved network. So we believe this is a temporary phenomenon, it's not something that will repeat and we're focused on customer service on pricing on tonnage and also execution and where we are.

Speaker 4: to allow us to give the backlogs in our network and get back to having much more improved network flow.

Speaker 4: We believe this is a temporary phenomenon, it's not something that would repeat. And we're focused on customer service, on pricing, on punish, and off the execution.

Speaker 4: And we're planning on delivering a billion dollars of EV South this year. So when we think about it overall, it's a strong plan. It's a plan that ties back to adding more capacity, investing more in the business, pivoting towards growth, and then servicing 25,000, and hopefully more in the future. Fantastic.

We're planning on delivering $1 billion of EBITDA. This year. So when we think about the overall, let's say, it's a strong plan. It's a plan that ties back to adding more capacity investing more into business pivoting towards growth and then servicing 25000 and hopefully more in the future are fantastic customers.

Speaker 11: Okay, got it. And then for my follow-up question, would love to kind of get your thoughts on the Intermodal Market. It's not a business that we hear you talk much about, but we're seeing a number of your IMC competitors making some interesting moves in terms of shifting real partners and adding additional containers and investing in their business.

Okay got it and then for my follow up question.

Love to kind of get your thoughts on the intermodal market, it's not a business that we hear you talk much about but we're seeing a number of your IMC competitors, making some interesting moves in terms of shifting real partners and adding additional containers and investing in their businesses with intermodal how are you thinking about the intermodal market and <unk>.

Speaker 11: within our modal, how are you thinking about the Intermodal Market and XPO's position within that as we look forward?

And within that as we look forward.

Again for the time.

Speaker 5: The intermodal market was strong. We continued to take...

The intermodal market was strong.

We continue we continue to take.

Speaker 5: We continued our recovery there. And if you look at the congestions and the equipment shorties, our organic revenue was up 38% on a year of year basis. Our GESR GM, per load, skyrocket. We are investing in containers as you look into.

We continued our recovery there and if you look at the congestion and the equipment shortage. Our organic revenue was up 38% on a year over year basis are you saw our GM per load skyrocket, we are investing in containers as you look into 2022, and we expect to be able to continue to grow on intermodal, but also.

Speaker 5: 2022 and we expect to be able to continue to grow on intermodal but also on our Dreidz side our Dreidz side complements intermodal and when you think about it one of the reasons that they marry so well together is because we have a Presence that every single major US port so we're very excited about the intermodal market and it was a strong performer for us and the Forkord.

In our drayage shop, our drayage side complements intermodal and when do you think about it one of the reasons that they mirror. So well together is because we have a presence at every single major U S. Port. So we're very excited about the intermodal market and it was a strong performer for us in the fourth quarter.

Yes.

Thank you.

Speaker 1: The only question is from the line of a meat martin with Deutsche Bank. This is you.

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

Speaker 2: Hey, thanks operator, hi everyone. Mario, I just want to go back to the first couple questions on the cadence of the operating ratio. And I just want to make sure we're on the same page in terms of the numbers that, you know, because there's a lot of operating ratios adjusted and unadjusted. If I look at the first quarter, it looks like you guys are guiding to an 86-STOT-3OR for the first quarter.

Hey, Thanks, Operator, hi, everyone Mario I just wanted to go back to.

The first couple of questions on the cadence of the operating ratio I just want to make sure. We're on the same page in terms of the numbers that you know well because theres a lot of operating ratios adjusted unadjusted, if I look at the first quarter. It looks like you guys are guiding to an 86 spot three or for the first quarter and if you are kind of flu.

Speaker 2: And if you're kind of sladish in the second quarter, that implies a jump in the OR or an improvement in the OR to 81.1.

Lavish in the second quarter that implies a jump in the or or an improvement in the or to 81 one.

Speaker 8: So first, are those numbers correct? Second, it implies an over 500 basis point.

So first are those numbers correct second it implies an over 500 basis point.

Speaker 2: improvement in the operating issue, the second quarter, which is a huge number, I think, would support a lot of the initiatives that you're talking about, but I just want to make sure that that expectation is well calibrated.

Improvement in the operating it for the second quarter, which is a huge number I think would support a lot of the initiatives that you're talking about but I just want to make sure that that expectation is well calibrated.

Speaker 4: So overall, when we think about the OR cases for the year, so for the first quarter, we expected 200 points of deterioration, and that would take us from the 84, 3 to 86, 86, 3. Now, in terms of the second quarter, we're expecting the inflection of to be OR positive by mid-year. Now, obviously, we haven't given specific guidance for the second quarter, but it would be in the zip code of what you mentioned. But that's kind of how we think about the case and then going over to improvement in the back half of the year.

So overall, when we think about the odd cadence for the year. So for the first quarter, we expect it to 100 points of saturation and that would take us from 84, 3% to 80 686, three now in terms of the second quarter, we're expecting the inflection after the odd positive by mid year now obviously, we haven't given specific guidance for the second quarter, but it would be in.

And the ZIP code of what are what you mentioned, but that's kind of how we think about the cadence and then going over to improvements in the back half of the year.

Okay. So in the full year guidance, just on 100 basis points against an 84, three so you're really forecasting and 83, three or better or for the full year, which is obviously a great outcome given the starting point of 86, three but I just want to make sure. We're all on the same page in terms of the numbers.

Speaker 2: Okay, so and the full year guidance just on a hundred basis point is against an 84.3. So you're really forecasting an 83.3 or better OR for the full year, which is obviously a great outcome given the starting point of 86.3. But I just want to make sure that we're on the same page in terms of the number.

Speaker 4: That's correct for the fully year, which is more than 100 basis point of our improvement. With that, it's a quandary improvement going obviously from the 200 deterioration, the first quarter, inflection at point, to a fully year of more than a month.

That's correct for the full year, which is more than 100 basis points of order improvement with that sequential improvement going obviously from the two other deterioration in the first quarter inflection point for the year before that 100 basis points. Okay. That's very helpful. Thank you and then the other question I had I think it goes back to Brandon's question on capacity so.

Speaker 2: Okay, that's very helpful. Thank you. And then the other question I had, I think it goes back to Brandon's question on capacity. So I guess very simply, why do you guys need more capacity? Because if I look at the operating metrics in 2021, XPOLTL did 9,000 fewer shipments per day than it did all the way back in 2012. Would basically

I guess very simply why do you guys need more capacity because if I look at the operating metrics in 2021.

<unk> 9000 fewer shipments per day than it did all the way back in 2012 with basically the same footprint and so I'm just wondering why do you need more doors.

Speaker 2: And so I'm just wondering why do you need more doors? You know, why are more doors part of the problem? Why are they part of the solution? And maybe it's as simple as kind of more targeted doors to release some of the pressure, but just give us a sense of why you need more capacity in the context of how shipment is to trend it over the last decade.

You know why are more doors part of the problem why are they part of the solution and maybe it's as simple as kind of more targeted doors to release some of the pressure, but just give us a sense of why you need more capacity in the context of these you know how shipments have trended over the last decade or so.

Speaker 12: Thanks, thanks, the question on it's Fred. It's really simple. We got a very high ROIC in this business. We've been running it for OR improvement. We've succeeded at that. Overall, we improved the OR by 910 basis points. We're now going to continue to focus on OR. But in addition to that, grow the top line. In order to grow the top line, we're going to invest in more trucks. We're going to invest in more doors. We're going to invest in more people.

Thanks for the question on spread and it's really simple we got a very high ROIC CNS business, we've been running it for or improvement. We succeeded at that overall, we proved or by 910 basis points. We're now going to continue to focus on or we bought in addition to that grow the top line in order to grow the top line.

We're going to invest in more trucks, we're going to invest in more doors, we invest in more people.

Yeah.

Speaker 2: Yeah, I understand that, but like the question is you have 9,000 fewer shipments per day than you did back in 2012. So, you know, doors and capacities, not the issue. It's maybe something else on the stake.

Yeah, I understand that but like the question is you have 9000 fewer shipments per day than you did back in 2012, so doors and capacity is not the issue, it's maybe something else unless I'm mistaken.

I mean, its not that theres two points two additional points to make one of them is while we do have coverage across the entire country as Mario said earlier covered 99% of the country. There are selected markets, where we know we have the opportunity for additional volume by putting in incremental doors. The second point is that we have ongoing opportunity to optimize our.

Speaker 7: And it's not that there's two points, two additional points to make. One of those, while we do have coverage across the entire country, as Mario said earlier, it covered 99% of the country, the heart-selected markets, where we know we have the opportunity for additional volume by putting in incremental.

Speaker 7: The second point is that we have ongoing opportunity to optimize our line-home network. And when we think about where we flip those doors, we're thinking not only about the P and D side and that opportunity for incremental business, but also the opportunity to smooth out our line-home network. And Mara, I think, goes additional.

Line haul network and when we think about where we put those doors, we're thinking not only about the PND side, and then that opportunity for incremental business, but also the opportunity to smooth out our line haul our line haul network and Margaret because an additional comment on that yeah. I'll tell you a lot of it also goes back to the customer feedback and I spend a lot of time with customers since I've taken over this role and.

Speaker 4: yeah also i mean i'll tell you you know a lot of also goes back to customer feedback and i spend a lot of time with customers uh... that they can over this rule and uh... with my time in constant for example one of the markets we want to expand the number of doors and it's not in california but i didn't really met with a with one of our large customers and that immediate feedback was

With my time in customer for example, one of the markets, we want to expand the number of doors and in southern California, but I recently met with eight with one of our large customers in that immediate feedback was sign us up as soon.

Speaker 4: Find us up as soon as you open up the new terminal there. We will be first aligned to tap into that capacitor.

As soon as you open up the new terminals. There if you want to be first in line to tap into that capacity. So although across the network, we have 15% extra capacity and we're seeing more demand in certain markets, where there are pinch points, what else, where we don't have enough doors to be able to support all the customer demand. We're seeing there so by expanding the network in those specific markets began ifs.

Speaker 4: So although across the network we have 15% extra capacity, we're seeing more demand in certain markets where the orange points for us, where we don't have enough doors to be able to support all the customer demand we're seeing there. So by expanding the network in those specific markets, we can effectively better service our customers and get both more volume in those in those markets. And as Matt said, on the line-holt side,

Activity and better service, our customers and get more volume in those in those markets and as Matt said on the line haul side a lot of these so take for example, a market like Atlanta, which is one of the.

Speaker 4: A lot of these, so take for example the market like Atlanta, which is one of the major areas of the South, and it's also the gateway into the Florida region as well, from a line-holt standpoint. So you think about that market extending in it, gives us both the line-holt capacity and the local city operation capacity as well.

Major areas of the South and it's also the gateway into the Florida region as well from a line haul standpoint. So you think about that market expanding and it gives us both the volume haul capacity and the local city operation capacity as well.

Speaker 2: got it and I know I'm asking more here with one additional question, but I hopefully you'll allow me to Brad last quarter in the third quarter transcript. You use the word non-core to describe some businesses with an expio. I don't think I've ever heard you use the word non-core when describing any business with an expio. But last.

Got it and I know I'm asking more here with one additional question but.

Hopefully you allow me to Brad last quarter and the third.

Third quarter transcript you used the word noncore to describe some businesses with the next P. O I don't think I've ever heard you use the word noncore when describing any businesses that could be over the last.

Speaker 13: ten years and so i don't know if that was a deliberate distinction if you can just expand on what businesses you think are non-core why you think they're not core because obviously the company spun off gx so that's been a huge success

10 years, and so I don't know if that was a deliberate distinction if you could just expand on what businesses. You think are noncore why do you think they're noncore because obviously the company spun off Jack So that's been a huge success just trying to understand if you're happy with the way X P O with today.

Speaker 13: I'm just trying to understand if you're happy with the way XPO is today, or if we should read into something in terms of calling, characterizing some businesses is actually none.

Or if we should read into something in terms of calling characterizing some businesses absolutely noncore.

Speaker 12: I'm very happy with what X-Toe is today, but I'm also always looking for ways to create more shareholder value. And that's our mission in life and loads the open-minded about that. The stock, we're constantly a lot of great stuff, but the stock is trading at seven points something times, even down 12 points.

I'm very happy with what <unk> is today, but I'm also always looking for ways to create more shareholder value and that's our mission in life and will always be open minded about that.

The stock companies a lot of great stuff, but the stock is trading at seven point something times, EBITDA and 12 point something times on a p/e basis, which is quite significant discounts to the market. So we've heard suggestions for various strategic alternatives and asset sales and we're not going to comment on any of that publicly.

Speaker 12: Something times on a PE basis, which is quite significant just counts to the market.

Speaker 12: So we've heard suggestions for various strategic alternatives and the asset sales, and we're not going to comment in any of that.

Speaker 12: And there's a rationale for keeping all of our lines of business. They're good businesses, the numbers are up and to the right. There's also a rationale for investing some of our lines of business. We could take the proceeds, we could pay it on debt, we'd make this investment rate faster, we'd become more of a pure play, which you see with the spin investors life pure plays. So I'm very happy that we have multiple numerous alternatives to create.

And.

There is a rationale for keeping all of our lines of business. The good businesses. The numbers are up into the right. There's also a rationale for divesting some of our lines of business. We could take the proceeds we could pay down debt. We make this investment grade faster will become more of a pure play what you see with the spin investors like pure plays so I'm very happy that we have multiple.

Paul numerous alternatives.

Shareholder value.

Speaker 13: Right, okay. Very good. Thank you very much. I wish you guys the best of luck. Appreciate the time. Thank you.

Right. Okay very good. Thank you very much or wish you guys best of luck I appreciate the time thank.

Thank you.

The next question is from the line of Tom out of it with UBS. Please proceed with your question.

Speaker 1: The next question is from the line of Tom Waterve. So, the UBS, push to see this.

Speaker 14: Yeah, good morning. I know you've had a lot on LTL, but I guess that's an important topic. So I wanted to ask a little bit more about the path. Um.

Yeah. Good morning, I know you've had a lot on <unk>, but I guess, that's an important topics I wanted to ask a little bit more about the path.

Do you think I guess in terms of network efficiency is the capacity add.

Speaker 14: Do you think, I guess, in terms of network efficiency, is the capacity-add really a key factor that builds? I know we talk about drivers, trailers, some additional doors. Is that a key driver for improving fluidity and productivity? Or is that the wrong way to look at it?

Really a key factor that builds you know I know.

You're talking about drivers trailers. Some some additional doors is that a key driver for improving fluidity and productivity.

Or is that the wrong way to look at it.

Speaker 4: It's a combination of both, but for the most part it's positioning capacity for getting more market share or getting more volume.

Let's say, it's a combination of both but for the most part it's positioning capacity getting more market share or getting more motor volume. So overall, if you think about let's talk with capacity if I may from a real estate perspective. So today, we have excess capacity of roughly around 15% across the network. However, some markets have pinch points, where do we do.

Speaker 4: So overall, if you think about, let's talk with capacity from a real estate perspective. So today we have excess capacity of roughly around 15% across the network. However, some markets have things points where we don't have enough capacity or enough doors. I mentioned earlier, for example, the Southern California market where we see obviously both high

Don't have enough capacity open up doors I mentioned earlier for example, the southern California market, where we see obviously both high.

Speaker 4: The man on imports, but at the same time it's a high consumer market as well.

Demand on imports, but at the same time, it's a it's a high consumer market as well. So when we think about it from <unk> perspective, it's a combination of adding more doors to handle more freight, but also adding more doors to handle more fluidity in the line haul network and breaking points, where we need where do we need more of that more of that capacity moving forward.

Speaker 4: So when we think about it from a doors perspective, it's a combination of adding more doors to handle more freight, but also adding more doors to handle more the probability in the line hall network and breaking points where we need more of that capacity moving forward.

Speaker 4: On the equipment side and the people side, obviously it's mostly focused on getting more volume. The more traders you have, the more trucks you have, the more people you have. You can effectively move a more freight for customers. Now a lot of the plan on the real estate side, you also have to think through that there's a six month ramp for any real estate or any any any set of doors that we add in terms of planning into the volume. So a lot of the benefits would be in 2023 and beyond as we think about adding those doors through the course of the year and then obviously we would get the margin of benefit through the course of the year as well from the ones we add this year.

The equipment side and the people side, obviously, it's mostly focused on getting more volume the more theaters you have the more trucks you have the more people you have you can effectively moved to a more straightforward motivate for customers that have a lot of the plan on the real estate side. You also have to think through that Theres, a six month trend put any states as I said, it or any any set of doors that we add in terms of lending into the vault.

So a lot of the benefits would be in 2023 and beyond as we think about adding dual source for the course of the year and then obviously you would get the margin benefit through the course of the year as well from the ones. We add we add this year.

You've talked a fair bit about tonnage growth.

Speaker 14: you've talked a fair bit about college growth at that's it you know become more important lever for you get i i don't think i've heard a comment on the call of of what the the right ballpark is from which tonnage growth you would

Become more important lever for you.

I don't think Ive heard a comment on the call of what the right ballpark is for how much tonnage growth you would expect this year. So I don't know if you have a thought on that and then I guess.

Speaker 14: I don't know if you have a thought on that. And then I guess the shifting gears to tonnage growth.

Shifting gears to tonnage growth.

Speaker 14: Is tonnage growth a key lever for the margin improvement? Or is that really more, you know, just a shift to another gear and that helps on top line growth? Because I guess you look at some LTL models that does seem tonnage growth is key to the margin. But obviously it could be, you know, it could be a stronger top line or it could be that and a margin driver.

Tonnage growth a key lever for the margin improvement or is that really more.

Just a shift to another gear and that helps on topline growth because I guess, if you look at some L. T. L models. It does seem tonnage growth is key to the margin.

But obviously it could be it could be a stronger top line.

Or it could be that and and margin driver.

Speaker 4: It's a combination of both. When we think about delivering on the margin improvements, it's driven by volume, price sync, and operational efficiency or cost.

It seems like it's a combination you got it it's a combination of both so when we think about again delivering on the margin improvement is driven by volume pricing and operational efficiency. Our wood cost. So our plan includes the volume growth through the course of the year. However, it's a low single digit volume growth assumption for the full year, that's obviously thoughts were.

Speaker 4: So our plan includes the volume growth through the course of the year. However, it's a low single digit volume growth assumption for the full year that obviously starts with being downed low single digits in the first quarter, which is obviously seasonally better than where we were in the fourth quarter and then we're then through the course of the year for the full year low single digits improvement and volume. Now also volume, so not only is there's a flow through of EBTA from the volume itself, but there's also the fixed cost leverage as you get by adding more volumes to the network. But when you think about margin improvement, this combination of volume pricing and operation efficiency to drive that.

Being down low single digits in the first quarter, which is obviously seasonally better than where we were in the fourth quarter and then it would ramp through the course of the year for the full year low single digit improvement in volume that also volume.

Only if there is a flow through of EBITDA from the volume itself, but there is also the fixed cost leverage that you get by adding more volume to the network, but when do you think about margin improvement its a combination of volume pricing and operational efficiency to drive that.

Speaker 15: Right, okay, thanks for the time.

Right. Okay. Thanks for the time.

Speaker 12: Thank you. Um, yeah, we're way by fast, but it's over. Uh, so let me conclude by saying we have a ton of momentum in L.T.L. years off to a very good start.

Thank you.

Yeah sure went by fast, but it's over so let me conclude by saying we have a ton of momentum in LTE. Our year is off to a very good start our action plan is working and we expect to generate at least $1 billion of LTM EBITDA this year and more than 100 basis points or improvement.

Speaker 12: Our action plan is working. We expect to generate at least a billion dollars of L.Chill, EBITDA this year, and more than 100 basis points OR improved.

Speaker 12: In truck brokerage, we continue to perform at best in class levels in Q4. We grew loads at 22%. And over the last eight years, our truck brokerage growth rate has been three times the industries. And we expect to continue to significantly outperform going forward. On the balance sheet, we're on track to reduce leverage to one to two times by the first half of next year. And we're determined to close the significant valuation gap of our stock versus our peers. And we're determined to close the significant valuation gap of our stock versus our peers.

In truck brokerage, we continue to perform at best in class levels. In Q4, we grew loans at 22% and over the last eight years, our truck brokerage growth rate has been three times the industries and we expect to continue to significantly outperform going forward on the balance sheet. We are on track to reduce leverage to one to two.

Two times by the first half of next year, and we're determined to close a significant valuation gap, if our stock versus our peers.

Speaker 12: So thank you and we look forward to seeing you at the upcoming conferences. Have a great day.

So thank you and we look forward to seeing you at the upcoming conferences have a great day.

Speaker 1: This concludes today's conference. May disconnect your lines this time. Thank you for your participation.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Yeah.

[music].

Speaker 16: I.

Speaker 16: I.

[music].

[music].

Welcome to the extra logistics fourth quarter 2021 earnings conference call and webcast.

Speaker 1: Welcome to the Exco Logistics 4th Quarter 2021 earning conference call on webcast. My name is Rob and I'll be your operator for today's call. At this time, I'll participate in Tarnolson only

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.

Speaker 1: If you have a question, please dial star one on your telephone keypad. Please note this conference.

If you have a question please dial star one on your telephone keypad.

Please note this conference is being recorded.

Speaker 1: Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements and the use of non-GAAP financial measures.

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

Speaker 1: During this call, the company will be making certain forward-looking statements within the meeting of applicable securities laws, which by their nature involve a number of risks, uncertainties, and other factors that could cause actual results, and differ materially from those projected in the forward-looking statement.

During this call the company will be making certain forward looking statements within the meaning of applicable securities laws, which by their nature involve a number of risks uncertainties and other factors that could cause actual results to differ materially from those projected in the forward looking statements.

Speaker 1: A discussion of factors that could cause actual results to different materially has contained in the company's SEC filings, as well as in its earnings release.

A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release.

Speaker 1: The forward-looking statements in the company's earnings release, or made on this call, are made only as of today, and the company has no obligation to update any of these forward-looking statements, except to the extent...

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

Speaker 1: During this call, the company also may refer to certain non-GAAP financial measures as to find under applicable SEC rule.

During this call. The company also may refer to certain non-GAAP financial measures as defined under applicable SEC rules.

Speaker 1: Our conciliation of such non- GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release and the related financial tables are on this website.

A reconciliation of such non-GAAP financial measures to the most comparable GAAP measures are contained in the company's earnings release, and the related financial tables or on its website.

Speaker 1: I'm going to find a copy of the company's earnings release which contains additional important information regarding follow-up statements and non- GAAP financial measures in the investor section on the company's website. I will now turn the call over to Brad Jacobs. Mr. Jacobs, you may now begin.

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

I will now turn the call over to Brad Jacobs, Mr. Jacobs you may now begin.

Good morning, everybody, thanks for joining our call.

Speaker 12: With me today in Greenwich or Robbie Tulsi in our CFO , Matt Fassler, our Chief Strategy Officer.

With me today in Greenwich are Ravi <unk>, our CFO , Matt Fassler, our chief strategy Officer.

Speaker 12: Mario Harc are CIO and acting president of LCL, and Drew Wilkerson, president of North American Transportation.

Mario <unk>, our CIO and acting president of LCL, and drew Wilkerson President of North American transportation.

Yesterday, we reported a fourth quarter that delivered a number of record results the.

Speaker 12: Yesterday, we reported a fourth quarter that delivered a number of record results. The company has a-

The company as a whole performed well.

Speaker 12: to grew revenue by 14% year over year to $3.4 billion, which was the highest revenue of any quarter in our history.

We grew revenue by 14% year over year to $3 4 billion, which was the highest revenue of any quarter in our history.

Speaker 12: We generated adjusted EBITDA that was a solid deep versus our fourth quarter guidance, and we'd be on full year EBITDA as well.

We generated adjusted EBITDA, there was a solid beat versus our fourth quarter guidance and we beat on full year EBITDA as well.

Speaker 12: We also reported the highest adjusted deluded EPS of any quarter in our history. Again, significantly higher than expectations.

We also reported the highest adjusted diluted EPS of any quarter in our history again significantly higher than expectations.

Okay.

Speaker 12: Our growth was led by our two largest businesses, North American LTL and truck broker

Our growth was led by our two largest businesses North American LCL in truck brokerage.

Speaker 12: In LCL, we delivered record fourth quarter revenue and record year-over-year growth in yield.

In <unk>, we delivered record fourth quarter revenue and record year over year growth in yield.

Speaker 12: Our adjusted operating ratio in the quarter degraded year over year, which was expected, given some third quarter challenges within our network.

Our adjusted operating ratio in the quarter degraded year over year, which was expected given some third quarter challenges within our network.

Speaker 12: But the negative trend bottomed out in October , when we launched our LTL action plan with Mario at the helm.

But the negative trend bottomed out in October when we launched our <unk> action plan with Mario at the helm.

Our plan had an immediate impact on our year over year performance.

Speaker 12: Our plan had an immediate impact on our year over year performance.

Speaker 12: We reduced the erosion interoperating ratio and improved our volume trend as the quarter progress.

We reduced the erosion in our operating ratio and improved our volume trend as the quarter progressed.

Speaker 12: Importantly, we expect our year-over-year adjusted operating ratio X real estate to inflect positive mid-year and generate over 100 basis points of improvement in 2022.

Importantly, we expect our year over year adjusted operating ratio ex real estate to inflect positive mid year and generate over 100 basis points of improvement in 2022.

Speaker 12: In truck brokerage, we had another quarter of outstanding growth with low count increasing to record levels for the third consecutive quarter.

In truck brokerage, we had another quarter of outstanding growth with low count increasing to record levels for the third consecutive quarter.

Speaker 12: The biggest tailwind driving our volume is XPO Connect, our digital brokerage platform.

The biggest tailwind driving our volume is <unk> connect our digital brokerage platform.

Speaker 12: Shipper and carrier adoption of Connect is growing extremely fast.

Shipper and carrier adoption of connect is growing extremely fast.

Speaker 12: In December , we exceeded 600,000 cumulative driver downloads of the platform's mobile app, which is good news for customers, because they want digital access to as many carriers as possible.

In December we exceeded 600000 cumulative driver downloads of the platforms mobile App, which is good news for customers because they want digital access to as many carriers as possible.

Speaker 12: In the fourth quarter, weekly carrier usage on X-Bio Connect was up year over year by 74%.

In the fourth quarter weekly carrier usage on X deal connect was up year over year by 74%.

Speaker 12: So in sum, a good fourth quarter with great traction going into 2022.

So it's.

A good fourth quarter with great traction going into 2022.

Speaker 12: The full year guidance we issued yesterday reflects our expectation of strong earnings growth this year.

Our full year guidance, we issued yesterday reflects our expectation of strong earnings growth this year.

Speaker 12: The midpoint of our guidance range for 2022, Adjust Ebeda, reflects 11% growth versus 2021.

The midpoint of our guidance range for 2022, adjusted EBITDA reflects 11% growth versus 2021.

Speaker 12: And the midpoint for adjusted diluted EPS reflects 22% growth.

And the midpoint for adjusted diluted EPS reflects 22% growth.

Speaker 12: Our LTL Action Plan is moving our adjusted operating ratio in the right direction.

Our LTM action plan is moving our adjusted operating ratio in the right direction.

Speaker 12: to generate at least one billion dollars of adjusted EBITDA in LTL this year.

We still expect to generate at least $1 billion of adjusted EBITDA in <unk> This year.

Speaker 12: And our truck brokerage revenue is growing at a pace that's three times faster than the industry grows.

And our truck brokerage revenue is growing at a pace, that's three times faster than the industry growth.

Finally, we remain committed to deleveraging toward a net leverage ratio of one to two times by the first half of next year.

Speaker 12: Finally, we remain committed to de-leveraging toward a net leverage ratio of one to two times by the first half of next year.

Speaker 12: This will be a key milestone in achieving an investment grade rating.

This will be a key milestone in achieving an investment grade rating.

Speaker 12: We're intent on being best in class in every aspect of our business. And we're confident of continuing to deliver superior shareholder value.

We are intent on being best in class in every aspect of our business and we're confident of continuing to deliver superior shareholder value.

Speaker 12: Now I'll hand it over to Robbie to discuss our results and our balance sheet. Robbie?

Now I'll hand, it over to Ravi to discuss our results and our balance sheet Ravi.

Speaker 3: Thank you Brad and good morning everyone. Today I will disturb our fourth quarter and fully a results our balance sheet and liquidity and our outlook for 2022.

Thank you Brad and good morning, everyone. Today, I haven't gets tougher fourth quarter and full year results, our balance sheet and liquidity and our outlook for 2022.

Speaker 3: I'll start with the fourth quarter where we deliver strong year over year growth in revenue adjusted if it does and adjusted diluted EPS.

I'll start with the fourth quarter, where we delivered strong year over year growth in revenue adjusted EBITDA and adjusted diluted EPS.

Speaker 3: Revenue in the quarter was a record $3.4 billion. Of 14% year over year.

Revenue in the quarter was a record $3 4 billion.

Up 14% year over year.

Speaker 3: the net impact of fuel prices and effects contributed three points to this growth. Organic revenue growth for the point-

The net impact of fuel prices and FX contributed three points of this growth.

Organic revenue growth for the quarter was 11%.

Speaker 3: We grew adjusted EBITDA by 12% to a Q4 record of $323 million.

We grew adjusted EBITDA by 12% to a Q4 record of $323 million. This reflects strong growth and execution in our brokerage and other services segment.

Speaker 3: This reflects strong growth and execution in our growth rate and other services segment.

Speaker 3: Looking at a two-year stack, adjusted EBITDA was up 25% on a performance basis.

Looking at the two year stack adjusted EBITDA was up 25% on a pro forma basis.

Speaker 3: Our adjusted earnings per day to share for the quarter was $1.34, which was up from 53 cents from a year ago, an increase of over 150%.

Our adjusted earnings per diluted share for the quarter was $1 34.

Which was up from 52 defense from a year ago, an increase of over 150%.

Speaker 3: This increase was primarily driven by higher adjusted the bit of lower interest expense and the lower tax rate.

This increase was primarily driven by higher adjusted EBITDA lower interest expense and a lower tax rate.

Speaker 3: We generated $98 million of cash flow from continuing operations, spent $101 million on gross capex and received $60 million of proceeds from asset sales.

We generated $98 million of Gaslog from continuing operations.

$101 million on growth Capex and received $60 million of proceeds from asset sales.

Speaker 3: As a result, our free cash flow was $57 million, which was at the high end of our expectation.

As a result.

Free cash flow was $57 million, which was at the high end of our expectations.

Speaker 3: For the full year 2021, we delivered revenue of $12.8 billion, a year over year increase of 26%. I just did a bidda for the year was $1.24 billion, reflecting growth of 46%.

For the full year 2021, we delivered revenue of $12 $8 billion, a year over year increase of 26%.

EBITDA for the year was one $4 billion, reflecting growth of 46%.

Speaker 3: We more than quadrupled our adjusted earnings per directed share from continuing operations to $4.30 compared to $1.01 from a year ago.

We more than quadrupled, our adjusted earnings per diluted share from continuing operations grew $4 and 30.

Compared to $1 <unk> from a year ago.

Speaker 3: We generated free cash flow of $425 million and increase of over $200 million year over year, representing a free cash conversion rate on net income of 97%.

We generated free cash flow of $475 million, an increase of over $200 million year over year, representing a free cash conversion rate on net income of 97%.

Speaker 3: Our gas balance at December 31st was $260 million.

Our cash balance at December 31 was $260 million.

Speaker 3: This cash, combined with available debt capacity under committed borrowing facilities, gave us $1.3 billion of liquidity at year end. We had no borrowings outstanding.

This cash combined with available debt capacity under our committed borrowing facilities gave us $1 $3 billion of liquidity at year end we.

We had no borrowings outstanding under our ABL facility.

Speaker 3: maintaining strong liquidity remains a top priority for us.

Maintaining strong liquidity remains adult priority for us.

Speaker 3: We reduced our growth debt by approximately $3 billion in the year. And we have no significant debt maturitys until 2025.

We reduced our gross debt by approximately $3 billion in the year and we have no significant debt maturities until 2025.

Speaker 3: Our 2021 net leverage at year end was 2.7 times adjusted EBITDA.

Our 221 net leverage at year end was two seven times adjusted EBITDA.

Speaker 3: Our plan is to continue to deliver our balance sheet through free cash flow generation and adjust it to be the growth.

Our plan is to continue to Delever, our balance sheet through free cash flow generation and adjusted EBITDA growth.

Speaker 3: Our progress on deleveraging is important in the context of our commitment to achieve an investment-grade rating. Turning to the guidance, please.

Kress on deleveraging is important in the context of our commitment to achieve an investment grade rating.

Turning to the guidance, we issued yesterday after market close.

Speaker 3: Our full year guidance for adjusted EBITDA is 1.36 billion to 1.4 billion dollars.

Our full year guidance for adjusted EBITDA is 126 billion to $1 4 billion.

Speaker 3: This guy assumes gained from real estate sales of approximately $50 million, but is 62 million in 2021.

This guide assumes gain from real estate sales of approximately $50 million versus $62 million in 2021.

Speaker 3: Our current plan is to execute real estate sales in the second half of the year and this sales will primarily consist of excess land that does not fit our long term needs.

Our current plan is to execute real estate sales in the second half of the year and this is will primarily consist of excess land that does not fit our long term needs.

Speaker 3: On the cash flow front, our outlook is for a full year free cash flow of 400 million to 450 million dollars.

On the Gaslog front, our outlook for full year free cash flow of 400 million to $450 million.

Speaker 3: We expect full year growth capex to be 500 million to $550 million and net capex to be 425 to 425 million dollars.

We expect full year gross capex to be 500 million to $550 million and net capex to be $425 million to $475 million.

Speaker 3: This significant year over year increase in growth gap X reflects our plan to make growth investments in our LPL business.

This significant year over year increase in gross Capex reflects our plan to make growth investments in our NGL business.

Speaker 3: Our full year guidance for depreciation and evocoration expense is approximately $400 million and we expect interest expense of $170 million to $180 million.

Our full year guidance for depreciation and amortization expense is approximately $400 million.

And we expect interest expense of 170 million $280 million.

Speaker 3: We expect our fully attacked rate to be 24% to 25%.

We expect our full year tax rate to be 24% to 25%.

Speaker 3: Our average diluted common share count for the year is expected to be approximately 117 million

Our average diluted common share count for the year is expected to be approximately $117 million.

Speaker 3: And our outlook for fully adjusted EPS is $5 to $5.45.

And our outlook for full year, adjusted EPS is $5 to $5 and 45.

Speaker 3: For the first quarter, we expect our adjusted EBITDA to be 280 million to 285 million dollars.

For the first quarter, we expect our adjusted EBITDA to be 280 million to $285 million.

Speaker 3: This guidance assumes no real estate sales in the quarter versus $17 million in the same period a year ago.

This guidance assumes no DSD sales in the quarter versus $17 million in the same period a year ago.

Speaker 3: In conclusion, we are continuing to execute on a strategy of driving shareholder value as a pure plate transportation company and we are excited about our prospects for 2022. I will now turn things over to Matt.

In conclusion, we are continuing to execute on our strategy of driving shareholder value as a pure play transportation company and we are excited about our prospects for 2022, I will now turn things over to Matt.

Speaker 7: Thanks, Ravi. All review our fourth quarter operating results, starting with our North American LTL segment.

Thanks, Ravi I'll review, our fourth quarter operating results, starting with our North American <unk> segment, we grew revenue by 10% year over year to a fourth quarter record of $1 billion. Excluding fuel we grew revenue by 4% year over year.

Speaker 7: We grew revenue by 10% year over year to a fourth quarter record of $1 billion. Excluding fuel, we grew revenue by 4% year over.

Speaker 7: We had a 4.9% year over year decline in townage per day. Reflecting the impact of the short-term embargoes we utilized to optimize network flow.

We had a four 9% year over year decline in tonnage per day.

Reflecting the impact of the short term embargoes, we utilized to optimize network flow.

Speaker 7: When the embargoes were in place in October and November , our tonnage trends lagged typical seasonality. Then, with the embargoes lifted, we outperformed typical seasonality in December and January , despite headwinds from Omicron and weather.

When the embargoes were in place in October and November our tonnage trends lagged typical seasonality than with the embargo is lifted we outperformed typical seasonality in December and January despite headwinds from Alba crime and weather.

Speaker 7: During the quarter, we saw evidence of industrial verticals regaining momentum. Given the amount of industrial and our LTL mix, this boathed well for demand for our services in 2022.

During the quarter, we saw evidence of industrial verticals regaining momentum given the amount of industrial and our <unk> mix. This bodes well for demand for our services in 2022.

Speaker 7: yields excluding fuel, out-perform typical seasonality in each month of the quarter. And for the quarter as a whole year over year, yields increased 11%. This was nearly twice our previous record increase set in the third quarter.

Yield excluding fuel outperformed typical seasonality in each month of the quarter.

And for the quarter as a whole year over year yield increased 11%. This was nearly twice our previous record increase set in the third quarter.

Speaker 7: Revenue for shipment for the quarter, excluding fuel, also grew 11.

Revenue per shipment for the quarter, excluding fuel also grew 11%.

Speaker 7: The LTL pricing environment remains firm, and we're driving yield with our own company-specific pricing.

The <unk> pricing environment remains firm and we're driving yield with our own company specific pricing initiatives.

Speaker 7: Our LTL adjusted operating ratio for the quarter was 84%. Excluding real estate gains, our adjusted operating ratio was 87.5.

Our LTM adjusted operating ratio for the quarter was 84% excluding real estate gains our adjusted operating ratio was 87, 5%, which was 300 basis points higher than the fourth quarter a year ago.

Speaker 7: which was 300 basis points higher than the fourth quarter or a year ago. The biggest drivers of the OR degradation, where the embargoes I mentioned earlier, which impacted volume and the higher cost of purchase transportation.

The biggest drivers of the art degradation, where the embargoes, I mentioned earlier, which impacted volume and the higher cost of purchased transportation.

Speaker 7: We expect to realize a favorable trend in our operating ratio as our network efficiency continues to improve and we bring new equipment and drivers into our organization.

We expect to realize a favorable trend in our operating ratio as our network efficiency continues to improve and we bring new equipment and drivers into our organization.

Speaker 7: In our brokerage and other services segment, we grew revenue by 17% to a record $2.4 billion and increased the justee de beda by 29%. To a record $161 million.

In our brokerage and other services segment, we grew revenue by 17% to a record $2 $4 billion and increased adjusted EBITDA by 29% to a record $161 million adjusted EBITDA margin for the segment expanded by 70 basis points to six 7%.

Speaker 7: Adjusted EBITDA margin for the segment expanded by 70 basis

Speaker 7: to 6.7% from 6% the priority.

<unk> from 6% the prior year.

Speaker 7: The largest revenue and profit driver in the segment is our North American truck brokerage business, which had an outstanding fourth quarter. We increased our brokerage loads per day by 22% versus a year ago, or 50% on a two year basis.

The largest revenue and profit driver in the segment is our North American truck brokerage business, which had an outstanding fourth quarter, we increased our brokerage loads per day by 22% versus a year ago or 50% on a two year basis.

Speaker 7: Fourth quarter revenue rose 36% year over year or 136% on a two year.

Quarter revenue rose, 36% year over year or 136% on a two year basis.

Speaker 7: Margin dollars rose 10% against the tough comp and rose 86% on a two-year basis. On a sequential basis, Margin dollars in the fourth quarter were 29% higher than in Q3.

Margin dollars rose, 10% against the tough comp and rose 86% on a two year basis on a sequential basis margin dollars in the fourth quarter were 29% higher than in Q3.

Speaker 7: Our truck brokerage growth reflects a strong market, our unique technology proposition, and our close ties with key enterprise customers. Drew will speak more about these drivers in a minute. Finally,

Our truck brokerage growth reflects a strong market our unique technology proposition and our close ties with key enterprise customers drew will speak more about these drivers in a minute.

Finally, I want to share a couple of notable awards.

Speaker 7: XPO was named one of America's best employers for 2022 by Forbes, and one of America's most responsible companies by News.

<unk> was named one of America's Best employers for 2022 by Forbes and one of America's most responsible companies by Newsweek. We were also a best place to work on the disability equality index and a top company for women to work for in transportation by the women in trucking Association now.

Speaker 7: We were also a best place to work on the disability equality index and a top company for women to work for in transportation by the Women in Trucking Association. Now, I'll turn it over to Mario for his comments on North American health.

Now I'll turn it over to Mario for his comments on North American <unk>.

Speaker 4: Thanks, Math, and good morning, everyone. SBL has made a lot of progress since our third quarter called.

Thanks, Matt and good morning, everyone.

<unk> has made a lot of progress since our third quarter call.

Speaker 4: I'll start with the five points of our action plan. We begin executing in October .

I'll start with the five points of our action plan, we began executing in October .

Speaker 4: One major objective was to achieve better network flow and our plan had an immediate impact.

One major objective was to achieve better network flow and our plan had an immediate impact.

Speaker 4: We started with selective strategic embargoes to rebalance the network. Finally, we had cleared out the tour.

We started with selective strategic embargoes to rebalance the network by.

By November we had cleared out the third quarter backlog.

Speaker 4: This improved our on-time transit sharply from the end of the third quarter to the end of the fourth quarter. Along with other service metrics.

This improved our online trends that shortly from the end of the third quarter to the end of the fourth quarter, along with other service metrics.

Speaker 4: Second, it's pricing at yield. The record 11% year-over-year increase in yield x-fuel, where it's reported, as the results of multiple initiatives we have underway.

Second it's pricing at yield.

A record 11% year over year increase in yield ex fuel we reported the results of multiple initiatives we have underway.

Speaker 4: Before our 5.9% generate increased forward from the typical January timing to early November .

Before our five 9% general rate increase forward from the typical January timing to early November .

Speaker 4: We're also making sure we get paid for services that give customers added value like equipment and attention and phrase that requires special handling. And then,

But also making sure we get paid for services that give customers added value like equipment in detention and fade that require special handling.

And then that our pricing technology. This is our single biggest opportunity to drive yield.

Speaker 4: This is our single biggest opportunity to drive heels. We've developed proprietary pricing tools that make sure we charge a fair price. The third part of our plan is our in-house driver schools.

We've developed proprietary pricing tools that make sure we charge a fair price.

The third part of our plan is our in house driver schools. This is a huge advantage in the driver shortage.

Speaker 4: We graduated approximately 900 new drivers last year, which is more than twice the number of graduates we had in 2019.

We graduated approximately 900, new drivers last year, which is more than twice the number of graduates we had in 2019.

Speaker 4: How would go to double that number again this year? To about 1800 drivers.

Our goal is to double that number again this year to about 1800 drivers.

Speaker 4: Forth on the equipment side, we added a second production line to our trader manufacturing facility in Arkansas. We'd interact with double our trader output this year.

Fourth on the equipment side, we added a second production line our trailer manufacturing facility in Arkansas, We're on track to double our trailer output this year.

Speaker 4: The fifth part of our plan has to do with expanding our footprint to drive growth and network addition.

Is this part of our plan has to do with expanding our footprint to drive growth and network efficiencies.

Speaker 4: We plan to add 900 net new doors to our network by year and 2023. This equates to about 6% increase in doors from the sort of the plan.

We plan to add 900, net new doors, our network by year end 2023.

Equates about 6% increase in doors from the start of the plan.

Speaker 4: So far, we've opened third most in Chicago, Hyton, October , and in Wisconsin and Arkansas in January . But also opening 40-year-old fleet maintenance.

So far we've opened third mills in Chicago Heights in October and in Wisconsin in Arkansas in January .

But also opening 40, you fleet maintenance shops this quarter.

Speaker 4: Now I want to take a deeper dive into our LTS technology and the new developments we're rolling out.

Now I want to take a deeper dive into our LTE technology and the new developments, we are rolling out.

Speaker 4: The pricing tools I mentioned are part of the new pricing platform we just deployed.

The pricing tools I mentioned are part of the new pricing platform, we just deployed.

Speaker 4: This platform does the heavy lifting and analyzing shipping data. So our LTF pricing experts can be much more productive with contact negotiation.

This platform does the heavy lifting in analyzing shipping data solid lts pricing experts can be much more productive with contract negotiations.

Speaker 4: These tools have reduced manual data processing, I as much as 80%

These tools have reduced manual data processing by as much as 80%.

Speaker 4: And we now have the ability to mind historical RST data as a seamless lead generation tool for sales. We'll continue to enhance this.

And we now have the ability to mind historical RFP data as a seamless lead generation tool for sales with.

We will continue to enhance this platform going forward.

We've also made inroads in dynamic pricing, which allows us to update customer rates on certain loads in real time to incentivize them to give the business to us.

Speaker 4: We've also made inroads in dynamic pricing, which allows us to update customer rates on certain loads in real time to incentivize them to give the business to us.

Speaker 4: And we launch an automated process that unbores customers immediately to dynamic pricing, which shortens the contact negotiations.

And we launched an automated process that onboard customers immediately to dynamic pricing, which shortens the contact negotiation cycle.

Speaker 4: The other areas right for tech innovation in LTL are our line haul and dock operations.

The other area is ripe for tech innovation and LTM, our line haul and dock operations.

Speaker 4: Between now and mid-year, we'll be launching new tools to help further optimize how we load our trailer.

Between now and midyear, we'll be launching new tools to help further optimize how we load our trailers.

Speaker 4: These tools are designed to increase direct revs, which utilize our trucks and drivers more efficiently, and they'll improve dog productivity.

Tools are designed to increase direct reps, which utilize our trucks and drivers more efficiently and then improved dock productivity.

Speaker 4: In other recent tech launches, we completed the rollout of new planning software on our pickup and delivery platform. And we'll complete a rollout of new dispatch tools by mid-year.

In other recent tech launches, we completed the rollout of new planning software on our pickup and delivery platform and will compete at all out of new dispatch tools by mid year.

Speaker 4: And we'll start deploying new digital tools for customer self-service and new visibility into multi-palored shipments.

And we'll start deploying new digital tools for customer self service and new visibility into multi pallet shipments.

Speaker 4: We're continuing to make it easy for our customers to do business with XBO.

We're continuing to make it easy for our customers to do business with ex vivo.

Speaker 4: So as you can see, we have a lot happening on the technology front and a lot more opportunity going forward as well as the tangible goals we set for 2020.

So as you can see we have a lot happening on the technology front and a lot more opportunity going forward as well as the tangible goals, we set for 2022.

Speaker 4: We expect to generate at least one billion dollars of adjusted EBITDA and LTL this year. Our entire team is committed.

We expect to generate at least $1 billion of adjusted EBITDA and <unk>. This year, our entire team is committed to delivering on this goal.

Speaker 4: We also expect to deliver more than a hundred basis points of full-year improvements in our adjusted operating ratio excluding real estate gain.

We also expect to deliver more than 100 basis points of full year improvements in our adjusted operating ratio excluding real estate gains.

Speaker 4: Here's how the dots will connect between where we are today and our golden.

Here's how the adults will connect between where we are today and our goal this year.

Speaker 4: In the first quarter, we project about 200 basis points of degradation, and I would adjust it operating ratio X, V, the state year over the year.

In the first quarter, we project about 200 basis points of degradation in our adjusted operating ratio ex fee the state year over year.

Speaker 4: From there, we'll continue to reduce the erosion and reach the inflection point mid-year.

From there, we'll continue to reduce the erosion and reached an inflection point mid year.

Speaker 4: We'll improve our adjusted operating ratio in the second half, putting us on track for more than a hundred basis points of improvement for the full year. We know it's

We'll improve our adjusted operating ratio in the second half putting us on track for more than a 100 basis points of improvement for the full year.

We know exactly what it takes to hit these marks.

Speaker 4: The comprehensive action plan with executing should unlock more LTL revenue and margin growth calling forward.

The comprehensive action plan with executing should unlock more STL revenue and margin growth going forward.

Speaker 4: In 2021, when our company Y3Cearned on invested capital was 32%, our ROIC from LCL was even higher.

In 2021, when our companywide return on invested capital was 32% our auto IC from LPL was even higher.

Speaker 4: We'll on track to nearly triple our adjusted evitat this year since acquiring this business in 2015.

We are on track to nearly triple our adjusted EBITDA. This year since acquiring this business in 2015.

Speaker 4: And it's a cash engine over the last six years. We've generated more than three billion dollars of net cash from LCL alone.

And it's a cash engine over the last six years, we've generated more than $3 billion of net cash from LPL alone.

Speaker 4: Now we're going to invest more of our LCL operating cash flow into the business to accelerate this growth.

Now, we're going to invest more of our LTM operating cash flow into the business accelerated its growth.

Speaker 4: This year, our LPL gross cap has to be 8 to 9% of revenue, covering investments in fleet, facilities, and technology. That compares to 5%

This year, our STL gross capex will be 8% to 9% of revenue covenant investments in fleet facilities and technology that compares to 5% of revenue last year.

Speaker 4: That gives you a high level view of the many tactical actions we're taking to drive revenue and margin growth and return to year-over-year improvement in our operating creation.

That gives you a high level view of the many tactical actions, we're taking to drive revenue and margin growth and return to year over year improvement in our operating ratio.

Speaker 4: where after a strong start, we generate a sequential operating ratio improvement through the fourth quarter, with December being the strongest month.

We're off to a strong start we generated sequential operating ratio improvement through the fourth quarter with December being the strongest month.

Speaker 4: In January , the college remained stronger than typical season Alex.

In January tonnage remained stronger than typical seasonality.

Speaker 4: We're seeing major improvements in our service metrics, along with improvements in customer satisfaction and employee satisfaction.

We're seeing major improvements in our service metrics, along with improvements in customer satisfaction and employee satisfaction.

Speaker 4: We believe strongly in this business. We're on the right track and our plan is working. Now the rules going to cover truck brokerage and then we'll go to Q&A. Through.

We believe strongly in this business we are on the right track and our plan is working.

Now drew is going to cover truck brokerage and then we'll go into Q&A through.

Speaker 5: Thanks Mario, North American truck brokerage had another phenomenal quarter. The latest in a long history of outperforming the Mars.

Thanks, Mario North American truck brokerage had another phenomenal quarter the latest in a long history of outperforming the market over.

Speaker 5: Over the last nine years, from 2013 through 2021, we delivered a revenue kegger of 27%, which is three times the industry kegger of 9%.

Over the last nine years from 2013 through 2021, we delivered a revenue CAGR of 27%, which is three times the industry CAGR of 9%.

Speaker 5: There were some compelling trends underpinning our growth in 2021.

There were some compelling trends underpinning our growth in 2021.

Speaker 5: For the full year, the number of customers who generated over a million dollars of revenue with us increased about 48% versus the prior year. We grew volume with our top 20 customers about 35%. These large sticky relationships are the bedrock of our customer base.

For the full year, the number of customers, who generated over $1 billion of revenue with us increased by 48% versus the prior year. We grew volume with our top 20 customers about 35%. These large sticky relationships are the bedrock of our customer base.

Speaker 5: And overall, we served over 2,200 customers who were not in our customer base a year earlier.

Overall, we served over 200 customers, who were not in our customer base a year earlier.

Speaker 5: Another reason we're getting outside's growth is our XBO Connect digital platform. We have first mover advantage with proprietary brokerage automation dating back to the inception of XBO in 2011. That's when we first envisioned industry demand for a fully automated service for transportation procurement. XBO Connect is continuing to grow super fast.

Another reason, we're getting outsized growth is our <unk> connect digital platform. We have first mover advantage with proprietary brokerage automation dating back to the inception of <unk> in 2011, that's when we first envisioned industry demand for a fully automated service for transportation procurement <unk> conduct.

Is continuing to grow Super fast in the fourth quarter. The number of customers registered on the platform was up 41% year over year and registered carriers were up 38%.

Speaker 5: In the fourth quarter, the number of customers registered on the platform was up 41% year over year. And registered carriers were up 38%.

Speaker 5: This technology is a great lever to attract and retain customers and also carriers, which is critical when the market is tight. 79% of the carriers who do business with us on XBO Connect return to the platform within 30 days. XBO Connect.

This technology is a great lever to attract and retain customers and also carriers, which is critical when the market is tight.

79% of the carriers, who do business with us on <unk> connect returned to the platform within 30 days.

<unk> connect is a powerful growth engine, but it's not the only advantage we have with our proprietary technology. We also created dynamic pricing algorithms that we use with customers and carriers.

Speaker 5: But it's not the only advantage we have with our proprietary technology. We also created dynamic pricing algorithms that we use with customers and carriers.

Speaker 5: The algorithms leverage automation and machine learning to generate real-time pricing for every transportation lane at any given day and time.

Algorithms leverage automation and machine learning to generate real time pricing for every transportation lane at any given day and Tom.

Speaker 5: Customers of all sizes increasingly won't access to our price.

Customers of all sizes increasingly want access to our pricing tools and.

Speaker 5: In the fourth quarter, the number of transactions driven by APIs and other integrations was 2.7 times higher year over year. And 70% of our loads in the quarter were created or covered digital.

In the fourth quarter, the number of transactions driven by Aps and other integrations was two seven times higher year over year, and 70% of our loads in the quarter were created or cover digitally.

Speaker 5: The bottom line is we have a lot of runway to continue to take market share and we're doing it properly.

The bottom line is we have a lot of runway to continue to take market share and we're doing it profitably.

Speaker 5: The $440 billion total addressable truckload market in North America is shifting towards brokers. In part, because companies are rethinking their supply chains, it won't flexible capacity with lower risk.

The $440 billion total addressable truckload market in North America is shifting towards brokers in part because companies are rethinking their supply chains and won't flexible capacity with lower risk.

Speaker 5: We've positioned our business to capture this opportunity at any point in the cycle. In the current environment, truckload demand is strong and capacity is constrained, primarily due to equipment shortages and driver shortages.

We positioned our business to capture this opportunity at any point in the cycle.

In the current environment truckload demand is strong and capacity is constrained primarily due to equipment shortages and driver shortages. We offer best in class combination of lane density technology experience and scale with access to over 1 million trucks in the head count we added during the pandemic increases our capacity for growth.

Speaker 5: We offer best-in-class combination of lane density, technology, experience, and scale with access to over a million trucks, and the headcount we added during the pandemic increases our capacity for growth. These are significant advantages.

<unk>.

These are significant advantages and expanding our business.

Speaker 5: That was true in 2021 and we saw it again in January when we realized strong year-over-year volume growth again in January .

That was true in 2021, and we saw it again in January when we realized strong year over year volume growth again in January .

Speaker 5: We expect to generate double digit volume growth in 2022 and going forward. With that, we'll go to Q&A and take your questions. Operator.

We expect to generate double digit volume growth in 2022 and going forward.

With that we'll go to Q&A and take your questions operator.

Speaker 1: Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question, please press star one from your telephone keypad and the confirmation tone will indicate your lines in the question queue. You may press star two if you would like to remove your question from the queue.

Thank you at this time, we'll be conducting a question and answer session.

I'd like to ask a question. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue you.

You May press star two if he would like to remove your question from the queue.

Speaker 1: Distance using speaker equipment and maybe necessary to pick up your handset before pressing the star keys One more please I'll leave poll for questions

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment, please how we pull for questions. Once again it is star one.

Speaker 1: Our first question comes from the line of Chris Weatherby with City Group. Please see with your question.

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

Hey, Thanks, and good morning, everybody.

Speaker 6: Maybe we could start on the LPL side. It was curious about the operating ratio progression as we think about 2022. So I know down to 100 in the first quarter and positive in the back half. How do you think about 2Q and maybe sort of how that cadence kind of plays out? Clearly the comms are a little easier in the back half of the year, so getting to that 100 on a full year.

Maybe we can start on the LPL side I was curious about the operating ratio progression as we think about 2022. So I note down 200 in the first quarter and positive in the back half how do you think about <unk> and maybe sort of how that cadence kind of plays out clearly the comps are a little easier in the back half of the year, so getting to that one.

On a full year basis will be supported by improvement then, but I guess I wanted to again I get a sense of what you think the shape of the first half will be.

Speaker 6: by improvement then, but I guess I'm one that can I get a sense of what you think the shape of the person.

Speaker 4: Yes, sure thing Chris, this is that, this is Mario. So when we think about the cadence, so first starting with the first quarter, we expect a 200 basis point or our degradation in that quarter, which is sequentially better by a 100 basis point from the 300 point segregation we had in the fourth quarter.

Yeah sure thing Chris. This is that this is mario so so when we think about the cadence. So first starting with the first quarter. We expect a 200 basis point degradation in that quarter, which was sequentially better by 100 basis point from the 300 points degradation, we head into the fourth quarter and we'll drive that all improvements starting with volume. So we had four 9%.

Speaker 4: And we drive that all our improvements starting with volume. So we had 4.9% volume decline in the fourth quarter. And we expect a low single digit decline in the first quarter. And both when we think about the exit run rate from the fourth quarter, both in the sender and January , we outpace difficulties inality and volume despite the on the crown and weather in the first part of the quarter here.

<unk> declined in the fourth quarter, and we expect a low single digit decline in the first quarter and both when we think about the exit run rate from the fourth quarter. Both in December and January we outpaced typical seasonality and volume despite the omicron and weather in the first part of the quarter here now.

Speaker 4: Now, the next step from there would be on the past side. So we already have seen improvement in labor efficiency. So as we clear the back part for the embargoes, and we're gonna expect that to continue through the course of the year.

Now the next step from there would be on the cost side. So we already have seen improvement in labor efficiencies as we cleared the backlogs with the embargoes and we're going to expect that to continue through the course of the year.

Speaker 4: And however, that was offset in the first quarter, but at least with higher purchase transportation costs that will carry through the first half of the year. Because we typically reset our fee cost in the spring timeframe.

However that was offset in the fourth quarter at least with higher purchase transportation cost that will carry through the first half of the year, because we typically reset our our <unk> costs in the spring timeframe.

Speaker 4: Now from yield standpoint, we continue to expect yield to be very strong for the year, starting with the first quarter. So for the first quarter, we expect yield to be up in the high single digits, which is still reflecting obviously the strong underlying environment, but also the actions we are taking, offset by weight-perchement being higher for us specifically in the first quarter. So that's a dynamic of Q1 of the 200-point deterioration.

Now from a yield standpoint, we continue to expect yield to be very strong for the year, starting with the first quarter. So for the first quarter, we expect yield to be end up in the high single digits, which is still reflecting obviously the underlying environment, but also the actions we are taken.

Offset by by week with shipment in being higher for us typically in the first quarter. So thats a dynamic of Q1 of the 200 point deterioration now as we go through the year, we expect to to get to an inflection by by mid year on auto order and then get back to a positive improvement on a full quarter basis in the back half for the total.

Speaker 4: Now as we go through the year, we expect to get through an inflection by mid-year on OR, and then get back to positive improvement on a full quarter basis in the back half for a total OR improvement of more than 100 basis points for the full year. But next night, if you think how we get there, one volume will keep on increasing. Year of the remains strong for the course of the year in the high single digits, obviously with Q4 being slightly softer, given the, given the, where we were in Q4 of last year.

Improvement of more than 100 basis points for the full year, but net net if you think how we get there one volumes will keep on increasing yields remained strong for the course of the year in the high single digit obviously with Q4 being slightly softer given that given the where we were in Q4 of last year, and then cost would normalize where some of the costs are heading.

Speaker 4: And then cars would normalize where some of the cost headwinds would turn into tailwinds as we get into that half of the year.

<unk> I will turn into a tailwind as we get into the back half of the year.

Speaker 6: Okay, so sounds like 2Q is kind of in that flatish type of range, is that reasonable to assume or is that sort of part of anything about the case? Yeah, but this is...

Okay. So it sounds like <unk> is kind of in that flattish type of range is that reasonable to assume or is that sort of part of how you think about the cadence.

Yes.

And the Zip codes.

Speaker 6: That's helpful. I appreciate that. And then just click follow up in terms of the growth of the door count.

Okay. That's helpful. I appreciate that and then just a quick follow up in terms of the growth of the the door count.

Speaker 6: I know you're targeting 6% over a two-year basis. Want to get a sense of how quickly do you start to see ramping up that capacity? I know you've opened some facilities that get to want to get a sense of maybe how you see it playing out in the context of that OR progression. We just talk.

In 2022, I know you're targeting 6% over a two year basis wanted to get a sense of how quickly do you start to see ramping up that capacity I know you've opened some facilities I guess I want to get a sense of maybe how you see it playing out in the context of that or progression, we just talked about.

Speaker 4: Overall, from adding capacity, we think about the RAM, from once we added the door to be roughly in the six month time frame. But also, there's a dynamic where we think about adding doors as a combination of both getting volume in certain markets, but also getting line hall efficiency in certain markets in terms of what we call freight assembly centers.

Overall from a from adding capacity, we think about the ramp from once we added doors to be roughly in the six.

Six month timeframe, but also theres a dynamic what we need when we think about adding doors as a combination of both getting volume in certain markets, but also getting line haul efficiency in certain markets in terms of our what we call trait Assembly centers, where we break freight and rebuild failures for customers as freight flows for the network, but typically from the business case, we are our.

Speaker 4: or where we break freight and rebuild trailers for customers as freight flows for the network. But typically from the business case, we, our ramp processes are around the six month timeframe.

Processes at only six month timeframe that we expect from the doors to add in 2022.

Speaker 4: Now we expect from the doors to add in 2022 to roughly have about 1% of revenue or 40 million dollars worth of additional revenue from these doors. And obviously that would accelerate coming to 2023 as we keep on adding terminals and doors. Okay. That's very helpful. Thanks.

Roughly have about 1% of revenue were $40 million worth of additional revenue from esports, and obviously that would accelerate going into 2023, as we keep on adding Tor minerals indoors.

Okay. That's very helpful. Thank you very much for the time as well I appreciate it.

Got it thank you.

Yeah.

Speaker 1: and an expression comes from the line of Scott Group with full research. Let's receive.

Next question comes from the line of Scott Group with Wolfe Research. Please proceed with your questions.

Speaker 2: Hey, thanks. Good morning, guys. I want to ask another on the LTL margin. I just want to think more sequentially. So the guidance implies that you outperform seasonality, pretty meaningfully, in second quarter and the rest of the year. I guess why didn't we see any of this in the fourth quarter when pricing was accelerating so sharply? And I guess what change is starting in too cute to get there, and maybe just along those lines? You mentioned something about...

Hey, Thanks, good morning, guys.

Wanted to ask another one on the <unk> margin I just want to think more sequentially. So the guidance implies that you outperform seasonality pretty meaningfully in second quarter and the rest of the year I guess why didn't we see any of this in the fourth quarter when when pricing was accelerating so sharply.

What changes starting in <unk> to get there and maybe just along those lines you mentioned something about.

Speaker 2: Tail, cross-tide winds turning into tail winds. Are you thinking that PT becomes a tail wind in the back half? Yes.

Cost headwinds turning into tailwind are you thinking that PT becomes a tailwind in the back half.

Yeah, Let me start first with <unk>.

Yes.

Speaker 4: You got it. So let's start first with the with the fourth quarter. So there were two drivers for the Q4 decline beyond the numbers we've discussed last time. One was that we obviously implemented our strategic embargoes, the meter of the amount of volume we're getting in the network, so improved network flow. And we extended these embargoes through November because they substantially improved network flow. And obviously that increases cost and lowers volume, which is short term pain for long term benefit of having better network flow.

Yeah, you got it Scott So let's start first with the fourth quarter. So there were two drivers for the Q4 decline beyond the numbers. We discussed last time, one was that we obviously implemented our strategic embargoes in either of the amount of volume with getting into the network to improve network flow and we extended these embargoes through November because they substantially improve network flow and obvious.

That increases costs, and lower volume, which is short term pain for long term benefit of having better network flow and also in the back half of the quarter. We saw the third party line haul rates went up and have since stabilized and when you think about the improvements or the benefits from improved network flow. They include obviously, reducing the backlog and we reduced that down to target levels.

Speaker 4: And also in the back half of the quarter, we saw the third party line halt rates went up and have since stabilized. Now when you think about the improvements or the benefits from improved network flow, they include obviously reducing the backlog and reduce that to the down-to-paragate levels. Servants has improved sharply versus the third quarter. Customers satisfaction has jumped in both internal and third-party surveys as well as typically network improvements or the precursor for auto-R and through.

Service has improved sharply versus the third quarter customer satisfaction has jumped in both internal and third party surveys as well as typically network improvements are the precursor fourth quarter order improvements now, but more importantly for the fourth quarter. When you think about the progression October was the low point of our degradation in December was the best month for.

Speaker 4: Now, more importantly, for the fourth quarter, when you think about the progression, October was the low point of our degradation, and December was the best month for the court.

Speaker 4: And again, we see that kind of affecting as we get through the mid year. Now, when we think through the course of the year, there are three main drivers for O.R. So the first one is volume, which is typically backed by capacity. Second is pricing, and third is operational efficiency that ties to cost.

For the quarter and again, we see that kind of expecting as we get through the mid year. When we think through the course of the year and there are three main drivers for a while so the first one is volume, which typically backed by capacity taken this pricing and then third is operational efficiency that ties to cost and starting with volume as I mentioned earlier, we have seen that acceleration of volume, which.

Speaker 4: And I'm starting with volume, as I mentioned earlier, we've seen that acceleration of volume, which outpaced the physical seasonality in both December and January .

<unk> seasonality in both December and January and we expect volume to continue to et cetera through the course of the year as we mentioned in our five point action plan.

Speaker 4: And we expect volumes to continue to accelerate through the course of the year. As we mentioned in our five point action plan, we're building to add more capacities to the network to allow us to handle more volume. We're graduating and hiring more drivers from our schools. We've doubled the trailer production capacity in our Enhouses Manufacturing Facility. We're adding more tractors, starting here in the first quarter, having great discussions with our OEM.

Building to add more capacity to the network to allow us to handle more volume.

Graduating and hiring more drivers from our schools, we've doubled the Taylor production capacity in our in house manufacturing facility, adding more tractors starting here in the first quarter, having great discussions with our Oems and we're also adding more doors progressively through the year I would also investing in our sales force. So we're dedicating some of our strategic centers to LPL and where.

Speaker 4: And we're also adding more doors progressively through the year. We're also investing in our Salesforce. So we're dedicating some of our strategic centers to LPLs and we're seeing more business either entered or returned to our network as well. So the volume is going to accelerate through the course of the year as we go forward.

Seeing more business either entered already earned at our network as well. So the volume is going to accelerate through the course of the year as we as we go forward on the pricing side.

Speaker 4: On the pricing side, so it's a similar dynamic, and there's a pricing staying strong for the full year, being in that high single digit range, is what we expect. We are also contemplating if a potential additional GRI for local accounts in the first half, depending on what's happening in the pricing environment.

A similar dynamic in terms of pricing being strong for the full year being in that high single digit range as what we expect and we are also contemplating a potential additional <unk> for local accounts in the first half depending on what's what's happening in the pricing environment and then finally on the cost side as I said earlier, the headwinds with fits into a tailwind because we will be cycling through bushes transport.

Speaker 4: And then finally on the cost side, as I said earlier, the headwinds were slipping to tailwinds because we would be cycling through a bushing transportation cost of the back half. But also as we build efficiency back from a labor perspective and all the other cost categories, that would turn to a lower increase in the back.

<unk> cost for the back half, but also as we build efficiency back from a labor perspective, and all the other cost categories that would turn to a lower increase in the back half.

Speaker 4: But that's not, I mean, obviously, it would be more than a hundred biggest points of proven for the full year for the record or for the...

But net net I mean, obviously it will be more than 100 basis point improvement for the full year put it anchored off of the year.

Speaker 2: Okay, thank you. And then just second question, the brokerage other operating margins were really strong in Q4. Doesn't look like the guidance implies that this continues. So maybe just some thoughts on the brokerage, op margin, brokerage and other op margins this year. And maybe as long as we're talking on this segment, any update Brad on potential asset sales.

Okay. Thank you and then just second question the brokerage other operating margins were really strong in Q4. It doesn't look like the guidance implies that this continues so maybe just some thoughts on.

The brokerage op margin brokerage and other op margins this year and maybe as long as we're talking on this segment any update Brad on potential asset sales here. Thank.

Speaker 5: So I'll kick it off. As we said, we've saw extremely strong trends in January of taking volume.

Thank you guys, so I'll kick it off.

As we said we saw extremely strong trends in January are taking volume.

Speaker 5: If you look back to the fourth quarter, volume was up 22% on a year of year basis. But we also saw over the last two years our loads per night was up 50% our net revenue per load was up 50% and our net revenue more than double. So we're continuing to take share and we're confident that we'll still be able to do that for three main reasons.

If you look back to the fourth quarter volume was up 22% on a year over year basis, but we also saw over the last two years, our loads per day was up 50%. Our net revenue per load was up 50% on our net revenue more than double so we're continuing to take share and we're confident that we will still be able to do that for three main reasons. One is our technology.

Speaker 5: One is our technology. If you look at our technology, it's focused on customers, the carriers we work with and our people. The customers that we work with, our technology, helps them make transportation decisions on what mode they should be shipping, when they should be shipping. It even does little things of give them updates that there's an alert on any sort of delay. It also helps on the carrier side that we're working with. It's very sticky and we see that because 79% of the carriers return to us on XBO Connect within 30 days.

If you look at our technology is focus on customers the carriers, we work with and our people with customers that we work with our technology helps them make transportation decisions on what they should be shipping when they should be shipping it even those little things of gives them updates of theirs and alert on any sort of delay. It also helps on the carrier side.

That we're working with it's very sticky and we see that because 79% of the carriers returned to US an extra year of connect within 30 days and then we're continuing to see it within our within our employees as you look over the last five years, our head count is up 38% and our LOE dropped 66%. The second piece is our customers.

Speaker 5: And then we'll continue to see it within our employees as you look over the last five years. Our head count is up 38% and our loads are up 66%. The second.

Speaker 5: We have strong relationships with a lot of the top companies in the country.

We have strong relationships with a lot of the top companies in the country and this has helped drive growth. If you look at our volume growth with our top customers was up our top 20 customers is up 35% those same customer serve as a reference point and you'll see that for us as our customers, who do a $1 billion in business with us was up 48%.

Speaker 5: And this has helped drive growth. If you look at our volume growth with our top customers, our top 20 customers, it's up 35%. Those same customers serve as a reference point. And you see that for us as our customers who do a million dollars in business with us is up 48% and we brought on 2,200 new customers.

And we brought on 2200, new customers, we've got a strong sales force and a lot of momentum the last pieces our people our people have their ear to the ground. We've got some of the best operators in the business they've got a proven track record director level and above has been with us for eight years on average. So we've got that allows us to create strong sticky real.

Speaker 5: We've got a strong sales horse and a lot of momentum. The last piece is our people.

Speaker 5: Our people have their ear to the ground. We've got some of the best operators in the business.

Speaker 5: They've got a proven track record. Director-level and above has been with us for eight years on average.

Speaker 5: So we've got that allowed us to create strong sticky relationships with our customers.

<unk> with our customers so because of those three things I'm confident that we're going to continue to take market share and we're going to do it profitably.

Speaker 5: So because of those three things, I'm confident that we're going to continue to take markets here and we're going to do it properly.

Speaker 12: Scott, on the ask the sale question you had, we're not going to comment on any possible strategic initiatives we have going on, but thank you for the question.

Scott on the.

Asset sale question, you had we're not going to comment on any possible strategic initiatives, we have going on but thank you for the question.

Okay. Thank you for the time guys I appreciate it.

Youre welcome.

Speaker 1: Next question is from the line of Brendan Oglinski with Parklase. Pleas is here.

Next question is from the line of Brendan Glinski with Barclays. Please proceed with your question.

Speaker 11: Hey, good morning everyone. So I wanted to talk about the ability to grow in LTL, because I think if I look historically here, the name of the game has been margin improvement through, for better or worse, shrinking the business, getting better, making, focusing on price, and those customers that fit the network better, I think.

Hey, good morning, everyone. So I wanted to talk about the ability to grow in <unk>, because I think if I look historically here.

The game has been margin improvement through.

For better or worse shrinking the business getting better mix focusing on price and those customers that fit the network better I think.

Speaker 11: And I understand now, you know, can you talk to this in the context of, you know, what seems to be a very expanded cat-backed budget? Because I'm showing gross cat-backs here in the last few years, maybe 300 to 330. And obviously stepping up quite a bit to 550 this year. Thank you.

And I understand now can.

Can you talk to us in the context of what seems to be a very expanded capex budget, because im showing growth capex here in the last few years, maybe 300 to 330, and obviously stepping up quite a bit to 500 to $5 50. This year. Thank you.

Sure Scott.

<unk>, yes.

Speaker 7: Yeah, we are going to wrap up LTL CupX substantially. We're going to be going from roughly 5% of revenue in 2021 to 8 to 9% of revenue in 2022. Some of that is in fact for new facilities. We spoke about opening 900 doors.

Yes, we are going to wrap up LTM capex substantially we're going to be going from roughly 5%.

Revenue in 2021% to 8% 9% of revenue in 2022. Some of that is in fact for new facilities, who spoke about opening 900 doors over the next two years by the end of 2023. Some of it is for equipment as we continue to replenish our fleet, we generate exceptional returns on capital.

Speaker 7: over the next two years by the end of 2023, some of it is for equipment as we continue to replenish our fleet. We generate exceptional returns on capital in LTO. Our company, why we return on capital is 32%. LTO is higher than that. We know that we can get a strong return on that level of investment. Hence the decision to allocate more capital to this business. So we're confident we have a line of sight on all of the spending areas, both real estate and...

And <unk> our company wide return on capital was 32% <unk> is higher than that we know that we can get a strong return on that level of investment hence the decision to allocate more capital to this business. So we're confident we have line of sight on all of the spending areas, both real estate and equipment.

Speaker 11: Well, I guess Matt Mayes, I can rephrase the question to be more direct. Was it a lack of capital reinvestment in the past few years that limited growth in the segment?

Well I guess, Matt maybe if I can rephrase. The question would be more direct was it a lack of capital reinvestment in the past few years that limited growth in this segment.

Speaker 4: Overall, it was more of a strategy. So when we think about how we're focused on Steve Bob Conway back in 2015, has been on expanding margins and the profits. And this allowed us to get to a higher ROIC. But in that business, we nearly tripled EBITDA with the one billion in this year, since we bought that business and improved the R by 910 basis points.

Yes, well open on it was it was more of a strategy. So when we think about our focus since via bulk con way back in 2015 has been on expanding margins in the process and this allows us to get to a higher ROIC.

That business, we nearly tripled EBITDA.

The $1 billion. This year since we bought that business in <unk> by 910 basis points now thats being reflecting towards the growth strategy that goes back to part of it is obviously, adding more doors to the network the 900 doors.

Speaker 4: Now that we're inflecting towards the growth strategy, it goes back to part of it, is obviously adding more doors to the network, the 900 doors that Matt just mentioned.

The just mentioned expanding the size of our fleet by doubling the trailer production.

Speaker 4: expanding the size of our fleet by doubling the trailer production and our manufacturing facility and adding more tractors.

Fracturing facility and adding more tractors and also adding more people to be able to move the freight both in drivers and dock workers. So I'd say, so we're leaning more towards now adding more capacity to the network. So we can grow from a volume and top line perspective.

Speaker 4: and also adding more people to be able to move the freight, both in drivers and dock workers. So we're leaning more towards now adding more capacity to the network so we can grow from a volume and top line perspective.

Okay. Thank you Mario I appreciate it.

Thank you.

Speaker 1: Hamza Masari with Jeffries.

The next question is coming from the line of Hamzah Mazar with Jefferies. Please proceed with your question.

Speaker 8: Great, thank you very much. Brad, I just wanted to ask two questions, and then I'll turn it over. Just questions we've been hearing more frequently from investors given your recent stock sale. One, I guess, are you planning to exit XBO and then two, should we expect to see you sell more shares in the future? And I'll leave it there. Thank you.

Great. Thank you very much.

Brad I just wanted to ask two questions and then I'll turn it over.

Just questions we've been hearing more frequently from investors given your recent.

Stock sale.

One I guess are you planning to exit ex vivo and then two should we expect.

See you sell more shares in the future.

I'll leave it there thank you.

Speaker 12: The fair questions, let me be very clear about it. I have no plans to leave XPO. I'm extremely proud of what we're accomplishing here and I'm super excited about the many, many opportunities that we have.

The fair questions, let me be very clear about it I have no plans to leave X DFS I.

Im extremely proud of what we're accomplishing here and I'm Super excited about the many many opportunities that we have to create significant shareholder value, both tactically and strategically.

Speaker 12: to create significant shareholder value both tactically and strategically. And regarding the stock sales, I still own by 11% of the company.

And regarding the stock sales I still own about 11% of the company and I'm very bullish about the company's prospects, but that said I have all of these shares for over a decade and I probably will sell some more shares at some time in the future.

Speaker 12: and I'm very bullish about the company's prospects. But that said, I've only shares for over a decade and I probably won't fail some more shares at some time.

Speaker 12: But I have no plans to lead the company in the foreseeable future to the contrary. I'm very much all in and highly focused. Does that answer what you asked me? Yeah, yeah, perfect. Thank you so much. Appreciate it. I'll turn it over.

No plans to leave the company in the foreseeable future to the contrary I'm very much all in and highly focused does that does that answer what you're asking.

Yes, yes, perfect. Thank you so much appreciate it I'll turn it over.

Thank you.

Speaker 1: Our next question comes from a line of Alps in Paliac with Wells Fargo.

Our next question comes from the line of Allison <unk> with Wells Fargo. Please proceed with your question Hi.

Speaker 9: Hi, good morning. First on brokerage, you seem pretty confident that double digit growth will persist after 22. Could you help us maybe think of that growth algorithm for that going forward? Is it mainly the market share that you were trying to articulate before?

Good morning.

First time brokerage you seem pretty confident that double digit growth.

Persist after 'twenty two could you help us maybe think of that growth algorithm for that going forward is it mainly the market share that you were trying to articulate before.

Speaker 5: Yes, it is the market share. And the brokerage space out of the trucking space is $440 billion. brokerage has about $80 billion of that.

Yes, it is the market share.

The brokerage space out of the trucking space was 440 billion brokerage has about $80 billion of that and brokers are continuing to take share of customers want to use brokers because they've got flexible capacity that can scale up or down based on what's going on in the market and we've got a proven track record. If you look at the last five years of the <unk>.

Speaker 5: And brokers are continuing to take share. Customers want to use brokers because they've got flexible capacity that they can scale up or down based on what's going on in the market. And we've got a proven track record. If you look at the last nine years of the industry tagger being at 9% at our growth rate being at 27%. We've got a proven track record of being able to deliver on that result. As I mentioned earlier, we've got a strong sales team and a great pipeline for going forward.

Industry CAGR being at 9% at our growth rate being a 27% we've got a proven track record of being able to deliver on that results as I mentioned earlier, we've got a strong sales team and a great pipeline for going forward.

Great and then just on the technology for LTI, you know a lot of initiatives being put in place. There is there a way to think of the contribution from those initiatives, whether it's price or our customer share or productivity and efficiencies that you were expecting to drive from some of these initiatives just any color there.

Speaker 9: Great. And then just on the technology for LTL, you know, a lot of initiatives being put in place there, is there a way to think of the contribution from those initiatives, whether it's, you know, praise our customer share or productivity and efficiencies that you're expecting to drive from some of these initiatives? Just any color there.

Speaker 4: You got it, Alison, so it's a combination of all of the above. Obviously, when we think about pricing technology, it's about improving on yield. And as I said, in my prepared remarks, where the U platform allows us to reduce manual data processing by 80% enabling our pricing experts spend more time analyzing account performance and negotiating along with sales. And also enables us to use historical RFPs as a lead gen tour for sales. So that ties to adding more volumes to the network by driving again more teeds.

You got it to Edison. So it's a combination of all of the above so obviously when we think about pricing technology, it's about improving on yields and as I said in my prepared remarks.

The platform allows us to reduce manual data processing by 80%, enabling outpacing expert to spend more time analyzing account performance and negotiating along with sales.

Also enables us to use historical rfps as the lead Gen to report sales. So that's nice to have adding more volume through the network and by driving by driving again more and more deeds.

Speaker 4: similar thing on dynamic pricing that allows us to be able to get a combination of yields and volume where we can flex that lever based on where we need the volume versus where we want the yield. On the efficiency side, you know, I mentioned areas around line hall and dot R.

Similar thing on dynamic pricing that allows us to be able to get the combination of yield and volume, where we can flex that level based on where we need the volume versus what we want the yield on the efficiency side I mentioned areas at our line haul embark ops and this all goes back to the efficiency that deficiency in that case by building more direct sales to destination, which we call. It that I think the head halls.

Speaker 4: This all goes back to efficiency. That efficiency in that case, by building more direct claders to destination, which we call it the technically headhalls, it should use three handles for better dog productivity across our dogs, it also improves our line haul operation there. And all the technology goes back to customer experience. I mentioned I was new web experience for customers and better visibility all the way down to the piece level. So if you have a multi-skid shipment being able to give customer accessibility all the way down to the pallet level, the size back more to customer satisfaction. So it's a combination of...

It's a three handle or better productivity across our dogs. It also improves our line haul operation there and all the technology goes back to customer experience I mentioned, our new web experience for customers and better better visibility all the way down to the peak levels. If you have a multi skilled shipment being able to give customers visibility all the way down to the pad.

Level.

The size back most of the customer satisfaction. So it's a combination of improvement in yield improvement and volume improvement in efficiency and customer sat.

Speaker 4: improvement in yield, and improvement in volume, and improvement in efficiency, and customer set.

Great. Thank you.

Thank you.

Speaker 1: The next question is from the line of Brian Austin, back with JP Morgan.

The next question is from the line of Brian <unk> with Jpmorgan. Please proceed with your questions.

Speaker 10: Hey, good morning, thanks for the time. Just want to come back to the cadence of the OR throughout the year. And is there any way you can kind of split that between contributions? You would think they're coming from the market and pricing and things you just mentioned in terms of that are more expio specific that you got more visibility in line of sight. And within that, you just give some context in terms of how going forward the GRI was handled in the market.

Hey, good morning, Thanks for the time.

Just wanted to come back to the.

The cadence of the or throughout the year and is there any way you can kind of split that between contributions you would think they are coming from the market and pricing and things you just mentioned in terms of it or more <unk> specific that you get more visibility and minus site and then within that could you just give some context in terms of how going forward the <unk>.

Was was was handled in the market.

Speaker 7: I'll do the first part, Brian , and I'll just heart them back to the color.

I'll do the first part Brian and ill just harking back to the color that Mario gave we expect VR improvement to progress through the year due to a combination of volume improvement and over the course of the year improvement on the cost front with pricing being a relatively constant positive to the extent that we're looking at volume.

Speaker 7: that Mario gave. We expect the R improvement to progress through the year due to a combination of volume improvement and over the course of the year improvement on the cost front with pricing being a relatively constant positive to the extent that we're looking at volume and cost. Those are idiosyncratic opportunities for XBO, both to improve from where we are going forward and also recycling some of the issues that we experienced in the second half of last year. I'll give it to Mario for discussion of the GRR.

Cost those are idiosyncratic opportunities for <unk>, both to improve from where we are going forward and also as we're cycling some of the issues that we experienced in the second half of last year and all.

Give it tomorrow for a discussion of the genre.

Speaker 4: Overall on the GRI side, I mean it's a firm pricing environment when it comes to when it comes to L. So the feedback I've gotten from customer hasn't been a WebNC in any pushback in the market. And we pulled back our GRI from typical January time frame to November .

Overall on the on the <unk> side I mean, it's a current pricing environment. When it comes to when it comes to Npls the feedback I've gotten from customer Hasnt been we havent seen any any pushback in the market and we pulled back our jihad iPhone typical January timeframe to a to November .

Speaker 4: but overall the feedback has been has been good from customers. Now, what are we going to do this year? We are contemplating doing a second GRI for our local accounts on the first half of the year, but depending on how the market progresses through the course of the year. And you should eGRI for us to impact our one segment of our customers, which is our local account business, but not all customers, which is roughly around 20 to 25% of the business.

But overall the feedback has been has been good from customers that when we go through this year and we are contemplating doing a second Gi for our local accounts in the first half of the year, but depending on how the market progresses through the through the course of the year and usually <unk>, what I'll say impact our one segment of our customers, which is our local account business, but not all and not all customers.

It's roughly around 20% to 25% of the business.

Okay. Thanks, Mario a question for you then on the brokerage side.

Speaker 10: Okay, thanks Mario. Question for Drew then on the broker side. We hear a lot about automation and what's not a touch and what's created digitally. So I don't think you can add some context to your 70% or you think that stands versus the competition in your view and what sort of customers are really attracting and retaining with those types of abilities and capabilities. Thanks.

We hear a lot about automation and what's what's no touch and was created digitally so anything you can add some context to your to your 70% where do you think that stands out versus the competition in your view and you know what what sort of customers are really attracting and retaining with us with those types of abilities and capabilities. Thanks.

Speaker 5: Yeah, so the 70% are created or covered digitally. That's the number that we're extremely proud of. If you look at our API integrations with our customers, that is up 2.7 times on a year-over-year basis.

Yes.

70% are created or covered digitally that's a number that we're extremely proud of.

If you look at our API integrations with our customers that is up three seven times on a year over year basis.

Speaker 5: the types of customers that are used and this is all types of customers. It's very sticky with our large customers. They are attracted to an API integration that we offer, but also our smaller customers are logging on and they're used in XBO Connect on a daily basis and again that helps them make the best transportation decisions possible. Tell them what mode they should be shipping and when they should be shipping. So we're seeing that across all of our customer base. Great, thanks.

The types of customers that are using this as all types of customers was very sticky with our large customers. They are attracted to the API integrations that we offer but also our smaller customers are logging on and they are using ex vivo connect on a daily basis, and again that helps them make the best transportation decisions possible tell them, what motivation would be shipping window.

Be shipping so we're seeing that across all of our customer base.

Great. Thanks, Jim.

Thank you.

The next question is from the line of Jack Atkins with Stephens. Please proceed with your question.

Speaker 11: Okay, great. Thank you for taking my question. I guess this one's for Mario. I guess I'm a little surprised.

Great. Thank you for taking my question I guess this one is for Mario I guess Im a little surprised.

Speaker 11: that you're not expecting a bit more than the 100 basis points or show of OR improvement in 2022, given that's probably going to lag your peers.

That.

We're not expecting a bit more than the 100 basis points or so of our improvement in 2022, given that's probably going to lag your peers.

Speaker 11: performance this year and your comms are arguably much easier given the under performance of the last two years. So I guess Mario bigger picture question you feel like maybe there's something more structural going on within your LPL assets. Why can't you see a more substantial improvement in operating ratio this year and do you feel like you know that five-point plan you outlined three months ago was really going to be enough to get the business back on track.

Our performance this year and your comps are arguably much easier given the underperformance over the last two years. So I guess Mario a bigger picture question do you feel like maybe there is something more structural going on within your <unk> assets.

Why can't you see a more substantial improvement in operating ratio this year and do you feel like that.

Our five point plan you outlined three months ago was really going to be enough to get the business back on track.

Speaker 4: Thanks, thanks, Jeff. So let me first talk about the structural piece of our SBL business. We have more than 290 terminals with 21,000 fantastic people who cover 99% of all zip codes.

Thanks, Ed Thanks, Jeff. So let me first talk about the structural piece of our SPM business, we have more than 290 terminals with 21000 and fantastic people, who cover 99% of all ZIP codes and that team has moved 18 billion pounds of rate for 25000 customers in 2021. So there is nothing structurally.

Speaker 4: And that team has moved 18 billion pounds of freight for 25,000 customers in 2021. So there's nothing structurally wrong with this business. And I went back to what I said earlier, what since we acquired the LPL business from Conway to we or the Conway acquisition, we nearly are on track to triple EBTAS by this year. And improve our OR by 910 basis points and after generating an add cash of $3 billion.

Wrong with this business and I went back to what I said earlier with since we acquired LCL business from Conway.

Two we are for the <unk> acquisition. When you usually are on track to Triple EBIDTA by this year and improve our or by 910 basis points and asset generating net cash of $3 billion. So there is again there is nothing structurally wrong here, we didn't make the mistake.

Speaker 4: So there's, you know, again, there's nothing structurally wrong here. We just make the mistake into the third quarter of the class here to ensure third party line haul. Our network closed temporarily, the theory array.

Third quarter of last year to in source third party line haul our network close.

It really deteriorated our costs went up due to the efficiencies associated with that and we implemented a five point action plan, starting with strategic embargoes. These allow us to effectively lower tonnage.

Speaker 4: I would pass when up due to the efficiencies associated with that. And we implemented the five point action plans following with strategic embargoes. This allowed us to, where we effectively lower.

Speaker 4: to allow us to use the backlogs in our network and get back to having much more improved network flow.

Allow us to give the backlogs in our network and get back to having much more improved network flow. We believe this is a temporary phenomenon, it's not something that will repeat and we're focused on customer service on pricing on tonnage and also execution and where we are.

Speaker 4: We believe this is a temporary phenomenon, it's not something that could repeat. And we're focused on customer service, on pricing, on punish, and off-site execution.

Speaker 4: And we're planning on delivering a billion dollars of EV South this year. So when we think about it overall, it's a strong plan. It's a plan that ties back to adding more capacity, investing more in the business, pivoting towards growth, and then servicing 25,000, and hopefully more in the future. Fantastic.

We are planning on delivering $1 billion of EBITDA. This year. So when we think about it overall, it's a it's a strong plan. It's a plan that ties back to adding more capacity investing more into business pivoting towards growth and then servicing 25000 and hopefully more in the future are fantastic customers.

Speaker 11: Okay, got it. And then for my follow-up question, would love to kind of get your thoughts on the Intermodal Market. It's not a business that we hear you talk much about, but we're seeing a number of your IMC competitors making some interesting moves in terms of shifting real partners and adding additional containers and investing in their business.

Okay got it and then for my follow up question.

Would love to kind of get your thoughts on the intermodal market, it's not a business that we hear you talk much about but.

We're seeing a number of your IMC competitors, making some interesting moves in terms of shifting real partners and adding additional containers and investing in their businesses with intermodal. How are you thinking about the intermodal market and <unk> position within that as we look forward. Thanks again for the time.

Speaker 11: within a modal, how are you thinking about the Intermodal Market and XPO's position within that as we look forward?

Speaker 5: The intermoto market was strong. We continued to take...

The intermodal market was strong.

Continue we continue to take with.

Speaker 5: We continued our recovery there. And if you look at the congestions and the equipment shorties, our organic revenue was up 38% on a year of year basis. Our G-E-S-R-G-M per load skyrocket. We are investing in containers as you look into.

Continued our recovery there.

You look at the congestion and the equipment shortage, our organic revenue was up 38% on a year over year basis.

You saw our GM furloughed skyrocket, we are investing in containers as you look into 2022 and we have.

Speaker 5: 2022 and we expect to be able to continue to grow on intermodal but also on our Dreyichsat. Our Dreyichsat complements intermodal and when you think about it one of the reasons that they marry so well together is because we have a Presence at every single major U.S. port. So we're very excited about the intermodal market and it was a strong performer for us in the port quarter.

But to be able to continue to grow on intermodal, but also on our drayage sought our dray absorbed complements intermodal and when do you think about it one of the reasons that mirrors. So well together is because we have a presence at every single major U S. Port. So we're very excited about the intermodal market and it was a strong performer for us in the four quarter.

Yes.

Thank you.

Speaker 1: A new question that's from the line of a meat martyred with Deutsche Bank. This is you.

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

Speaker 13: Hey, thanks operator, hi everyone. Mario, I just wanna go back to the first couple questions on the cadence of the operating ratio. And I just wanna make sure we're on the same page in terms of the numbers that, you know, because there's a lot of operating ratios adjusted and unadjusted. If I look at the first quarter, it looks like you guys are guiding to an 86 spot 3OR for the first quarter.

Hey, Thanks, Operator, hi, everyone Mario I just wanted to go back to.

The first couple of questions on the cadence of the operating ratio I just want to make sure. We're on the same page in terms of the numbers that you know what.

Because theres a lot of operating ratios adjusted unadjusted, if I look at the first quarter. It looks like you guys are guiding to an 86 stop three or for the first quarter and if you are kind of flattish in the second quarter that implies a jump in the or or an improvement in the or to 81 one.

Speaker 13: And if you're kind of flatish in the second quarter, that implies a jump in the OR or an improvement in the OR to 81-1.

Speaker 13: So first, are those numbers correct? Second, it implies an over 500 basis point.

So first are those numbers correct second it implies an over 500 basis point.

Speaker 13: Improven in the operating issue, the second quarter, which is a huge number. I think would support a lot of the initiatives that you're talking about, but I just want to make sure that that expectation is well calibrated.

Improvement in the operating it for the second quarter, which is a huge number I think would support a lot of the initiatives that you're talking about but I just want to make sure that that expectation is well calibrated.

Speaker 4: So overall, when we think about the OR cases for the year, so for the first quarter, we expected 200 points of deterioration and that would take us from the 84, 3 to 86, 86, 3. Now, in terms of the second quarter, we're expecting the inflection of to be OR positive by mid-year. Now, obviously, we haven't given specific guidance for the second quarter, but it would be in the zip code of what you mentioned. But that's kind of how we think about the case and then going over to improvement in the back half of the year.

So overall, when we think about the odd cadence for the year. So for the first quarter. We expect it to 100 point deterioration and that would take us from 84, 3% to 80 686 III now in terms of the second quarter, we're expecting the inflection after the odd positive by mid year now obviously, we haven't given specific guidance for the second quarter about it.

B into and the ZIP code of what what you mentioned, but that's kind of how we think about the cadence and then going over to improvement in the back half of the year.

Speaker 13: Okay, so and the full year guidance just on 100 basis points is against an 84.3. So you're really forecasting an 83.3 or better OR for the full year, which is obviously a great outcome given the starting point of 86.3, but I just want to make sure that we're on the same page in terms of the.

Okay. So in the full year guidance, just on 100 basis points as against an 84, three so you're really forecasting and 83, three or better or for the full year, which is obviously a great outcome given the starting point of 86, three but I just want to make sure that we're on the same page in terms of the numbers.

Speaker 4: That's correct for the full year, which is more than 100 basis points of our improvement with that sequential improvement going obviously from the 200 deterioration to the first quarter and section that's point, so a full year of more than 100.

That's correct for the full year, which is more than 100 basis points of order improvement with that sequential improvement coming obviously from the two other deterioration in the first quarter inflection point for the year of more than 100 basis points. Okay. That's very helpful. Thank you and then the other question I had I think it goes back to Brandon's question on capacity so.

Speaker 13: Okay, that's very helpful. Thank you. And then the other question I had, I think it goes back to Brandon's question on capacity. So I guess very simply, why do you guys need more capacity? Because if I look at the operating metrics in 2021, XPLLTO did 9,000 fewer shipments per day than it did all the way back in 2012.

Very simply why do you guys need more capacity because if I look at the operating metrics in 2021.

<unk> 9000 fewer shipments per day than it did all the way back in 2012.

Speaker 13: with basically the same footprint. And so I'm just wondering why do you need more doors? You know, why are more doors part of the problem? Why are they part of the solution? And maybe it's as simple as kind of more targeted doors to release some of the pressure, but just give us a sense of why you need more capacity in the context of these, you know, of how shipment of trended over the last decade or.

But basically the same footprint and so I'm just wondering why do you need more doors.

Why are more doors part of the problem why are they part of the solution and maybe it's as simple as kind of more targeted doors to release some of the pressure, but just give us a sense of why you need more capacity in the context of these.

You know how shipments have trended over the last decade or so.

Speaker 12: Thanks, thanks, the question on this bread. It's really simple. We got a very high ROIC in this business. We've been running it for OR improvement. We've succeeded at that. Overall, we proved OR by 910 basis points. We're now going to continue to focus on OR. But in addition to that, grow the top line. In order to grow the top line, we're going to invest in more trucks. We're going to invest in more doors. We're going to invest in more people.

Thanks for the question on spread and it's really simple we got a very high ROIC CNS business, we've been running it for or improvement. We succeeded at that overall proved or by 910 basis points. We're now going to continue to focus on O arm, but in addition to that grow the top line in order to grow the top line.

We're going to invest in more trucks, we're going to invest in more doors, we invest in more people.

Speaker 13: Yeah, I understand that, but like the question is you have 9,000 fewer shipments per day than you did back in 2012. So, you know, doors and capacities, not the issue. It's maybe something else on the stake.

Yeah, I understand that but like the question is you have 9000 fewer shipments per day than you did back in 2012 so.

Doors and capacity is not the issue, it's maybe something else unless I'm mistaken.

Speaker 7: And it's not that there's two points, two additional points to make. One of those, while you have coverage across the entire country, as Mario said earlier, it covered 99% of the country, the heart-selected markets, where we know we have the opportunity for additional volume by putting in incremental.

Hi, Matt its Matt there is two points two additional points to make one of them is while we do have coverage across the entire country as Mario said earlier covered 99% of the country. There are selected markets, where we know we have the opportunity for additional volume by putting in incremental doors. The second point is that we have ongoing opportunity to optimize.

Speaker 7: The second point is that we have ongoing opportunity to optimize our line home network. And when we think about where we put those doors, we're thinking not only about the P&D side and that opportunity for incremental business, but also the opportunity to smooth out our line home network. And Mara, I think, is additional.

Our line haul network and when we think about where we put those doors, we're thinking not only about the P&G cybernetics that opportunity for incremental business, but also the opportunity to smooth out our line haul our line haul network and Margaret because of additional comment on that yes, I'll tell you a lot of it also goes back to the customer feedback and I spend a lot of time with customers since I've taken over this role.

Speaker 4: Yeah, and also I'll tell you, you know, a lot of it also goes back to customer feedback. And I spend a lot of time with customers, since I've taken over this role. And with my time in customer, for example, one of the markets we want to expand the number of doors and the Southern California, but I recently met with a one of our large customers and that immediate feedback was

And with my time in customer for example, one of the markets, we want to expand the number of doors and a southern California, what I recently met with eight with one of our large customers that immediate feedback was.

Speaker 4: Find us up as soon as you open up the new terminal there. We want to be first aligned to tap into that capacity.

Sign us up as soon we're going to ask.

As soon as you open up the new terminal there if we want to be first in line to tap into that capacity.

Speaker 4: So although across the network, we have 15% extra capacity. We're seeing more demand in certain markets where the orange points for us, where we don't have enough doors to be able to support all the customer demand we're seeing there. So by expanding the network in those specific markets, we can effectively better service our customers and get more volume in those in those markets. And as Matt said, on the line-holt side,

Although across the network, we have 15% extra capacity and we're seeing more demand in certain markets.

Our pinch points, what else, where we don't have enough doors to be able to support all the customer demand. We're seeing there so by expanding the network in those specific markets began effectively better service, our customers and get more volume in those in those markets and as Matt said on the line haul side a lot of these so take for example, a market like Atlanta, which is one of the.

Speaker 4: A lot of these, so take for example, the market like Atlanta, which is one of the major areas of the South, and it's also the gateway into the Florida region as well, from a line-up standpoint. So you think about that market extending in it, gives us both the line-up capacity and the local city operation capacity as well.

Major areas of the South and it's also the gateway into the Florida region as well from a line haul standpoint. So you think about that market expanding and it gives us both the buy and hold capacity and the local city operation capacity as well.

Speaker 13: got it and I know I'm asking more here with one additional question but I hopefully you'll allow me to Brad last quarter in in the third quarter transcript you use the word non-core to describe some businesses with an expio I don't think I've ever heard you use the word non-core when describing any business at expio but last

Got it.

No I'm asking more here with one additional question but.

Hopefully you allow me to Brad last quarter in the third quarter transcript you used the word noncore to describe some businesses with the next PEO I don't think I've ever heard you use the word noncore when describing any business so that could be over the last 10 years and so I don't know if that was a deliberate.

Speaker 13: ten years and so i don't know if that was a deliberate distinctly you can just expand on what businesses you think are non-core why you think they're not core because obviously the company spun off gx so that's been a huge success

If you could just expand on what businesses. You think are noncore why do you think they're noncore because obviously the company spun off <unk>. So that's been a huge success just trying to understand if you are happy with the way <unk> is today.

Speaker 13: Just trying to understand if you're happy with the way XPO is today, or if we should read into something in terms of calling, characterizing some businesses is actually non.

Or if we should read into something in terms of calling characterizing some businesses absolutely noncore.

Speaker 12: I'm very happy with what ex-cio is today, but I'm also always looking for ways to create more shareholder value. And that's our mission in life and loads the open-minded about that. The stock, we're constantly a lot of great stuff, but the stock is trading at seven points something times, even down 12 points.

I'm very happy with what <unk> is today, but I'm also always looking for ways to create more shareholder value and that's our mission in life lows the open minded about that.

The stock we're accomplishing.

Companies a lot of great stuff, but the stock is trading at seven point something times EBITDA 12 point something times on a p/e basis, which is quite significant discounts to the market. So we've heard suggestions for various strategic alternatives and asset sales and we're not going to comment on any of that publicly and.

Speaker 12: Something times on a PE basis, which is quite significant just counts to the market.

Speaker 12: So we've heard suggestions for various strategic alternatives and asset sales, and we're not going to comment in any of that public.

Speaker 12: And there's a rationale for keeping all of our lines of business, the good businesses, the numbers are up and to the right. There's also a rationale for investing some of our lines of business. We could take the proceeds, we could pay it out debt, we'd make this investment grade faster, we'd become more of a pure play, which you see with the spin investors life pure plays. So I'm very happy that we have multiple numerous alternatives to create, share,

There is a rationale for keeping all of our lines of business. The good businesses. The numbers are up into the right. There is also a rationale for divesting some of our lines of business. We could take the proceeds we could pay down debt. We made this investment grade faster will become more of a pure play, which you've seen with the spin investors like pure plays so I'm very happy that we have multi.

Paul numerous alternatives to.

To create shareholder value.

Speaker 13: Okay, very good. Thank you very much. I wish you guys the best of luck. Appreciate the time. Thank you.

Right. Okay very good. Thank you very much I wish you guys best of luck I appreciate the time.

Thank you.

Speaker 1: The next question is from the line of Tom Waterveld to the UBS. Please shoot it.

The next question is from the line of Tom <unk> with UBS. Please proceed with your questions.

Speaker 14: Yeah, good morning. I know you've had a lot on LTL, but I guess that's an important topic. So I wanted to ask a little bit more about the path.

Yes, good morning, I know <unk> had a lot on LCL, but I guess, that's an important topics I wanted to ask a little bit more about the path.

Do you think I guess in terms of network efficiency is the capacity add.

Speaker 14: Do you think, I guess in terms of network efficiency, is the capacity add really a key factor that builds? You know, I know, you know, we talk about drivers, trailers, some additional doors. Is that a key driver for improving fluidity and productivity? Or is that the wrong way to look at it?

Really a key factor that builds.

You're talking about drivers trailers. Some some additional doors is that a key driver for improving fluidity and productivity.

Or is that the wrong way to look at it.

Speaker 4: It's a combination of both, but for the most part, it's positioning capacity for getting more market share or getting more volume.

I'd say its a combination of both but for the most part its position and capacity for getting more market share or getting more motor volume.

Speaker 4: So overall, if you think about, let's talk with capacity from a real estate perspective. So today we have excess capacity of roughly around 15% across the network.

Overall, if you think about let's talk with capacity if I may from a real estate perspective. So today, we have excess capacity of roughly around 15% across the network. However, some markets have pinch points, where we don't have enough capacity or an up doors I mentioned earlier for example, the southern California market, where we see obviously both high.

Speaker 4: However, some markets have change points where we don't have enough capacity or enough doors. I mentioned earlier, for example, the Southern California market, where we see, obviously, both high...

Speaker 4: The man on imports, but at the same time it's a high consumer market as well.

Demand on imports, but at the same time I'd say its a high consumer market as well. So when we think about it from <unk> perspective, it's a combination of adding more doors to handle more freight, but also adding more doors to handle more fluidity in the line haul network and breaking points, where we need when we need more of that and what of that capacity moving forward.

Speaker 4: So when we think about it from a doors perspective, it's a combination of adding more doors to handle more freight, but also adding more doors to handle more COVID-19 in the Lion Hall network, and breaking points where we need more of that capacity moving forward.

Speaker 4: On the equipment side and the people side, obviously it's mostly focused on getting more volume. The more traders you have, the more trucks you have, the more people you have, you can effectively move freight for customers. Now, a lot of the plan on the real estate side, you also have to think through that there's a six-month trend for any real estate, any set of doors that we add in terms of branding into the volume. So a lot of the benefits would be in 2023 and beyond as we think about adding those doors through the course of the year. And then obviously you would get the margin of benefit through the course of the year as well from the ones we add this year.

The equipment side and the people side, obviously, it's mostly focused on getting more volume the more theaters you have the more trucks you have the more people you have you can effectively moved to a more playful motivate for customers that have a lot of the plan on the real estate side. You also have to think through that Theres, a six month ramp put any safety or any any set of doors that we add in terms of lending into the vault.

So a lot of the benefits would be in 2023 and beyond as we think about adding dual source for the course of the year and then obviously you would get the margin benefit through the course of the year as well as on the ones. We add we add this year.

You've talked a fair bit about tonnage growth.

Speaker 14: You've talked a fair bit about tonnage growth that's become more important lever for you. I don't think I've heard a comment on the call of what the right ballpark is for how much tonnage growth you would.

Become more important lever for you.

Don't think I've heard a comment on the call of what the right ballpark is for how much tonnage growth you would expect this year. So I don't know if you have a thought on that and then I guess.

Speaker 14: I don't know if you have a thought on that. And then I guess the shifting gears to tonnage growth.

Shifting gears to tonnage growth.

Speaker 14: Is tonnage growth a key lever for the margin improvement? Or is that really more, you know, just a shift to another gear and that helps on top line growth? Because I guess you look at some LTL models that does seem tonnage growth is key to the margin. But obviously it could be, you know, it could be a stronger top line or it could be that and a margin driver.

Tonnage growth a key lever for the margin improvement or is that really more.

Just shift to another gear and that helps on topline growth because I guess, if you look at some LPL models. It does seem tonnage growth is key to the margin.

But obviously it could be it could be a stronger top line.

Or it could be that and and a margin driver.

Speaker 4: It's a combination of both. When we think about delivering on the margin improvements, it's driven by volume, price thing, and operational efficiency or cost.

I'd say its a combination you got it it's a combination of both so when we think about delivering on the margin improvement is driven by volume pricing and operational efficiency would cost. So our plan includes the volume growth through the course of the year. However, it's a low single digit volume growth assumption for the full year, that's obviously thoughts were.

Speaker 4: So our plan includes the volume growth through the course of the year. However, it's a low single digit volume growth assumption for the full year that obviously it's farce with being downed low single digits in the first quarter, which is obviously seasonally better than where we were in the fourth quarter. And then we're then through the course of the year for a full year low single digit improvement and volume. Now also volume health is not only that it's a flow through of EBTA from the volume itself, but there's also the fixed cost leverage that you get by adding more volume to the network. But when you think about margin improvement, the combination of volume pricing and operation efficiency to drive that.

Being down low single digits in the first quarter, which is obviously seasonally better than where we were in the fourth quarter and then it would ramp through the course of the year for the full year low single digit improvement in volume now also volume.

There is a flow through of EBITDA from the volume itself, but there is also the fixed cost leverage that you get by adding more volume through the network, but when do you think about margin improvement is a combination of volume pricing and operational efficiency to drive that.

Speaker 15: Right, okay, thanks for the time.

Great. Okay. Thanks for the time.

Speaker 12: Thank you. Um, yeah, we're way by fast, but it's over. Uh, so let me conclude by saying we have a ton of momentum in L.T.L. years off to a very good start.

Thank you.

Yamana, whereby fast, but it's over so let me conclude by saying we have a ton of momentum in LTE. Our year is off to a very good start our action plan is working we expect to generate at least $1 billion of LCL EBITDA this year and more than 100 basis points or improvement in truck brokerage we can.

Speaker 12: Our action plans working, we expect to generate at least a billion dollars of L. Chail, Ibadavish here, and more than a hundred basis points OR improved.

Speaker 12: In truck brokerage, we continue to perform at best in class levels. In Q4, we grew loads at 22%. And over the last eight years, our truck brokerage growth rate has been three times the industry. And we expect to continue to significantly outperform going forward. On the balance sheet, we're on track to reduce leverage to one to two times by the first half of next year. And we're determined to close the significant valuation gap of our stock versus our peers.

Continue to perform at best in class levels in Q4, we grew loads at 22% and over the last eight years, our truck brokerage growth rate has been three times the industries and we expect to continue to significantly outperform going forward on the balance sheet. We are on track to reduce leverage to one to two times by the first half of <unk>.

Next year, and we're determined to close the significant valuation gap of our stock versus our peers.

Speaker 12: So thank you and we look forward to seeing you at the upcoming conferences. Have a great day.

So thank you and we look forward to seeing you at the upcoming conferences have a great day.

Speaker 1: This concludes today's conference. Let me disconnect your lines this time. Thank you for your patience.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.