XPO Logistics, Inc. (NYSE:XPO) Q4 2016 Earnings Conference Call - Final Transcript

Aug 02, 2018 • 08:30 am ET

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XPO Logistics, Inc. (NYSE:XPO) Q4 2016 Earnings Conference Call - Final Transcript

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Operator
Operator

Welcome to the XPO Logistics Second Quarter 2018 Earnings Conference Call and Webcast. My name is Robin and I will be your operator for today's call. [Operator Instructions] Please note that this conference is being recorded.

Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements and the use of non-GAAP financial measures. During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which by their nature involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those projected in the forward-looking statements.

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

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

Executive
Bradley Jacobs

Thank you, operator. Good morning, everybody. Thanks for joining our earnings call. With me in Greenwich today are John Hardig, our CFO; Scott Malat, our Chief Strategy Officer; and Tavio Headley, our Head of Investor Relations.

I'm pleased to report that we had an outstanding quarter. Revenue, operating income and earnings were all strong and in fact, all were company records for a second quarter. We generated higher than expected organic revenue growth of 11%, and we continue to grow adjusted EBITDA at a faster rate than revenue. On a year-over-year basis, our EBITDA in the quarter was up 18%, underscoring the broad based growth that we delivered across our operations.

In our transportation segment, we increased freight brokerage revenue by 27%, and increased brokerage net revenue by 46%. In North American LTL, we achieved an adjusted operating ratio of 84.3%, which was our best operating ratio in 30 years. In last mile, we grew revenue in the quarter by 17%. And once again, the big driver of last mile performance was e-commerce. We opened another 16 last mile hubs in the second quarter, bringing our last mile network to 71 hubs across North America, on track for a total of 85 ahead of the holiday peak.

The growth in e-commerce is a global phenomenon. In our logistics segment, e-commerce fueled an acceleration of our organic revenue growth to 14%. We implemented a record 37 contract logistics start-ups in the quarter, bringing our year-to-date start-ups through June