XPO Logistics, Inc. (NYSE:XPO) Q3 2019 Earnings Conference Call - Final Transcript

Oct 29, 2019 • 08:30 am ET

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XPO Logistics, Inc. (NYSE:XPO) Q3 2019 Earnings Conference Call - Final Transcript

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Operator
Operator

Welcome to the XPO Logistics Third Quarter 2019 Earnings Conference Call and Webcast. My name is Melissa, 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 as to the extent required by law. During this call the company may also 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 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'll now turn the call over to Brad Jacobs. Mr. Jacobs please go ahead.

Executive
Bradley Jacobs

Thank you operator, Good morning everybody. Thanks for joining our third quarter earnings call. I'm here in Greenwich today with Matt Fassler our Chief Strategy Officer; and Tavio Headley our Senior Director of Investor Relations. We delivered beats this quarter on both adjusted EBITDA, and adjusted EPS. We also generated strong free cash flow. We achieved these results despite a soft macro which is reflected in our updated revenue guidance. Our main lines of business produced important gains in the quarter. In logistics we increased adjusted EBITDA by 11%. We continued to buy truckload capacity at better-than-market rates. We grew revenue in managed transportation by 22% with a tailwind from XPO Connect. We outperformed the market in Europe. And our LTL adjusted operating ratio was our best third quarter OR ever.

We remain firmly on track for our LTL business to generate at least $1 billion of EBITDA in 2021. Our proprietary technology is continuing to drive benefits for our customers and our shareholders. Our entire management team is highly focused on executing on 10 major levers to significantly improve our profit over the next several years. The majority of these 10 initiatives relate directly to our technology. Companywide we're using our tech to optimize a $5 billion variable-cost opportunity in our $6.5 billion annual labor spend. For example in LTL we've rolled out game-changing tools that use machine learning to reduce our $1.3 billion annual linehaul spend our $650 million spend for pickup and delivery and also