XPO Logistics, Inc. (NYSE:XPO) Q4 2019 Earnings Conference Call - Final Transcript

Feb 11, 2020 • 08:30 am ET


XPO Logistics, Inc. (NYSE:XPO) Q4 2019 Earnings Conference Call - Final Transcript


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Welcome to the XPO Logistics Q4 2019 Earnings Conference Call and Webcast. My name is Kevin, and I'll be your operator for today's call. [Operator Instructions]

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 security 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 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 may also refer to certain non-GAAP financial measures as defined under 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 of the Company's website.

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

Bradley Jacobs

Thank you, operator. Good morning, everybody. Welcome to our earnings call, and thank you for your interest in XPO.

I'm joined here this morning by Matt Fassler, our Chief Strategy Officer, and Tavio Headley, our Senior Director of Investor Relations.

I'm pleased to report that we delivered a solid full year performance capped by a strong fourth quarter. I'm particularly pleased that on a year-over-year basis our fourth quarter adjusted EPS was up 56%, coming in at $1.12 versus $0.72 last year. And our adjusted EBITDA was $432 million for the quarter, up 14% from the prior year, with margin up 170 basis points. Full year adjusted EBITDA was up 7% to $1.67 billion. We beat on free cash flow for the quarter at $221 million. Full year free cash flow was $628 million, just above the midpoint of the higher guidance we issued in August.

In LTL, we had the best fourth quarter adjusted operating ratio in our history, coming in at 82.3%. Year-over-year, this was an improvement of 500 basis points, and excluding real estate, it was an improvement of 150 basis points. LTL yield, excluding fuel, remained strong, up 3.1% year-over-year. Pricing on contract renewals was also strong at 3.4%.

Our team in truck brokerage executed remarkably well in the quarter. We're continuing to automate brokerage and improve productivity. In the fourth quarter, we grew volume 1%, with nearly 20% fewer people. Excluding the downsizing of our largest customer, volume was up 19%. We've been experiencing exponential growth in XPO Connect, our digital freight marketplace. We exceeded