XPO, Inc.

Welcome to the XBO Logistics fourth quarter 2020 earnings conference call and webcast. My name is Melissa, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. If you have a question, please press star 1 on your telephone keypad. 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. For instance, there can be no assurance that the company's planned spinoff of its logistics business will occur as currently contemplated or at all. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings. 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 the 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 on its website. 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 investor section on the company's website. I'll now turn the call over to Brad Jacobs. Mr. Jacobs, you may begin.

Thank you, Melissa, and good morning, everybody, and welcome to our fourth quarter and full year 2020 earnings call. Joining me on the call today are Malcolm Wilson, our CEO of XPO Europe, David Weissner, our CFO, and Matt Fassler, our Chief Strategy Officer. I'm very pleased with our fourth quarter results. We reported much better than expected revenue, adjusted EBITDA, adjusted EPS, and free cash flow. Year over year, revenue was up 13%, and strengthened across every business unit in logistics and transportation. In fact, revenue in both segments showed increases in the double digits. Adjusted EBITDA was a fourth quarter record. We also generated solid free cash flow that brought us to over half a billion dollars for the full year. Within transportation in our LTL business, Our fourth quarter adjusted operating ratio, excluding real estate, was also a record. And our truck brokerage results were simply stellar. Within logistics, our growth accelerated in both North America and Europe, and these higher volumes are increasingly being handled by robots. We're off to a great start in Q1. Across our key regions, the consumer-led recovery remains robust. and the industrial economy is starting to catch up. Demand for our expertise has never been greater, driven by the shift to outsourcing, e-commerce growth, and customer interest in our technology. We're seeing strong momentum in our three largest lines of business, truck brokerage, LTL, and logistics. And we expect both of our segments to generate year-over-year EBITDA growth in the range of 24 We issued higher-than-expected guidance for full-year adjusted EBITDA of $1.725 to $1.8 billion. We're also making good progress on the planned spinoff of our logistics segment. We've named a world-class management team from our own ranks, and we're excited about the impressive talent we're recruiting. We're still targeting a completion date in the second half of this year. We remain confident that the spin, if completed as planned, would enhance the growth prospects of both companies, giving them greater flexibility to tailor strategies and capital allocations to their end markets. We believe that the planned spinoff is an effective way to unlock significant value for our customers, employees, and shareholders. Now I'll turn the call over to Malcolm Wilson to update you on our European business. Malcolm runs our European operations, and upon the completion of the plan spin, will become CEO of the global logistics business. Malcolm's been managing multinational 3PLs for three decades in Europe, North America, and Asia. He joined us in 2015 when we acquired Norbert Dantesang, where he grew the logistics division into its largest revenue-producing unit. Then he came to XPO and led our logistics business to unprecedented growth and efficiencies. He's ideally suited for this next opportunity. Malcolm?

Thank you, Brian, and good morning, everyone. I'm very excited about our momentum in Europe. Our logistics business has fully recovered from COVID, and our transportation business is most of the way back. Our European logistics business operates in 15 countries and we're a leader in many important verticals. Foremost among these is e-commerce, where we are the first European outsourced provider of logistics. Across e-commerce and all of our verticals, we're helping our customers accelerate their adoption of new technology. We have a large and growing population of robots in our warehouses, and the benefit of our XPO Smart productivity tools, we believe we'll see large upside to productivity when XPO Smart is fully utilized in all our logistics sites. To give you an idea of our operating landscape in Europe, we have the bluest of blue chip customer bases with an average customer relationship of between five and 10 years. Some of these relationships go back 30 years or more. As we infuse more technology into our operations, the tenure is growing. Tenures contracts are becoming quite normal now. As is the case in the US, COVID has created a real appreciation for the critical importance of supply chains throughout Europe. During the past four years, our senior management team have delivered 12% CAGR in logistics gross margin while tackling big project in a variety of market environments. The company has been very resilient through the pandemic. We stood up our highly automated Nestle facility in the UK during the height of COVID last year while maintaining stringent safety measures. This brought the facility online in time to deliver an excellent peak season performance. We also stood up new operations for several omnichannel retailers, including the luxury brand Carin in Northern Italy, where we launched a large campus of automated warehouses, also in the peak of COVID. Although new lockdowns were implemented in many countries in the fourth quarter, governments have been much more thoughtful about how they apply these measures. The latest restrictions were designed to keep commerce moving. We've seen no material impact to our business. As for Brexit, we've experienced only minimal impact there as well. Our logistics business in the UK has been unaffected by the changes in the trading relationship with the rest of Europe, as our UK sites largely serve customers who sell to UK consumers. And with our UK transportation business, Brexit has actually worked in our favor. We have been able to recover costs related to border delays, and some of our competitors have exited the lanes going into the UK. So we've picked up share. Looking forward, we have several new high-profile projects starting in 2021. One notable logistics contract is with Nutritia, Danone's healthcare products business, This will be a fully automated facility in the Netherlands. And finally, we're very excited to have completed the acquisition of the majority of Koon & Nagel's UK business, which gave us the opportunity to welcome nearly 6,000 new colleagues serving three strategic verticals, tech and e-commerce, food service, and beverages. We've also onboarded many new customers with the acquisitions, These blue chip brands operate across Europe, and we are already seeing new business opportunities with them. The tech customers in particular include many industry leaders, such as Virgin Media and BT. All the customers are high-quality relationships. The transaction closed on the 1st of January. The transition has gone smoothly, and all customers and key employees have been retained. We had identified significant synergy benefits prior to the acquisition, and a number of these are already in process. We expect this acquisition to add more than $600 million to our annual revenue and drive significant synergies during 2021. All in, we have an enormous opportunity in front of us, and even more so as a separate company. I've had the pleasure of meeting some of you and I'm looking forward to spending time with more of you in the months ahead. Now, David will cover the results.