XPO, Inc.

Welcome to the XPO third quarter 2024 earnings conference call and webcast. My name is Paul, 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 dial star 1 on your telephone keypad. Please limit yourself to one question when you come up in the queue. If you have additional questions, you're welcome to get back in the queue, and we'll take as many as we can. 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 as well as in its earnings release. 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 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 in 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 of the company's website. I will now turn the call over to XPO's Chief Executive Officer, Mario Harrick. Mr. Harrick, you may begin.

Good morning, everyone. Thanks for joining our call.

I'm here in Greenwich with Kyle Wismans, our Chief Financial Officer, and Ali Faghri, our Chief Strategy Officer. This morning, we reported strong third-quarter results and a soft backdrop for freight transportation, with above-market earnings growth and margin expansion. Company-wide, we grew revenue year-over-year by 4% to $2.1 billion, and we achieved significant operating leverage on that growth, delivering a 20 percent increase in adjusted EBITDA to $333 million. Our adjusted diluted EPS was $1.02, which is a 16 percent increase from a year ago. The standout result of the quarter was a strong margin expansion, with a year-over-year improvement in LTL adjusted operating ratio of 200 basis points. This improvement was at the high end of our target range. What drives our results are the four levers of our strategy, service quality, yield growth, investments in the network, and cost efficiency. These levers are closely aligned, and each one has a distinct role in driving our performance. I'll start with service quality. We delivered a damage claims ratio of 0.2% which is an improvement from 0.4% last year. Importantly, damage frequency continued to improve each month in the quarter to record levels. We also improved our on-time performance year-over-year for the 10th consecutive quarter. The speed and reliability of our network are the primary reasons why our customers trust us with their freight, and they experience these benefits on a daily basis. Our second lever is the targeted investments we're making in capacity ahead of the strong demand we anticipate in a freight market recovery. These ongoing investments are designed to deliver world-class service at every stage of the freight market cycle. Over the past three years, we've added nearly 15,000 trailers and more than 4,000 tractors to our fleet. We're using our rolling stock to accelerate our line haul insourcing with a broad benefit to service across our network. In addition, we've now opened up 21 of the 28 service centers we acquired last December, and we expect to open the last seven sites by early next year. This is on track with our plan. The majority of these sites are in markets where we want to build density and leverage our existing teams. Each new service center helps our network operate more efficiently. When they're all online, we'll have roughly 30% excess door capacity in the network. Strategically, this positions us to capitalize quickly in an up cycle, driving substantial operating leverage and profitable market share gains. Yield is our third lever and the primary driver of our margin improvement. We've been reporting above market yield growth throughout this year as we align our pricing with the value we deliver. In the third quarter, we grew yield excluding fuel by 6.7% year-over-year. This underpinned the 200 basis points of OR improvement we reported. We achieved this by executing on multiple initiatives that are yield and margin accretive. With our customers under contract, we increased renewal pricing by half single digits year-over-year for the fifth consecutive quarter, supported by the service improvements we're making. And we're earning more market share from local customers due to the investments we made in our sales force. In the third quarter, we increased shipments from local customers by over 10% compared with a year ago. Our new premium services are another benefit to yield. We've continued to increase our revenue mix from high margin accessorial services, and we expect this revenue stream to grow substantially over time. The final level of our strategy is cost efficiency, where we have three areas of focus, purchase transportation, variable costs, and overhead. In the third quarter, we reduced our purchase transportation costs by 40% year over year, primarily driven by our line haul insourcing initiative. We ended the quarter with 13.6% of line haul miles outsourced to third parties. which was a reduction of nearly 800 basis points year over year. This is the lowest level of outsourcing in our company's history, and we're on track to meet our 2027 target by year end 2024, three years ahead of plan. We now expect our outsourced miles to be below 10% next year. And to support this trajectory, we're deploying more driver teams and steeper cab trucks for long distance line haul runs. And we're continuing to manage labor costs effectively using our proprietary technology. We can realign labor hours quickly to address changes in volume and do that at the service center level. Turning to Europe, where transportation remains soft in most countries, we continue to outperform the industry. On a year-over-year basis, we increased third-quarter segment revenue by 7% It was our strongest quarterly revenue growth since 2021, with volume accelerating for the fifth consecutive quarter. The strongest revenue performance was in the UK, where our year-over-year organic revenue growth was up mid-teens. Importantly, our sales pipeline in Europe is growing at near-record levels as we close new business and replenish new leaves. This should support ongoing above-market growth across our key geographies. In summary, the strong third quarter we delivered highlights the effectiveness of our strategy and our company-specific initiatives regardless of the macro. The world-class service we provide is within our control. It creates value for our customers and enables us to outpace the industry with yield growth and margin expansion. In addition, we've made significant progress in becoming more cost-efficient with our operations. Even in the current environment, our strategy is driving robust financial and operational results, and our investments in capacity will accelerate those results when the freight market rebounds. We have a long runway for additional market share and earnings growth, and we're well positioned to capture that opportunity. Now, I'm going to hand the call over to Kyle to discuss the financial results. Kyle, over to you.