XPO(US:XPO)2022-02-09 16:16Financial Data and Key Metrics Changes - The company reported a record revenue of $3.4 billion for Q4 2021, representing a 14% year-over-year growth [8][17] - Adjusted EBITDA for the quarter was $323 million, up 12% year-over-year, marking a record for Q4 [17] - Adjusted diluted EPS increased to $1.34, up from $0.53 a year ago, reflecting an increase of over 150% [18][20] - For the full year 2021, revenue reached $12.8 billion, a 26% increase, while adjusted EBITDA grew by 46% to $1.24 billion [20] Business Line Data and Key Metrics Changes - North American LTL revenue grew by 10% year-over-year to a record $1 billion in Q4, with yield increasing by 11% [29][30] - The truck brokerage segment saw revenue rise by 17% to a record $2.4 billion, with adjusted EBITDA increasing by 29% to $161 million [33] - The number of loads per day in truck brokerage increased by 22% year-over-year, reflecting strong market demand [34] Market Data and Key Metrics Changes - The company experienced a 4.9% year-over-year decline in tonnage per day in LTL due to strategic embargoes, but performance improved in December and January [29][30] - The digital brokerage platform, XPO Connect, saw a 74% year-over-year increase in weekly carrier usage, with over 600,000 driver downloads [12][54] Company Strategy and Development Direction - The company is focused on becoming best-in-class in all aspects of its business and aims to generate at least $1 billion of adjusted EBITDA in LTL for 2022 [14][47] - A five-point action plan was implemented to improve network flow, pricing, driver recruitment, equipment production, and network expansion [37][42] - The company plans to increase growth CapEx to 8% to 9% of revenue in 2022, up from 5% in 2021, to support expansion and capacity growth [92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in strong earnings growth for 2022, with guidance reflecting an 11% growth in adjusted EBITDA and a 22% growth in adjusted diluted EPS [13][14] - The company anticipates a positive inflection in adjusted operating ratio midyear, with expectations of over 100 basis points improvement for the full year [10][66] - Management noted that the current operating environment is characterized by strong demand and constrained capacity, which presents opportunities for growth [58] Other Important Information - The company generated $475 million in free cash flow for the full year 2021, representing a free cash conversion rate on net income of 97% [20][21] - The company reduced gross debt by approximately $3 billion in 2021, with a net leverage ratio of 2.7x adjusted EBITDA at year-end [22] Q&A Session Summary Question: LTL operating ratio progression for 2022 - Management expects a 200 basis point degradation in Q1, improving to positive in the second half of the year, with a total improvement of more than 100 basis points for the full year [61][66] Question: Growth of door count in 2022 - The company anticipates a ramp-up in capacity from new doors within a 6-month timeframe, expecting about $40 million in additional revenue from these doors [69][71] Question: LTL margin expectations - Management explained that Q4's decline was due to strategic embargoes and increased costs, but improvements in network flow and service metrics are expected to lead to better performance in 2022 [75][78] Question: Brokerage operating margins - The company remains confident in maintaining strong margins due to technology, customer relationships, and operational efficiencies [84][88] Question: Future of intermodal market - Management acknowledged the intermodal market but did not provide specific details on XPO's position within that segment [119]