XPO (XPO) This fall 2023 Earnings Name Transcript

XPO (XPO 18.86%)
This fall 2023 Earnings Name
Feb 07, 2024, 8:30 a.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Individuals

Ready Remarks:

Operator

Welcome to the XPO This fall 2023 earnings convention name and webcast. My identify is Sherry, and I will probably be your operator for in the present day’s name. Right now, all contributors are in a listen-only mode. Later, we are going to conduct a question-and-answer session.

[Operator instructions] Please be aware that this convention is being recorded. Earlier than the decision begins, let me learn a quick assertion on behalf of the corporate relating to forward-looking statements and using non-GAAP monetary measures. Throughout this name, the corporate will probably be guaranteeing forward-looking statements throughout the which means of relevant securities legal guidelines, which by their nature, contain various dangers, uncertainties and different elements that might trigger precise outcomes to vary materially from these projected within the forward-looking statements. A dialogue of things that might trigger precise outcomes to vary materially is contained within the firm’s SEC filings, in addition to in its earnings launch.

The forward-looking statements within the firm’s earnings launch or made on this name are made solely as of in the present day, and the corporate has no obligation to replace any of those forward-looking statements, besides to the extent required by legislation. Throughout this name, the corporate can also confer with sure non-GAAP monetary measures as outlined beneath relevant SEC guidelines. Reconciliations of such non-GAAP monetary measures to probably the most comparable GAAP measures are contained within the firm’s earnings launch and the associated monetary tables or on its web site. You’ll find a replica of the corporate’s earnings launch, which comprises further vital data relating to forward-looking statements and non-GAAP monetary measures, within the buyers part of the corporate’s web site.

I’ll now flip the decision over to XPO’s chief govt officer, Mario Harik. Mr. Harik, you could start.

Mario Harik — Chief Govt Officer

Good morning, everybody. Thanks for becoming a member of our name. I am right here in Greenwich with Kyle Wismans, our chief monetary officer; and Ali Faghri, our chief technique officer. I am happy to report that we stored a powerful yr for the quarter that exceeded expectations, and we have carried that momentum into 2024.

Companywide, we reported fourth quarter income of $1.9 billion, which is 6% larger yr over yr. And we grew adjusted EBITDA to $264 million for a rise of 28%, excluding actual property beneficial properties in 2022. Our adjusted diluted EPS for the corporate was $0.77, which was additionally higher than anticipated. I need to thank our crew for delivering these nice ends in a delicate freight surroundings.

Taking a look at our North American LTL phase, we reported our strongest progress since we launched our LTL 2.0 plan in 2021. We grew adjusted working earnings yr over yr by 51% and improved our adjusted working ratio by 380 foundation factors. We delivered the most effective harm claims ratio in our historical past at 0.3%, in addition to a report stage of worker satisfaction. And we considerably accelerated our yr over yr yield development, excluding gasoline, to 10.3%.

We additionally improved value effectivity for the fourth consecutive quarter with additional will increase in labor productiveness and linehaul and sourcing. And we proceed to deploy capital effectively as we reinvest again into the enterprise. All of those are proof factors that our plan has sturdy traction. And the 28 service facilities we just lately acquired from the Yellow Community will construct on this momentum.

This acquisition is a once-in-a-generation alternative to combine prime areas into our community to help yield development and margin growth. When the market recovers and business capability tightens, we’ll be in a stronger place to serve our clients and drive worthwhile development for years to return. Now, I need to share some particulars of the quarter, beginning with the primary pillar of our LTL 2.0 plan, service enhancements. We improved each main part of customer support high quality within the quarter, together with our buyer satisfaction score, which has risen by greater than 40% since 2021.

Our on-time efficiency was three share factors higher than within the prior fourth quarter. And I discussed that our harm claims ratio of 0.3% is a brand new report for us. To place that in context, it is a huge enchancment from 1.2% after we launched our plan. These are metrics our clients watch intently as an indicator of service high quality.

Our high precedence is to turn out to be the customer support chief in our business. And we’re persevering with to equip our crew with the instruments to make this a actuality. One instance is the brand new freight airbags I spoke about on our final name. The rollout has been going properly, and this resolution is now put in at over 50% of our doorways.

The airbags have diminished damages by greater than 20% at these areas, and the profit will unfold throughout our community. We count on to complete the installations by the center of this yr. The second pillar of LTL 2.0 is to spend money on our community to drive long-term development. We added extra tractors and trailers in 2023 than any yr in XPO’s historical past, to each develop and refresh our fleet.

This resulted in report community fluidity and supported our technique to in-source extra line-haul miles. On the tractor facet, we bought greater than 1,400 items in 2023. This diminished our common fleet age to 5 years at year-end, in contrast with 5.9 years in 2022. On the trailer facet, we manufactured over 6,400 items at our in-house facility in Arkansas, exceeding our manufacturing goal.

For 2024, we count on our LTL capex stage to be within the low-teens as a % of income, and once more, primarily allotted to our fleet. By way of the 28 service facilities, we acquired from Yellow, the most important affect on our capital technique is timing. We have put ahead dozens of actual property investments that we plan to make over the following a number of years. I am going to add some strategic coloration to my earlier feedback on the acquisition.

These service facilities will ship vital advantages to the enterprise for years to return. First, they’re going to get us nearer to clients, and provides us bigger services in main metro areas. This could drive substantial value efficiencies throughout our line haul, pickup-and-delivery and dock operations. Second, they’re going to improve our yield development by additional enhancing, our service with fewer freight three handles, cut back damages, and higher on-time efficiency.

And third, that’ll give us extra capability in key metros like Indianapolis, Columbus and Las Vegas. These are markets the place we’re presently turning away worthwhile clients, as a result of we do not have sufficient door capability. We plan to start out bringing these areas on-line in April and have all of them operational throughout the subsequent 12 months to 18 months. We count on the transaction to be accretive to EPS and our LTL working ratio in 2025.

This assumes no underlying restoration in business volumes. Any market rebound would signify an upside to our baseline forecast. The third pillar of our plan is to drive above-market yield development, which is our single greatest lever for margin enchancment. You may see this dynamic within the fourth quarter after we drove yield, excluding gasoline, larger yr over yr by 10.3%.

This helped us ship practically 400 foundation factors of adjusted working ratio enchancment. We received there by executing on service enhancements, accessorials, and quantity development inside our native buyer base. These are the three levers for our long-term pricing alternative. The thrilling traits in our service metrics translate to worth for our clients, with a direct correlation to the worth we earn.

More and more, our clients see XPO as a high-value enterprise accomplice with the assets to assist them succeed. This was mirrored in our contract renewal pricing, which was up yr over yr by 9% for the second consecutive quarter. Accessorials are one other alternative to develop our yield, by delivering extra worth by means of premium companies. We plan to develop our vary of choices this yr.

We noticed an early affect within the fourth quarter with the introduction of our retail retailer rollout providing. We have already got over a dozen clients utilizing this service to distribute important product launches for retailers. And with the third lever, our native channel, we grew cargo counts by double digits for the third consecutive quarter. Our native gross sales crew at year-end was over 20% bigger than in 2022, reflecting the significance we place on this high-yielding margin-accretive enterprise.

So, we have now a variety of avenues resulting in yield development and every step ahead helps to align our pricing with the worth we ship. The fourth and ultimate pillar of LTL 2.0 is value effectivity. The primary alternatives listed here are with buy transportation, variable prices, and overhead. Within the fourth quarter, we diminished our buy transportation value by 22% yr over yr by in-sourcing extra miles and paying decrease contract charges to third-party suppliers.

We ended the quarter with lower than 20% of linehaul miles outsourced, for a yr over yr discount of 290 foundation factors. On a sequential foundation, we diminished our reliance on outsourcing by 190 foundation factors. We have come a great distance for the reason that starting of 2022 after we had been outsourcing about 25% of our linehaul miles At the moment we’re properly on the best way to bringing down that share to the low teenagers by 2027. Lastly, a fast replace on our initiative so as to add driver groups and sleeper cab vans for lengthy hauls.

The purpose right here is to extend the effectivity and suppleness of our linehaul community. We began placing these groups in place final quarter and we presently have over 50 groups in operation. We count on to have a number of hundred long-haul groups on the highway by the tip of this yr. This could assist to speed up our in-sourcing plan.

We’re additionally persevering with to handle our variable labor prices successfully, rising our quantity by greater than our head depend yr over yr for the fourth consecutive quarter. And the unfold within the quarter was substantial. Our cargo depend was up 5.7%, whereas our headcount was up simply 1.7%. This can be a credit score to the crew’s operational self-discipline, supported by our proprietary expertise for labor planning.

In abstract, in 2023, we made important progress on our plan throughout the board, whereas laying a strong basis for the longer term. We improved our operations in all 4 quarters of the yr by producing report service ranges, making strategic investments within the community, additional accelerating yield development, and working extra value effectively. Consequently, the enterprise carried out above expectations with strong margin growth and earnings development and powerful ahead momentum. Now, I’ll hand the decision over to Kyle to debate the fourth quarter monetary outcomes.

Kyle over to you.

Kyle Wismans — Chief Monetary Officer

Thanks, Mario, and good morning everybody. I am going to take you thru our key monetary outcomes, steadiness sheet and liquidity. It was a powerful fourth quarter total. Income for the entire firm was $1.9 billion, up 6% yr over yr.

This features a 9% improve in our LTL phase. Excluding gasoline, LTL income was up 14% yr over yr. Wage wages and advantages for LTL had been 10% larger within the quarter than a yr in the past. This improve primarily displays wage and profit inflation, in addition to incentive compensation aligned with our sturdy fourth quarter efficiency.

These impacts had been mitigated by our productiveness beneficial properties. We have now improved our labor hours per cargo on a year-over-year foundation for 4 straight quarters all through 2023. We had been additionally extra value environment friendly with buy transportation by means of a mixture of in-sourcing and charge negotiation. Our expense for third-party carriers was $83 million within the quarter, which was down yr over yr by 22%.

Depreciation expense elevated yr over yr by 23%, or $13 million, as we continued to reinvest within the enterprise. This stays our high precedence for capital allocation in LTL. Within the fourth quarter, our capex was primarily allotted to our fleet, as we bought new tractors from the producers and construct extra trailers in-house. Subsequent, I am going to add some element to adjusted EBITDA beginning with the corporate as an entire.

We generated adjusted EBITDA of $264 million within the quarter, up 28% from a yr in the past and improved our adjusted EBITDA margin by 230 foundation factors. These metrics exclude the affect of actual property beneficial properties within the fourth quarter of 2022 to offer you a like-to-like comparability. We had no actual property beneficial properties within the fourth quarter of 2023. Our fourth quarter company expense was $5 million, for a yr over yr financial savings of 44%, or $4 million.

We’re persevering with to rationalize our company construction for the stand-alone enterprise and count on to report additional reductions this yr. Trying solely on the LTL phase, we grew our adjusted working earnings by 51% yr over yr to $160 million. And we grew adjusted EBITDA to $233 million. The beneficial properties we achieved by means of income development and price efficiencies greater than offset the non-operational headwinds from decrease gasoline surcharge income and pension earnings.

In our European transportation phase, adjusted EBITDA was $36 million for the quarter. Companywide, we reported working earnings of $119 million for the quarter, in comparison with $4 million within the prior yr. Our web earnings from persevering with operations was $58 million for diluted earnings per share of $0.49, in contrast with a lack of $36 million or $0.31 a yr in the past. This represents an enchancment of $0.80 in diluted EPS from persevering with operations, pushed by important yr over yr reductions in transaction and integration prices and restructuring costs.

On an adjusted foundation, our EPS for the quarter was $0.77, which is down 21% from a yr in the past. This primarily displays the affect of actual property beneficial properties in 2022, in addition to decrease pension earnings and better curiosity expense in 2023. Our acquisition of the 28 service facilities closed on December 20 and didn’t have a fabric affect on our working ends in the earnings assertion. And lastly, we generated $251 million of money circulation from persevering with operations within the quarter and deployed $151 million of web capex, excluding spend associated to the acquisition.

Shifting to the steadiness sheet. We ended the quarter with $412 million of money readily available. Mixed with accessible capability beneath dedicated borrowing services, this gave us $920 million of liquidity. We had no borrowings excellent beneath our ABL facility at quarter-end.

In December, we raised $985 million by means of a mixture of $585 million of senior notes and $400 million of time period loans. We used $870 million of proceeds to finish our acquisition of 28 LTL service facilities and we refinanced our present senior notes due in 2025. We now haven’t any funded debt maturities till 2028. We additionally maintained all company and issue-level credit score rankings.

Our web debt leverage at year-end was 3 times trailing 12 months adjusted EBITDA. The investments we’re making within the enterprise will improve our earnings trajectory for a excessive return on capital, according to our long-term purpose of attaining an investment-grade profile. Earlier than I shut, I am going to summarize the complete yr 2024 assumptions we offered in our investor presentation that will help you together with your fashions. They’re as follows.

Gross capex of $700 million to $800 million, curiosity expense of $240 million to $260 million, pension earnings of roughly $25 million and adjusted efficient tax charge of 23% to 25% and a diluted share depend of 121 million shares. Now, I am going to flip it over to Ali who will cowl our working outcomes.

Ali Faghri — Chief Technique Officer

Thanks, Kyle. I am going to begin with our LTL phase, which reported one other quarter of worthwhile development. On a year-over-year foundation, we elevated our shipments per day by 5.7% within the quarter, led by 12% development in our native gross sales channel. This resulted in development in tonnage per day of two%.

Our weight per cargo was down 3.4% yr over yr, which was notably much less of a decline for the second consecutive quarter. On a month-to-month foundation, our October tonnage per day was up 2.5% yr over yr. November was down 0.5%, and December was up 3.6%. Trying simply at shipments per day, October was up 6.2% yr over yr, November was up 3.7%, and December was up 6.6%.

In January, our tonnage per day was down 1.1% yr over yr, whereas cargo depend was up 1.4%. The transportation business was disrupted by climate occasions in January, however we noticed a rebound extra just lately and ended the month with stronger volumes. And sequentially, each our tonnage and cargo depend elevated from December to January, outperforming seasonality. We additionally outperformed on yield within the fourth quarter, delivering a second consecutive quarter of acceleration.

We grew yield, excluding gasoline, by a powerful 10.3% in contrast with the prior yr. Importantly, our underlying pricing traits are sturdy as we proceed to align our pricing with the higher service we’re offering. Our contract renewal pricing was up 9% within the quarter in contrast with a yr in the past. Turning to margin.

Our fourth quarter adjusted working ratio was 86.5%, which was an enchancment of 380 foundation factors yr over yr. Our sturdy margin efficiency was primarily pushed by yield development and underpinned by our value initiatives and productiveness beneficial properties. Sequentially, our adjusted OR elevated by 30 foundation factors, which outperformed seasonality by 280 foundation factors. Shifting to our European enterprise.

We delivered income development of two% yr over yr, regardless of ongoing challenges within the macro surroundings. This development was supported by sturdy pricing, which outpaced inflation. And in some areas just like the UK, we grew adjusted EBITDA versus the prior yr, reflecting disciplined value management. Whereas our quantity declined barely yr over yr, we outperformed the business and we mitigated the decline with new buyer wins because the quarter progressed.

And this development improved in January. The crew is executing properly and incomes new enterprise from high-caliber clients. This momentum, along with the expansion of our gross sales pipeline, ought to proceed to strengthen our place in key European areas. I am going to shut with a abstract of the three major achievements you heard from us this morning, as they relate to our expectations for a powerful 2024.

First, we’re persevering with to ship extra worth for patrons within the type of service high quality with our metrics at report ranges. And we’re on a superb trajectory. Second, we accelerated yield development to double digits as we exited 2023, and we count on to ship one other strong yield efficiency this yr with a direct profit to profitability. And third, we’re exhibiting that we will function extra productively by leveraging our expertise and enhancing our value to serve.

Briefly, we have taken main strides with our community operations, and we’re nonetheless within the early innings of considerably enhancing our working ratio. Now, we’ll take your questions. Operator, please open the road for Q&A.

Questions & Solutions:

Operator

Thanks. [Operator instructions] Our first query is from Scott Group with Wolfe Analysis. Please proceed.

Scott Group — Wolfe Analysis — Analyst

Hey. Thanks. Good morning. Any ideas on how to consider the OR from This fall to Q1 and perhaps full yr margin enchancment? After which, greater image Mario, you made a remark that every one this terminal development is additive to yields and margins.

I suppose, why it needs to be good for quantity, however perhaps some ideas on the way it truly helps yield and margin as properly?

Mario Harik — Chief Govt Officer

Positive, thanks, Scott. First, beginning with the primary quarter outlook. We usually give tonnage yield and what OR would appear like. Beginning with tonnage, following the beneficial properties we had within the fourth quarter, we do count on to outperform seasonality in Q1.

Sometimes, a standard seasonality for us name it flattish tonnage sequentially from This fall to Q1, and we count on to do higher than that. So we count on Q1 tonnage needs to be up low single-digit considerably in the identical ZIP code as the place we had been within the fourth quarter on a year-on-year foundation. Now, if you have a look at January tonnage particularly, it did do higher as Ali talked about earlier in comparison with seasonality in your outdated ahead December into January. And we had a powerful finish of the month as properly, regardless of the climate earlier within the month.

On the yield entrance, we count on a powerful efficiency for yield throughout the board this yr. We do count on yield to be up on a year-on-year foundation within the first quarter someplace in the identical ZIP code as we had been within the fourth quarter year-on-year. And in the end from our standpoint, often typical seasonality for us This fall to Q1 we see OR deteriorate about 40 foundation factors and we count on to do higher than that. Now, how significantly better will depend upon how the remainder of the quarter performs out.

Normally, Q1 as you recognize March is the massive month of the quarter. However that means roughly 300 foundation factors of OR enchancment year-on-year. For the complete yr 2024, we additionally count on a powerful yr for us by way of OR enchancment. Given all of the issues, we’re doing in yield and tonnage and price and effectivity enchancment and repair enchancment we count on OR to be up within the 150 to 250 foundation factors vary for the complete yr.

And there is a path for us to do higher than the highest finish of the vary relying right here on how the yr performs out. Now, taking a step again in your query on the service facilities and the way they affect yield. So we see an enormous value profit first and that value profit comes from larger effectivity and having greater break bulks that result in value financial savings and line haul having service facilities nearer to the client that results in decrease D&D value and in addition reducing dock-handling prices related to that. Now, the best way they assist yield is as a result of bigger service facilities assist enhance your service product and repair product in tight yield.

But additionally, we talked about premium companies. And when you consider premium companies in some markets like Las Vegas, we’re tapped on capability. And by having now the most important service heart within the greatest market, we’re going to have the ability to launch new choices like commerce reveals for example and this comes additionally at the next yield and better margin as properly.

Scott Group — Wolfe Analysis — Analyst

Thanks, guys.

Mario Harik — Chief Govt Officer

Thanks.

Operator

Our subsequent query is from Ken Hoexter with Financial institution of America. Please proceed.

Ken Hoexter — Financial institution of America Merrill Lynch — Analyst

Hey. Nice. Good morning. Congrats on some strong efficiency right here on the OR.

Possibly simply digging into that although. Speak in regards to the ramp of the 28 services. How ought to we anticipate the drag versus your forecast? And I suppose with that it looks like you are bumping up in opposition to your sort of long-term targets now of the 600 foundation level enchancment. How – does that shift – or the velocity with which you will get there begin altering in your thought course of?

Mario Harik — Chief Govt Officer

Thanks, Ken. Effectively beginning with the ramp of the service facilities. Effectively, by way of getting them up and operating, we do count on to get them up and operating in – the primary dozen or so service facilities over the following three to 6 months, the following dozen over the following six to 12 months after which the remaining 4 or 5 will go stay subsequent yr name it 12 to 18 months. Now, we do not anticipate an OR drag from them that might be materials to our numbers.

And the explanation why as a result of the vast majority of the service facilities are in markets the place we already function. So if you consider it there’s one case the place we transfer our crew, our present crew from a smaller service heart to a bigger service heart. The carrying value of actual property is pretty low on a per door foundation however we get the quick advantage of value efficiencies and price financial savings related to having a bigger facility to function from. In markets the place we’re including a service heart and preserving the prevailing one in that individual case we break up the crew between the 2 service facilities based mostly on quantity and we solely step up if there’s an inflection in quantity and we have now incremental volumes.

So we do not anticipate the service facilities to have a drag on OR this yr. We do count on them to be accretive for the EBITDA. We do count on a drag on EPS, pushed by the incremental debt there. And we count on them to be accretive on all these KPIs in 2025 and past.

By way of the long-term targets, we have at all times stated 600 foundation factors. I imply, a minimum of 600 foundation factors. And there is nothing magical about 600 foundation factors, there’s nothing magical about 2027. With all of the momentum that we have now right here and with all – with the brand new service facilities, the pricing, the service enhancements, we do count on to outperform and I might maintain us to get to the 70s and properly into the 70s over time from an OR perspective.

Ken Hoexter — Financial institution of America Merrill Lynch — Analyst

Thanks, Mario.

Mario Harik — Chief Govt Officer

Thanks.

Operator

Our subsequent query is from Jon Chappell with Evercore ISI. Please proceed.

Jon Chappell — Evercore ISI — Analyst

Thanks. Good morning. I am unsure if Mario or Ali desires to take this, however that is the second straight quarter now with contract renewal pricing up 9%. The place do you stand on the guide of enterprise, because it pertains to sort of marking to marketplace for the brand new service? Do you continue to have a pair extra quarters, the place you assume that sort of excessive single-digit contract renewal is on the agenda? Or are you sort of near sort of marking it to market and also you assume perhaps that moderates a bit bit to perhaps mid-single digits sort of in line extra with the GRI ranges?

Kyle Wismans — Chief Monetary Officer

Hey, Jon, it is Kyle. So if you consider contract renewals proper now, we did speed up closely within the again half from 5% to 9%. And so, far within the yr or within the again half we negotiated 50% of the guide. So there’s nonetheless some extra to work by means of.

I nonetheless assume we’re in a good marketplace for renewals and we should always count on constructive momentum to hold ahead right here in 2024.

Jon Chappell — Evercore ISI — Analyst

Simply to be clear although it is sort of like for those who’re achieved with 50% is that this the primary half larger finish of that vary, reacceleration just like the again half of 2023, after which sort of extra of a normalized stage within the again half? Or do you assume that what you have achieved over the past six months as you proceed to enhance service sort of lead you extra towards what you have achieved within the final six months or in order a share foundation?

Kyle Wismans — Chief Monetary Officer

I feel renewals are in all probability going to observe the place we see yields for the primary half. So we’re anticipating sturdy yield to proceed. Should you assume our Q1 yield information, we expect Q1 yield goes to be up excessive single-digit in keeping with what we noticed in This fall. That ought to carry ahead into our contract renewals at first of the yr.

Operator

Our subsequent query is from Chris Wetherbee with Citigroup. Please proceed.

Chris Wetherbee — Citi — Analyst

Hey. Thanks. Good morning, guys. I suppose I need to speak a bit bit about a few of the initiatives that perhaps you guys are interested by for 2024.

So, we have talked about type of the crew drivers you talked about type of the in-sourcing of line haul. Curious sort of as you begin to consider including these up within the context of the 150 to 250 foundation factors of OR enchancment how a lot you get from that versus perhaps what could be sort of core pricing above value inflation and perhaps a bit little bit of leverage on the amount? I do not know for those who can unpack that however any element you may give us could be nice.

Mario Harik — Chief Govt Officer

I am going to speak on the initiatives. And Chris the best way we have a look at it I imply, our plan entails substantial yield enchancment. It does contain persevering with our nice service momentum or service product enchancment momentum. Tonnage enchancment, we do see tonnage going up for the complete yr however we do count on it to be up name it in the identical zip code of the place we had been within the fourth quarter so low single-digit as a result of our purpose is to drive extra yield than it’s to drive quantity.

Equally, our purpose is to drive value efficiencies as you talked about. So, I am going to give a fast replace on the initiatives. As a part of our plan is to in-source extra to the third-party linehaul miles as a result of that comes each at a price profit however it additionally comes as a service profit after we go from utilizing a third-party service with a 53-feet trailer versus having two 28-feet pups, which provides us extra space provides us secure stack within the trailers the place we will separate the freight bodily and our drivers present up on time 100% of the time. We will proceed to enhance that service product.Now, that can include value financial savings right here in 2024, however the long run value financial savings additionally come if you consider an inflection in truckload charges sooner or later, that is going to be clearly materials financial savings for us from what we might be spending internally on a per mile foundation versus what we’re spending for third-party carriers.

So, our expectation is to proceed to — we insource 290 foundation factors right here within the fourth quarter year-on-year. We’re sub-20% at this level, we’re at 19 and alter. And we will drive that within the first part right down to the low teenagers and past that as we amp up these groups as properly.

Chris Wetherbee — Citi — Analyst

OK. That is useful. Recognize it. Thanks.

Mario Harik — Chief Govt Officer

Thanks, Chris.

Operator

Our subsequent query is from Fadi Chamoun with BMO Capital Markets. Please proceed.

Fadi Chamoun — BMO Capital Markets — Analyst

Sure. Good morning crew. So, my query is you talked about the double-digit development that you just’re seeing within the native account I suppose. I am pondering this has clearly been a reasonably first rate tailwind for density and price per cargo and in the end the yield.

The place are you in this type of trajectory of enhancing native account penetration? Are we within the first innings of that? Is there a chance that’s of great dimension nonetheless in entrance of you?

Mario Harik — Chief Govt Officer

If you have a look at the native account technique Fadi, it’s a phase that we’re planning on rising through the years to return right here. Now, for those who look again at 2023 we had been run-rating at roughly 20% of our quantity and income is generated from that channel. Now, what we have now achieved by means of the course of the yr is that we elevated the dimensions of our native accounts. We employed greater than 20% extra native sellers by means of the course of 2023.

And the purpose right here by means of 2024 is so as to add roughly one other 10%. So, all-in to be 30% larger on the general gross sales power dimension that’s promoting to that channel. Now, as you may think about each time we onboard new individuals, it does take a ramp often about six months for them to be absolutely productive and absolutely up and operating. Now, for those who have a look at the complete yr, we did enhance our native accounts larger — on the next run charge than the remainder of our guide.

Right here within the fourth quarter, we grew our native shipments in that channel by 12% on a year-on-year foundation. And we do count on to proceed to see these actually sturdy beneficial properties in that channel, since we onboarded 20% extra sellers. Now, by way of the inning, I might say, we’re nonetheless within the early innings by way of outcomes, however we’re very properly underway by way of having the crew and having them seen a few quarters of ramp right here being fairly productive in 2024 and past.

Fadi Chamoun — BMO Capital Markets — Analyst

Recognize that. Thanks and congrats on the sturdy outcomes.

Mario Harik — Chief Govt Officer

Thanks, Fadi.

Operator

Our subsequent query is from Stephanie Moore with Jefferies. Please proceed.

Stephanie Moore — Jefferies — Analyst

Hello. Good morning. Thanks. I wished to perhaps contact a bit on the, I suppose, persevering with on the pricing dialogue right here.

I feel pricing accelerated over 10% right here within the quarter. I feel you guided to extra excessive single digits. Are you able to perhaps stroll by means of the drivers of the upside? What you are seeing and sort of your ideas as we take into consideration 2024 for additional pricing acceleration, particularly your view of what can occur if the macro does truly flip? Thanks.

Ali Faghri — Chief Technique Officer

Positive, Stephanie. That is Ali. So we’re seeing very sturdy pricing traits, as we enter 2024. For the primary quarter specifically, we might count on our yield on an ex gasoline foundation to be up someplace in the same vary, as we simply delivered right here within the fourth quarter.

So name it roughly about 10% development. Now, on a full yr foundation, we might count on yield to be up someplace in that mid to excessive single-digit vary. I might add that there is definitely a path to do higher than that. It is nonetheless very early within the yr.

So we’ll replace you because the yr progresses. Plenty of that yield development and the outperformance versus the business is being pushed by our inside initiatives. If you consider our service enchancment, we’re at report ranges right here within the fourth quarter. We’re persevering with to lean extra into premium companies.

We rolled out retail retailer rollout right here within the fourth quarter. We now have a variety of traction there. And as Mario simply famous, a variety of momentum on the native facet as properly too and that is larger yielding and margin-accretive enterprise. So, total, we really feel excellent in regards to the yield outlook right here in 2024 and count on it to be a powerful yr for us total.

Stephanie Moore — Jefferies — Analyst

Nice. Thanks. Possibly only a follow-up to that, however a bit bit greater image, as you consider incentive comp throughout the group, perhaps speak a bit bit about what metrics which were presumably realigned simply to align curiosity throughout the group yield, margins, EBIT, what is the main metrics we needs to be targeted on based mostly on incentive comp modifications in 2024? Thanks.

Mario Harik — Chief Govt Officer

Stephanie, that is Mario. I am going to take that. So, in 2023 first and 2022, we used to compensate predominantly our area based mostly on EBITDA development and EBITDA efficiency. However we have now added portion of the comp plan to be targeted on service high quality.

In order service facilities and group service high quality and on-time service, they successfully — they’d chunk of their incentive comp relies on that. Now, in 2024 would be the first yr the place we’re switching from compensating our area from EBITDA and EBITDA development and have it’s targeted on OR enchancment. So it is now targeted on how can we develop our margins over time. As a result of as you recognize we need to incentivize successfully driving that higher service product that yields to larger yield, whereas managing prices successfully, which might result in OR growth on the service heart stage and in the end on the community stage as properly.

Operator

Our subsequent query is from Tom Wadewitz with UBS. Please proceed.

Tom Wadewitz — UBS — Analyst

Sure. I simply had I suppose one sort of fast one on the D&A and perhaps how we take into consideration the ramp-up in that given you might be spending stage of capex. So, on that, however I suppose a broader query could be on, how you consider the terminal community. And I suppose what’s — as you convey on terminals like the place you sit in the present day, what’s your extra capability from a door and a terminal perspective? And as you convey on extra terminal capability sort of the place do you need to get to, proper? I feel we have seen {that a} excessive service mannequin you do have some first rate quantity of extra capability.

However I sort of wished to see the place you are at in the present day, the place you’d prefer to get to on extra capability after which a particular one simply on sort of D&A modeling. Thanks.

Mario Harik — Chief Govt Officer

Thanks, Tom. I am going to begin with the community and the capability facet and switch it over to Kyle for D&A. If you have a look at our community in the present day, earlier than the 28 service heart acquisition, we had been run-rating name it within the mid to excessive teenagers by way of extra capability within the present surroundings. And if we roll ahead, we’re including 28 service facilities, out of those roughly half of them could be additive and the opposite half could be ones the place we’re relocating from a smaller service heart to a bigger service heart.

And we roughly acquired about 3,000 doorways and we might be including a web after we’re all stated and achieved with the mixing, a web 2,000 doorways which is name it a ten%, 15% growth in capability. So as soon as we get these service facilities on-line, we will probably be within the 25% to 30% extra capability in our community. And that is an excellent place to be as an LTL community, particularly in a delicate freight market. So this fashion each time there is a freight market restoration and also you see larger demand, the type of our business has been capability constrained, actual property comes with a really low carrying value and this is able to allow us to flex up each time that demand comes again.

So that is how we have a look at presently the place we’re and as we open up these service facilities the place we’ll be including a capability perspective.

Kyle Wismans — Chief Monetary Officer

Sure, Tom. And if you consider the D&A ramp, so we’re going to see elevated capex throughout the LTL phase. So we might count on about $74 million to $75 million 1 / 4 for LTL, reflecting the elevated capex spend.

Tom Wadewitz — UBS — Analyst

OK. Nice. Thanks.

Operator

Our subsequent query is from Bruce Chan with Stifel. Please proceed.

Bruce Chan — Stifel Monetary Corp. — Analyst

Sure. Thanks, operator, and good morning, everybody. Possibly simply to start out Kyle, are you able to remind us of what your goal leverage vary is? After which, I do know in earlier quarters you pulled again on a few of the commentary across the sale of the European enterprise. However with the necessity for extra finest pay-down doubtlessly with these new services, is there any extra urgency to promote that enterprise now?

Kyle Wismans — Chief Monetary Officer

Hey Bruce, it is Kyle. I’ll begin after which I am going to hand it over to Mario. So when you consider our long-term leverage outlook, our intention is one to 2 occasions trailing 12 months EBITDA. And we expect we’re in an excellent spot with the investments we made and the EBITDA we will generate to essentially make a variety of progress on that right here within the subsequent couple of years.

Mario Harik — Chief Govt Officer

And on the European sale, Bruce, our long-term plan stays to be a pure-play North American LTL service and promoting the European enterprise is one in all our strategic priorities. However we will be affected person. Our purpose is to maximise the return we get on that enterprise. It’s a enterprise that has a shortage worth to it.

We’re both No. 1, two or three in less-than-truckload truckload asset-light brokerage in lots of geographies in Western Europe, assume UK, France, Spain Portugal. And it isn’t a matter of if, however a matter of when. And in the meantime for those who take a step again, the enterprise is performing properly.

Regardless of a delicate economic system in Europe with outperforming the tiers, our income was up within the quarter. We have improved quantity each month of the quarter and additional improved within the month of January. And so, credit score to the crew’s sturdy execution. So once more, for those who take a step again, it is a matter of time and sooner or later we’ll get there.

Bruce Chan — Stifel Monetary Corp. — Analyst

OK. Recognize it.

Operator

Our subsequent query is from Jason Seidl with TD Cowen. Please proceed.

Jason Seidl — TD Cowen — Analyst

Thanks, operator. Mario, I feel you talked about accessorials and that there is about 12 various things that XPO was doing to drive them larger. Are you able to assist us perceive the timing and your capability to implement these accessorial and the affect we should always count on?

Mario Harik — Chief Govt Officer

So if you take a step again on these accessorials, they’re predominantly what we name premium companies. So these are companies that our clients are asking for, that transcend your typical decide up a number of skids of freight and get them delivered to a vacation spot. So examples are, Kyle talked about earlier, the retail retailer rollouts providing, the place in that individual case, you may think about when you have some type of a vacation, or a brand new product launch, a buyer wants us to ship many, many shipments, to assume, it could possibly be tons of of shipments in a short while window, and so they want any individual to coordinate all of these choices. And that leads, clearly, to the next worth and the client is happier as a result of they’re getting a service that they want.

We do have various different choices. Commerce reveals is an effective instance of that. Working with retailers that should arrive by date kind providing, and lots of others that we’re launching by means of the course of the yr right here. We do count on to get them launched — they will not all be launched inside a number of quarters.

A few of them will take a bit longer, that may expedite a service for example. However as we launch these, we count on them to be accretive to yield over time. By way of magnitude, roughly in the present day, our accessorial as a % of income is roughly round — name it within the low double digits. And our purpose is to develop that to the mid-teens as we launch these packages through the years to return.

Jason Seidl — TD Cowen — Analyst

That is nice coloration. I wished to additionally follow-up on the general pricing dialogue. LTL pricing this quarter has been very sturdy. Your renewals are at 9%, sale is sort of at 9%.

ArcBest is the most effective they’ve reported since quarter in 2022. And that is all in a really sluggish demand backdrop and tremendous low cost LTL pricing. Because the economic system recovers and capability tightens total, is it loopy to consider double-digit pricing going ahead for you guys?

Mario Harik — Chief Govt Officer

We had double-digit pricing up right here within the fourth quarter, and we do count on a really sturdy first half of the yr as properly. I imply, there’s an surroundings. Should you have a look at our business, it has been traditionally capability constrained. If you return earlier than Yellow ceased operations, we did not have sufficient capability versus the demand that was on the market.

We’re presently in a sluggish freight surroundings the place demand is down, roughly, name it double-digit low teenagers, and that is when that capability went away from the market. So each time there’s any type – even with a few of that capability coming again into LTL, each time there’s any type of inflection in demand, there would not be sufficient doorways and repair facilities in our business. So you’d see pricing speed up accordingly. For us particularly, we even have all the corporate particular initiatives we’re driving between driving higher service, which comes at a premium, between driving premium companies, between driving additionally growth of our native channels.

All of those could be accretive to yield as properly. So double-digit pricing will not be out of the query.

Jason Seidl — TD Cowen — Analyst

Unbelievable. Recognize the time.

Mario Harik — Chief Govt Officer

Thanks.

Operator

Our subsequent query is from Bascome Majors with Susquehanna. Please proceed.

Bascome Majors — Susquehanna Worldwide Group — Analyst

Thanks for taking my questions. I wished to return to the incentives targeted from earlier. Are you able to speak extra particularly about the way you’re tactically incentivizing your salespeople particularly and if that has modified in any respect because the enterprise has developed and your priorities have developed over the past 10 months? And individually, from a long-term senior govt administration incentive strategy, how may these look totally different this yr than they’ve over the previous couple of years? Thanks.

Mario Harik — Chief Govt Officer

Thanks, Bascome. So first, beginning with the gross sales compensation. So it will depend on what kind of wage you might be within the group. We modified the comp plan accordingly.

So for those who’re within the native channel, the purpose is to develop your guide versus, for instance, for those who’re into various kinds of accounts, you are going to need to deal with profitability extra. However typically, the theme is that, for those who have a look at a service heart they’re compensated based mostly on the OR enchancment for that particular service heart. Should you’re an area account govt, you are incentivized to develop your guide and a part of your compensation is pushed by working ratio as properly. Should you’re dealing with bigger accounts then the lion’s share of your compensation is round OR and revenue enchancment, as properly related to that.

So that is how usually gross sales are compensated however it’s extra pushed by your guide of enterprise versus your area or the community as an entire. Now, by way of senior exec compensation that is usually a part of our proxy. However we incentivize our senior executives based mostly on a mixture of OR development, EBITDA development and the TSR affiliate holder worth creation as properly.

Bascome Majors — Susquehanna Worldwide Group — Analyst

And you do not count on the long-term incentive system to essentially change apart from the targets for this three-year interval?

Mario Harik — Chief Govt Officer

The framework could be similar to what we had prior to now.

Operator

Our subsequent query is from Jordan Alliger with Goldman Sachs. Please proceed.

Jordan Alliger — Goldman Sachs — Analyst

Sure. Hello. Morning. Simply type of curious, thanks for the format by way of the door opening timing, and many others.

Within the context of your ideas on the economic system and the brand new door openings, is there a means to consider tonnage or quantity trajectory as we undergo the yr type of like year-over-year development potential or the way you count on it to type of ramp up? That may be the primary query. Thanks.

Ali Faghri — Chief Technique Officer

Positive, Jordan. That is Ali. I am going to then cross it to Mario. So for the complete yr, as we famous, we count on a a lot larger contribution from yield and quantity.

We’re being very disciplined on the kind of quantity we’re onboarding onto the community and you must count on that to proceed by means of this yr. So total for the complete yr, we might count on tonnage to be up someplace in that low single-digit vary for the complete yr after which yield someplace in that mid- to excessive single-digits or higher. Now, be mindful, we do have harder comps within the second half of the yr. It’s nonetheless early within the yr and clearly the macro is usually a swing issue.

By way of the brand new service facilities, we do not count on any type of significant contribution from quantity this yr. We’d count on contribution from quantity to be sub 1% of incremental volumes so not a significant quantity total.

Mario Harik — Chief Govt Officer

Once we take into consideration the service facilities within the near-term forward of any kind of macro an infection each time it comes, there’s a huge profit we will get from value financial savings as I discussed earlier on by having bigger services. And if you consider what we purchased from the Yellow Community, we purchased a few of the largest service facilities. You have a look at a website like Carlisle, you may’t get any greater than 120 acres of land proper off I-76 and I-81 the place we have now a 300-door service heart now in that market. Similar factor with Nashville.

We received a 40, 50-acre facility west of Nashville with greater than 200 doorways in it. So when you consider these bigger services that allow you to run extra effectively, your line haul, your D&D, your dock operations, that is going to result in value financial savings as quickly as we begin shifting into them. The opposite profit is a few markets, if you have a look at a market like Brooklyn, New York or Columbus or Indianapolis or Las Vegas, we’re tapped out on capability in the present day. So we do not have sufficient doorways in these markets.

And by having this incremental capability, we have already got clients which might be able to go the place we will onboard them as we open up these service facilities. And we have now two small service facilities. One is in Eau Claire Wisconsin, one is Nogales, Arizona, the place we – these are web provides or new markets. However these are small service facilities, the place we have already got demand lined up based mostly on present buyer relationships we have now as properly.

Jordan Alliger — Goldman Sachs — Analyst

Bought it. After which, simply type of curious, how you are going to handle the terminal opening? So in different phrases, is there some financial dependency on it how good the economic system is? Or is there going to be a specific amount that you just’re simply going to open it doesn’t matter what strategically or in any other case?

Mario Harik — Chief Govt Officer

Once we take into consideration the rollout timing, we prioritize these service facilities these markets the place we’re capability constrained in the present day. So in a softer freight surroundings, the place we see that, we do not have sufficient capability. And the second precedence relies on value effectivity, so the service facilities that can create probably the most quantity of value effectivity. And after we take into consideration the opening schedule, I am going to name it, over the following three months to 18 months, it is going to be we will drive by means of it no matter what the freight the markets are doing.

This might be an inexpensive timeframe by way of bringing these terminals as much as our requirements and doing the rebranding and these sort of issues to get them up and operating. After which, we — for us for those who — I discussed, this earlier on, if you consider the headcount there is not any want for us to rent individuals forward of quantity. So what we do is that we both relocate the prevailing crew into a bigger facility, or we add a facility to an present market the place we break up a crew from an present facility into two totally different service facilities, so there is not any incremental value related to that. If we do see an inflection in quantity, the place the markets are getting higher then we step up to have the ability to help that quantity.

And importantly, Jordan, for those who have a look at our yr in 2023, we had been in a position to enhance effectivity each single quarter of the yr. So we have now the nice capability between operational self-discipline that Dave and the crew are bringing to the desk, supported by our proprietary expertise to have the ability to run our community very effectively from a labor standpoint.

Operator

Our subsequent query is from Brandon Oglenski with Barclays. Please proceed.

Brandon Oglenski — Barclays — Analyst

Hey. Thanks for taking my query. Mario, perhaps we will follow-up on that one there. I do know, you are speaking about value efficiencies of opening new terminals within the community.

And it feels like doubtlessly, you are going to transfer employees from one to the opposite. However I suppose, simply protecting transports for 20 years now if you open new nodes within the community, particularly scheduled community is not there like a small up time on capability efficiencies, particularly on like line haul and stroll up, decide up and supply that we needs to be anticipating? As a result of it feels like what you are guiding to you could immediately match effectivity if not even get higher with these new services.

Mario Harik — Chief Govt Officer

I imply, everytime you open up these websites, you do have a small headwind in value, however that for us could be a really quick lived. I imply, you are speaking 30 to 90 days of value headwind as you progress into a bigger facility. And predominantly, it comes from the carrying value of the incremental doorways. However Brandon remember the fact that the price of a door in our P& L is sub 5% as a % of whole.

So it is a small incremental value related to that. However when you consider the quick effectivity, you acquire in pickup and supply and line haul in all of these items, that is the place we see that this once more drag that’s short-lived. It does not have a significant affect on the community as an entire. And to offer you an instance over the past couple of years right here, we have opened up a dozen service facilities and every one in all them was accretive inside 30 to 60 days.

Every one in all them is exceeding our return hurdles as properly. So we really feel excellent about our capability to get these on-boarded with very minimal drag. And that is the explanation why, we do not count on any drag from an OR perspective from the service heart. And at last, I would say, additionally with having Dave on the crew, he has an unbelievable quantity of expertise by way of including capability to a community and ensuring, it is accretive fairly shortly.

Brandon Oglenski — Barclays — Analyst

Recognize. Congrats on the quarter.

Mario Harik — Chief Govt Officer

Thanks.

Operator

Our subsequent query is from James Monigan with Wells Fargo. Please proceed.

James Monigan — Wells Fargo Securities — Analyst

Hey, guys. Thanks. Simply wished to return again to pricing a bit bit. And of the pricing hole to friends, how a lot of that pricing hole is type of attributable to service stage variations? And you’ve got improved service match right here.

So of that hole, how a lot type of is accessible to you given the place service is in the present day?

Ali Faghri — Chief Technique Officer

Positive James, that is Ali. So, total, we see roughly a couple of mid-teens pricing upside alternative within the years to return and it is primarily pushed by three levers. At first it is pushed by service. So, as we proceed to enhance our service high quality, we’re going to have the ability to higher align the worth with the worth we’re delivering.

We quantify that about half of that mid-teens pricing hole, so name it about 700, 800 foundation factors of pricing alternative as we proceed to enhance service. And we’re realizing that proper now. Within the third quarter, we delivered an organization report harm claims ratio and our yield development accelerated to double-digits. So, we’re within the early innings of realizing that chance.

Then you could have one other about 500 foundation factors or 5% of pricing upside that is tied to accessorials and extra particularly premium companies. As Mario famous earlier, we need to develop our accessorials as a share of total income from roughly that 10% vary proper now to fifteen%-plus over time. And that is about 5 factors of pricing upside. After which, lastly, the native channel can be a chance for us from a pricing perspective.

That is larger yielding and better margin enterprise for us. At present, that is roughly about 20% of our income and we need to develop that to 30%-plus over time. And that is roughly about one other 200 to 300 foundation factors of pricing upside. So, total there’s a number of totally different levers we will pull to develop pricing.

And as we transfer by means of 2024, we might count on these to translate to very sturdy yield development for us.

James Monigan — Wells Fargo Securities — Analyst

Bought it. However given the place service is in the present day full 700 to 800 of worth that’s tied to service is that like absolutely accessible to you? Or does service want to enhance additional so as so that you can get that 700 to 800 foundation factors as you progress by means of the contract repricing?

Mario Harik — Chief Govt Officer

It does take time. I imply, it isn’t like a swap the place as you enhance your service product, your clients gives you that premium instantly. However we’re seeing — we have already got been seeing it play out in the midst of 2023, if you have a look at the advance we have seen in yield quarter after quarter in having these very sturdy contract renewals. So, presently for those who have a look at it I imply, you return two years in the past, we had a harm claims ratio of 1.2%.

We’re right down to 0.3%, which is an organization report. However our purpose continues to maintain on enhancing that. We’re a customer-loving group. We need to handle our clients, decide up the freight on time, ship it on time, ship damage-free each single time.

And if you consider it from that perspective, that over time earns you a premium. So, after we consider that seven to eight-point differential it will take us various years to plow by means of it. However that is why after we look ahead we consider our capability to get this above market pricing goes to be pushed by this continued enchancment and continued deal with taking good care of our clients.

Operator

Brian Ossenbeck with J.P. Morgan. Please proceed.

Brian Ossenbeck — JPMorgan Chase and Firm — Analyst

Hey. Good morning. Thanks for taking the questions right here. So, Mario simply to return again to the extra terminals and door counts.

Are you able to give us a way of what incremental margins total you are assuming? And it feels like they’re fairly excessive for not anticipating any actual OR dilution. And on that time as properly, it is clearly an enormous buy worth, buy worth accounting takes some time to settle out, however is not there an enormous D&A part from this as properly? I do know Kyle talked in regards to the part earlier than however it gave the impression of that was primarily for CapEx. So, it could be hopeful to listen to a bit bit about that. Should you can perhaps simply end up with what you are seeing on the demand surroundings have not talked an excessive amount of about that seeing a bit little bit of enchancment in PMIs perhaps some restocking forward, however will probably be curious to see what you are listening to out of your clients to start out the yr.

Thanks.

Mario Harik — Chief Govt Officer

Thanks Brian. So, I am going to begin first with the return on the service facilities. And we count on that to be within the — on the long term to be within the 30% to 40% vary. And I am going to flip it over to Kyle shortly right here to debate the small print of that.

Now, when you consider the client demand surroundings, it’s a fluid surroundings. It’s powerful to name what the macro goes to do by means of the steadiness of the yr. From one perspective, you see the charges the place they’re from a Fed perspective. We’re seeing totally different blended alerts.

Now, we do survey our clients regularly. And for the primary half of the yr roughly two-thirds of the shoppers expect both flat or barely enhancing demand. So there is a little more optimism within the first half than what we have seen within the again half of final yr. However there’s much more optimism for the again half the place the vast majority of the shoppers did say that they count on a pickup in demand within the again half of 2024.

So we’re cautiously optimistic, however it’s powerful to name the macro at this level. Now, if you have a look at it extra close to time period, you have a look at — we do watch the ISM manufacturing index given two-thirds of our clients are industrial firms. And if you look by means of the course right here of the fourth quarter, the trough was in October, November, we noticed it get higher in December and right here in January, it even additional improved the ISM posted 49 and alter, which may be very near 50, which is usually your level the place you begin seeing an inflationary surroundings. So once more, we’re seeing demand maintain.

We’re seeing demand barely enhance and with extra optimism towards the again half of the yr.

Kyle Wismans — Chief Monetary Officer

After which, simply to handle the capex query related to Yellow. When you consider the 28 service facilities, we’re anticipating incremental capex about $1 million to $2 million per website, so about $50 million to $60 million in whole. Now, that is not unfold evenly throughout all 28 service facilities and that is actually largely tied to refreshing and refurbishing the websites convey as much as customary. So it will cowl building, portray, rebranding.

And that capex for these websites is included in our total information for the yr. A few of these websites already began to work on a few of the areas. So going again to Mario’s earlier feedback, we count on one thing to return on-line right here in Q2.

Operator

We now have reached the tip of our question-and-answer session. I want to flip the decision again over to Mario Harik for closing remarks.

Mario Harik — Chief Govt Officer

Thanks, operator, and thanks all for becoming a member of our name in the present day. As you may see from our outcomes, our plan is working, and our service enhancements are delivering income development, margin growth, and earnings development. Quickly we will begin integrating to acquired service facilities into our community, which is now extra productive and extra value environment friendly. We now have a variety of sturdy momentum right here as we begin 2024, and we look ahead to updating you on the following quarter.

Operator, now you can finish the decision. Thanks.

Operator

[Operator signoff]

Period: 0 minutes

Name contributors:

Mario Harik — Chief Govt Officer

Kyle Wismans — Chief Monetary Officer

Ali Faghri — Chief Technique Officer

Scott Group — Wolfe Analysis — Analyst

Ken Hoexter — Financial institution of America Merrill Lynch — Analyst

Jon Chappell — Evercore ISI — Analyst

Chris Wetherbee — Citi — Analyst

Fadi Chamoun — BMO Capital Markets — Analyst

Stephanie Moore — Jefferies — Analyst

Tom Wadewitz — UBS — Analyst

Bruce Chan — Stifel Monetary Corp. — Analyst

Jason Seidl — TD Cowen — Analyst

Bascome Majors — Susquehanna Worldwide Group — Analyst

Jordan Alliger — Goldman Sachs — Analyst

Brandon Oglenski — Barclays — Analyst

James Monigan — Wells Fargo Securities — Analyst

Brian Ossenbeck — JPMorgan Chase and Firm — Analyst

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