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We grew adjusted operating income year-over-year by 51% and improved our adjusted operating ratio by 380 basis points. We delivered the best damage claims ratio in our history at 0.3%, as well as a record level of employee satisfaction. And we significantly accelerated our year-over-year yield growth, excluding fuel, to 10.3%. We also improved cost efficiency for the fourth consecutive quarter with further increases in labor productivity and linehaul and sourcing. And we continue to deploy capital efficiently as we reinvest back into the business. All of these are proof points that our plan has strong traction. And the 28 service centers we recently acquired from the Yellow Network will build on this momentum. This acquisition is a once-in-a-generation opportunity to integrate prime locations into our network to support yield growth and margin expansion.

When the market recovers and industry capacity tightens, we'll be in a stronger position to serve our customers and drive profitable growth for years to come. Now, I want to share some details of the quarter, starting with the first pillar of our LTL 2.0 plan, service improvements. We improved every major component of customer service quality in the quarter, including our customer satisfaction rating, which has risen by more than 40% since 2021. Our on-time performance was three percentage points better than in the prior fourth quarter. And I mentioned that our damage claims ratio of 0.3% is a new record for us. To put that in context, it's a vast improvement from 1.2% when we launched our plan. These are metrics our customers watch closely as an indicator of service quality.

Our top priority is to become the customer service leader in our industry. And we're continuing to equip our team with the tools to make this a reality. One example is the new freight airbags I spoke about on our last call. The rollout has been going well, and this solution is now installed at over 50% of our doors. The airbags have reduced damages by more than 20% at those locations, and the benefit will spread across our network. We expect to finish the installations by the middle of this year. The second pillar of LTL 2.0 is to invest in our network to drive long-term growth. We added more tractors and trailers in 2023 than any year in XPO's history, to both grow and refresh our fleet. This resulted in record network fluidity and supported our strategy to in-source more line-haul miles.

On the tractor side, we purchased more than 1,400 units in 2023. This reduced our average fleet age to five years at year-end, compared with 5.9 years in 2022. On the trailer side, we manufactured over 6,400 units at our in-house facility in Arkansas, exceeding our production target. For 2024, we expect our LTL CapEx level to be in the low-teens as a percent of revenue, and again, primarily allocated to our fleet. In terms of the 28 service centers, we acquired from Yellow, the largest impact on our capital strategy is timing. We've put forward dozens of real estate investments that we plan to make over the next several years. I'll add some strategic color to my earlier comments on the acquisition. These service centers will deliver important benefits to the business for years to come.

First, they'll get us closer to customers, and give us larger facilities in major metro areas. This should drive substantial cost efficiencies across our line haul, pickup-and-delivery and dock operations. Second, they'll enhance our yield growth by further improving, our service with fewer freight three handles, reduce damages, and better on-time performance. And third, that'll give us more capacity in key metros like Indianapolis, Columbus and Las Vegas. These are markets where we are currently turning away profitable customers, because we don't have enough door capacity. We plan to start bringing these locations online in April and have all of them operational within the next 12 months to 18 months. We expect the transaction to be accretive to EPS and our LTL operating ratio in 2025.

This assumes no underlying recovery in industry volumes. Any market rebound would represent an upside to our baseline forecast. The third pillar of our plan is to drive above-market yield growth, which is our single biggest lever for margin improvement. You can see this dynamic in the fourth quarter when we drove yield, excluding fuel, higher year-over-year by 10.3%. This helped us deliver nearly 400 basis points of adjusted operating ratio improvement. We got there by executing on service improvements, accessorials, and volume growth within our local customer base. These are the three levers for our long-term pricing opportunity. The exciting trends in our service metrics translate to value for our customers, with a direct correlation to the price we earn.

Increasingly, our customers see XPO as a high-value business partner with the resources to help them succeed. This was reflected in our contract renewal pricing, which was up year-over-year by 9% for the second consecutive quarter. Accessorials are another opportunity to grow our yield, by delivering more value through premium services. We plan to expand our range of offerings this year. We saw an early impact in the fourth quarter with the introduction of our retail store rollout offering. We already have over a dozen customers using this service to distribute critical product launches for retailers. And with the third lever, our local channel, we grew shipment counts by double digits for the third consecutive quarter. Our local sales team at year-end was over 20% larger than in 2022, reflecting the importance we place on this high-yielding margin-accretive business.

So, we have a lot of avenues leading to yield growth and each step forward helps to align our pricing with the value we deliver. The fourth and final pillar of LTL 2.0 is cost efficiency. The main opportunities here are with purchase transportation, variable costs, and overhead. In the fourth quarter, we reduced our purchase transportation cost by 22% year-over-year by in-sourcing more miles and paying lower contract rates to third-party providers. We ended the quarter with less than 20% of linehaul miles outsourced, for a year-over-year reduction of 290 basis points. On a sequential basis, we reduced our reliance on outsourcing by 190 basis points. We've come a long way since the beginning of 2022 when we were outsourcing about 25% of our linehaul miles Today we're well on the way to bringing down that percentage to the low teens by 2027.

Lastly, a quick update on our initiative to add driver teams and sleeper cab trucks for long hauls. The goal here is to increase the efficiency and flexibility of our linehaul network. We started putting these teams in place last quarter and we currently have over 50 teams in operation. We expect to have a few hundred long-haul teams on the road by the end of this year. This should help to accelerate our in-sourcing plan. We're also continuing to manage our variable labor costs effectively, growing our volume by more than our head count year-over-year for the fourth consecutive quarter. And the spread in the quarter was substantial. Our shipment count was up 5.7%, while our headcount was up just 1.7%. This is a credit to the team's operational discipline, supported by our proprietary technology for labor planning.

In summary, in 2023, we made significant progress on our plan across the board, while laying a solid foundation for the future. We improved our operations in all four quarters of the year by generating record service levels, making strategic investments in the network, further accelerating yield growth, and operating more cost efficiently. As a result, the business performed above expectations with robust margin expansion and earnings growth and strong forward momentum. Now I'm going to hand the call over to Kyle to discuss the fourth quarter financial results. Kyle over to you.

Kyle Wismans: Thank you, Mario, and good morning everyone. I'll take you through our key financial results, balance sheet and liquidity. It was a strong fourth quarter overall. Revenue for the total company was $1.9 billion, up 6% year-over-year. This includes a 9% increase in our LTL segment. Excluding fuel, LTL revenue was up 14% year-over-year. Salary wages and benefits for LTL were 10% higher in the quarter than a year ago. This increase primarily reflects wage and benefit inflation as well as incentive compensation aligned with our strong fourth quarter performance. These impacts were mitigated by our productivity gains. We've now improved our labor hours per shipment on a year-over-year basis for four straight quarters throughout 2023.

We were also more cost efficient with purchase transportation through a combination of in-sourcing and rate negotiation. Our expense for third-party carriers was $83 million in the quarter, which was down year-over-year by 22%. Depreciation expense increased year-over-year by 23%, or $13 million, as we continued to reinvest in the business. This remains our top priority for capital allocation in LTL. In the fourth quarter, our CapEx was primarily allocated to our fleet, as we purchased new tractors from the manufacturers and build more trailers in-house. Next, I'll add some detail to adjusted EBITDA starting with the company as a whole. We generated adjusted EBITDA of $264 million in the quarter, up 28% from a year ago and improved our adjusted EBITDA margin by 230 basis points.

These metrics exclude the impact of real estate gains in the fourth quarter of 2022 to give you a like-to-like comparison. We had no real estate gains in the fourth quarter of 2023. Our fourth quarter corporate expense was $5 million, for a year-over-year savings of 44%, or $4 million. We're continuing to rationalize our corporate structure for the standalone business and expect to report further reductions this year. Looking solely at the LTL segment, we grew our adjusted operating income by 51% year-over-year to $160 million. And we grew adjusted EBITDA to $233 million. The gains we achieved through revenue growth and cost efficiencies more than offset the non-operational headwinds from lower fuel surcharge revenue and pension income. In our European transportation segment, adjusted EBITDA was $36 million for the quarter.

Company-wide, we reported operating income of $119 million for the quarter, compared to $4 million in the prior year. Our net income from continuing operations was $58 million for diluted earnings per share of $0.49, compared with a loss of $36 million or $0.31 a year ago. This represents an improvement of $0.80 in diluted EPS from continuing operations, driven by significant year-over-year reductions in transaction and integration costs and restructuring charges. On an adjusted basis, our EPS for the quarter was $0.77, which is down 21% from a year ago. This primarily reflects the impact of real estate gains in 2022, as well as lower pension income and higher interest expense in 2023. Our acquisition of the 28 service centers closed on December 20 and did not have a material impact on our operating results in the income statement.

And lastly, we generated $251 million of cash flow from continuing operations in the quarter and deployed $151 million of net CapEx, excluding spend related to the acquisition. Moving to the balance sheet. We ended the quarter with $412 million of cash on hand. Combined with available capacity under committed borrowing facilities, this gave us $920 million of liquidity. We had no borrowings outstanding under our ABL facility at quarter-end. In December, we raised $985 million through a combination of $585 million of senior notes and $400 million of term loans. We used $870 million of proceeds to complete our acquisition of 28 LTL service centers and we refinanced our existing senior notes due in 2025. We now have no funded debt maturities until 2028.

We also maintained all corporate and issue-level credit ratings. Our net debt leverage at year-end was three times trailing 12 months adjusted EBITDA. The investments we're making in the business will enhance our earnings trajectory for a high return on capital, consistent with our long-term goal of achieving an investment-grade profile. Before I close, I'll summarize the full year 2024 assumptions we provided in our investor presentation to help you with your models. They are as follows. Gross CapEx of $700 million to $800 million, interest expense of $240 million to $260 million, pension income of approximately $25 million and adjusted effective tax rate of 23% to 25% and a diluted share count of 121 million shares. Now, I'll turn it over to Ali who will cover our operating results.

Ali Faghri: Thank you, Kyle. I'll start with our LTL segment, which reported another quarter of profitable growth. On a year-over-year basis, we increased our shipments per day by 5.7% in the quarter, led by 12% growth in our local sales channel. This resulted in growth in tonnage per day of 2%. Our weight per shipment was down 3.4% year-over-year, which was notably less of a decline for the second consecutive quarter. On a monthly basis, our October tonnage per day was up 2.5% year-over-year. November was down 0.5%, and December was up 3.6%. Looking just at shipments per day, October was up 6.2% year-over-year, November was up 3.7%, and December was up 6.6%. In January, our tonnage per day was down 1.1% year-over-year, while shipment count was up 1.4%.

The transportation industry was disrupted by weather events in January, but we saw a rebound more recently and ended the month with stronger volumes. And sequentially, both our tonnage and shipment count increased from December to January, outperforming seasonality. We also outperformed on yield in the fourth quarter, delivering a second consecutive quarter of acceleration. We grew yield, excluding fuel, by a strong 10.3% compared with the prior year. Importantly, our underlying pricing trends are strong as we continue to align our pricing with the better service we're providing. Our contract renewal pricing was up 9% in the quarter compared with a year ago. Turning to margin. Our fourth quarter adjusted operating ratio was 86.5%, which was an improvement of 380 basis points year-over-year.

Our strong margin performance was primarily driven by yield growth and underpinned by our cost initiatives and productivity gains. Sequentially, our adjusted OR increased by 30 basis points, which outperformed seasonality by 280 basis points. Moving to our European business. We delivered revenue growth of 2% year-over-year, despite ongoing challenges in the macro environment. This growth was supported by strong pricing, which outpaced inflation. And in some regions like the UK, we grew adjusted EBITDA versus the prior year, reflecting disciplined cost control. While our volume declined slightly year-over-year, we outperformed the industry and we mitigated the decline with new customer wins as the quarter progressed. And this trend improved in January.

The team is executing well and earning new business from high-caliber customers. This momentum, together with the growth of our sales pipeline, should continue to strengthen our position in key European regions. I'll close with a summary of the three main achievements you heard from us this morning, as they relate to our expectations for a strong 2024. First, we're continuing to deliver more value for customers in the form of service quality with our metrics at record levels. And we're on an excellent trajectory. Second, we accelerated yield growth to double digits as we exited 2023, and we expect to deliver another robust yield performance this year with a direct benefit to profitability. And third, we're showing that we can operate more productively by leveraging our technology and improving our cost to serve.

In short, we've taken major strides with our network operations, and we're still in the early innings of significantly improving our operating ratio. Now we'll take your questions. Operator, please open the line for Q&A.

Operator: Thank you. [Operator Instructions] Our first question is from Scott Group with Wolfe Research. Please proceed.

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