Jason Seidl: That’s great.
Kyle Wismans: And then with respect —
Jason Seidl: Sorry.
Kyle Wismans: And then with respect to the OR target, yes, so if — as we’re performing now and what we expect, just rolling seasonality would put you at the higher end of that target in the 250 basis point range.
Jason Seidl: Yes. That’s what I talking about. All right. Fantastic. Thank you very much for the time as always.
Kyle Wismans: You got it.
Operator: Thank you. Our next question is coming from Jordan Alliger with Goldman Sachs. Please proceed with your question.
Jordan Alliger: Yes. Hi, good morning. Longer-term question, I think you’d mentioned that LTL 2.0 is still in the earlier days or earlier innings. And obviously, now since you first put that plan out, you have the former Yellow terminals that you’re rolling out. Any thoughts on assessment sort of the longer-term, margin improvement potential that you could get to in Less-Than-Truckload vis-à-vis the original expectations or updated expectations? Thanks.
Mario Harik: Thanks. Thanks, Jordan. Well, initially, we expect at least 600 basis points of our improvement from a baseline of 2021 and through 2027. But we — but we always said at least because we’re not stopping at 600 basis points, and we’re not stopping in 2027. But with the momentum we have and all the initiatives and the plan working as expected, we do expect to get there faster. But obviously, we’re not stopping at 600 or 2027. Our goal is to get to the 70s from an OR perspective and eventually into the mid-70s and eventually the low 70s.
Operator: Thank you. Our next question is coming from the line of Brandon Oglenski with Barclays. Please proceed with your question.
Brandon Oglenski: Hey, good morning. Thanks for taking the question. Mario, I was wondering if you could talk to service outcomes during the quarter. I know you guys were calling out a really low claims ratio. And then how does that factor in with these new terminals opening, does XPO actually become more of a growth story as you look out the next two years to three years, I mean, obviously, cycle contingent?
Mario Harik: Yes. So the way we think about the new service centers, they will help us deliver better service as well. Because usually, when you have more space on the dock, you have to — you turn less often your doors, your dock doors, which gives you more time to load trailers effectively, and also being able to build what we call pure trailers that can go through the network without any rehandling along the way. So we believe that more space is going to enable us to even have a better service product over time as well. Similarly, we have initiatives around in-sourcing third-party linehaul, as we mentioned earlier on. And these also come with an improvement in-service. And we have obviously the airbags systems and the new loading methodology and all the things that we are doing as a company to further improve service.
Now, in terms of being growth, our goal is to keep on improving service and drive yield more than tonnage. But at some point, whenever there is a market inflection, we’d be able to take on more freight but we’re focused on making sure it’s OR-accretive freight, and it’s operating at the right yield as well. So again, we’re not chasing tonnage we’re chasing yield and keep on improving that service product as well.
Operator: Thank you. Our next question is coming from the line of Scott Schneeberger with Oppenheimer. Please proceed with your question.
Scott Schneeberger: Thanks very much. Could we touch on Europe? I think Mario; you mentioned it was the best quarter since COVID and seeing some strength in the UK and France. What end market specifically? And I guess, I’ll throw in the question too of, is now an improved time to be considering that disposition? Thanks.
Mario Harik: First, I’ll start with the back half of the question. Our long-term plan remains to be a pure-play North American LTL carrier and selling that business is a strategic priority of ours. But we’re going to be patient. We want to make sure that we are maximizing the returns on that business. It is a business that has a lot of scarcity value in Western Europe, we’re either number one, number two, or number three in LTL, truckload and brokerage. And it’s in key Western European geographies; think about UK, France, Spain, Portugal. So it’s not a matter of if, but when. Meanwhile, the business is performing really well. And as you mentioned, we — our EBITDA for the first quarter was the highest it’s been since the pandemic.
In some of these key geographies in France, for example, our EBITDA was up in the mid-teens. In the UK, our EBITDA was up in the high-single-digits. And a lot of it is driven by really good strong sales pipeline driven by good pricing. And the team is just executing in every level in our European business. And keep in mind that in the backdrop of a soft freight economy and we have seen our volumes inflect positive in the month of March, we are seeing more strength in the Less-Than-Truckload business in Europe, but also in the brokerage side and the truckload side, we are also seeing an improvement in overall trend.
Operator: Thank you. Our next question is coming from Kevin Gainey with Thompson Davis & Company. Please proceed with your question.
Kevin Gainey: Hey guys, good morning. Congrats on the quarter. I actually wanted to go into operating cash flow. It was a pretty strong quarter for that. And I was wondering what levers kind of drove that from your standpoint? Or was there any kind of efficiency changes that you guys have done there? And then maybe the outlook that you guys have for the remainder of the year on cash flow.
Kyle Wismans: Yes, from the cash flow quarter, I think it’s another strong quarter from a working capital perspective. Obviously, Q1 tends to be negative from a cash flow standpoint. But I think even given that and the higher CapEx, we had a really good end result. I think what’s important when you think about cash flow is for the rest of the year, we expect to generate over $100 million in cash flow in 2024. That’s even contemplating the elevated level of spending from a CapEx perspective. So we said $700 million, $800 million in our planning assumptions. We think we’ll be in that range. And I think even with that, we should still be comfortably over $100 million in cash flow. Again, timing, you got to think about, so Q1, we said it’s negative.
But we had a lot of tractor deliveries here in the first quarter, 1,600 deliveries in Q1, most of the whole year. So that CapEx number for Q1 at $299 million, and that CapEx will come down over the course of the year. We feel very strong — we feel very good about our cash generation ability this year.
Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to XPO’s Chief Executive Officer, Mario Harik, for concluding comments.
Mario Harik: Thank you, operator, and thank you all for joining us today. I’m proud of our strong first quarter and the tremendous progress we’re making. As you can see from our results, our LTL 2.0 plan is working and is gaining momentum in a soft macro for freight transportation. We look forward to updating you on our continued progress next quarter. Operator, you can now end the call. Thank you.
Operator: Thank you. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation, and you may disconnect your lines at this time.
