Welcome to the XPO Logistics Investors Conference Call and Webcast. My name is Vanessa, and I will be your operator for today's call. Please note that this conference is being recorded. Before the call begins, let me read a brief statement on behalf of the company regarding forward-looking statements. During this call, the company will be making certain forward-looking statements within the meaning of applicable securities laws, which, by their nature, involve a number of risks, uncertainties, and other factors that could cause the actual results to differ materially from those projected in the forward-looking statements. A discussion of factors that could cause the actual results to differ materially is contained in the SEC filings of XPO.
The forward-looking statements in the press release or made on this call are made as of today, and XPO has no obligation to update any of these forward-looking statements, including its financial targets, except to the extent required by law. You can find a copy of the press release, which contains additional important information regarding forward-looking statements, in the Investors section of XPO's website at www.xpo.com. I would now like to turn the call over to Mr. Brad Jacobs, Chairman and CEO. Mr. Jacobs, you may begin.
Thank you, operator, and good morning, everybody. Welcome to our call. With me today are John Hardig, our CFO; Scott Malat, our Chief Strategy Officer; and Tavio Headley, our Director of IR. We're very excited about our agreement to acquire Con-way, the second-largest provider of less-than-truckload transportation in North America, with revenue of about $5.7 billion. LTL is a service that's used by nearly all of our 16,000 customers in North America. It's a high value-add business. It's a $35 billion market where size and technology matter, and the 36,000 customers served by Con-way will have immediate access to our expedite, our brokerage, intermodal, last mile, and freight forwarding services. One of the crown jewels we're getting with Con-way is its asset-light subsidiary, Menlo Logistics, whose three service offerings are identical to ones that we currently provide at XPO.
Menlo is the fifteenth-largest contract logistics provider in North America and has about $600 million of logistics revenue worldwide. It's also the seventh-largest North American provider of managed transportation, with $1.3 billion of freight under management. Menlo has $200 million of truck brokerage business as well. In addition, Con-way has a full truckload business that operates in the fast-growing cross-border Mexico corridor. We'll integrate these businesses and rebrand them as XPO Logistics. We're launching a tender offer probably tomorrow, maybe Monday, and we expect to complete the acquisition in October, following the successful completion of the tender offer and satisfaction of customary conditions. Upon close, XPO will have about $15 billion in revenue and about $1.1 billion in EBITDA.
The acquisition will add significant ground transportation capacity to our network and will give us a more blended model of brokered, owned, and contracted capacity. We're already running a highly profitable blended network in Europe, where we have leading LTL positions in the UK, France, Spain, and Portugal. We'll now be able to share LTL best practices to a much greater degree on both sides of the Atlantic. Menlo's contract logistics platform will give us an additional 22 million sq ft of contract logistics space to serve our customers, growing our global footprint to 151 million sq ft. Menlo serves blue-chip customers in verticals such as high tech, healthcare, and retail, complementing XPO's expertise in aerospace, retail, telecom, chemicals, agriculture, and food and beverage.
XPO and Con-way both have e-fulfillment contract logistics platforms in North America and Europe, and the combination will strengthen XPO's position in a highly desirable e-commerce sector. Very importantly, one of the main reasons we're buying Con-way is that we see a concrete opportunity to improve its annual operating profit by at least $170 million-$210 million, before one-time implementation costs of $125 million-$150 million, and we have a detailed plan to get there in two years. Our plan has two profitability streams. The first is that we'll run the business for greater efficiency with a fresh set of eyes, using many of the best practices employed at XPO globally. The second is our ability to capitalize on synergies created by the combination.
Con-way has an IT budget, for example, of $227 million, most of which is outsourced. We will bring much of that in-house and merge our technology organizations, and we'll leverage our combined technology infrastructure to reduce Con-way's $227 million IT budget. We've identified significant opportunities to improve purchasing and vendor management. With greater purchasing power and best practices, we will lower the external spend in not just technology, but in facility operations, equipment purchasing, fuel, professional services, maintenance, supplies, and many, many other categories. There are also significant duplicative costs that we can eliminate in the back office and in public company costs. And we'll integrate Con-way's brokerage business with ours and move it onto our Freight Optimizer technology.
This will allow us to share capacity and data, and we'll gain significant savings by reducing the $3.6 billion combined spend on purchase transportation. We'll use the larger flow of data from our combined $2.7 billion of freight under management to identify carriers, assign loads, and very importantly, fill backhauls more efficiently. In addition, we'll tap our extensive intermodal network to improve LTL line haul efficiency by shifting a portion of the freight to rail. So those are some of the major buckets of the plan. It's very exciting, and we're eager to get on with it. On, at $47.60 per share, the transaction value represents a multiple of approximately 5.7x Con-way's 2015 consensus EBITDA of $528 million before synergies, and less than 4.3x EBITDA after expected synergies.
We think the purchase price is fair to both parties. We expect the acquisition to be substantially accretive to our earnings in the first 12 months, and we'll raise our 2015 financial targets and issue new long-term targets once we close. After the acquisition, we'll still be asset light, with assets accounting for only about a third of our revenue and net CapEx of only 3.3% of sales. So in summary, this is an opportunistic acquisition for us, one that catapults XPO to the top 2 position in LTL in North America. We're expanding our leading global position in contract logistics. We're nearly doubling our freight under management to $2.7 billion. The acquisition makes us much more valuable to customers.
From a financial perspective, we'll achieve a certain critical mass with $15 billion of revenue and $1.1 billion of EBITDA. And very importantly, we have a clear plan to increase Con-way's profitability by $170 million-$210 million over two years. And with that, operator, I'd like to open it up for Q&A.
And thank you. We will now take questions. If you have a question, please press star, then one on your touch tone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. And if you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then one on your touch tone phone. And we have our first question from Rob Salmon with Deutsche Bank.
Hey, thanks, and good morning, and congratulations, guys.
Good morning, Rob. Thank you.
You know, Brad, the biggest kind of inbound question that I've been getting from investors, you know, relates to the kind of more asset-intensive nature of the transaction. Can you give us a sense, because the transaction does kind of arise the potential for some perceived thesis drift here, away from kind of the asset-light nature. I realize that asset-intensive is only going to be about a third of overall revenue, and CapEx is still right around kind of 3% here.
Can you give us a sense, you know, what made this deal unique from XPO's perspective, whether it's related to kind of underlying customer requests and kind of what you feel is necessary from the organization from a service perspective, and you know, how big the asset-based piece you think makes sense to grow to over time?
Okay, well, thanks for all those questions. So I do not think this is a shift in our strategy. I think this is an evolution of our strategy and being responsive to what's changing in the industry and what we've learned as a result of the Norbert Dentressangle acquisition. What do I mean by that? So we looked at buying Menlo Logistics a couple of years ago, and we were eager to buy that for obvious reasons. It's contract logistics, it's freight brokerage, it's freight under management, it's non-asset. It really fits perfectly with much of what we do here. Couldn't get to a deal on that because of technical reasons in terms of the tax basis of it. So we kind of just. It didn't work out. One of those deals that we tried our best and couldn't get there.
We weren't interested in buying all of Con-way at that time because our mindset was, well, we want to be non-asset. We, we don't want to be in assets, other than intermodal, where if you don't have some assets, you're not going to be a major player. We then bought Norbert Dentressangle, which had some component of asset, majority of it non-asset, but about 20% came from asset. I went and visited dozens and dozens of now XPO Logistics Europe, formerly Norbert Dentressangle, customers, and I got an appreciation for the, the, the respect and appreciation that you get from the customer, the larger seat at the table that you get, the more meaningful relationship that you get when you have some component of your business with assets.
So as a broker, you're gonna get, you know, maybe $5 million of lanes, maybe $10 million of lanes. Maybe for a few of your top accounts, you're gonna get some few tens of millions of dollars of lanes. But by and large, you're not sitting at the adult table. You're gonna get, you know, 3, 4, or 5% of the transportation spend of the big shippers. So having that asset component, even though it's a minority of our business, really does change our perception from our customers. And I gotta tell you, in the last 24 hours since we announced the deal, it's been a tale of two cities, Rob. We have had...
As much as we've had a lot of questions and a lot of skepticism, and a lot of issues raised by both the sell side and the buy side, we have had an overwhelmingly positive response from customers and from our employees. Like, 100% of our customer response, 100% of our employee response, they're very, very positive, and they get this.
Now, Brad, that makes sense. And I guess when you detailed the significant synergies from the transaction, it sounded like that was much more cost-based, and you just highlighted the fact that there's a lot of positive shipper reception to the transaction. Can you give us a sense if there are any sort of revenue synergies baked into that $170 million-$210 million that you had called out?
We've not put in the revenue synergies except for a minor amount from the cross-selling, but very big upside from that. So the synergies that are easiest to focus in on are the ones that are the lowest hanging fruit and lowest execution risks are cost synergies. But boy, the opportunity to cross-sell is very well known by our sales force, and my iPhones have been blowing up with emails from our sales folks, particularly our strategic account managers, who have been forwarding emails from their customers, and it's just a big, big, big plus from them. Now, another strategic reason for this acquisition, going back to your earlier question was, what is our major view? Our major long-term view is that capacity ultimately is gonna get tighter for all the obvious reasons: the driver shortage, the driver demographics, the government regulations.
We all know what that is. What do you do if you're going into a market where you see something becoming very short? You go along it. So we want to be prepared for what some people call the mother of all capacity squeeze is coming up, and likely to be coming up in a few years from now. And controlling capacity in that scenario will be extremely helpful. And we got a taste of that in 2014, when capacity got tight, mainly due to the weather.
Right. No, that, that makes a lot of sense. I guess my last one before I shift it over, Brad. In terms of the three different subsidiaries at Con-way, can you give us a sense of where the kind of profit improvement is coming from? I would imagine the majority is over at Freight, but any sort of bigger percentages or numbers that you're willing to break out between where that—where you see that mix coming from?
So the beauty of the transaction is, it's everywhere. In every, literally every part of Con-way, there is massive amounts of synergy with what we do at XPO. So if you look at it globally, their IT, they have a $227 million IT budget, the majority of which is outsourced. And as you know, we have a very rich, fulsome IT infrastructure in our organization, and we're gonna merge their organization with ours. We're gonna in-source much of that outsourced IT at much more efficient, much more effective, and much more inexpensive pricing as well. And that IT budget applies to all of Con-way. There's purchasing power, so not just lowering the cost of technology, but all across the board, where you're a bigger company, you have, you deserve cheaper pricing from the vendors.
The whole vendor list, from A to Z, will all be approached for reductions in pricing. There's duplicative costs in the back office in all parts of Con-way and Menlo, and there's obviously the public company costs. We're not gonna have two sets of boards. We're not gonna have two sets of auditors. It's a lot of overlap on the public company costs. And then when you look at the $200 million brokerage business that they have, we're going to immediately integrate. I have no doubt that we will see the same uplift in profitability from all at bringing that $200 million on, that we have with all the other truck brokers that we've bought over the years, putting them onto our proprietary Freight Optimizer, sharing capacity better, sharing data better, being all part of the same network.
And then if you look at purchased transportation, we will be one of the largest purchasers of transportation in the world. We'll have a $3.6 billion combined purchase transportation spend. And you can do the math, even if you can take 100 or 200 basis points out of that, it's really huge, and we're not counting on that, but you can... In the numbers that we gave you, huge upside to fine-tune the cost structure by modest changes in that. And then you look at the freight under management. We will have—we will be one of the top managed transportation companies in the world. We will have $2.7 billion of FUM, Freight Under Management... and the backhaul opportunity to serve our customers better by filling those backhauls and, and not having them be empty, it's a big, big opportunity.
Then on the LTL side, you mentioned on the freight side, there's a portion of the line haul that can be shifted from over the road to intermodal, and that'll save our customers money, and it also increased bottom line money to our bottom line, too. So short answer to your question is, there's synergies and cost-saving opportunities all over the place.
Got it. Makes sense. Well, congrats again on the acquisition, and I'll turn it over to someone else.
Thank you very much, Rob.
Thank you. Our next question comes from Allison Landry with Credit Suisse.
Thanks. Good morning.
Morning, Allison.
So, I had a question. How are you guys thinking about who will eventually lead the LTL business? And, sort of along those lines, do you plan on conducting an outside executive search? So, any color you could provide there?
So, two answers to that. Who's going to run the LTL business day one? That's me. I'm going to run the LTL business. Very, very similar to the network businesses I've run at United Rentals and United Waste. I'm very familiar with this kind of business, where it's managing assets, where it's managing CapEx, where it's managing capacity utilization, where it's managing pricing. I get this business. This is the business I've spent most of my adult life in. I'm not going to permanently run it. We are going to do a search, starting very soon, for a new LTL leader. We are going to look for a best athlete, not necessarily from the industry, but if we get someone from the industry, that's great.
There's not a whole lot of companies larger than us in LTL now, after this transaction, so there's not a huge amount of people who have run this, this size of an LTL business. We may go for a best athlete in another networked distributed network business like equipment rental or car rental or just someone who's a really good, effective manager, who can help implement these significant cost reductions and maximize efficiencies. You may recall, Allison, that at United Rentals we had the 23rd largest private fleet, and at United Waste we had the 5th largest garbage trucking company. So this is a field that I'm very, very familiar with.
Okay. And then maybe turning to the financing piece and the leverage on XPO currently. You know, in the past, you've sort of talked about not wanting to go above 4x debt to EBITDA. So, you know, running above that now, but you know, sort of how are you thinking about the ways that you guys will contemplate getting the financing for the deal done?
Hey, Allison, it's Scott. We do have in place an agreement with Morgan Stanley for $2 billion in debt to backstop the transaction. Pro forma will be somewhere in the range of five turns of debt, net debt to EBITDA. We will look to delever, both from the synergies that we laid out, from overall profit improvement in EBITDA and from free cash flow generation. We do have a significant amount of flexibility and variable around our CapEx, around our cost structure, with two-thirds of our business coming from asset-light. A lot of that, most of the CapEx that we have on a combined basis is discretionary. So we do have a lot of flexibility to change that CapEx, but we expect to delever over the next several years.
Okay, excellent. Thank you.
Thank you.
Thank you. Our next question is from Kevin Sterling with BB&T Capital Markets.
Oh, thank you. Good morning, gentlemen.
Good morning, Kevin.
Brad, you've been quite busy lately.
The whole management team's been busy.
I know. So let me ask you a question, kind of going back to the asset-based route. So why, you know, I know you explained, you know, you want access to capacity, but why the asset-based route in LTL versus maybe, say, LTL brokerage? Did you look at LTL brokerage as a possibility to possibly remain more asset light versus jumping in feet first into asset-intensive LTL company?
Yes. So when you look at the LTL world, there really is no big LTL non-asset provider. There's... I think Robinson's the biggest, and I may not be totally accurate in their numbers. I think it's roughly about $1 billion, and then it goes down to maybe three, four guys, who are a few hundred million dollars, and then it falls down below there. So if we want to be big, so our strategy is to be the number one or number two provider in the most important parts of the supply chain for our customers. We're not going to get there in Parcel because we're about 30 years too late in that. But other than that, we want to be number one or number two.
We've got these great positions in contract logistics and last mile, intermodal, truck brokerage, expedite, and now we have a number two position also in LTL. I didn't want to go into LTL as a minor player, wanted to go into LTL as a major player.
Okay, great. Thank you. How much customer overlap with Menlo is there in your existing customer base?
There's some, but the vast majority of it is different. They have a very blue-chip customer base. It's a lot of high tech. It's a little more Silicon Valley than ours. It's more international than ours in some ways. It's a great customer list. I mean, the Con-way as a whole, when you look at who their customers are in all parts of their business, it's fantastic. I mean, it's really a blue, blue-chip list of customers, and that's why our Greg Ritter and our strategic sales force is really excited about this because all those customers can use all the other services that we're number one and two in, that I mentioned earlier.
Got you. So you've got a lot of new customers, access to more customers to sell to. Is that right?
Exactly. Exactly.
Okay, last question here. Since you guys have been so busy with, with Norbert and now Con-way, do you- and having done them so quickly, do you worry about integration issues, digesting too much, too fast? And maybe you could update us how the Norbert deal is going and progressing.
So, Kevin, we can chew gum and pat our head and jump up and down at the same time. We have a management team that I built in 2011, and since then, that's deep, that's broad, that has broad shoulders. It has an appetite for being active, for being focused, for being creative, for being resourceful, and getting a lot of things done. The integration in Europe is going wonderfully. It's being done wisely and as fast as responsibly it can. Morale is very high. The business results are very good at XPO in Europe. We're beating budget there. The coordination between Europe and North America is excellent. We're on the telephone and Skype literally every day between Europe and here. I and the other members of the senior management team, we're going back and forth from Europe to Europe regularly.
We have two people running the business there on a day-to-day basis who've been running it for a long time. One is Malcolm Wilson, a Brit, who runs logistics, and the other is Luis Gomez, who's a Spaniard, who lives in Lyon, and he runs transportation. They're very stable, and we're in very close communication with them. Now, one of my very chief lieutenants, Troy Cooper, who's been with me for 20 years, is taking charge to make sure that Europe stays on track with our profit improvement plans. I'm going to focus my time partly on Europe, but more on the United States, and particularly, Con-way.
Okay, great. Well, thanks again for your time, and congratulations.
Thank you.
Our next question comes from Scott Schneeberger. Pardon me, Scott Schneeberger with Oppenheimer. Please proceed.
Thanks very much. Good morning, guys.
Good morning, Scott.
Hey, Brad. I guess could we start with what the kind of big picture, what does the acquisition pipeline look like from here? Historically, you've talked to contract logistics, freight brokerage as still being two of the leading areas. Does this change the longer-term view of what you're going to be looking at to add from here? Thanks.
Longer term, our focus will continue to be non-asset. I don't rule out we do any more asset deals somewhere along the line if they're very compelling and make a lot of sense, and we'll be opportunistic about that. But overall, we'll be non-asset. For the majority of our business, not all of our business, for the majority of our business. We'll do acquisitions. We're not going to be a $15 billion company for the rest of our life. We still see some opportunities that are highly accretive, and we'll continue to act on those. There's a few smaller and medium-sized acquisitions, especially in Europe, that have been in process for a long time, and the ops guys would shoot me if I could put a kibosh on those.
So we do have a little dry powder for some acquisitions and generally dealing with the smaller, medium-sized ones for the near term makes more sense right now. The large focus now is on increasing the EBITDA we have today and increasing it to $1.5 billion within a few short years. So when I step back and I look at so what have we as a management team done over the last four years? We've very carefully bought acquisitions strategically here and in Europe and built up a network that's unique, that after Con-way, will be $15 billion in revenue and will have roughly $14 billion of costs, about $1.1 billion in EBITDA. When you have $14 billion of costs, you should be able to find a few hundred million dollars to take out.
When you've assembled that $15 billion of revenue, including, not organically, when you've assembled it or, or by acquisition. When you step back and look at the organization and say, "Okay, now let's, let's forget about what we inherited, and let's forget about what we acquired. Let's look what the organizational chart should look like on a global basis, now that we've got $15 billion of revenue, now that we have $1.1 billion of EBITDA." There's opportunities galore to improve the profitability.
From a financial perspective, the goal is to take that $1.1 billion of EBITDA and grow it by several hundred million dollars of EBITDA over the next few years, and use the network that we have to please customers, to delight customers, to satisfy customers' needs, much more than any of the companies that we've bought or that we've cold started, could have done alone.
Great, thanks. And somewhat following on that, what are your near and longer-term growth expectations for LTL, and then taking that up a level, how it affects your view on the organic growth rate of the total pro forma XPO going forward? Thanks.
Hey, Scott. Yeah, so overall, we expect this to accelerate our organic profitability. So we are going to give you updated guidance when the deal closes, but it's very likely, as a result of the transaction, that we're going to hit our long-term EBITDA guidance earlier than thought. We've also identified some opportunities to, in some cases, shed unprofitable businesses overall in the company, both in Conway as well as in other parts of the business. We look at that as a good thing. It will likely be a partial offset to the top line, while EBITDA will grow faster than we expected. We're focused on increasing the profitability substantially over the next several years.
You know, Scott made an interesting—this Scott, Scott Malat, made an interesting comment to you, Scott Schneeberger, that we have locations around the world that are losing money, and there's very few things that get me upset. But locations that lose money get me upset because we're not a nonprofit organization. We're for. We have a duty to please customers and to make a fair profit doing that. And when you have hundreds and hundreds of locations worldwide, and you have district managers or RVPs managing dozens, dozens in their district, and they have 45, 46 of them are making money, and three or four of them are losing money, nobody really notices so much. We notice! We notice very well.
So we've been doing stack rankings of all our locations globally, Europe and here, and it's surprising how many locations are making suboptimal margins. So we have profit improvement plans for all of those. So we're just fine-tuning the organization globally and improving the margins and finding new ways to grow in all continents.
Thanks, guys. One super quick follow-up to my first question. Brad, do you—is there a level, a mixed level of asset-heavy, asset-light that you have that you target for the company over the long term? Thanks. I'll wrap it there.
You know, I, I like the mix we have right now. After Con-way, we'll have about a third of our revenue coming from assets. We'll have two-thirds non-asset. Our CapEx, as a percentage of sales, will just be 3.3%. You compare that to, you know, asset-heavy guys, there are many multiples of that. I, I like the balance we are right now. I like the street cred that we get with the major shippers, and I love the reaction that we've gotten since yesterday at 4:00 from our major customers to the fact that we now have assets. In the next few years, there will be a capacity shortage. There's no doubt about that in my mind. When exactly that is, is up for debate. When that capacity shortage comes, he who controls assets will do very, very well.
Excellent. Thanks, and congratulations.
Thank you, Scott.
Our next question comes from Brandon Oglenski with Barclays.
Hey, good morning, everyone, and congrats on getting the deal done here. Brad, look, don't shoot the messenger here, but I've fielded a lot of questions from investors, too, and frankly, you know, I do have a lot of questions as well. So let me just lay this out if we can put some context around this. I mean, when we first learned about XPO, this was gonna be an asset-light story, really focused on technology and making brokerage markets much more efficient, and a role of strategy around that. And then, you know, we got scope creep into contract logistics, which I think a lot of us could understand.
We got into Norbert and, you know, rolled out the fact that, hey, this is European asset-based trucking, but bringing the assets to the table helps with customers, just like you're talking about here with Con-way. And then, you know, we do a big LTL transaction in the U.S. But obviously, you know, you've asked folks to buy stock here at higher multiples. But, I mean, the market's sold off right now.
But I think the big risk, and with all due respect, Brad, to your whole team, you know, there's a lot of folks that have covered transportation longer than me, and managers that have been here a lot longer, that say, look, as much as we try to sell into a holistic logistics supply chain solution to our customers, at the end of the day, LTL, TL, air freight, forwarding, you know, you name it, they are separate products. A lot of them are separate managed, and customers want the lowest price. So I get it. I mean, you've taken higher valued equity and bought cheaper companies, and you're definitely opportunistic on Con-way, but now you have a lot of disparate assets that, at least historically, haven't worked all that together when people have tried to roll up these, these various businesses.
And on top of it, you know, I, I don't want this to be too far off of Con-way, but you did just buy Norbert, which was a transformational acquisition for XPO. We heard Hervé on the call, what was it, three or four months ago? You, you said that he's gonna be the leader of Europe. Obviously, he has since, you know, stepped away from the organization. So can you just talk about, you know, how this is all going to work together? And obviously, there's a lot of integration risk here, and I think that's the biggest challenge for your investors, which says, are these businesses actually gonna be more valuable with XPO than they were standalone? Because we've seen this before in certain circumstances where it just didn't work out all that well.
Brandon, the concerns and risks that you just outlined are all have some validity to them. They're all issues that we've thought through ourselves, we've gotten comfortable with, we've addressed, we've made our bets. We are not going to be a company that is a stable, boring, I say stable in an unsatisfactory part of stable, boring, predictable, repetitive, non-agile company. We are going to be agile, we are gonna be opportunistic, we're gonna be flexible, we're going to be adaptable, we're going to listen very, very closely to customers. We are going to skate to where the puck is going, not where the puck is. We are going to look to see where the trends are going and embrace strategies that capitalize on that growth. We're very well aware that roll-ups in this industry have fared poorly.
Fair enough. I shouldn't say poorly, okay to poorly. We're very well aware that roll-ups in other industries have largely not worked out. We believe that the talent that we've put together in the team, that the infrastructure that we put in place in 2011, 2012, 2013, the building the company like a tank in the back office is what separates us from roll-ups that have failed and roll-ups that will succeed. Our investment in technology from day one, I remember in 2011, 2012, a huge chorus of skeptics and a huge amount of short sellers saying, "These guys are putting $60 million-$70 million a year of infrastructure in place. What the heck are they doing?" We did that so that we could now grow into a many multibillion-dollar organization and function effectively.
So we're moving now roughly 45,000 loads a day in Europe. We're arranging a similar amount here in North America, and with Con-way, we'll be up to roughly about 150,000 loads a day. We can run the business. The business runs very, very effectively. Customer satisfaction is very high. You mentioned the Norbert Dentressangle acquisition, you mentioned Hervé's departure, so let me address that. Hervé was a great manager, and Hervé was a great guy. Hervé and I both agreed there was no role for him in the organization if we wanted to have a lean management infrastructure. It's nothing, anything more complicated than that. That was a business that had 43,000 employees. It has one less employee, a great employee, but one less employee. The entire management team under Hervé is still there in place.
We haven't skipped a beat in Europe. The integration is going extremely, extremely well. So I don't find any challenge that's not overcomeable at doing Con-way just because we have Norbert going on in the other part of the house. I really don't see a conflict on that. We have the management bandwidth. It's just a question of being organized and being focused. One other thing that you mentioned about customers, 'cause what customers think is very, very important to us, for obvious reasons. Customers do want low price. I agree with that. I totally agree with that. I've never met a customer, in this industry or any other industry, that says, "Hey, you know, we're trying to figure out a way to have -- pay higher prices." Of course, they want lower prices. Every customer does.
We have to be larger and have scale and be and be more efficient in order to pass along some of that cost savings to our customers. So scale gives us that advantage. Now, one other point you mentioned, Brandon, which I thought was a good one, was, gee, you know, you have all these different verticals, the customers really want it, or is that, like, totally separate? The answer is very clear to us that customers do want it. Every single one of our intermodal customers has significant truckload business, and every single one of our expedite business businesses also has other modes of business as well. It's all across the board. So customers don't think in terms of modes, specifically, first.
They think in terms of, here's my global supply chain, and here's my national supply chain, and I have to move my products from point A to point B to point C, and how can I do that most efficiently, most cheaply, and most reliably, and most on time, most predictably? By having a comprehensive suite of services, the type of conversation that we have at XPO with our customers is on an entirely different level than a, than a competitor of ours who's smaller and only has one or two of these services. It's a completely different conversation. The level of access that we have to higher levels up the food chain and supply chain organizations at our customers is, is much better. Did I answer your questions, or was there any follow-up in that, Brandon?
No, no, and look, I asked a bunch, so I, I guess I won't really push the, the follow-up here, Brad, but I do appreciate it. Like, that's the feedback that you're going to hear from investors, and, and when you challenge the status quo in an industry that's been very established, obviously, there's, there's a lot of folks that detract from that, so appreciate it.
If you have follow-up, just call us afterwards.
Thank you.
Operator.
Our next... Yes, sir.
Go ahead. Next question, please.
Yes. Thank you. Our next question comes from Alex Vecchio with Morgan Stanley.
Hey there. Good morning.
Good morning.
Brad, can you give some color around to what extent XPO's freight brokerage customers are already using Con-way for their LTL needs? You know, presumably, you know, Con-way is already being used, too, because it's the second-largest carrier, but if it's not a big carrier already being used, what's the pitch to your existing customers for switching carriers to Con-way? What's the real sell there?
So, when we did our due diligence on Con-way, I was very impressed with the level of reaction that we got from their largest customers, the praise that they got for on-time pickup, on-time delivery, reliability, accurate billing, low level of damages, prompt resolution of any claims. Across the board, they got very, very high marks for equipment reliability and the strong fleet and high-quality assets and a great network. And this is, if you look at Con-way's LTL business, nobody has more next-day and two-day lanes in LTL than Con-way. There is, I mean, that's a pretty powerful statement. So the quality of the network is very, very strong.
What we want to do is now manage that network more intensely, with more vigor, with more energy, with more focus, with more concentration on profitability and continuing the great levels of service. The service is great. It's not a fixer-upper, where we got a company with, you know, dissatisfied customers who don't appreciate the service and have complaints. They have great customers, and they're very satisfied with the service. We just want to improve the efficiency and the profitability of the business.
... Okay, that makes sense. And then, on the synergies, the $170-$210, can you give us a sense of timing with regard to how much of that you expect to achieve through the first year versus the second?
Yeah, Alex, how you doing, Scott? That will roll in over the next two years. We'll get the full benefit starting toward the end of 2017 of the two years. It's roughly evenly split, how much we're going to start to get in year one and then in year two. A lot of it, the timing will be dependent on contracts, but in general, it'll be roughly split between year one and then year two to get to the final number. There are additional savings beyond that that will continue to ramp up. In the first two years, $170 million-$210 million is the right baseline.
Okay, that's helpful. And then, just a question on financing and guidance. One, on the financing side, are you, are you you know, rough math would suggest, you know, if you wanted to stay at four times or below, you'd have to issue, quite a bit of equity. I came up with $1 billion, roughly, but it sounds like you're willing to, to lever up a bit more. Can you just help us think about to what extent, you may issue equity as part of, financing this deal? And then B, on the guidance, the new long-term guidance you expect to issue, when you close, should we continue to expect, those figures to refer to full year 2019 for revenue and EBITDA?
So the answer to the equity is really easy. We're not going to raise equity. What we are going to do is we're going to substantially increase our ABL facility. We inherited a great amount of receivables in Europe with Norbert Dentressangle, and also, we will inherit great level of receivables with Con-way, and our ABL facility can be increased by a large multiple, and that is the cheapest source of capital and appropriate source of capital. We will also grow the multiple. We will also bring down the 5x leverage to 4x leverage, two other ways, cash flow and increase the EBITDA. So we're very confident that we are going to increase the EBITDA. The synergies and cost savings that we've outlined are not being given to you flippantly.
They're being done after great, great diligence and forethought, and we have a huge level of confidence in our ability to execute on them, and that helps bring down the multiple to the level that we want it to be at. Long term, we are comfortable at a 4x leverage. We think that adds enough juice to our return to our equity, but doesn't put us in any risk to not sleep at night when we go into recession, whenever that is. With respect to the 2019 question, there is no question. We're. Let's close the acquisition, then we'll update the numbers. There's no question that getting to $1.5 billion by 2019 it should not be very difficult at all whatsoever.
How much we want to raise that for 2019, or how much we want to bring those numbers in and give you guidance more closer to now, we'll figure that out between now and closing. We'll take input from, from our shareholders, what kind of guidance they would like. But we'll probably share more detailed guidance than we have in the past, now that we've got a more fulsome critical mass to work with.
Great. Thanks very much.
Thank you.
Thank you. Our next question is from Todd Fowler with KeyBanc Capital Markets.
Great. Thanks. Good morning. I wanted to come back to an earlier question about the growth rates. You know, Con-way, over the last three years, has had a difficult time growing the top line. So with putting them in the mix and having them about a third of the revenue, does that imply that the organic growth that you previously talked about, the 9%-10%, that that will be lower? The LTL market doesn't seem to be growing like some of the other markets. And then just as a second part to that question, how do you think about the cyclicality of Con-way's EBITDA? You know, the LTL market is much more cyclical than some of the other markets that you're in.
When you think about the longer-term guidance, you know, how do we factor in the potential for Con-way's EBITDA to be more cyclical than some of your other businesses?
So you are right that the growth in LTL is lower than the organic growth in some of the other parts of our business, and that will bring down the blended organic growth rate. When we look at organic growth, we look at two types of organic growth internally, organic revenue growth, organic EBITDA growth. We do not compensate people on organic revenue growth. We do compensate people, and we do incentivize people on organic EBITDA growth. Sometimes there's a conflict between those two. We mentioned earlier in the call, sometimes you have to close locations that are not losing money, that are not making money or not making enough money and taking up too much resources.
Sometimes you have to have difficult discussions with customers and revisit pricing, and if it doesn't work out, to wait until that contract expires and then lose that revenue because you're actually making more money by losing that revenue. Sometimes it's specific lanes that are money-losing lanes. So constantly doing stack ranking of lanes, of customers, of locations, and fine-tuning it, sometimes that's going to hurt your organic growth, but that's going to help your organic EBITDA growth. My prediction is that the industry as a whole, not just us, the industry as a whole, is going to experience lower organic revenue growth rates than they have in the last few years. And tell you why: economy slowed. And when the economy slows-
Yeah.
Organic growth slows a little bit. So I don't think we can naively think that organic growth, industry-wide, taking XPO out of the equation per second, is going to be at the same robust levels, because you don't see in other industries. When you look at other industries that have similar end markets with retail, with manufacturing, construction, you know, you see growth rates having been slowed.
... And then the other part, yeah, and the cyclicality of it, yeah.
Yeah, sorry about that. So on the other part of your question about cyclicality, you know, LTL is not as cyclical as truckload. When you, when you look at the numbers, LTL obviously gets hit in a recession because its customers are primarily industrial and manufacturers, and when PMI goes down, tonnage goes down. Tonnage goes down, pricing goes down. Tonnage and pricing goes down, EBITDA goes down. So it's, you know, basic kind of stuff. So in the recession, LTL will come down, but it's not going to come down as dramatically as, as some other parts of the business, even some that are not asset. We've looked at businesses, you know, hundreds and hundreds of businesses, and analyzed how they did in the last downturn.
A lot of it depended on how agile they were, how flexible they were, how much they were able to surf around the, the conditions and, and hustle and find, find opportunities to grow even when the overall market is, is suffering. The beauty of this industry being so huge is that even the largest players, and now we're amongst the largest players, we're still tiny percentages of the whole market. Even the largest, largest logistics companies worldwide are still small, small parts of the global logistics world. Our worldview is that this industry is the last industry that hasn't been consolidated yet, but should and will be consolidated.
We believe that we will be one of the winners ultimately in that consolidation, and we will have, we will share with one or two other companies majority market share of the global transportation logistics industry, and we will have a much better cost basis, and we will be able to have higher levels of service and please customers better.
Okay. Maybe I'll follow up offline on the cyclicality of the EBITDA, because I'm still not 100% sure. I mean, the growth rate of, you know, where Con-way's at right now, when I go back a couple of years, I mean, it's been anywhere between $100 million-$200 million lower. I guess I just need to think about that in the longer term perspective. A couple of other questions. Scott, you made a comment about, you know, getting out of some underperforming businesses. You know, is there an expectation that you would divest one of Con-way's larger segments, like the truckload business, or can you give a little bit more color about what you're thinking of specifically from a divestiture standpoint?
Todd, before we go to that second question, I don't dispute those numbers. I think in a recession, Con-way's EBITDA could go down between $100 million and $200 million. That's a normal amount to go down in a recession. That's not unexpected, maybe towards the shorter end of that than the longer end, but I don't think you're off base on that whatsoever. In terms of asset divestitures, let's not talk about Con-way specifically, but globally, worldwide, we're always looking at our business. Now, after Con-way, we'll have a $15 billion business, and we're always gonna be looking at different parts of the business to see, does this fit in? Does this make sense? Is there synergy with the rest of the organization?
Is this something that makes more sense to divest or to keep in building? And, I don't want to get into any specifics, for obvious reasons, on any part of either Con-way's or XPO's business, but like any corporation, we'll keep an open mind to that.
Okay, that makes sense. And just my last one, and I apologize if this has been... If you comment on this, but what would your expectation be for more permanent financing from an interest rate perspective?
Well, I like the ABL. I like the fact that it's a LIBOR plus, you know, circa 175-200. I like the fact that there's basically no, no meaningful covenants that we would have any worry about. We like high yield. We like high yield. It's a market that we've tapped. I personally tapped over $10 billion of high yield over my career. I feel very comfortable in that market, and I like the you make the interest payments and everybody's happy. So it's those are the two debt markets that we feel most comfortable with. We may look at term loans at some point or another. John is always showing me proposals for term loans, and yeah, we'll keep an open mind to that as well.
Brad, where do you think the high-yield market for you right now would be?
Well, you mean where it would be in terms of rate?
What, what sort of rate would you get? That's right.
Well, depending on the tenor, whether it's, you know, depending on how long it goes out, our bonds are trading right now in the circa 7%-7.5% range.
Okay. Thanks for the time this morning. That helps.
Thank you, Todd, and please feel free to follow up.
And thank you. Our next question comes from Donald Broughton with Avondale Partners.
Good morning, gentlemen.
Good morning.
Help me think how you view the pricing dynamic for Con-way on the LTL side strategically. This has not been a market in which there's been a lot of discipline in pricing, and certainly as the second-largest player, you have an opportunity to change that. Is it that you need to drive service, and then you can ask for a better price? Or do you think that there's real pricing opportunity just given where service levels are in the current infrastructure?
I like the service levels at Con-way. More importantly, their customers like the service level. There's no problem with service at Con-way. That's not the problem. We are going to focus in on executing on the minutiae, executing on the details of every part of the organization, on the cost side, on the productivity side, on the efficiency side, at the flow, at everything, the velocity. We're going to go in like any new management team comes into an organization, even if it was run five stars. A new management team with a fresh set of eyes, full of vim and vigor, with no sacred cows, with a blank slate, will find ways to improve it. That's just the way it works. We've seen it happen many, many, many times over the years, and that's what we'll do here at Con-way as well.
In terms of pricing strategy, the pricing strategy is not something I want to talk about on a public conference call, both for antitrust reasons and also because many of our customers listen to the call. You know, pricing is something we want to have one-to-one conversations with each one of our customers and come to win-win solutions that make sense, and we want to price appropriately.
Fair enough. Thank you, gentlemen.
Thank you, Donald.
Our next question comes from Casey Deak with Wells Fargo.
Thank you. Just wondering, there, there's always been a lot of investor chatter about Menlo and that possibly being a divestiture and a better play for, for Con-way, to go that route. So how, how did you view the company as a whole of Con-way with Menlo? How did you view the interaction, the complementary aspects of the businesses? Did you feel that that was a good marriage of businesses as it stood as a standalone, and that it or that it was not a good marriage and that bringing it into XPO represents different opportunity? Can you comment around how you saw that?
Yes, Casey. Good morning, by the way. So in terms of Menlo, we would have loved to buy Menlo a couple years ago, and we weren't interested in buying the rest of Con-way. Menlo is a great company with a great name and great customer relationships, and it has a $1.7 billion non-asset company, and it's got $600 million of contract logistics with blue-chip customers, and it's got $200 million of brokerage, and it's got $1.3 billion of freight under management. There's a lot to love about Menlo. It's a very fine organization globally. It's recognized globally as a premier contract logistics and overall non-asset logistics company. We couldn't figure out a way to make that deal work.
We tried real hard, just couldn't get the numbers to work because of the low tax bases that Con-way had. We would have not been interested in buying Con-way as a whole prior to Norbert Dentressangle, because prior to buying Norbert Dentressangle, we didn't have an appreciation of the value that having some portion, a minority portion, of your business in assets brings to the table. We didn't recognize until we actually met with customers in Europe and to understand how a customer looks at that, and then the lights clicked. And then it made sense to buy Con-way as a whole and replicate our already highly successful and highly profitable blended capacity, mix that we have in Europe, replicated here in the United States. Does that answer your question?
Yes. So the aspect of Con-way being, as it stood as a standalone, being majority asset-based with a smaller portion of the non-asset, isn't something that was as attractive. So bringing in a smaller portion of an asset company into a larger non-asset makes a little more sense for you? Is that how you're thinking about it?
Sort of. I mean, prior to Norbert, I would say, yes, we would have been only interested in buying the Menlo part of it. We just weren't really focusing on buying assets. After Norbert, and seeing the value that customers place on having some asset mix there, we did become interested in buying all of Con-way as a whole, asset and non-asset.
Okay. That helps. Thanks. I'll pass it along.
Thank you, Casey.
Thank you. Our next question is from Jack Atkins with Stephens.
Great. Thanks for the time this morning, guys.
Good morning, Jack.
So, Brad, you know, I guess, first of all, is there a breakup fee associated with the transaction?
Why? You thinking of making a competing bid, Jack? Don't do that.
You got a good deal, it looks like.
There is a breakup fee. I believe it's 3 point... I don't remember the exact number. I think it was 3.8, 3.9%, something like that. So I think it comes to. I don't want to guess what it comes to. It comes to, it's a substantial number, that is customary and fair and reasonable and, you know, market-oriented.
Okay. Okay, makes sense. And then, you know, we talked about the cyclicality of the Con-way earnings stream, which I think most people are familiar with. But, you know, as you guys think about adding this leverage to your model, could you maybe talk about how quickly you expect to be able to delever? And, you know, is there any concern, just given sort of we're long in the tooth of this economic cycle, potentially, that having that much leverage could create some additional volatility around the business?
So deleverage opportunities, we are going to delever because we don't want to be at 5 times leverage. I mean, 5 times leverage is not 6, 7, 8 times leverage, still, it's higher than where we want to be. We've always said we'd be willing to go for some medium term, short to medium term, 5-6 times in conjunction with an acquisition that was compelling. This is a compelling acquisition, and we felt opportunistically leveraging up to 5 times, 1 turn above where we want to be as a steady-state level, is perfectly acceptable. We will delever from 5 times to where we want to be, 4 times. There are many avenues to follow in order to do that. Most, first and foremost, it's increasing the EBITDA, so the ratio obviously falls in line. Second is generating free cash flow and paying down debt.
Third is, there could be some opportunities. I'm not flagging that there are, and I'm not indicating there's anything specific or decided, but there could be opportunities somewhere in our global $15 billion network for divestitures that would, that would raise cash. I'm not indicating whether that could possibly be in this part of the organization or that part of the organization, but conceptually, we're not, we're not, against the idea of considering, asset disposals when you have a $15 billion organization.
Okay. That helps, Brad. Thank you. And then, you know, in terms of rebranding Con-way, you know, this is a business that has, you know, a long brand history, and it's very highly regarded, as you pointed out, in the marketplace. Are you concerned at all that you either may lose drivers on the Con-way side, if you rebrand or, you know, more significantly, see some freight leave the network, if you rebrand XPO Logistics?
I'm always, always, always worried about losing employees and losing vendors and losing relationships in every acquisition, because when you do an acquisition, you have a bull's-eye target on you for, for the competition to come in, and I'm sure the headhunters have already started calling. No question about that. One good fact about Con-way is they must be doing something right because their driver turnover is much, much better than industry average. They're about 7%-8% turnover in freight, and I'm pretty sure it was about 65% in truckload, which I know—I'm sure you know, are far, far better than industry averages. So they've got good relationships with their drivers. They've had some very impressive success with driver satisfaction. They've worked very hard at compensation reform.
They pay very well, and they've instilled a cultural emphasis on safety and on driver first, and we're going to build on those best practices. I mean, I think what Con-way does in the truckload to keep the drivers happy and what the former Norbert Dentressangle organization does to keep our drivers in what's now XPO Europe is great, and cross-fertilizing those best practices is going to be even greater. I can't wait, once we clear antitrust, to get our top LTL operators, because, you know, we're the leaders in what's called pallet distribution in Europe, or if there's six or more pallets, groupage, but it's LTL, what we call LTL. We're the number one LTL provider in Spain. We're the number one LTL provider in France. We're the number one LTL provider in Portugal. We're the number one asset-based LTL provider in the U.K.
We have a lot of institutional knowledge about how to run a leading LTL organization, as does Con-way. We're going to put all these people in a room, and I'm going to lead all that, and I'm really, really looking forward to transferring those best practices. Now, with respect to drivers, remember one thing, a driver at Con-way today will have an opportunity to get many more miles once they are part of XPO Logistics. Will the decal say XPO Logistics instead of Con-way? Yeah, it will. Will they get more miles? Yeah, they will.
From a driver, the most important thing is to not be running empty, and that, that's something once we have our sales force, having all of Con-way's, what will then be known as XPO Logistics's trucks, up on their screen when they come in at 7:00 A.M., they're going to fill those trucks. They're going to, they're going to sell that capacity.
Okay, that makes sense. And then, just two quick follow-up questions to that, Brad. I guess, first of all, when you think about, you know, XPO historically, certainly before Norbert, you know, as a non-asset-based broker, you were sort of carrier agnostic. How do you think this changes the relationship you have with your third-party carriers once this acquisition closes?
We still need the third-party carriers. We absolutely need them, and we cherish those relationships, and we're going to continue. Just like in Europe, we have 7,700 trucks that we drive, that we own, that the drivers are our own employees, and we have several thousand other trucks that are owner-operators, and then we have tens of thousands of trucks that are completely independent. One, they don't say XPO Logistics, or some of them haven't been rebranded yet, Norbert Dentressangle on the side of them at all. And we need all of... That's the beauty of it, Jack. The beauty is, we are a company that's not just an asset-based trucking company. We're a company that's not just an owner-operator, asset-light company. We're a company that's not just relying on third-party capacity.
We have a blended mix of ground transportation, owned, owner-operator, and independent operators, independent contractors, and that's what we think is the best approach to run efficiently, to run effectively, and to please customers.
Okay, makes sense. And then last question for me, and I'll turn it back over. You know, I know that Con-way has been a target in recent years of the Teamsters trying to unionize that business. You know, I know that your European operations, I think, are more unionized. You know, is there any concern that you could have an additional push or an increased focus by the Teamsters to make Con-way a unionized company going forward?
I'm sure they're smiling today, saying, "Hey, you know, let's, let's go after XPO Logistics." Look, the Teamsters went after United Waste, the Teamsters went after United Rentals. The Teamsters have been going after Conway, by the way. It's not, not something new.
Sure.
We believe very firmly, as does the present management of Conway, that the employees of Conway and the drivers of Conway and the dock workers of Conway are better off without a union intermediary with its own ulterior motives between ourselves. That Conway, way prior to XPO joining the scene, has clearly cracked the nut and figured out that it cracked the code of how do you treat drivers with respect? How do you listen to their needs? How do you meet their needs? How do you pay them fairly? You got to pay drivers fairly, otherwise they're going to leave. It's not that complicated. One of the reasons that Conway has such fantastic, fantastically low, better than average industry turnover, is that they pay drivers fairly. We're going to continue to pay drivers fairly.
They're very important to us, and I think as long as we maintain that excellent culture, that part of Conway, I have high regard for. I think they've done a really good job, and the facts speak for themselves at keeping their drivers happy. We're not going to tinker with that very much. We're going to keep that and learn from them.
Okay, great. Thanks very much for the time.
Thank you, Jack.
Thank you. Our next question comes from Dan Strachman with Jefferies.
...Hey, guys. Thanks for taking the call. This call is run long, so I'll keep it quick. Brad, to follow up on an earlier question, could you more clearly answer the question on future deals, especially large deals, in the very near term? Do you now have what you need, and is this the base case that we can model what the company will largely look like over the next 18 to 24 months? And secondly, why now? We're not in the first inning of this cycle here in the U.S. You went over to Europe because you thought it was very early in the cycle over there. That seemed to make sense. It seems to be later on in this cycle here, so why now, outside of you understanding the customer relationship that you learned from Norbert?
I have one follow-up as well. Thank you.
Okay, Dan. So 2 important questions. Are we going to do more large transformational deals, and if so, when? The answer is yes, we are gonna do larger transformational deals. However, we're not gonna do them in the foreseeable short-term future. Why are we not gonna do it in the foreseeable short-term future? Number one, as I mentioned before, we're, we're comfortable at 5 times leverage and then deleveraging that down to 4 times. We don't want to issue more, get more levered up much more than that, for even for a shorter period of time, maybe for an eensy-beensy period of time, not no long period of time. And secondly, who wants to issue equity at half of where it was, you know, a month ago?
That would not be, you don't get a gold star for on capital markets planning for doing that. So from a financial perspective, it doesn't really make sense to do a large deal right now. But even if it did, I answered the question before truthfully, that I have no angst whatsoever, that I'm... And I'm very, very confident that we can continue with the effective running of the Norbert Dentressangle operations in Europe, and at the same time, integrate effectively and improve the profitability of Conway. I'm very certain of that. If we did another transformational acquisition right now, I don't know if I'd be so certain about that, and I don't want to take the risk.
So we have a huge amount of opportunity to take that $15 billion of revenue and $1.1 billion of EBITDA, and grow that $1.1 billion of EBITDA to in excess of $1.5 billion of EBITDA within a few short years. We don't need to do another transformational acquisition to create enormous amount of shareholder value. The second part of your question, or the second question that you had, was: why now? So I've used the word opportunistic in the press release and on this call. Opportunistic to me means when the opportunity presents itself, don't dawdle around. Seize the opportunity. Don't focus on all the reasons why you shouldn't do it. Focus on whether the reasons you shouldn't do it outweigh the reasons you should do it.
And if you take out your yellow pad and the left side are all the reasons you should do the deal, and it goes on to the next page, and the left part of your yellow pad are the reasons you shouldn't do the deal, the asset intensity, the cyclicality, where are you in the cycle? We all know what they are. We all know what the negatives are. It only fills up half of one page, and it becomes obviously, visually, very compelling acquisition to do. You don't dilly-dally. You opportunistically seize the opportunity when the stars are lined up, when you've got a willing seller, and when you've got an opportunity with that seller to purchase it on terms that you can live with and feel good about.
Okay, that makes sense. And lastly, many of your previous transactions were predicated on taking a company that was a great company, but wasn't focused on growth and supercharging the sales force, the incentives, and implementing your best practices to really grow the top line. This seems to be a different transaction. This seems to be predicated on improving profitability and getting the bottom line as big as you possibly can over the next few years by implementing your best practices and operational improvement. Is that the right way to be thinking about this now, and this is becoming more of a bottom-line company, that people should focus on how big the EBITDA could be and not how quickly you can be growing the top line? And if I'm wrong, please let me know. Thank you, guys.
You're, you're not wrong. So we have a $15 billion top line, post-Con-way. We have a pretty healthy top line. I'm not satisfied with the $1.1 billion of EBITDA. That margin has to go up, and it has to go up substantially, and the opportunity is in front of us with execution to do it. So I want the entire organization focused with great discipline on executing on the business plan to improve the margins, improve the profitability of the business. If going along with that is organic revenue growth, great! Nothing wrong with that at all, whatsoever. I love organic top revenue growth. But if I have a conflict between those two, we're absolutely gonna focus in on growing the EBITDA.
Because look, at the end of the day, the end of the day, all you've got, as a publicly traded company, is the number of shares outstanding, the amount of debt, and how much profit you have. So we're going to try to keep the shares as stable as possible. We're gonna try to keep the debt as stable as possible. We're gonna try to grow the profitability significantly. Very, very significantly. That opportunity is in front of us. We should seize that opportunity. Now, another part of your question was about incentive compensation. We are big, big believers in spending a lot of time figuring out what the right compensation structure should be for every part of the organization. We believe that that's part of the secret sauce.
We believe that aligning the interests of the employees with what the goals are of the organization, and align them with the shareholders, is critical. And to drive behavior that increases shareholder value, that's very, very important. So we will be applying very win-win incentive compensation form plans throughout the whole organization.
Thank you, Brad. Good luck, guys.
Thank you.
... Thank you. We have time for one more question. Our next question will come from Matt Elkott with Cowen and Company.
Thank you. Good morning, gentlemen. Can you-
Good morning, Matt. Good morning, Matt. Matt, and I, I apologize that we had to cancel to your conference in Boston, but we have, we have a good excuse.
Absolutely. Can you guys maybe just switch it up a little bit? Can you guys talk about the current state of the brokerage market and whether the, you know, current equilibrium in the freight market is causing margin pressure in the non-asset market? And does that, along with, you know, you know, depressed valuations currently, create more opportunities for you guys in, you know, for acquisitions in the brokerage market? Or would you even consider, you know, acquisitions in the near term, given your focus on integrating Con-way?
This is Scott. If you look at the asset-light market, it's a very profitable time right now in truck brokerage. Not only are we growing, but the margins are continuing to move up because cost of purchase transportation is probably not as high as people would have thought. It's not as tight of a market. So we tend to see margin expansion in those type of environments. So your profitability goes up a significant amount. Your volumes probably aren't increasing as much as they would have in a tight environment, but your profitability is more, and we're in that sweet spot. In terms of other transactions in truck brokerage, we'll look at truck brokerage. Truck brokerage makes a lot of sense. We can put it onto our platform. We can grow it.
It has to make sense, both from a strategic standpoint and from a financial standpoint. We are very disciplined around what we pay for acquisitions. That's a large part of the value we create in each acquisition. So we're very disciplined around those prices. And in truck brokerage, while it adds a very big strategic point, we'll have to make sure that from a financial standpoint, we get the right price.
Okay, fair enough. Thank you. And, my other question is, you know, Con-way historically has had, you know, some of the best operating ratios in the industry, but the, you know, in recent years, that has slipped a bit. Have you guys internally or otherwise identified an operating ratio, target, a long-term operating ratio target for the freight sector?
Give us a chance to close the transaction, and on the next conference call, we want to, we want to roll out many detailed metrics. But let's own it first.
Okay. And just-
Go ahead.
I'm sorry. I just had one follow-up, but if you had a thought that you wanted to finish, please.
Nope. Matt, your thoughts are more important than mine. Go ahead.
Okay. So just one final quick question. Now that you guys have a strong presence in North America and in Europe, will you consider other geographies?
Well, Con-way has business overseas in Asia as well. I mean, Menlo has a very strong reputation and long-standing business in Singapore and in many parts of Asia. So we have an entree into Asia now with Menlo. If you look at their warehouse logistics facilities locations, there's about nine in Europe, there's about three in LatAm, and there's about 15 in Asia. I may be off by one or two in each one of those categories, but that's the general zip code, and the rest of them are here in the United States. So if you look at it revenue-wise, it's rough. Again, these are rough numbers. It's about $300-some odd million revenue in North America.
It's about EUR 150 million in Europe, it's about EUR 75 million in LatAm, and it's about EUR 100+ million in Asia, if that helps you.
Okay. Then, do you think this, you know, instant access to those markets, do you think this will empower you guys to potentially seek even, you know, a bigger transactions in those geographies, Asia or Latin America, or?
Like I was—like I was responding to Strachman's question before, our goal right now is to not, in the near term, do another large transaction. Our goal right now is to improve the profitability substantially of our existing business and at the same time endear ourselves to customers, please customers more. That's our goal. Our goal at $15 billion of revenue and $1.1 billion in growing EBITDA, that's the more. That's the focus, becoming more effective at what we've got. So would we close our minds to an acquisition? Not going to close our minds to acquisitions, but we'll be very much biased against them, and we'll probably price ourselves out of them because we would factor in a risk and just not, it's not a priority for us to do the large ones right now.
When you go overseas to places like LatAm or Asia, the risk is a little bit higher.
Okay, great. Thank you. Thank you very much, guys, for squeezing me in.
Thank you.
Thank you. This concludes the question and answer session. I will now turn the call back over to Brad Jacobs for closing remarks.
Thank you, operator, and thank you for everyone who participated in this phone call. Look, we look at this as an opportunistic acquisition for us. I was looking at some a report that Satish Jindel put out on the size of the LTL market, the opportunities there. This is a $35 billion market. This is a serious, large market, and one that, by doing this acquisition, makes us the number 2 player in North America overnight. And the contract logistics business that we get from Menlo just expands the businesses that we have worldwide in contract logistics already. And it doubles our freight under management to $2.7 billion. And we're just that much more valuable to customers.
The most important point I want to make from a financial perspective is, we have a clear plan to take the $1.1 billion of EBITDA we will be at post-Con-way, and grow that substantially over the next several years. Thank you for your attention. Talking to you all soon. Bye now.
Thank you, ladies and gentlemen. This concludes today's conference. We thank you for participating, and you may now disconnect.