Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2022)
45 slides from Xpo's investor presentation, Feb 8, 2022
Slide 1: February 2022 Investor Presentation
FEBRUARY 2022 Investor Presen t a t ion
Slide 2: Disclaimers
INVESTOR PRESENTATION FEBRUARY 2022 Disclaimers 2 NON - GAAP FINANCIAL MEASURES As required by the rules of the Securities and Exchange Commission (“SEC”), we provide reconciliations of the non - GAAP financial measures contained in this document to the most directly comparable measure under GAAP, w
Slide 3: Disclaimers (cont.)
INVESTOR PRESENTATION FEBRUARY 2022 Disclaimers (cont.) 3 FORWARD - LOOKING STATEMENTS This document includes forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended, including ou
Slide 4: Table of contents
INVESTOR PRESENTATION FEBRUARY 2022 Table of contents 4 INVESTMENT HIGHLIGHTS 5 LESS - THAN - TRUCKLOAD (LTL) 15 TRUCK BROKERAGE 23 SUPPLEMENTAL MATERIALS 31
Slide 5: Why invest in XPO today?
INVESTOR PRESENTATION FEBRUARY 2022 Why invest in XPO today? 1 A top provider in highly attractive less - than - truckload and truck brokerage sectors 2 High - ROIC businesses benefitting from secular tailwinds 3 Company - specific initiatives in LTL to improve operating ratio, increase volume and g
Slide 6: Strong positioning of core businesses
INVESTOR PRESENTATION FEBRUARY 2022 STRONG POSITIONING OF CORE BUSINESSES XPO KEY METRICS 1 2021 revenue $ 12.8 billion Locations 7 71 Employees ~4 2 ,000 Customers ~50,000 LTL industry, North America 2 ~$42 billion Truck brokerage industry, North America 3 ~$80 billion 1 Global data for revenue, lo
Slide 7: XPO is a strategic partner to blue-chip customers in diverse sectors
INVESTOR PRESENTATION FEBRUARY 2022 XPO is a strategic partner to blue - chip customers in diverse sectors Note: Partial list 7
Slide 8: Long track record of significant shareholder value creation
INVESTOR PRESENTATION FEBRUARY 2022 Long track record of significant shareholder value creation ▪ XPO was the 7th best - performing stock of the last decade on the Fortune 500, based on Bloomberg market data ▪ Spent more than $3 billion on technology on all operations over the past 10 years, includi
Slide 9: Long runway for revenue growth and margin expansion
INVESTOR PRESENTATION FEBRUARY 2022 Long runway for revenue growth and margin expansion XPO’S REVENUE DRIVERS ▪ Transportation outsourcing: XPO’s ability to provide dependable capacity and enhanced visibility through technology continues to drive strong share gains in truck brokerage ▪ XPO Connect ®
Slide 10: Fourth quarter 2021 results commentary
INVESTOR PRESENTATION FEBRUARY 2022 Commentary ▪ Revenue increased 14% to $3.36 billion, a record for any quarter in the company’s history ▪ Net income 1 was $126 million, or $1.08 diluted earnings per share, compared with $34 million, or $0.33 diluted earnings per share for Q4 2020 ▪ Operating inco
Slide 11: Full year 2021 results
INVESTOR PRESENTATION FEBRUARY 2022 Full year 2021 results 1 Net income from continuing operations attributable to common shareholders 2 Diluted earnings from continuing operations per share 3 Net cash provided by operating activities from continuing operations Refer to the “Non - GAAP Financial Mea
Slide 12: 2022 guidance
INVESTOR PRESENTATION FEBRUARY 2022 2022 guidance )RUIXOO\HDU DVVXPHVJDLQVIURPUHDOHVWDWHVDOHVRIDSSUR[LPDWHO\ PLOOLRQGROODUVFRPSDUHGZLWK PLOOLRQLQ IRUILUVWTXDUWHU DVVXPHVQRJDLQIURPUHDOHVWDWHVDOHV FRPSDUHGZLWK PLOOLRQLQ WKHFRPSDQ\FXUUHQWO\SODQVWRH[HFXWHUHDOHVWDWHVDOHVLQWKHVHFRQGKDOIRI 7KHFRPSDQ\H[SHFW
Slide 13: Balance sheet and liquidity as of December 31, 2021
INVESTOR PRESENTATION FEBRUARY 2022 Balance sheet and liquidity as of December 31, 2021 1 Commentary ▪ Reduced net leverage to 2.7x, from 2.8x the prior quarter ▪ In the full year 2021, the company paid down ~$3 billion of debt, including the retirement of Senior Notes due 2022, 2023 and 2024, using
Slide 14: Strong ESG culture, with chief diversity officer leading DE&I
INVESTOR PRESENTATION FEBRUARY 2022 Strong ESG culture, with chief diversity officer leading DE&I W o rk fo rc e and Talent Employee and Community Safety Diversity, Equity and Inclusion ,QIR UPD WLRQ 6HFXULW\ Environmental and Sustainability Governance ESG Scorecard Categories ESG targets tie to exe
Slide 15: Less-than-truckload (LTL)
L e s s - th a n - t r u ckl o a d ( L TL)
Slide 16: XPO is a top three provider of LTL transportation in North America
,19(672535(6(17$7,21)(%58$5< LTL is the transportation of a quantity of freight that is larger than a parcel but too small to require an entire truck, often shipped on pallets. Freight for different customers is consolidated in the same trailer. XPO is a top three provider of LTL transportation in N
Slide 17: 2021 North American LTL business profile
INVESTOR PRESENTATION FEBRUARY 2022 5HYHQXH $1.0 billion Operating income $137 million Adjusted EBITDA $210 million Adjusted operating ratio 2 87.5% 2021 North American LTL business profile 1 Source: Third - party research, North America 2 Excluding gains from sales of real estate Refer to the “Non
Slide 18: North American LTL pricing fundamentals benefit XPO's long-term expansion
INVESTOR PRESENTATION FEBRUARY 2022 North America n LTL pricing fundamentals benefit XPO’s long - term expansion 1 Excludes the impact of fuel surcharges XPO LTL GROSS REVENUE PER HUNDREDWEIGHT 1 In Q4 2021, grew yield ex - fuel by a record 11% YoY 18 $16.48 $17.20 $17.32 $17.70 $18.27 $18.63 $19.80
Slide 19: Improvement in LTL adjusted operating margin under XPO ownership
INVESTOR PRESENTATION FEBRUARY 2022 910 bps improvement in LTL adjusted operating margin under XPO ownership ~ 7% ~ 1 6 % 2 0 15 2021 1 Excluding gains from sales of real estate Refer to the “Non - GAAP Financial Measures” section on page 2 and Supplemental Materials for related information In 2022,
Slide 20: Opportunity to drive further gains with proprietary technology
INVESTOR PRESENTATION FEBRUARY 2022 Significant opportunity to drive further gains with XPO’s proprietary technology 20 Pricing ▪ Data - driven pricing tools optimize LTL rates for local and regional accounts, while improving efficiency ▪ Elasticity tools help determine best pricing for large, contr
Slide 21: Progress report on five-part action plan for LTL
INVESTOR PRESENTATION FEBRUARY 2022 Progress report on five - part action plan for LTL, initiated October 2021 21 Improving network flow: ▪ Targeted initiatives substantially improved freight flows and customer satisfaction in Q4 2021 as the quarter progressed ▪ Generated significantly stronger serv
Slide 22: Progress report on five-part action plan for LTL (cont'd)
INVESTOR PRESENTATION FEBRUARY 2022 Progress report on five - part action plan for LTL (cont’d) 22 Increasing trailer production: ▪ Added second production line at Searcy, Arkansas trailer manufacturing facility ▪ In 2022, the company expects to produce twice the number of trailer units YoY Expandin
Slide 23: Truck brokerage
T ru c k b r o kera g e
Slide 24: XPO's best-in-class truck brokerage business is second largest worldwide
INVESTOR PRESENTATION FEBRUARY 2022 XPO’s best - in - class truck brokerage business is second largest worldwide ▪ Massive capacity of 98,000 carriers globally, representing a total of over one million trucks ▪ Flexible, non - asset model designed to profit in any market environment ▪ Highly experie
Slide 25: 2021 North American truck brokerage business profile
INVESTOR PRESENTATION FEBRUARY 2022 2021 North American truck brokerage business profile Industry size, North America $80 billion 1 XPO’s industry share ~3% Average tenure of XPO’s top 10 customers ~13 years Full truckload market opportunity, North America $440 billion 1 25 1 Source: Third - party r
Slide 26: Brokers have been steadily capturing truckload share for decades
INVESTOR PRESENTATION FEBRUARY 2022 6% 7% 7% 7% 21% 20% 19% 17% 16% 14% 14% 13% 12% 12% 11% 11% 10% 10% 10% 9% 8% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Third - party research Brokers have been steadily capturing truckload sha
Slide 27: XPO is growing North American truck brokerage 3x faster than the industry
INVESTOR PRESENTATION FEBRUARY 2022 $39 billion $80 billion 2013 2021 $397 million $2.749 billion 2013 2021 XPO is growing North American truck brokerage 3x faster than the industry 1 Third - party research: North American truck brokerage industry size; reflects brokered component of ~$ 440 billion
Slide 28: Fastest-growing digital brokerage platform in the industry
INVESTOR PRESENTATION FEBRUARY 2022 Fastest - growing digital brokerage platform in the industry ▪ In Q4 2021, 70% of XPO’s brokerage orders in North America were created or covered digitally ▪ Automation drives productivity in XPO’s brokerage operation — grew loads at approximately 2x the rate of h
Slide 29: XPO Connect carrier platform and Drive XPO app
INVESTOR PRESENTATION FEBRUARY 2022 FREIGHT M ANA G E M E N T CARRIER SCORE AND REWARDS CAPACITY POSTING LOAD BOOKING 74% increase in weekly average carrier users on the platform in Q4 YoY ▪ Proprietary mobile app gives truck drivers access to the XPO Connect ® platform from the road ▪ Fully automat
Slide 30: XPO's digital marketplace is widely adopted and growing hyper-fast
INVESTOR PRESENTATION FEBRUARY 2022 Total registered customer users Total digital brokerage orders Note: All data is global and cumulative as of December 31 , 2021 XPO’s digital marketplace is widely adopted and growing hyper - fast 30 CUSTOMERS WANT DIGITAL ACCESS TO XPO’S DEEP POOL OF TRUCKS AND D
Slide 31: Supplemental materials
Supplemen t al materials
Slide 32: Highly skilled management team
INVESTOR PRESENTATION NOVEMBER 2021 Highly skilled management team Brad Jacobs Chief Executive Officer United Rentals, United Waste Lou Amo President, Truck Brokerage – North America Electrolux, Union Pacific, Odyssey Logistics Josephine Berisha Chief Human Resources Officer Morgan Stanley Erik Cald
Slide 33: Highly diversified revenue across attractive verticals
INVESTOR PRESENTATION FEBRUARY 2022 XPO 2021 REVENUE DIVERSIFICATION BY VERTICALS Highly diversified revenue across attractive verticals 33 Industrial and Manufacturing 37% Retail and E - commerce 23% Consumer Goods 7% Food and Beverage 8% Logistics and Transportation 8% Other 17%
Slide 34: Last mile logistics for heavy goods
INVESTOR PRESENTATION FEBRUARY 2022 142 146 170 200 232 263 302 346 397 459 520 598 840 914 1,006 1,105 1,210 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019A 2020A 2021E 2022E 2023E 2024E #1 last mile logistics provider for heavy goods 2021 revenue $1 billion Hub locations 85
Slide 35: XPO holds leading transportation positions in key European geographies
INVESTOR PRESENTATION FEBRUARY 2022 XPO holds leading transportation positions in key European geographies TRUCK BROKERAGE #1 LTL provider in France and Iberia #1 single - owner LTL network in the UK ▪ LTL network of ~ 130 locations serving countries across Europe ▪ Optimal LTL operating model utili
Slide 36: XPO is widely recognized for performance and culture
INVESTOR PRESENTATION FEBRUARY 2022 XPO is widely recognized for performance and culture ▪ Named one of the World’s Most Admired Companies by Fortune, 2018, 2019, 2020, 2021 ▪ Ranked #1 in the Fortune 500 category of Transportation and Logistics, 2017, 2018, 2019, 2020, 2021 ▪ Named a Top Company fo
Slide 37: Selected highlights of XPO's people-first culture
INVESTOR PRESENTATION FEBRUARY 2022 Select ed highlights of XPO’s people - first culture ▪ Appointed a Chief Diversity Officer and launched a Diversity and Inclusion Council in 2020 ▪ Launching a global Sustainability Steering Committee, planned for Q2 2022 ▪ Created a global Diversity and Inclusion
Slide 38: XPO is strongly committed to sustainability
INVESTOR PRESENTATION FEBRUARY 2022 XPO is strongly committed to sustainability ▪ CarbonNET, XPO’s proprietary, cloud - based calculator, helps document emission sources, activity data and CO 2 calculations ▪ Named a Top 75 Green Supply Chain Partner by Inbound Logistics for 2016, 2017, 2018, 2019,
Slide 39: Business glossary
INVESTOR PRESENTATION FEBRUARY 2022 Business glossary XPO SERVICES ▪ Less - than - truckload (LTL): LTL is the transportation of a quantity of freight that is larger than a parcel but doesn’t require an entire truck, and is often shipped on a pallet. LTL shipments are priced according to the weight
Slide 40: Reconciliation of income from continuing operations to adjusted EBITDA
INVESTOR PRESENTATION FEBRUARY 2022 Change % Change % Income (loss) from continuing operations $ 126 $ 66 90.9% $ 323 $ (13) NM Debt extinguishment loss - - 54 - Interest expense 35 81 211 307 Income tax provision (benefit) 27 14 87 (22) Depreciation and amortization expense 119 119 476 470 Unrealiz
Slide 41: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2022 Financial reconciliations (cont.) 1 Charge relating to the 2020 conversion of 69,445 shares of the company's Series A Preferred Stock 2 Income tax rate applied to reconciling items is based on the GAAP annual effective tax rate, excluding discrete items and con tr
Slide 42: Reconciliation to free cash flow
INVESTOR PRESENTATION FEBRUARY 2022 The following table reconciles XPO’s net cash provided by operating activities from continuing operations for the quarters en ded December 31, 2021 and 2020, and the years ended December 31, 2021, 2020 and 2019 to free cash flow for the same periods. Financial rec
Slide 43: North American LTL financial reconciliations
INVESTOR PRESENTATION FEBRUARY 2022 Revenue (excluding fuel surcharge revenue) $ 838 $ 806 $ 3,486 $ 3,106 $ 3,259 $ 3,230 $ 3,140 $ 3,035 $ 3,081 Fuel surcharge revenue 166 110 632 433 532 552 455 370 448 Revenue 1,004 916 4,118 3,539 3,791 3,782 3,595 3,405 3,529 Salaries, wages and employee benef
Slide 44: Reconciliation of North American truck brokerage margin
INVESTOR PRESENTATION FEBRUARY 2022 (1) Margin is calculated as revenue less cost of transportation and services (exclusive of depreciation and amortization) Refer to the “Non - GAAP Financial Measures” section on page 2 of this document The following table reconciles XPO’s revenue attributable to i
Slide 45: Return on invested capital
INVESTOR PRESENTATION FEBRUARY 2022 We believe that return on invested capital (ROIC) is an important metric, as it measures how effectively we deploy our capita l b ase. ROIC is calculated as net operating profit after tax (NOPAT) for the year ended December 31, 2021, divided by invested capita l a
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