Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (November 2021)
45 slides from Xpo's investor presentation, Nov 2, 2021
Slide 1: Investor Presentation November 2021
NOVEMBER 2021 Investor Presen t a t ion Exhibit 99.2
Slide 2: Disclaimers
INVESTOR PRESENTATION NOVEMBER 2021 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 or
Slide 3: Disclaimers (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 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 NOVEMBER 2021 Table of contents 4 INVESTMENT HIGHLIGHTS 5 LESS - THAN - TRUCKLOAD (LTL) 13 TRUCK BROKERAGE 21 SUPPLEMENTAL MATERIALS 29
Slide 5: Why invest in XPO today?
INVESTOR PRESENTATION NOVEMBER 2021 Why invest in XPO today? 1 Top three provider in highly attractive less - than - truckload and truck brokerage sectors 2 High - ROIC businesses benefitting from secular tailwinds 3 Leading technology platform, with soaring industry adoption rates 4 Company - speci
Slide 6: XPO key metrics
INVESTOR PRESENTATION NOVEMBER 2021 TTM revenue $ 12.4 billion Locations 7 56 Employees ~4 2 ,000 Customers ~50,000 LTL industry, North America 2 ~$42 billion Truck brokerage industry, North America 3 ~$64 billion 1 Global data for revenue, locations, customers and employees as of September 30, 2021
Slide 7: Long track record of significant shareholder value creation
INVESTOR PRESENTATION NOVEMBER 2021 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 over the past 10 years, including truck brokerage
Slide 8: Long runway for revenue growth and margin expansion
INVESTOR PRESENTATION NOVEMBER 2021 Long runway for revenue growth and margin expansion XPO’S REVENUE DRIVERS ▪ Industrial recovery: XPO is benefiting from the ongoing increase in industrial demand, as supply chains continue to recover from COVID - 19 ▪ E - commerce: As customers increasingly expect
Slide 9: Third quarter 2021 results
INVESTOR PRESENTATION NOVEMBER 2021 Commentary ▪ Revenue of $3.27 billion is a company record for any quarter – Brokerage and Other Services segment increased third quarter revenue to $2.26 billion, compared with $1.78 billion in Q3 2020 – North American Less - Than - Truckload segment increased thi
Slide 10: Updates FY 2021 guidance based on higher-than-expected growth
INVESTOR PRESENTATION NOVEMBER 2021 1 Spin - off completed on August 2, 2021 2 Interest expense presented on a pro forma basis; 2021 interest expense expected to be approximately $230 million 3 Adjusted diluted EPS, assuming interest expense of $230 million, would be a range of $4.00 to $4.05 Refer
Slide 11: Balance sheet and liquidity as of September 30, 2021
INVESTOR PRESENTATION NOVEMBER 2021 Balance sheet and liquidity as of September 30, 2021 1 Commentary ▪ In the third quarter, XPO paid down $1.5 billion of debt, including the the retirement of Senior Notes due 2023 and 2024, using available cash from: – A cash distribution of $794 million, represen
Slide 12: Strong ESG culture, with chief diversity officer leading DE&I
INVESTOR PRESENTATION NOVEMBER 2021 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 Info rma tion Security Environmental and Sustainability Governance ESG S c o r eca rd T a r g e t Ar ea s ESG targ
Slide 13: Less-than-truckload (LTL)
L e s s - th a n - t r u ckl o a d ( L TL)
Slide 14: XPO is a top three provider of LTL transportation in North America
INVESTOR PRESENTATION NOVEMBER 2021 Note: LTL is the transportation of a quantity of freight that is larger than a parcel but too small to require an entire truc k, often shipped on pallets. Freight for different customers is consolidated in the same trailer. XPO is a top three provider of LTL trans
Slide 15: Key LTL operating and financial metrics
INVESTOR PRESENTATION NOVEMBER 2021 TTM revenue September 30, 2021 $4 billion TTM adjusted operating ratio 83.5% 2 Key LTL operating and financial metrics 1 Source: Third - party research 2 Excluding gains from sales of real estate Refer to the “Non - GAAP Financial Measures” section on page 2 and S
Slide 16: Scaled LTL network represents multiple decades of investment
INVESTOR PRESENTATION NOVEMBER 2021 Scaled LTL network represents multiple decades of investment Note: As of September 30, 2021 291 terminals cover ~99% of all US zip codes and key routes in Canada, with strategic network expansion underway 16
Slide 17: Nearly 1,000 bps improvement in LTL adjusted operating margin since 2015
INVESTOR PRESENTATION NOVEMBER 2021 Nearly 1,000 bps improvement in LTL adjusted operating margin since 2015 ~ 7% ~ 1 7 % 2 0 15 TTM September 30, 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 in
Slide 18: North America LTL pricing fundamentals are favorable
INVESTOR PRESENTATION NOVEMBER 2021 North America LTL pricing fundamentals are favorable for long - term expansion 1 Excludes the impact of fuel surcharges XPO LTL GROSS REVENUE PER HUNDREDWEIGHT 1 Yield ex - fuel was up 6% YoY in the third quarter and accelerated in October 18 $16.48 $17.20 $17.32
Slide 19: Company-specific plan to enhance LTL network efficiencies and drive growth
INVESTOR PRESENTATION NOVEMBER 2021 Company - specific plan to enhance LTL network efficiencies and drive growth 19 Labor, equipment and physical footprint ▪ Expanding 2022 graduate count at XPO’s US driver training schools; expect to more than double the nearly 800 graduates the company will have i
Slide 20: Proprietary technology has significant room to deliver additional gains
INVESTOR PRESENTATION NOVEMBER 2021 Proprietary technology has significant room to deliver additional gains 20 Pricing ▪ Data - driven pricing tools to optimize rates for smaller accounts while improving efficiency ▪ Elasticity models to identify the best pricing Linehaul and network ▪ Opportunity t
Slide 21: Truck brokerage
T ru c k b r o kera g e
Slide 22: XPO is the second largest truck broker worldwide
INVESTOR PRESENTATION NOVEMBER 2021 Note: Truck brokerage is a non - asset business that facilitates the movement of full truckloads of freight, typically from a sing le shipper. A broker purchases truck capacity from independent carriers. XPO is the second largest truck broker worldwide ▪ Massive c
Slide 23: Key truck brokerage operating and financial metrics
INVESTOR PRESENTATION NOVEMBER 2021 T TM revenue September 30, 2021 $2.5 billion Key truck brokerage operating and financial metrics XPO NORTH AMERICAN TRUCK BROKERAGE 2 Industry size, North America $64 billion 1 XPO’s industry share ~3% Average tenure of XPO’s top 10 customers ~13 years Full truckl
Slide 24: Brokers have been steadily capturing truckload share for decades
INVESTOR PRESENTATION NOVEMBER 2021 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 25: XPO's brokerage revenue CAGR has outperformed industry by more than 3x
INVESTOR PRESENTATION NOVEMBER 2021 XPO’s brokerage revenue CAGR has outperformed industry by more than 3x 1 Third - party research: North American truck brokerage industry size; reflects brokered component of ~$360 billion total addressable truckload opportunity $39 billion $64 billion 2013 2020 $3
Slide 26: XPO Connect is our cutting-edge digital freight platform
INVESTOR PRESENTATION NOVEMBER 2021 XPO Connect ® is our cutting - edge digital freight platform ▪ Improves transportation procurement by providing deep visibility into available capacity and market conditions ▪ Captures high - margin opportunities with proprietary pricing technology ▪ Optimizes shi
Slide 27: Drive XPO app and platform features
INVESTOR PRESENTATION NOVEMBER 2021 FREIGHT M ANA G E M E N T CARRIER SCORE AND REWARDS CAPACITY POSTING LOAD BOOKING Drivers have downloaded the Drive XPO ® app over 5 5 0,000 times Nearly 3x the cumulative downloads of a year ago ▪ Proprietary mobile app gives truck drivers access to the XPO Conne
Slide 28: XPO's digital marketplace is widely adopted and growing
INVESTOR PRESENTATION NOVEMBER 2021 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 Q1 2019 Q2 2019 Q3
Slide 29: Supplemental materials
Supplemen t al materials
Slide 30: 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 Diana Bro
Slide 31: Highly diversified revenue across attractive verticals
INVESTOR PRESENTATION NOVEMBER 2021 Industrial and Manufacturing 37% Retail and E - commerce 22% Consumer Goods 7% Food and Beverage 8% Logistics and Transportation 8% Other 18% TTM as of September 30, 2021 XPO REVENUE DIVERSIFICATION BY VERTICALS Highly diversified revenue across attractive vertica
Slide 32: #1 last mile logistics provider for heavy goods
INVESTOR PRESENTATION NOVEMBER 2021 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 TTM revenue $1 billion Hub locations 85
Slide 33: XPO holds leading transportation positions in key European geographies
INVESTOR PRESENTATION NOVEMBER 2021 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 ▪ Approximately 100 LTL locations serving countries across Europe ▪ Optimal LTL operating model util
Slide 34: XPO is widely recognized for performance and culture
INVESTOR PRESENTATION NOVEMBER 2021 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 35: Selected highlights of XPO's people-first culture
INVESTOR PRESENTATION NOVEMBER 2021 Select ed highlights of XPO’s people - first culture ▪ Road to Zero program helped decrease the percentages of distracted driving, lost work days and crashes by double - digits in 2020 ▪ Appointed a Chief Diversity Officer and launched a Diversity and Inclusion Co
Slide 36: XPO is strongly committed to sustainability
INVESTOR PRESENTATION NOVEMBER 2021 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 37: Business glossary
INVESTOR PRESENTATION NOVEMBER 2021 Business glossary XPO SERVICES ▪ Less - than - truckload (LTL): LTL is the transportation of a quantity of freight that is larger than a parcel but too small to require an entire truck, and is often shipped on a pallet. LTL shipments are priced according to the we
Slide 38: Financial reconciliations
INVESTOR PRESENTATION NOVEMBER 2021 Financial reconciliations The following table reconciles XPO’s income (loss) from continuing operations for the periods ended September 30, 2021 and 2020 to adjusted EBITDA for the same periods. Note: NM = not meaningful 1 Adjusted EBITDA margin is calculated as a
Slide 39: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 Financial reconciliations (cont.) 1 Income tax rate applied to reconciling items is based on GAAP annual effective tax rate, excluding discrete items and contrib uti on - and margin - based taxes 2 Discrete tax items reflect a tax benefit related to a tax planning
Slide 40: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 The following table reconciles XPO’s operating income for the periods ended September 30, 2021 and 2020 to adjusted operating income for the same periods. $ in millions (unaudited) Financial reconciliations (cont.) 40 Refer to the “Non - GAAP Financial Measures” s
Slide 41: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 The following table reconciles XPO’s cash flows from operating activities of continuing operations for the periods ended September 30, 2021 and 2020 to free cash flow for the same periods. $ in millions (unaudited) Financial reconciliations (cont.) 41 Refer to the
Slide 42: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 Financial reconciliations (cont.) The following table reconciles XPO’s operating income attributable to its North American less - than - truckload business for the trailing twelve months ended September 30, 2021, the quarters ended September 30, 2021 and 2020, the
Slide 43: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 The following table reconciles XPO’s revenue attributable to its North American truck brokerage business for the quarters ended September 30, 2021 and 2020 to net revenue for the same period. Financial reconciliations (cont.) 43 Change % Revenue $ 700 $ 432 62.0%
Slide 44: Financial reconciliations (cont.)
INVESTOR PRESENTATION NOVEMBER 2021 Refer to the “Non - GAAP Financial Measures” section on page 2 of this document The following table reconciles XPO’s income (loss) from continuing operations for the trailing twelve months ended September 30, 2021, the nine - month periods ended September 30, 2021
Slide 45: Return on invested capital for TTM September 30, 2021
INVESTOR PRESENTATION NOVEMBER 2021 Financial reconciliations (cont.) RETURN ON INVESTED CAPITAL FOR TTM SEPTEMBER 30, 2021 Equity $ 1,016 (+) Debt 3,571 (+) Operating lease liabilities 830 ( - ) Cash 254 ( - ) Goodwill and intangibles 3,096 Invested capital $ 2,067 Select balance sheet items Adjust
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