Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (July 2021)
59 slides from Xpo's investor presentation, Jul 28, 2021
Slide 1: Investor Presentation July 2021
INVESTOR PRESENTATION JULY 2021 v JULY 2021 Investor Presentation Exhibit 99.2
Slide 2: Disclaimers
INVESTOR PRESENTATION JULY 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 presentation to the most directly comparable measure under GAAP, w
Slide 3: Table of contents
INVESTOR PRESENTATION JULY 2021 Table of contents 3 BUSINESS OVERVIEW 4 FINANCIAL OVERIVEW AND Q2 2021 RESULTS 7 XPO: LESS - THAN - TRUCKLOAD 14 XPO: TRUCK BROKERAGE 20 GXO: LOGISTICS 28 SUMMARY 37 SUPPLEMENTAL MATERIALS 41 APPENDIX 51
Slide 4: Business overview
INVESTOR PRESENTATION JULY 2021 Business overview
Slide 5: Planned spin-off will create two pure-play industry powerhouses
INVESTOR PRESENTATION JULY 2021 Planned spin - off on August 2 will create two pure - play industry powerhouses 5 Will be the largest pure - play contract logistics provider in the world, and a leader in outsourced e - commerce fulfillment and returns A leading provider of freight transportation, pr
Slide 6: Overview of XPO post-spin: a leading global provider of freight transportation
INVESTOR PRESENTATION JULY 2021 TTM revenue $11.8 billion Countries of operation 18 Locations 744 Team members 3 ~44,000 LTL TAM, North America 4 ~$42 billion Brokerage TAM, North America 5 ~$61 billion Overview of XPO post - spin: a leading global provider of freight transportation 6 REVENUE SPLIT
Slide 7: Financial overview and Q2 2021 results
INVESTOR PRESENTATION JULY 2021 Financial overview and Q2 2021 results
Slide 8: Double-digit growth in revenue and adjusted EBITDA
INVESTOR PRESENTATION JULY 2021 Double - digit growth in revenue and adjusted EBITDA 8 REVENUE ADJUSTED EBITDA 1 Full year 2021 forecast range for XPO’s adjusted EBITDA as a combined company, pre - spin - off Note: Both charts exclude the impact of the North American truckload unit divested in Octob
Slide 9: Strong free cash flow generation
INVESTOR PRESENTATION JULY 2021 Strong free cash flow generation 9 FREE CASH FLOW 1 Full year 2021 forecast range for XPO’s free cash flow as a combined company, excludes transaction - related charges for the plan ned spin - off Note: 2016 and 2017 data have been recast to reflect the impact of Acco
Slide 10: Balance sheet and liquidity as of June 30, 2021
INVESTOR PRESENTATION JULY 2021 Balance sheet and liquidity as of June 30, 2021 10 NET DEBT 1 $4.5 billion CASH AND CASH EQUIVALENTS $801 million NET LEVERAGE 2 2.4x TOTAL LIQUIDITY $1.9 billion Recent activities ▪ In June, the company put in place an undrawn $800 million revolving credit facility f
Slide 11: XPO second quarter 2021 consolidated results
INVESTOR PRESENTATION JULY 2021 XPO second quarter 2021 consolidated results 11 REVENUE $5.04 billion NET INCOME 1 $156 million DILUTED EARNINGS PER SHARE $1.38 ADJUSTED NET INCOME 1 $209 million ADJUSTED DILUTED EARNINGS PER SHARE ADJUSTED EBITDA $507 million CASH FLOW FROM OPERATIONS $366 million
Slide 12: XPO pro forma 2021 guidance
INVESTOR PRESENTATION JULY 2021 Note: Pro forma 2021 guidance excludes impacts associated with the planned spin - off of the logistics segment; assumes 116 millio n diluted shares outstanding at the time of the spin - off 1 P ro forma for planned debt paydown post - spin - off Refer to the “Non - GA
Slide 13: GXO pro forma 2021 guidance and 2022 targets
INVESTOR PRESENTATION JULY 2021 Note: Pro forma 2021 guidance excludes impacts associated with the planned spin - off of the logistics segment; assumes 116 millio n diluted shares outstanding at the time of the spin - off Refer to the “Non - GAAP Financial Measures” section on page 2 REVENUE $7.5 bi
Slide 14: XPO: Less-than-truckload
INVESTOR PRESENTATION JULY 2021 XPO: Less - than - truckload
Slide 15: XPO is a top three provider of LTL service in North America
INVESTOR PRESENTATION JULY 2021 XPO is a top three provider of LTL service in North America 15 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 are consolidated in the s
Slide 16: Key metrics for XPO's North American LTL business
INVESTOR PRESENTATION JULY 2021 TTM revenue 1 $3.9 billion Locations 291 Team members 2 ~21,400 Number of tractors / trailers ~ 7,800 / 25,000 Shipments per year 3 ~12.4 million Key metrics for XPO’s North American LTL business 16 1 As of June 30, 2021, North America only 2 ~21,100 employees and ~3
Slide 17: Industry fundamentals favorable for long-term expansion
INVESTOR PRESENTATION JULY 2021 17 Industry fundamentals favorable for long - term expansion ▪ Industry characterized by rational pricing dynamics ▪ Core base of industrial demand diversified by the rapid growth of e - commerce, as more retail shipments are driven to LTL carriers National providers
Slide 18: +960 basis point improvement in adjusted operating margin
INVESTOR PRESENTATION JULY 2021 +960 basis point improvement in adjusted operating margin 1 2015 – 2020, with more to come Industry - best North American LTL operating margin improvement 18 Executing on additional upsides XPO’s optimization technology has already delivered significant margin expansi
Slide 19: XPO Smart intelligent productivity tools optimize LTL variable labor spend
INVESTOR PRESENTATION JULY 2021 XPO Smart Œ intelligent productivity tools optimize LTL variable labor spend 19 Proprietary technology uses machine learning to become continually smarter at site - specific optimization ▪ Analyzes all major productivity levers simultaneously, giving managers the data
Slide 20: XPO: Truck brokerage
INVESTOR PRESENTATION JULY 2021 XPO: Truck brokerage
Slide 21: XPO is a brokerage leader with first-mover advantage in digital technology
INVESTOR PRESENTATION JULY 2021 XPO is a brokerage leader with first - mover advantage in digital technology 21 Truck brokerage is a non - asset business that facilitates the movement of a quantity of freight requiring a full truckload, typically from a single shipper. A broker purchases truck capac
Slide 22: Best-in-class value proposition and performance
INVESTOR PRESENTATION JULY 2021 Best - in - class value proposition and performance 22 Critical scale and capacity ▪ #3 broker in North America and #2 worldwide ▪ 67,000 carrier relationships in North America, 85,000 globally ▪ A transportation leader across UK, France, Spain, Portugal and Morocco R
Slide 23: Brokers have been steadily capturing truckload share for decades
INVESTOR PRESENTATION JULY 2021 Proportion of outsourced freight transportation is shifting from asset - based trucking companies to brokers, as shippers seek more reliable access to capacity and agility 6% 7% 7% 7% 8% 9% 10% 10% 10% 11% 11% 12% 12% 13% 14% 14% 16% 17% 19% 20% 21% 2000 2001 2002 200
Slide 24: XPO's brokerage CAGR has outperformed industry CAGR by more than 3x
INVESTOR PRESENTATION JULY 2021 BROKERAGE REVENUE GROWTH ⏤ XPO VS INDUSTRY XPO’s brokerage CAGR has outperformed industry CAGR by more than 3x 24 US brokerage industry ~ $40 billion ~ $61 billion 2013 2020 Source: Third - party research Note: Total addressable truckload opportunity is ~$360 billion;
Slide 25: XPO is accelerating revenue and margin expansion as a digital broker
INVESTOR PRESENTATION JULY 2021 25 Fully automated, cloud - based digital platform ▪ Provides deep visibility into available transportation capacity and market conditions ▪ Optimizes freight - matching by sourcing the best carriers for each load profile ▪ Improves transportation procurement by provi
Slide 26: Drive XPO mobile app
INVESTOR PRESENTATION JULY 2021 ▪ Proprietary mobile app gives drivers access to the XPO Connect Œ platform from the road ▪ Fully automated transactions, tracking solution and intuitive tools for bidding, booking loads and more ▪ Enhances access to truckload capacity for XPO customers regardless of
Slide 27: XPO's digital marketplace is widely adopted and growing fast
INVESTOR PRESENTATION JULY 2021 Total Drive XPO app downloads Total registered carrier users Total registered customer users XPO CONNECT ΠCARRIERS Total digital brokerage orders Note: All data is cumulative XPO CONNECT ΠCUSTOMERS 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450
Slide 28: GXO: Logistics
INVESTOR PRESENTATION JULY 2021 GXO: Logistics
Slide 29: GXO will be the largest pure-play contract logistics provider globally
INVESTOR PRESENTATION JULY 2021 US 33% France 10% UK 29% Spain 7% Other 21% Retail / E - commerce 39% Food and beverage 13% Consumer packaged goods 13% Consumer technology 12% Other 23% GXO will be the largest pure - play contract logistics provider globally Logistics is an asset - light business ch
Slide 30: Global leader in warehouse automation, expertise and quality of performance
INVESTOR PRESENTATION JULY 2021 Global leader in warehouse automation, expertise and quality of performance 30 Strong positioning in a fast - growing industry with massive tailwinds ▪ Well - positioned to continue to benefit from the rapid growth in e - commerce and reverse logistics, customer deman
Slide 31: GXO key metrics
INVESTOR PRESENTATION JULY 2021 TTM revenue 1 $7 billion Countries of operation 27 Warehouses 869 Team members 2 ~94,000 Total warehouse space ~ 208 million sq. ft. – Capacity in Europe ~ 104 million sq. ft. – Capacity in North America ~ 97 million sq. ft. – Capacity in Asia ~ 7 million sq. ft. Appr
Slide 32: Diversified blue-chip customer base with long tenure
INVESTOR PRESENTATION JULY 2021 Diversified blue - chip customer base with long tenure End markets Key customers E - commerce, omnichannel and technology Food and beverage Consumer packaged goods Average tenure of top 20 customers is 15 years No customer accounted for more than 4% of 2020 revenue Mu
Slide 33: Three major tailwinds are early-stage with low penetration
INVESTOR PRESENTATION JULY 2021 Currently insourced 80 % Currently outsourced 20 % Automation opportunity 95 % Automated warehouses 5 % Currently o utsourced 30% $130 billion Currently insourced 70% $300 billion Three major tailwinds are early - stage with low penetration and significant runways Con
Slide 34: Intelligent warehouse automation generates measurable improvements
INVESTOR PRESENTATION JULY 2021 34 Intelligent warehouse automation generates measurable improvements ROBOTICS GOODS - TO - PERSON SYSTEMS ADVANCED SORTATION SYSTEMS VISION TECHNOLOGY ▪ Automation delivers reliable, consistent outcomes for customers, with increased speed and accuracy ▪ Warehouse man
Slide 35: Proprietary labor management tools optimize labor cost in logistics operations
INVESTOR PRESENTATION JULY 2021 35 Proprietary labor management tools and analytics use machine learning to optimize ~$3 billion of labor cost in logistics operations ▪ Technology provides detailed visibility into current warehouse labor activities in real time, as well as pre - scheduled labor for
Slide 36: GXO Direct national distribution solution
INVESTOR PRESENTATION JULY 2021 36 ▪ Maintain independent brand identity and value chain ▪ Access to logistics scale, expertise and technology without adding high - fixed - cost distribution centers ▪ Predictive analytics help plan inventory flows ▪ Reposition inventory within one and two - day grou
Slide 37: Summary
INVESTOR PRESENTATION JULY 2021 Summary
Slide 38: Powerful tailwinds propelling growth and returns
INVESTOR PRESENTATION JULY 2021 POWERFUL TAILWINDS PROPELLING GROWTH AND RETURNS Less - than - truckload ▪ Extremely favorable industry trends ▪ Company - specific tech initiatives improving margin, independent of the macro ▪ #3 LTL provider in North America Truck brokerage ▪ Significantly outperfor
Slide 39: Rationale for spin-off, expected to close August 2, 2021
INVESTOR PRESENTATION JULY 2021 Rationale for spin - off, expected to close August 2, 2021 39 Strategic focus ▪ XPO and GXO will both benefit from an undiluted focus on their specific strategic priorities and customer requirements Differentiation ▪ Each company can deepen its differentiation by enha
Slide 40: Culture of ESG will continue at XPO and GXO
INVESTOR PRESENTATION JULY 2021 Culture of ESG will continue at XPO and GXO Workforce and Talent Employee and Community Safety Diversity, Equity and Inclusion Information Security Environmental and Sustainability Governance Tracking progress on ~40 ESG initiatives ESG Scorecard XPO took decisive act
Slide 41: Supplemental materials
INVESTOR PRESENTATION JULY 2021 Supplemental materials
Slide 42: Additional service: last mile logistics for heavy goods
INVESTOR PRESENTATION JULY 2021 ▪ XPO is the largest last mile provider for heavy goods ▪ Customers include omnichannel retail, e - commerce and direct - to - consumer manufacturers ▪ Asset - light platform positioned within 125 miles of 90% of the US population; independent contractor network ▪ Con
Slide 43: XPO holds leading transportation positions in key European geographies
INVESTOR PRESENTATION JULY 2021 XPO holds leading transportation positions in key European geographies 43 Truck Brokerage #1 truck broker in France and Spain #3 truck broker in the UK Less - Than - Truckload #1 LTL provider in France and Spain #3 LTL provider in the UK Optimal LTL operating model ut
Slide 44: XPO is widely recognized for performance and culture
INVESTOR PRESENTATION JULY 2021 XPO is widely recognized for performance and culture 44 ▪ 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 ▪ Awarded silver CSR rating in
Slide 45: XPO is widely recognized for performance and culture (cont.)
INVESTOR PRESENTATION JULY 2021 XPO is widely recognized for performance and culture (cont.) 45 ▪ Ranked in top 100 of America's Most Responsible Companies by Newsweek, 2019 ▪ Named a Winning “W” Company by 2020 Women on Boards for gender diversity of the board of directors, 2019 ▪ Named a Disruptiv
Slide 46: Select highlights of XPO's people-first culture
INVESTOR PRESENTATION JULY 2021 Select highlights of XPO’s people - first culture 46 ▪ 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 Counci
Slide 47: Strongly committed to sustainability in transportation and logistics
INVESTOR PRESENTATION JULY 2021 CarbonNET , our proprietary, cloud - based calculator, helps our operations document emission sources, activity data and CO 2 calculations Strongly committed to sustainability in transportation and logistics 47 TRANSPORTATION ▪ Named a Top 75 Green Supply Chain Partne
Slide 48: Strongly committed to sustainability in transportation and logistics (cont.)
INVESTOR PRESENTATION JULY 2021 Strongly committed to sustainability in transportation and logistics (cont.) 48 LOGISTICS ▪ XPO’s Digital Distribution Warehouse of the Future for Nestlé in the UK is an environmentally advanced facility, with ammonia refrigeration, LED lighting, air - source heat pum
Slide 49: Business glossary
INVESTOR PRESENTATION JULY 2021 Business glossary 49 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 wei
Slide 50: Business glossary (cont.)
INVESTOR PRESENTATION JULY 2021 Business glossary (cont.) 50 XPO TECHNOLOGY ▪ XPO Connect Œ : XPO’s proprietary, fully automated, self - learning digital freight marketplace connects shippers and carriers directly, as well as through company operations. XPO Connect Œ gives shippers comprehensive vis
Slide 51: Appendix
INVESTOR PRESENTATION JULY 2021 Appendix
Slide 52: Financial reconciliations
INVESTOR PRESENTATION JULY 2021 Financial reconciliations 52 The following table reconciles XPO’s net income (loss) attributable to common shareholders for the periods ended June 30, 2021 and 2020 to adjusted EBITDA for the same periods. NM - Not meaningful 1 The sum of quarterly net income (loss) a
Slide 53: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 53 1 The second quarter and first six months of 2020 were recast to exclude the amortization of acquisition - related intangible asset s 2 The income tax rate applied to reconciling items is based on the GAAP annual effective tax rate
Slide 54: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 54 Note: 2016 and 2017 data have been recast to reflect the impact of Accounting Standards Update 2016 - 18 Refer to the “Non - GAAP Financial Measures” section on page 2 of this document The following table reconciles XPO’s net cash
Slide 55: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 55 The following table reconciles XPO’s operating income attributable to its North American less - than - truckload business for the quarters ended June 30, 2021 and 2020, and for the years ended December 31, 2020, 2019, 2018, 2017, 2
Slide 56: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 56 The following table reconciles XPO’s revenue attributable to its North American Truck Brokerage business for the quarters ended June 30, 2021 and 2020 to net revenue for the same period. Note: Refer to the “Non - GAAP Financial Mea
Slide 57: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 57 The following table reconciles XPO’s Logistics segment revenue to organic revenue for the quarter ended June 30, 2021. 1 Organic revenue growth is calculated as the relative change in year - over - year organic revenue, expressed a
Slide 58: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 58 1 Relates to the conversion of 69,445 shares of the company's Series A Preferred Stock 2 Relates to the Series A Preferred Stock and is comprised of actual preferred stock dividends and the non - cash allocation of und istributed e
Slide 59: Financial reconciliations (cont.)
INVESTOR PRESENTATION JULY 2021 Financial reconciliations (cont.) 59 1 2020 charge relates to the conversion of 69,445 shares of the company's Series A Preferred Stock Note: Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe Refer to the “Non - GAAP Financial Measures” sect