Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (August 2022)
48 slides from Xpo's investor presentation, Aug 4, 2022
Slide 1: August 2022 Investor Presentation
AUGUST 2022 Investor Presen t a t ion
Slide 2: Non-GAAP financial measures
Investor Presentation August 2022 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, which are set f
Slide 3: Forward-looking statements
Investor Presentation August 2022 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 statements relating to t
Slide 4: Agenda
Investor Presentation August 2022 INVESTMENT HIGHLIGHTS AND SPIN - OFF 5 KEY FINANCIAL RESULTS AND GUIDANCE 13 XPO: LESS - THAN - TRUCKLOAD (LTL) 17 RXO: TRUCK BROKERAGE 24 SUPPLEMENTAL MATERIALS 33
Slide 5: Why invest in XPO today?
Investor Presentation August 2022 Investor Presentation August 2022 5 Why invest in XPO today? Multiple catalysts for value creation, largely independent of macro conditions: XPO - specific levers for LTL transformation; spin - off of RXO brokered transportation platform; divestiture of European bus
Slide 6: XPO is a leading provider of freight transportation services
Investor Presentation August 2022 6 ▪ One of the largest providers of less - than - truckload (LTL) transportation in North America ▪ Fourth largest US truckload transportation broker ▪ More than 90% of 2021 operating income derived from North American LTL and truck brokerage businesses ▪ European b
Slide 7: Strategic partner to blue-chip customers in diverse sectors
Investor Presentation August 2022 Note: Partial list 7 Strategic partner to blue - chip customers in diverse sectors
Slide 8: Planned spin-off will create two standalone industry leaders
Investor Presentation August 2022 8 Planned spin - off will create two standalone industry leaders, each with a long runway for earnings growth ▪ XPO will be asset - based: Third largest pure - play less - than - truckload provider o One of the few LTL networks in the US with national scale o Propri
Slide 9: North American LTL segment overview
Investor Presentation August 2022 1 XPO’s North American LTL segment; terminals, drivers, tractors and trailers as of June 30, 2022 2 Excludes gains on sales of real estate Refer to the “Non - GAAP Financial Measures” section on page 2 and Supplemental Materials for related information 9 ▪ Asset - b
Slide 10: RXO will be a tech-enabled brokerage leader
Investor Presentation August 2022 10 ▪ Flexible, asset - light model with high ROIC, designed to grow profits in any cycle ▪ First - mover technology advantage; proprietary XPO Connect ® digital brokerage offering with rapid industry adoption ▪ Massive capacity of ~98,000 independent truckload carri
Slide 11: Long track record of significant shareholder value creation
Investor Presentation August 2022 11 Long track record of significant shareholder value creation Refer to the “Non - GAAP Financial Measures” section on page 2 and Supplemental Materials for related information GXO Logistics spin - off was the best - performing stock of all fully divested spin - off
Slide 12: ESG and DE&I initiatives
Investor Presentation August 2022 12 ▪ Chief diversity officer leading DE&I; steering committees furthering diversity, inclusion and sustainability ▪ Executive compensation tied to ESG targets ▪ Core DE&I objectives relate to recruitment and retention ▪ Working to significantly increase the diversit
Slide 13: Key financial results and guidance
Key financial results and guidance
Slide 14: Second quarter 2022 results
Investor Presentation August 2022 14 ▪ Revenue, net income 1 and operating income are Q2 records; adjusted EBITDA and adjusted diluted EPS are records for any quarter ▪ 14.6% YoY revenue growth in North American LTL ▪ $405 million adjusted EBITDA; ninth straight quarterly beat on adjusted EBITDA ▪ $
Slide 15: Raises 2022 full year guidance on stronger outlook
Investor Presentation August 2022 15 Raises 2022 full year guidance on stronger outlook 1 Adjusted operating ratio excludes gains on sales of real estate Refer to the “Non - GAAP Financial Measures” section on page 2 Note: 2022 guidance excludes impacts associated with the intended spin - off of the
Slide 16: Balance sheet and liquidity
Investor Presentation August 2022 16 Balance sheet and liquidity 1 Calculated as total debt of $2.91 billion less $436 million of cash and cash equivalents 2 Calculated as net debt of $2.48 billion divided by adjusted EBITDA of $1.36 billion for the trailing twelve months ended June 30, 2022 3 Inclu
Slide 17: XPO: Less-than-truckload
XPO: L e s s - th a n - t r u ckl o a d
Slide 18: XPO is one of the largest providers of LTL in North America
Investor Presentation August 2022 18 XPO is one of the largest providers of less - than - truckload transportation in North America 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 ; f reight for differ
Slide 19: Long runway for earnings growth
Investor Presentation August 2022 Long runway for earnings growth : 70 basis point improvement YoY in Q2 adjusted operating ratio 1 to 80.4% North American LTL business profile Industry size 2 ~$51 billion XPO’s industry share ~8% Largest customer as % of 2021 revenue 2% 2021 freight delivered ~18 b
Slide 20: LTL pricing fundamentals benefit long-term expansion
Investor Presentation August 2022 20 North American LTL pricing fundamentals benefit XPO’s long - term expansion 1 Excludes the impact of fuel surcharges XPO LTL GROSS REVENUE PER HUNDREDWEIGHT 1 In Q2 2022, grew yield ex - fuel YoY by 11%
Slide 21: Opportunity to drive productivity gains with technology
Investor Presentation August 2022 21 Significant opportunity to drive further productivity gains with XPO’s technology Roadmap includes piece - level tracking, further optimization of linehaul and pick - up and delivery service, and dock productivity PRICING ▪ Data - driven pricing tools optimize LT
Slide 22: Company-specific levers for LTL network efficiency and growth
Investor Presentation August 2022 22 Company - specific levers for LTL network efficiency and growth Launched in Q2 2022: National initiative to further improve quality of trailer loading and on - time delivery, and engaging with customers on best practices to package freight IMPROVING NETWORK FLOW
Slide 23: Additional levers for network efficiency and growth
Investor Presentation August 2022 23 Additional company - specific levers for network efficiency and growth INCREASING TRAILER PRODUCTION: ▪ Added second production line at Searcy, Arkansas trailer manufacturing facility ▪ Producing trailers at about double 2021 run rate through Q2 EXPANDING NETWORK
Slide 24: RXO: Truck brokerage
RXO: T ru c k b r o kera ge
Slide 25: RXO will be the fourth largest US truck broker
Investor Presentation August 2022 25 RXO will be the fourth largest US truck broker Truck brokerage is an asset - light business that facilitates the movement of full truckloads of freight, typically from a single shipper; a broker purchases truck capacity from independent carriers. ▪ Truck brokerag
Slide 26: Long runway for earnings growth in truck brokerage
Investor Presentation August 2022 Long runway for earnings growth: Adept at taking share in a growing market under all macro conditions 26 North American truck brokerage business profile Industry size 1 $88 billion RXO’s industry share ~4% Average tenure of top 10 customers, 2021 ~15 years Total add
Slide 27: Steady broker penetration of for-hire trucking fueling growth
Investor Presentation August 2022 Source: Third - party research 27 Steady broker penetration of for - hire trucking is fueling growth, expected to be 28% by 2026 BROKER PENETRATION OF US TRUCKLOAD INDUSTRY Outsourced freight transportation has been shifting from asset - based trucking companies to
Slide 28: Growing truck brokerage revenue at ~3x industry rate
Investor Presentation August 2022 $42 billion $88 billion 2013 2021 $397 million $2.749 billion 2013 2021 28 Growing truck brokerage revenue at ~3x industry rate 1 US brokered truckload industry revenue; reflects brokered component of ~$400 billion total addressable opportunity US BROKERAGE INDUSTRY
Slide 29: Proprietary digital brokerage platform RXO Connect
Investor Presentation August 2022 29 Breakthrough, proprietary digital brokerage platform RXO Connect has first - mover advantage in helping shippers and carriers make informed decisions by providing real - time information about supply and demand for truckload capacity. ▪ Demand for RXO Connect is
Slide 30: Digital adoption metrics for RXO Connect
Investor Presentation August 2022 (1,000) 1,000 3,000 5,000 7,000 9,000 11,000 13,000 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Total registered customer users 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Q1 2
Slide 31: Carrier app and platform features
Investor Presentation August 2022 FREIGHT M ANA G E M E N T CARRIER SCORE AND REWARDS CAPACITY POSTING LOAD BOOKING 31 Drivers have downloaded the platform’s mobile app more than 800,000 times ▪ In Q2 2022, over 70% of carrier users that logged into the platform for the first time returned within on
Slide 32: Spin-off to include complementary asset-light services
Investor Presentation August 2022 32 In 2021, over 80% of the operating income generated by the planned spin - off operations was generated by truck brokerage. The balance of the spin - off platform will be comprised of three additional brokered transportation services. Spin - off to include complem
Slide 33: Supplemental materials
Supplemen t al materials
Slide 34: Leadership
Investor Presentation August 2022 Brad Jacobs Chief Executive Officer United Rentals, United Waste Lou Amo President, Truck Brokerage – North America Electrolux, Union Pacific Josephine Berisha Chief Human Resources Officer Morgan Stanley Matthew Fassler Chief Strategy Officer Goldman Sachs Luis - A
Slide 35: Leading transportation positions in key European geographies
Investor Presentation August 2022 35 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 util
Slide 36: XPO is widely recognized for performance and culture
Investor Presentation August 2022 36 XPO is widely recognized for performance and culture ▪ Recognized as one of America’s Best Large Employers by Forbes, 2022 ▪ Named one of the World’s Most Admired Companies by Fortune, 2018, 2019, 2020, 2021 ▪ Ranked #1 in the Fortune 500 category of Transportati
Slide 37: Selected highlights of people-first culture
Investor Presentation August 2022 37 Selected highlights of XPO’s people - first culture ▪ Appointed a Chief Diversity Officer and launched a Diversity and Inclusion Council , 2020 ▪ Launched a global Diversity and Inclusion Steering Committee, 2021 , and a global Sustainability Steering Committee,
Slide 38: Strongly committed to sustainability
Investor Presentation August 2022 38 Strongly committed to sustainability ▪ CarbonNET, XPO’s proprietary, cloud - based calculator, helps document emission sources, activity data and CO 2 calculations ▪ Awarded Silver Status for ESG Performance by EcoVadis in Europe, 2022 ▪ Named a Top 75 Green Supp
Slide 39: Glossary
Investor Presentation August 2022 39 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 of the f
Slide 40: Financial reconciliations: net income to adjusted EBITDA
Investor Presentation August 2022 T he following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the periods en ded June 30, 2022 and 2021, to adjusted EBITDA for the same periods. 40 Financial reconciliations RECONCILIATION OF NET INCOME FROM CON
Slide 41: Financial reconciliations: adjusted net income
Investor Presentation August 2022 The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the periods ended June 30 , 2022 and 2021 , and the year ended December 31 , 2021 , to adjusted net income from continuing operations attributable to c
Slide 42: Financial reconciliations: free cash flow
Investor Presentation August 2022 The following table reconciles XPO’s net cash provided by operating activities from continuing operations for the periods end ed June 30, 2022 and 2021, and the years ended December 31, 2021, 2020 and 2019, to free cash flow for the same periods. Financial reconcili
Slide 43: Reconciliations of North American LTL adjusted operating ratio
Investor Presentation August 2022 The following table reconciles XPO’s operating income attributable to its North American less - than - truckload business to adjuste d operating income, adjusted operating ratio, adjusted EBITDA and net cash for the respective periods shown in the table below. Finan
Slide 44: Reconciliation of income from continuing operations to adjusted EBITDA
Investor Presentation August 2022 RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the trailing twelve months ended June 30 , 2022 , the six - month periods ended
Slide 45: Reconciliation of adjusted EBITDA for North American truck brokerage
Investor Presentation August 2022 The following table reconciles XPO’s operating income attributable to its North American Truck Brokerage business for the qua rte rs ended June 30, 2022 and 2021 to adjusted EBITDA for the same periods. Financial reconciliations (cont.) 1 Adjusted EBITDA margin is c
Slide 46: Reconciliation of adjusted EBITDA attributable to RXO
Investor Presentation August 2022 The following table reconciles XPO’s operating income attributable to the planned spin - off operations (1) for the year ended December 31, 2021 to adjusted EBITDA for the same period. Financial reconciliations (cont.) 1 The planned spin - off is expected to include
Slide 47: Return on invested capital reconciliation
Investor Presentation August 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 trailing twelve months ended June 30, 2022, divided by i nve s
Slide 48: Reconciliation of net leverage and net debt
Investor Presentation August 2022 W e believe that net leverage and net debt are important measures of our overall liquidity position and are calculated by remov ing cash and cash equivalents from our reported total debt and reporting net debt as a ratio of our adjusted EBITDA. The following tab les