Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (November 2017)
43 slides from Xpo's investor presentation, Nov 2, 2017
Slide 1: XPO Investor Presentation November 2017
XPO Investor Presentation November 2017 Exhibit 99.2
Slide 2: Disclaimers: Non-GAAP Financial Measures
Disclaimers Non-GAAP Financial Measures This document contains certain non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission ("SEC"), including earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA for the three and n
Slide 3: Key Factors Driving High Growth and Returns
Key Factors Driving High Growth and Returns Solid organic revenue growth supported by numerous tailwinds Leadership positions in fast-growing areas of transportation and logistics $1 trillion addressable opportunity, of which we hold less than 1.5% market share Strong presence in high-growth e-comme
Slide 4: Logistics and Transportation Business Overview
63% of Revenue Truckload, Brokerage and Expedite Less-Than-Truckload Last Mile Intermodal and Drayage Global Forwarding LOGISTICS Warehousing with High-Value-Add Services TRANSPORTATION Moving Freight Using Optimal Modes 37% of Revenue E-Commerce and Omnichannel Fulfillment Customized Warehousing an
Slide 5: Global Scale with Well-Diversified Business Mix
By Country of Operation By Customer Vertical Global Scale with Well-Diversified Business Mix Customers Over 50,000 Employees 91,000 Locations 1,444 Countries of Operation 32 Contract Logistics Facilities 166 million sq. feet (15.4 million sq. meters) Key Metrics Gross Revenue Profile Investor Presen
Slide 6: Optimal Network Mix Creates Value
Optimal Network Mix Creates Value Ground transportation assets: 16,000 owned tractors; 39,000 trailers; 10,000 53-ft. intermodal boxes; and 5,200 chassis Non-asset transportation network: 11,000 trucks contracted via independent owner-operators; and more than 1 million brokered trucks Facility asset
Slide 7: XPO Leads the Industry in Rapid Technology Development
Investor Presentation November 2017 XPO Leads the Industry in Rapid Technology Development Leading-edge software driven by $425 million of annual technology spend Global technology team of over 1,600 professionals, including over 100 data scientists Cloud-based platform supports agile product develo
Slide 8: Highly Skilled Management Team
Highly Skilled Management Team Investor Presentation November 2017 Partial list, in alphabetical order Bradley Jacobs Chief Executive Officer United Rentals, United Waste Josephine Berisha Senior Vice President–Global Compensation and Benefits Morgan Stanley Tony Brooks President–Less-Than-Truckload
Slide 9: Highly Skilled Management Team (Cont'd)
Highly Skilled Management Team (Cont’d) Investor Presentation November 2017 Charles Hitt President–Last Mile 3PD, Affinity Logistics, GeoLogistics Russell Hoch Senior Vice President–Strategic Account Management Cisco, Lucent Technologies, AT&T Erin Kurtz Senior Vice President–Communications Thomson
Slide 10: Current Share of $1 Trillion Addressable Opportunity
< 1.5% Current Share of $1 Trillion Addressable Opportunity Investor Presentation November 2017 Investment in Sales Growth More than tripled strategic account managers, and hired over 200 local account executives Rolled out common CRM platform to increase visibility across organization Implemented g
Slide 11: Leading Positions in Fast-Growing Industry Sectors
Leading Positions in Fast-Growing Industry Sectors Investor Presentation November 2017 Revenue mix for FY 2016, excludes North American truckload business divested in 2016 Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc., Bureau of Economi
Slide 12: Global Player in High-Growth E-Commerce Sector
Investor Presentation November 2017 Global Player in High-Growth E-Commerce Sector Largest e-fulfillment provider in Europe and a leading provider in North America Omnichannel and reverse logistics / returns management leader in North America Customers include many of the largest e-tailers and retai
Slide 13: Steady Margin Improvement 2016–2018E
Steady Margin Improvement 2016–2018E Investor Presentation November 2017 Adjusted EBITDA and EBITDA Margin % Note: Excludes impact of North American truckload unit: 2016 revenue of $431.9 million and adjusted EBITDA of $80.1 million, see Supplemental Materials for reconciliation
Slide 14: Clear Path to 10% Adjusted EBITDA Margin
Clear Path to 10% Adjusted EBITDA Margin Investor Presentation November 2017 Focused on $13 billion of spend across purchased services, shared services, technology infrastructure, labor and real estate Opportunities for improvement include: Centralized procurement across global organization Price op
Slide 15: Creating Dramatic Shareholder Value through M&A
Investor Presentation November 2017 Creating Dramatic Shareholder Value through M&A Track record of acquiring, integrating and improving highly accretive acquisitions October 2015 acquisition of Con-way Grew adjusted operating income in LTL by 86% from FY 2015 to TTM Sept. 30, 2017 Realized approxim
Slide 16: Key Lines of Business
XPOLogistics Key Lines of Business
Slide 17: Contract Logistics: Long-Term Recurring Revenue
Contract Logistics Long-Term Recurring Revenue Investor Presentation November 2017 Asset-light business characterized by long-term contractual relationships, low cyclicality and a high-value-add component that minimizes commoditization Deep expertise in high-growth sectors that trend toward outsourc
Slide 18: Truck Brokerage: Broad Cross-Selling Opportunity
Truck Brokerage Broad Cross-Selling Opportunity Investor Presentation November 2017 Non-asset business that places shippers’ freight with qualified carriers through brokers that match capacity with shipper demand High free cash flow conversion and minimal capex Fragmented market with opportunity to
Slide 19: Last Mile: Demand Propelled by E-Commerce and Omnichannel
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation November 2017 Asset-light business that arranges the final stage of heavy goods delivery from distribution centers or retail stores to end consumers’ home or business Customers include nearly all of the top 30 big-box ret
Slide 20: North American Less-Than-Truckload: Major Success Story
North American Less-Than-Truckload Major Success Story Investor Presentation November 2017 Asset-based business utilizing employee drivers, a fleet of tractors and trailers for line-haul, pick-up and delivery of pallets, and a network of terminals Second largest LTL carrier, covering 99% of all U.S.
Slide 21: Intermodal and Drayage
Intermodal and Drayage Long-term Sales Potential for Truck-to-Rail Conversion Investor Presentation November 2017 Asset-light business that arranges the long-haul portion of containerized freight, including rail brokerage, local drayage and on-site operational services Third largest intermodal provi
Slide 22: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation November 2017 Leading platform for dedicated and non-dedicated truckload, less-than-truckload, truck brokerage, and new last mile service LTL, truck brokerage and dedicated transport combined account for abo
Slide 23: Global Forwarding: Integrated Global Network
Global Forwarding Integrated Global Network Investor Presentation November 2017 Non-asset logistics solution for domestic, cross-border and international shipments, including customs brokerage Freight forwarding is a $150 billion industry, of which XPO has less than a 1% share 157,000 TEUs and 58,00
Slide 24: Financial Performance
Financial Performance
Slide 25: Industry-Leading Growth in Revenue and EBITDA
Investor Presentation November 2017 Industry-Leading Growth in Revenue and EBITDA Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 145% CAGR: 279% Note: Excludes impact of North American truckload unit: 2016 revenue of $431.9 million and adjusted EBITDA of $80.1 million; and 2015 revenue of
Slide 26: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix Investor Presentation November 2017 Enhances customer service and financial returns % Low Net Capex as a % of Revenue vs. Competitor Groups Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; Parcel includes FedEx and UPS; LT
Slide 27: Accelerating Free Cash Flow Generation
$625 million of cash flow from operations in 2016 $211 million of free cash flow in 2016 Targeting $350 million of free cash flow in 2017 Targeting $900 million of cumulative free cash flow in 2017-2018 through: EBITDA growth Lower interest expense Lower transaction, integration and rebranding costs
Slide 28: Third Quarter 2017 Highlights
Third Quarter 2017 Highlights Investor Presentation November 2017 $3.89 billion of revenue $57.5 million of net income; $0.44 per diluted share $369.6 million of adjusted EBITDA $76.7 million of adjusted net income $293.7 million of cash flow from operations $183.2 million of free cash flow Generate
Slide 29: Guidance
Guidance Investor Presentation November 2017 Financial targets reaffirmed November 1, 2017 2017: adjusted EBITDA of at least $1.365 billion 2018: adjusted EBITDA of at least $1.6 billion 2017–2018: cumulative free cash flow target of approximately $900 million Includes at least $350 million of free
Slide 30: Results Matter: Proven Credentials for Value Creation
Results Matter: Proven Credentials for Value Creation Investor Presentation November 2017 Leading global positions in the fastest-growing areas of transportation and logistics Differentiated, end-to-end range of supply chain services Accelerating top-line growth Approximately 26% of revenue comes fr
Slide 31: Supplemental Materials
XPOLogistics Supplemental Materials
Slide 32: A Strong and Global Commitment to Sustainability
A Strong and Global Commitment to Sustainability Investor Presentation November 2017 Owns one of the most modern and environmental-friendly fleets in Europe 97% compliant with Euro V, EEV and Euro VI standards, with average truck age of 2.5 years Owns the largest natural gas truck fleet in Europe In
Slide 33: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) Investor Presentation November 2017 Awarded the label “Objectif CO2” for outstanding environmental performance of transport operations in Europe by the French Ministry of the Environment and the French Environment and Energy Agency Large capex investment in
Slide 34: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) Investor Presentation November 2017 Packaging engineers ensure that the optimal carton size is used for each product slated for distribution Recycled packaging purchased when feasible Reusable kitting tools utilized for the installation of parts in customer
Slide 35: Business Glossary
Business Glossary Investor Presentation November 2017 Contract Logistics: An asset-light, technology-enabled business characterized by long-term contractual relationships with high renewal rates, low cyclicality and a high-value-add component that minimizes commoditization. Contracts are typically s
Slide 36: Business Glossary (Cont'd)
Business Glossary (Cont’d) Intermodal: An asset-light business that facilitates the movement of long-haul, containerized freight by rail, often with a drayage (trucking) component at either end. Intermodal is a variable cost business, with revenue generated by a mix of contractual and spot market tr
Slide 37: Financial Reconciliations
Financial Reconciliations The following table reconciles XPO’s net income (loss) attributable to common shareholders for the periods ended September 30, 2017 and 2016 to adjusted EBITDA for the same periods. Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. Adjusted EBIT
Slide 38: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation November 2017 The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended September 30, 2017 and 2016 to adjusted net income attributable to common shareholders for the same periods. Refer to the “Non-G
Slide 39: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. Free cash flow was prepared assuming 100% ownership of XPO Logistics Europe. The following table reconciles XPO’s cash flows provided by operating activities for the periods ended Decemb
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s cash flows provided by operating activities for the periods ended September 30, 2017 and 2016 to free cash flow for the same periods. Investor Presentation November 2017 Refer to the “Non-GAAP Financial Measures” section on page
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation November 2017 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the periods ended September 30, 2017 and 2016 to adjusted operating ratio for the same periods. Refer to the “Non-GA
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation November 2017 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, 2017 to adjusted operating income for the same period. Refer
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) | Investor Presentation July 2017 The following table reconciles XPO’s net income (loss) attributable to common shareholders for the periods ended December 31, 2016, 2015, and 2014, to adjusted EBITDA excluding the North American truckload business divested in 2016
XPO Logistics — Investor Presentation (November 2017) on 6ix