Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (August 2018)
44 slides from Xpo's investor presentation, Aug 1, 2018
Slide 1: Investor Presentation August 2018
Investor Presentation August 2018 Exhibit 99.2
Slide 2: Disclaimers
Disclaimers 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 forth in the financial table
Slide 3: Key Factors Driving High Growth and High Returns
Key Factors Driving High Growth and High Returns Significant investments in secular drivers of organic growth Leadership positions in fast-growing areas of transportation and logistics Strong presence in the e-commerce sector $1 trillion addressable opportunity, of which we hold less than 2% market
Slide 4: Top 10 Global Provider of Supply Chain Services
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 Over 97,000 Locations 1,505 Countries of Operation 32 Contract Logistics Facilities 183 million sq. feet (17 million sq. meters) Key Metrics Gross Revenue Profile Investor Pre
Slide 6: Optimal Network Mix Creates Value
Optimal Network Mix Creates Value Ground transportation assets: 16,000 owned tractors; 39,000 trailers; 9,500 53-ft. intermodal boxes; and 5,000 chassis Non-asset transportation network: 12,000 trucks contracted via independent owner-operators; and more than 1 million brokered trucks Facility assets
Slide 7: Intense Pace of Innovation Across the Business
$450+ million annual investment in technology is a key competitive advantage Global technology team of more than 1,700 professionals Over 100 data scientists focused on predictive analytics and machine learning XPO Connect digital freight marketplace gives shippers and carriers real-time visibility
Slide 8: Highly Skilled Management Team
Highly Skilled Management Team Bradley Jacobs Chief Executive Officer United Rentals, United Waste Josephine Berisha Senior Vice President–Global Compensation and Benefits Morgan Stanley Erik Caldwell Chief Operating Officer–Supply Chain, Americas and Asia Pacific Hudson's Bay Company, Luxottica Ric
Slide 9: Highly Skilled Management Team (Cont'd)
Highly Skilled Management Team (Cont’d) Meghan Henson Chief Human Resources Officer Chubb, PepsiCo Charles Hitt President–Last Mile 3PD, Geologistics Erin Kurtz Senior Vice President–Communications Thomson Reuters, AOL Katrina Liddell Senior Vice President–Transportation Sales, North America Johnson
Slide 10: Less Than 2% Current Share of $1 Trillion Addressable Opportunity
< 2% Current Share of $1 Trillion Addressable Opportunity Larger Salesforce Closed a Record $1.1 Billion of Sales in Q2 ‘18 More than tripled the number of strategic account managers over the last two years In Europe, deepened bench strength of senior-level sales talent in both logistics and transpo
Slide 11: Leading Positions in Fast-Growing Industry Sectors
Leading Positions in Fast-Growing Industry Sectors Revenue mix for FY 2017 Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc., Bureau of Economic Analysis, US Department of Commerce, A.T. Kearney, Transport Intelligence, American Trucking As
Slide 12: Expanding Share of High-Growth E-Commerce Market
Expanding Share of High-Growth E-Commerce Market Largest e-fulfillment 3PL in Europe, with a strong presence in North America Omnichannel and reverse logistics / returns management leader in North America Customers include many e-commerce and omnichannel retail giants Logistics experience with fast-
Slide 13: Clear Path to $1.6 Billion of Adjusted EBITDA in 2018
Clear Path to $1.6 Billion of Adjusted EBITDA in 2018 Investor Presentation August 2018 On track for at least 17% adjusted EBITDA growth this year Implementation of pricing initiatives Continued investments in salesforce expansion and effectiveness Better management of overtime and temporary labor t
Slide 14: 2018 Investments Drive Long-Term Growth
2018 Investments Drive Long-Term Growth Investor Presentation August 2018 Company-specific levers for sustainable growth throughout market cycles Growing XPO Direct network from 75 North American locations to approximately 100 locations by year-end primarily to serve omnichannel and e-commerce deman
Slide 15: Opportunity to Create Substantial Value through M&A
Opportunity to Create Substantial Value through M&A Exploring acquisitions that are strategically and financially compelling Primary focus on North America and Europe in existing or complementary lines of business Potential opportunities to improve the profitability of acquired businesses include: C
Slide 16: Strong Track Record of Optimizing Acquired Operations
October 2015 acquisition of Con-way Instilled a culture of accountability by focusing employees on results that matter Invested in sales force recruitment and training to optimize business mix Realized approximately $200 million of cost improvements Doubled adjusted operating income from FY 2015 to
Slide 17: XPOLogistics Key Lines of Business
XPOLogistics Key Lines of Business
Slide 18: Contract Logistics
Contract Logistics Competitive Position as Technology Leader Asset-light business characterized by long-term, recurring contractual relationships, low cyclicality and a high-value-add component that minimizes commoditization Deep expertise in high-growth sectors that trend toward outsourcing: retail
Slide 19: Truck Brokerage
Truck Brokerage Broad Opportunity to Cross-Sell Massive Capacity Non-asset business that matches shippers’ freight with an established network of over 38,000 pre-qualified trucking carriers High free cash flow conversion and minimal capex Fragmented market with opportunity to expand Outsourcing tren
Slide 20: Last Mile Demand Propelled by E-Commerce and Omnichannel
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation August 2018 Asset-light business that arranges the final stage of heavy goods deliveries from distribution centers, cross-docks or retail stores to consumers’ homes Customers include nearly all of the top 30 big-box retai
Slide 21: North American Less-Than-Truckload
North American Less-Than-Truckload Strong Tailwind from Sales Expansion Investor Presentation August 2018 Asset-based business utilizing employee drivers, fleet of tractors and trailers for line-haul, pick-up and delivery of pallets, and network of terminals Second largest LTL carrier, covering 99%
Slide 22: Intermodal and Drayage
Intermodal and Drayage Long-term Sales Potential for Truck-to-Rail Conversion Investor Presentation August 2018 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 provide
Slide 23: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation August 2018 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 about
Slide 24: Global Forwarding
Global Forwarding Integrated Global Network Investor Presentation August 2018 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 Ability to leverage grou
Slide 25: XPOLogistics Financial Performance
XPOLogistics Financial Performance
Slide 26: Industry-Leading Growth in Revenue and EBITDA
Industry-Leading Growth in Revenue and EBITDA Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 32% CAGR: 50% Note: Excludes impact of divested North American truckload unit Investor Presentation August 2018
Slide 27: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix Business model enhances customer service and financial returns % Adjusted EBITDA Net Capex Adjusted EBITDA Minus Net Capex Investor Presentation August 2018 Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; Parcel includes
Slide 28: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation 2018 free cash flow expected to be driven by EBITDA growth, lower interest expense and lower integration and rebranding costs Cash Flow from Operations Free Cash Flow Investor Presentation August 2018 Note: 2018E is based on the company’s target for free cash flow an
Slide 29: Second Quarter 2018 Results
Second Quarter 2018 Results $4.36 billion of revenue 10.9% organic revenue growth $137.5 million of net income; $1.03 per diluted share $131.8 million of adjusted net income; $0.98 per diluted share $436.7 million of adjusted EBITDA $267.4 million of cash flow from operations $192.9 million of free
Slide 30: Financial Guidance Reaffirmed
Financial Guidance Reaffirmed targets 2018 adjusted EBITDA of at least $1.6 billion 2017–2018 cumulative free cash flow of approximately $1 billion Targeting approximately $625 million of free cash flow in 2018 XPO has met or exceeded its full year financial targets for six straight years Investor P
Slide 31: Fundamentals Established for Value Creation
Fundamentals Established for Value Creation Leading positions in fast-growing areas of transportation and logistics Unique ability to help large customers realize efficiencies across the supply chain Large presence in rapidly expanding e-commerce sector Highly integrated organization with culture of
Slide 32: XPOLogistics Supplemental Materials
XPOLogistics Supplemental Materials
Slide 33: Strongly Committed to Sustainability
Strongly Committed to Sustainability Transportation Named a Top 75 Green Supply Chain Partner by Inbound Logistics for 2016, 2017, 2018 Honored for excellence in environmental improvement by SmartWay® Awarded the label “Objectif CO2” for outstanding environmental performance of transport operations
Slide 34: Strongly Committed to Sustainability
Strongly Committed to Sustainability On track to reduce French fleet emissions by 6% by year-end 2018 vs. 2015 North American LTL operations have energy-saving policies in place and are implementing a phased upgrade to LED lighting Drivers train in responsible eco-driving and fuel usage reduction te
Slide 35: Strongly Committed to Sustainability
Strongly Committed to Sustainability Energy efficiency evaluations are performed prior to selecting warehouses to lease, and energy efficient equipment is purchased when feasible Fuel emissions from forklifts are monitored at logistics sites, with protocols in place to take immediate corrective acti
Slide 36: Business Glossary
Business Glossary 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 structured as either fixed-variable,
Slide 37: 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 38: Financial Reconciliations
Financial Reconciliations The following table reconciles XPO’s net income attributable to common shareholders for the periods ended June 30, 2018 and 2017 to adjusted EBITDA for the same periods. Investor Presentation August 2018 Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of
Slide 39: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation August 2018 The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended June 30, 2018 and 2017 to adjusted net income attributable to common shareholders for the same periods. Note: Refer to the “Non-GA
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation August 2018 The following table reconciles XPO’s cash flows provided by operating activities for the three and six months ended June 30, 2018 and 2017, and the 12 months ended December 31, 2017, 2016 and 2015, to free cash flow for the same pe
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s operating income attributable to its North American less-than-truckload business for the trailing twelve months ended June 30, 2018, six months ended June 30, 2018 and 2017, and years ended December 31, 2017 and 2015, to adjuste
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation August 2018 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the periods ended June 30, 2018 and 2017 to adjusted operating ratio for the same periods. Note: Refer to the “Non-GAA
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document Note: Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe Investor Presentation August 2018 The following table reconciles XPO’s net income (loss) attributa
Slide 44: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation August 2018 Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document