Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2019)
43 slides from Xpo's investor presentation, Feb 14, 2019
Slide 1: Investor Presentation February 2019
Investor Presentation February 2019 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 presentation to the most directly comparable measure under GAAP, which are set forth in the financial t
Slide 3: Key Factors Driving Growth and Returns
Key Factors Driving Growth and Returns Leading positions in fast-growing areas of transportation and logistics $1 trillion addressable opportunity, with less than 2% market share Ability to provide a broad range of integrated solutions to customers with complex supply chains Differentiation through
Slide 4: Top 10 Global Provider of Supply Chain Services
Note: Revenue data, excluding intersegment elimination, as reported for FY 2018 Move all types of freight using optimal mode or combination of modes Full truckload via brokered, contracted and owned truck and trailer capacity Less-than-truckload Last mile delivery, assembly and installation of heavy
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 100,000 Locations 1,535 Countries of Operation 32 Contract Logistics Facilities 190 million sq. feet (18 million sq. meters) Key Metrics Gross Revenue Profile Investor Pr
Slide 6: Network Composition Creates Value
Note: Revenue mix for FY 2018 Network Composition Creates Value Non-asset transportation network: 12,000 trucks contracted via independent owner-operators; and more than 1 million brokered trucks Ground transportation assets: 16,000 tractors; 39,000 trailers; 9,500 53-ft. intermodal boxes; and 5,000
Slide 7: Fast Pace of Innovation
$500 million annual investment in technology is a key competitive advantage Global technology team of ~1,700 professionals Over 100 data scientists focused on predictive analytics and machine learning XPO Connect digital freight marketplace gives shippers real-time visibility into supply and demand,
Slide 8: Highly Skilled Management Team
Note: Partial list in alphabetical order 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 P
Slide 9: Highly Skilled Management Team (Cont'd)
Note: Partial list in alphabetical order Highly Skilled Management Team (Cont’d) Meghan Henson Chief Human Resources Officer Chubb, PepsiCo Julie Katigan Senior Vice President, Human Resources, Supply Chain–North America Electrolux, Mead Johnson Nutrition Erin Kurtz Senior Vice President, Communicat
Slide 10: Current Share of $1 Trillion Addressable Opportunity
< 2% Current Share of $1 Trillion Addressable Opportunity Larger Salesforce Closed a Record $3.8 Billion of Sales in FY 2018 Continued to grow strategic account management team in North America with a focus on expanding large customer relationships Created European strategic account management team
Slide 11: Leading Positions in Fast-Growing Industry Sectors
Revenue mix for FY 2018 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 Associations, Technavio, Wall Street Research and man
Slide 12: Major Player in the High-Growth E-Commerce Market
Major Player in the High-Growth E-Commerce Market Largest e-fulfillment 3PL in Europe, with a strong position in North America Omnichannel and reverse logistics (returns management) leader in North America Customers include pure-play e-commerce companies and retail giants Extensive experience with p
Slide 13: Company-Specific Growth Drivers
Company-Specific Growth Drivers Investor Presentation February 2019 2018 investments drive benefits going forward Expanded contract logistics infrastructure with warehouse management software, data-driven workforce planning tools and automated solutions Launched national operations of XPO Direct to
Slide 14: Grew Adjusted EBITDA by 14.3% in 2018
Grew Adjusted EBITDA by 14.3% in 2018, versus 2017 Investor Presentation February 2019 Delivered $1.562 billion of adjusted EBITDA for full year 2018 Investments in salesforce expansion and effectiveness Execution of pricing initiatives Implementation of process improvements, advanced robotics and o
Slide 15: XPOLogistics Key Lines of Business
XPOLogistics Key Lines of Business
Slide 16: 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 17: 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 Continuously improving productivity through proprietary Freight Optimizer technology Drive XPO mobile app and
Slide 18: Last Mile
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation February 2019 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 big-box retail
Slide 19: North American Less-Than-Truckload
North American Less-Than-Truckload Top three LTL Carrier in North America Investor Presentation February 2019 Asset-based business utilizing employee drivers, fleet of tractors and trailers for line-haul, pick-up and delivery of pallets, and network of terminals Covers 99% of all US zip codes Laser
Slide 20: Intermodal Rail
Intermodal Rail Long-term Sales Potential for Truck-to-Rail Conversion Investor Presentation February 2019 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 provider 9,5
Slide 21: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation February 2019 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 22: Global Forwarding
Global Forwarding Integrated Global Network Investor Presentation February 2019 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 gr
Slide 23: XPOLogistics Financial Highlights
XPOLogistics Financial Highlights
Slide 24: Share Repurchase Programs
Share Repurchase Programs On February 4, 2019, the company completed the share repurchase program announced in December 2018: A total of 18 million shares of XPO common stock were retired for approximately $1 billion $56.09 average share price On February 13, 2019, the company’s board of directors a
Slide 25: Industry-Leading Growth in Revenue and Adjusted EBITDA
Industry-Leading Growth in Revenue and Adjusted EBITDA Note: Excludes impact of divested North American truckload unit Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document Investor Presentation February 2019 Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 24%
Slide 26: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix Business model enhances customer service and financial returns % Investor Presentation February 2019 Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; LTL includes Old Dominion Freight Line, YRC Worldwide, ArcBest and Saia;
Slide 27: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation 2019F free cash flow reflects forecasted 6% to 10% adjusted EBITDA growth, and interest expense related to expected share repurchases Investor Presentation February 2019 Note: 2019F free cash flow reflects: 1) the company’s adjusted EBITDA target of $1.650 billion to
Slide 28: Fourth Quarter 2018 Results
Fourth Quarter 2018 Results Investor Presentation February 2019 Q4 2018, compared with Q4 2017: $4.39 billion of revenue, compared with $4.19 billion 5.4% organic revenue growth $84 million of net income1, compared with $189 million2 $0.62 diluted earnings per share, compared with $1.42 $98 million
Slide 29: 2019 Financial Targets
2019 Financial Targets The company updated its full-year 2019 targets on February 14, 2019: Revenue growth of 3% to 5%, which corresponds to organic revenue growth of 4% to 6% year-over-year; Adjusted EBITDA in the range of $1.650 billion to $1.725 billion, an increase of 6% to 10% year-over-year, v
Slide 30: Well-Positioned to Create Meaningful Shareholder Value
Well-Positioned to Create Meaningful Shareholder Value Leading positions in fast-growing areas of transportation and logistics Highly skilled at capital allocation Differentiated solutions that help customers manage their supply chains most efficiently Leading-edge technology for operations, custome
Slide 31: XPOLogistics Supplemental Materials
XPOLogistics Supplemental Materials
Slide 32: XPO Is Widely Recognized for Performance and Culture
XPO Is Widely Recognized for Performance and Culture Named one of the World’s Most Admired Companies by Fortune, 2018 and 2019 Named to the Fortune Future 50 list of US companies best positioned for breakout growth by Fortune, 2018 Ranked #7 of the Glassdoor Top 20 UK companies with the best leaders
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 (Cont'd)
Strongly Committed to Sustainability (Cont’d) 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 techniques Waste mitigation measures are instilled in daily operati
Slide 35: Strongly Committed to Sustainability (Cont'd)
Strongly Committed to Sustainability (Cont’d) 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 correc
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 December 31, 2018 and 2017 to adjusted EBITDA for the same periods. Investor Presentation February 2019 Note: Refer to the “Non-GAAP Financial Measures” section on page
Slide 39: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2019 The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended December 31, 2018 and 2017 to adjusted net income attributable to common shareholders for the same periods. Note: Refer to the “
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2019 Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document Note: 2016 and 2017 data have been recast to reflect the impact of Accounting Standards Update 2016-18 The following table reconciles XPO’s cash
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2019 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the three months and years ended December 31, 2018 and 2017 to adjusted operating income and adjusted operating rati
Slide 42: 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 February 2019 The following table reconciles XPO’s net income (loss) attribu
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2019 The following table reconciles XPO’s GAAP revenue to organic revenue for the three months ended December 31, 2018 and 2017 for the Logistics segment, and the three months and years ended December 31, 2018 and 2017 for the consoli
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