Slide 1: Investor Overview Q2 2023
Investor Overview Q2 2023 August 2023
Slide 2: Forward-looking statements
Forward-looking statements This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to our full year 2023 expectations of gross cape
Slide 3: Second quarter 2023 highlights
Second quarter 2023 highlights Delivering solid results $1.9 billion of revenue $244 million of adjusted EBITDA $0.71 adjusted diluted earnings per share LTL adjusted operating ratio of 87.6%, 200 bps sequential improvement from Q1’23 LTL shipments per day up 1.9% YoY LTL damage claims ratio of 0.7%
Slide 4: Second quarter 2023 performance
Second quarter 2023 performance REVENUE $1.92 billion BY SEGMENT NET INCOME 1 $31 million NORTH AMERICAN LTL DILUTED EARNINGS PER SHARE2 $0.27 REVENUE $1.14 billion $83 million ADJUSTED EBITDA $208 million ADJUSTED NET INCOME 1 $0.71 ADJUSTED OPERATING RATIO 87.6% ADJUSTED DILUTED EPS2 ADJUSTED EBIT
Slide 5: Why invest in XPO?
Why invest in XPO? 1 An LTL leader in a 2 Critical nationwide LTL 3 Data-driven levers of 4 High-ROIC business with 5 Results-oriented bedrock industry with network coverage, profit growth compelling outlook and leaders with long disciplined pricing and with in-house sources embedded in well-defined
Slide 6: Strong position in North American LTL
Strong position in North American LTL 6
Slide 7: A leading carrier in a compelling industry
A leading carrier in a compelling industry 6% North American LTL industry revenue CAGR • $59 billion bedrock industry for the US economy; with 77% of share held by top 10 LTL players • Diverse demand across verticals, with secular growth drivers • Attractive pricing environment, with industry pricin
Slide 8: A major player in the supply-chain ecosystem
A major player in the supply-chain ecosystem $4.6 billion 8% 9% 34% annual revenue 2022 industry share 2022 revenue allocated return on invested capital to gross capex 27,000 620 million >12 million 18 billion customers served linehaul miles run shipments per year pounds of freight per year per year
Slide 9: Expansive network covering 99% of US zip codes
Expansive network covering 99% of US zip codes Service Centers Freight Assembly Centers • 294 service centers • Cross-border and offshore capabilities • Strategic investments in high-demand markets 9
Slide 10: Strategic mix of blue-chip and local customers
Strategic mix of blue-chip and local customers 27,000 customers as of December 31, 2022 2% revenue from largest customer, low concentration risk 16-year average tenure of top 10 customers Selected customers of XPO 10
Slide 11: LTL growth plan and levers
LTL growth plan and levers 11
Slide 12: Strong momentum in executing LTL 2.0 growth plan
Strong momentum in executing LTL 2.0 growth plan • Building a best-in-class service organization Provide best-in-class • Incentivizing employees to drive service quality service • Improved Q2’23 damage claims ratio to 0.7% from 1.2% at launch of LTL 2.0 Invest in network for the • Expanding linehaul
Slide 13: 11% to 13% adjusted EBITDA CAGR in North American LTL 2021-2027
11% to 13% adjusted EBITDA CAGR in North American LTL 2021-2027 Expected components and contributions Combination of volume gains + pricing over inflation 6% to 7% Operating costs optimized through technology 3% to 4% Linehaul insourced from third parties 2% 11% to 13% 13
Slide 14: Damage claims ratio (as a % of LTL revenue)
Damage claims ratio (as a % of LTL revenue) LTL 2.0 LTL 2.0 service initiatives driving significant improvement in damage claims ratio Note: Based on claims payment data 14
Slide 15: Employee engagement and satisfaction at record levels
Employee engagement and satisfaction at record levels 54% of field 17% better employee 47% of drivers have 10+ 100+ graduates in field management trainees retention years tenure management program are diverse Highest employee satisfaction Experienced drivers are Strong leadership DE&I initiatives id
Slide 16: Disciplined investing in high-return projects
Disciplined investing in high-return projects 9.1% 10.0% 700 600 8.0% Gross capex as a % of revenue1 500 Gross capex ($ millions) $424 6.0% 5.2% 400 4.8% 4.1% 3.8% 300 4.0% $197 $197 200 $145 $145 2.0% 100 0 0.0% 2018 2019 2020 2021 2022 Tractor age in years As of December 31 5.3 5.1 5.4 5.9 5.9 Gro
Slide 17: In-house capabilities provide distinct competitive advantages
In-house capabilities provide distinct competitive advantages Trailer manufacturing facility in Arkansas • Expanded linehaul trailer fleet by 4,700 units or 10% in 2022 • Self-sufficient for critical component of fleet capacity, instead of relying on OEMs • Added second production line in January 20
Slide 18: Appendix
Appendix 18
Slide 19: European Transportation segment
European Transportation segment Unique pan-European transportation platform holds leading positions in key geographies • In France: the #1 full truckload (FTL) broker and the #1 pallet network (LTL) provider • In Iberia (Spain and Portugal): the #1 FTL broker and the #1 LTL provider • In the UK: a t
Slide 20: Full year 2023 planning assumptions
Full year 2023 planning assumptions The company provided the following expectations: • Gross capex of $500 million to $600 million • Interest expense of $185 million to $195 million • Pension income of approximately $20 million • Effective tax rate of 24% to 26% • Diluted share count of 118 million
Slide 21: Financial reconciliations
Financial reconciliations The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the periods ended June 30, 2023 and 2022 to adjusted EBITDA for the same periods. Reconciliation of net income from continuing operations to adjusted EBITDA $
Slide 22: Financial reconciliations (cont.)
Financial reconciliations (cont.) The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the periods ended June 30, 2023 and 2022 to adjusted net income from continuing operations attributable to common shareholders for the same periods. Re
Slide 23: Financial reconciliations (cont.)
Financial reconciliations (cont.) The following table reconciles XPO’s net cash provided by operating activities from continuing operations for the periods ended June 30, 2023 and 2022 to free cash flow for the same periods. Reconciliation of cash flows from operating activities of continuing operat
Slide 24: Financial reconciliations (cont.)
Financial reconciliations (cont.) The following table reconciles XPO’s operating income attributable to its North American less-than-truckload segment to adjusted operating income, adjusted operating ratio and adjusted EBITDA for the respective periods shown in the table below. Reconciliation of Nor
Slide 25: Financial reconciliations (cont.)
$ in millions Financial reconciliations (cont.) (unaudited) Year Ended The following table calculates XPO's return on invested capital (ROIC) attributable to itsstatement Select income North items American less-than-truckloadDecember segment for 31, 2022 Adjusted EBITDA $ 1,012 the periods presented
Slide 26: Non-GAAP financial measures
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 tables attached to