Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2018)
43 slides from Xpo's investor presentation, Feb 7, 2018
Slide 1: XPO Investor Presentation February 2018
XPO Investor Presentation February 2018 Exhibit 99.2
Slide 2: Disclaimers
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-month
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: 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 95,000 Locations 1,455 Countries of Operation 32 Contract Logistics Facilities 170 million sq. feet (15.8 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 5,000 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 Fast-Tracks Innovation Across the Supply Chain
Over $450 million annual investment in technology across XPO’s service range Global team of approximately 1,700 professionals deploy proprietary software very rapidly Over 100 data scientists focus on predictive analytics that use machine learning for demand forecasting of inventory, capacity and la
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 Tony Brooks President–Less-Than-Truckload Sysco, Dean Foods, Frito-Lay, Roadway Richard Cawston Managing Director
Slide 9: Highly Skilled Management Team (Cont'd)
Highly Skilled Management Team (Cont’d) Meghan Henson Chief Human Resources Officer Chubb Group, PepsiCo Charles Hitt President–Last Mile 3PD, Affinity Logistics, GeoLogistics Russell Hoch Senior Vice President–Less-Than-Truckload Sales, North America Cisco, Lucent Technologies, AT&T Erin Kurtz Seni
Slide 10: Current Share of $1 Trillion Addressable Opportunity
< 1.5% Current Share of $1 Trillion Addressable Opportunity Investment in Sales Growth More than tripled the number of strategic account managers Hired over 200 local account executives; executing plan for another 170 hires; doubled the size of the Canadian sales team In Europe, deepened bench stren
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 and a leading provider in North America Omnichannel and reverse logistics / returns management leader in North America Customers include many e-commerce and retail giants Experience with fast-growing categories such
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 February 2018 On track for 5% to 8% organic revenue growth and at least 17% adjusted EBITDA growth in 2018 Continued investment in global sales force effectiveness Implementation of pricing initiatives by business unit Furth
Slide 14: 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 15: Strong Track Record of Optimizing Acquired Operations
October 2015 acquisition of Con-way Grew adjusted operating income in LTL by 90% from FY 2015 to FY 2017 Realized approximately $200 million of cost improvements Launched cross-selling with growth-based incentives and advanced training Instilled a culture of accountability by focusing employees on r
Slide 16: Key Lines of Business
XPOLogistics Key Lines of Business
Slide 17: Contract Logistics
Contract Logistics Long-Term Recurring Revenue 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 outsourcing: retail, e-commerce, industrial,
Slide 18: Truck Brokerage
Truck Brokerage Broad Cross-Selling Opportunity Non-asset business that matches shippers’ freight with an established network of pre-qualified trucking carriers High free cash flow conversion and minimal capex Fragmented market with opportunity to expand Outsourcing trends drive industry growth Cont
Slide 19: Last Mile
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation February 2018 Asset-light business that arranges the final stage of heavy goods delivery from distribution centers or retail stores to end consumers’ home or business Global Footprint Customers include nearly all of the t
Slide 20: North American Less-Than-Truckload
North American Less-Than-Truckload Major Success Story Investor Presentation February 2018 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 February 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 provi
Slide 22: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation February 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 abo
Slide 23: Global Forwarding
Global Forwarding Integrated Global Network Investor Presentation February 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 gr
Slide 24: Financial Performance
Financial Performance
Slide 25: Industry-Leading Growth in Revenue and EBITDA
Industry-Leading Growth in Revenue and EBITDA Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 87% CAGR: 157% Note: Excludes impact of divested North American truckload unit Investor Presentation February 2018
Slide 26: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix Model enhances customer service and financial returns % Adjusted EBITDA Net Capex Adjusted EBITDA Minus Capex Investor Presentation February 2018 Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; Parcel includes FedEx and U
Slide 27: Accelerating Free Cash Flow Generation
Accelerating Free Cash Flow Generation 2018 free cash flow expected to be driven by EBITDA growth, lower interest expense and lower integration and rebranding costs $ in millions Cash Flow from Operations Free Cash Flow $ in millions Investor Presentation February 2018 Note: 2018E is based on the co
Slide 28: Record Fourth Quarter 2017 Results
Record Fourth Quarter 2017 Results $4.19 billion of revenue 10.4% organic revenue growth $188.5 million of net income; $1.42 per diluted share $336.7 million of adjusted EBITDA $59.2 million of adjusted net income $273.9 million of cash flow from operations $179.5 million of free cash flow In 2017,
Slide 29: 2018 Guidance
2018 Guidance Financial targets Reaffirmed adjusted EBITDA of at least $1.6 billion Raised 2017–2018 cumulative free cash flow to approximately $1 billion from $900 million 2017 was the sixth straight year that XPO met or exceeded its full year financial targets Investor Presentation February 2018
Slide 30: Results Matter: Proven Credentials for Value Creation
Results Matter: Proven Credentials for Value Creation Leading global positions in the fastest-growing areas of transportation and logistics Differentiated, end-to-end range of supply chain services Robust top-line growth Accelerating free cash flow generation Leading-edge technology Large presence i
Slide 31: Supplemental Materials
XPOLogistics Supplemental Materials
Slide 32: A Strong and Global Commitment to Sustainability
A Strong and Global Commitment to Sustainability Owns and operates one of the most modern fleets in Europe 97% compliant with Euro V, EEV and Euro VI standards, with an average truck age of 2.5 years Owns and operates a large fleet of natural gas trucks in Europe Introduced the first LNG-powered tra
Slide 33: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) Named a Top 75 Green Supply Chain Partner by Inbound Logistics Awarded the label “Objectif CO2” for outstanding environmental performance of transport operations by the French Ministry of the Environment and the French Environment and Energy Agency Committe
Slide 34: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) 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 operations, manufactured by XPO Mea
Slide 35: 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 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 December 31, 2017 and 2016 to adjusted EBITDA for the same periods. Investor Presentation February 2018 Refer to the “Non-GAAP Financial Measures” section on pag
Slide 38: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended December 31, 2017 and 2016 to adjusted net income attributable to common shareholders for the same periods. Refer to the “Non-GAAP Financial Measures” section on pa
Slide 39: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2018 The following table reconciles XPO’s cash flows provided by operating activities for the periods ended December 31, 2017, 2016, 2015 and 2014 to free cash flow for the same periods. Refer to the “Non-GAAP Financial Measures” sect
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2018 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the periods ended December 31, 2017 and 2016 to adjusted operating ratio for the same periods. Refer to the “Non-GAA
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 years ended December 31, 2017, 2016 and 2015 to adjusted operating income for the same periods. Investor Presentation February 2018 Refer t
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Refer to the “Non-GAAP Financial Measures” section on page 2 of this document Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe Investor Presentation February 2018 The following table reconciles XPO’s net income (loss) attributable to com
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation February 2018 Refer to the “Non-GAAP Financial Measures” section on page 2 of this document.
XPO Logistics — Investor Presentation (February 2018) on 6ix