Xpo, Inc. · NYSE:XPO
Xpo — Q1 2023 Earnings Presentation
27 slides from Xpo's earnings presentation, May 4, 2023
Slide 1: Investor Presentation
Investor Presentation May 2023
Slide 2: 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
Slide 3: 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 4: Solid first quarter 2023 results
Solid first quarter 2023 results Q1 Highlights $1.9 billion of revenue, up 1% YoY $210 million of adjusted EBITDA, up 14% YoY $0.56 adjusted diluted earnings per share, up 22% YoY $224 million of capital expenditures LTL damage claims ratio of 0.7% improved from 1.1% in Q1’22 LTL shipments per day,
Slide 5: First quarter 2023 summary of results
First quarter 2023 summary of results REVENUE $1.91 billion BY SEGMENT NET INCOME 1 $17 million NORTH AMERICAN LTL DILUTED EARNINGS PER SHARE 2 $0.15 REVENUE $1.12 billion ADJUSTED NET INCOME 1 $65 million ADJUSTED EBITDA $182 million ADJUSTED DILUTED EPS2 $0.56 ADJUSTED OPERATING RATIO 89.6% ADJUST
Slide 6: Why invest in XPO?
Why invest in XPO? 1 2 3 4 5 An LTL leader in a Critical nationwide LTL Data-driven levers of High-ROIC business with Results-oriented bedrock industry network coverage, profit growth compelling outlook and leaders with long with disciplined with in-house sources embedded in well-defined growth hist
Slide 7: Strongly positioned in North American LTL, an industry with rock-solid credentials
Strongly positioned in North American LTL, an industry with rock-solid credentials 7
Slide 8: XPO is one of the largest carriers in a compelling industry for investment
XPO is one of the largest carriers in a compelling industry for investment 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 e
Slide 9: XPO moves LTL freight over 750 million miles a year for customers
XPO moves LTL freight over 750 million miles a year for customers 8% $4.6 billion 18 billion 620 million 2022 industry share annual revenue pounds of freight linehaul miles run per year per year 27,000 >12 million 294 22,000 accounts served shipments per year terminals employees 13,000 29,000 34% 9%
Slide 10: National scale with hub-and-spoke coverage of 99% of US zip codes
National scale with hub-and-spoke coverage of 99% of US zip codes 294 terminals, with strategic investments focused on high- demand markets Freight Assembly Centers Terminals Note: XPO also provides service to Alaska, Hawaii and the Caribbean (not shown) 10
Slide 11: Strategic mix of blue-chip customers and a strong base of local accounts
Strategic mix of blue-chip customers and a strong base of local accounts 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 11
Slide 12: XPO is well-positioned to gain share in a stable competitive landscape
XPO is well-positioned to gain share in a stable competitive landscape Top 10 LTL carriers by 2022 revenue $ in billions $10.2 $6.2 $5.2 $4.6 $4.4 $4.0 $3.0 $2.9 $2.8 $1.7 ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ = top 10 LTL carriers by revenue a decade ago 9 largest carriers were also in the top 10 a decade ago Sources:
Slide 13: LTL growth plan and levers
TL growth plan and levers A’ de
Slide 14: Executing all parts of LTL 2.0 growth plan with strong momentum
Executing all parts of LTL 2.0 growth plan with strong momentum • Building a best-in-class service organization Provide best-in-class service • Incentivizing employees to drive service quality • Improved Q1 damage claims ratio to 0.7%, from 1.2% at launch of LTL 2.0 Invest in our network for the • E
Slide 15: Drivers of 11% to 13% adjusted EBITDA CAGR in North American LTL, 2021-2027
4 Drivers of 11% to 13% adjusted EBITDA CAGR in North American LTL, 2021- 2027 Expected components and contributions Combination of volume gains + pricing over inflation 6% to 7% Operating costs optimized through technology 3% to 4% Linehaul insourced from third parties 2% 11% to 13% 15
Slide 16: Damage Claims Ratio (as a % of LTL Revenue)
Damage Claims Ratio (as a % of LTL Revenue) LTL 2.0 service initiatives driving significant improvement in damage claims ratio Note: Based on claims payment data 16
Slide 17: XPO is winning business as a top carrier for service quality
XPO is winning business as a top carrier for service quality, based on customer experience 17% better employee 47% of drivers have 10+ 100+ graduates in 54% trainee diversity in retention years tenure field management field management Highest employee Experienced drivers are Strong leadership DE&I i
Slide 18: Disciplined investing in high-return projects
Disciplined investing in high-return projects 9.1% 10.0% 700 600 8.0% Gross capex as a % of revenue1 500 Gross capex ($ 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 19: XPO's in-house capabilities are distinct competitive advantages
XPO’s in-house capabilities are 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
Slide 20: Appendix
Appendix 20
Slide 21: European Transportation segment
European Transportation segment XPO’s unique pan-European transportation platform has 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:
Slide 22: Financial reconciliations
Financial reconciliations The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the periods ended March 31, 2023 and 2022 to adjusted EBITDA for the same periods. Reconciliation of net income from continuing operations to adjusted EBITDA $
Slide 23: 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 March 31, 2023 and 2022 to adjusted net income from continuing operations attributable to common shareholders for the same periods. R
Slide 24: 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 March 31, 2023 and 2022 to free cash flow for the same periods. Reconciliation of cash flows from operating activities of continuing opera
Slide 25: 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 26: Financial reconciliations (cont.)
$ in millions Financial reconciliations (cont.) (unaudited) Year Ended The following table calculates XPO's return on invested capital (ROIC) attributable Select income to its North statement items American less-than-truckload segment December 31, 2022 Adjusted EBITDA $ 1,012 for the periods present
Slide 27: Full year 2023 planning assumptions
Full year 2023 planning assumptions The company provided the following expectations for the full year 2023: • 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 shar