Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (August 2017)
44 slides from Xpo's investor presentation, Aug 2, 2017
Slide 1: XPO Investor Presentation August 2017
XPO Investor Presentation August 2017 Exhibit 99.1
Slide 2: Disclaimers: Non-GAAP Financial Measures
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 and s
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: 63% of Revenue: Transportation and Logistics Overview
63% of Revenue Truckload, Brokerage and Expedite Less-Than-Truckload Last Mile Intermodal and Drayage Global Forwarding LOGISTICS High-Value-Add Services TRANSPORTATION Freight Is Moved Using Optimal Mode 37% of Revenue Omni-Channel and E-Commerce Fulfillment Reverse Logistics Technology-Enabled Man
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 90,000 Locations 1,435 Countries of Operation 31 Contract Logistics Facilities 162 million sq. feet (15.1 million sq. meters) Key Metrics Gross Revenue Profile | Investor Pres
Slide 6: XPO's Global Transportation and Logistics Platform
XPO’s Global Transportation and Logistics Platform | Investor Presentation August 2017 #2 largest contract logistics provider worldwide #2 freight brokerage firm worldwide #1 last mile logistics provider for heavy goods in North America #2 largest less-than-truckload provider in North America, cover
Slide 7: Comprehensive Network for Customers
Comprehensive Network for Customers Meticulously built to add value to customers and generate high returns for shareholders: Talent: Top operators with highly engaged employees Technology: Best-in-class, proprietary applications integrated on cloud-based platform Ground transportation assets: 16,000
Slide 8: XPO Leads the Industry in Rapid Technology Development
| Investor Presentation August 2017 XPO Leads the Industry in Rapid Technology Development Leading-edge software driven by $425 million of annual IT spend in 2016 Global IT team of more than 1,600 professionals, including over 100 data scientists Cloud-based platform supports agile product developme
Slide 9: Technology Across Lines of Business
Last Mile Patented technology enables real-time delivery performance management Online order creation and management Facilitates complex in-home installations European Transport U.S. IT best practices application lowers costs and offers enhanced data analytics IT-enabled improvements to pricing, wor
Slide 10: Highly Skilled Management Team
Highly Skilled Management Team | Investor Presentation August 2017 Partial list, in alphabetical order 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-Truckloa
Slide 11: Highly Skilled Management Team (Cont'd)
Highly Skilled Management Team (Cont’d) | Investor Presentation August 2017 Charles Hitt President–Last Mile 3PD, Affinity Logistics, GeoLogistics Erin Kurtz Senior Vice President, Communications Thomson Reuters, AOL Scott Malat Chief Strategy Officer Goldman Sachs, UBS, JPMorgan Chase John Mitchell
Slide 12: Current Share of $1 Trillion Addressable Opportunity
< 1.5% Current Share of $1 Trillion Addressable Opportunity | Investor Presentation August 2017 Investment in Sales Growth More than tripled strategic account managers, and hired over 160 local account executives Rolled out common CRM platform to increase visibility across organization Implemented g
Slide 13: Leading Positions in Fast-Growing Industry Sectors
Leading Positions in Fast-Growing Industry Sectors | Investor Presentation August 2017 Revenue mix for FY 2016, excludes North American truckload business divested in 2016 Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc., Bureau of Economi
Slide 14: Global Player in High-Growth E-Commerce Sector
| Investor Presentation August 2017 Global Player in High-Growth E-Commerce Sector Largest e-fulfillment provider in Europe and a leading provider in North America Omni-channel and reverse logistics / returns management leader in North America Last mile business propelled by e-commerce tailwinds Cus
Slide 15: Clear Path to Targeted Basis Point Margin Improvement
Clear Path to Targeted 200 Basis Point Margin Improvement | Investor Presentation August 2017 Comprehensive plan in progress to take out costs Includes approximately $190 million of savings already realized from the original LTL profit improvement plan Focused on $13 billion of spend across purchase
Slide 16: Opportunity to Enhance Shareholder Value through M&A
| Investor Presentation August 2017 Opportunity to Enhance Shareholder Value through M&A Disciplined process to find acquisitions that are strategically and financially compelling Primary focus on North America and Europe in existing or complementary lines of business Sensible valuation and terms Op
Slide 17: Track Record of Highly Accretive M&A
| Investor Presentation August 2017 Track Record of Highly Accretive M&A Successful at acquiring, integrating and improving operations June 2015 acquisition of Norbert Dentressangle Delivering record revenue and profits in both segments Accelerating top-line growth through cross selling, investments
Slide 18: XPO Logistics Key Lines of Business
XPOLogistics Key Lines of Business
Slide 19: Contract Logistics: Long-Term Recurring Revenue
Contract Logistics Long-Term Recurring Revenue | Investor Presentation August 2017 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 outsourc
Slide 20: Truck Brokerage: Broad Cross-Selling Opportunity
Truck Brokerage Broad Cross-Selling Opportunity | Investor Presentation August 2017 Non-asset business that places shippers’ freight with qualified carriers through brokers that match capacity with shipper demand High free cash flow conversion and minimal capex Fragmented market with opportunity to
Slide 21: Last Mile: Demand Propelled by E-Commerce
Last Mile Demand Propelled by E-Commerce | Investor Presentation August 2017 Asset-light business that arranges the final stage of heavy goods delivery from distribution centers or retail stores to end consumers’ home or business Customers include nearly all of the top 30 big-box retailers and e-tai
Slide 22: North American Less-Than-Truckload: Major Success Story
North American Less-Than-Truckload Major Success Story | Investor Presentation August 2017 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, recognized as the most r
Slide 23: Intermodal and Drayage
Intermodal and Drayage Long-term Sales Potential for Truck-to-Rail Conversion | Investor Presentation August 2017 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 24: European Transport
European Transport Cross-fertilizing Best Practices with North America | Investor Presentation August 2017 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 25: Global Forwarding: Integrated Global Network
Global Forwarding Integrated Global Network | Investor Presentation August 2017 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 157,000 TEUs and 58,00
Slide 26: XPO Logistics Financial Performance
XPOLogistics Financial Performance
Slide 27: Industry-Leading Growth in Revenue and EBITDA
| Investor Presentation August 2017 Industry-Leading Growth in Revenue and EBITDA Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 145% CAGR: 279% Note: Excludes impact of North American truckload unit: 2016 revenue of $431.9 million and adjusted EBITDA of $80.1 million; and 2015 revenue of
Slide 28: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix | Investor Presentation August 2017 Enhances customer service and financial returns % Low Net Capex as a % of Revenue vs. Competitor Groups Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; Parcel includes FedEx and UPS; LT
Slide 29: Accelerating Free Cash Flow Generation
$625 million of cash flow from operations and $211 million of free cash flow in 2016 Expect to grow free cash flow of existing business by over 2.5x in the medium term through: EBITDA growth Lower interest expense Lower transaction, integration and rebranding costs Annual net capex spend likely in $
Slide 30: Second Quarter 2017 Highlights
Second Quarter 2017 Highlights | Investor Presentation August 2017 $3.76 billion of revenue $47.6 million of net income; $0.38 per diluted share $371 million of adjusted EBITDA $75 million of adjusted net income $216 million of cash flow from operations Free cash flow of $98.1 million Accelerated or
Slide 31: Raised EBITDA Guidance
Raised EBITDA Guidance | Investor Presentation August 2017 Financial targets updated August 2, 2017 2017: adjusted EBITDA of at least $1.365 billion 2018: adjusted EBITDA of at least $1.6 billion 2017–2018: cumulative free cash flow target of approximately $900 million Includes at least $350 million
Slide 32: Results Matter: Proven Credentials for Value Creation
Results Matter: Proven Credentials for Value Creation | Investor Presentation August 2017 Leading global positions in the fastest-growing areas of transportation and logistics Differentiated, end-to-end range of supply chain services Accelerating top-line growth Approximately 26% of revenue comes fr
Slide 33: XPO Logistics Supplemental Materials
XPOLogistics Supplemental Materials
Slide 34: A Strong and Global Commitment to Sustainability
A Strong and Global Commitment to Sustainability | Investor Presentation August 2017 Owns one of the most modern and environmental-friendly fleets in Europe 97% compliant with Euro V, EEV and Euro VI standards, with average truck age of 2.5 years Owns the largest natural gas truck fleet in Europe In
Slide 35: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) | Investor Presentation August 2017 Awarded the label “Objectif CO2” for outstanding environmental performance of transport operations in Europe by the French Ministry of the Environment and the French Environment and Energy Agency Large capex investment in
Slide 36: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) | Investor Presentation August 2017 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
Slide 37: Business Glossary
Business Glossary | Investor Presentation August 2017 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 s
Slide 38: 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 39: Financial Reconciliations
Financial Reconciliations The following table reconciles XPO’s net income (loss) attributable to common shareholders for the periods ended June 30, 2017 and 2016 to adjusted EBITDA for the same periods. Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. Adjusted EBITDA wa
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended June 30, 2017 and 2016 to adjusted net income attributable to common shareholders for the same periods. | Investor Presentation August 2017 Refer to the “
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. Free cash flow was prepared assuming 100% ownership of XPO Logistics Europe. The following table reconciles XPO’s cash flows provided by operating activities for the periods ended Decemb
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s cash flows provided by operating activities for the periods ended June 30, 2017 and 2016 to free cash flow for the same periods. | Investor Presentation August 2017 Refer to the “Non-GAAP Financial Measures” section on page 2 of
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the periods ended June 30, 2017 and 2016 to adjusted operating ratio for the same periods. | Investor Presentation August 2017 Refer to the “Non-GAAP Fi
Slide 44: Financial Reconciliations (Cont'd): Organic Revenue
Financial Reconciliations (Cont’d) | Investor Presentation August 2017 XPO Logistics, Inc. Organic Revenue (Unaudited) (In millions) Three Months Ended June 30, 2017 2016 Total Revenue $ 3,760.3 $ 3,683.3 North American Truckload - (133.4) Fuel (334.6) (296.5) Foreign Exchange Rates 73.1 - Total Org