Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (May 2019)
45 slides from Xpo's investor presentation, May 1, 2019
Slide 1: 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 Differentiated through cutting-edge technology in every line of business Strong, multimodal presence in the e-commerce an
Slide 2: 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 heav
Slide 3: 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 Approximately 100,000 Locations 1,540 Countries of Operation 32 Contract Logistics Facilities 194 million sq. feet (18 million sq. meters) Key Metrics Gross Revenue Profile 5
Slide 4: Network Composition Creates Value
Note: Revenue mix reflects FY 2018 total revenue. 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. intermo
Slide 5: Fast Pace of Innovation
$550 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 6: 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 Tony Brooks President, Less-Than-Truckload – North America Sysco, Peps
Slide 7: Highly Skilled Management Team (Cont'd)
Note: Partial list in alphabetical order. Highly Skilled Management Team (Cont’d) Tavio Headley Senior Director, Investor Relations Jefferies, American Trucking Associations Meghan Henson Chief Human Resources Officer Chubb, PepsiCo Erin Kurtz Senior Vice President, Communications Thomson Reuters, A
Slide 8: Less than 2% Share of $1 Trillion Addressable Opportunity
< 2% Current Share of $1 Trillion Addressable Opportunity Larger Salesforce Closed a Record $1.1 Billion of New Business in Q1 2019 Continued to grow strategic account management team in North America with a focus on expanding large customer relationships Created European strategic account managemen
Slide 9: 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 ma
Slide 10: Strong Positions in E-Commerce and Omnichannel Retail
Strong Positions in E-Commerce and Omnichannel Retail Combination of scale, expertise and proprietary technology drives high consumer satisfaction levels Largest e-fulfillment 3PL provider in Europe Largest last mile logistics provider for heavy goods in North America, a growing category of online a
Slide 11: Company-Specific Growth Drivers of Sustainable Growth
Company-Specific Growth Drivers of Sustainable Growth 13 Investor Presentation May 2019 2018 investments deliver benefits going forward Expanded contract logistics infrastructure with warehouse management software Grew LTL salesforce in North America and global strategic account manager teams Launch
Slide 12: Company-Specific Drivers of Sustainable Growth (Cont.)
Company-Specific Drivers of Sustainable Growth (Cont.) 14 Investor Presentation May 2019 2019 technology initiatives enhance productivity and customer engagement Rapid adoption of XPO Connect™ digital freight marketplace by 18,000 US carriers to date Successful deployment of XPO Connect™ customer po
Slide 13: Company-Specific Drivers of Sustainable Growth (Cont.)
Company-Specific Drivers of Sustainable Growth (Cont.) 2019 technology initiatives enhance productivity and customer engagement > Rapid adoption of XPO Connect™ digital freight marketplace by 18,000 US carriers to date Successful deployment of XPO Connect™ customer portal in Europe New XPO Connect™
Slide 14: Contract Logistics Competitive Position as Technology Leader
Contract Logistics Competitive Position as Technology Leader 16 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: ret
Slide 15: Truck Brokerage: Broad Opportunity to Cross-Sell Massive Capacity
Truck Brokerage Broad Opportunity to Cross-Sell Massive Capacity 17 Non-asset business that matches shippers’ freight with an established network of over 38,000 pre-qualified trucking carriers XPO Connect™ digital freight network and Drive XPO™ app improve productivity and margin by connecting custo
Slide 16: Last Mile Demand Propelled by E-Commerce and Omnichannel
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation May 2019 18 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 retailer
Slide 17: North American Less-Than-Truckload
North American Less-Than-Truckload Top three LTL Carrier in North America Investor Presentation May 2019 19 Asset-based business utilizing employee drivers, fleet of tractors and trailers for line-haul, pick-up and delivery of pallets, and network of terminals Network covers approximately 99% of all
Slide 18: Intermodal: Long-term Sales Potential for Truck-to-Rail Conversion
Intermodal Long-term Sales Potential for Truck-to-Rail Conversion Investor Presentation May 2019 20 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 Leading U.
Slide 19: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation May 2019 21 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 accounted for abo
Slide 20: Global Forwarding
Global Forwarding Integrated Global Network Investor Presentation May 2019 22 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 grou
Slide 21: Global Forwarding
Global Forwarding Integrated Global Network 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 ground, air and ocean carrier rela
Slide 22: $2.5 Billion Share Repurchase Program
$2.5 Billion Share Repurchase Program From December 14, 2018, through April 30, 2019, the company repurchased: 35.2 million shares of XPO common stock At a $53.42 average price per share For a total cost of approximately $1.9 billion As of April 30, 2019, XPO had approximately 92 million shares of i
Slide 23: 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. 25 Investor Presentation May 2019 Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 24%
Slide 24: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix 26 Business model enhances customer service and financial returns % Investor Presentation May 2019 Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; LTL includes Old Dominion Freight Line, YRC Worldwide, ArcBest and Saia; P
Slide 25: Strong Free Cash Flow Generation
Strong Free Cash Flow Generation 2019F free cash flow reflects forecasted 6% to 10% adjusted EBITDA growth, and share repurchase interest expense 27 Investor Presentation May 2019 Note: 2019F free cash flow reflects: 1) the company’s adjusted EBITDA target of $1.650 billion to $1.725 billion; 2) the
Slide 26: First Quarter 2019 Results
First Quarter 2019 Results 28 Investor Presentation May 2019 Q1 2019, compared with Q1 2018: $4.12 billion of revenue(1), compared with $4.19 billion 2.3% organic revenue growth(2) $43 million of net income(1), compared with $67 million(3) $0.37 diluted earnings per share(1), compared with $0.50 $59
Slide 27: 2019 Financial Targets
The company has reaffirmed its full-year 2019 targets: Revenue growth of 3% to 5%, which corresponds to organic revenue growth(1) of 5.5% to 7.5% 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 Free cash flow(2) in the range of
Slide 28: Resilient in Creating Meaningful Shareholder Value
Resilient in Creating Meaningful Shareholder Value Leading positions in fast-growing areas of transportation and logistics Leading-edge technology for operations, customers and carriers Strong position in rapidly expanding e-commerce and omnichannel sectors Differentiated solutions that help custome
Slide 29: Resilient in Creating Meaningful Shareholder Value
Resilient in Creating Meaningful Shareholder Value > > > > > > > > Leading positions in fast-growing areas of transportation and logistics Leading-edge technology for operations, customers and carriers Strong position in rapidly expanding e-commerce and omnichannel sectors Differentiated solutions t
Slide 30: 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 one of Spain’s Best Companies to Work For by Forbes, 2019 Named to the Fortune Future 50 list of US companies best positioned for breakout growth by Fortune, 2018 Rank
Slide 31: Highlights of XPO's Inaugural Sustainability Report
Highlights of XPO’s Inaugural Sustainability Report In 2018: US warehouse employees received an average annual wage increase of 8%, with over 30% receiving an increase of 10% or more XPO partnered with a leading healthcare network for women and families to offer supplemental health services from ove
Slide 32: XPO's Pregnancy Care and Family Bonding Benefits
The 2018 Sustainability Report is at sustainability.xpo.com XPO’s Pregnancy Care and Family Bonding benefits are progressive in any industry: Any XPO employee, male or female, receives up to six weeks of 100% paid postnatal leave as the infant’s primary caregiver Women receive up to 20 days of 100%
Slide 33: Strongly Committed to Sustainability: Transportation
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)
Our CarbonNET proprietary, cloud-based calculator helps our operations document emission sources, activity data and CO2 calculations 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
Slide 35: Strongly Committed to Sustainability (Cont'd)
Strongly Committed to Sustainability (Cont’d) 37 Energy efficiency evaluations are performed prior to selecting warehouses to lease, and energy efficient equipment is purchased when feasible 79% of material handling devices used in our logistics sites operate on battery power instead of fuel Million
Slide 36: Business Glossary
Business Glossary 38 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-variabl
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: Business Glossary (Cont'd)
Business Glossary (Cont’d) XPO Connect™: XPO’s fully automated, self-learning digital freight marketplace connects shippers and carriers directly, as well as through company operations. XPO Connect™ gives customers comprehensive visibility across multiple transportation modes in real time, including
Slide 39: Financial Reconciliations
Financial Reconciliations The following table reconciles XPO’s net income attributable to common shareholders for the periods ended March 31, 2019 and 2018 to EBITDA and adjusted EBITDA for the same periods. 41 Investor Presentation May 2019 Note: The sum of quarterly net income attributable to comm
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) 42 Investor Presentation May 2019 The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended March 31, 2019 and 2018 to adjusted net income attributable to common shareholders for the same periods. Note: Refer to the “Non-G
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) 43 Investor Presentation May 2019 Note: 2016 and 2017 data have been recast to reflect the impact of Accounting Standards Update 2016-18. Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. The following table reconciles XPO’s cash
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) 44 Investor Presentation May 2019 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the three months ended March 31, 2019 and 2018 to adjusted operating income and adjusted operating ratio for the same
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Note: Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe. Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document. 45 Investor Presentation May 2019 The following table reconciles XPO’s net income (loss) attribu
Slide 44: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) 46 Investor Presentation May 2019 The following table reconciles XPO’s GAAP revenue to organic revenue and organic revenue growth for the three months ended March 31, 2019 and 2018 for the consolidated company and the logistics segment. Note: Refer to the “Non-GAAP
Slide 45: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont'd) The following table reconciles XPO's GAAP revenue to organic revenue and organic revenue growth for the three months ended ‘March 31, 2019 and 2018 for the consolidated company and the logistics segment. {in itions) —_toaisties __Consodated ‘Three Months Ended Marc