Xpo, Inc. · NYSE:XPO
Xpo — Q4 2023 Earnings Presentation
24 slides from Xpo's earnings presentation, Feb 7, 2024
Slide 1: Investor Overview Q4 2023
Investor Overview Q4 2023 February 2024
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 2024 expectations of gross cape
Slide 3: Fourth quarter 2023 highlights
Fourth quarter 2023 highlights Delivering strong results $1.94 billion of revenue, up 6% YoY $264 million of adjusted EBITDA, up 28% YoY, excluding $55 million of real estate gains in 2022 $160 million of LTL adjusted operating income, up 51% YoY LTL adjusted operating ratio of 86.5%, improving by 3
Slide 4: Fourth quarter 2023 performance
Fourth quarter 2023 performance REVENUE $1.94 billion BY SEGMENT OPERATING INCOME $119 million NORTH AMERICAN LTL NET INCOME 1 $58 million REVENUE $1.19 billion DILUTED EARNINGS PER SHARE 2 $0.49 ADJUSTED EBITDA $233 million $93 million ADJUSTED OPERATING RATIO 86.5% ADJUSTED NET INCOME 1 ADJUSTED D
Slide 5: Four pillars of LTL 2.0 plan will drive significant margin and earnings expansion
Four pillars of LTL 2.0 plan will drive significant margin and earnings expansion 1 Provide best-in- 2 Invest in network 3 Accelerate yield 4 Drive cost class service for the long-term growth efficiencies Targets for LTL Growth, Profitability and Efficiency, 2021-2027 Revenue CAGR of 6% to 8% Adjust
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 $4.7 billion 9% 3rd largest 12.4% 2023 revenue 2022 industry share1 LTL carrier by 2022 2023 revenue allocated revenue1 to gross capex 31,000 650 million 13 million 18 billion customers served linehaul miles run shipments per year pounds of freight per ye
Slide 9: Expansive network covering 99% of US zip codes
Expansive network covering 99% of US zip codes Service Centers Acquired Service Centers1 • 293 service centers • 28 additional service centers acquired • Cross-border and offshore capabilities • Strategic investments in high-demand markets 1 Indicates planned expansion of footprint with 28 service c
Slide 10: Strategic mix of blue-chip and local customers
Strategic mix of blue-chip and local customers 31,000 customers as of December 31, 2023 2.5% revenue from largest customer, low concentration risk 15-year average tenure of top 10 customers Note: Company data for North American LTL segment as of December 31, 2023, unless otherwise noted; selected cu
Slide 11: LTL growth plan and levers
LTL growth plan and levers 11
Slide 12: Executing on four pillars of LTL 2.0 plan
Executing on four pillars of LTL 2.0 plan • Building a customer-centric service organization Provide best-in-class • Incentivizing employees to drive service quality service • Investing in new tools for field organization and enhancing training programs • Targeting capex of 8-12% of revenue on avera
Slide 13: Delivering meaningful service improvements
Delivering meaningful service improvements Damage claims declining as a % of LTL revenue1 1.2% 1.2% LTL 2.0 1.1% 1.1% 1.1% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.7% 0.7% 0.6% 0.4% 0.3% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4
Slide 14: Investing in high-return growth levers
Investing in high-return growth levers LTL 2.0 $800 14.0% 12.4% 12.0% $581 $600 Gross capex as a % of revenue 9.1% 10.0% Gross capex ($ millions) $424 8.0% $400 5.2% 6.0% 4.8% 3.8% 4.1% $197 $197 4.0% $200 $145 $145 2.0% $- 0.0% 1 2018 2019 2020 2021 2022 2023 Tractor age in years As of December 31
Slide 15: Earning price by delivering value through service excellence
Earning price by delivering value through service excellence Gross revenue per hundredweight (excluding fuel surcharges) LTL 2.0 $23.37 $22.81 $21.63 $21.34 $21.43 $21.19 $21.06 $20.90 $20.76 $20.02 $19.29 $19.11 $18.90 $18.82 $18.34 $18.45 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4
Slide 16: Insourcing linehaul is a key cost and service opportunity
Insourcing linehaul is a key cost and service opportunity Linehaul miles outsourced to third-party carriers, as a % of total linehaul miles 25.5% 25.7% LTL 2.0 25.3% 24.5% 24.7% 24.4% 23.8% 23.9% 23.6% 23.5% 22.7% 22.5% 21.8% 21.5% 20.7% 19.6% Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021
Slide 17: 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% 17
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: 2024 planning assumptions
2024 planning assumptions For the full year 2024, the company expects: • Gross capex of $700 million to $800 million • Interest expense of $240 million to $260 million • Pension income of approximately $25 million • Adjusted effective tax rate of 23% to 25% • Diluted share count of 121 million Refer
Slide 21: Financial reconciliations
Financial reconciliations The following table reconciles XPO’s net income (loss) from continuing operations for the periods ended December 31, 2023 and 2022 to adjusted EBITDA and adjusted EBITDA excluding gains on real estate transactions for the same periods. Reconciliation of net income (loss) fr
Slide 22: Financial reconciliations (cont.)
Financial reconciliations (cont.) The following table reconciles XPO’s net income (loss) from continuing operations for the periods ended December 31, 2023 and 2022, to adjusted net income from continuing operations for the same periods. Reconciliation of adjusted net income and adjusted diluted ear
Slide 23: Financial reconciliations (cont.)
Financial reconciliations (cont.) The following table reconciles XPO’s operating income attributable to its North American less-than-truckload (LTL) segment for the periods ended December 31, 2023 and 2022, to adjusted operating income, adjusted operating ratio and adjusted EBITDA. Reconciliation of
Slide 24: 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