Xpo, Inc. · NYSE:XPO
Xpo — Q4 2022 Earnings Presentation
29 slides from Xpo's earnings presentation, Feb 8, 2023
Slide 1: Investor Presentation February 2023
Investor Presentation February 2023 Exhibit 99.1
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 attache
Slide 3: Forward-looking statements
3 Forward - looking statements This document includes forward - looking statements within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended, including statements relating to our full year 2023 expectations of
Slide 4: Strong fourth quarter and full year 2022 performance
Strong fourth quarter and full year 2022 performance 4 Q4 Highlights _______________________________________________________________________________________ $1.8 billion of revenue, up 3%, and $262 million of adjusted EBITDA, up 38% YoY $0.98 adjusted diluted earnings per share, up 53% YoY $107 mill
Slide 5: Fourth quarter 2022 summary of results
5 Fourth quarter 2022 summary of results REVENUE $1.83 billion NET LOSS 1 $36 million DILUTED LOSS PER SHARE 2 $0.31 ADJUSTED NET INCOME 1 $ 113 million ADJUSTED DILUTED EPS 2 $ 0.98 ADJUSTED EBITDA $ 262 million CASH FLOW FROM OPERATING ACTIVITIES 3 $196 million FREE CASH FLOW $ 107 million NORTH A
Slide 6: Full year 2022 summary of results
6 Full year 2022 summary of results REVENUE $7.72 billion NET INCOME 1 $184 million DILUTED EPS 2 $1.59 ADJUSTED NET INCOME 1 $ 408 million ADJUSTED DILUTED EPS 2 $ 3.53 ADJUSTED EBITDA $ 997 million CASH FLOW FROM OPERATING ACTIVITIES 3 $824 million FREE CASH FLOW $ 391 million NET LEVERAGE 2.1x TO
Slide 7: Why invest in XPO?
1 An LTL leader in a bedrock industry with disciplined pricing and deep competitive moat 2 3 4 5 Why invest in XPO? Critical nationwide LTL network coverage, with in - house sources of capacity Data - driven levers of profit growth embedded in proprietary technology High - ROIC business with compell
Slide 8: Strongly positioned in North American LTL, an industry with rock-solid credentials
Strongly positioned in North American LTL, an industry with rock - solid credentials 8 8
Slide 9: 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 • $51 billion bedrock industry for the US economy; with 76% of share held by top 10 LTL players • Diverse demand across verticals, with secular growth drivers • Attractive pricing environment, with industry pricing positive Y
Slide 10: XPO moves LTL freight over 6 billion miles... key network statistics
XPO moves LTL freight over 750 million miles a year for customers Note: Company data for North American LTL segment as of December 31, 2022, unless otherwise noted Refer to "Non - GAAP Financial Measures" section on page 2 and Appendix for related information 18 billion pounds of freight per year 6
Slide 11: 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 Note: XPO also provides service to Alaska, Hawaii and the Caribbean (not shown) 11 294 terminals, with strategic investments focused on high - demand markets Freight Assembly Centers Terminals
Slide 12: Strategic mix of blue-chip customers and strong base of local accounts
Strategic mix of blue - chip customers and strong base of local accounts 12 2% revenue from largest customer, low concentration risk 16 - y ear average t enure of t op 10 customers 27,000 customers as of December 31, 2022 Selected customers of XPO
Slide 13: XPO is well-positioned to gain share in a stable competitive landscape
XPO is well - positioned to gain share in a stable competitive landscape $8.6 $5.2 $5.1 $4.1 $3.8 $3.2 $2.5 $2.4 $2.3 $1.5 Sources: Third - party research; company filings = top 10 LTL carriers by revenue a decade ago x x x x x x x x x 13 9 largest carriers were also in top 10 a decade ago Top 10 LT
Slide 14: LTL growth plan and levers
ry = LIL growth plan and l@vers \ Dx»
Slide 15: Executing all parts of LTL 2.0 growth plan with strong momentum
Invest in expanding network capacity ahead of demand Provide best - in - class service at scale to gain market share Optimize pricing and operational efficiency through proprietary technology • Expanding linehaul fleet with in - house trailer manufacturing • Investing in network capacity of 900 net
Slide 16: Drivers of 11% to 13% adjusted EBITDA CAGR in North American LTL
16 Drivers of 11% to 13% adjusted EBITDA CAGR in North American LTL, 2021 - 2027 Combination of volume gains + pricing over inflation 6% to 7% 3% to 4% 2% Operating costs optimized through technology Linehaul insourced from third parties Expected components and contributions 11% to 13% 4
Slide 17: Disciplined investing in high-return projects
$145 $197 $145 $197 $424 3.8% 5.2% 4.1% 4.8% 9.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 0 100 200 300 400 500 600 700 2018 2019 2020 2021 2022 Gross capex as a % of revenue1 Gross capex ($ millions) Disciplined investing in high - return projects 17 Tractor age in years As of December 31 5.3 5.1 5.4 5.9 5.
Slide 18: 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 Janu
Slide 19: 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 H ighest employee satisfaction score in a decade at YE 2022 YoY Q4 improvement in incidence of shipment damage 17% better employee retention 19 Note: Data points are for full year 2022 unless otherwise specifi
Slide 20: Appendix
Appendix 20
Slide 21: European Transportation segment
European Transportation segment • 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 top - tier dedicated truckload provider, and the largest single - owner LTL network • Se
Slide 22: Reconciliation of net income to adjusted EBITDA
22 The following table reconciles XPO’s net income (loss) from continuing operations attributable to common shareholders for the periods ended December 31, 2022 and 2021 to adjusted EBITDA for the same periods. 1 The goodwill impairment relates to the European Transportation reportable segment Refer
Slide 23: Reconciliation of net income to adjusted net income
23 The following table reconciles XPO’s net income (loss) from continuing operations attributable to common shareholders for the periods ended December 31, 2022 and 2021 to adjusted net income from continuing operations attributable to common shareholder s for the same periods. 1 The goodwill impair
Slide 24: Reconciliation of operating cash flow to free cash flow
24 The following table reconciles XPO’s net cash provided by operating activities from continuing operations for the periods end ed December 31, 2022 and 2021 to free cash flow for the same periods. Financial reconciliations (cont.) Reconciliation of cash flows from operating activities of continuin
Slide 25: Reconciliation of net leverage and net debt
25 We believe that net leverage and net debt are important measures of our overall liquidity position and are calculated by remo vin g cash and cash equivalents from our reported total debt and reporting net debt as a ratio of our adjusted EBITDA. The followin g tables calculate XPO's net leverage a
Slide 26: North American LTL adjusted operating ratio and adjusted EBITDA
26 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. Financial reconciliations (cont.) Reconciliation
Slide 27: LTL adjusted operating ratio reflecting incremental corporate costs
27 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. Financial reconciliations (cont.) Reconciliation
Slide 28: North American LTL return on invested capital
28 The following table calculates XPO's return on invested capital (ROIC) attributable to its North American less - than - truckload se gment for the periods presented. We believe that ROIC is an important metric, as it measures how effectively we deploy our capital base . R OIC is calculated as net
Slide 29: Full year 2023 planning assumptions
29 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 share count of 117 million Full year