Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (May 2018)
43 slides from Xpo's investor presentation, May 2, 2018
Slide 1: XPO Investor Presentation May 2018
XPO Investor Presentation May 2018 Exhibit 99.2
Slide 2: Disclaimers
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-mont
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 2% market share Strong presence in high-growth e-commerc
Slide 4: Top 10 Global Provider of Supply Chain Services
63% of Revenue Truckload, Brokerage and Expedite Less-Than-Truckload Last Mile Intermodal and Drayage Global Forwarding LOGISTICS Warehousing with High-Value-Add Services TRANSPORTATION Moving Freight Using Optimal Modes 37% of Revenue E-Commerce and Omnichannel Fulfillment Customized Warehousing an
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 95,000 Locations 1,466 Countries of Operation 32 Contract Logistics Facilities 173 million sq. feet (16.1 million sq. meters) Key Metrics Gross Revenue Profile Investor Presen
Slide 6: Optimal Network Mix Creates Value
Optimal Network Mix Creates Value Ground transportation assets: 16,000 owned tractors; 39,000 trailers; 9,500 53-ft. intermodal boxes; and 5,000 chassis Non-asset transportation network: 11,000 trucks contracted via independent owner-operators; and more than 1 million brokered trucks Facility assets
Slide 7: Innovation, a Key Competitive Moat
XPO is the industry’s foremost champion of innovation, a key competitive moat $450+ million annual investment in technology Global team of approximately 1,700 professionals deploy proprietary software very rapidly Over 100 data scientists focus on predictive analytics and machine learning Voice inte
Slide 8: Highly Skilled Management Team
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 Sysco, Dean Foods, Frito-Lay, Roadway Richard Cawston Managing Director
Slide 9: Highly Skilled Management Team (Cont'd)
Highly Skilled Management Team (Cont’d) Meghan Henson Chief Human Resources Officer Chubb Group, PepsiCo 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,
Slide 10: Current Share of $1 Trillion Addressable Opportunity
< 2% Current Share of $1 Trillion Addressable Opportunity Investment in Sales Growth More than tripled the number of strategic account managers Hired 190 local account executives since November, including 140 in the first quarter of 2018 In Europe, deepened bench strength of senior-level sales talen
Slide 11: Leading Positions in Fast-Growing Industry Sectors
Leading Positions in Fast-Growing Industry Sectors Revenue mix for FY 2017 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 As
Slide 12: Expanding Share of High-Growth E-Commerce Market
Expanding Share of High-Growth E-Commerce Market Largest e-fulfillment 3PL in Europe and a leading provider in North America Omnichannel and reverse logistics / returns management leader in North America Customers include many e-commerce and retail giants Experience with fast-growing categories such
Slide 13: Clear Path to $1.6 Billion of Adjusted EBITDA in 2018
Clear Path to $1.6 Billion of Adjusted EBITDA in 2018 Investor Presentation May 2018 On track for at least 17% adjusted EBITDA growth this year Continued investment in global sales force effectiveness Implementation of pricing initiatives by business unit Further efficiencies in logistics through th
Slide 14: Opportunity to Create Substantial Value through M&A
Opportunity to Create Substantial Value through M&A Exploring acquisitions that are strategically and financially compelling Primary focus on North America and Europe in existing or complementary lines of business Potential opportunities to improve the profitability of acquired businesses include: C
Slide 15: Strong Track Record of Optimizing Acquired Operations
October 2015 acquisition of Con-way Grew adjusted operating income in LTL by 90% from FY 2015 to FY 2017 Realized approximately $200 million of cost improvements Launched cross-selling with growth-based incentives and advanced training Instilled a culture of accountability by focusing employees on r
Slide 16: XPO Logistics Key Lines of Business
XPOLogistics Key Lines of Business
Slide 17: Contract Logistics
Contract Logistics Long-Term Recurring Revenue 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 outsourcing: retail, e-commerce, industrial,
Slide 18: Truck Brokerage
Truck Brokerage Broad Cross-Selling Opportunity Non-asset business that matches shippers’ freight with an established network of pre-qualified trucking carriers High free cash flow conversion and minimal capex Fragmented market with opportunity to expand Outsourcing trends drive industry growth Cont
Slide 19: Last Mile
Last Mile Demand Propelled by E-Commerce and Omnichannel Investor Presentation May 2018 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 retailer
Slide 20: North American Less-Than-Truckload
North American Less-Than-Truckload Major Success Story Investor Presentation May 2018 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, covering 99% of all U.S. zip
Slide 21: Intermodal and Drayage
Intermodal and Drayage Long-term Sales Potential for Truck-to-Rail Conversion Investor Presentation May 2018 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 9
Slide 22: European Transport
European Transport Cross-Fertilizing Best Practices with North America Investor Presentation May 2018 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 about 80
Slide 23: Global Forwarding
Global Forwarding Integrated Global Network Investor Presentation May 2018 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,
Slide 24: Financial Performance
Financial Performance
Slide 25: Industry-Leading Growth in Revenue and EBITDA
Industry-Leading Growth in Revenue and EBITDA Revenue Adjusted EBITDA $ in millions $ in millions CAGR: 87% CAGR: 157% Note: Excludes impact of divested North American truckload unit Investor Presentation May 2018
Slide 26: Flexible Asset / Non-Asset Business Mix
Flexible Asset / Non-Asset Business Mix Model enhances customer service and financial returns % Adjusted EBITDA Net Capex Adjusted EBITDA Minus Capex Investor Presentation May 2018 Note: Brokers include CH Robinson, Echo Global Logistics and Expeditors International; Parcel includes FedEx and UPS; L
Slide 27: Accelerating Free Cash Flow Generation
Accelerating Free Cash Flow Generation 2018 free cash flow expected to be driven by EBITDA growth, lower interest expense and lower integration and rebranding costs Cash Flow from Operations Free Cash Flow Investor Presentation May 2018 Note: 2018E is based on the company’s target for free cash flow
Slide 28: First Quarter 2018 Results
First Quarter 2018 Results $4.19 billion of revenue 11% organic revenue growth $66.9 million of net income; $0.50 per diluted share $80.9 million of adjusted net income; $0.61 per diluted share $330.2 million of adjusted EBITDA Cash flow from operations and free cash flow of $19.4 million usage and
Slide 29: Financial Guidance Reaffirmed
Financial Guidance Reaffirmed targets 2018 adjusted EBITDA of at least $1.6 billion 2017–2018 cumulative free cash flow of approximately $1 billion 2017 was the sixth straight year that XPO met or exceeded its full year financial targets Investor Presentation May 2018
Slide 30: Results Matter: Proven Credentials for Value Creation
Results Matter: Proven Credentials for Value Creation Leading global positions in the fastest-growing areas of transportation and logistics Differentiated, end-to-end range of supply chain services Robust top-line growth Accelerating, full year free cash flow generation Leading-edge technology Large
Slide 31: XPO Logistics Supplemental Materials
XPOLogistics Supplemental Materials
Slide 32: A Strong and Global Commitment to Sustainability
A Strong and Global Commitment to Sustainability Owns and operates one of the most modern fleets in Europe 98% compliant with Euro V, EEV and Euro VI standards, with an average truck age of 2.5 years Owns and operates a large fleet of natural gas trucks in Europe Introduced the first LNG-powered tra
Slide 33: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) Named a Top 75 Green Supply Chain Partner by Inbound Logistics Awarded the label “Objectif CO2” for outstanding environmental performance of transport operations by the French Ministry of the Environment and the French Environment and Energy Agency Committe
Slide 34: XPO Is a Leader in Sustainability (Cont'd)
XPO Is a Leader in Sustainability (Cont’d) 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 operations, manufactured by XPO Mea
Slide 35: Business Glossary
Business Glossary 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-variable,
Slide 36: 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 37: Financial Reconciliations
Financial Reconciliations The following table reconciles XPO’s net income attributable to common shareholders for the periods ended March 31, 2018 and 2017 to adjusted EBITDA for the same periods. Investor Presentation May 2018 Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of th
Slide 38: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation May 2018 The table reconciles XPO’s GAAP net income attributable to common shareholders for the periods ended March 31, 2018 and 2017 to adjusted net income attributable to common shareholders for the same periods. Note: Refer to the “Non-GAAP
Slide 39: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation May 2018 The following table reconciles XPO’s cash flows provided by operating activities for the three months ended March 31, 2018 and 2017, and the 12 months ended December 31, 2017, 2016, 2015 and 2014, to free cash flow for the same period
Slide 40: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation May 2018 The following table reconciles XPO’s revenue attributable to its North American less-than-truckload business for the periods ended March 31, 2018 and 2017 to adjusted operating ratio for the same periods. Note: Refer to the “Non-GAAP
Slide 41: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) The following table reconciles XPO’s operating income attributable to its North American less-than-truckload business for the years ended December 31, 2017, 2016 and 2015 to adjusted operating income for the same periods. Investor Presentation May 2018 Note: Refer
Slide 42: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document Note: Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe Investor Presentation May 2018 The following table reconciles XPO’s net income (loss) attributable
Slide 43: Financial Reconciliations (Cont'd)
Financial Reconciliations (Cont’d) Investor Presentation May 2018 Note: Refer to the “Non-GAAP Financial Measures” section on page 2 of this document