Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2021)
63 slides from Xpo's investor presentation, Feb 10, 2021
Slide 1: Investor Presentation February 2021
INVESTOR PRESENTATION FEBRUARY 2021 v FEBRUARY 2021 Investor Presentation Exhibit 99.2
Slide 2: Disclaimers
INVESTOR PRESENTATION FEBRUARY 2021 Disclaimers 2 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 presentation to the most directly comparable measure under GAA
Slide 3: Table of contents
INVESTOR PRESENTATION FEBRUARY 2021 Table of contents 3 INVESTOR HIGHLIGHTS 4 BUSINESS OVERVIEW 5 FINANCIAL HIGHLIGHTS AND KEY METRICS 11 LOGISTICS 19 LESS - THAN - TRUCKLOAD 27 TRUCK BROKERAGE 35 SUPPLEMENTAL MATERIALS 44
Slide 4: Investor highlights: Key factors driving growth and returns
INVESTOR PRESENTATION FEBRUARY 2021 Investor highlights: Key factors driving growth and returns 4 Leading positions in fast - growing sectors A leader in logistics, less - than - truckload (LTL) transportation and truck brokerage Numerous opportunities for top - line growth Proven ability to capture
Slide 5: Business overview
INVESTOR PRESENTATION FEBRUARY 2021 Business overview
Slide 6: Serving over 50,000 customers in countries
INVESTOR PRESENTATION FEBRUARY 2021 Serving over 50,000 customers in 30 countries 6 1 C ompany segment revenue data, excluding intersegment eliminations 2 Locations and employees adjusted to reflect the Kuehne + Nagel acquisition January 2021 XPO is the second largest contract logistics provider glo
Slide 7: Key 2020 financial metrics
INVESTOR PRESENTATION FEBRUARY 2021 Key 2020 financial metrics 7 Refer to the “Non - GAAP Financial Measures” section on page 2 and the “Financial Highlights” section for related information FREE CASH FLOW 1 $554 million Asset - Based 29% Asset - Light 71% US 58% France 11% UK 13% Spain 6% Other 12%
Slide 8: Annual investment in innovative supply chain technology
INVESTOR PRESENTATION FEBRUARY 2021 ~$ 500 million average annual investment in innovative supply chain technology 8 LOGISTICS ▪ Proprietary warehouse management system manages all distribution processes and warehouse operations ▪ Provides in - house control of robotics and other advanced automation
Slide 9: XPO Connect is a powerful, digital ecosystem for freight management
INVESTOR PRESENTATION FEBRUARY 2021 XPO Connect Œ is a powerful, digital ecosystem for freight management INTELLIGENT BROKERAGE AUTOMATION CREATES VALUE IN REAL TIME ▪ Optimizes freight - matching by sourcing the best carriers for each load profile ▪ Expands revenue and margins with automated load -
Slide 10: XPO Smart improves productivity of warehouse and cross-dock operations
INVESTOR PRESENTATION FEBRUARY 2021 XPO Smart Œ improves productivity of warehouse and cross - dock operations BECOMES CONTINUOUSLY SMARTER AT SITE - SPECIFIC OPTIMIZATION ▪ Labor management and planning ▪ Attendance tracking ▪ Productivity tracking ▪ Access on cloud applications, large - format dis
Slide 11: Financial highlights and key metrics
INVESTOR PRESENTATION FEBRUARY 2021 Financial highlights and key metrics
Slide 12: Industry-leading growth in revenue and adjusted EBITDA
INVESTOR PRESENTATION FEBRUARY 2021 Industry - leading growth in revenue and adjusted EBITDA 12 REVENUE ADJUSTED EBITDA Note: Both charts exclude the impact of the North American truckload unit divested in October 2016 Refer to the “Non - GAAP Financial Measures” section on page 2 of this document 7
Slide 13: Strong free cash flow generation
INVESTOR PRESENTATION FEBRUARY 2021 Strong free cash flow generation 13 FREE CASH FLOW Note: 2016 and 2017 data have been recast to reflect the impact of Accounting Standards Update 2016 - 2018 Refer to the “Non - GAAP Financial Measures” section on page 2 of this document $ in millions (98) 207 399
Slide 14: Balance sheet and liquidity as of December 31, 2020
INVESTOR PRESENTATION FEBRUARY 2021 Balance sheet and liquidity as of December 31, 2020 14 NET DEBT 1 $4.7 billion CASH AND CASH EQUIVALENTS $2.1 billion NET LEVERAGE 2 3.3x TOTAL LIQUIDITY $3.1 billion Recent activities ▪ The company redeemed $1.2 billion of Senior Notes due 2022 in January 2021 ▪
Slide 15: Fourth quarter 2020 results
INVESTOR PRESENTATION FEBRUARY 2021 Fourth quarter 2020 results 15 REVENUE $4.67 billion NET INCOME 1 $93 million DILUTED EARNINGS PER SHARE $0.91 ADJUSTED NET INCOME 1 $121 million ADJUSTED DILUTED EARNINGS PER SHARE 2 ADJUSTED EBITDA $449 million CASH FLOW FROM OPERATIONS $193 million FREE CASH FL
Slide 16: Full-year 2020 results
INVESTOR PRESENTATION FEBRUARY 2021 Full - year 2020 results 16 REVENUE $16.25 billion NET INCOME 1 $79 million DILUTED EPS $0.78 ADJUSTED NET INCOME 1 $205 million ADJUSTED DILUTED EPS 2 ADJUSTED EBITDA $1.39 billion CASH FLOW FROM OPERATIONS $885 million FREE CASH FLOW $554 million $2.01 1 Net inc
Slide 17: Full-year 2021 guidance
INVESTOR PRESENTATION FEBRUARY 2021 Full - year 2021 guidance 17 1 Excluding amortization of acquisition - related intangible assets 2 Excludes amortization of acquisition - related intangible assets estimated to be $145 million in 2021 Refer to the “Non - GAAP Financial Measures” section on page 2
Slide 18: Potential profit growth opportunity of ~$700 million to $1 billion
INVESTOR PRESENTATION FEBRUARY 2021 Potential profit growth opportunity of ~$700 million to $1 billion 18 Pricing benefits 20% New business initiatives 20% Cost initiatives 60% Revenue initiatives POOL OF COST OPPORTUNITIES ▪ XPO Smart Ρ optimization of ~$5 billion of variable labor cost ▪ Greater e
Slide 19: Logistics
INVESTOR PRESENTATION FEBRUARY 2021 Logistics
Slide 20: XPO is the second largest contract logistics provider globally
INVESTOR PRESENTATION FEBRUARY 2021 XPO is the second largest contract logistics provider globally 20 1 Source: Third - party industry research; refers to contract logistics 2 Full - year 2020 revenue; all other metrics as of December 31, 2020, locations and employees adjusted to reflect the Kuehne
Slide 21: Decades of vertical expertise and prominent customers
INVESTOR PRESENTATION FEBRUARY 2021 XPO has decades of vertical expertise and prominent customers 21 TOP VERTICALS % 2020 REVENUE DEEP EXPERTISE E - commerce / retail ▪ Comprehensive B2C services, including warehousing, distribution, advanced automation, labor, inventory management, peak management
Slide 22: Global leader in innovation, expertise and quality of performance
INVESTOR PRESENTATION FEBRUARY 2021 Known as a global leader in innovation, expertise and quality of performance 22 Strongly positioned with blue - chip customers requiring bespoke solutions ▪ XPO’s reputation for reliable outcomes resonates with customers seeking to de - risk supply chains ▪ Expans
Slide 23: Sophisticated capabilities are mission-critical for customers
INVESTOR PRESENTATION FEBRUARY 2021 23 Sophisticated capabilities are mission - critical for customers 23 ▪ Technology - enabled fulfillment and returns, continuously improved by AI and machine learning ▪ Significant increases in unit throughput ▪ Enhanced safety and workplace environment ▪ Ongoing
Slide 24: Intelligent warehouse automation generates measurable improvements
INVESTOR PRESENTATION FEBRUARY 2021 ▪ First - mover advantage with advanced automation strongly differentiates XPO as a logistics partner of choice ▪ Automation increases speed and accuracy by tying in multiple technologies to perform several steps of a process ▪ Robotics work cooperatively with hum
Slide 25: XPO Smart delivering logistics productivity improvement of 5% to 7%
INVESTOR PRESENTATION FEBRUARY 2021 XPO Smart Œ is delivering average logistics productivity improvement of 5% to 7% 25 Proprietary suite of productivity tools optimizes ~$5 billion variable labor cost, which is primarily in logistics ▪ Analytics provide deep visibility into warehouse labor activity
Slide 26: XPO Direct flexible distribution network in North America
INVESTOR PRESENTATION FEBRUARY 2021 XPO Direct Œ flexible distribution network in North America 26 ADVANTAGES FOR CUSTOMERS ADVANTAGES FOR XPO ▪ Retailers, e - tailers and manufacturers have access to logistics scale, expertise and technology without adding high - fixed - cost distribution centers ▪
Slide 27: Less-than-truckload
INVESTOR PRESENTATION FEBRUARY 2021 Less - than - truckload
Slide 28: XPO is a top three provider of LTL service in North America
INVESTOR PRESENTATION FEBRUARY 2021 XPO is a top three provider of less - than - truckload (LTL) service in North America 28 LTL is the transportation of a quantity of freight that is larger than a parcel but too small to require an entire truck, often shipped on pallets. Freight for different custo
Slide 29: LTL terminals provide critical coverage and lane density
INVESTOR PRESENTATION FEBRUARY 2021 290 LTL terminals provide critical coverage and lane density 29 Many large customers prefer a single LTL partner for national service
Slide 30: Fundamentals favorable for long-term industry expansion
INVESTOR PRESENTATION FEBRUARY 2021 30 Fundamentals favorable for long - term industry expansion ▪ Industry characterized by rational pricing dynamics ▪ Rapid growth of e - commerce driving retail shipments to LTL carriers National providers have a strong advantage ▪ XPO is one of few US providers w
Slide 31: Compelling value proposition differentiated by scale and technology
INVESTOR PRESENTATION FEBRUARY 2021 Critical capacity, density and scale 1 ▪ One of the largest, most modern and safety - equipped fleets in industry ▪ ~ 12,000 professional drivers ▪ All types of commodities accepted ▪ Over 75,000 next - day and two - day lanes Intelligent technology ▪ Data - drive
Slide 32: Technology uses machine learning to continually improve operations
INVESTOR PRESENTATION FEBRUARY 2021 XPO’s technology uses machine learning to become continually smarter at improving operations LTL network optimization technology prioritizes three key areas 32 ROUTING LOAD - BUILDING PRICING Dynamic routing and real - time digital visibility ▪ Increases pickup -
Slide 33: XPO Smart delivers labor and service efficiencies on cross-docks
INVESTOR PRESENTATION FEBRUARY 2021 XPO Smart Œ delivers significant labor and service efficiencies on cross - docks 33 Rightsizes all components of LTL labor mix ▪ Real - time visibility drives more motor moves per hour on cross - docks, with high engagement of dock workers and drivers ▪ Manages ma
Slide 34: A leading LTL provider in the UK, France, Spain and Portugal
INVESTOR PRESENTATION FEBRUARY 2021 A leading LTL provider in the UK, France, Spain and Portugal 34 XPO international hub Partner international hub XPO platform Partner platform ▪ Over 100 LTL locations serving countries across Europe ▪ Optimal operating model used for each national market: contract
Slide 35: Truck brokerage
INVESTOR PRESENTATION FEBRUARY 2021 Truck brokerage
Slide 36: XPO is the third largest truck brokerage provider in North America
INVESTOR PRESENTATION FEBRUARY 2021 XPO is the third largest truck brokerage provider in North America 36 Truck brokerage is a non - asset business that facilitates the movement of a quantity of freight requiring a full truckload, typically from a single shipper. A broker purchases truck capacity fr
Slide 37: Brokerage revenue diversified across resilient verticals
INVESTOR PRESENTATION FEBRUARY 2021 2020 REVENUE BY CUSTOMERS 2020 REVENUE BY END - MARKET Brokerage revenue diversified across resilient verticals, low concentration risk Strategic focus on expanding share of e - commerce and consumer goods 37 Food and beverage 21% Retail and E - commerce 23% Indus
Slide 38: Revenue CAGR 2013-2019 better than industry's
INVESTOR PRESENTATION FEBRUARY 2021 XPO’s 16.3% revenue CAGR from 2013 – 2019 was ~770 bps better than industry’s 6% 7% 7% 7% 8% 9% 10% 10% 10% 11% 11% 12% 12% 13% 14% 14% 16% 17% 19% 20% 21% 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A
Slide 39: Compelling value proposition underpins long track record of outperformance
INVESTOR PRESENTATION FEBRUARY 2021 Compelling value proposition underpins long track record of outperformance 39 Critical scale and capacity ▪ #3 broker in North America and #2 worldwide ▪ A transportation leader across UK, France, Spain, Portugal and Morocco Secular industry tailwinds ▪ Accelerati
Slide 40: Technology-driven multiple profit initiatives underway
INVESTOR PRESENTATION FEBRUARY 2021 TECHNOLOGY - DRIVEN MULTIPLE PROFIT INITIATIVES UNDERWAY Expand XPO Connect Œ ▪ Significant opportunity to unlock incremental revenue and profit well beyond current levels ▪ Value of XPO Connect Œ will compound in response to rapid adoption Pricing optimization ▪
Slide 41: Digital brokerage platform is flexible and customizable
INVESTOR PRESENTATION FEBRUARY 2021 DIGITAL BROKERAGE PLATFORM IS FLEXIBLE AND CUSTOMIZABLE CUSTOMER FUNCTIONALITY CARRIER FUNCTIONALITY PERSONALIZED FREIGHT MANAGEMENT TAILORED CAPACITY MANAGEMENT ▪ Quote and buy different kinds of truck capacity online through a single point of access ▪ Leverage a
Slide 42: Drive XPO mobile app
INVESTOR PRESENTATION FEBRUARY 2021 ▪ Proprietary mobile app gives drivers access to the XPO Connect Œ platform from the road ▪ Fully automated transactions, tracking solution and intuitive tools for bidding, booking loads and more ▪ Enhances access to truckload capacity for XPO customers regardless
Slide 43: XPO Connect is widely adopted and growing fast
INVESTOR PRESENTATION FEBRUARY 2021 Total Drive XPO app downloads Total registered carrier users Total registered customer users CARRIERS Total digital brokerage orders Note: All data is cumulative CUSTOMERS 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1
Slide 44: Supplemental materials
INVESTOR PRESENTATION FEBRUARY 2021 Supplemental materials
Slide 45: Planned spin-off of the logistics segment
INVESTOR PRESENTATION FEBRUARY 2021 45 Planned spin - off of the logistics segment In December 2020, XPO announced its plan to pursue a spin - off of its logistics segment as a separate, publicly traded company. The intended transaction would be generally tax - free for US federal income tax purpose
Slide 46: COVID-pandemic response
INVESTOR PRESENTATION FEBRUARY 2021 46 COVID - 19 pandemic response XPO is continuing to use a combination of rigorous protective measures, technology and virtual communications to keep its employees safe. These are some of the many actions the company has taken as part of its COVID - 19 response: ▪
Slide 47: Highly skilled management team
INVESTOR PRESENTATION FEBRUARY 2021 Highly skilled management team 47 Brad Jacobs Chief Executive Officer United Rentals, United Waste Aroon Amarnani Vice President, Strategy TIAA, Barclays Capital Josephine Berisha Chief Human Resources Officer Morgan Stanley Tony Brooks President, Less - Than - Tr
Slide 48: Highly skilled management team (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Highly skilled management team (cont.) 48 LaQuenta Jacobs Chief Diversity Officer Delta Air Lines, Home Depot, Turner Broadcasting Katrina Liddell President, Global Forwarding and Expedite Johnson Controls International Eduardo Pelleissone Chief Transformation Off
Slide 49: Business glossary
INVESTOR PRESENTATION FEBRUARY 2021 Business glossary 49 XPO SERVICES ▪ Less - than - truckload (LTL): LTL is the transportation of a quantity of freight that is larger than a parcel but too small to require an entire truck, and is often shipped on a pallet. LTL shipments are priced according to the
Slide 50: Business glossary (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Business glossary (cont.) 50 XPO TECHNOLOGY ▪ XPO Connect Œ : XPO’s proprietary, fully automated, self - learning digital freight marketplace connects shippers and carriers directly, as well as through company operations. XPO Connect Œ gives shippers comprehensive
Slide 51: Additional service: Last mile logistics for heavy goods
INVESTOR PRESENTATION FEBRUARY 2021 ▪ XPO is the largest last mile provider for heavy goods ▪ Customers include omnichannel retail, e - commerce and direct - to - consumer manufacturers ▪ Asset - light platform positioned within 125 miles of 90% of the US population; independent contractor network ▪
Slide 52: XPO is widely recognized for performance and culture
INVESTOR PRESENTATION FEBRUARY 2021 XPO is widely recognized for performance and culture 52 ▪ Named one of the World’s Most Admired Companies by Fortune, 2018, 2019, 2020, 2021 ▪ Ranked #1 in the Fortune 500 category of Transportation and Logistics, 2017, 2018, 2019, 2020 ▪ Awarded silver CSR rating
Slide 53: XPO is widely recognized for performance and culture (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 XPO is widely recognized for performance and culture (cont.) 53 ▪ Named a Great Supply Chain Partner by Supply Chain Brain, 2020 ▪ Awarded Trucks & Roads Award in Russia for operational excellence, 2018, 2019, 2020 ▪ Named a Disruptive Technology Leader on the Fre
Slide 54: Select highlights of XPO's people-first culture
INVESTOR PRESENTATION FEBRUARY 2021 Select highlights of XPO’s people - first culture 54 ▪ XPO’s US warehouse safety record for OSHA reportable incidents is more than four times better than industry average ▪ Appointed a Chief Diversity Officer and launched a Diversity and Inclusion Council in 2020
Slide 55: Strongly committed to sustainability in transportation and logistics
INVESTOR PRESENTATION FEBRUARY 2021 Strongly committed to sustainability in transportation and logistics 55 TRANSPORTATION ▪ Named a Top 75 Green Supply Chain Partner by Inbound Logistics for 2016, 2017, 2018, 2019, 2020 ▪ Awarded Trophées EVE 2020 for implementing an “urban river” solution to reduc
Slide 56: Strongly committed to sustainability in transportation and logistics (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Strongly committed to sustainability in transportation and logistics (cont.) 56 LOGISTICS ▪ XPO’s Digital Distribution Warehouse of the Future for Nestlé in the UK is an environmentally advanced facility, with ammonia refrigeration, LED lighting, air - source heat
Slide 57: Share repurchase program
INVESTOR PRESENTATION FEBRUARY 2021 Share repurchase program 57 For the full year 2020, the company executed the following share repurchases: XPO has approximately $503 million remaining on the current $2.5 billion share repurchase authorization. The company is not obligated to repurchase any specif
Slide 58: Financial reconciliations
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations 58 1 The sum of quarterly net income attributable to common shareholders and distributed and undistributed net income may not equa l year - to - date amounts because losses are not allocated to the Series A Preferred Stock 2 Relates to th
Slide 59: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations (cont.) 59 1 Relates to the conversion of 69,445 shares of the company's Series A Preferred Stock 2 The income tax rate applied to reconciling items is based on the GAAP annual effective tax rate, excluding discrete items and c ontributio
Slide 60: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations (cont.) 60 Net cash provided by operating activities $ 193 $ 349 $ 885 $ 791 $ 1,102 $ 785 $ 622 $ 91 Cash collected on deferred purchase price receivable - - - 186 - - - - Adjusted net cash provided by operating activities 193 349 885 97
Slide 61: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations (cont.) 61 The following table reconciles XPO’s operating income attributable to its North American less - than - truckload business for the years ended December 31, 2020, 2019, 2018, 2017, 2016 and 2015 to adjusted operating income, adju
Slide 62: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations (cont.) 62 1 Operating income and adjusted operating income include real estate gains of $14 million, $32 million and $5 million for the t hr ee months ended December 31, 2020, 2019 and 2017, respectively 2 Operating ratio is calculated a
Slide 63: Financial reconciliations (cont.)
INVESTOR PRESENTATION FEBRUARY 2021 Financial reconciliations (cont.) 63 The following table reconciles XPO’s net income attributable to common shareholders for the years ended December 31, 2020, 2019, 2018, 2017, 2016 and 2015 to adjusted EBITDA, and adjusted EBITDA excluding the North American tru
XPO Logistics — Investor Presentation (February 2021) on 6ix