Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (May 2022)
51 slides from Xpo's investor presentation, May 9, 2022
Slide 1: May 2022 Investor Presentation
MAY 2022 Investor Presentation Exhibit 99.2
Slide 2: Non-GAAP financial measures
Investor Presentation May 2022 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 document to the most directly comparable measure under GAAP, which are set forth in
Slide 3: Forward-looking statements
Investor Presentation May 2022 3 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 the planned
Slide 4: Table of contents
Investor Presentation May 2022 INVESTMENT HIGHLIGHTS AND SPIN-OFF 5 KEY FINANCIAL RESULTS AND GUIDANCE 13 LESS-THAN-TRUCKLOAD (LTL) 18 TRUCK BROKERAGE 26 SUPPLEMENTAL MATERIALS 34 4
Slide 5: Why invest in XPO today?
Investor Presentation May 2022 Investor Presentation May 2022 5 Why invest in XPO today? Multiple avenues for outsized value creation: spin-off of brokered services, divestiture of the European business, company-specific levers for LTL transformation and continued deleveraging 1 A top provider in hi
Slide 6: Long track record of significant shareholder value creation
Investor Presentation May 2022 Investor Presentation May 2022 6 Long track record of significant shareholder value creation ▪ XPO was the 7th best-performing stock of the last decade on the Fortune 500, based on Bloomberg market data ▪ High 38% return on invested capital (ROIC) for the trailing 12 m
Slide 7: XPO is a leading provider of freight transportation services
Investor Presentation May 2022 7 ▪ One of the largest providers of less-than- truckload (LTL) transportation in North America ▪ Fourth largest truck broker in North America ▪ More than 90% of 2021 operating income derived from North American LTL and truck brokerage businesses ▪ Leading positions in
Slide 8: Strategic partner to blue-chip customers in diverse sectors
Investor Presentation May 2022 Note: Partial list 8 Strategic partner to blue-chip customers in diverse sectors
Slide 9: Planned spin-off will separate XPO into two high-ROIC transportation leaders
Investor Presentation May 2022 Investor Presentation May 2022 9 Planned spin-off will separate XPO into two high-ROIC transportation leaders ▪ SpinCo will be an asset-light, tech-enabled brokered transportation platform o Best-in-class truck brokerage business is fourth largest in North America, wit
Slide 10: SpinCo: Tech-enabled brokered transportation platform
Investor Presentation May 2022 10 ▪ Flexible, asset-light model with high ROIC, designed to grow profits in any cycle ▪ First-mover technology advantage; proprietary XPO Connect® digital brokerage offering with rapid industry adoption ▪ Massive capacity of ~88,000 independent truckload carriers in N
Slide 11: RemainCo: Third largest pure-play LTL provider
Investor Presentation May 2022 11 ▪ High ROIC from capital allocated to grow network, expand fleet and talent base, and enhance technology ▪ Favorable North American industry dynamics: firm pricing environment; strong end-market demand; top 10 carriers have 76% market share ▪ More levered to industr
Slide 12: ESG framework and DE&I
Investor Presentation May 2022 12 ▪ Chief diversity officer leading DE&I ▪ Steering committees for diversity and inclusion and sustainability ▪ Executive compensation tied to ESG targets ▪ Core DE&I objectives relate to recruitment and retention ▪ Working to significantly increase the diversity of t
Slide 13: Key financial results and guidance
Key financial results and guidance
Slide 14: First quarter 2022 results
Investor Presentation May 2022 Investor Presentation May 2022 14 First quarter 2022 results ▪ Revenue of $3.47 billion is the highest of any quarter in the company’s history ▪ Double-digit revenue growth in both North American LTL and North American Transportation, with 14% organic revenue growth co
Slide 15: Updates full-year guidance on stronger outlook
Investor Presentation May 2022 Investor Presentation May 2022 15 Updates full-year guidance on stronger outlook After adjusting for the sale of the intermodal operation, XPO raised its 2022 target for adjusted EBITDA, and updated the underlying metrics, to reflect its higher expectations for 2022 fi
Slide 16: Continued deleveraging
Investor Presentation May 2022 16 ▪ Continued to execute deleveraging plan ▪ Reduced net leverage to 2.0x, down from 2.7x at year-end 2021 o On March 24, 2022, sold North American intermodal operation for cash proceeds of ~$710 million ▪ On April 9, 2022, redeemed $630 million of $1.15 billion in ag
Slide 17: Full year 2021 results
Investor Presentation May 2022 Investor Presentation May 2022 17 Full year 2021 results ▪ Full year results exclude the logistics segment, which was spun off on August 2, 2021 ▪ Revenue of $12.806 billion is a full-year company record o North American Less-Than- Truckload segment increased revenue t
Slide 18: Less-than-truckload (LTL)
Less-than-truckload (LTL)
Slide 19: XPO is one of the largest providers of LTL transportation in North America
Investor Presentation May 2022 Investor Presentation May 2022 19 XPO is one of the largest providers of LTL transportation in North America ▪ Significant competitive advantages in the US as one of the few national LTL networks, with numerous longstanding customer relationships among ~25,000 accounts
Slide 20: Expect at least $1 billion of LTL adjusted EBITDA in 2022
Investor Presentation May 2022 20 Expect to generate at least $1 billion of LTL adjusted EBITDA in 2022 North American LTL business profile 1 Third-party research, North America 2 As of March 31, 2022 3 Excluding gains from sales of real estate Refer to the “Non-GAAP Financial Measures” section on p
Slide 21: North American LTL pricing fundamentals
Investor Presentation May 2022 21 North American LTL pricing fundamentals benefit XPO’s long-term expansion 1 Excludes the impact of fuel surcharges XPO LTL GROSS REVENUE PER HUNDREDWEIGHT 1 In Q1 2022, grew yield ex-fuel YoY by 9%
Slide 22: Improvement in LTL adjusted operating margin under XPO ownership
Investor Presentation May 2022 Investor Presentation May 2022 22 910 bps improvement in LTL adjusted operating margin under XPO ownership In 2022, expect to achieve YoY improvement of more than 100 basis points in adjusted operating ratio ~7% ~16% 2015 2021 1 Excluding gains from sales of real estat
Slide 23: Opportunity to drive gains with proprietary technology
Investor Presentation May 2022 Investor Presentation May 2022 23 Significant opportunity to drive further gains with XPO’s proprietary technology PRICING ▪ Data-driven pricing tools optimize LTL rates for local and regional accounts, while improving efficiency ▪ Elasticity tools help to determine be
Slide 24: Company-specific levers for network efficiency and growth
Investor Presentation May 2022 Investor Presentation May 2022 Company-specific levers for network efficiency and growth Launched in Q2 2022: National initiative to further improve quality of trailer loading and on-time delivery, and engaging with customers on best practices to package freight 24 IMP
Slide 25: Company-specific levers, continued
Investor Presentation May 2022 Investor Presentation May 2022 25 INCREASING TRAILER PRODUCTION: ▪ Added second production line at Searcy, Arkansas trailer manufacturing facility ▪ Produced a record number of trailers in Q1, running at double the 2021 run rate EXPANDING NETWORK FOOTPRINT: ▪ The compa
Slide 26: Truck brokerage
Truck brokerage
Slide 27: XPO is the fourth largest truck broker in North America
Investor Presentation May 2022 Investor Presentation May 2022 27 XPO is the fourth largest truck broker in North America ▪ Best-in-class truck brokerage, with massive capacity of ~88,000 independent carriers in North America and access to more than 1.5 million trucks ▪ Flexible, asset-light model wi
Slide 28: Six consecutive quarters of load growth above 20%
Investor Presentation May 2022 28 Six consecutive quarters of YoY load growth of more than 20% through first quarter 2022 North American truck brokerage business profile Industry size, North America1 $88 billion XPO’s industry share ~3% Average tenure of XPO’s top 10 customers ~15 years Total addres
Slide 29: Brokers have been steadily capturing truckload share
Investor Presentation May 2022 Source: Third-party research 29 Brokers have been steadily capturing truckload share for decades BROKER PENETRATION OF NORTH AMERICAN TRUCKLOAD INDUSTRY Outsourced freight transportation is shifting from asset-based trucking companies to brokers, as shippers seek relia
Slide 30: XPO is growing truck brokerage at 3x the industry rate
Investor Presentation May 2022 $42 billion $88 billion 2013 2021 $397 million $2.749 billion 2013 2021 30 XPO is growing North American truck brokerage at 3x the industry rate 1 Third-party research: North American truck brokerage industry size; reflects brokered component of ~$400 billion total add
Slide 31: Fastest-growing digital brokerage platform in the industry
Investor Presentation May 2022 Investor Presentation May 2022 31 Fastest-growing digital brokerage platform in the industry ▪ In Q1 2022, 74% of XPO’s brokerage orders in North America were created or covered digitally ▪ Grows loads faster than headcount by enhancing productivity through automation
Slide 32: XPO Connect and Drive XPO app
Investor Presentation May 2022 FREIGHT MANAGEMENT CARRIER SCORE AND REWARDSCAPACITYPOSTING LOAD BOOKING In Q1 2022, weekly average carrier users on the platform increased YoY by 59% 32 Drivers have downloaded the Drive XPO® mobile app over 700,000 times ▪ Proprietary app connects truck drivers to XP
Slide 33: Digital brokerage platform widely adopted and growing
Investor Presentation May 2022 - 2,000 4,000 6,000 8,000 10,000 12,000 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Total registered customer users 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1
Slide 34: Supplemental materials
Supplemental materials
Slide 35: Leadership
Investor Presentation May 2022 Brad Jacobs Chief Executive Officer United Rentals, United Waste Lou Amo President, Truck Brokerage – North America Electrolux, Union Pacific Josephine Berisha Chief Human Resources Officer Morgan Stanley Matthew Fassler Chief Strategy Officer Goldman Sachs Luis-Angel
Slide 36: 2021 revenue diversification by verticals
Investor Presentation May 2022 Investor Presentation May 2022 XPO 2021 REVENUE DIVERSIFICATION BY VERTICALS Industrial and Manufacturing 37% Retail and E-commerce 23% Consumer Goods 7% Food and Beverage 8% Logistics and Transportation 8% Other 17% 36 Highly diversified revenue across attractive vert
Slide 37: Complementary brokered spin-off services
Investor Presentation May 2022 37 In 2021, over 80% of the operating income generated by the planned spin-off services was generated by truck brokerage. The balance of the spin-off platform is comprised of three additional brokered transportation services. Complementary brokered spin-off services Pr
Slide 38: Leading transportation positions in key European geographies
Investor Presentation May 2022 38 XPO holds leading transportation positions in key European geographies TRUCK BROKERAGE #1 LTL provider in France and Iberia #1 single-owner LTL network in the UK ▪ LTL network of ~130 locations serving countries across Europe ▪ Optimal LTL operating model utilized f
Slide 39: Recognized for performance and culture
Investor Presentation May 2022 39 XPO is widely recognized for performance and culture ▪ Recognized as one of America’s Best Large Employers by Forbes, 2022 ▪ Named one of the World’s Most Admired Companies by Fortune, 2018, 2019, 2020, 2021 ▪ Ranked #1 in the Fortune 500 category of Transportation
Slide 40: Selected highlights of people-first culture
Investor Presentation May 2022 40 Selected highlights of XPO’s people-first culture ▪ Appointed a Chief Diversity Officer and launched a Diversity and Inclusion Council, 2020 ▪ Launched a global Diversity and Inclusion Steering Committee, 2021, and a global Sustainability Steering Committee, 2022 ▪
Slide 41: Strongly committed to sustainability
Investor Presentation May 2022 41 Strongly committed to sustainability ▪ CarbonNET, XPO’s proprietary, cloud-based calculator, helps document emission sources, activity data and CO2 calculations ▪ Awarded Silver Status for ESG Performance by EcoVadis in Europe, 2022 ▪ Named a Top 75 Green Supply Cha
Slide 42: Business glossary
Investor Presentation May 2022 42 Business glossary XPO SERVICES ▪ Less-than-truckload (LTL): LTL is the transportation of a quantity of freight that is larger than a parcel but doesn’t require an entire truck, and is often shipped on a pallet. LTL shipments are priced according to the weight of the
Slide 43: Reconciliation of income to adjusted EBITDA
Investor Presentation May 2022 43 The following table reconciles XPO’s income from continuing operations for the periods ended March 31, 2022 and 2021, to adjusted EBITDA for the same periods. Financial reconciliations RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS TO ADJUSTED EBITDA 1 Adjusted
Slide 44: Reconciliation to adjusted net income
Investor Presentation May 2022 44 The following table reconciles XPO’s net income from continuing operations attributable to common shareholders for the quarters ended March 31, 2022 and 2021, and the year ended December 31, 2021, to adjusted net income from continuing operations attributable to com
Slide 45: Reconciliation to free cash flow
Investor Presentation May 2022 45 The following table reconciles XPO’s net cash provided by operating activities from continuing operations for the quarters ended March 31, 2022 and 2021, and the years ended December 31, 2021, 2020 and 2019, to free cash flow for the same periods. Financial reconcil
Slide 46: Reconciliation of North American LTL operating income
Investor Presentation May 2022 46 The following table reconciles XPO’s operating income attributable to its North American less-than-truckload business for the quarters ended March 31, 2022 and 2021, and the years ended December 31, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, to adjusted operating
Slide 47: Reconciliation of truck brokerage margin
Investor Presentation May 2022 47 The following table reconciles XPO’s revenue attributable to its North American Truck Brokerage business for the quarters ended March 31, 2022 and 2021, and the years ended December 31, 2021 and 2020, to margin for the same periods. Financial reconciliations (cont.)
Slide 48: Reconciliation of trailing twelve months adjusted EBITDA
Investor Presentation May 2022 48 The following table reconciles XPO’s income from continuing operations for the trailing twelve months ended March 31, 2022, the three-month periods ended March 31, 2022 and 2021, and twelve months ended December 31, 2021, to adjusted EBITDA for the same periods. Fin
Slide 49: Return on invested capital
Investor Presentation May 2022 49 We believe that return on invested capital (ROIC) is an important metric, as it measures how effectively we deploy our capital base. ROIC is calculated as net operating profit after tax (NOPAT) for the trailing twelve months ended March 31, 2022, divided by invested
Slide 50: Adjusted EBITDA attributable to planned spin-off
Investor Presentation May 2022 50 The following table reconciles XPO’s operating income attributable to the planned spin-off operations1 for the year ended December 31, 2021 to adjusted EBITDA for the same period. Financial reconciliations (cont.) 1 The planned spin-off is expected to include the co
Slide 51: Reconciliation of organic revenue
Investor Presentation May 2022 51 The following table reconciles XPO’s revenue for the periods ended March 31, 2022 and 2021 to organic revenue for the same periods. Financial reconciliations (cont.) RECONCILIATION OF ORGANIC REVENUE $ in millions (unaudited) Revenue $ 3,473 $ 2,989 Fuel (562) (408)