• XPO Announces Third Quarter 2022 Results

    Source: Nasdaq GlobeNewswire / 31 Oct 2022 06:00:01   America/New_York

    Delivered third quarter record operating income, up 65% year-over-year

    Improved tonnage in North American LTL each month through third quarter; tonnage inflected positive year-over-year in September

    Grew North American truck brokerage volume year-over-year by 9%

    GREENWICH, Conn., Oct. 31, 2022 (GLOBE NEWSWIRE) --  XPO (NYSE: XPO) today announced its financial results for the third quarter 2022.

    Revenue was $3.04 billion for the third quarter, compared with $3.27 billion for the same period in 2021. Excluding third quarter 2021 revenue from the company’s intermodal operation, which was sold in March 2022, third quarter 2022 revenue increased year-over-year by 3%.

    Net income from continuing operations attributable to common shareholders was $131 million for the third quarter, compared with $21 million for the same period in 2021. Operating income was $185 million for the third quarter, compared with $112 million for the same period in 2021. Diluted earnings from continuing operations per share was $1.13 for the third quarter, compared with $0.19 for the same period in 2021.

    Adjusted net income from continuing operations attributable to common shareholders, a non-GAAP financial measure, increased to $168 million for the third quarter, compared with $109 million for the same period in 2021. Adjusted diluted earnings from continuing operations per share, a non-GAAP financial measure, was $1.45 for the third quarter, compared with $0.94 for the same period in 2021.

    Adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), a non-GAAP financial measure, increased to $352 million for the third quarter, compared with $307 million for the same period in 2021.

    For the third quarter 2022, the company generated $265 million of cash flow from operating activities and $142 million of free cash flow, a non-GAAP financial measure.

    Reconciliations of non-GAAP financial measures used in this release are provided in the attached financial tables.

    2022 Less-Than-Truckload (LTL) Financial Targets

    For the full year 2022, for the North American LTL business, the company reaffirmed the following targets, both previously announced: 

    • At least $1 billion of full year adjusted EBITDA, including gains on sales of real estate of up to $50 million in the fourth quarter; and
    • Year-over-year improvement of 50 to 100 basis points in adjusted operating ratio for the full year, including at least 120 basis points of improvement in the fourth quarter, excluding gains on sales of real estate.

    CEO Comments

    Brad Jacobs, chairman and chief executive officer of XPO, said, “Our record results in the third quarter demonstrate how strongly our North American businesses are positioned for growth as standalone companies. Both LTL and truck brokerage outperformed on key metrics leading into tomorrow’s spin-off, and will thrive under the leadership of Mario Harik as CEO of XPO, and Drew Wilkerson as CEO of RXO.

    “Our plan for LTL 2.0 is showing tangible results. We reported third quarter LTL records for revenue and adjusted EBITDA. Our year-over-year tonnage accelerated every month through the quarter and inflected positive in September, with more improvement in October. Importantly, our third quarter tonnage trend outperformed typical seasonality, bucking industry trends.

    “Our truck brokerage business achieved a gross profit margin of 19% in the third quarter, with gross profit dollars up dramatically year-over-year by 31%. We grew volume by 9%, decisively outpacing the industry.”

    Jacobs continued, “I thank our shareholders for their long-standing support of the company we began building in 2011 and the new public companies we’ve created. XPO was the seventh best-performing stock of the last decade on the Fortune 500, and I’m proud that our evolution into XPO, RXO and GXO is serving the best interests of our shareholders.”

    Results by Business Segment

    Third Quarter 2022 Summary Segment Results
                       
    Three months ended September 30,  Revenue Operating Income (Loss) Adjusted EBITDA(1)
    (in millions)  2022  2021  2022  2021  2022  2021
    North American Less-Than-Truckload Segment $          1,204  $          1,071  $             182  $             149  $             258  $             222
    Brokerage and Other Services Segment            1,921             2,261                  62                  58                123                131
    Corporate and Intersegment Eliminations               (83)               (62)               (59)               (95)               (29)               (46)
    Total(3) $          3,042  $          3,270  $             185  $             112  $             352  $             307
                       
                       
                       
    Nine months ended September 30,   Revenue Operating Income (Loss) Adjusted EBITDA(1)
    (in millions)  2022  2021  2022(2)  2021  2022  2021
    North American Less-Than-Truckload Segment $          3,548  $          3,114  $             530  $             481  $             757  $             694
    Brokerage and Other Services Segment            6,420             6,493                255                189                439                386
    Corporate and Intersegment Eliminations             (221)             (162)               255              (228)             (118)             (164)
    Total(3) $          9,747  $          9,445  $          1,040  $             442  $          1,078  $             916
                       
    (1) Reconciliations of adjusted EBITDA are provided in the attached financial tables
    (2) Corporate operating income includes a $434 million gain for the nine months ended September 30, 2022 related to the sale of the intermodal operation
    (3) See the Non-GAAP Financial Measures section in this release


    • North American Less-Than-Truckload (LTL): The segment generated revenue of $1.2 billion for the third quarter 2022, compared with $1.1 billion for the same period in 2021. The year-over-year growth in revenue primarily reflects an increase in yield.

      Operating income for the segment was $182 million for the third quarter 2022, compared with $149 million for the same period in 2021. Adjusted EBITDA for the third quarter 2022, which had no gains on real estate sales, was $258 million; compared with adjusted EBITDA for the third quarter 2021 of $222 million, which included approximately $5 million in gains on real estate sales. Excluding real estate sales in both periods, LTL adjusted EBITDA grew by 19%.

      Third quarter 2022 operating ratio was 85.0%. Adjusted operating ratio, excluding gains on real estate sales, improved 160 basis points year-over-year to 82.8%.
    • Brokerage and Other Services: Revenue for the segment was $1.92 billion for the third quarter 2022, compared with $2.26 billion for the same period in 2021. The decrease in revenue was due primarily to the sale of the North American intermodal operation in March 2022, which impacted revenue by $309 million (including intercompany transactions). 

      Operating income for the segment was $62 million for the third quarter 2022, compared with $58 million for the same period in 2021. Adjusted EBITDA was $123 million for the third quarter 2022, compared with $131 million for the same period in 2021. The year-over-year decrease in adjusted EBITDA was due primarily to the sale of the intermodal operation.

      Truck brokerage revenue in North America decreased 2% to $686 million for the third quarter 2022, compared with $700 million for the same period in 2021. The decrease in revenue was primarily driven by lower truckload pricing in the spot market, partially offset by a year-over-year increase in North American truck brokerage volume, facilitated by the company’s digital brokerage platform.

    • Corporate: Corporate expense was $59 million for the third quarter 2022, compared with $95 million for the same period in 2021. Corporate adjusted EBITDA was an expense of $29 million for the third quarter 2022, compared with $46 million for the same period in 2021.

    Liquidity and Deleveraging

    As of September 30, 2022, the company had $1.54 billion of total liquidity, including $544 million of cash and cash equivalents and approximately $1 billion of available borrowing capacity. The net leverage ratio as of September 30, 2022 was 1.7x, down from 1.8x as of June 30, 2022, and within the company’s target range of 1.0x – 2.0x.

    Net leverage ratio is calculated as net debt of $2.36 billion, divided by adjusted EBITDA of $1.40 billion for the trailing 12 months ended September 30, 2022.

    Conference Call  

    The company will hold a conference call on Monday, October 31, 2022, at 8:30 a.m. Eastern Time. Participants can call toll-free (from US/Canada) 1-877-269-7756; international callers dial +1-201-689-7817. A live webcast of the conference will be available on the investor relations area of the company’s website, xpo.com/investors. The conference will be archived until December 1, 2022. To access the replay by phone, call toll-free (from US/Canada) 1-877-660-6853; international callers dial +1-201-612-7415. Use participant passcode 13733483.

    About XPO

    XPO (NYSE: XPO) is a leading provider of freight transportation services, primarily less-than-truckload (LTL) and truck brokerage. XPO uses its proprietary technology, including its digital freight marketplace, to move goods efficiently through supply chains. Following the planned spin-off of the RXO brokered transportation platform on November 1, 2022, XPO’s sole business in North America will be one of the largest providers of asset-based LTL transportation, and together with its business in Europe, XPO will serve approximately 43,000 shippers with 564 locations and 38,000 employees. The company is headquartered in Greenwich, Conn., USA. Visit xpo.com for more information, and connect with XPO on Facebook, Twitter, LinkedIn, Instagram and YouTube.

    About the RXO spin-off
    XPO intends to spin off its tech-enabled brokered transportation platform in North America as an independent publicly traded company (NYSE: RXO) on November 1, 2022. RXO’s best-in-class brokerage offering will provide customers with access to massive truckload capacity, cutting-edge technology and complementary brokered services for managed transportation, last mile and freight forwarding. Visit rxo.com for more information.

    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 press release to the most directly comparable measure under GAAP, which are set forth in the financial tables attached to this press release.

    XPO’s non-GAAP financial measures in this press release include: adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) on a consolidated basis and for corporate and intersegment eliminations; adjusted EBITDA margin on a consolidated basis; adjusted net income from continuing operations attributable to common shareholders and adjusted diluted earnings from continuing operations per share (“adjusted EPS”); margin (revenue less cost of transportation and services (exclusive of depreciation and amortization)) and margin as a percentage of revenue (margin % of revenue) by service offering; free cash flows; adjusted operating income (including and excluding gains on real estate transactions) for our North American less-than-truckload segment; adjusted operating ratio (including and excluding gains on real estate transactions) for our North American less-than-truckload segment; adjusted EBITDA excluding gains on real estate transactions for our North American less-than-truckload segment; net leverage and net debt. We also refer to (i) margin as gross profit dollars and (ii) margin as a percentage of revenue (margin % of revenue) as gross profit margin in this release.

    We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not be reflective of, or are unrelated to, XPO and its business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. Other companies may calculate these non-GAAP financial measures differently, and therefore our measures may not be comparable to similarly titled measures of other companies. These non-GAAP financial measures should only be used as supplemental measures of our operating performance.

    Adjusted EBITDA, adjusted EBITDA margin, adjusted net income from continuing operations attributable to common shareholders and adjusted EPS include adjustments for transaction and integration costs, as well as restructuring costs and other adjustments as set forth in the attached tables. Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition, divestiture or spin-off and may include transaction costs, consulting fees, retention awards, and internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems. Restructuring costs primarily relate to severance costs associated with business optimization initiatives. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating XPO’s and each business segment’s ongoing performance.

    We believe that free cash flow is an important measure of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value. We calculate free cash flow as net cash provided by operating activities from continuing operations, less payment for purchases of property and equipment plus proceeds from sale of property and equipment. We believe that adjusted EBITDA and adjusted EBITDA margin improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), litigation settlements, tax impacts and other adjustments as set out in the attached tables that management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses. We believe that adjusted net income from continuing operations attributable to common shareholders and adjusted EPS improve the comparability of our operating results from period to period by removing the impact of certain costs and gains that management has determined are not reflective of our core operating activities, including amortization of acquisition-related intangible assets, transaction and integration costs, restructuring costs and other adjustments as set out in the attached tables. We believe that margin (revenue less cost of transportation and services (exclusive of depreciation and amortization)) and margin as a percentage of revenue (margin % of revenue) improve the comparability of our operating results from period to period by removing the cost of transportation and services, in particular the cost of fuel, incurred in the reporting period as set out in the attached tables. We believe that adjusted operating income and adjusted operating ratio improve the comparability of our operating results from period to period by (i) removing the impact of certain transaction and integration costs and restructuring costs, as well as amortization expenses and (ii) including the impact of pension income incurred in the reporting period as set out in the attached tables. We believe that net leverage and net debt are important measures of our overall liquidity position and are calculated by removing cash and cash equivalents from our reported total debt and reporting net debt as a ratio of our trailing twelve-month reported adjusted EBITDA.

    With respect to our financial targets for full year 2022 and fourth quarter 2022 North American LTL adjusted operating ratio, a reconciliation of these non-GAAP measures to the corresponding GAAP  measures is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from these non-GAAP target measures. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statement of income and statement of cash flows prepared in accordance with GAAP that would be required to produce such a reconciliation.

    Forward-looking Statements

    This release 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 spin-off of our tech-enabled brokered services platform, the expected timing and anticipated benefits of the spin-off; our 2022 financial target of at least $1 billion of adjusted EBITDA in the North American LTL segment, including gains on sales of real estate of up to $50 million in the fourth quarter 2022; and our 2022 financial target of year-over-year improvement of 50 to 100 basis points in North American LTL adjusted operating ratio, including at least 120 basis points of improvement in fourth quarter 2022 (excluding gains on sales of real estate). All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as “anticipate,” “estimate,” “believe,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “should,” “will,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target,” “trajectory” or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

    These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include our ability to effect the spin-off of our tech-enabled brokered services platform and meet the related conditions of the spin-off, our ability to complete the  divestiture of our European business, the expected timing of the completion of these transactions and the terms of the transactions, our ability to achieve the expected benefits of the transactions, our ability to retain and attract key personnel for the separate businesses, the risks discussed in our filings with the SEC, and the following: economic conditions generally; the severity, magnitude, duration and aftereffects of the COVID-19 pandemic, including supply chain disruptions due to plant and port shutdowns and transportation delays, the global shortage of certain components such as semiconductor chips, strains on production or extraction of raw materials, cost inflation and labor and equipment shortages, which may lower levels of service, including the timeliness, productivity and quality of service, and government responses to these factors; our ability to align our investments in capital assets, including equipment, service centers, and warehouses and other network facilities, to our customers’ demands; our ability to implement our cost and revenue initiatives; the effectiveness of our action plan, and other management actions, to improve our North American LTL business; our ability to benefit from a sale, spin-off or other divestiture of one or more business units, and the impact of anticipated material compensation and other expenses, including expenses related to the acceleration of equity awards, to be incurred in connection with a substantial disposition; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; goodwill impairment, including in connection with a business unit sale, spin-off or other divestiture; matters related to our intellectual property rights; fluctuations in currency exchange rates; fuel price and fuel surcharge changes; natural disasters, terrorist attacks, wars or similar incidents, including the conflict between Russia and Ukraine and increased tensions between Taiwan and China; risks and uncertainties regarding the expected benefits of a future spin-off of a business unit, the impact of a future spin-off of a business unit on the size and business diversity of our company; the ability of the spin-off of a business unit to qualify for tax-free treatment for U.S. federal income tax purposes; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our indebtedness; our ability to raise debt and equity capital; fluctuations in fixed and floating interest rates; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to attract and retain qualified drivers; labor matters, including potential labor disputes between railroads and their union employees and our ability to manage our subcontractors, and risks associated with labor disputes at our customers and efforts by labor organizations to organize our employees and independent contractors; litigation, including litigation related to alleged misclassification of independent contractors and securities class actions; risks associated with our self-insured claims; risks associated with defined benefit plans for our current and former employees; the impact of potential sales of common stock by our chairman; governmental regulation, including trade compliance laws, as well as changes in international trade policies, sanctions and tax regimes; governmental or political actions, including the United Kingdom’s exit from the European Union; and competition and pricing pressures.

    All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

    Where required by law, no binding decision will be made with respect to the divestiture of the European business other than in compliance with applicable employee information and consultation requirements.

    Investor Contacts
    Tavio Headley
    +1-203-413-4006
    tavio.headley@xpo.com

    Kevin Sterling
    + 1 804-441-6179
    kevin.sterling@rxo.com

    Media Contacts
    Karina Frayter
    +1-203-484-8303
    karina.frayter@xpo.com

    Nina Reinhardt
    +1-980-408-1594
    nina.reinhardt@rxo.com


    XPO Logistics, Inc.  
    Condensed Consolidated Statements of Income (Loss)  
    (Unaudited)  
    (In millions, except per share data)  
                  
     Three Months Ended Nine Months Ended  
     September 30, September 30,  
      2022  2021  2022  2021  
                  
    Revenue (1)$               3,042  $               3,270  $               9,747  $               9,445   
    Cost of transportation and services (exclusive of depreciation and amortization)                2,044                  2,306                  6,634                  6,545   
    Direct operating expense (exclusive of depreciation and amortization)                   363                     366                  1,113                  1,058   
    Sales, general and administrative expense (2)                   298                     339                     966                  1,001   
    Depreciation and amortization expense                   118                     118                     349                     357   
    Gain on sale of business                      -                          -                      (434)                       -     
    Transaction and integration costs                     25                       15                       60                       26   
    Restructuring costs                       9                       14                       19                       16   
    Operating income                   185                     112                  1,040                     442   
    Other income                    (15)                     (19)                     (44)                     (45)  
    Debt extinguishment loss                      -                         46                       26                       54   
    Interest expense                     35                       53                     103                     176   
    Income from continuing operations before income tax provision                   165                       32                     955                     257   
    Income tax provision                     34                       11                     194                       60   
    Income from continuing operations                    131                       21                     761                     197   
    Income (loss) from discontinued operations, net of taxes                      -                        (78)                       (1)                      22   
    Net income (loss)                   131                      (57)                    760                     219   
    Net income from discontinued operations attributable to noncontrolling interests                      -                          -                          -                          (5)  
    Net income (loss) attributable to XPO$                  131  $                   (57) $                  760  $                  214   
                  
    Net income (loss) attributable to common shareholders             
    Continuing operations$                  131  $                    21  $                  761  $                  197   
    Discontinued operations                      -                        (78)                       (1)                      17   
    Net income (loss) attributable to common shareholders  $                  131  $                   (57) $                  760  $                  214   
                  
    Basic earnings (loss) per share attributable to common shareholders (3)             
    Continuing operations$                 1.14  $                 0.19  $                 6.62  $                 1.78   
    Discontinued operations                      -                     (0.69)                  (0.01)                   0.15   
    Basic earnings (loss) per share attributable to common shareholders$                 1.14  $                (0.50) $                 6.61  $                 1.93   
    Diluted earnings (loss) per share attributable to common shareholders (3)             
    Continuing operations$                 1.13  $                 0.19  $                 6.58  $                 1.73   
    Discontinued operations                      -                     (0.68)                  (0.01)                   0.14   
    Diluted earnings (loss) per share attributable to common shareholders$                 1.13  $                (0.49) $                 6.57  $                 1.87   
                  
    Weighted-average common shares outstanding             
    Basic weighted-average common shares outstanding                   115                     115                     115                     111   
    Diluted weighted-average common shares outstanding                   116                     116                     116                     114   
                  
    (1) Revenue for the three months ended September 30, 2021 included approximately $309 million (including intercompany transactions) attributable to the Company's intermodal business, which the Company sold in March 2022.  
    (2) Sales, general and administrative expenses includes $29 million related to litigation settlements for the three and nine months ended September 30, 2021.  
    (3) The sum of quarterly earnings (loss) per share may not equal year-to-date amounts due to differences in the weighted-average number of shares outstanding during the respective periods.  
      


    XPO Logistics, Inc.
    Condensed Consolidated Balance Sheets
    (Unaudited)
    (In millions, except per share data)
          
     September 30, December 31,
     2022 2021
    ASSETS     
    Current assets     
    Cash and cash equivalents$                        544  $                        260
    Accounts receivable, net of allowances of $51 and $47, respectively                      2,013                        2,105
    Other current assets                         257                           286
    Current assets of discontinued operations                           17                             26
    Total current assets                      2,831                        2,677
    Long-term assets     
    Property and equipment, net of $1,848 and $1,828 in accumulated depreciation, respectively                      1,828                        1,808
    Operating lease assets                         816                           908
    Goodwill                      2,229                        2,479
    Identifiable intangible assets, net of $598 and $612 in accumulated amortization, respectively                          496                           580
    Other long-term assets                         303                           255
    Total long-term assets                      5,672                        6,030
    Total assets$                     8,503  $                     8,707
          
          
    LIABILITIES AND STOCKHOLDERS’ EQUITY     
    Current liabilities     
    Accounts payable$                     1,022  $                     1,110
    Accrued expenses                      1,087                        1,107
    Short-term borrowings and current maturities of long-term debt                           60                             58
    Short-term operating lease liabilities                         145                           170
    Other current liabilities                         111                             69
    Current liabilities of discontinued operations                           17                             24
    Total current liabilities                      2,442                        2,538
    Long-term liabilities     
    Long-term debt                      2,848                        3,514
    Deferred tax liability                         334                           316
    Employee benefit obligations                         116                           122
    Long-term operating lease liabilities                         671                           752
    Other long-term liabilities                         306                           327
    Total long-term liabilities                      4,275                        5,031
          
    Stockholders’ equity     
    Common stock, $0.001 par value; 300 shares authorized; 115 issued and outstanding      
    as of September 30, 2022 and December 31, 2021                            -                                -  
    Additional paid-in capital                      1,195                        1,179
    Retained earnings                         803                             43
    Accumulated other comprehensive loss                        (212)                           (84)
    Total equity                      1,786                        1,138
    Total liabilities and equity$                     8,503  $                     8,707


    XPO Logistics, Inc.
    Condensed Consolidated Statements of Cash Flows
    (Unaudited)
    (In millions)
           
      Nine Months Ended
      September 30,
       2022    2021
    Cash flows from operating activities of continuing operations     
    Net income$                  760  $                  219
    Income (loss) from discontinued operations, net of taxes                      (1)                      22
    Income from continuing operations                    761                     197
    Adjustments to reconcile income from continuing operations to net cash from operating activities     
     Depreciation, amortization and net lease activity                   349                     357
     Stock compensation expense                     26                       29
     Accretion of debt                     12                       15
     Deferred tax expense                     10                         5
     Debt extinguishment loss                     26                       54
     Gain on sale of business                  (434)                       -  
     Gains on sales of property and equipment                      (4)                     (36)
     Other                     29                         5
    Changes in assets and liabilities     
     Accounts receivable                  (245)                   (371)
     Other assets                     30                        (1)
     Accounts payable                     76                     133
     Accrued expenses and other liabilities                     28                     171
    Net cash provided by operating activities from continuing operations                   664                     558
    Cash flows from investing activities of continuing operations     
     Proceeds from sale of business                   705                        -  
     Payment for purchases of property and equipment                  (394)                   (212)
     Proceeds from sale of property and equipment                     11                       72
     Proceeds from settlement of cross currency swaps                     29                        -  
     Other                      -                          (3)
    Net cash provided by (used in) investing activities from continuing operations                   351                    (143)
    Cash flows from financing activities of continuing operations     
     Repayment of borrowings related to securitization program                      -                        (24)
     Repurchase of debt                  (651)                (2,769)
     Proceeds from borrowings on ABL facility                   275                        -  
     Repayment of borrowings on ABL facility                  (275)                   (200)
     Repayment of debt and finance leases                    (47)                     (63)
     Payment for debt issuance costs                      -                          (5)
     Issuance of common stock                      -                       384
     Change in bank overdrafts                       6                       33
     Payment for tax withholdings for restricted shares                    (13)                     (25)
     Distribution from GXO                      -                       794
     Other                      (1)                       (5)
    Net cash used in financing activities from continuing operations                  (706)                (1,880)
    Cash flows from discontinued operations     
     Operating activities of discontinued operations                      (5)                      68
     Investing activities of discontinued operations                       2                      (95)
     Financing activities of discontinued operations                      -                      (302)
    Net cash used in discontinued operations                      (3)                   (329)
    Effect of exchange rates on cash, cash equivalents and restricted cash                    (25)                       (7)
    Net increase (decrease) in cash, cash equivalents and restricted cash                   281                 (1,801)
    Cash, cash equivalents and restricted cash, beginning of period                   273                  2,065
    Cash, cash equivalents and restricted cash, end of period                   554                     264
    Less: Cash, cash equivalents and restricted cash of discontinued operations, end of period                       -                          -  
    Cash, cash equivalents and restricted cash of continuing operations, end of period $                  554  $                  264


    North American Less-Than-Truckload Segment  
    Summary Financial Table  
    (Unaudited)  
    (In millions)  
                      
     Three Months Ended September 30, Nine Months Ended September 30,  
     2022 2021      Change % 2022 2021      Change %  
                      
    Revenue (excluding fuel surcharge revenue)$            931  $            904  3.0% $         2,777  $         2,648  4.9%  
    Fuel surcharge revenue             273               167  63.5%              771               466  65.5%  
    Revenue          1,204            1,071  12.4%           3,548            3,114  13.9%  
    Salaries, wages and employee benefits             538               495  8.7%           1,557            1,434  8.6%  
    Purchased transportation             123               124  -0.8%              393               334  17.7%  
    Fuel and fuel-related taxes             105                 73  43.8%              320               207  54.6%  
    Other operating expenses             171               151  13.2%              498               430  15.8%  
    Depreciation and amortization               60                 57  5.3%              175               169  3.6%  
    Rents and leases               23                 21  9.5%                68                 58  17.2%  
    Transaction and integration costs                -                     1  -100.0%                  2                   1  100.0%  
    Restructuring costs                 2                  -    NM                  5                  -    NM  
    Operating income             182               149  22.1%              530               481  10.2%  
    Operating ratio (1) 85.0%  86.1%    85.1%  84.6%    
    Other income (2)               15                 15                   45                 43     
    Amortization expense                 8                   8                   25                 25     
    Transaction and integration costs                -                     1                     2                   1     
    Restructuring costs                 2                  -                       5                  -       
    Adjusted operating income (3)$            207  $            173  19.7% $            607  $            550  10.4%  
    Adjusted operating ratio (3) (4) 82.8%  83.9%    82.9%  82.3%    
    Depreciation expense               52                 49  6.1%              150               144  4.2%  
    Other                (1)                 -    NM                 -                    -    NM  
    Adjusted EBITDA (5)$            258  $            222  16.2% $            757  $            694  9.1%  
    Adjusted EBITDA margin (6) 21.5%  20.8%    21.3%  22.3%    
                      
    Gains on real estate transactions                -                    (5)                   -                  (27)    
    Adjusted EBITDA, excluding gains on real estate transactions (3)             258               217  18.9% $            757  $            667  13.5%  
    Adjusted operating income, excluding gains on real estate transactions (3)$            207  $            168  23.2% $            607  $            523  16.1%  
    Adjusted operating ratio, excluding gains on real estate transactions (3) (4) 82.8%  84.4%    82.9%  83.2%    
                      
    NM - Not meaningful.  
    (1) Operating ratio is calculated as (1 - (Operating income divided by Revenue)).  
    (2) Other income primarily consists of pension income.  
    (3) See the “Non-GAAP Financial Measures” section of the press release.  
    (4) Adjusted operating ratio is calculated as (1 - (Adjusted operating income divided by Revenue)); adjusted operating margin is the inverse of adjusted operating ratio  
    (5) Adjusted EBITDA is used by our chief operating decision maker to evaluate segment profit (loss) in accordance with ASC 280.  
    (6) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.  
    Note: Effective in the first quarter 2023, the Company expects making the following changes: (i) adjusted operating income to exclude pension income and (ii) both adjusted EBITDA and adjusted operating income to reflect an allocation of an additional $80 million of annual corporate costs.  
      


    North American Less-Than-Truckload Segment
    Summary Data Table
    (Unaudited)
                    
     Three Months Ended September 30, Nine Months Ended September 30,
     2022 2021 Change % 2022 2021 Change %
                    
    Pounds per day (thousands)  70,063  72,152 -2.9%  70,854  73,138 -3.1%
                    
    Shipments per day  49,744  50,637 -1.8%  49,459  51,187 -3.4%
                    
    Average weight per shipment (in pounds)  1,408  1,425 -1.2%  1,433  1,429 0.3%
                    
    Gross revenue per shipment $387.65  $ 336.95 15.0% $384.85  $ 326.08 18.0%
                    
    Gross revenue per hundredweight (including fuel surcharges)$27.52  $ 23.65 16.4% $26.86  $ 22.82 17.7%
                    
    Gross revenue per hundredweight (excluding fuel surcharges)$21.43  $ 20.02 7.0% $21.18  $ 19.47 8.8%
                    
    Average length of haul (in miles) 831.0  847.0    830.7  838.9  
                    
    Total average load factor (1) 23,574  23,905 -1.4%  23,914  24,237 -1.3%
                    
    Average age of tractor fleet (years) 5.96  5.86          
                    
    Number of working days  64.0  64.0    191.5  190.5  
                    
                    
    (1) Total average load factor equals freight pound miles divided by total linehaul miles.


    Brokerage and Other Services Segment
    Summary Financial Table
    (Unaudited)
    (In millions)
                    
     Three Months Ended September 30, Nine Months Ended September 30,
     2022 2021      Change % 2022   2021 Change %
                    
    Revenue (1)$         1,921  $         2,261  -15.0% $         6,420  $         6,493  -1.1%
    Cost of transportation and services          1,449            1,762  -17.8%           4,836            4,983  -3.0%
    Direct operating expense             155               175  -11.4%              510               531  -4.0%
    Sales, general and administrative expense             196               193  1.6%              637               593  7.4%
    Depreciation and amortization               54                 60  -10.0%              168               180  -6.7%
    Transaction and integration costs                 3                   5  -40.0%                  6                   8  -25.0%
    Restructuring costs                 2                   8  -75.0%                  8                   9  -11.1%
    Operating income$              62  $              58  6.9% $            255  $            189  34.9%
    Other income                 2                  -                       2                  -     
    Depreciation and amortization               54                 60                 168               180   
    Transaction and integration costs                 3                   5                     6                   8   
    Restructuring costs                 2                   8                     8                   9   
    Adjusted EBITDA (1)(2)$            123  $            131  -6.1% $            439  $            386  13.7%
    Adjusted EBITDA margin (3) 6.4%  5.8%    6.8%  5.9%  
                    
    (1) The three and nine months ended September 30, 2021 include the results of operations of the Company's intermodal business, which the Company sold in March 2022. The revenue (including intercompany transactions) and adjusted EBITDA attributable to intermodal for the three months ended September 30, 2021 were approximately $309 million and $20 million, respectively. The revenue (including intercompany transactions) and adjusted EBITDA attributable to intermodal for the period from April 1, 2021 through September 30, 2021 were approximately $575 million and $31 million, respectively.
    (2) Adjusted EBITDA is used by our chief operating decision maker to evaluate segment profit (loss) in accordance with ASC 280.
    (3) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.


    XPO Logistics, Inc.
    Key Data by Service Offering
    (Unaudited)
    (In millions)
                
     Three Months Ended September 30, Nine Months Ended September 30,
     2022 2021 2022 2021
    Revenue           
    North America           
    Less-Than-Truckload$                 1,250  $                 1,091  $                 3,658  $                 3,165
    Truck Brokerage                     686                       700                    2,265                    1,903
    Last Mile                     264                       250                       784                       765
    Other Brokerage (1)                     186                       547                       936                    1,486
    Total North America                  2,386                    2,588                    7,643                    7,319
    Europe                     741                       757                    2,335                    2,311
    Eliminations                      (85)                       (75)                     (231)                     (185)
    Total Revenue$                 3,042  $                 3,270  $                 9,747  $                 9,445
                
    Cost of Transportation and Services (exclusive of depreciation and amortization)           
    North America           
    Less-Than-Truckload$                    715  $                    622  $                 2,109  $                 1,764
    Truck Brokerage                     556                       601                    1,844                    1,604
    Last Mile                     191                       176                       554                       516
    Other Brokerage (1)                     109                       416                       611                    1,136
    Total North America                  1,571                    1,815                    5,118                    5,020
    Europe                     558                       566                    1,747                    1,710
    Eliminations                      (85)                       (75)                     (231)                     (185)
    Total Cost of Transportation and Services (exclusive of depreciation and amortization)$                 2,044  $                 2,306  $                 6,634  $                 6,545
                
    Margin (2) (4)           
    North America           
    Less-Than-Truckload$                    535  $                    469  $                 1,549  $                 1,401
    Truck Brokerage                     130                         99                       421                       299
    Last Mile                       73                         74                       230                       249
    Other Brokerage (1)                       77                       131                       325                       350
    Total North America                     815                       773                    2,525                    2,299
    Europe                     183                       191                       588                       601
    Total Margin$                    998  $                    964  $                 3,113  $                 2,900
                
    Margin % of Revenue (3)(4)           
    North America           
    Less-Than-Truckload 42.8%  42.9%  42.3%  44.2%
    Truck Brokerage 19.0%  14.1%  18.6%  15.7%
    Last Mile 27.9%  29.7%  29.4%  32.6%
    Other Brokerage (1) 41.1%  23.9%  34.7%  23.6%
    Total North America 34.2%  29.8%  33.0%  31.4%
    Europe 24.7%  25.2%  25.2%  26.0%
    Overall Margin % of Revenue 32.8%  29.5%  31.9%  30.7%
                
    (1) Other brokerage includes expedite, freight forwarding and managed transportation services, and intermodal through its date of sale in March 2022. Freight forwarding includes operations conducted outside of North America but managed by our North American entities.
    (2) Margin is calculated as Revenue less cost of transportation and services (exclusive of depreciation and amortization). We also refer to this measure as gross profit dollars.
    (3) We also refer to margin % of revenue as gross profit margin.
    (4) See the “Non-GAAP Financial Measures” section of the press release.
     
    Less-Than-Truckload revenue is before intercompany eliminations and includes revenue from the Company’s trailer manufacturing business.


    Corporate and Intersegment Eliminations
    Summary Financial Table
    (Unaudited)
    (In millions)
                    
     Three Months Ended September 30, Nine Months Ended September 30,
     2022 2021      Change % 2022 2021      Change %
                    
    Sales, general and administrative expense (1)$               28  $               79  -64.6% $             115  $             196  -41.3%
    Depreciation and amortization                  4                    1  300.0%                   6                    8  -25.0%
    Gain on sale of business                 -                     -    NM              (434)                  -    NM
    Transaction and integration costs                22                    9  144.4%                 52                  17  205.9%
    Restructuring costs                  5                    6  -16.7%                   6                    7  -14.3%
    Operating income (loss) (2)$              (59) $              (95) -37.9% $             255  $            (228) NM
    Other income (expense) (3)                 (1)                   4                     (3)                   3   
    Depreciation and amortization                  4                    1                      6                    8   
    Gain on sale of business                 -                     -                   (434)                  -     
    Litigation settlements                 -                    29                     -                    29   
    Transaction and integration costs                22                    9                    52                  17   
    Restructuring costs                  5                    6                      6                    7   
    Adjusted EBITDA (4)$              (29) $              (46) -37.0% $            (118) $            (164) -28.0%
                    
    NM - Not meaningful.
    (1) Sales, general and administrative expenses includes $29 million related to litigation settlements for the three and nine months ended September 30, 2021.
    (2) Corporate operating loss, excluding the gain on the sale of the intermodal operation, was $179 million for the nine months ended September 30, 2022.
    (3) Other income (expense) consists of foreign currency gain (loss) and other income (expense).
    (4) See the “Non-GAAP Financial Measures” section of the press release.
                    
                    
    Intersegment eliminations represent intercompany activity between the Company’s reportable segments that is eliminated upon consolidation. The following table summarizes the intersegment eliminations by line item.
                    
     Three Months Ended   Nine Months Ended  
     September 30,   September 30,  
     2022 2021       2022 2021     
     
    Revenue$              (83) $              (62)   $            (221) $            (162)  
    Cost of transportation and services                (83)                (62)                (221)              (162)  
    (exclusive of depreciation and amortization)           


    XPO Logistics, Inc.
    Reconciliation of Non-GAAP Measures
    (Unaudited)
    (In millions)
                    
     Three Months Ended September 30, Nine Months Ended September 30,
     2022 2021 Change % 2022 2021 Change %
                    
    Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA               
    Net income from continuing operations attributable to common shareholders$              131  $                21  523.8% $              761  $              197  286.3%
    Debt extinguishment loss                  -                     46                     26                   54   
    Interest expense                 35                   53                   103                 176   
    Income tax provision                 34                   11                   194                   60   
    Depreciation and amortization expense               118                 118                   349                 357   
    Unrealized loss on foreign currency option and forward contracts                  -                      -                        -                       1   
    Gain on sale of business                  -                      -                    (434)                   -     
    Litigation settlements                  -                     29                      -                     29   
    Transaction and integration costs                 25                   15                     60                   26   
    Restructuring costs                   9                   14                     19                   16   
    Adjusted EBITDA (1) (2)$              352  $              307  14.7% $           1,078  $              916  17.7%
    Revenue (2)$           3,042  $           3,270  -7.0% $           9,747  $           9,445  3.2%
    Adjusted EBITDA margin (1) (3) 11.6%  9.4%    11.1%  9.7%  
                    
                    
    (1) See the “Non-GAAP Financial Measures” section of the press release.
    (2) The three and nine months ended September 30, 2021 include the results of operations of the Company's intermodal business, which the Company sold in March 2022. The revenue (including intercompany transactions) and adjusted EBITDA attributable to intermodal for the three months ended September 30, 2021 were approximately $309 million and $20 million, respectively. The revenue (including intercompany transactions) and adjusted EBITDA attributable to intermodal for the period from April 1, 2021 through September 30, 2021 were approximately $575 million and $31 million, respectively.
    (3) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.


    XPO Logistics, Inc.
    Reconciliation of Non-GAAP Measures (cont.)
    (Unaudited)
    (In millions, except per share data)
                 
      Three Months Ended Nine Months Ended
      September 30,  September 30,
      2022 2021 2022 2021
                 
    Reconciliation of Net Income from Continuing Operations and Diluted Earnings Per Share from Continuing Operations to Adjusted Net Income from Continuing Operations and Adjusted Earnings Per Share from Continuing Operations           
    Net income from continuing operations attributable to common shareholders$               131       $                  21   $                761       $                197
     Debt extinguishment loss                   -                      46                    26                    54
     Unrealized loss on foreign currency option and forward contracts                   -                       -                       -                        1
     Amortization of acquisition-related intangible assets                  19                    22                    58                    65
     Gain on sale of business                   -                       -                   (434)                    -  
     ABL amendment cost                   -                        1                     -                        1
     Litigation settlements                   -                      29                     -                      29
     Transaction and integration costs                  25                    15                    60                    26
     Restructuring costs                    9                    14                    19                    16
     Income tax associated with the adjustments above (1)                 (16)                  (35)                   32                   (49)
     Discrete and other tax-related adjustments (2)                   -                       (4)                    -                       (4)
    Adjusted net income from continuing operations attributable to           
     common shareholders (3)$               168   $                109   $                522   $                336
                 
    Adjusted diluted earnings from continuing operations per share (3)$              1.45  $              0.94  $              4.51  $              2.95
                 
    Weighted-average common shares outstanding           
     Diluted weighted-average common shares outstanding                116                  116                  116                  114
                 
    (1) This line item reflects the aggregate tax (expense) benefit of all non-tax related adjustments reflected in the table above. The detail by line item is as follows:
     Debt extinguishment loss$                  -    $                 12  $                   6  $                 14
     Amortization of acquisition-related intangible assets                    4                      6                    14                    16
     Gain on sale of business                    3                     -                     (71)                    -  
     Litigation settlements                   -                        8                     -                        8
     Transaction and integration costs                    6                      4                    14                      6
     Restructuring costs                    3                      5                      5                      5
      $                 16  $                 35  $                (32) $                 49
                 
    The income tax rate applied to reconciling items excluding the gain on sale of business is based on the GAAP annual effective tax rate, excluding discrete items and contribution- and margin-based taxes. The income tax rate applied to the gain on the sale of business represents the actual tax expense impact which is considered a discrete item.
                 
    (2) Discrete tax items reflect a tax benefit related to a tax planning initiative that resulted in the recognition of a long-term capital loss offset by tax expense due to valuation allowances that were recognized as a result of the spin-off of our logistics business.
    (3) See the "Non-GAAP Financial Measures" section of the press release.
                 
      Three Months Ended Nine Months Ended
      September 30,  September 30,
      2022 2021 2022 2021
    Reconciliation of Cash Flows from Operating Activities of Continuing Operations to
    Free Cash Flow    		           
    Net cash provided by operating activities from continuing operations$               265  $               250  $               664  $               558
     Payment for purchases of property and equipment               (127)                  (77)                (394)                (212)
     Proceeds from sale of property and equipment                    4                    12                    11                    72
    Free Cash Flow (1)(2)$               142  $               185  $               281  $               418
                 
    (1) The third quarter of 2022 includes $53 million of cash outflows related to transaction costs.
    (2) See the "Non-GAAP Financial Measures" section of the press release.


    XPO Logistics, Inc.
     Other Reconciliations
    (Unaudited)
    (In millions)
                         
     September 30, June 30,         
     2022 2022         
    Reconciliation of Net Debt                    
    Total debt$                                                       2,908  $                                                  2,912          
    Less: Cash and cash equivalents                                                           544                                                        436          
    Net debt (1)$                                                       2,364  $                                                  2,476          
                         
     Trailing Twelve Months Ended Trailing Twelve Months Ended         
     September 30, June 30,         
     2022 2022         
    Reconciliation of Net Leverage                    
    Net debt$                                                       2,364  $                                                  2,476          
    Adjusted EBITDA$                                                       1,401  $                                                  1,356          
    Net leverage (1) 1.7x  1.8x         
                         
                         
     Trailing Twelve Months Ended Nine Months Ended Trailing Twelve Months Ended Six Months Ended Twelve Months Ended Nine Months Ended Six Months Ended
     September 30,(2) September 30,  June 30,(3) June 30, December 31, September 30,  June 30,
     2022 2022 2022 2022 2021 2021 2021
    Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA                    
                         
    Net income from continuing operations attributable to common shareholders$                       887  $                  761  $                  777  $                  630  $                       323  $                  197  $                  176
    Debt extinguishment loss                          26                       26                       72                       26                            54                       54                         8
    Interest expense                        138                     103                     156                       68                          211                     176                     123
    Income tax provision                        221                     194                     198                     160                            87                       60                       49
    Depreciation and amortization expense                        468                     349                     468                     231                          476                     357                     239
    Unrealized loss on foreign currency option and forward contracts                           -                          -                          -                          -                                1                         1                         1
    Gain on sale of business                       (434)                   (434)                   (434)                   (434)                            -                          -                          -  
    Litigation settlements                            2                        -                         31                        -                              31                       29                        -  
    Transaction and integration costs                          71                       60                       61                       35                            37                       26                       11
    Restructuring costs                          22                       19                       27                       10                            19                       16                         2
    Adjusted EBITDA (1)$                    1,401  $               1,078  $               1,356  $                  726  $                    1,239  $                  916  $                  609
                         
    (1) See the “Non-GAAP Financial Measures” section of the press release.
    (2) Trailing twelve months ended September 30, 2022 is calculated as the nine months ended September 30, 2022 plus the twelve months ended December 31, 2021 less the nine months ended September 30, 2021.
    (3) Trailing twelve months ended June 30, 2022 is calculated as the six months ended June 30, 2022 plus the twelve months ended December 31, 2021 less the six months ended June 30, 2021.


    Primary Logo

Share on,