Exhibit 99.1
XPO Logistics Announces Second Quarter 2019 Results
GREENWICH, Conn. — August 1, 2019 — XPO Logistics, Inc. (NYSE: XPO) today announced financial results for the second quarter 2019. Second quarter revenue was $4.24 billion, compared with $4.36 billion for the same period in 2018. Net income attributable to common shareholders was $122 million for the quarter, compared with $138 million for the same period in 2018. Operating income was $258 million for the quarter, compared with $228 million for the same period in 2018. Diluted earnings per share was $1.19 for the quarter, compared with $1.03 for the same period in 2018.
Adjusted net income attributable to common shareholders, a non-GAAP financial measure, was $132 million for the second quarter 2019, compared with $132 million for the same period in 2018. Adjusted diluted earnings per share, a non-GAAP financial measure, was $1.28 for the quarter, compared with $0.98 for the same period in 2018.
Adjusted net income attributable to common shareholders and adjusted diluted earnings per share for the second quarter 2019 exclude: $7 million, or $6 million after-tax, of non-cash unrealized losses on foreign currency contracts; $4 million, or $3 million after-tax, of restructuring costs, primarily severance; and $1 million, or $1 million after-tax, of transaction, integration and rebranding costs.
Adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), a non-GAAP financial measure, increased to $455 million for the second quarter 2019, compared with $437 million for the same period in 2018. Adjusted EBITDA for the second quarter 2019 excludes: $4 million of restructuring costs, primarily severance; and $1 million of transaction, integration and rebranding costs.
For the second quarter 2019, the company generated $260 million of cash flow from operations and $246 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.
Updates 2019 Financial Targets
The company has updated its full-year 2019 financial targets for revenue, adjusted EBITDA, free cash flow, effective tax rate and cash taxes as follows:
| · | Revenue growth of (1%) to 1% year-over-year, from 3% to 5% previously; which translates to organic revenue growth, a non-GAAP financial measure, of 2.5% to 4.5%, from 5.5% to 7.5% previously. The update to revenue growth reflects the expected impact of lower truckload rates in freight brokerage and unfavorable foreign currency exchange; | |
| · | Adjusted EBITDA in the range of $1.675 billion to $1.725 billion, or year-over-year growth of 7% to 10%, up from the prior range of $1.650 billion to $1.725 billion, or growth of 6% to 10%; |
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| · | Free cash flow in the range of $575 million to $675 million, up from the prior range of $525 million to $625 million; | |
| · | Net capital expenditures in the range of $400 million to $450 million, unchanged; | |
| · | Depreciation and amortization in the range of $765 million to $785 million, unchanged; | |
| · | Effective tax rate in the range of 25% to 28%, from 26% to 29% previously; and | |
| · | Cash taxes in the range of $130 million to $150 million, from $165 million to $190 million previously. |
The company’s 2019 targets for free cash flow and cash taxes assume cash interest expense of $275 million to $290 million, down from the prior range of $275 million to $315 million. The company continues to expect an incremental benefit to free cash flow of $125 million to $150 million from trade receivables programs in 2019.
CEO Comments
Bradley Jacobs, chairman and chief executive officer of XPO Logistics, said, “We beat on EPS, adjusted EBITDA and free cash flow in the second quarter, offsetting a softer operating environment with cost discipline and margin gains. In North American freight brokerage, we improved net revenue margin to 20.4%, up 360 basis points from last year’s second quarter. In North American less-than-truckload, we improved yield by 3.9% and realized a record adjusted operating ratio of 80.3%.
“We’re implementing innovations in North American LTL to drive the next leg of profit improvement. Our workforce productivity tools are returning positive results in 18 pilot service centers ahead of the national roll-out to all 290 LTL centers this year. In addition, we’re developing an entire suite of proprietary tools that utilize machine learning for dynamic pricing, route optimization of pickup and delivery, linehaul efficiency and yard management. We’re on track to deliver at least $1 billion of EBITDA in LTL in 2021.”
Jacobs continued, “Our updated guidance provides more visibility into our outlook on 2019. We’ve increased our free cash flow range by $50 million, and raised the low end of adjusted EBITDA by $25 million, while expecting revenue to remain flat.”
Second Quarter 2019 Results by Segment
| · | Transportation: The company's transportation segment generated revenue of $2.75 billion for the second quarter 2019, compared with $2.89 billion for the same period in 2018. Segment revenue primarily reflects a reduction in freight brokerage and direct postal injection business from the company’s largest customer, unfavorable foreign currency exchange and lower truckload rates in freight brokerage, offset in part by growth in North American less-than-truckload (LTL) and managed transportation. |
| Operating income for the transportation segment was $243 million for the second quarter 2019, compared with $205 million for the same period in 2018. Adjusted EBITDA for the segment was $362 million for the quarter, compared with $335 million for the same period in 2018. |
| In North American LTL, yield improved by 3.9% year-over-year for the second quarter 2019, excluding fuel, compared with 3% improvement for the first quarter 2019. The second quarter operating ratio for LTL was 81.8% and the adjusted operating ratio, a non-GAAP financial measure, was 80.3%, a 400 basis point improvement year-over-year. This is the best LTL adjusted operating ratio for any quarter in the company’s history. |
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| · | Logistics: The company's logistics segment generated revenue of $1.53 billion for the second quarter 2019, a 1.2% increase from the same period in 2018. Organic revenue growth was 4.8%. Segment revenue growth was led by food and beverage, consumer packaged goods, aerospace and healthcare in North America and by e-commerce in Europe, largely offset by unfavorable foreign currency exchange and a reduction in business from the company’s largest customer. |
| Operating income was $61 million for the second quarter 2019, compared with $67 million for the same period in 2018. The change in operating income primarily reflects higher depreciation expense related to prior capital investments in new business wins, a reduction in business from the company’s largest customer and unfavorable foreign currency exchange. Adjusted EBITDA for the segment was $136 million for the quarter, a 1.5% increase from the same period in 2018. The increase in adjusted EBITDA primarily reflects growth from existing customers and from new business startups in recent quarters, offset in part by a reduction in business from the company’s largest customer and unfavorable foreign currency exchange. |
| · | Corporate: Corporate SG&A expense was $46 million for the second quarter 2019, compared with $44 million for the same period in 2018. |
Six Months 2019 Financial Results
For the six months ended June 30, 2019, the company reported total revenue of $8.36 billion, compared with $8.56 billion for the same period in 2018. Net income attributable to common shareholders was $165 million, compared with $205 million for the same period in 2018. Operating income for the first six months of 2019 was $390 million, compared with $369 million for the same period in 2018. Earnings per diluted share was $1.51, compared with $1.53 for the same period in 2018.
Adjusted net income attributable to common shareholders was $191 million for the first six months of 2019, compared with $213 million for the same period in 2018. Adjusted earnings per diluted share was $1.74 for the first six months of 2019, compared with $1.59 for the same period in 2018. Adjusted net income attributable to common shareholders and adjusted earnings per diluted share for the first six months of 2019 exclude: $17 million, or $12 million after-tax, of restructuring costs, primarily severance; $9 million, or $7 million after-tax, of non-cash unrealized losses on foreign currency contracts; a non-cash charge of $6 million, or $4 million after-tax, related to the impairment of customer relationship intangibles; $5 million, or $4 million after-tax, of debt extinguishment costs; and $2 million, or $2 million after-tax, of transaction, integration and rebranding costs.
Adjusted EBITDA for the first six months of 2019 increased to $798 million, compared with $767 million for the same period in 2018. Adjusted EBITDA for the first six months of 2019 excludes: $17 million of restructuring costs, primarily severance; and $2 million of transaction, integration and rebranding costs.
Conference Call
The company will hold a conference call on Friday, August 2, 2019, 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 September 2, 2019. 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 13692302.
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About XPO Logistics
XPO Logistics, Inc. (NYSE: XPO) is a top ten global logistics provider of cutting-edge supply chain solutions to the most successful companies in the world. The company operates as a highly integrated network of people, technology and physical assets in 30 countries, with 1,537 locations and approximately 100,000 employees. XPO uses its network to help more than 50,000 customers manage their goods most efficiently throughout their supply chains. XPO's corporate headquarters are in Greenwich, Conn., USA, and its European headquarters are in Lyon, France. xpo.com
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 release.
XPO’s non-GAAP financial measures for the quarter and six months ended June 30, 2019 used in this release include: earnings before interest, taxes, depreciation and amortization ("EBITDA") and adjusted EBITDA on a consolidated basis and for our transportation and logistics segments; free cash flow; adjusted net income attributable to common shareholders and adjusted earnings per share (basic and diluted) ("adjusted EPS"); net revenue for our transportation and logistics segments and intersegment eliminations; adjusted operating income and adjusted operating ratio for our North American less-than-truckload business; and organic revenue and organic revenue growth on a consolidated basis and for our logistics business.
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 net income attributable to common shareholders and adjusted EPS include adjustments for transaction, integration and rebranding costs as well as adjustments for restructuring costs. Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition and include transaction costs, acquisition and integration consulting fees, 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. Rebranding adjustments primarily relate to the rebranding of the XPO Logistics name on our truck fleet and buildings. 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.
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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 adjusted net cash used in operating activities, less payment for purchases of property and equipment plus proceeds from sale of property and equipment, with adjusted net cash used in operating activities defined as net cash used in operating activities plus cash collected on deferred purchase price receivables. We believe that EBITDA and adjusted EBITDA improve comparability from period to period by removing the impact of our capital structure (interest and financing expenses), asset base (depreciation and amortization), 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 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. We believe that net revenue improves 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 for our North American less-than-truckload business improve the comparability of our operating results from period to period by (i) removing the impact of certain restructuring costs and 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 organic revenue is an important measure because it excludes the impact of the following items: foreign currency exchange rate fluctuations, fuel surcharges and revenue associated with our direct postal injection service in last mile.
With respect to our 2019 financial targets for adjusted EBITDA, free cash flow and organic revenue growth, as well as our 2021 target for EBITDA in our North American less-than-truckload business, each of which is a non-GAAP measure, a reconciliation of the non-GAAP measure to the corresponding GAAP measure is not available without unreasonable effort due to the variability and complexity of the reconciling items described below that we exclude from the non-GAAP target measure. 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 balance sheet, statement of income and statement of cash flow, 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 our 2019 financial targets for our consolidated revenue growth, organic revenue growth, adjusted EBITDA, free cash flow, net capital expenditures, depreciation and amortization, effective tax rate, cash taxes and the free cash flow benefit from our trade receivables programs, as well as our 2021 target for EBITDA in our North American less-than-truckload business. 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.
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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 the risks discussed in our filings with the SEC and the following: economic conditions generally; competition and pricing pressures; our ability to align our investments in capital assets, including equipment, service centers and warehouses, to our customers' demands; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our substantial indebtedness; our ability to raise debt and equity capital; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to attract and retain qualified drivers; litigation, including litigation related to alleged misclassification of independent contractors and securities class actions; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers and efforts by labor organizations to organize our employees; risks associated with our self-insured claims; risks associated with defined benefit plans for our current and former employees; fluctuations in currency exchange rates; fluctuations in fixed and floating interest rates; fuel price and fuel surcharge changes; issues related to our intellectual property rights; governmental regulation, including trade compliance laws; and governmental or political actions, including the United Kingdom's likely exit from the European Union. 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.
Investor Contact
XPO Logistics, Inc.
Tavio Headley
+1-203-930-1602
tavio.headley@xpo.com
Media Contact
XPO Logistics, Inc.
Erin Kurtz
+1-203-489-1586
erin.kurtz@xpo.com
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XPO Logistics, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
(In millions, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 4,238 | $ | 4,363 | $ | 8,358 | $ | 8,555 | ||||||||
| Operating expenses | ||||||||||||||||
| Cost of transportation and services | 2,108 | 2,274 | 4,204 | 4,499 | ||||||||||||
| Direct operating expense | 1,417 | 1,406 | 2,823 | 2,782 | ||||||||||||
| Sales, general and administrative expense | 455 | 455 | 941 | 905 | ||||||||||||
| Total operating expenses | 3,980 | 4,135 | 7,968 | 8,186 | ||||||||||||
| Operating income | 258 | 228 | 390 | 369 | ||||||||||||
| Other expense (income) | (13 | ) | (30 | ) | (30 | ) | (49 | ) | ||||||||
| Foreign currency loss (gain) | 8 | (10 | ) | 10 | 2 | |||||||||||
| Debt extinguishment loss | - | - | 5 | 10 | ||||||||||||
| Interest expense | 72 | 55 | 143 | 114 | ||||||||||||
| Income before income tax provision | 191 | 213 | 262 | 292 | ||||||||||||
| Income tax provision | 46 | 54 | 65 | 54 | ||||||||||||
| Net income | 145 | 159 | 197 | 238 | ||||||||||||
| Net income attributable to noncontrolling interests | (10 | ) | (10 | ) | (15 | ) | (16 | ) | ||||||||
| Net income attributable to XPO | $ | 135 | $ | 149 | $ | 182 | $ | 222 | ||||||||
| Net income attributable to common shareholders (1) (2) | $ | 122 | $ | 138 | $ | 165 | $ | 205 | ||||||||
| Basic earnings per share (2) | $ | 1.32 | $ | 1.14 | $ | 1.66 | $ | 1.70 | ||||||||
| Diluted earnings per share (2) | $ | 1.19 | $ | 1.03 | $ | 1.51 | $ | 1.53 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic weighted-average common shares outstanding | 92 | 121 | 100 | 120 | ||||||||||||
| Diluted weighted-average common shares outstanding | 102 | 134 | 110 | 134 | ||||||||||||
| (1) Net income attributable to common shareholders reflects the following items: | ||||||||||||||||
| Non-cash allocation of undistributed earnings | $ | 13 | $ | 11 | $ | 16 | $ | 16 | ||||||||
| Preferred dividends | - | - | 1 | 1 | ||||||||||||
(2) The sum of quarterly net income attributable to common shareholders and earnings per share may not equal year-to-date amounts due to differences in the weighted-average number of shares outstanding during the respective periods and the impact of the two-class method of calculating earnings per share.
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XPO Logistics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In millions, except per share data)
| June 30, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 497 | $ | 502 | ||||
| Accounts receivable, net of allowances of $57 and $52, respectively | 2,723 | 2,596 | ||||||
| Other current assets | 570 | 590 | ||||||
| Total current assets | 3,790 | 3,688 | ||||||
| Property and equipment, net of $1,855 and $1,585 in accumulated depreciation, respectively | 2,551 | 2,605 | ||||||
| Operating lease assets | 2,074 | - | ||||||
| Goodwill | 4,451 | 4,467 | ||||||
| Identifiable intangible assets, net of $775 and $706 in accumulated amortization, respectively | 1,168 | 1,253 | ||||||
| Other long-term assets | 280 | 257 | ||||||
| Total long-term assets | 10,524 | 8,582 | ||||||
| Total assets | $ | 14,314 | $ | 12,270 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,176 | $ | 1,258 | ||||
| Accrued expenses | 1,491 | 1,480 | ||||||
| Short-term borrowings and current maturities of long-term debt | 340 | 367 | ||||||
| Short-term operating lease liabilities | 481 | - | ||||||
| Other current liabilities | 183 | 208 | ||||||
| Total current liabilities | 3,671 | 3,313 | ||||||
| Long-term debt | 5,134 | 3,902 | ||||||
| Deferred tax liability | 463 | 444 | ||||||
| Employee benefit obligations | 145 | 153 | ||||||
| Operating lease liabilities | 1,611 | - | ||||||
| Other long-term liabilities | 378 | 488 | ||||||
| Total long-term liabilities | 7,731 | 4,987 | ||||||
| Stockholders’ equity: | ||||||||
| Convertible perpetual preferred stock, $0.001 par value; 10 shares authorized; 0.07 of Series A shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | 41 | 41 | ||||||
| Common stock, $0.001 par value; 300 shares authorized; 92 and 116 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively | - | - | ||||||
| Additional paid-in capital | 2,054 | 3,311 | ||||||
| Retained earnings | 563 | 377 | ||||||
| Accumulated other comprehensive loss | (153 | ) | (154 | ) | ||||
| Total stockholders’ equity before noncontrolling interests | 2,505 | 3,575 | ||||||
| Noncontrolling interests | 407 | 395 | ||||||
| Total equity | 2,912 | 3,970 | ||||||
| Total liabilities and equity | $ | 14,314 | $ | 12,270 | ||||
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XPO Logistics, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In millions)
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities | ||||||||
| Net income | $ | 197 | $ | 238 | ||||
| Adjustments to reconcile net income to net cash from operating activities | ||||||||
| Depreciation and amortization | 360 | 348 | ||||||
| Stock compensation expense | 31 | 45 | ||||||
| Accretion of debt | 9 | 8 | ||||||
| Deferred tax expense | 12 | 8 | ||||||
| Debt extinguishment loss | 5 | 10 | ||||||
| Unrealized loss (gain) on foreign currency option and forward contracts | 9 | (12 | ) | |||||
| Gains on sale of property and equipment | (40 | ) | (2 | ) | ||||
| Other | 23 | (42 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (289 | ) | (179 | ) | ||||
| Other assets | (23 | ) | (103 | ) | ||||
| Accounts payable | (81 | ) | (44 | ) | ||||
| Accrued expenses and other liabilities | (49 | ) | (27 | ) | ||||
| Net cash provided by operating activities | 164 | 248 | ||||||
| Investing activities | ||||||||
| Payment for purchases of property and equipment | (236 | ) | (268 | ) | ||||
| Proceeds from sale of property and equipment | 85 | 62 | ||||||
| Cash collected on deferred purchase price receivable | 137 | - | ||||||
| Other | - | 10 | ||||||
| Net cash used in investing activities | (14 | ) | (196 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of debt | 1,758 | 894 | ||||||
| Repurchase of debt | - | (812 | ) | |||||
| Proceeds from borrowings on ABL facility | 1,355 | 680 | ||||||
| Repayment of borrowings on ABL facility | (1,355 | ) | (780 | ) | ||||
| Repayment of debt and capital leases | (565 | ) | (59 | ) | ||||
| Payment for debt issuance costs | (27 | ) | (6 | ) | ||||
| Repurchase of common stock | (1,347 | ) | - | |||||
| Change in bank overdrafts | 30 | 8 | ||||||
| Payment for tax withholdings for restricted shares | (5 | ) | (46 | ) | ||||
| Dividends paid | (2 | ) | (2 | ) | ||||
| Other | 5 | 4 | ||||||
| Net cash used in financing activities | (153 | ) | (119 | ) | ||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (2 | ) | (7 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (5 | ) | (74 | ) | ||||
| Cash, cash equivalents and restricted cash, beginning of period | 514 | 449 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 509 | $ | 375 | ||||
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Transportation
Summary Financial Table
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Revenue | $ | 2,747 | $ | 2,888 | $ | (141 | ) | -4.9 | % | $ | 5,406 | $ | 5,662 | $ | (256 | ) | -4.5 | % | ||||||||||||||
| Cost of transportation and services | 1,914 | 2,068 | (154 | ) | -7.4 | % | 3,825 | 4,095 | (270 | ) | -6.6 | % | ||||||||||||||||||||
| Net revenue (1) | 833 | 820 | 13 | 1.6 | % | 1,581 | 1,567 | 14 | 0.9 | % | ||||||||||||||||||||||
| Direct operating expense | 322 | 340 | (18 | ) | -5.3 | % | 637 | 676 | (39 | ) | -5.8 | % | ||||||||||||||||||||
| Sales, general and administrative expense | ||||||||||||||||||||||||||||||||
| Salaries and benefits | 160 | 153 | 7 | 4.6 | % | 333 | 308 | 25 | 8.1 | % | ||||||||||||||||||||||
| Other sales, general and administrative expense | 39 | 40 | (1 | ) | -2.5 | % | 84 | 83 | 1 | 1.2 | % | |||||||||||||||||||||
| Purchased services | 25 | 38 | (13 | ) | -34.2 | % | 60 | 69 | (9 | ) | -13.0 | % | ||||||||||||||||||||
| Depreciation and amortization | 44 | 44 | - | 0.0 | % | 96 | 87 | 9 | 10.3 | % | ||||||||||||||||||||||
| Total sales, general and administrative expense | 268 | 275 | (7 | ) | -2.5 | % | 573 | 547 | 26 | 4.8 | % | |||||||||||||||||||||
| Operating income | $ | 243 | $ | 205 | $ | 38 | 18.5 | % | $ | 371 | $ | 344 | $ | 27 | 7.8 | % | ||||||||||||||||
| Other income (expense) (2) | 8 | 11 | (3 | ) | -27.3 | % | 16 | 21 | (5 | ) | -23.8 | % | ||||||||||||||||||||
| Total depreciation and amortization | 108 | 116 | (8 | ) | -6.9 | % | 224 | 230 | (6 | ) | -2.6 | % | ||||||||||||||||||||
| EBITDA (1) | $ | 359 | $ | 332 | $ | 27 | 8.1 | % | $ | 611 | $ | 595 | $ | 16 | 2.7 | % | ||||||||||||||||
| Transaction, integration and rebranding costs | 1 | 3 | (2 | ) | -66.7 | % | 1 | 6 | (5 | ) | -83.3 | % | ||||||||||||||||||||
| Restructuring costs | 2 | - | 2 | 100.0 | % | 14 | - | 14 | 100.0 | % | ||||||||||||||||||||||
| Adjusted EBITDA (1) (3) | $ | 362 | $ | 335 | $ | 27 | 8.1 | % | $ | 626 | $ | 601 | $ | 25 | 4.2 | % | ||||||||||||||||
(1) See the “Non-GAAP Financial Measures” section of the Press Release.
(2) Other income (expense) consists of pension income and is included in Other expense (income) on the Condensed Consolidated Statement of Income.
(3) For purposes of the summary financial table, adjusted EBITDA is reconciled to operating income in the Condensed Consolidated Statements of Income.
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Transportation
Key Data by Service Offering
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | ||||||||||||||||
| North America | ||||||||||||||||
| Freight Brokerage | $ | 624 | $ | 729 | $ | 1,243 | $ | 1,439 | ||||||||
| Less-Than-Truckload | 1,012 | 989 | 1,938 | 1,909 | ||||||||||||
| Last Mile | 212 | 269 | 436 | 507 | ||||||||||||
| Managed Transport | 142 | 114 | 266 | 251 | ||||||||||||
| Total North America | 1,990 | 2,101 | 3,883 | 4,106 | ||||||||||||
| Europe | ||||||||||||||||
| Freight Brokerage and Truckload | 470 | 482 | 943 | 951 | ||||||||||||
| Less-Than-Truckload | 249 | 258 | 502 | 511 | ||||||||||||
| Total Europe | 719 | 740 | 1,445 | 1,462 | ||||||||||||
| Global Forwarding | 78 | 85 | 155 | 167 | ||||||||||||
| Eliminations | (40 | ) | (38 | ) | (77 | ) | (73 | ) | ||||||||
| Total Revenue | $ | 2,747 | $ | 2,888 | $ | 5,406 | $ | 5,662 | ||||||||
| Net Revenue | ||||||||||||||||
| North America | ||||||||||||||||
| Freight Brokerage | $ | 127 | $ | 122 | $ | 254 | $ | 238 | ||||||||
| Less-Than-Truckload | 423 | 408 | 771 | 765 | ||||||||||||
| Last Mile | 73 | 81 | 140 | 150 | ||||||||||||
| Managed Transport | 30 | 26 | 55 | 52 | ||||||||||||
| Total North America | 653 | 637 | 1,220 | 1,205 | ||||||||||||
| Europe | 165 | 168 | 332 | 333 | ||||||||||||
| Global Forwarding | 15 | 15 | 29 | 29 | ||||||||||||
| Total Net Revenue (1) | $ | 833 | $ | 820 | $ | 1,581 | $ | 1,567 | ||||||||
| Net Revenue % | ||||||||||||||||
| North America | ||||||||||||||||
| Freight Brokerage | 20.4 | % | 16.8 | % | 20.4 | % | 16.5 | % | ||||||||
| Less-Than-Truckload | 41.8 | % | 41.2 | % | 39.8 | % | 40.1 | % | ||||||||
| Last Mile | 34.2 | % | 30.3 | % | 32.1 | % | 29.6 | % | ||||||||
| Managed Transport | 21.1 | % | 22.0 | % | 20.5 | % | 20.6 | % | ||||||||
| Total North America | 31.4 | % | 30.3 | % | 31.4 | % | 29.3 | % | ||||||||
| Europe | 22.8 | % | 22.7 | % | 23.0 | % | 22.8 | % | ||||||||
| Global Forwarding | 19.3 | % | 17.5 | % | 19.0 | % | 17.3 | % | ||||||||
| Overall Net Revenue % | 30.3 | % | 28.4 | % | 29.2 | % | 27.7 | % | ||||||||
| Direct Operating Expense | ||||||||||||||||
| North America | ||||||||||||||||
| Freight Brokerage | $ | 22 | $ | 22 | $ | 46 | $ | 46 | ||||||||
| Less-Than-Truckload | 161 | 170 | 312 | 338 | ||||||||||||
| Last Mile | 21 | 20 | 43 | 41 | ||||||||||||
| Managed Transport | 19 | 18 | 34 | 38 | ||||||||||||
| Total North America | 223 | 230 | 435 | 463 | ||||||||||||
| Europe | 96 | 106 | 196 | 206 | ||||||||||||
| Global Forwarding | 3 | 4 | 6 | 7 | ||||||||||||
| Total Direct Operating Expense | $ | 322 | $ | 340 | $ | 637 | $ | 676 | ||||||||
(1) 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.
11
XPO Logistics North American Less-Than-Truckload
Summary Data Table
(Unaudited)
| Three Months Ended June 30, | ||||||||
| 2019 | 2018 | |||||||
| Number of Working Days | 63.5 | 64.0 | ||||||
| Lbs. per Day (Thousands) | 76,522 | 78,178 | ||||||
| % Change in Lbs. per Day (1) | -2.1 | % | -0.6 | % | ||||
| Shipments per Day | 53,711 | 53,356 | ||||||
| % Change in Shipments per Day (1) | 0.7 | % | -6.3 | % | ||||
| Avg. Weight per Shipment (in pounds) | 1,425 | 1,465 | ||||||
| % Change in Weight per Shipment (1) | -2.8 | % | 6.1 | % | ||||
| Gross Revenue per Shipment | $ | 299.48 | $ | 297.11 | ||||
| Gross Revenue per Hundred Weight (including fuel surcharges) | $ | 21.02 | $ | 20.28 | ||||
| Gross Revenue per Hundred Weight (excluding fuel surcharges) | $ | 18.11 | $ | 17.43 | ||||
| % Change in Gross Revenue per Hundred Weight (1) | ||||||||
| Including fuel surcharges | 3.7 | % | 4.8 | % | ||||
| Excluding fuel surcharges | 3.9 | % | 2.0 | % | ||||
| Average Length of Haul (in Miles) | 803.8 | 797.2 | ||||||
| Total Average Load Factor (2) | 23,619 | 23,433 | ||||||
| Average Age of Tractor Fleet (Years) | 5.54 | 5.68 | ||||||
(1) Compared with the same quarter of the previous year.
(2) Total Average Load Factor equals freight pound miles divided by total linehaul miles.
12
XPO Logistics North American Less-Than-Truckload
Adjusted Operating Ratio
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Revenue (excluding fuel surcharge revenue) | $ | 857 | $ | 834 | $ | 23 | 2.8 | % | $ | 1,643 | $ | 1,613 | $ | 30 | 1.9 | % | ||||||||||||||||
| Fuel surcharge revenue | 142 | 143 | (1 | ) | -0.7 | % | 269 | 271 | (2 | ) | -0.7 | % | ||||||||||||||||||||
| Revenue | 999 | 977 | 22 | 2.3 | % | 1,912 | 1,884 | 28 | 1.5 | % | ||||||||||||||||||||||
| Salaries, wages and employee benefits | 451 | 441 | 10 | 2.3 | % | 896 | 870 | 26 | 3.0 | % | ||||||||||||||||||||||
| Purchased transportation | 108 | 99 | 9 | 9.1 | % | 208 | 196 | 12 | 6.1 | % | ||||||||||||||||||||||
| Fuel and fuel-related taxes | 70 | 75 | (5 | ) | -6.7 | % | 140 | 143 | (3 | ) | -2.1 | % | ||||||||||||||||||||
| Depreciation and amortization | 54 | 62 | (8 | ) | -12.9 | % | 112 | 121 | (9 | ) | -7.4 | % | ||||||||||||||||||||
| Other operating expenses | 93 | 123 | (30 | ) | -24.4 | % | 195 | 242 | (47 | ) | -19.4 | % | ||||||||||||||||||||
| Maintenance | 27 | 25 | 2 | 8.0 | % | 54 | 51 | 3 | 5.9 | % | ||||||||||||||||||||||
| Rents and leases | 12 | 11 | 1 | 9.1 | % | 24 | 22 | 2 | 9.1 | % | ||||||||||||||||||||||
| Purchased labor | 2 | 3 | (1 | ) | -33.3 | % | 4 | 6 | (2 | ) | -33.3 | % | ||||||||||||||||||||
| Operating income | 182 | 138 | 44 | 31.9 | % | 279 | 233 | 46 | 19.7 | % | ||||||||||||||||||||||
| Operating ratio (1) | 81.8 | % | 85.9 | % | 85.4 | % | 87.7 | % | ||||||||||||||||||||||||
| Restructuring costs | - | - | - | 0.0 | % | 2 | - | 2 | 100.0 | % | ||||||||||||||||||||||
| Amortization expense | 9 | 8 | 1 | 12.5 | % | 17 | 17 | - | 0.0 | % | ||||||||||||||||||||||
| Other income (2) | 5 | 7 | (2 | ) | -28.6 | % | 11 | 14 | (3 | ) | -21.4 | % | ||||||||||||||||||||
| Adjusted operating income (3) | $ | 196 | $ | 153 | $ | 43 | 28.1 | % | $ | 309 | $ | 264 | $ | 45 | 17.0 | % | ||||||||||||||||
| Adjusted operating ratio (4) | 80.3 | % | 84.3 | % | 83.8 | % | 86.0 | % | ||||||||||||||||||||||||
(1) Operating ratio is calculated as (1 - (Operating income divided by Revenue)).
(2) Other income primarily consists of pension income and is included in Other expense (income) on the Condensed Consolidated Statement of 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)).
13
Logistics
Summary Financial Table
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Revenue | $ | 1,526 | $ | 1,508 | $ | 18 | 1.2 | % | $ | 3,020 | $ | 2,956 | $ | 64 | 2.2 | % | ||||||||||||||||
| Cost of transportation and services | 226 | 239 | (13 | ) | -5.4 | % | 441 | 467 | (26 | ) | -5.6 | % | ||||||||||||||||||||
| Net revenue (1) | 1,300 | 1,269 | 31 | 2.4 | % | 2,579 | 2,489 | 90 | 3.6 | % | ||||||||||||||||||||||
| Direct operating expense | 1,096 | 1,067 | 29 | 2.7 | % | 2,187 | 2,107 | 80 | 3.8 | % | ||||||||||||||||||||||
| Sales, general and administrative expense | ||||||||||||||||||||||||||||||||
| Salaries and benefits | 87 | 76 | 11 | 14.5 | % | 169 | 150 | 19 | 12.7 | % | ||||||||||||||||||||||
| Other sales, general and administrative expense | 14 | 19 | (5 | ) | -26.3 | % | 32 | 37 | (5 | ) | -13.5 | % | ||||||||||||||||||||
| Purchased services | 19 | 20 | (1 | ) | -5.0 | % | 40 | 41 | (1 | ) | -2.4 | % | ||||||||||||||||||||
| Depreciation and amortization | 23 | 20 | 3 | 15.0 | % | 44 | 39 | 5 | 12.8 | % | ||||||||||||||||||||||
| Total sales, general and administrative expense | 143 | 135 | 8 | 5.9 | % | 285 | 267 | 18 | 6.7 | % | ||||||||||||||||||||||
| Operating income | $ | 61 | $ | 67 | $ | (6 | ) | -9.0 | % | $ | 107 | $ | 115 | $ | (8 | ) | -7.0 | % | ||||||||||||||
| Other income (expense) (2) | 7 | 8 | (1 | ) | -12.5 | % | 12 | 16 | (4 | ) | -25.0 | % | ||||||||||||||||||||
| Total depreciation and amortization | 67 | 58 | 9 | 15.5 | % | 128 | 113 | 15 | 13.3 | % | ||||||||||||||||||||||
| EBITDA (1) | $ | 135 | $ | 133 | $ | 2 | 1.5 | % | $ | 247 | $ | 244 | $ | 3 | 1.2 | % | ||||||||||||||||
| Transaction, integration and rebranding costs | - | 1 | (1 | ) | -100.0 | % | - | 2 | (2 | ) | -100.0 | % | ||||||||||||||||||||
| Restructuring costs | 1 | - | 1 | 100.0 | % | 2 | - | 2 | 100.0 | % | ||||||||||||||||||||||
| Adjusted EBITDA (1) (3) | $ | 136 | $ | 134 | $ | 2 | 1.5 | % | $ | 249 | $ | 246 | $ | 3 | 1.2 | % | ||||||||||||||||
(1) See the “Non-GAAP Financial Measures” section of the Press Release.
(2) Other income (expense) consists of pension income and is included in Other expense (income) on the Condensed Consolidated Statement of Income.
(3) For purposes of the summary financial table, adjusted EBITDA is reconciled to operating income in the Condensed Consolidated Statements of Income.
14
Logistics
Key Data by Geography
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | ||||||||||||||||
| North America | $ | 608 | $ | 575 | $ | 1,206 | $ | 1,116 | ||||||||
| Europe | 918 | 933 | 1,814 | 1,840 | ||||||||||||
| Total Revenue | $ | 1,526 | $ | 1,508 | $ | 3,020 | $ | 2,956 | ||||||||
| Net Revenue | ||||||||||||||||
| North America | $ | 584 | $ | 546 | $ | 1,157 | $ | 1,062 | ||||||||
| Europe | 716 | 723 | 1,422 | 1,427 | ||||||||||||
| Total Net Revenue (1) | $ | 1,300 | $ | 1,269 | $ | 2,579 | $ | 2,489 | ||||||||
| Direct Operating Expense | ||||||||||||||||
| North America | $ | 526 | $ | 485 | $ | 1,046 | $ | 950 | ||||||||
| Europe | 570 | 582 | 1,141 | 1,157 | ||||||||||||
| Total Direct Operating Expense | $ | 1,096 | $ | 1,067 | $ | 2,187 | $ | 2,107 | ||||||||
| Gross Margin | ||||||||||||||||
| North America | $ | 58 | $ | 61 | $ | 111 | $ | 112 | ||||||||
| Europe | 146 | 141 | 281 | 270 | ||||||||||||
| Total Gross Margin | $ | 204 | $ | 202 | $ | 392 | $ | 382 | ||||||||
| Gross Margin % | ||||||||||||||||
| North America | 9.7 | % | 10.8 | % | 9.2 | % | 10.1 | % | ||||||||
| Europe | 15.8 | % | 15.0 | % | 15.5 | % | 14.7 | % | ||||||||
| Total Gross Margin % | 13.4 | % | 13.4 | % | 13.0 | % | 12.9 | % | ||||||||
(1) See the “Non-GAAP Financial Measures” section of the Press Release.
15
XPO Corporate
Summary of Sales, General and Administrative Expense
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Sales, general and administrative expense | ||||||||||||||||||||||||||||||||
| Salaries and benefits | $ | 26 | $ | 25 | $ | 1 | 4.0 | % | $ | 52 | $ | 52 | $ | - | 0.0 | % | ||||||||||||||||
| Other sales, general and administrative expense | 3 | - | 3 | 100.0 | % | 6 | 2 | 4 | 200.0 | % | ||||||||||||||||||||||
| Purchased services | 12 | 16 | (4 | ) | -25.0 | % | 22 | 31 | (9 | ) | -29.0 | % | ||||||||||||||||||||
| Depreciation and amortization | 5 | 3 | 2 | 66.7 | % | 8 | 5 | 3 | 60.0 | % | ||||||||||||||||||||||
| Total sales, general and administrative expense | $ | 46 | $ | 44 | $ | 2 | 4.5 | % | $ | 88 | $ | 90 | $ | (2 | ) | -2.2 | % | |||||||||||||||
16
Intersegment Eliminations
Summary Financial Table
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Revenue | $ | (35 | ) | $ | (33 | ) | $ | (2 | ) | 6.1 | % | $ | (68 | ) | $ | (63 | ) | $ | (5 | ) | 7.9 | % | ||||||||||
| Cost of transportation and services | (32 | ) | (33 | ) | 1 | -3.0 | % | (62 | ) | (63 | ) | 1 | -1.6 | % | ||||||||||||||||||
| Net revenue (1) | (3 | ) | - | (3 | ) | 100.0 | % | (6 | ) | - | (6 | ) | 100.0 | % | ||||||||||||||||||
| Direct operating expense | (1 | ) | (1 | ) | - | 0.0 | % | (1 | ) | (1 | ) | - | 0.0 | % | ||||||||||||||||||
| Sales, general and administrative expense | ||||||||||||||||||||||||||||||||
| Salaries and benefits | (2 | ) | - | (2 | ) | 100.0 | % | (3 | ) | - | (3 | ) | 100.0 | % | ||||||||||||||||||
| Other sales, general and administrative expense | 1 | - | 1 | 100.0 | % | (1 | ) | (1 | ) | - | 0.0 | % | ||||||||||||||||||||
| Purchased services | (1 | ) | 1 | (2 | ) | -200.0 | % | (1 | ) | 2 | (3 | ) | -150.0 | % | ||||||||||||||||||
| Depreciation and amortization | - | - | - | 0.0 | % | - | - | - | 0.0 | % | ||||||||||||||||||||||
| Total sales, general and administrative expense | (2 | ) | 1 | (3 | ) | -300.0 | % | (5 | ) | 1 | (6 | ) | -600.0 | % | ||||||||||||||||||
| Operating income | $ | - | $ | - | $ | - | - | $ | - | $ | - | $ | - | - | ||||||||||||||||||
Note: Intersegment Eliminations represent intercompany activity between the Company's reportable segments that is eliminated upon consolidation. The difference between operating income component line items in the Condensed Consolidated Statements of Income and the sum of the respective line items from the Transportation and Logistics Summary Financial Tables and Corporate Summary of Sales, General and Administrative Expense above represents intercompany eliminations between our reportable segments. The table above summarizes the intersegment eliminations by line item.
(1) See the “Non-GAAP Financial Measures” section of the Press Release.
17
Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Consolidated Reconciliation of Net Income to Adjusted EBITDA
(Unaudited)
(In millions)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
| 2019 | 2018 | $ Variance | Change % | 2019 | 2018 | $ Variance | Change % | |||||||||||||||||||||||||
| Net income attributable to common shareholders (1) | $ | 122 | $ | 138 | $ | (16 | ) | -11.6 | % | $ | 165 | $ | 205 | $ | (40 | ) | -19.5 | % | ||||||||||||||
| Distributed and undistributed net income (1) | 13 | 11 | 2 | 18.2 | % | 17 | 17 | - | 0.0 | % | ||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 10 | 10 | - | 0.0 | % | 15 | 16 | (1 | ) | -6.3 | % | |||||||||||||||||||||
| Net income | 145 | 159 | (14 | ) | -8.8 | % | 197 | 238 | (41 | ) | -17.2 | % | ||||||||||||||||||||
| Debt extinguishment loss | - | - | - | 0.0 | % | 5 | 10 | (5 | ) | -50.0 | % | |||||||||||||||||||||
| Interest expense | 72 | 55 | 17 | 30.9 | % | 143 | 114 | 29 | 25.4 | % | ||||||||||||||||||||||
| Income tax provision | 46 | 54 | (8 | ) | -14.8 | % | 65 | 54 | 11 | 20.4 | % | |||||||||||||||||||||
| Depreciation and amortization expense | 180 | 177 | 3 | 1.7 | % | 360 | 348 | 12 | 3.4 | % | ||||||||||||||||||||||
| Unrealized loss (gain) on foreign currency option and forward contracts | 7 | (16 | ) | 23 | -143.8 | % | 9 | (12 | ) | 21 | -175.0 | % | ||||||||||||||||||||
| EBITDA (2) | $ | 450 | $ | 429 | $ | 21 | 4.9 | % | $ | 779 | $ | 752 | $ | 27 | 3.6 | % | ||||||||||||||||
| Transaction, integration and rebranding costs | 1 | 8 | (7 | ) | -87.5 | % | 2 | 15 | (13 | ) | -86.7 | % | ||||||||||||||||||||
| Restructuring costs | 4 | - | 4 | 100.0 | % | 17 | - | 17 | 100.0 | % | ||||||||||||||||||||||
| Adjusted EBITDA (2) | $ | 455 | $ | 437 | $ | 18 | 4.1 | % | $ | 798 | $ | 767 | $ | 31 | 4.0 | % | ||||||||||||||||
(1) The sum of quarterly net income attributable to common shareholders and distributed and undistributed net income may not equal year-to-date amounts due to the impact of the two-class method of calculating earnings per share.
(2) See the “Non-GAAP Financial Measures” section of the Press Release. Adjusted EBITDA was prepared assuming 100% ownership of XPO Logistics Europe.
18
Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Consolidated Reconciliation of GAAP Net Income and Net Income Per Share to
Adjusted Net Income and Adjusted Net Income Per Share
(Unaudited)
(In millions, except per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| GAAP net income attributable to common shareholders | $ | 122 | $ | 138 | $ | 165 | $ | 205 | ||||||||
| Debt extinguishment loss | - | - | 5 | 10 | ||||||||||||
| Unrealized loss (gain) on foreign currency option and forward contracts | 7 | (16 | ) | 9 | (12 | ) | ||||||||||
| Impairment of customer relationship intangibles | - | - | 6 | - | ||||||||||||
| Transaction, integration and rebranding costs | 1 | 8 | 2 | 15 | ||||||||||||
| Restructuring costs | 4 | - | 17 | - | ||||||||||||
| Income tax associated with the adjustments above (1) | (2 | ) | 2 | (10 | ) | (4 | ) | |||||||||
| Impact of noncontrolling interests on above adjustments | - | - | (1 | ) | - | |||||||||||
| Allocation of undistributed earnings | - | - | (2 | ) | (1 | ) | ||||||||||
| Adjusted net income attributable to common shareholders (2) | $ | 132 | $ | 132 | $ | 191 | $ | 213 | ||||||||
| Adjusted basic earnings per share (2) | $ | 1.41 | $ | 1.09 | $ | 1.92 | $ | 1.77 | ||||||||
| Adjusted diluted earnings per share (2) | $ | 1.28 | $ | 0.98 | $ | 1.74 | $ | 1.59 | ||||||||
| Weighted-average common shares outstanding | ||||||||||||||||
| Basic weighted-average common shares outstanding | 92 | 121 | 100 | 120 | ||||||||||||
| Diluted weighted-average common shares outstanding | 102 | 134 | 110 | 134 | ||||||||||||
| (1) This line item reflects the aggregate tax benefit of all non-tax related adjustments reflected in the table above. The detail by line item is as follows: | ||||||||||||||||
| Debt extinguishment loss | $ | - | $ | - | $ | 1 | $ | 3 | ||||||||
| Unrealized loss (gain) on foreign currency option and forward contracts | 1 | (4 | ) | 2 | (3 | ) | ||||||||||
| Impairment of customer relationship intangibles | - | - | 2 | - | ||||||||||||
| Transaction, integration and rebranding costs | - | 2 | - | 4 | ||||||||||||
| Restructuring costs | 1 | - | 5 | - | ||||||||||||
| $ | 2 | $ | (2 | ) | $ | 10 | $ | 4 | ||||||||
(2) See the “Non-GAAP Financial Measures” section of the Press Release.
19
Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Reconciliation of Cash Flows from Operating Activities to Free Cash Flow
(Unaudited)
(In millions)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net cash provided by operating activities | $ | 260 | $ | 267 | $ | 164 | $ | 248 | ||||||||
| Cash collected on deferred purchase price receivable | 66 | - | 137 | - | ||||||||||||
| Adjusted net cash provided by operating activities | 326 | 267 | 301 | 248 | ||||||||||||
| Payment for purchases of property and equipment | (118 | ) | (126 | ) | (236 | ) | (268 | ) | ||||||||
| Proceeds from sale of property and equipment | 38 | 52 | 85 | 62 | ||||||||||||
| Free Cash Flow (1) | $ | 246 | $ | 193 | $ | 150 | $ | 42 | ||||||||
(1) See the “Non-GAAP Financial Measures” section of the Press Release.
20
Reconciliation of Non-GAAP Measures
XPO Logistics, Inc.
Reconciliation of GAAP Revenue to Organic Revenue
(Unaudited)
(In millions)
| Logistics | Consolidated | |||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 1,526 | $ | 1,508 | $ | 4,238 | $ | 4,363 | ||||||||
| Fuel | - | - | (428 | ) | (447 | ) | ||||||||||
| Direct postal injection revenue | - | - | - | (54 | ) | |||||||||||
| Foreign exchange rates | 54 | - | 99 | - | ||||||||||||
| Organic Revenue | $ | 1,580 | $ | 1,508 | $ | 3,909 | $ | 3,862 | ||||||||
| Organic Revenue Growth (1) | 4.8 | % | 1.2 | % | ||||||||||||
(1) Organic revenue growth is calculated as the relative change in year-over-year organic revenue, expressed as a percentage of 2018 organic revenue. See the “Non-GAAP Financial Measures” section of the Press Release.
21