XPO Logistics Earnings 2019-09-30

XPO 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Comparables ($MM TTM)
Ticker	M Cap	Assets	Liab	Rev	G Profit	Net Inc	EBITDA	EV	G Margin	EV/EBITDA	ROA
XPO	5,888	14,314	11,402	17,082	8,364	404	1,508	11,097	49%	7.4	3%
GATX	2,793	8,353	6,518	1,382	0	206	414	2,506	0%	6.1	2%
TVPT	2,018	3,053	3,175	2,530	924	38	428	4,007	37%	9.4	1%
TOUR	1,842	6,557	7,850	0	0	0	0	1,011			0%
PRSC	1,143	606	211	1,514	45	-14	13	1,108	3%	82.5	-2%
AAWW	1,130	5,985	3,858	436	0	339	301	3,135	0%	10.4	6%
LIND	863	508	371	324	164	17	43	951	50%	22.0	3%
DESP	823	764	516	0	0	0	0	471			0%
ERA	183	765	303	213	0	24	86	258	0%	3.0	3%
BRS	75	2,732	1,862	1,408	0	-362	-119	-147	0%	1.2	-13%

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

Form 10-Q

___________________________________________

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from____________to____________

Commission File Number: 001-32172

_______________________________________________________

XPO Logistics, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________



Delaware		03-0450326
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Five American Lane
Greenwich,	CT	06831
(Address of principal executive offices)		(Zip Code)

(855) 976-6951

(Registrant’s telephone number, including area code)

______________________________________________________________________________________________________________

N/A

______________________________________________________________________________________________________________

Former name, former address and former fiscal year, if changed since last report

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	XPO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐	Emerging growth company	☐

Non-accelerated filer	☐	Smaller reporting company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 21, 2019, there were 92,300,242 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

XPO Logistics, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended September 30, 2019

Table of Contents



	Page No.
Part I—Financial Information
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Income	2
Condensed Consolidated Statements of Comprehensive Income	3
Condensed Consolidated Statements of Cash Flows	4
Condensed Consolidated Statements of Changes in Equity	5
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures About Market Risk	37
Item 4. Controls and Procedures	37
Part II—Other Information
Item 1. Legal Proceedings	39
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3. Defaults Upon Senior Securities	39
Item 4. Mine Safety Disclosures	39
Item 5. Other Information	39
Item 6. Exhibits	39
Signatures	41

Table of Contents

Part I—Financial Information

Item 1. Financial Statements.

XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



	September 30,			December 31,
(In millions, except per share data)	2019			2018
ASSETS
Current assets:
Cash and cash equivalents	$	425		$	502
Accounts receivable, net of allowances of $60 and $52, respectively	2,577			2,596
Other current assets	424			590
Total current assets	3,426			3,688
Property and equipment, net of $1,905 and $1,585 in accumulated depreciation, respectively	2,589			2,605
Operating lease assets	2,110			—
Goodwill	4,374			4,467
Identifiable intangible assets, net of $802 and $706 in accumulated amortization, respectively	1,114			1,253
Other long-term assets	303			257
Total long-term assets	10,490			8,582
Total assets	$	13,916		$	12,270
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,132		$	1,258
Accrued expenses	1,417			1,480
Short-term borrowings and current maturities of long-term debt	64			367
Short-term operating lease liabilities	454			—
Other current liabilities	140			208
Total current liabilities	3,207			3,313
Long-term debt	5,121			3,902
Deferred tax liability	483			444
Employee benefit obligations	141			153
Operating lease liabilities	1,671			—
Other long-term liabilities	328			488
Total long-term liabilities	7,744			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 September 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 September 30, 2019 and December 31, 2018, respectively	—			—
Additional paid-in capital	2,056			3,311
Retained earnings	680			377
Accumulated other comprehensive loss	(205		)	(154		)
Total stockholders’ equity before noncontrolling interests	2,572			3,575
Noncontrolling interests	393			395
Total equity	2,965			3,970
Total liabilities and equity	$	13,916		$	12,270

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions, except per share data)	2019			2018			2019			2018
Revenue	$	4,154		$	4,335		$	12,512		$	12,890
Operating expenses
Cost of transportation and services	2,068			2,249			6,272			6,748
Direct operating expense	1,401			1,431			4,224			4,213
Sales, general and administrative expense	456			446			1,397			1,351
Total operating expenses	3,925			4,126			11,893			12,312
Operating income	229			209			619			578
Other expense (income)	(11		)	(18		)	(41		)	(67		)
Foreign currency (gain) loss	(5		)	3			5			5
Debt extinguishment loss	—			17			5			27
Interest expense	75			51			218			165
Income before income tax provision	170			156			432			448
Income tax provision	34			41			99			95
Net income	136			115			333			353
Net income attributable to noncontrolling interests	(6		)	(6		)	(21		)	(22		)
Net income attributable to XPO	$	130		$	109		$	312		$	331

Earnings per share data:
Net income attributable to common shareholders	$	117		$	101		$	282		$	306

Basic earnings per share	$	1.27		$	0.81		$	2.91		$	2.50
Diluted earnings per share	$	1.14		$	0.74		$	2.63		$	2.26

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	92			125			97			122
Diluted weighted-average common shares outstanding	102			137			107			135

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
(In millions)	2019			2018			2019			2018
Net income	$	136		$	115		$	333		$	353

Other comprehensive loss, net of tax
Foreign currency translation loss, net of tax effect of $(11), $(1), $(17) and $1	$	(66	)	$	(12	)	$	(68	)	$	(81	)
Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $-, $-, $- and $(1)	—			—			1			(8		)
Defined benefit plans adjustments, net of tax effect of $- in all periods	(1		)	—			(1		)	(1		)
Other comprehensive loss	(67		)	(12		)	(68		)	(90		)
Comprehensive income	$	69		$	103		$	265		$	263
Less: Comprehensive (loss) income attributable to noncontrolling interests	(9		)	4			4			7
Comprehensive income attributable to XPO	$	78		$	99		$	261		$	256

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Nine Months Ended September 30,
(In millions)	2019			2018
Operating activities
Net income	$	333		$	353
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization	546			528
Stock compensation expense	48			64
Accretion of debt	16			11
Deferred tax expense	26			14
Debt extinguishment loss	5			27
Unrealized loss (gain) on foreign currency option and forward contracts	5			(13		)
Gains on sale of property and equipment	(73		)	(3		)
Other	17			7
Changes in assets and liabilities:
Accounts receivable	(190		)	(262		)
Other assets	(12		)	(99		)
Accounts payable	(153		)	(4		)
Accrued expenses and other liabilities	(126		)	(87		)
Net cash provided by operating activities	442			536
Investing activities
Payment for purchases of property and equipment	(413		)	(413		)
Proceeds from sale of property and equipment	192			92
Cash collected on deferred purchase price receivable	186			—
Other	—			(13		)
Net cash used in investing activities	(35		)	(334		)
Financing activities
Proceeds from issuance of debt	1,751			896
Repurchase of debt	—			(1,225		)
Proceeds from borrowings on ABL facility	1,690			925
Repayment of borrowings on ABL facility	(1,690		)	(1,025		)
Repayment of debt and finance leases	(850		)	(85		)
Payment for debt issuance costs	(28		)	(6		)
Proceeds from forward sale settlement	—			349
Repurchase of common stock	(1,347		)	—
Change in bank overdrafts	2			18
Payment for tax withholdings for restricted shares	(11		)	(49		)
Dividends paid	(3		)	(4		)
Other	7			5
Net cash used in financing activities	(479		)	(201		)
Effect of exchange rates on cash, cash equivalents and restricted cash	(7		)	(10		)
Net decrease in cash, cash equivalents and restricted cash	(79		)	(9		)
Cash, cash equivalents and restricted cash, beginning of period	514			449
Cash, cash equivalents and restricted cash, end of period	$	435		$	440
Supplemental disclosure of cash flow information:
Cash paid for interest	$	202		$	172
Cash paid for income taxes	$	89		$	46

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)



	Series A Preferred Stock			Common Stock
(Shares in thousands, dollars in millions)	Shares	Amount		Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total XPO Stockholders' Equity			Non-controlling Interests			Total Equity
Balance as of June 30, 2019	72	$	41	91,992	$	—	$	2,054		$	563		$	(153	)	$	2,505		$	407		$	2,912
Net income	—	—		—	—		—			130			—			130			6			136
Other comprehensive loss	—	—		—	—		—			—			(52		)	(52		)	(15		)	(67		)
Exercise and vesting of stock compensation awards	—	—		242	—		—			—			—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(7		)	—			—			(7		)	—			(7		)
Retirement of common stock	—	—		—	—		—			—			—			—			—			—
Dividend declared	—	—		—	—		—			(1		)	—			(1		)	(3		)	(4		)
Stock compensation expense	—	—		—	—		8			—			—			8			—			8
Adoption of new accounting standard and other	—	—		—	—		1			(12		)	—			(11		)	(2		)	(13		)
Balance as of September 30, 2019	72	$	41	92,234	$	—	$	2,056		$	680		$	(205	)	$	2,572		$	393		$	2,965



	Series A Preferred Stock			Common Stock
(Shares in thousands, dollars in millions)	Shares	Amount		Shares		Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total XPO Stockholders' Equity			Non-controlling Interests			Total Equity
Balance as of December 31, 2018	72	$	41	115,683		$	—	$	3,311		$	377		$	(154	)	$	3,575		$	395		$	3,970
Net income	—	—		—		—		—			312			—			312			21			333
Other comprehensive loss	—	—		—		—		—			—			(51		)	(51		)	(17		)	(68		)
Exercise and vesting of stock compensation awards	—	—		423		—		—			—			—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—		—		(11		)	—			—			(11		)	—			(11		)
Retirement of common stock	—	—		(23,932	)	—		(1,275		)	—			—			(1,275		)	—			(1,275		)
Dividend declared	—	—		—		—		—			(2		)	—			(2		)	(4		)	(6		)
Stock compensation expense	—	—		—		—		27			—			—			27			—			27
Adoption of new accounting standard and other	—	—		60		—		4			(7		)	—			(3		)	(2		)	(5		)
Balance as of September 30, 2019	72	$	41	92,234		$	—	$	2,056		$	680		$	(205	)	$	2,572		$	393		$	2,965

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Changes in Equity (continued)

(Unaudited)



	Series A Preferred Stock			Common Stock
(Shares in thousands, dollars in millions)	Shares	Amount		Shares	Amount		Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total XPO Stockholders' Equity			Non-controlling Interests			Total Equity
Balance as of June 30, 2018	72	$	41	120,849	$	—	$	3,562		$	178		$	(49	)	$	3,732		$	408		$	4,140
Net income	—	—		—	—		—			109			—			109			6			115
Other comprehensive loss	—	—		—	—		—			—			(10		)	(10		)	(2		)	(12		)
Exercise and vesting of stock compensation awards	—	—		52	—		—			—			—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(4		)	—			—			(4		)	—			(4		)
Issuance of common stock from forward sale settlement	—	—		6,000	—		349			—			—			349			—			349
Dividend declared	—	—		—	—		—			(1		)	—			(1		)	(4		)	(5		)
Stock compensation expense	—	—		—	—		7			—			—			7			—			7
Balance as of September 30, 2018	72	$	41	126,901	$	—	$	3,914		$	286		$	(59	)	$	4,182		$	408		$	4,590



	Series A Preferred Stock			Common Stock
(Shares in thousands, dollars in millions)	Shares	Amount		Shares	Amount		Additional Paid-In Capital		(Accumulated Deficit)/Retained Earnings			Accumulated Other Comprehensive Income (Loss)		Total XPO Stockholders' Equity		Non-controlling Interests		Total Equity
Balance as of December 31, 2017	72	$	41	119,920	$	—	$	3,590	$	(43	)	$	16	$	3,604	$	406	$	4,010
Net income	—	—		—	—		—		331			—		331		22		353
Other comprehensive loss	—	—		—	—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$0.00	110	$5,888

10-Q	2019-10-28	Quarter: 2019-09-30
10-Q	2019-08-01	Quarter: 2019-06-30
10-Q	2019-05-01	Quarter: 2019-03-31
10-K	2019-02-14	Annual: 2018-12-31
10-Q	2018-11-05	Quarter: 2018-09-30
10-Q	2018-08-03	Quarter: 2018-06-30
10-Q	2018-05-07	Quarter: 2018-03-31
10-K	2018-02-12	Annual: 2017-12-31
10-Q	2017-11-06	Quarter: 2017-09-30
10-Q	2017-08-04	Quarter: 2017-06-30
10-Q	2017-05-09	Quarter: 2017-03-31
10-K	2017-02-28	Annual: 2016-12-31
10-Q	2016-11-08	Quarter: 2016-09-30
10-Q	2016-08-08	Quarter: 2016-06-30
10-Q	2016-05-05	Quarter: 2016-03-31
10-K	2016-02-29	Annual: 2015-12-31
10-Q	2015-11-09	Quarter: 2015-09-30
10-Q	2015-08-10	Quarter: 2015-06-30
10-Q	2015-05-07	Quarter: 2015-03-31
10-K	2015-02-23	Annual: 2014-12-31
10-Q	2014-11-07	Quarter: 2014-09-30
10-Q	2014-07-31	Quarter: 2014-06-30
10-Q	2014-05-02	Quarter: 2014-03-31
10-K	2014-02-26	Annual: 2013-12-31
10-Q	2013-11-05	Quarter: 2013-09-30
10-Q	2013-08-01	Quarter: 2013-06-30
10-Q	2013-05-08	Quarter: 2013-03-31
10-K	2013-03-12	Annual: 2012-12-31
10-Q	2012-11-06	Quarter: 2012-09-30
10-Q	2012-08-07	Quarter: 2012-06-30
10-Q	2012-05-10	Quarter: 2012-03-31
10-Q	2011-11-10	Quarter: 2011-09-30
10-Q	2011-08-15	Quarter: 2011-06-30
10-Q	2011-05-13	Quarter: 2011-03-31
10-K	2011-03-25	Annual: 2010-12-31
10-Q	2010-11-12	Quarter: 2010-09-30
10-Q	2010-08-13	Quarter: 2010-06-30
10-Q	2010-05-12	Quarter: 2010-03-31
10-K	2010-03-26	Annual: 2009-12-31

8-K	2020-01-15	Other Events, Exhibits
8-K	2019-11-25	Regulation FD, Exhibits
8-K	2019-10-28	Earnings, Exhibits
8-K	2019-10-28	Regulation FD, Exhibits
8-K	2019-08-01	Regulation FD, Exhibits
8-K	2019-08-01	Earnings, Exhibits
8-K	2019-06-05	Officers
8-K	2019-05-15	Officers, Shareholder Vote, Exhibits
8-K	2019-05-01	Regulation FD, Exhibits
8-K	2019-05-01	Earnings, Exhibits
8-K	2019-04-30	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-03-18	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2019-03-11	Officers
8-K	2019-03-07	Enter Agreement, Other Events
8-K	2019-02-22	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2019-02-19	Other Events, Exhibits
8-K	2019-02-19	Regulation FD, Other Events, Exhibits
8-K	2019-02-14	Earnings, Exhibits
8-K	2019-02-14	Regulation FD, Exhibits
8-K	2019-02-07	Officers, Other Events, Exhibits
8-K	2018-12-24	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-12-13	Other Events, Exhibits
8-K	2018-12-11	Regulation FD
8-K	2018-10-31	Regulation FD, Exhibits
8-K	2018-10-31	Earnings, Exhibits
8-K	2018-10-29	Officers
8-K	2018-08-01	Officers, Exhibits
8-K	2018-08-01	Regulation FD, Exhibits
8-K	2018-08-01	Earnings, Exhibits
8-K	2018-07-30	Off-BS Arrangement, Other Events
8-K	2018-05-17	Shareholder Vote
8-K	2018-05-02	Regulation FD, Exhibits
8-K	2018-05-02	Earnings, Exhibits
8-K	2018-04-23	Officers, Exhibits
8-K	2018-02-23	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2018-02-14	Other Events
8-K	2018-02-07	Regulation FD, Exhibits
8-K	2018-02-07	Earnings, Exhibits

EX-31.1	xpo2019q310-qexx311.htm
EX-31.2	xpo2019q310-qexx312.htm
EX-32.1	xpo2019q310-qexx321.htm
EX-32.2	xpo2019q310-qexx322.htm