XPO Logistics Earnings 2019-06-30

XPO 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

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 June 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)

_______________________________________________________

Securities registered or to be 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 July 26, 2019, there were 92,181,297 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 June 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	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	34
Item 4. Controls and Procedures	34
Part II—Other Information
Item 1. Legal Proceedings	36
Item 1A. Risk Factors	36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3. Defaults Upon Senior Securities	36
Item 4. Mine Safety Disclosures	36
Item 5. Other Information	36
Item 6. Exhibits	37
Signatures	38

Table of Contents

Part I—Financial Information

Item 1. Financial Statements.

XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



	June 30,			December 31,
(In millions, except per share data)	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

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Income

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except per share data)	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

Earnings per share data:
Net income attributable to common shareholders	$	122		$	138		$	165		$	205

Basic earnings per share	$	1.32		$	1.14		$	1.66		$	1.70
Diluted earnings per share	$	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

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2019			2018			2019			2018
Net income	$	145		$	159		$	197		$	238

Other comprehensive income (loss), net of tax
Foreign currency translation loss, net of tax effect of $-, $13, $(6) and $32	$	(1	)	$	(114	)	$	(2	)	$	(69	)
Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $(1), $3, $- and $(1)	4			(8		)	1			(8		)
Defined benefit plans adjustments, net of tax effect of $- in all periods	—			(1		)	—			(1		)
Other comprehensive income (loss)	3			(123		)	(1		)	(78		)
Comprehensive income	$	148		$	36		$	196		$	160
Less: Comprehensive income (loss) attributable to noncontrolling interests	13			(15		)	13			3
Comprehensive income attributable to XPO	$	135		$	51		$	183		$	157

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Six Months Ended June 30,
(In millions)	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
Supplemental disclosure of cash flow information:
Cash paid for interest	$	125		$	125
Cash paid for income taxes	$	58		$	27

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 March 31, 2019	72	$	41	93,207		$	—	$	2,122		$	428	$	(153	)	$	2,438		$	395		$	2,833
Net income	—	—		—		—		—			135		—			135			10			145
Other comprehensive income	—	—		—		—		—			—		—			—			3			3
Exercise and vesting of stock compensation awards	—	—		87		—		—			—		—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—		—		(2		)	—		—			(2		)	—			(2		)
Retirement of common stock	—	—		(1,362	)	—		(80		)	—		—			(80		)	—			(80		)
Dividend declared	—	—		—		—		—			—		—			—			(1		)	(1		)
Stock compensation expense	—	—		—		—		11			—		—			11			—			11
Other	—	—		60		—		3			—		—			3			—			3
Balance as of June 30, 2019	72	$	41	91,992		$	—	$	2,054		$	563	$	(153	)	$	2,505		$	407		$	2,912



	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	—	—		—		—		—			182			—			182			15			197
Other comprehensive income (loss)	—	—		—		—		—			—			1			1			(2		)	(1		)
Exercise and vesting of stock compensation awards	—	—		181		—		—			—			—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—		—		(4		)	—			—			(4		)	—			(4		)
Retirement of common stock	—	—		(23,932	)	—		(1,275		)	—			—			(1,275		)	—			(1,275		)
Dividend declared ($10.00 per share)	—	—		—		—		—			(1		)	—			(1		)	(1		)	(2		)
Stock compensation expense	—	—		—		—		19			—			—			19			—			19
Adoption of new accounting standard	—	—		—		—		—			6			—			6			—			6
Other	—	—		60		—		3			(1		)	—			2			—			2
Balance as of June 30, 2019	72	$	41	91,992		$	—	$	2,054		$	563		$	(153	)	$	2,505		$	407		$	2,912

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 Income (Loss)			Total XPO Stockholders' Equity			Non-controlling Interests			Total Equity
Balance as of March 31, 2018	72	$	41	120,598	$	—	$	3,558		$	33		$	49		$	3,681		$	424		$	4,105
Net income	—	—		—	—		—			149			—			149			10			159
Other comprehensive loss	—	—		—	—		—			—			(98		)	(98		)	(25		)	(123		)
Exercise and vesting of stock compensation awards	—	—		194	—		—			—			—			—			—			—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(5		)	—			—			(5		)	—			(5		)
Dividend declared	—	—		—	—		—			—			—			—			(1		)	(1		)
Stock compensation expense	—	—		—	—		9			—			—			9			—			9
Other	—	—		57	—		—			(4		)	—			(4		)	—			(4		)
Balance as of June 30, 2018	72	$	41	120,849	$	—	$	3,562		$	178		$	(49	)	$	3,732		$	408		$	4,140



	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	—	—		—	—		—			222			—			222			16			238
Other comprehensive loss	—	—		—	—		—			—			(65		)	(65		)	(13		)	(78		)
Exercise and vesting of stock compensation awards	—	—		872	—		1			—			—			1			—			1
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(45		)	—			—			(45		)	—			(45		)
Dividend declared ($10.00 per share)	—	—		—	—		—			(1		)	—			(1		)	(1		)	(2		)
Stock compensation expense	—	—		—	—		16			—			—			16			—			16
Other	—	—		57	—		—			—			—			—			—

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$61.44	92	$5,650

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

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	Earnings, Exhibits
8-K	2019-05-01	Regulation FD, 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	2019-02-22	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2019-02-19	Regulation FD, Other Events, Exhibits
8-K	2019-02-19	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	Earnings, Exhibits
8-K	2018-10-31	Regulation FD, Exhibits
8-K	2018-10-29	Officers
8-K	2018-08-01	Officers, Exhibits
8-K	2018-08-01	Earnings, Exhibits
8-K	2018-08-01	Regulation FD, 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	2018-04-23	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

PHI	PLDT	5,180
ALKS	Alkermes	4,210
MLP	Maui Land & Pineapple	223
UG	United Guardian	87
FRSX	Foresight Autonomous	38
EACO	Eaco	0
KMG	KMG Chemicals	0
PTIE	Pain Therapeutics	0
AEI26	AEI Income & Growth Fund 26	0
ENJ	Entergy New Orleans	0

EX-10.3	xpo2019q210-qexx103.htm
EX-10.4	xpo2019q210-qexx104.htm
EX-10.5	xpo2019q210-qexx105.htm
EX-10.6	xpo2019q210-qexx106.htm
EX-10.7	xpo2019q210-qexx107.htm
EX-31.1	xpo2019q210-qexx311.htm
EX-31.2	xpo2019q210-qexx312.htm
EX-32.1	xpo2019q210-qexx321.htm
EX-32.2	xpo2019q210-qexx322.htm