XPO Logistics, Inc. [XPO] Filings

10-Q 1 xpo-20220331.htm 10-Q xpo-20220331

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 March 31, 2022


☐			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

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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 May 4, 2022, there were 115,018,449 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 March 31, 2022

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			Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited):
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			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk			27
Item 4. Controls and Procedures			27
Part II—Other Information
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3. Defaults Upon Senior Securities			28
Item 4. Mine Safety Disclosures			28
Item 5. Other Information			28
Item 6. Exhibits			29
Signatures			30

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Part I—Financial Information

Item 1. Financial Statements.

XPO Logistics, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


	March 31,		December 31,
(In millions, except per share data)	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	1,004	$	260
Accounts receivable, net of allowances of $47 and $47, respectively	2,248		2,105
Other current assets	279		286
Current assets of discontinued operations	24		26
Total current assets	3,555		2,677
Long-term assets
Property and equipment, net of $1,790 and $1,828 in accumulated depreciation, respectively	1,796		1,808
Operating lease assets	821		908
Goodwill	2,332		2,479
Identifiable intangible assets, net of $578 and $612 in accumulated amortization, respectively	548		580
Other long-term assets	268		255

Total long-term assets	5,765		6,030
Total assets	$	9,320	$	8,707
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,330	$	1,110
Accrued expenses	1,084		1,107
Short-term borrowings and current maturities of long-term debt	682		58
Short-term operating lease liabilities	134		170
Other current liabilities	178		69
Current liabilities of discontinued operations	24		24
Total current liabilities	3,432		2,538
Long-term liabilities
Long-term debt	2,877		3,514
Deferred tax liability	300		316
Employee benefit obligations	120		122
Long-term operating lease liabilities	682		752
Other long-term liabilities	311		327

Total long-term liabilities	4,290		5,031
Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 115 shares issued and outstanding as of March 31, 2022 and December 31, 2021	—		—
Additional paid-in capital	1,176		1,179
Retained earnings	531		43
Accumulated other comprehensive loss	(109)		(84)


Total equity	1,598		1,138
Total liabilities and equity	$	9,320	$	8,707

See accompanying notes to condensed consolidated financial statements.

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XPO Logistics, Inc.

Condensed Consolidated Statements of Income

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)		2022		2021
Revenue		$	3,473	$	2,989
Cost of transportation and services (exclusive of depreciation and amortization)		2,437		2,053
Direct operating expense (exclusive of depreciation and amortization)		385		334
Sales, general and administrative expense		344		338
Depreciation and amortization expense		116		119
Gain on sale of business		(450)		—
Transaction and integration costs		10		5
Restructuring costs		6		1
Operating income		625		139
Other income		(14)		(16)
Debt extinguishment loss		—		8
Interest expense		37		65
Income from continuing operations before income tax provision		602		82
Income tax provision		113		19
Income from continuing operations		489		63
Income (loss) from discontinued operations, net of taxes		(1)		55
Net income		488		118

Net income from discontinued operations attributable to noncontrolling interests		—		(3)
Net income attributable to XPO		$	488	$	115

Net income (loss) attributable to common shareholders
Continuing operations		$	489	$	63
Discontinued operations		(1)		52
Net income attributable to common shareholders		$	488	$	115

Earnings (loss) per share data
Basic earnings per share from continuing operations		$	4.26	$	0.59
Basic earnings (loss) per share from discontinued operations		(0.01)		0.49
Basic earnings per share attributable to common shareholders		$	4.25	$	1.08
Diluted earnings per share from continuing operations		$	4.23	$	0.56
Diluted earnings (loss) per share from discontinued operations		(0.01)		0.46
Diluted earnings per share attributable to common shareholders		$	4.22	$	1.02

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding		115		106
Diluted weighted-average common shares outstanding		116		112

See accompanying notes to condensed consolidated financial statements.

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XPO Logistics, Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
(In millions)		2022		2021
Net income		$	488	$	118

Other comprehensive loss, net of tax
Foreign currency translation loss, net of tax effect of $(2) and $(6)		$	(26)	$	(42)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $— and $—		1		—

Other comprehensive loss		(25)		(42)
Comprehensive income		$	463	$	76
Less: Comprehensive loss attributable to noncontrolling interests		—		(2)
Comprehensive income attributable to XPO		$	463	$	78

See accompanying notes to condensed consolidated financial statements.

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XPO Logistics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2022		2021
Cash flows from operating activities of continuing operations
Net income	$	488	$	118
Income (loss) from discontinued operations, net of taxes	(1)		55
Income from continuing operations	489		63
Adjustments to reconcile income from continuing operations to net cash from operating activities
Depreciation, amortization and net lease activity	116		119
Stock compensation expense	8		6
Accretion of debt	4		5
Deferred tax (benefit) expense	(12)		9
Debt extinguishment loss	—		8
Gain on sale of business	(450)		—
Gains on sales of property and equipment	(1)		(23)
Other	10		2
Changes in assets and liabilities
Accounts receivable	(405)		(198)
Other assets	94		(21)
Accounts payable	366		34
Accrued expenses and other liabilities	(19)		73
Net cash provided by operating activities from continuing operations	200		77
Cash flows from investing activities of continuing operations
Proceeds from sale of business	705		—
Payment for purchases of property and equipment	(137)		(74)
Proceeds from sale of property and equipment	3		36

Net cash provided by (used in) investing activities from continuing operations	571		(38)
Cash flows from financing activities of continuing operations

Repayment of borrowings related to securitization program	—		(24)
Repurchase of debt	—		(1,200)

Repayment of borrowings on ABL facility	—		(200)
Repayment of debt and finance leases	(16)		(24)
Payment for debt issuance costs	—		(5)


Change in bank overdrafts	3		8
Payment for tax withholdings for restricted shares	(12)		(21)

Other	1		2
Net cash used in financing activities from continuing operations	(24)		(1,464)

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	Three Months Ended March 31,
(In millions)	2022		2021

Cash flows from discontinued operations
Operating activities of discontinued operations	1		96
Investing activities of discontinued operations	—		(57)
Financing activities of discontinued operations	—		(37)
Net cash provided by discontinued operations	1		2
Effect of exchange rates on cash, cash equivalents and restricted cash	(3)		(2)
Net increase (decrease) in cash, cash equivalents and restricted cash	745		(1,425)
Cash, cash equivalents and restricted cash, beginning of period	273		2,065
Cash, cash equivalents and restricted cash, end of period	1,018		640
Less: Cash, cash equivalents and restricted cash of discontinued operations, end of period	4		407
Cash, cash equivalents and restricted cash of continued operations, end of period	$	1,014	$	233
Supplemental disclosure of cash flow information

Leased assets obtained in exchange for new operating lease liabilities	$	46	$	79
Leased assets obtained in exchange for new finance lease liabilities	4		16
Cash paid for interest	13		74
Cash paid for income taxes	5		1

See accompanying notes to condensed consolidated financial statements.

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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 December 31, 2021	—	$	—	114,737	$	—	$	1,179	$	43	$	(84)	$	1,138	$	—	$	1,138
Net income	—	—		—	—		—		488		—		488		—		488
Other comprehensive loss	—	—		—	—		—		—		(25)		(25)		—		(25)

Exercise and vesting of stock compensation awards	—	—		245	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(12)		—		—		(12)		—		(12)





Stock compensation expense	—	—		—	—		8		—		—		8		—		8
Other	—	—		—	—		1		—		—		1		—		1
Balance as of March 31, 2022	—	$	—	114,982	$	—	$	1,176	$	531	$	(109)	$	1,598	$	—	$	1,598


	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, 2020	1	$	1	102,052	$	—	$	1,998	$	868	$	(158)	$	2,709	$	140	$	2,849
Net income	—	—		—	—		—		115		—		115		3		118
Other comprehensive loss	—	—		—	—		—		—		(37)		(37)		(5)		(42)
Exercise and vesting of stock compensation awards	—	—		270	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(21)		—		—		(21)		—		(21)
Conversion of preferred stock to common stock	(1)	(1)		139	—		1		—		—		—		—		—
Exercise of warrants	—	—		9,215	—		—		—		—		—		—		—

Stock compensation expense	—	—		—	—		10		—		—		10		—		10

Balance as of March 31, 2021	—	$	—	111,676	$	—	$	1,988	$	983	$	(195)	$	2,776	$	138	$	2,914

See accompanying notes to condensed consolidated financial statements.

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XPO Logistics, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Description of Business and Basis of Presentation

XPO Logistics, Inc., together with its subsidiaries (“XPO” or “we”), is a leading provider of freight transportation services. We use our proprietary technology to move goods efficiently through our customers’ supply chains, primarily by providing less-than-truckload (“LTL”) and truck brokerage services. See Note 4—Segment Reporting for additional information on our operations.

2022 Strategic Plan

On March 8, 2022, we announced that our Board of Directors approved a plan to pursue the strategic spin-off of our tech-enabled brokered transportation platform in North America as a publicly traded company and to pursue two divestitures: the sale of our North American intermodal operation and the sale or listing of our European business. We sold our intermodal operation, which provides rail brokerage and drayage services, in March 2022. For further information, see Note 3—Divestiture.

If the spin-off to XPO shareholders is completed, the transaction will result in two pure-play, publicly traded companies with simplified business models and clearly delineated value propositions. The core business of the spin-off will be our truck brokerage service, with complementary brokered services for managed transportation, last mile logistics and global forwarding. The remaining company will be an asset-based provider of LTL service in North America. The planned spin-off transaction, which is intended to be tax-free to XPO and our shareholders for U.S. federal income tax purposes, would result in XPO shareholders owning stock in both companies. In connection with the transaction, it is anticipated that a portion of XPO’s outstanding debt may be repaid using proceeds from borrowings incurred and debt securities to be issued by the spun-off company.

We currently expect to complete the spin-off in the fourth quarter of 2022, subject to various conditions, including the effectiveness of a Form 10 registration statement, receipt of a tax opinion from counsel, the refinancing of XPO’s debt on terms satisfactory to the XPO Board of Directors, and final approval by the XPO Board of Directors, among other requirements. There can be no assurance that any strategic transaction will occur, or if one or more do occur, of the terms or timing.

2021 Spin-Off of the Logistics Segment

On August 2, 2021, we completed the spin-off of our Logistics segment as GXO Logistics, Inc. (“GXO”). The historical results of our Logistics segment are presented as discontinued operations in our Condensed Consolidated Financial Statements. For information on our discontinued operations, see Note 2—Discontinued Operations.

Basis of Presentation

We prepared our Condensed Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and on the same basis as the accounting policies described in our annual report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). The interim reporting requirements of Form 10-Q allow certain information and note disclosures normally included in annual consolidated financial statements to be condensed or omitted. These Condensed Consolidated Financial Statements should be read in conjunction with the 2021 Form 10-K.

The Condensed Consolidated Financial Statements are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair presentation of the financial condition, operating results and cash flows for the interim periods presented. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

We have recast prior period amounts to conform to the current period’s presentation.

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Restricted Cash

As of March 31, 2022 and December 31, 2021, our restricted cash included in Other long-term assets on our Condensed Consolidated Balance Sheets was $10 million.

Trade Receivables Securitization and Factoring Programs

We sell certain of our trade accounts receivable on a non-recourse basis to third-party financial institutions under factoring agreements. We also sell trade accounts receivable under our securitization program. We use trade receivables securitization and factoring programs to help manage our cash flows and offset the impact of extended payment terms for some of our customers.

The maximum amount of net cash proceeds available at any one time under our securitization program, inclusive of any unsecured borrowings, is €200 million (approximately $221 million as of March 31, 2022). As of March 31, 2022, €1 million (approximately $1 million) was available under the program, subject to having sufficient receivables available to sell and with consideration to amounts previously purchased. The weighted average interest rate was 0.53% as of March 31, 2022. Charges for commitment fees, which are based on a percentage of available amounts, and charges for administrative fees were not material to our results of operations for the three months ended March 31, 2022 and 2021.

Information related to the trade receivables sold was as follows:


	Three Months Ended March 31,
(In millions)		2022		2021 (1)
Securitization programs
Receivables sold in period		$	447	$	347
Cash consideration		447		347

Factoring programs
Receivables sold in period		27		16
Cash consideration		27		16

(1) Information for the three months ended March 31, 2021 excludes the Logistics segment.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The levels of inputs used to measure fair value are:

•Level 1—Quoted prices for identical instruments in active markets;

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and

•Level 3—Valuations based on inputs that are unobservable, generally utilizing pricing models or other valuation techniques that reflect management’s judgment and estimates.

We base our fair value estimates on market assumptions and available information. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and current maturities of long-term debt approximated their fair values as of March 31, 2022 and December 31, 2021 due to their short-term nature and/or being receivable or payable on demand. The Level 1 cash equivalents include money market funds valued using quoted prices in active markets and a cash deposit for the securitization program. Our derivative instruments are classified as Level 2 and are valued using inputs other than quoted prices, such as foreign exchange rates and yield curves. For information on financial liabilities, see Note 7—Debt.

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The fair value hierarchy of cash equivalents was as follows:


(In millions)	Carrying Value		Fair Value		Level 1
March 31, 2022	$	931	$	931	$	931
December 31, 2021	181		181		181

Cash equivalents at March 31, 2022 include the cash proceeds from the sale of our intermodal operation in March 2022. For further information, see Note 3—Divestiture.

Adoption of New Accounting Standard

In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.” The ASU increases the transparency surrounding government assistance by requiring annual disclosure of (i) the types of assistance received, (ii) an entity’s accounting for the assistance and (iii) the effect of the assistance on the entity’s financial statements. We adopted this standard on January 1, 2022, on a prospective basis. The adoption did not have a material impact on our financial statement disclosures.

Accounting Pronouncement Issued but Not Yet Effective

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting.” The ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform. The amendments apply only to contracts and hedging relationships that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The amendments are elective and are effective upon issuance through December 31, 2022. We intend to apply this guidance if modifications of contracts that include LIBOR occur, which is not expected to have a material impact on our consolidated financial statements.

2. Discontinued Operations

The following table summarizes the financial results from discontinued operations of GXO:


	Three Months Ended March 31,
(In millions)		2021
Revenue		$	1,818
Direct operating expense (exclusive of depreciation and amortization)		1,514
Sales, general and administrative expense		150
Depreciation and amortization expense		73
Transaction and other operating costs		17
Operating income		64
Other income		(11)
Interest expense		4
Income from discontinued operations before income tax provision		71
Income tax provision		16
Net income from discontinued operations, net of taxes		55
Net income from discontinued operations attributable to noncontrolling interests		(3)
Net income from discontinued operations attributable to GXO		$	52

During the three months ended March 31, 2022 and 2021, we incurred approximately $4 million and $13 million, respectively, of costs related to the GXO spin-off. For the three months ended March 31, 2021, $12 million of these

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costs are reflected within income from discontinued operations in our Condensed Consolidated Statements of Income.

In accordance with a separation and distribution agreement, GXO has agreed to indemnify XPO for payments XPO makes with respect to certain self-insurance matters that were incurred by GXO prior to the spin-off and remain obligations of XPO. The receivable and reserve for these matters was approximately $20 million each as of March 31, 2022 and approximately $23 million and $21 million, respectively, as of December 31, 2021.

3. Divestiture

In March 2022, we sold our North American intermodal operation for cash proceeds of approximately $705 million, net of cash disposed and subject to a customary post-closing purchase price adjustment. We recorded a pre-tax gain on the sale of $450 million, net of transaction costs, for the three months ended March 31, 2022. We agreed to provide certain specified customary transition services for a period not exceeding 12 months from the sale. The intermodal operation generated revenue of $1.2 billion and operating income of $53 million for the year ended December 31, 2021. The intermodal operation was included in our Brokerage and Other Services segment through the date of the sale.

4. Segment Reporting

We are organized into two reportable segments: (i) North American LTL and (ii) Brokerage and Other Services.

In our asset-based North American LTL segment, we provide our customers with geographic density and day-definite regional, inter-regional and transcontinental LTL freight services. Our services include cross-border U.S. freight movements to and from Mexico and Canada, as well as intra-Canada service.

In our asset-light Brokerage and Other Services segment, shippers create demand for our technology-enabled services and we place their freight with qualified independent carriers, pricing the transactions on either a contract or a spot basis. Our truck brokerage business is the largest component of the segment, which also includes three complementary brokered services: managed transportation, last mile logistics for heavy goods and global forwarding. Our European business, which we plan to divest through either a sale or a listing on a European stock exchange, is also currently reported within this segment.

Some of our operating units provide services to our other operating units outside of their reportable segment. Billings for such services are based on negotiated rates and are reflected as revenues of the billing segment. We adjust these rates from time to time based on market conditions. We eliminate intersegment revenues and expenses in our consolidated results.

Corporate includes corporate headquarters costs for executive officers and certain legal and financial functions, and other costs and credits not attributed to our reporting segments.

Our chief operating decision maker (“CODM”) regularly reviews financial information at the operating segment level to allocate resources to the segments and to assess their performance. We include items directly attributable to a segment, and those that can be allocated on a reasonable basis, in segment results reported to the CODM. We do not provide asset information by segment to the CODM. Our CODM evaluates segment profit (loss) based on adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), which we define as income from continuing operations before debt extinguishment loss, interest expense, income tax, depreciation and amortization expense, gain on sale of business, transaction and integration costs, restructuring costs and other adjustments.

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Selected financial data for our segments is as follows:


	Three Months Ended March 31,
(in millions)		2022		2021
Revenue
North American LTL		$	1,105	$	962
Brokerage and Other Services		2,432		2,071
Eliminations		(64)		(44)
Total		$	3,473	$	2,989

Adjusted EBITDA
North American LTL		$	205	$	214
Brokerage and Other Services		164		125
Corporate		(48)		(60)
Total adjusted EBITDA		321		279
Less:
Debt extinguishment loss		—		8
Interest expense		37		65
Income tax provision		113		19
Depreciation and amortization expense		116		119
Unrealized (gain) loss on foreign currency option and forward contracts		—		(1)
Gain on sale of business		(450)		—

Transaction and integration costs (1)		10		5
Restructuring costs (2)		6		1
Income from continuing operations		$	489	$	63

Depreciation and amortization expense
North American LTL		$	55	$	55
Brokerage and Other Services		60		60
Corporate		1		4
Total		$	116	$	119

(1) Transaction and integration costs for the three months ended March 31, 2022 and 2021 are primarily comprised of third-party professional fees related to strategic initiatives, including the spin-offs and other disposal activities, as well as retention awards paid to certain employees. Transaction and integration costs for the three months ended March 31, 2022 and 2021 include $2 million and $1 million, respectively, related to our Brokerage and Other Services segment and $8 million and $4 million, respectively, related to Corporate.

(2) See Note 6— Restructuring Charges for further information on our restructuring actions.

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5. Revenue Recognition

Disaggregation of Revenues

We disaggregate our revenue by geographic area and service offering. Our revenue disaggregated by geographical area, based on sales office location, was as follows:


	Three Months Ended March 31, 2022
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,082	$	1,519	$	(64)	$	2,537
North America (excluding United States)	23		101		—		124
France	—		352		—		352
United Kingdom	—		225		—		225
Europe (excluding France and United Kingdom)	—		210		—		210
Other	—		25		—		25
Total	$	1,105	$	2,432	$	(64)	$	3,473


	Three Months Ended March 31, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	940	$	1,221	$	(44)	$	2,117
North America (excluding United States)	22		69		—		91
France	—		342		—		342
United Kingdom	—		209		—		209
Europe (excluding France and United Kingdom)	—		213		—		213
Other	—		17		—		17
Total	$	962	$	2,071	$	(44)	$	2,989

Table of Contents

Our revenue disaggregated by service offering was as follows:


	Three Months Ended March 31,
(In millions)		2022		2021
North America
LTL (1)		$	1,133	$	976
Truck brokerage		824		596
Last mile		246		246
Other brokerage (2)		551		453
Total North America		2,754		2,271
Europe		787		763
Eliminations		(68)		(45)
Total		$	3,473	$	2,989

(1) LTL revenue is before intercompany eliminations and includes revenue from our trailer manufacturing business.

(2) Other brokerage includes intermodal, expedite, freight forwarding and managed transportation services. Freight forwarding includes operations conducted outside of North America but managed by our North American entities. In March 2022, we sold our intermodal operation. For further information, see Note 3—Divestiture.

Performance Obligations

Remaining performance obligations represent firm contracts for which services have not been performed and future revenue recognition is expected. As permitted in determining the remaining performance obligation, we omit obligations that: (i) have original expected durations of one year or less or (ii) contain variable consideration. On March 31, 2022, the fixed consideration component of our remaining performance obligation was approximately $120 million, and we expect approximately 89% of that amount to be recognized over the next three years and the remainder thereafter. We estimate remaining performance obligations at a point in time and actual amounts may differ from these estimates due to changes in foreign currency exchange rates and contract revisions or terminations.

6. Restructuring Charges

We engage in restructuring actions as part of our ongoing efforts to best use our resources and infrastructure, including actions in connection with spin-offs and other disposal activities. These actions generally include severance and facility-related costs, including impairment of operating lease assets, as well as contract termination costs and are intended to improve our efficiency and profitability.

Table of Contents

Our restructuring-related activity was as follows:


			Three Months Ended March 31, 2022
(In millions)	Reserve Balance as of December 31, 2021		Charges Incurred		Payments		Reserve Balance as of March 31, 2022
Severance

Brokerage and Other Services	$	6	$	2	$	(3)	$	5
Corporate	7		1		(2)		6
Total severance	13		3		(5)		11
Facilities

Brokerage and Other Services	2		—		—		2
Total facilities	2		—		—		2
Contract termination
North American LTL	—		3		(3)		—
Total contract termination	—		3		(3)		—
Total	$	15	$	6	$	(8)	$	13

We expect the majority of the cash outlays related to the charges incurred in the first quarter of 2022 will be complete within 12 months.

7. Debt


	March 31, 2022				December 31, 2021
(In millions)	Principal Balance		Carrying Value		Principal Balance		Carrying Value

Term loan facilities	$	2,003	$	1,979	$	2,003	$	1,977



6.25% Senior notes due 2025	1,150		1,141		1,150		1,141
6.70% Senior debentures due 2034	300		215		300		214

Finance leases, asset financing and other	224		224		240		240
Total debt	3,677		3,559		3,693		3,572
Short-term borrowings and current maturities of long-term debt	682		682		58		58
Long-term debt	$	2,995	$	2,877	$	3,635	$	3,514

The fair value of our debt and classification in the fair value hierarchy was as follows:


(In millions)	Fair Value		Level 1		Level 2
March 31, 2022	$	3,717	$	1,500	$	2,217
December 31, 2021	3,811		1,571		2,240

We valued Level 1 debt using quoted prices in active markets. We valued Level 2 debt using bid evaluation pricing models or quoted prices of securities with similar characteristics. The fair value of the asset financing arrangements approximates carrying value as the debt is primarily issued at a floating rate, the debt may be prepaid at any time at par without penalty, and the remaining life of the debt is short-term in nature.

ABL Facility

As of March 31, 2022, our borrowing base was $1.0 billion and our availability under our revolving loan credit agreement (the “ABL Facility”) was $996 million after considering outstanding letters of credit of $4 million. As of March 31, 2022, we were in compliance with the ABL Facility’s financial covenants.