XPO Logistics Earnings 2020-09-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

xpo-20200930

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, 2020


☐			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 November 2, 2020, there were 91,415,716 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, 2020

Table of Contents


			Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Income (Loss)			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			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			34
Part II—Other Information
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 3. Defaults Upon Senior Securities			37
Item 4. Mine Safety Disclosures			37
Item 5. Other Information			37
Item 6. Exhibits			37
Signatures			39

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)	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	2,025	$	377
Accounts receivable, net of allowances of $79 and $58, respectively	2,624		2,500
Other current assets	435		465
Total current assets	5,084		3,342
Long-term assets
Property and equipment, net of $2,435 and $2,054 in accumulated depreciation, respectively	2,573		2,704
Operating lease assets	2,221		2,245
Goodwill	4,506		4,450
Identifiable intangible assets, net of $914 and $850 in accumulated amortization, respectively	994		1,092
Other long-term assets	367		295
Total long-term assets	10,661		10,786
Total assets	$	15,745	$	14,128
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,025	$	1,157
Accrued expenses	1,855		1,414
Short-term borrowings and current maturities of long-term debt	130		84
Short-term operating lease liabilities	461		468
Other current liabilities	177		135
Total current liabilities	3,648		3,258
Long-term liabilities
Long-term debt	6,545		5,182
Deferred tax liability	494		495
Employee benefit obligations	157		157
Long-term operating lease liabilities	1,763		1,776
Other long-term liabilities	353		364
Total long-term liabilities	9,312		7,974
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, 2020 and December 31, 2019, respectively	41		41
Common stock, $0.001 par value; 300 shares authorized; 91 and 92 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	—		—
Additional paid-in capital	1,971		2,061
Retained earnings	766		786
Accumulated other comprehensive loss	(129)		(145)
Total stockholders’ equity before noncontrolling interests	2,649		2,743
Noncontrolling interests	136		153
Total equity	2,785		2,896
Total liabilities and equity	$	15,745	$	14,128

See accompanying notes to condensed consolidated financial statements.

Table of Contents

XPO Logistics, Inc.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2020		2019		2020		2019
Revenue	$	4,221	$	4,154	$	11,587	$	12,512
Operating expenses
Cost of transportation and services	2,038		2,068		5,577		6,272
Direct operating expense	1,461		1,401		4,191		4,224
Sales, general and administrative expense	499		456		1,656		1,397
Total operating expenses	3,998		3,925		11,424		11,893
Operating income	223		229		163		619
Other income	(20)		(11)		(59)		(41)
Foreign currency (gain) loss	—		(5)		(5)		5
Debt extinguishment loss	—		—		—		5
Interest expense	86		75		240		218
Income (loss) before income tax provision (benefit)	157		170		(13)		432
Income tax provision (benefit)	59		34		(2)		99
Net income (loss)	98		136		(11)		333
Net income attributable to noncontrolling interests	(5)		(6)		(4)		(21)
Net income (loss) attributable to XPO	$	93	$	130	$	(15)	$	312

Earnings (loss) per share data
Net income (loss) attributable to common shareholders	$	84	$	117	$	(17)	$	282

Basic earnings (loss) per share	$	0.93	$	1.27	$	(0.18)	$	2.91
Diluted earnings (loss) per share	$	0.83	$	1.14	$	(0.18)	$	2.63

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	91		92		91		97
Diluted weighted-average common shares outstanding	102		102		91		107

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)	2020		2019		2020		2019
Net income (loss)	$	98	$	136	$	(11)	$	333

Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $13, $(11), $6 and $(17)	$	71	$	(66)	$	27	$	(68)
Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $—, $—, $— and $—	(1)		—		(1)		1
Defined benefit plans adjustments, net of tax effect of $(1), $—, $1 and $—	(2)		(1)		(7)		(1)
Other comprehensive income (loss)	68		(67)		19		(68)
Comprehensive income	$	166	$	69	$	8	$	265
Less: Comprehensive income (loss) attributable to noncontrolling interests	10		(9)		7		4
Comprehensive income attributable to XPO	$	156	$	78	$	1	$	261

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)	2020		2019
Operating activities
Net income (loss)	$	(11)	$	333
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation, amortization and net lease activity	572		546
Stock compensation expense	50		48
Accretion of debt	14		16
Deferred tax expense	4		26
Debt extinguishment loss	—		5
Unrealized (gain) loss on foreign currency option and forward contracts	(1)		5
Gains on sales of property and equipment	(68)		(73)
Other	46		17
Changes in assets and liabilities
Accounts receivable	(152)		(190)
Other assets	(52)		(12)
Accounts payable	(105)		(153)
Accrued expenses and other liabilities	395		(126)
Net cash provided by operating activities	692		442
Investing activities
Payment for purchases of property and equipment	(377)		(413)
Proceeds from sale of property and equipment	148		192
Cash collected on deferred purchase price receivable	—		186
Other	5		—
Net cash used in investing activities	(224)		(35)
Financing activities
Proceeds from issuance of debt	1,155		1,751
Proceeds from borrowings related to securitization program	48		—
Proceeds from borrowings on ABL facility	820		1,690
Repayment of borrowings on ABL facility	(620)		(1,690)
Repayment of debt and finance leases	(65)		(850)
Payment for debt issuance costs	(21)		(28)
Purchase of noncontrolling interests	(21)		—
Repurchase of common stock	(114)		(1,347)
Change in bank overdrafts	20		2
Payment for tax withholdings for restricted shares	(21)		(11)
Other	1		4
Net cash provided by (used in) financing activities	1,182		(479)
Effect of exchange rates on cash, cash equivalents and restricted cash	(2)		(7)
Net increase (decrease) in cash, cash equivalents and restricted cash	1,648		(79)
Cash, cash equivalents and restricted cash, beginning of period	387		514
Cash, cash equivalents and restricted cash, end of period	$	2,035	$	435
Supplemental disclosure of cash flow information
Leased assets obtained in exchange for new operating lease liabilities	$	481	$	559
Leased assets obtained in exchange for new finance lease liabilities	32		35
Cash paid for interest	215		202
Cash paid for income taxes	20		89

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, 2020	72	$	41	91,322	$	—	$	1,963	$	672	$	(192)	$	2,484	$	150	$	2,634
Net income	—	—		—	—		—		93		—		93		5		98
Other comprehensive income	—	—		—	—		—		—		63		63		5		68
Exercise and vesting of stock compensation awards	—	—		39	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(3)		—		—		(3)		—		(3)
Purchase of noncontrolling interests	—	—		—	—		(1)		—		—		(1)		(20)		(21)
Dividend declared	—	—		—	—		—		—		—		—		(4)		(4)
Stock compensation expense	—	—		—	—		10		—		—		10		—		10
Other	—	—		—	—		2		1		—		3		—		3
Balance as of September 30, 2020	72	$	41	91,361	$	—	$	1,971	$	766	$	(129)	$	2,649	$	136	$	2,785


	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, 2019	72	$	41	92,342	$	—	$	2,061	$	786	$	(145)	$	2,743	$	153	$	2,896
Net (income) loss	—	—		—	—		—		(15)		—		(15)		4		(11)
Other comprehensive income	—	—		—	—		—		—		16		16		3		19
Exercise and vesting of stock compensation awards	—	—		672	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(21)		—		—		(21)		—		(21)
Purchase of noncontrolling interests	—	—		—	—		(1)		—		—		(1)		(20)		(21)
Retirement of common stock	—	—		(1,715)	—		(114)		—		—		(114)		—		(114)
Dividend declared	—	—		—	—		—		(2)		—		(2)		(4)		(6)
Stock compensation expense	—	—		—	—		42		—		—		42		—		42
Adoption of new accounting standard and other	—	—		62	—		4		(3)		—		1		—		1
Balance as of September 30, 2020	72	$	41	91,361	$	—	$	1,971	$	766	$	(129)	$	2,649	$	136	$	2,785

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, 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)
Dividend declared	—	—		—	—		—		(1)		—		(1)		(3)		(4)
Stock compensation expense	—	—		—	—		8		—		—		8		—		8
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

Price	70.54	EPS	3
Shares	107	P/E	23
MCap	7,548	P/FCF	17
Net Debt	4,686	EBIT	650
TEV	12,234	TEV/EBIT	19
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-09-30	Filed 2020-11-06
10-Q	2020-06-30	Filed 2020-08-03
10-Q	2020-03-31	Filed 2020-05-05
10-K	2019-12-31	Filed 2020-02-10
10-Q	2019-09-30	Filed 2019-10-28
10-Q	2019-06-30	Filed 2019-08-01
10-Q	2019-03-31	Filed 2019-05-01
10-K	2018-12-31	Filed 2019-02-14
10-Q	2018-09-30	Filed 2018-11-05
10-Q	2018-06-30	Filed 2018-08-03
10-Q	2018-03-31	Filed 2018-05-07
10-K	2017-12-31	Filed 2018-02-12
10-Q	2017-09-30	Filed 2017-11-06
10-Q	2017-06-30	Filed 2017-08-04
10-Q	2017-03-31	Filed 2017-05-09
10-K	2016-12-31	Filed 2017-02-28
10-Q	2016-09-30	Filed 2016-11-08
10-Q	2016-06-30	Filed 2016-08-08
10-Q	2016-03-31	Filed 2016-05-05
10-K	2015-12-31	Filed 2016-02-29
10-Q	2015-09-30	Filed 2015-11-09
10-Q	2015-06-30	Filed 2015-08-10
10-Q	2015-03-31	Filed 2015-05-07
10-K	2014-12-31	Filed 2015-02-23
10-Q	2014-09-30	Filed 2014-11-07
10-Q	2014-06-30	Filed 2014-07-31
10-Q	2014-03-31	Filed 2014-05-02
10-K	2013-12-31	Filed 2014-02-26
10-Q	2013-09-30	Filed 2013-11-05
10-Q	2013-06-30	Filed 2013-08-01
10-Q	2013-03-31	Filed 2013-05-08
10-K	2012-12-31	Filed 2013-03-12
10-Q	2012-09-30	Filed 2012-11-06
10-Q	2012-06-30	Filed 2012-08-07
10-Q	2012-03-31	Filed 2012-05-10
10-Q	2011-09-30	Filed 2011-11-10
10-Q	2011-06-30	Filed 2011-08-15
10-Q	2011-03-31	Filed 2011-05-13
10-K	2010-12-31	Filed 2011-03-25
10-Q	2010-09-30	Filed 2010-11-12
10-Q	2010-06-30	Filed 2010-08-13
10-Q	2010-03-31	Filed 2010-05-12
10-K	2009-12-31	Filed 2010-03-26

8-K	2020-11-05	Earnings, Exhibits
8-K	2020-11-05	Regulation FD, Exhibits
8-K	2020-07-30	Regulation FD, Exhibits
8-K	2020-07-30	Earnings, Exhibits
8-K	2020-07-30	Regulation FD, Exhibits
8-K	2020-05-27
8-K	2020-05-14
8-K	2020-05-04
8-K	2020-05-04
8-K	2020-05-04
8-K	2020-04-28
8-K	2020-04-23
8-K	2020-04-23
8-K	2020-04-23
8-K	2020-04-16
8-K	2020-03-20
8-K	2020-03-09
8-K	2020-02-10
8-K	2020-02-10
8-K	2020-02-10
8-K	2020-01-15
8-K	2019-11-25
8-K	2019-10-28
8-K	2019-10-28
8-K	2019-10-10
8-K	2019-08-01
8-K	2019-08-01
8-K	2019-06-05
8-K	2019-05-15
8-K	2019-05-01
8-K	2019-05-01
8-K	2019-04-30
8-K	2019-03-18
8-K	2019-03-11
8-K	2019-03-07
8-K	2019-02-22
8-K	2019-02-19
8-K	2019-02-19
8-K	2019-02-14
8-K	2019-02-14
8-K	2019-02-07
8-K	2018-12-24
8-K	2018-12-13
8-K	2018-12-11
8-K	2018-10-31
8-K	2018-10-31
8-K	2018-10-29
8-K	2018-08-01
8-K	2018-08-01
8-K	2018-08-01
8-K	2018-07-30
8-K	2018-05-17
8-K	2018-05-02
8-K	2018-05-02
8-K	2018-04-23
8-K	2018-02-23
8-K	2018-02-14
8-K	2018-02-07
8-K	2018-02-07

EX-31.1	xpo2020q310-qexx311.htm
EX-31.2	xpo2020q310-qexx312.htm
EX-32.1	xpo2020q310-qexx321.htm
EX-32.2	xpo2020q310-qexx322.htm

XPO 10Q Quarterly Report

XPO Logistics Earnings 2020-09-30