XPO, Inc 10-Q for FY2022 Q2

XPO, Inc. (XPO)

10-Q 2022-08-08 For: 2022-06-30

Added on April 09, 2026

About this 10-Q

XPO, Inc filed this 10-Q on August 8, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.23B; up 1.4% from $3.19B a year earlier
Net income: $141M; down 9.6% from net income of $156M a year earlier
Diluted EPS: $1.22; down 11.6% from $1.38 a year earlier

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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)


			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			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Item 3. Quantitative and Qualitative Disclosures About Market Risk			33
Item 4. Controls and Procedures			33
Part II—Other Information
Item 1. Legal Proceedings			33
Item 1A. Risk Factors			33
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			33
Item 3. Defaults Upon Senior Securities			33
Item 4. Mine Safety Disclosures			33
Item 5. Other Information			33
Item 6. Exhibits			34
Signatures			35


	June 30,		December 31,
(In millions, except per share data)	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	436	$	260
Accounts receivable, net of allowances of $47 and $47, respectively	2,190		2,105
Other current assets	271		286
Current assets of discontinued operations	19		26
Total current assets	2,916		2,677
Long-term assets
Property and equipment, net of $1,823 and $1,828 in accumulated depreciation, respectively	1,799		1,808
Operating lease assets	832		908
Goodwill	2,284		2,479
Identifiable intangible assets, net of $589 and $612 in accumulated amortization, respectively	522		580
Other long-term assets	287		255

Total long-term assets	5,724		6,030
Total assets	$	8,640	$	8,707
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,153	$	1,110
Accrued expenses	1,106		1,107
Short-term borrowings and current maturities of long-term debt	55		58
Short-term operating lease liabilities	142		170
Other current liabilities	159		69
Current liabilities of discontinued operations	19		24
Total current liabilities	2,634		2,538
Long-term liabilities
Long-term debt	2,857		3,514
Deferred tax liability	325		316
Employee benefit obligations	118		122
Long-term operating lease liabilities	689		752
Other long-term liabilities	310		327

Total long-term liabilities	4,299		5,031
Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 115 shares issued and outstanding as of June 30, 2022 and December 31, 2021	—		—
Additional paid-in capital	1,187		1,179
Retained earnings	672		43
Accumulated other comprehensive loss	(152)		(84)


Total equity	1,707		1,138
Total liabilities and equity	$	8,640	$	8,707


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions, except per share data)	2022		2021		2022		2021
Revenue	$	3,232	$	3,186	$	6,705	$	6,175
Cost of transportation and services (exclusive of depreciation and amortization)	2,153		2,186		4,590		4,239
Direct operating expense (exclusive of depreciation and amortization)	365		358		750		692
Sales, general and administrative expense	324		324		668		662
Depreciation and amortization expense	115		120		231		239
(Gain) loss on sale of business	16		—		(434)		—
Transaction and integration costs	25		6		35		11
Restructuring costs	4		1		10		2
Operating income	230		191		855		330
Other income	(15)		(10)		(29)		(26)
Debt extinguishment loss	26		—		26		8
Interest expense	31		58		68		123
Income from continuing operations before income tax provision	188		143		790		225
Income tax provision	47		30		160		49
Income from continuing operations	141		113		630		176
Income (loss) from discontinued operations, net of taxes	—		45		(1)		100
Net income	141		158		629		276

Net income from discontinued operations attributable to noncontrolling interests	—		(2)		—		(5)
Net income attributable to XPO	$	141	$	156	$	629	$	271

Net income (loss) attributable to common shareholders
Continuing operations	$	141	$	113	$	630	$	176
Discontinued operations	—		43		(1)		95
Net income attributable to common shareholders	$	141	$	156	$	629	$	271

Earnings (loss) per share data
Basic earnings per share from continuing operations	$	1.23	$	1.01	$	5.49	$	1.61
Basic earnings (loss) per share from discontinued operations	—		0.38		(0.01)		0.87
Basic earnings per share attributable to common shareholders	$	1.23	$	1.39	$	5.48	$	2.48
Diluted earnings per share from continuing operations	$	1.22	$	1.00	$	5.45	$	1.56
Diluted earnings (loss) per share from discontinued operations	—		0.38		(0.01)		0.84
Diluted earnings per share attributable to common shareholders	$	1.22	$	1.38	$	5.44	$	2.40

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	115		112		115		109
Diluted weighted-average common shares outstanding	116		113		116		113


	Three Months Ended June 30,				Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Net income	$	141	$	158	$	629	$	276

Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $(9), $3, $(11) and $(3)	$	(46)	$	15	$	(72)	$	(27)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $(1), $—, $(1) and $—	3		—		4		—

Other comprehensive income (loss)	(43)		15		(68)		(27)
Comprehensive income	$	98	$	173	$	561	$	249
Less: Comprehensive income attributable to noncontrolling interests	—		5		—		3
Comprehensive income attributable to XPO	$	98	$	168	$	561	$	246


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


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


	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, 2022	—	$	—	114,982	$	—	$	1,176	$	531	$	(109)	$	1,598	$	—	$	1,598
Net income	—	—		—	—		—		141		—		141		—		141
Other comprehensive loss	—	—		—	—		—		—		(43)		(43)		—		(43)

Exercise and vesting of stock compensation awards	—	—		51	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(1)		—		—		(1)		—		(1)



Stock compensation expense	—	—		—	—		10		—		—		10		—		10
Other	—	—		—	—		2		—		—		2		—		2
Balance as of June 30, 2022	—	$	—	115,033	$	—	$	1,187	$	672	$	(152)	$	1,707	$	—	$	1,707


(In millions)	Carrying Value		Fair Value		Level 1
June 30, 2022	$	377	$	377	$	377
December 31, 2021	181		181		181


	Three Months Ended June 30, 2022
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,212	$	1,141	$	(74)	$	2,279
North America (excluding United States)	27		102		—		129
France	—		352		—		352
United Kingdom	—		224		—		224
Europe (excluding France and United Kingdom)	—		231		—		231
Other	—		17		—		17
Total	$	1,239	$	2,067	$	(74)	$	3,232


	Three Months Ended June 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,057	$	1,276	$	(56)	$	2,277
North America (excluding United States)	24		70		—		94
France	—		352		—		352
United Kingdom	—		222		—		222
Europe (excluding France and United Kingdom)	—		215		—		215
Other	—		26		—		26
Total	$	1,081	$	2,161	$	(56)	$	3,186


	Six Months Ended June 30, 2022
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	2,294	$	2,660	$	(138)	$	4,816
North America (excluding United States)	50		203		—		253
France	—		704		—		704
United Kingdom	—		449		—		449
Europe (excluding France and United Kingdom)	—		441		—		441
Other	—		42		—		42
Total	$	2,344	$	4,499	$	(138)	$	6,705


	Six Months Ended June 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,997	$	2,497	$	(100)	$	4,394
North America (excluding United States)	46		139		—		185
France	—		694		—		694
United Kingdom	—		431		—		431
Europe (excluding France and United Kingdom)	—		428		—		428
Other	—		43		—		43
Total	$	2,043	$	4,232	$	(100)	$	6,175


			Six Months Ended June 30, 2022
(In millions)	Reserve Balance as of December 31, 2021		Charges Incurred		Payments		Reserve Balance as of June 30, 2022
Severance

Brokerage and Other Services	$	6	$	4	$	(6)	$	4
Corporate	7		1		(4)		4
Total severance	13		5		(10)		8
Facilities

Brokerage and Other Services	2		1		(1)		2
Total facilities	2		1		(1)		2
Contract termination
North American LTL	—		3		(3)		—
Brokerage and Other Services	—		1		—		1
Total contract termination	—		4		(3)		1
Total	$	15	$	10	$	(14)	$	11


	June 30, 2022
			Derivative Assets			Derivative Liabilities
(In millions)	Notional Amount		Balance Sheet Caption	Fair Value		Balance Sheet Caption	Fair Value
Derivatives designated as hedges
Cross-currency swap agreements	$	343	Other current assets	$	8	Other current liabilities	$	—
Cross-currency swap agreements	89		Other long-term assets	6		Other long-term liabilities	—
Interest rate swaps	2,003		Other current assets	4		Other current liabilities	—


Total				$	18		$	—


	Three Months Ended June 30,						Six Months Ended June 30,
	2022		2021		Change %		2022		2021		Change %
Pounds per day (thousands)	72,333		76,520		(5.5)	%	71,250		73,636		(3.2)	%









Gross revenue per hundredweight, excluding fuel surcharges	$	21.34	$	19.29	10.6	%	$	21.05	$	19.20	9.6	%


*						Filed herewith.
**						Furnished herewith.
+						This exhibit is a management contract or compensatory plan or arrangement.


			XPO LOGISTICS, INC.

By:			/s/ Brad Jacobs
			Brad Jacobs
			Chief Executive Officer
			(Principal Executive Officer)

By:			/s/ Ravi Tulsyan
			Ravi Tulsyan
			Chief Financial Officer
			(Principal Financial Officer)


	Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Loss Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Three Months Ended June 30,
(In millions)	2022		2021		2022		2021		2022		2021
Derivatives designated as cash flow hedges
Cross-currency swap agreements	$	—	$	(2)	$	—	$	(2)	$	—	$	—
Interest rate swaps	4		—		—		—		—		—
Derivatives designated as net investment hedges
Cross-currency swap agreements	28		(13)		—		—		2		2
Total	$	32	$	(15)	$	—	$	(2)	$	2	$	2


	Amount of Gain Recognized in Other Comprehensive Income (Loss) on Derivatives				Amount of Gain Reclassified from AOCI into Net Income				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Six Months Ended June 30,
(In millions)	2022		2021		2022		2021		2022		2021
Derivatives designated as cash flow hedges
Cross-currency swap agreements	$	—	$	4	$	—	$	4	$	—	$	—
Interest rate swaps	5		—		—		—		—		—
Derivatives designated as net investment hedges
Cross-currency swap agreements	37		35		—		—		4		5
Total	$	42	$	39	$	—	$	4	$	4	$	5


	Three Months Ended June 30,				Percent of Revenue				Change		Six Months Ended June 30,				Percent of Revenue				Change
(Dollars in millions)	2022		2021		2022		2021		2022 vs. 2021		2022		2021		2022		2021		2022 vs. 2021
Revenue	$	3,232	$	3,186	100.0	%	100.0	%	1.4	%	$	6,705	$	6,175	100.0	%	100.0	%	8.6	%
Cost of transportation and services (exclusive of depreciation and amortization)	2,153		2,186		66.6	%	68.6	%	(1.5)	%	4,590		4,239		68.5	%	68.6	%	8.3	%
Direct operating expense (exclusive of depreciation and amortization)	365		358		11.3	%	11.2	%	2.0	%	750		692		11.2	%	11.2	%	8.4	%
Sales, general and administrative expense	324		324		10.0	%	10.2	%	—	%	668		662		10.0	%	10.7	%	0.9	%
Depreciation and amortization expense	115		120		3.6	%	3.8	%	(4.2)	%	231		239		3.4	%	3.9	%	(3.3)	%
(Gain) loss on sale of business	16		—		0.5	%	—	%	NM		(434)		—		(6.5)	%	—	%	NM
Transaction and integration costs	25		6		0.8	%	0.2	%	316.7	%	35		11		0.5	%	0.2	%	218.2	%
Restructuring costs	4		1		0.1	%	—	%	300.0	%	10		2		0.1	%	—	%	400.0	%
Operating income	230		191		7.1	%	6.0	%	20.4	%	855		330		12.8	%	5.3	%	159.1	%
Other income	(15)		(10)		(0.5)	%	(0.3)	%	50.0	%	(29)		(26)		(0.4)	%	(0.4)	%	11.5	%
Debt extinguishment loss	26		—		0.8	%	—	%	NM		26		8		0.4	%	0.1	%	225.0	%
Interest expense	31		58		1.0	%	1.8	%	(46.6)	%	68		123		1.0	%	2.0	%	(44.7)	%
Income from continuing operations before income tax provision	188		143		5.8	%	4.5	%	31.5	%	790		225		11.8	%	3.6	%	251.1	%
Income tax provision	47		30		1.5	%	0.9	%	56.7	%	160		49		2.4	%	0.8	%	226.5	%
Income from continuing operations	141		113		4.4	%	3.5	%	24.8	%	630		176		9.4	%	2.9	%	258.0	%
Income (loss) from discontinued operations, net of taxes	—		45		—	%	1.4	%	NM		(1)		100		—	%	1.6	%	NM
Net income	$	141	$	158	4.4	%	5.0	%	(10.8)	%	$	629	$	276	9.4	%	4.5	%	127.9	%


Exhibit Number						Description

10.1+						Amendment No. 3 to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation (incorporated herein by reference to Annex B to the registrant’s definitive proxy statement on Schedule 14A filed with the SEC on April 18, 2022).

10.2						Amendment No. 7 to Senior Secured Term Loan Credit Agreement, dated June 10, 2022, by and among the registrant and certain subsidiaries signatory thereto, the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 13, 2022).

31.1 *						Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , 2022.

31.2 *						Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , 2022.

32.1 **						Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , 2022.

32.2 **						Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 3 0 , 2022.

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