XPO, Inc 10-Q for FY2022 Q3

XPO, Inc. (XPO)

10-Q 2022-11-02 For: 2022-09-30

Added on April 09, 2026

About this 10-Q

XPO, Inc filed this 10-Q on November 2, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).

Headline figures

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

Revenue: $3.04B; down 7.0% from $3.27B a year earlier
Net income: $131M; compared with a net loss of $57M a year earlier
Diluted EPS: $1.13; compared with -$0.49 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 (Loss)			2
Condensed Consolidated Statements of Comprehensive Income (Loss)			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			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			36
Item 4. Controls and Procedures			36
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


	September 30,		December 31,
(In millions, except per share data)	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	544	$	260
Accounts receivable, net of allowances of $51 and $47, respectively	2,013		2,105
Other current assets	257		286
Current assets of discontinued operations	17		26
Total current assets	2,831		2,677
Long-term assets
Property and equipment, net of $1,848 and $1,828 in accumulated depreciation, respectively	1,828		1,808
Operating lease assets	816		908
Goodwill	2,229		2,479
Identifiable intangible assets, net of $598 and $612 in accumulated amortization, respectively	496		580
Other long-term assets	303		255

Total long-term assets	5,672		6,030
Total assets	$	8,503	$	8,707
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,022	$	1,110
Accrued expenses	1,087		1,107
Short-term borrowings and current maturities of long-term debt	60		58
Short-term operating lease liabilities	145		170
Other current liabilities	111		69
Current liabilities of discontinued operations	17		24
Total current liabilities	2,442		2,538
Long-term liabilities
Long-term debt	2,848		3,514
Deferred tax liability	334		316
Employee benefit obligations	116		122
Long-term operating lease liabilities	671		752
Other long-term liabilities	306		327

Total long-term liabilities	4,275		5,031
Stockholders’ equity

Common stock, $0.001 par value; 300 shares authorized; 115 shares issued and outstanding as of September 30, 2022 and December 31, 2021	—		—
Additional paid-in capital	1,195		1,179
Retained earnings	803		43
Accumulated other comprehensive loss	(212)		(84)


Total equity	1,786		1,138
Total liabilities and equity	$	8,503	$	8,707


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions, except per share data)	2022		2021		2022		2021
Revenue	$	3,042	$	3,270	$	9,747	$	9,445
Cost of transportation and services (exclusive of depreciation and amortization)	2,044		2,306		6,634		6,545
Direct operating expense (exclusive of depreciation and amortization)	363		366		1,113		1,058
Sales, general and administrative expense	298		339		966		1,001
Depreciation and amortization expense	118		118		349		357
Gain on sale of business	—		—		(434)		—
Transaction and integration costs	25		15		60		26
Restructuring costs	9		14		19		16
Operating income	185		112		1,040		442
Other income	(15)		(19)		(44)		(45)
Debt extinguishment loss	—		46		26		54
Interest expense	35		53		103		176
Income from continuing operations before income tax provision	165		32		955		257
Income tax provision	34		11		194		60
Income from continuing operations	131		21		761		197
Income (loss) from discontinued operations, net of taxes	—		(78)		(1)		22
Net income (loss)	131		(57)		760		219

Net income from discontinued operations attributable to noncontrolling interests	—		—		—		(5)
Net income (loss) attributable to XPO	$	131	$	(57)	$	760	$	214

Net income (loss) attributable to common shareholders
Continuing operations	$	131	$	21	$	761	$	197
Discontinued operations	—		(78)		(1)		17
Net income (loss) attributable to common shareholders	$	131	$	(57)	$	760	$	214

Earnings (loss) per share data
Basic earnings per share from continuing operations	$	1.14	$	0.19	$	6.62	$	1.78
Basic earnings (loss) per share from discontinued operations	—		(0.69)		(0.01)		0.15
Basic earnings (loss) per share attributable to common shareholders	$	1.14	$	(0.50)	$	6.61	$	1.93
Diluted earnings per share from continuing operations	$	1.13	$	0.19	$	6.58	$	1.73
Diluted earnings (loss) per share from discontinued operations	—		(0.68)		(0.01)		0.14
Diluted earnings (loss) per share attributable to common shareholders	$	1.13	$	(0.49)	$	6.57	$	1.87

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	115		115		115		111
Diluted weighted-average common shares outstanding	116		116		116		114


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
Net income (loss)	$	131	$	(57)	$	760	$	219

Other comprehensive loss, net of tax
Foreign currency translation loss, net of tax effect of $(7), $7, $(18) and $4	$	(60)	$	(47)	$	(132)	$	(74)
Unrealized gain (loss) on financial assets/liabilities designated as hedging instruments, net of tax effect of $—, $1, $(1) and $1	—		(3)		4		(3)
Defined benefit plans adjustments, net of tax effect of $—, $(9), $— and $(9)	—		28		—		28
Other comprehensive loss	(60)		(22)		(128)		(49)
Comprehensive income (loss)	$	71	$	(79)	$	632	$	170
Less: Comprehensive income attributable to noncontrolling interests	—		—		—		3
Comprehensive income (loss) attributable to XPO	$	71	$	(79)	$	632	$	167


☒			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 June 30, 2022	—	$	—	115,033	$	—	$	1,187	$	672	$	(152)	$	1,707	$	—	$	1,707
Net income	—	—		—	—		—		131		—		131		—		131
Other comprehensive loss	—	—		—	—		—		—		(60)		(60)		—		(60)

Exercise and vesting of stock compensation awards	—	—		19	—		—		—		—		—		—		—




Stock compensation expense	—	—		—	—		8		—		—		8		—		8

Balance as of September 30, 2022	—	$	—	115,052	$	—	$	1,195	$	803	$	(212)	$	1,786	$	—	$	1,786


(In millions)	Carrying Value		Fair Value		Level 1
September 30, 2022	$	502	$	502	$	502
December 31, 2021	181		181		181


	Three Months Ended September 30, 2022
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,178	$	1,079	$	(83)	$	2,174
North America (excluding United States)	26		90		—		116
France	—		313		—		313
United Kingdom	—		217		—		217
Europe (excluding France and United Kingdom)	—		212		—		212
Other	—		10		—		10
Total	$	1,204	$	1,921	$	(83)	$	3,042


	Three Months Ended September 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	1,049	$	1,384	$	(62)	$	2,371
North America (excluding United States)	22		73		—		95
France	—		330		—		330
United Kingdom	—		224		—		224
Europe (excluding France and United Kingdom)	—		199		—		199
Other	—		51		—		51
Total	$	1,071	$	2,261	$	(62)	$	3,270


	Nine Months Ended September 30, 2022
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	3,472	$	3,739	$	(221)	$	6,990
North America (excluding United States)	76		293		—		369
France	—		1,017		—		1,017
United Kingdom	—		666		—		666
Europe (excluding France and United Kingdom)	—		653		—		653
Other	—		52		—		52
Total	$	3,548	$	6,420	$	(221)	$	9,747


	Nine Months Ended September 30, 2021
(In millions)	North American LTL		Brokerage and Other Services		Eliminations		Total
Revenue
United States	$	3,046	$	3,881	$	(162)	$	6,765
North America (excluding United States)	68		212		—		280
France	—		1,024		—		1,024
United Kingdom	—		655		—		655
Europe (excluding France and United Kingdom)	—		627		—		627
Other	—		94		—		94
Total	$	3,114	$	6,493	$	(162)	$	9,445


			Nine Months Ended September 30, 2022
(In millions)	Reserve Balance as of December 31, 2021		Charges Incurred		Payments		Foreign Exchange and Other		Reserve Balance as of September 30, 2022
Severance
North American LTL	$	—	$	2	$	—	$	—	$	2
Brokerage and Other Services	6		6		(9)		(1)		2
Corporate	7		6		(6)		—		7
Total severance	13		14		(15)		(1)		11
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	$	19	$	(19)	$	(1)	$	14


	September 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	$	332	Other current assets	$	18	Other current liabilities	$	—
Cross-currency swap agreements	79		Other long-term assets	10		Other long-term liabilities	—
Interest rate swaps	2,003		Other current assets	6		Other current liabilities	—


Total				$	34		$	—


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
Securitization programs
Receivables sold in period	$	418	$	504	$	1,323	$	1,259
Cash consideration	418		504		1,323		1,259

Factoring programs
Receivables sold in period	42		17		102		46
Cash consideration	42		17		102		46


	Three Months Ended September 30,				Nine Months Ended September 30,
(In millions)	2022		2021		2022		2021
North America
LTL (1)	$	1,250	$	1,091	$	3,658	$	3,165
Truck brokerage	686		700		2,265		1,903
Last mile	264		250		784		765
Other brokerage (2)	186		547		936		1,486
Total North America	2,386		2,588		7,643		7,319
Europe	741		757		2,335		2,311
Eliminations	(85)		(75)		(231)		(185)
Total	$	3,042	$	3,270	$	9,747	$	9,445


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022		2021		Change %		2022		2021		Change %
Pounds per day (thousands)	70,063		72,152		(2.9)	%	70,854		73,138		(3.1)	%









Gross revenue per hundredweight, excluding fuel surcharges	$	21.43	$	20.02	7.0	%	$	21.18	$	19.47	8.8	%


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


	Amount of Gain Recognized in Other Comprehensive Loss on Derivatives				Amount of Gain Reclassified from AOCI into Net Income (Loss)				Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Three Months Ended September 30,
(In millions)	2022		2021		2022		2021		2022		2021
Derivatives designated as cash flow hedges
Cross-currency swap agreements	$	—	$	—	$	—	$	3	$	—	$	—

Derivatives designated as net investment hedges
Cross-currency swap agreements	25		41		—		—		1		1
Total	$	25	$	41	$	—	$	3	$	1	$	1


	Three Months Ended September 30,				Percent of Revenue				Change		Nine Months Ended September 30,				Percent of Revenue				Change
(Dollars in millions)	2022		2021		2022		2021		2022 vs. 2021		2022		2021		2022		2021		2022 vs. 2021
Revenue	$	3,042	$	3,270	100.0	%	100.0	%	(7.0)	%	$	9,747	$	9,445	100.0	%	100.0	%	3.2	%
Cost of transportation and services (exclusive of depreciation and amortization)	2,044		2,306		67.2	%	70.5	%	(11.4)	%	6,634		6,545		68.1	%	69.3	%	1.4	%
Direct operating expense (exclusive of depreciation and amortization)	363		366		11.9	%	11.2	%	(0.8)	%	1,113		1,058		11.4	%	11.2	%	5.2	%
Sales, general and administrative expense	298		339		9.8	%	10.4	%	(12.1)	%	966		1,001		9.9	%	10.6	%	(3.5)	%
Depreciation and amortization expense	118		118		3.9	%	3.6	%	—	%	349		357		3.6	%	3.8	%	(2.2)	%
Gain on sale of business	—		—		—	%	—	%	—	%	(434)		—		(4.5)	%	—	%	NM
Transaction and integration costs	25		15		0.8	%	0.5	%	66.7	%	60		26		0.6	%	0.3	%	130.8	%
Restructuring costs	9		14		0.3	%	0.4	%	(35.7)	%	19		16		0.2	%	0.2	%	18.8	%
Operating income	185		112		6.1	%	3.4	%	65.2	%	1,040		442		10.7	%	4.7	%	135.3	%
Other income	(15)		(19)		(0.5)	%	(0.6)	%	(21.1)	%	(44)		(45)		(0.5)	%	(0.5)	%	(2.2)	%
Debt extinguishment loss	—		46		—	%	1.4	%	NM		26		54		0.3	%	0.6	%	(51.9)	%
Interest expense	35		53		1.2	%	1.6	%	(34.0)	%	103		176		1.1	%	1.9	%	(41.5)	%
Income from continuing operations before income tax provision	165		32		5.4	%	1.0	%	415.6	%	955		257		9.8	%	2.7	%	271.6	%
Income tax provision	34		11		1.1	%	0.3	%	209.1	%	194		60		2.0	%	0.6	%	223.3	%
Income from continuing operations	131		21		4.3	%	0.6	%	523.8	%	761		197		7.8	%	2.1	%	286.3	%
Income (loss) from discontinued operations, net of taxes	—		(78)		—	%	(2.4)	%	NM		(1)		22		—	%	0.2	%	NM
Net income (loss)	$	131	$	(57)	4.3	%	(1.7)	%	NM		$	760	$	219	7.8	%	2.3	%	247.0	%


Exhibit Number						Description



10.1*+						Employment Agreement, dated August 5, 2022, between the registrant and Mario A. Harik.

10.2*+						Form of Performance-Based Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation Plan).

10.3*+						Letter of Amendment to Separation Agreement, dated September 1, 2022, between the registrant and Troy A. Cooper.

10.4*+						Employment Agreement, dated September 13, 2022, between the registrant and Bradley S. Jacobs.

10.5*+						Offer Letter, dated October 6, 2022, between the registrant and Carl Anderson.

10.6*+						Change in Control and Severance Agreement, dated October 9, 2022, between the registrant and Carl Anderson.

10.7*+						Form of Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation Plan).

10.8*+						Form of Performance-Based Restricted Stock Unit Award Agreement (2016 Omnibus Incentive Compensation Plan).

10.9*+						Transition Agreement, dated October 10, 2022, between the registrant and Ravi Tulsyan.

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 September 30, 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 September 30, 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 September 30, 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 September 30, 2022.

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104 *						Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


			XPO LOGISTICS, INC.

By:			/s/ Mario Harik
			Mario Harik
			Chief Executive Officer
			(Principal Executive Officer)

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


Promotion Date:			Earlier of the effective date of the spinoff of the Company’s tech-enabled brokered transportation services business (the “Spinoff”) and January 1, 2023. Until the Promotion Date, the terms of the employment agreement between the Employee and the Company, dated July 31, 2020, shall govern the terms of Employee’s employment except that the Employee shall serve as President, LTL and report to the Chief Executive Officer of the Company.
Employee:			Mario A. Harik
Position:			As of the Promotion Date, Employee will serve as Chief Executive Officer of the Company. Additionally, effective as of the Promotion Date, Employee will be appointed to serve as a member of the Board of Directors of the Company.
Reporting Person:			Board of Directors of the Company
Base Salary:			$850,000
Target Bonus:			200% of Base Salary If the Promotion Date occurs during fiscal year 2022, the fiscal year 2022 bonus opportunity (i) with respect to the Employee’s position as Chief Information Officer and President, LTL shall be prorated to reflect the period from January 1, 2022 until the Promotion Date and (ii) with respect to the Employee’s position of Chief Executive Officer will be prorated to reflect the period from the Promotion Date until December 31, 2022.
2023 Annual LTI Opportunity:			Employee will be eligible to receive fiscal year 2023 annual long-term incentive awards from the Company with a total grant date value of $7,500,000. 80% of the award opportunity (corresponding to a grant date value of $6,000,000) is expected to be granted in the form of performance-based restricted stock units and 20% of the award opportunity (corresponding to a grant date value of $1,500,000) is expected to be granted in the form of time-based restricted stock units. The grant of the long-term incentive award and all terms and conditions thereof (including vesting terms and conditions) will be subject to the approval of the Compensation Committee.


If to the Company:			XPO Logistics, Inc. Five American Lane Greenwich, CT 06831 Attention: Chief Human Resources Officer
If to you:			To your address as most recently supplied to the Company and set forth in the Company’s records


XPO LOGISTICS, INC.
By

			Josephine Berisha
			Chief Human Resources Officer


Percentile Position vs. Index Companies			Shares Earned as a Percentage of Target*
Below 67th Percentile			0%
67th Percentile			100%
83rd Percentile and above			150%


Annualized Basis Pt. Outperformance vs. Peers			Multiplier
200 bps and below			100%
500 bps and above			133%


Start Date:			The earlier of (x) January 1, 2023 and (y) immediately following the completion of the RXO Spinoff
Employee:			Bradley S. Jacobs
Position:			Executive Chairman of the Board of Directors of the Company
Reporting Person:			Board of Directors of the Company
Annual Base Salary:			$600,000
Target Bonus:			150% of Base Salary
Target Annual Long-Term Incentive (“LTI”):			$5,000,000


XPO LOGISTICS, INC. By Name: Josephine Berisha Title: Chief Human Resources Officer


XPO LOGISTICS, INC.
By

			Name: Josephine Berisha
			Title: Chief Human Resources Officer