XPO, Inc 10-Q for FY2020 Q2

XPO, Inc. (XPO)

10-Q 2020-08-03 For: 2020-06-30

Added on April 09, 2026

About this 10-Q

XPO, Inc filed this 10-Q on August 3, 2020, covering the quarter ended June 30, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.5B; down 17.4% from $4.24B a year earlier
Net loss: $131M; compared with net income of $135M a year earlier
Diluted EPS: -$1.45; compared with $1.19 a year earlier

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			Page No.
Part I—Financial Information
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of (Loss) Income			2
Condensed Consolidated Statements of Comprehensive (Loss) 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			20
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			34
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			38
Signatures			40


	June 30,		December 31,
(In millions, except per share data)	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	2,285	$	377
Accounts receivable, net of allowances of $79 and $58, respectively	2,244		2,500
Other current assets	501		465
Total current assets	5,030		3,342
Long-term assets
Property and equipment, net of $2,291 and $2,054 in accumulated depreciation, respectively	2,597		2,704
Operating lease assets	2,226		2,245
Goodwill	4,422		4,450
Identifiable intangible assets, net of $864 and $850 in accumulated amortization, respectively	1,015		1,092
Other long-term assets	351		295
Total long-term assets	10,611		10,786
Total assets	$	15,641	$	14,128
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	840	$	1,157
Accrued expenses	1,673		1,414
Short-term borrowings and current maturities of long-term debt	198		84
Short-term operating lease liabilities	460		468
Other current liabilities	158		135
Total current liabilities	3,329		3,258
Long-term liabilities
Long-term debt	6,939		5,182
Deferred tax liability	507		495
Employee benefit obligations	155		157
Long-term operating lease liabilities	1,770		1,776
Other long-term liabilities	307		364
Total long-term liabilities	9,678		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 June 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 June 30, 2020 and December 31, 2019, respectively	—		—
Additional paid-in capital	1,963		2,061
Retained earnings	672		786
Accumulated other comprehensive loss	(192)		(145)
Total stockholders’ equity before noncontrolling interests	2,484		2,743
Noncontrolling interests	150		153
Total equity	2,634		2,896
Total liabilities and equity	$	15,641	$	14,128


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions, except per share data)	2020		2019		2020		2019
Revenue	$	3,502	$	4,238	$	7,366	$	8,358
Operating expenses
Cost of transportation and services	1,641		2,108		3,539		4,204
Direct operating expense	1,370		1,417		2,730		2,823
Sales, general and administrative expense	632		455		1,157		941
Total operating expenses	3,643		3,980		7,426		7,968
Operating (loss) income	(141)		258		(60)		390
Other expense (income)	(21)		(13)		(39)		(30)
Foreign currency loss (gain)	3		8		(5)		10
Debt extinguishment loss	—		—		—		5
Interest expense	82		72		154		143
(Loss) income before income tax (benefit) provision	(205)		191		(170)		262
Income tax (benefit) provision	(71)		46		(61)		65
Net (loss) income	(134)		145		(109)		197
Net loss (income) attributable to noncontrolling interests	3		(10)		1		(15)
Net (loss) income attributable to XPO	$	(131)	$	135	$	(108)	$	182

Earnings (loss) per share data
Net (loss) income attributable to common shareholders	$	(132)	$	122	$	(110)	$	165

Basic (loss) earnings per share	$	(1.45)	$	1.32	$	(1.20)	$	1.66
Diluted (loss) earnings per share	$	(1.45)	$	1.19	$	(1.20)	$	1.51

Weighted-average common shares outstanding
Basic weighted-average common shares outstanding	91		92		92		100
Diluted weighted-average common shares outstanding	91		102		92		110


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2020		2019		2020		2019
Net (loss) income	$	(134)	$	145	$	(109)	$	197

Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss), net of tax effect of $4, $—, $(7) and $(6)	$	21	$	(1)	$	(44)	$	(2)
Unrealized gain on financial assets/liabilities designated as hedging instruments, net of tax effect of $—, $(1), $— and $—	—		4		—		1
Defined benefit plans adjustments, net of tax effect of $—, $—, $2 and $—	—		—		(5)		—
Other comprehensive income (loss)	21		3		(49)		(1)
Comprehensive (loss) income	$	(113)	$	148	$	(158)	$	196
Less: Comprehensive income (loss) attributable to noncontrolling interests	—		13		(3)		13
Comprehensive (loss) income attributable to XPO	$	(113)	$	135	$	(155)	$	183


	Six Months Ended June 30,
(In millions)	2020		2019
Operating activities
Net (loss) income	$	(109)	$	197
Adjustments to reconcile net (loss) income to net cash from operating activities
Depreciation, amortization and net lease activity	379		360
Stock compensation expense	39		31
Accretion of debt	8		9
Deferred tax expense	3		12
Debt extinguishment loss	—		5
Unrealized (gain) loss on foreign currency option and forward contracts	(1)		9
Gains on sales of property and equipment	(39)		(40)
Other	42		23
Changes in assets and liabilities
Accounts receivable	186		(289)
Other assets	(84)		(23)
Accounts payable	(277)		(81)
Accrued expenses and other liabilities	247		(49)
Net cash provided by operating activities	394		164
Investing activities
Payment for purchases of property and equipment	(255)		(236)
Proceeds from sale of property and equipment	77		85
Cash collected on deferred purchase price receivable	—		137
Other	6		—
Net cash used in investing activities	(172)		(14)
Financing activities
Proceeds from issuance of debt	1,161		1,758
Proceeds from borrowings related to securitization program	109		—
Proceeds from borrowings on ABL facility	620		1,355
Repayment of borrowings on ABL facility	(20)		(1,355)
Repayment of debt and finance leases	(40)		(565)
Payment for debt issuance costs	(21)		(27)
Repurchase of common stock	(114)		(1,347)
Change in bank overdrafts	23		30
Payment for tax withholdings for restricted shares	(18)		(5)
Other	1		3
Net cash provided by (used in) financing activities	1,701		(153)
Effect of exchange rates on cash, cash equivalents and restricted cash	(15)		(2)
Net increase (decrease) in cash, cash equivalents and restricted cash	1,908		(5)
Cash, cash equivalents and restricted cash, beginning of period	387		514
Cash, cash equivalents and restricted cash, end of period	$	2,295	$	509
Supplemental disclosure of cash flow information
Leased assets obtained in exchange for new operating lease liabilities	$	371	$	327
Leased assets obtained in exchange for new finance lease liabilities	17		30
Cash paid for interest	149		125
Cash paid for income taxes	10		58


☒			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, 2020	72	$	41	91,044	$	—	$	1,943	$	804	$	(210)	$	2,578	$	150	$	2,728
Net loss	—	—		—	—		—		(131)		—		(131)		(3)		(134)
Other comprehensive income	—	—		—	—		—		—		18		18		3		21
Exercise and vesting of stock compensation awards	—	—		216	—		—		—		—		—		—		—
Tax withholdings related to vesting of stock compensation awards	—	—		—	—		(2)		—		—		(2)		—		(2)
Dividend declared	—	—		—	—		—		(1)		—		(1)		—		(1)
Stock compensation expense	—	—		—	—		20		—		—		20		—		20
Other	—	—		62	—		2		—		—		2		—		2
Balance as of June 30, 2020	72	$	41	91,322	$	—	$	1,963	$	672	$	(192)	$	2,484	$	150	$	2,634


(In millions)	Carrying Value		Fair Value		Level 1		Level 2
June 30, 2020	$	1,900	$	1,900	$	1,900	$	—
December 31, 2019	144		144		127		17


(In millions)	Transportation		Logistics		Corporate		Eliminations/Other		Total
Three months ended June 30, 2020
Revenue	$	2,127	$	1,404	$	—	$	(29)	$	3,502
Operating loss ⁽¹⁾	(15)		(43)		(83)		—		(141)
Depreciation and amortization	113		80		3		—		196

Three months ended June 30, 2019
Revenue	$	2,747	$	1,526	$	—	$	(35)	$	4,238
Operating income (loss) ⁽²⁾	243		61		(46)		—		258
Depreciation and amortization	108		67		5		—		180

Six months ended June 30, 2020
Revenue	$	4,586	$	2,841	$	—	$	(61)	$	7,366
Operating income (loss) ⁽³⁾	105		(5)		(160)		—		(60)
Depreciation and amortization	223		149		7		—		379

Six months ended June 30, 2019
Revenue	$	5,406	$	3,020	$	—	$	(68)	$	8,358
Operating income (loss) ⁽⁴⁾	371		107		(88)		—		390
Depreciation and amortization	224		128		8		—		360


			Six Months Ended June 30, 2020
(In millions)	Reserve Balance as of December 31, 2019		Charges Incurred		Payments		Foreign Exchange and Other		Reserve Balance as of June 30, 2020
Severance
Transportation	$	12	$	18	$	(11)	$	(1)	$	18
Logistics	11		21		(7)		1		26
Corporate	2		8		(4)		—		6
Total severance	25		47		(22)		—		50
Facilities
Transportation	—		6		—		(1)		5
Total	$	25	$	53	$	(22)	$	(1)	$	55


	June 30, 2020
			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	$	135	Other current assets	$	—	Other current liabilities	$	(5)
Cross-currency swap agreements	1,074		Other long-term assets	13		Other long-term liabilities	(2)
Interest rate swaps	2,003		Other current assets	—		Other current liabilities	(5)
Derivatives not designated as hedges
Foreign currency option contracts	212		Other current assets	1		Other current liabilities	—
Total				$	14		$	(12)


	Amount of (Loss) Gain Recognized in Other Comprehensive Income on Derivatives						Amount of Loss Reclassified from AOCI into Net (Loss) Income						Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Three Months Ended June 30,
(In millions)	2020		2019		2020		2019		2020		2019
Derivatives designated as cash flow hedges
Cross-currency swap agreements	$	(3)	$	(1)	$	(3)	$	(3)	$	—	$	—
Interest rate swaps	—		5		—		—		—		—
Derivatives designated as net investment hedges
Cross-currency swap agreements	(19)		(7)		—		—		—		3
Total	$	(22)	$	(3)	$	(3)	$	(3)	$	—	$	3


	Amount of Gain (Loss) Recognized in Other Comprehensive Loss on Derivatives						Amount of Gain Reclassified from AOCI into Net (Loss) Income						Amount of Gain Recognized in Income on Derivative (Amount Excluded from Effectiveness Testing)
	Six Months Ended June 30,
(In millions)	2020		2019		2020		2019		2020		2019
Derivatives designated as cash flow hedges
Cross-currency swap agreements	$	5	$	5	$	—	$	2	$	—	$	—
Interest rate swaps	(5)		(1)		—		—		—		—
Derivatives designated as net investment hedges
Cross-currency swap agreements	19		28		—		—		4		5
Total	$	19	$	32	$	—	$	2	$	4	$	5


	Three Months Ended June 30,						Percent of Revenue						Change		Six Months Ended June 30,						Percent of Revenue	Change
(Dollars in millions)	2020 ⁽¹⁾		2019 ⁽²⁾		2020		2019		2020 vs. 2019		2020 ⁽³⁾		2019 ⁽⁴⁾		2020		2019		2020 vs. 2019
Revenue	$	3,502	$	4,238	100.0	%	100.0	%	(17.4)	%	$	7,366	$	8,358	100.0	%	100.0	%	(11.9)	%
Cost of transportation and services	1,641		2,108		46.9	%	49.7	%	(22.2)	%	3,539		4,204		48.0	%	50.3	%	(15.8)	%
Direct operating expense	1,370		1,417		39.1	%	33.4	%	(3.3)	%	2,730		2,823		37.1	%	33.8	%	(3.3)	%
SG&A expense	632		455		18.0	%	10.7	%	38.9	%	1,157		941		15.7	%	11.3	%	23.0	%
Operating (loss) income	(141)		258		(4.0)	%	6.1	%	(154.7)	%	(60)		390		(0.8)	%	4.7	%	(115.4)	%
Other expense (income)	(21)		(13)		(0.6)	%	(0.3)	%	61.5	%	(39)		(30)		(0.5)	%	(0.4)	%	30.0	%
Foreign currency loss (gain)	3		8		0.1	%	0.2	%	(62.5)	%	(5)		10		(0.1)	%	0.1	%	(150.0)	%
Debt extinguishment loss	—		—		—	%	—	%	—	%	—		5		—	%	0.1	%	(100.0)	%
Interest expense	82		72		2.3	%	1.7	%	13.9	%	154		143		2.1	%	1.7	%	7.7	%
(Loss) income before income tax (benefit) provision	(205)		191		(5.9)	%	4.5	%	(207.3)	%	(170)		262		(2.3)	%	3.1	%	(164.9)	%
Income tax (benefit) provision	(71)		46		(2.0)	%	1.1	%	(254.3)	%	(61)		65		(0.8)	%	0.8	%	(193.8)	%
Net (loss) income	$	(134)	$	145	(3.8)	%	3.4	%	(192.4)	%	$	(109)	$	197	(1.5)	%	2.4	%	(155.3)	%


	Three Months Ended June 30,						Six Months Ended June 30,
(In millions)	2020		2019		2020		2019
Securitization programs
Receivables sold in period	$	598	$	338	$	1,289	$	661
Cash consideration	598		269		1,289		529
Deferred purchase price	—		69		—		132

Factoring programs
Receivables sold in period	$	199	$	235	$	463	$	419
Cash consideration	199		234		462		417


	Three Months Ended June 30, 2019
(In millions)	Transportation		Logistics		Eliminations		Total
Revenue
United States	$	1,924	$	570	$	(7)	$	2,487
North America (excluding United States)	73		15		—		88
France	351		172		(6)		517
United Kingdom	186		350		(18)		518
Europe (excluding France and United Kingdom)	207		397		(4)		600
Other	6		22		—		28
Total	$	2,747	$	1,526	$	(35)	$	4,238


	Six Months Ended June 30, 2020
(In millions)	Transportation		Logistics		Eliminations		Total
Revenue
United States	$	3,207	$	1,045	$	(19)	$	4,233
North America (excluding United States)	142		24		—		166
France	566		292		(6)		852
United Kingdom	307		667		(27)		947
Europe (excluding France and United Kingdom)	334		769		(7)		1,096
Other	30		44		(2)		72
Total	$	4,586	$	2,841	$	(61)	$	7,366


	Six Months Ended June 30, 2019
(In millions)	Transportation		Logistics		Eliminations		Total
Revenue
United States	$	3,760	$	1,127	$	(12)	$	4,875
North America (excluding United States)	140		33		—		173
France	715		341		(11)		1,045
United Kingdom	374		685		(36)		1,023
Europe (excluding France and United Kingdom)	408		789		(8)		1,189
Other	9		45		(1)		53
Total	$	5,406	$	3,020	$	(68)	$	8,358


Exhibit Number						Description

4.1						Indenture, dated April 28, 2020, between the registrant, the guarantors party thereto and Wells Fargo Bank, National Association, as Trustee (incorporated herein by reference to Exhibit 4.1 to the registrant’s current report on Form 8-K filed with the SEC on April 28, 2020).

10.1 *						Amendment No. 4 to Second Amended and Restated Revolving Loan Credit Agreement, dated April 3, 2020, by and among the registrant, certain subsidiaries signatory thereto, the lenders party thereto and Morgan Stanley Senior Funding Inc., as agent.

10.2 +						Amendment No. 2 to the XPO Logistics, Inc. 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Annex B to the registrant’s definitive proxy statement on Schedule 14A filed with the SEC on April 21, 2020).

10.3 +						Separation Agreement, dated May 4, 2020, between the registrant and Sarah J.S. Glickman (incorporated herein by reference to Exhibit 99.1 to the registrant’s current report on Form 8-K filed with the SEC on May 8, 2020).

10.4 *						Amendment No. 5 to Second Amended and Restated Revolving Loan Credit Agreement, dated June 29, 2020, by and among the registrant, certain subsidiaries signatory thereto, the lenders party thereto and Morgan Stanley Senior Funding Inc., as agent.

10.5 +*						Employment Agreement, effective as of July 31, 2020, between the registrant and Bradley S. Jacobs.

10.6 +*						Employment Agreement, effective as of July 31, 2020, between the registrant and Troy A. Cooper.

10.7 +*						Employment Agreement, effective as of July 31, 2020, between the registrant and Mario A. Harik.

10.8 +*						Form of Cash Long-Term Incentive Award Agreement (2016 Omnibus Incentive Compensation Plan).

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 , 2020.

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 , 2020.

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 , 2020.

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 , 2020.

101.INS *						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH *						XBRL Taxonomy Extension Schema.

101.CAL *						XBRL Taxonomy Extension Calculation Linkbase.

101.DEF *						XBRL Taxonomy Extension Definition Linkbase.

101.LAB *						XBRL Taxonomy Extension Label Linkbase.

101.PRE *						XBRL Taxonomy Extension Presentation Linkbase.


Exhibit Number						Description

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


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


			XPO LOGISTICS, INC.

By:			/s/ Bradley S. Jacobs
			Bradley S. Jacobs
			Chief Executive Officer
			(Principal Executive Officer)

By:			/s/ David B. Wyshner
			David B. Wyshner
			Chief Financial Officer
			(Principal Financial Officer)