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XPOLogistics XPO Logistics Announces Second Quarter 2021 Results July 28 , 2021 Reports highest revenue of any quarter in company history Raises adjusted EBITDA guidance for both XPO and GXO GREENWICH , Conn . , July 28 , 2021 ( GLOBE NEWSWIRE ) - XPO Logistics , Inc. ( NYSE : XPO ) today announced its financial results for the second quarter 2021. Revenue increased to $ 5.04 billion for the second quarter , compared with $ 3.50 billion for the same period in 2020. Net income attributable to common shareholders was $ 156 million for the second quarter , compared with a net loss attributable to common shareholders of $ 132 million for the same period in 2020. Operating income was $ 246 million for the second quarter , compared with an operating loss of $ 141 million for the same period in 2020. Diluted earnings per share was $ 1.38 for the second quarter , compared with a diluted loss per share of $ 1.45 for the same period in 2020 . Adjusted net income attributable to common shareholders , a non - GAAP financial measure , was $ 209 million for the second quarter , compared with an adjusted net loss attributable to common shareholders of $ 29 million for the same period in 2020. Adjusted diluted earnings per share , a non - GAAP financial measure , was $ 1.86 for the second quarter , compared with an adjusted diluted loss per share of $ 0.32 for the same period in 2020 . Adjusted earnings before interest , taxes , depreciation and amortization ( " adjusted EBITDA " ) , a non - GAAP financial measure , increased to $ 507 million for the second quarter , compared with $ 172 million for the same period in 2020 . For the second quarter 2021 , the company generated $ 366 million of cash flow from operations and $ 282 million of free cash flow , a non - GAAP financial measure . Reconciliations of non - GAAP financial measures used i this release are provided in the attached financial tables . XPO and GXO Guidance The company has updated its pro forma full year 2021 financial targets for XPO and GXO , the two public companies that will result from the planned spin - off on August 2 , 2021. Additionally , we raised GXO's 2022 target for adjusted EBITDA to a range of $ 705 million to $ 740 million , with year - over - year organic revenue growth of 8 % to 12 % next year . XPO increased its pre - spin combined adjusted EBITDA target for full year 2021 to a range of $ 1.875 billion to $ 1.915 billion , reflecting higher expectations for both segments following its second quarter performance . Utilizing this combined target , the following pro forma targets have been calculated as if the spin - off had been completed on January 1 , 2021 . XPO full year pro forma 2021 financial targets * : Adjusted EBITDA of $ 1.195 billion to $ 1.235 billion , including adjusted EBITDA of $ 574 million to $ 614 million generated in the last six months of 2021 ; • Depreciation and amortization of $ 385 million to $ 395 million , excluding approximately $ 95 million of acquisition - related amortization expense ; • Interest expense of approximately $ 200 million ; Effective tax rate of 23 % to 25 % ; Adjusted diluted EPS of $ 4.00 to $ 4.30 ; • Net capital expenditures of $ 250 million to $ 275 million ; and • Free cash flow of $ 400 million to $ 450 million . GXO full year pro forma 2021 financial targets * : Revenue of $ 7.5 billion to $ 7.7 billion ; Adjusted EBITDA of $ 605 million to $ 635 million , including adjusted EBITDA of $ 309 million to $ 339 million generated in the last six months of 2021 ; • Depreciation and amortization of $ 240 million to $ 250 million , excluding approximately $ 60 million of acquisition - related amortization expense ; • Interest expense of $ 20 million to $ 25 million ; • Effective tax rate of 26 % to 28 % ; and Net capital expenditures of $ 240 million to $ 250 million . * Pro forma 2021 guidance excludes impacts associated with the planned spin - off of the logistics segment ; assumes 116 million diluted shares outstanding at the time of the spin - off . CEO Comments Brad Jacobs , chairman and chief executive officer of XPO Logistics , said , " We continued to execute extremely well in the second quarter , reporting near - record net income and the highest revenue and adjusted EBITDA of any quarter in our company's history . We've given our transportation and logistics segments a strong springboard for the planned spin - off next week , when they'll move forward independently as XPO and GXO . " In North American less - than - truckload , where we have a long track record of margin expansion , we delivered two quarterly records our first billion - dollar revenue quarter in LTL , and an adjusted operating ratio of 81.1 % , excluding gains on real estate sales . In truck brokerage , where our digital capabilities are creating above - market growth , our loads in North America were up 38 % , gross revenue was up 101 % and net revenue was up 47 % . And in our global logistics business , we doubled our adjusted EBITDA year - over - year and reported another quarter of double - digit growth , with revenue up 34 % and organic revenue up 16 % . The three major logistics tailwinds of e - commerce , warehouse automation and outsourcing will continue to propel this best - in - class business as GXO . " Jacobs concluded , " Given our momentum , we increased our expectations for full year earnings in both segments , and raised our pro forma 2021 adjusted EBITDA targets for XPO and GXO , as well as GXO's 2022 adjusted EBITDA target . " Second Quarter 2021 Results by Segment • Transportation : The company's transportation segment generated revenue of $ 3.19 billion for the second quarter 2021 , compared with $ 2.13 billion for the same period in 2020 . Operating income for the transportation segment was $ 255 million for the second quarter , compared with a $ 15 million operating loss for the same period in 2020. Adjusted EBITDA for the segment was $ 391 million for the second quarter , compared with $ 146 million for the same period in 2020. The increases in operating income and adjusted EBITDA were primarily due to substantially higher revenue and profit margins across the majority of segment operations , reflecting the benefit of technology - related initiatives unique to XPO , as well as lower COVID - 19 - related costs . Operating income also benefited from lower restructuring , transaction and integration costs . In North American LTL , the second quarter operating ratio was 82.7 % and the adjusted operating ratio was 80.6 % . Excluding gains from sales of real estate , LTL adjusted operating ratio improved 1,030 basis points year - over - year to a quarterly record of 81.1 % . In North American truck brokerage , the company continued to significantly outperform the market . Truck brokerage revenue doubled year - over - year to $ 598 million for the second quarter , compared with $ 298 million for the same period in 2020. Net revenue increased 47 % year - over - year to $ 87 million for the quarter , compared with $ 60 million for the same period in 2020 . • Logistics : The company's logistics segment generated revenue of $ 1.88 billion for the second quarter 2021 , compared with $ 1.40 billion for the same period in 2020. The year - over - year increase in segment revenue was primarily due to 16 % organic revenue growth and the 2021 acquisition of logistics operations in the UK . Logistics segment operating income was $ 71 million for the second quarter , compared with a $ 43 million operating loss for the same period in 2020. Adjusted EBITDA was $ 169 million for the second quarter , compared with $ 83 million for the same period in 2020. The year - over - year increases in operating income and adjusted EBITDA were primarily related to higher revenue from contracts won and lower COVID - 19 - related costs in 2021. Operating income also benefited from lower restructuring , transaction and integration costs . • Corporate : Corporate expense was $ 80 million for the second quarter 2021 , compared with an expense of $ 83 million for the same period in 2020. Corporate adjusted EBITDA was an expense of $ 53 million for the second quarter , compared with an expense of $ 57 million for the same period in 2020 . Liquidity Position As of June 30 , 2021 , the company had approximately $ 1.9 billion of total liquidity , including $ 801 million of cash and cash equivalents and approximately $ 1.1 billion of available borrowing capacity . The company's net leverage was 2.4x , calculated as net debt of $ 4.5 billion , divided by adjusted EBITDA of $ 1.8 billion for the 12 months ended June 30 , 2021 . Following the spin - off , XPO's net leverage is expected to be approximately 2.8x , calculated as pro forma net debt of $ 3.4 billion , divided by 2021 pro forma adjusted EBITDA of $ 1.2 billion . The company has no significant debt maturing until mid - 2023 , and plans to deleverage to achieve an investment - grade credit rating . Conference Call The company will hold a conference call on Thursday , July 29 , 2021 , at 8:30 a.m. Eastern Time . Participants can call toll - free ( from US / Canada ) 1-877-269-7756 ; international callers dial + 1-201-689-7817 . A live webcast of the conference will be available on the investor relations area of the company's website , xpo.com/investors . The conference will be archived until August 29 , 2021. To access the replay by phone , call toll - free ( from US / Canada ) 1-877-660-6853 ; intemational callers dial + 1-201-612-7415 . Use participant passcode 13721352 . About XPO Logistics XPO Logistics , Inc. ( NYSE : XPO ) provides cutting - edge supply chain solutions to the most successful companies in the world . XPO uses a network of 1,623 locations in 30 countries to serve more than 50,000 customers . Approximately 141,000 team members , including 107,000 employees and 34,000 temporary workers , help XPO's customers manage their supply chains most efficiently , using advanced technology for the movement of goods . The company's corporate headquarters are in Greenwich , Conn . , USA . Visit xpo.com for more information , and connect with XPO on Facebook , Twitter . LinkedIn , Instagram and YouTube . About the GXO spin - off XPO intends to spin off its logistics segment as GXO Logistics on August 2 , 2021 , creating two , pure - play industry powerhouses . The separation will create two , independent public companies with distinct investment identities and service offerings in vast addressable markets . GXO will be the largest pure - play contract logistics provider in the world , and XPO will be a leading provider of transportation services , primarily less - than - truckload transportation and truck brokerage . For more information , visit gxo.com . Non - GAAP Financial Measures As required by the rules of the Securities and Exchange Commission ( " SEC " ) , we provide reconciliations of the non - GAAP financial measures contained in this press release to the most directly comparable measure under GAAP , which are set forth in the financial tables attached to this release . XPO's non - GAAP financial measures for the three and six months ended June 30 , 2021 and 2020 used in this release include : adjusted earnings before interest , taxes , depreciation and amortization ( " adjusted EBITDA " ) and adjusted EBITDA margin on a consolidated basis and for our transportation and logistics segments as well as adjusted EBITDA for corporate ; free cash flow ; adjusted net income ( loss ) attributable to common shareholders and adjusted eamings ( loss ) per share ( basic and diluted ) ( adjusted EPS " ) ; net revenue and net revenue margin for our transportation segment , including net revenue for our North American truck brokerage business ; adjusted operating income , adjusted operating ratio ( including and excluding real estate ) , adjusted EBITDA and adjusted EBITDA margin for our North American less - than - truckload business ; organic revenue for our logistics segment ; net leverage and net debt . We believe that the above adjusted financial measures facilitate analysis of our ongoing business operations because they exclude items that may not be reflective of , or are unrelated to , XPO and its business segments ' core operating performance , and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses . Other companies may calculate these non - GAAP financial measures differently , and therefore our measures may not be comparable to similarly titled measures of other companies . These non - GAAP financial measures should only be used as supplemental measures of our operating performance . Adjusted EBITDA , adjusted net income attributable to common shareholders and adjusted EPS include adjustments for transaction and integration costs , as well as restructuring costs and other adjustments as set forth in the attached tables . Transaction and integration adjustments are generally incremental costs that result from an actual or planned acquisition , divestiture or spin - off and may include transaction costs , consulting fees , retention awards , and internal salaries and wages ( to the extent the individuals are assigned full - time to integration and transformation activities ) and certain costs related to integrating and converging IT systems . Restructuring costs primarily relate to severance costs associated with business optimization initiatives . Management uses these non - GAAP financial measures in making financial , operating and planning decisions and evaluating XPO's and each business segment's ongoing performance . We believe that free cash flow is an important measure of our ability to repay maturing debt or fund other uses of capital that we believe will enhance stockholder value . We calculate free cash flow as net cash provided by operating activities , less payment for purchases of property and equipment plus proceeds from sale of property and equipment . We believe that adjusted EBITDA and adjusted EBITDA margin improve comparability from period to period by removing the impact of our capital structure ( interest and financing expenses ) , asset base ( depreciation and amortization ) , tax impacts and other adjustments as set out in the attached tables that management has determined are not reflective of core operating activities and thereby assist investors with assessing trends in our underlying businesses . We believe that adjusted net income ( loss ) attributable to common shareholders and adjusted earnings ( loss ) per share improve the comparability of our operating results from period to period by removing the impact of certain costs and gains that management has determined are not reflective of our core operating activities ,