GlobeNewswire Inc | May 3, 2021 04:16PM EDT

May 03, 2021

Reports highest revenue of any quarter in XPOs history

Generates record first quarter net income and adjusted EBITDA

Significantly raises full year 2021 adjusted EBITDA guidance range to $1.825 billion to $1.875 billion

GREENWICH, Conn., May 03, 2021 (GLOBE NEWSWIRE) -- XPO Logistics, Inc. (NYSE: XPO) today announced its financial results for the first quarter 2021. Revenue increased to $4.77 billion for the first quarter, compared with $3.86 billion for the same period in 2020. Net income attributable to common shareholders was $115 million for the first quarter, compared with $21 million for the same period in 2020. Operating income was $202 million for the first quarter, compared with $81 million for the same period in 2020. Diluted earnings per share was $1.02 for the first quarter, compared with $0.20 for the same period in 2020.

Adjusted net income attributable to common shareholders, a non-GAAP financial measure, was $164 million for the first quarter, compared with $71 million for the same period in 2020. Adjusted diluted earnings per share, a non-GAAP financial measure, was $1.46 for the first quarter, compared with $0.69 for the same period in 2020.

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), a non-GAAP financial measure, increased to $443 million for the first quarter, compared with $333 million for the same period in 2020.

For the first quarter 2021, the company generated $173 million of cash flow from operations and $69 million of free cash flow, a non-GAAP financial measure.

Reconciliations of non-GAAP financial measures used in this release are provided in the attached financial tables.

Raises 2021 Financial Targets

The company issued new full year guidance as follows:

-- Adjusted EBITDA of $1.825 billion to $1.875 billion, compared with the prior guidance of $1.725 billion to $1.8 billion. The new range for adjusted EBITDA reflects a year-over-year increase in adjusted EBITDA of 31% to 35% from 2020, comprised of: 28% to 32% growth in adjusted EBITDA in the logistics segment; and30% to 34% growth in adjusted EBITDA in the transportation segment. -- Depreciation and amortization of $625 million to $645 million, excluding $145 million of acquisition-related amortization expense; -- Interest expense of $270 million to $280 million; -- Effective tax rate of 24% to 26%; and -- Adjusted diluted EPS of $5.90 to $6.50, up from the prior range of $5.10 to $5.85.

With respect to 2021 cash flows, the company issued the following targets:

-- Gross capital expenditures of $650 million to $700 million, up from the prior range of $625 million to $675 million; -- Net capital expenditures of $500 million to $550 million, up from the prior range of $475 million to $525 million; and -- Free cash flow of $650 million to $725 million, up from the prior range of $600 million to $700 million.

The companys 2021 guidance excludes impacts associated with the planned spin-off of the logistics segment; and assumes 113 million diluted shares outstanding.

CEO Comments

Brad Jacobs, chairman and chief executive officer of XPO Logistics, said, In the first quarter, we reported the highest revenue of any quarter in our history, appreciably outpacing a macro thats recovering faster than expected. Our net income and adjusted EBITDA were both first quarter records, and we grew adjusted EPS by 112% year-over-year.

Our truck brokerage business is continuing to outperform the market, powered by the growth of our XPO Connect digital platform. We increased our first quarter brokerage revenue by 83% year-over-year, and grew net revenue by 132%.

In North American less-than-truckload, we improved our first quarter adjusted operating ratio, excluding real estate sales, by 220 basis points year-over-year to 84.3%. Our LTL business has strong momentum: our technology is expanding margin, and the recovery in the industrial economy is stimulating demand for our services.

In logistics, our record first quarter revenue of $1.82 billion was propelled by the big three logistics tailwinds: e-commerce, outsourcing and warehouse automation. Weve won a tremendous amount of logistics business in the first four months of this year, including a $1.8 billion contract with a longstanding customer that extends and expands our relationship through 2032. This is the largest contract in our companys history.

Jacobs continued, We now expect to grow our 2021 adjusted EBITDA by 31% to 35% year-over-year to a range of $1.825 billion to $1.875 billion, with strong contributions from both of our business segments.

First Quarter 2021 Results by Segment

-- Transportation: The companys transportation segment generated revenue of$2.99 billionfor the first quarter 2021, compared with $2.46 billion for the same period in 2020.Operating income for the transportation segment was $209 million for the first quarter, compared with $120 million for the same period in 2020. Adjusted EBITDA for the segment was $343 million for the first quarter, compared with $253 million for the same period in 2020.The increases in operating income and adjusted EBITDA were related primarily to higher profitability in truck brokerage and in less-than-truckload (LTL).In North American LTL, the first quarter operating ratio was 84.9% and the adjusted operating ratio was 82.6%. Excluding gains from sales of real estate, LTL adjusted operating ratio improved 220 basis points year-over-year to 84.3%.In North American truck brokerage, revenue increased by 83% year-over-year to $589 million for the first quarter, compared with $321 million for the same period in 2020. Net revenue increased 132% year-over-year to $110 million for the quarter, compared with $47 million for the same period in 2020.

-- Logistics: The companys logistics segment generated revenue of $1.82 billion for the first quarter 2021, compared with $1.44 billion for the same period in 2020. The year-over-year increase in segment revenue was primarily due to 13% organic revenue growth, the acquisition of contract logistics operations in the UK and Ireland, and a benefit from foreign currency conversion.Logistics segment operating income was $68 million for the first quarter, compared with $38 million for the same period in 2020. Adjusted EBITDA was $155 million for the first quarter, compared with $121 million for the same period in 2020. The increases in operating income and adjusted EBITDA were primarily related to higher revenue from contracts won in prior periods.

-- Corporate: Corporate expense was $75 million for the first quarter 2021, compared with an expense of $77 million for the same period in 2020. Corporate adjusted EBITDA was an expense of $55 million for the first quarter, compared with an expense of $41 million for the same period in 2020.

Liquidity

As of March 31, 2021, the company had access to approximately $1.7 billion of total liquidity, including $629 million of cash and cash equivalents and approximately $1.1 billion of available borrowing capacity.

Progress on the GXO Spin-Off

The company is on track with its plan to spin off its logistics segment in the second half of 2021. To date, as previously announced, the company has:

-- Unveiled the spin-offs corporate name as GXO Logistics, Inc., its brand as GXO and its tagline as Logistics at full potential; -- Named eight executives to GXO leadership positions; all will transition to GXO from XPO once the spin-off is complete: Malcolm Wilson, chief executive officer; Baris Oran, chief financial officer; Mark Manduca, chief investment officer; Richard Cawston, president Europe; Ashfaque Chowdhury, president Americas and Asia Pacific; Bill Fraine, chief commercial officer; Sandeep Sakharkar, chief information officer; and Maryclaire Hammond, chief human resources officer; and -- Filed a confidential initial Form 10 registration statement for the spin-off with the U.S. Securities and Exchange Commission in March.

Completion of the spin-off is subject to various conditions, and there can be no assurance that the transaction will occur or, if it does occur, of its terms or timing.

Conference Call

The company will hold a conference call on Tuesday, May 4, 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 companys website, xpo.com/investors. The conference will be archived until June 4, 2021. To access the replay by phone, call toll-free (from US/Canada) 1-877-660-6853; international callers dial +1-201-612-7415. Use participant passcode 13718521.

About XPO Logistics

XPO Logistics, Inc. (NYSE: XPO) provides cutting-edge supply chain solutions to the most successful companies in the world. The company is the second largest contract logistics provider and the second largest freight broker globally, and a top three less-than-truckload provider in North America. XPO uses a highly integrated network of 1,621 locations in 30 countries to serve more than 50,000 customers. Approximately 140,000 team members, including 108,000 employees and 32,000 temporary workers, help XPOs customers manage their supply chains most efficiently. The companys corporate headquarters are in Greenwich, Conn., USA, and its European headquarters are in Lyon, France. Visitxpo.comfor more information, and connect with XPO on Facebook, Twitter, LinkedIn, Instagram and YouTube.

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.

XPOs non-GAAP financial measures for the three ended March 31, 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 attributable to common shareholders and adjusted earnings 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, adjusted EBITDA and adjusted EBITDA margin for our North American less-than-truckload business; and organic revenue for our logistics segment.

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 XPOs and each business segments 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 attributable to common shareholders and adjusted EPS 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, including amortization of acquisition-related intangible assets. We believe that net revenue and net revenue margin improve the comparability of our operating results from period to period by removing the cost of transportation and services, in particular the cost of fuel, incurred in the reporting period as set out in the attached tables. We believe that adjusted operating income and adjusted operating ratio for our North American less-than-truckload business improve the comparability of our operating results from period to period by (i) removing the impact of certain transaction and integration and restructuring costs, as well as amortization expenses and (ii) including the impact of pension income incurred in the reporting period as set out in the attached tables. We believe that organic revenue is an important measure because it excludes the impact of the following items: foreign currency exchange rate fluctuations and revenue generated by the logistics operations we recently acquired from Kuehne+Nagel in the UK.

With respect to our full year 2021 financial targets for adjusted EBITDA, adjusted diluted EPS and free cash flow, a reconciliation of these non-GAAP measures to the corresponding GAAP measures is not available without unreasonable effort due to the variability and complexity of the reconciling items described above that we exclude from these non-GAAP target measures. The variability of these items may have a significant impact on our future GAAP financial results and, as a result, we are unable to prepare the forward-looking statement of income and statement of cash flows prepared in accordance with GAAP that would be required to produce such a reconciliation.

Forward-looking Statements

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including our full year 2021 financial targets for adjusted EBITDA, depreciation and amortization (excluding acquisition-related amortization expense), interest expense, effective tax rate, adjusted diluted EPS, gross capital expenditures, net capital expenditures and free cash flow as well as our companys planned spin-off of its logistics segment. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as anticipate, estimate, believe, continue, could, intend, may, plan, potential, predict, should, will, expect, objective, projection, forecast, goal, guidance, outlook, effort, target, trajectory or the negative of these terms or other comparable terms. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances.

These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause or contribute to a material difference include the risks discussed in our filings with the SEC and the following: economic conditions generally; the severity, magnitude, duration and aftereffects of the COVID-19 pandemic and government responses to the COVID-19 pandemic; our ability to align our investments in capital assets, including equipment, service centers and warehouses, to our customers demands; our ability to implement our cost and revenue initiatives; our ability to successfully integrate and realize anticipated synergies, cost savings and profit improvement opportunities with respect to acquired companies; matters related to our intellectual property rights; fluctuations in currency exchange rates; fuel price and fuel surcharge changes; natural disasters, terrorist attacks or similar incidents; risks and uncertainties regarding the potential timing and expected benefits of the proposed spin-off of our logistics segment, including final approval for the proposed spin-off and the risk that the spin-off may not be completed on the terms or timeline currently contemplated, if at all; the impact of the proposed spin-off on the size and business diversity of our company; the ability of the proposed spin-off to qualify for tax-free treatment for U.S. federal income tax purposes; our ability to develop and implement suitable information technology systems and prevent failures in or breaches of such systems; our substantial indebtedness; our ability to raise debt and equity capital; fluctuations in fixed and floating interest rates; our ability to maintain positive relationships with our network of third-party transportation providers; our ability to attract and retain qualified drivers; labor matters, including our ability to manage our subcontractors, and risks associated with labor disputes at our customers and efforts by labor organizations to organize our employees; litigation, including litigation related to alleged misclassification of independent contractors and securities class actions; risks associated with our self-insured claims; risks associated with defined benefit plans for our current and former employees; and governmental regulation, including trade compliance laws, as well as changes in international trade policies and tax regimes; governmental or political actions, including the United Kingdoms exit from the European Union; and competition and pricing pressures.

All forward-looking statements set forth in this release are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us or our business or operations. Forward-looking statements set forth in this release speak only as of the date hereof, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, changes in expectations or the occurrence of unanticipated events, except to the extent required by law.

Investor ContactXPO Logistics, Inc.Tavio Headley+1-203-413-4006tavio.headley@xpo.com

Media ContactXPO Logistics, Inc.Joe Checkler+1-203-423-2098joe.checkler@xpo.com

XPO Logistics, Inc. Condensed Consolidated Statements of Income (Unaudited) (In millions, except per share data) Three Months Ended March 31, 2021 2020 Revenue $ 4,774 $ 3,864 Cost oftransportation 2,328 1,898 and servicesDirect operating 1,656 1,360 expenseSales, generaland 588 525 administrativeexpenseOperating income 202 81 ^(1)Other income (26) (18) Foreign currency gain (2) (8)Debt extinguishment 8 - lossInterest expense 69 72 Income beforeincome tax 153 35 provisionIncome tax 35 10 provisionNet income 118 25 Net incomeattributable to noncontrolling (3) (2)interestsNet incomeattributable to $ 115 $ 23 XPO Net incomeattributable tocommon $ 115 $ 21 shareholders ^(2) Basic earnings $ 1.08 $ 0.23 per shareDiluted earnings $ 1.02 $ 0.20 per share Weighted-averagecommon shares outstandingBasicweighted-average 106 92 common sharesoutstandingDilutedweighted-average 112 103 common sharesoutstanding ^(1) Operating income for the three months ended March 31, 2021 and 2020 reflects the net impact of direct and incremental COVID-19-related costs of $2million and $5 million, respectively.

^(2) Net incomeattributable tocommon shareholdersreflects thefollowing items:Non-cashallocation of $ $ undistributed - 1earningsPreferred dividends - 1

XPO Logistics, Inc.Condensed Consolidated Balance Sheets(Unaudited)(In millions, except per share data) March 31, December 31, 2021 2020ASSETS Current assets Cash and cash $ $ 2,054equivalents 629Accountsreceivable, net ofallowances of $60 3,137 2,886and $65,respectivelyOther current 430assets 505Total current 4,271 5,370assetsLong-term assets Property andequipment, net of$2,653 and $2,568 2,651 2,661in accumulateddepreciation,respectivelyOperating lease 2,602 2,278assetsGoodwill 4,554 4,599Identifiableintangible assets,net of $944 and $909 in 955 974accumulatedamortization,respectivelyOther long-term 287assets 336Total long-term 11,098 10,799assetsTotal assets $ 15,369 $ 16,169 LIABILITIES ANDSTOCKHOLDERS? EQUITYCurrent liabilitiesAccounts payable $ 1,329 $ 1,255Accrued expenses 1,966 1,814Short-termborrowings and 1,338current maturities 88of long-term debtShort-term operating lease 533 483liabilitiesOther current 263liabilities 260Total current 4,176 5,153liabilitiesLong-term liabilitiesLong-term debt 5,162 5,369Deferred tax 371liability 378Employee benefit 192obligations 178Long-termoperating lease 2,086 1,795liabilitiesOther long-term 440liabilities 475Total long-term 8,279 8,167liabilities Stockholders? equityConvertibleperpetualpreferred stock,$0.001 par value; 10 sharesauthorized; ? and0.001of Series A sharesissued andoutstanding as of March 31, 2021 and - 1December 31, 2020,respectivelyCommon stock,$0.001 par value;300 shares authorized; 112and 102 sharesissued andoutstanding as ofMarch 31, 2021 and December 31, 2020, - -respectivelyAdditional paid-in 1,988 1,998capitalRetained earnings 868 983Accumulated other comprehensive loss (195) (158)Totalstockholders?equity before 2,776 2,709noncontrollinginterestsNoncontrolling 140interests 138Total equity 2,914 2,849Total liabilities $ 15,369 $ 16,169and equity

XPO Logistics, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited)(In millions) Three Months Ended March 31, 2021 2020Operating activitiesNet income $ 118 $ 25Adjustments toreconcile netincome to net cash fromoperatingactivities Depreciation, amortization 192 183 and net lease activity Stock compensation 10 18 expense Accretion of debt 5 4 Deferred tax benefit (4) (2) Debt extinguishment 8 - loss Unrealized gain on foreign currency (1) (4) option and forward contracts Gains on sales of property (24) (27) and equipment Other (2) 5Changes in assets and liabilities Accounts (196) 44 receivable Other assets (21) (16) Accounts 12 (69) payable Accrued expenses and 76 19 other liabilitiesNet cash providedby operating 173 180activitiesInvesting activities Payment for purchases of (140) (139) property and equipment Proceeds from sale of 36 54 property and equipment Other 9 6Net cash used ininvesting (95) (79)activitiesFinancing activities Proceeds from (repayment of) borrowings (49) 182 related to securitization program Repurchase of (1,200) debt - Proceeds from borrowings on - 620 ABL facility Repayment of borrowings on (200) (20) ABL facility Repayment of debt and (29) (25) finance leases Payment for debt issuance (5) - costs Repurchase of (114) common stock - Change in bank 42 overdrafts 1 Payment for tax withholdings (21) (16) for restricted shares Other 2 (1)Net cash providedby (used in) (1,501) 668financingactivitiesEffect ofexchange rates on cash, cash (2) (19)equivalents andrestricted cashNet increase(decrease) incash, cash (1,425) 750equivalents andrestricted cashCash, cashequivalents andrestricted cash, 2,065 387beginning ofperiodCash, cashequivalents and $ 640 $ 1,137restricted cash,end of period

Transportation Summary Financial Table (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Change % Revenue $ 2,989 $ 2,459 21.6% Cost of transportation 2,099 1,732 21.2% and servicesDirect operating 350 308 13.6% expenseSales, general and 331 299 10.7% administrative expenseOperating income ^(1) $ 209 $ 120 74.2% Other income ^(2) 30.8% 17 13Total depreciation and 115 110 4.5% amortizationTransaction and -85.7% integration costs 1 7Restructuring costs -66.7% 1 3Adjusted EBITDA ^(3) $ 343 $ 253 35.6% Adjusted EBITDA margin 11.5% 10.3% ^(3) (4) ^(1) Operating income for the three months ended March 31, 2021 and 2020 reflects the net impact of direct and incremental COVID-19-related costs of$2 million and $2 million, respectively.

^(2) Other incomeconsists of pension income.^(3) See the ?Non-GAAP Financial Measures? section of the press release. ^(4) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

Transportation Key Data by Service Offering (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Revenue North America Freight Brokerage $ 890 $ 586 Less-Than-Truckload 976 910 Last Mile 246 201 Managed Transport ^ (1) 97 83Total North America 2,209 1,780 Europe Freight Brokerage 494 437 and TruckloadLess-Than-Truckload 245 225 Total Europe 739 662 Global Forwarding 100 61Eliminations (59) (44)Total Revenue $ 2,989 $ 2,459 Net Revenue North America Freight Brokerage $ 177 $ 103 Less-Than-Truckload 409 371 Last Mile 84 70Managed Transport 23 24Total North America 693 568 Europe 177 146 Global Forwarding 20 13Total Net Revenue ^ $ 890 $ 727 (2) Net Revenue Margin North America Freight Brokerage 19.9% 17.5% Less-Than-Truckload 41.9% 40.8% Last Mile 34.2% 35.0% Managed Transport 23.4% 28.8% Total North America 31.4% 31.9% Europe 24.0% 22.0% Global Forwarding 20.2% 22.9% Overall Net Revenue 29.8% 29.6% Margin Direct Operating ExpenseNorth America Freight Brokerage $ $ 30 23Less-Than-Truckload 169 147 Last Mile 28 26Managed Transport 15 15Total North America 242 211 Europe 105 95Global Forwarding 3 2Total Direct $ 350 $ 308 Operating Expense ^(1) Within our managed transportation business, to the extent that we areprimarily being paid for arranging transportation on behalf of our customer, we generally recognize revenue as the difference between theamount the customer pays us for the service less the amount we are charged by third parties who provide the service.

^(2) Net revenue equals Revenue less Cost of transportation and services. See the ?Non-GAAP Financial Measures? section of the press release. Less-Than-Truckload revenue is before intercompany eliminations and includes revenue from the Company?s trailer manufacturing business.

North American Less-Than-TruckloadSummary Data Table(Unaudited) Three Months Ended March 31, 2021 2020 Change % Pounds per day (thousands) 70,730 68,212 3.7% Shipments per day 49,788 48,603 2.4% Average weight per shipment (in pounds) 1,421 1,403 1.3% Gross revenue per shipment $ 314.45 $ 297.03 5.9% Gross revenue per hundredweight (including $ 22.13 $ 21.16 4.6%fuel surcharges) Gross revenue per hundredweight (excluding $ 19.11 $ 18.34 4.2%fuel surcharges) Average length of haul (in miles) 833.2 813.3 Total average load factor ^(1) 24,411 23,859 2.3% Average age of tractor fleet (years) 5.59 5.14 Number of working days 63.0 64.0 ^(1) Total average load factor equals freight pound miles divided by totallinehaul miles.

North American Less-Than-Truckload Adjusted Operating Ratio and Adjusted EBITDA (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Change % Revenue (excluding fuel $ 827 $ 775 6.7% surcharge revenue)Fuel surcharge revenue 135 123 9.8% Revenue 962 898 7.1% Salaries, wages and 453 437 3.7% employee benefitsPurchased transportation 8.0% 94 87Fuel and fuel-related 10.5% taxes 63 57Other operating expenses 134 118 13.6% Depreciation and -1.8% amortization 55 56Rents and leases 20.0% 18 15Operating income ^(1) 145 128 13.3% Operating ratio ^(2) 84.9% 85.7% Transaction and NM integration costs - 2Amortization expense 0.0% 8 8Other income ^(3) 27.3% 14 11Adjusted operating income $ 167 $ 149 12.1% ^(4)Adjusted operating ratio ^ 82.6% 83.4% (4) (5) (6)Depreciation expense -2.1% 47 48Adjusted EBITDA ^(4) $ 214 $ 197 8.6% Adjusted EBITDA margin ^ 22.2% 21.9% (4) (7) NM - Not meaningful. ^(1) Operating income for the three months ended March 31, 2021 and 2020 reflects the net impact of direct and incremental COVID-19-related costs of$2 million and $- million, respectively.

^(2) Operating ratio is calculated as (1 - (Operating income divided by Revenue)).^(3) Other income primarily consists of pension income. ^(4) See the ?Non-GAAP Financial Measures? section of the press release. ^(5) Adjusted operating ratio is calculated as (1 - (Adjusted operating income divided by Revenue)).^(6) Excluding the impact of gains on real estate transactions from both periods, the Adjusted operating ratio improved by 220 basis points from 86.5% in the first quarter of 2020 to 84.3% in the first quarter of 2021. ^(7) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

Logistics Summary Financial Table (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Change % Revenue ^(1) $ 1,818 $ 1,437 26.5% Cost of transportation 261 198 31.8% and servicesDirect operating 1,307 1,051 24.4% expenseSales, general and 182 150 21.3% administrative expenseOperating income ^(2) $ $ 78.9% 68 38Other income ^(3) 14.3% 8 7Total depreciation and 7.2% amortization 74 69Transaction and -28.6% integration costs 5 7Restructuring costs 0.0% - -Adjusted EBITDA ^(4) $ 155 $ 121 28.1% Adjusted EBITDA margin 8.5% 8.4% ^(4) (5) ^(1) The Kuehne + Nagel business, which was acquired in January 2021,contributed approximately 8.2 percentage points to Logistics? revenue growth.^(2) Operating income for the three months ended March 31, 2021 and 2020 reflects the net impact of direct and incremental COVID-19-related costs of $- million and $3 million, respectively. ^(3) Other income consists of pension income. ^(4) See the ?Non-GAAP Financial Measures? section of the press release. ^(5) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

LogisticsKey Data by Geography(Unaudited)(In millions) Three Months Ended March 31, 2021 2020Revenue North America $ 621 $ 572Europe ^(1) 1,197 865Total revenue $ 1,818 $ 1,437 Gross margin ^(2) North America $ 61 $ 53Europe 189 135Total gross margin $ 250 $ 188 Gross margin % North America 9.8% 9.2%Europe 15.8% 15.7%Total gross margin % 13.8% 13.1% ^(1) The Kuehne + Nagel acquired business contributed approximately 13.6percentage points to Europe?s revenue growth of 38.4%.^(2) Gross margin equals Revenue less Cost of transportation and services andDirect operating expense.

CorporateSummary of Sales, General and Administrative Expense(Unaudited)(In millions) Three Months Ended March 31, 2021 2020 Change % Sales, general and $ $ -2.6%administrative expense 75 77Operating loss $ $ -2.6% (75) (77)Other income (expense) ^ 0.0%(1) 2 2Total depreciation and -25.0%amortization 3 4Transaction and -60.0%integration costs 12 30Restructuring costs NM 3 -Adjusted EBITDA ^(2) $ $ 34.1% (55) (41) NM - Not meaningful. ^(1) Other income (expense) consists of pension income, foreign currency gain(loss) and other income (expense).^(2) See the ?Non-GAAP Financial Measures? section of the press release. Intersegment eliminations represent intercompany activity between the Company?sreportable segments that is eliminated upon consolidation. The following tablesummarizes the intersegment eliminations by line item. Three Months Ended March 31, 2021 2020

Revenue $ $ (33) (32)Cost of transportation and services (32) (32)Direct operating expense (1) 1Sales, general and administrative expense - (1)Operating income $ $ - -

XPO Logistics, Inc. Reconciliation of Net Income to Adjusted EBITDA (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Change % Net income attributable $ 115 $ 447.6% to common shareholders 21Distributed and undistributed net income - 2 ^(1)Net income attributable to noncontrolling 3 2 interestsNet income 118 372.0% 25Debt extinguishment loss 8 -Interest expense 69 72Income tax provision 35 10Depreciation and 192 183 amortization expenseUnrealized gain on foreign currency option (1) (4) and forward contractsTransaction and integration costs 18 44Restructuring costs 4 3Adjusted EBITDA ^(2) $ 443 $ 333 33.0% Revenue $ 4,774 $ 3,864 23.6% Adjusted EBITDA margin ^ 9.3% 8.6% (2) (3) ^(1) Relates to the Series A Preferred Stock and is comprised of actual preferred stock dividends and the non-cash allocation of undistributedearnings.

^(2) See the ?Non-GAAP Financial Measures? section of the press release. Adjusted EBITDA was prepared assuming 100% ownership of XPO LogisticsEurope.

^(3) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Revenue.

XPO Logistics, Inc.Reconciliation of GAAP Net Income and Net Income Per Share toAdjusted Net Income and Adjusted Net Income Per Share(Unaudited)(In millions, except per share data) Three Months Ended March 31, 2021 2020 ^(1) GAAP net income attributable to $ 115 $ common shareholders 21 Debt extinguishment loss 8 - Unrealized gain on foreign currency option and forward (1) (4) contracts Amortization of acquisition-related intangible 36 35 assets Transaction and integration costs 18 44 Restructuring costs 4 3 Income tax associated with the adjustments above ^(2) (15) (22) Impact of noncontrolling interests on above adjustments (1) - Allocation of undistributed earnings - (6)Adjusted net income attributable to $ 164 $ common shareholders ^(3) 71 Adjusted basic earnings per share ^ $ 1.55 $ 0.77(3)Adjusted diluted earnings per share $ 1.46 $ 0.69^(3) Weighted-average common shares outstanding Basic weighted-average common 106 shares outstanding 92 Diluted weighted-average common 112 103 shares outstanding ^(1) First quarter 2020 was recast to exclude the amortization ofacquisition-related intangible assets.^(2) This line item reflects the aggregate tax benefit of all non-tax relatedadjustments reflected in the table above. The detail by line item is asfollows: Debt extinguishment loss $ $ 2 - Unrealized gain on foreign currency option and forward - (1) contracts Amortization of acquisition-related intangible 8 10 assets Transaction and integration costs 4 12 Restructuring costs 1 1 $ $ 15 22 The income tax rate applied to reconciling items is based on the GAAP annualeffective tax rate, excluding discrete items and contribution- and margin-basedtaxes. ^(3) See the ?Non-GAAP Financial Measures? section of the press release.

XPO Logistics, Inc. Other Reconciliations (Unaudited) (In millions) Three Months Ended March 31, 2021 2020 Reconciliationof Cash Flowsfrom Operating Activities toFree Cash FlowNet cashprovided by $ $ operating 173 180activitiesPayment forpurchases of property and (140) (139)equipmentProceeds fromsale of property and 36 54equipmentFree Cash Flow $ $ ^(1) 69 95 Three Months Ended March 31, 2021 2020 Reconciliationof Logistics'GAAP Revenue to OrganicRevenueRevenue $ $ 1,437 1,818Kuehne + Nagel revenue (118) -Foreign exchange rates (79) -Organic $ $ 1,437 Revenue ^(1) 1,621OrganicRevenue Growth 12.8% ^(1) (2) Three Months Ended March 31, 2021 2020 Change %North AmericanTruckBrokerageReconciliation of GAAPRevenue to NetRevenueRevenue $ $ 83.4% 589 321Cost of transportation 479 274 and servicesNet revenue ^ 131.5% (1) 110 47 ^(1) See the?Non-GAAPFinancial Measures?section of thepress release. ^(2) Organic revenue growth is calculated as the relative change in year-over-year organic revenue, expressed as a percentage of 2020 organicrevenue. See the ?Non-GAAP Financial Measures? section of the press release.