XPO Logistics reflects on economic and environmental performance

US-based XPO Logistics has detailed the company’s efforts to improve environmental protection, safety and workplace inclusion for its operations in North America and Europe.

XPO aims to use its 2018 Sustainability Report and 2018 Corporate Social Responsibility Report (Europe) as a baseline for future presentations.

“We believe that the only enduring way to succeed is by making meaningful contributions to the success of others,” said XPO Logistics CEO, Bradley Jacobs.

“I’m pleased that our new Sustainability Report captures the cultural aspects of our commitment to economic and environmental performance. We'll continue to adhere to the highest standards of business conduct, while staying aligned with our values and the interests of our stakeholders,” he said.

According to XPO Logistics: 86 per cent of materials used when XPO constructs a new 28’ double-walled trailer is recycled; 78 per cent of waste was recycled by XPO operations in Europe in 2018; and 79 per cent of materials handling equipment, such as forklifts, used at XPO supply chain sites are battery powered.

In a letter to stockholders, Jacobs explained that 2018 was a year of record growth and profitability for XPO – characterised, in many ways, by its final four months.

“In September, a longtime European customer went bankrupt,” he said,

“Then, macro conditions in France and the UK deteriorated. We were hit by a short-and-distort scheme in December – the same month our largest customer accelerated its plan to insource. To top it off, we didn’t execute up to our usual standards.

“As a result, we missed our 2018 target for adjusted EBITDA and our stock fell 47 per cent between October and January.

“In light of our pay-for-performance culture, our president, Troy Cooper, and I voluntarily waived an aggregate $4.3 million [approx. €3.8 million] in bonuses and deferred compensation awards.

“I’m proud that our team delivered 12.3 per cent year-over-year revenue growth in 2018, including 9.3 per cent organic revenue growth, despite the temporary turbulence.

“We generated net income attributable to common shareholders of $390 million [€346.7 million]. And we grew adjusted EBITDA to $1.56 billion [approx. €1.3 billion] – up 14.3 per cent year-over-year. Moreover, we generated cash flow from operations of $1.1 billion [approx. €977.9 million], and free cash flow of $694 million [approx. €857 million]. Our free cash flow handily surpassed our target of $626 million [€556.5 million], due in part to improved working capital management.

“We ended 2018 with a strong balance sheet and modest leverage of net debt to adjusted EBITDA of 2.4x. Our earliest significant debt maturity isn’t until 2022, and some of our debt doesn’t mature until 2034.

“Our liquidity gives us considerable flexibility in making the best capital allocations on behalf of our stockholders. When our share price dropped, we paused M&A in favour of buying back our own stock – a rare opportunity to create compelling shareholder value. In December, our board authorised $1 billion [approx. €889 million] of share repurchases, followed by an additional $1.5 billion [approx. €1.3 billion] authorisation in February. We’re very good at M&A, and we’ll return to acquisitions when the time is right,” he said.

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