XPO(XPO) - 2021 Q3 - Quarterly Report

Part I—Financial Information This section details XPO Logistics' unaudited financial statements and management's analysis of its financial performance and condition post-GXO spin-off Item 1. Financial Statements (Unaudited) This section presents XPO Logistics, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income statements, cash flow statements, and statements of changes in equity, along with detailed notes. The financial data reflects the impact of the GXO Logistics spin-off and significant debt deleveraging activities during the period Condensed Consolidated Balance Sheets This table presents XPO's financial position, including assets, liabilities, and equity, reflecting the impact of the GXO spin-off and debt reduction Condensed Consolidated Balance Sheets (In millions): | Item | September 30, 2021 | December 31, 2020 | | :------------------------------------------------ | :------------------- | :------------------ | | ASSETS | | | | Cash and cash equivalents | $254 | $1,731 | | Accounts receivable, net | $1,987 | $1,680 | | Current assets of discontinued operations | $25 | $1,664 | | Total current assets | $2,550 | $5,378 | | Property and equipment, net | $1,821 | $1,891 | | Goodwill | $2,493 | $2,536 | | Long-term assets of discontinued operations | — | $4,666 | | Total assets | $8,533 | $16,177 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Accounts payable | $963 | $854 | | Short-term borrowings and current maturities of long-term debt | $56 | $1,281 | | Current liabilities of discontinued operations | $24 | $1,728 | | Total current liabilities | $2,527 | $5,161 | | Long-term debt | $3,515 | $5,240 | | Long-term liabilities of discontinued operations | — | $1,430 | | Total liabilities | $7,517 | $13,328 | | Total equity | $1,016 | $2,849 | Condensed Consolidated Statements of Income (Loss) This table summarizes XPO's revenues, operating expenses, and net income (loss) from continuing and discontinued operations over specified periods Condensed Consolidated Statements of Income (Loss) (In millions, except per share data): | Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Revenue | $3,270 | $2,675 | $9,445 | $7,261 | | Operating income | $112 | $138 | $442 | $75 | | Debt extinguishment loss | $46 | — | $54 | — | | Interest expense | $53 | $81 | $176 | $226 | | Income (loss) from continuing operations | $21 | $37 | $197 | $(79) | | Income (loss) from discontinued operations, net of taxes | $(78) | $61 | $22 | $68 | | Net income (loss) | $(57) | $98 | $219 | $(11) | | Net income (loss) attributable to common shareholders | $(57) | $84 | $214 | $(17) | | Basic earnings (loss) per share from continuing operations | $0.19 | $0.30 | $1.78 | $(0.86) | | Basic earnings (loss) per share from discontinued operations | $(0.69) | $0.63 | $0.15 | $0.68 | | Basic earnings (loss) per share attributable to common shareholders | $(0.50) | $0.93 | $1.93 | $(0.18) | | Diluted earnings (loss) per share from continuing operations | $0.19 | $0.27 | $1.73 | $(0.86) | | Diluted earnings (loss) per share from discontinued operations | $(0.68) | $0.56 | $0.14 | $0.68 | | Diluted earnings (loss) per share attributable to common shareholders | $(0.49) | $0.83 | $1.87 | $(0.18) | Condensed Consolidated Statements of Comprehensive Income (Loss) This table outlines XPO's net income (loss) and other comprehensive income (loss) components, leading to total comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (In millions): | Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Net income (loss) | $(57) | $98 | $219 | $(11) | | Other comprehensive income (loss) | $(22) | $68 | $(49) | $19 | | Comprehensive income (loss) | $(79) | $166 | $170 | $8 | | Comprehensive income (loss) attributable to XPO | $(79) | $156 | $167 | $1 | Condensed Consolidated Statements of Cash Flows This table details XPO's cash flows from operating, investing, and financing activities for both continuing and discontinued operations Condensed Consolidated Statements of Cash Flows (In millions): | Item | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities from continuing operations | $558 | $292 | | Net cash used in investing activities from continuing operations | $(143) | $(78) | | Net cash provided by (used in) financing activities from continuing operations | $(1,880) | $1,195 | | Net cash provided by (used in) discontinued operations | $(329) | $241 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(1,801) | $1,648 | | Cash, cash equivalents and restricted cash, end of period | $264 | $2,035 | Condensed Consolidated Statements of Changes in Equity This table illustrates the changes in XPO's stockholders' equity, including the impact of the GXO spin-off and stock transactions Condensed Consolidated Statements of Changes in Equity (In millions): | Item | Balance as of Dec 31, 2020 | Balance as of Sep 30, 2021 | | :------------------------------------------------ | :------------------------- | :------------------------- | | Additional Paid-In Capital | $1,998 | $1,174 | | Retained Earnings (Accumulated Deficit) | $868 | $(79) | | Accumulated Other Comprehensive Loss | $(158) | $(79) | | Total XPO Stockholders' Equity | $2,709 | $1,016 | | Noncontrolling Interests | $140 | — | | Total Equity | $2,849 | $1,016 | - The spin-off of GXO resulted in a reduction of $2,234 million in Total XPO Stockholders' Equity and $40 million in Noncontrolling Interests[21][24] - Issuance of common stock contributed $384 million to Additional Paid-In Capital[21][24] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements 1. Organization, Description of Business and Basis of Presentation This note outlines XPO's core business as freight transportation services (LTL and truck brokerage) and details the completion of the GXO Logistics spin-off on August 2, 2021, with GXO's historical results presented as discontinued operations. It also covers accounting policies, reclassifications, restricted cash, trade receivables securitization and factoring programs, fair value measurements, and the adoption of new accounting standards - XPO Logistics, Inc. completed the spin-off of its Logistics segment, GXO Logistics, Inc., on August 2, 2021, distributing 100% of GXO common stock to XPO stockholders[29] - The historical results of the Logistics segment for periods prior to the spin-off are presented as discontinued operations in the Condensed Consolidated Financial Statements[30] Trade Receivables Sold (In millions): | Program | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Securitization programs: Receivables sold | $504 | $355 | $1,259 | $1,008 | | Factoring programs: Receivables sold | $17 | $17 | $46 | $58 | 2. Discontinued Operations This note provides a summary of the financial results and assets/liabilities of GXO Logistics, Inc., which was spun off on August 2, 2021, and is now reported as discontinued operations. It details the costs incurred related to the spin-off and the cash payment received from GXO - XPO incurred approximately $68 million and $111 million in costs related to the spin-off for the three and nine months ended September 30, 2021, respectively, with $57 million and $96 million reflected within income (loss) from discontinued operations[45] - GXO completed a debt offering and used the net proceeds to fund a cash payment of $794 million to XPO, which was used to repay outstanding borrowings[45] Financial Results from Discontinued Operations of GXO (In millions): | Item | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Revenue | $651 | $1,580 | $4,350 | $4,421 | | Operating income (loss) | $(31) | $84 | $87 | $88 | | Net income (loss) from discontinued operations, net of taxes | $(78) | $61 | $22 | $68 | 3. Segment Reporting This note details XPO's revised reportable segments post-spin-off: North American LTL and Brokerage and Other Services. It describes the services provided by each segment and presents selected financial data, with Adjusted EBITDA now used as the primary measure of segment profit - Following the spin-off, XPO's reportable segments are (i) North American LTL and (ii) Brokerage and Other Services[51] - The chief operating decision maker (CODM) now evaluates segment profit (loss) based on Adjusted EBITDA, defined as income (loss) from continuing operations before interest expense, income tax, depreciation and amortization expense, transaction and integration costs, restructuring costs, and other adjustments[56] Selected Financial Data for Segments (In millions): | Item | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :-------------------------- | :------ | :------ | :------ | :------ | | Revenue: | | | | | | North American LTL | $1,071 | $933 | $3,114 | $2,623 | | Brokerage and Other Services | $2,261 | $1,778 | $6,493 | $4,738 | | Adjusted EBITDA: | | | | | | North American LTL | $222 | $238 | $694 | $562 | | Brokerage and Other Services | $131 | $90 | $386 | $159 | | Corporate | $(46) | $(60) | $(164) | $(163) | | Total Adjusted EBITDA | $307 | $268 | $916 | $558 | 4. Revenue Recognition This note disaggregates XPO's revenue by geographic area and service offering for the three and nine months ended September 30, 2021 and 2020. It also provides information on remaining performance obligations Revenue Disaggregated by Service Offering (In millions): | Service Offering | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :-------------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | North America LTL | $1,091 | $941 | $3,165 | $2,652 | | Truck Brokerage | $700 | $432 | $1,903 | $1,062 | | Last Mile | $250 | $243 | $765 | $662 | | Other Brokerage | $547 | $413 | $1,486 | $1,108 | | Europe | $757 | $687 | $2,311 | $1,894 | | Total Revenue | $3,270 | $2,675 | $9,445 | $7,261 | - As of September 30, 2021, the fixed consideration component of remaining performance obligations was approximately $135 million, with about 84% expected to be recognized over the next three years[61] 5. Restructuring Charges This note details XPO's restructuring activities, including severance and facility-related costs, undertaken to improve efficiency and profitability. These actions are partly in connection with the spin-off and in response to COVID-19 Restructuring-Related Activity (Nine Months Ended Sep 30, 2021, In millions): | Item | Reserve Balance as of Dec 31, 2020 | Charges Incurred | Payments | Reserve Balance as of Sep 30, 2021 | | :-------------------- | :--------------------------------- | :--------------- | :------- | :--------------------------------- | | Severance | $8 | $16 | $(10) | $13 | | Facilities | $5 | — | $(2) | $4 | | Total | $13 | $16 | $(12) | $17 | - Restructuring costs for the first nine months of 2021 were $16 million, compared with $31 million for the same period in 2020[146] - XPO expects to achieve annualized pre-tax run-rate savings of approximately $20 million by mid-2022 from the restructuring initiatives recorded in the first nine months of 2021[146] 6. Derivative Instruments This note describes XPO's use of derivative instruments, such as cross-currency swap agreements and interest rate swaps, to manage exposure to interest rate and foreign currency risks. It provides fair values and the impact of these derivatives on the financial statements Fair Value of Derivative Instruments (In millions): | Item | September 30, 2021 Fair Value | December 31, 2020 Fair Value | | :-------------------------- | :------------------------------ | :------------------------------ | | Derivative Assets | $0 | $0 | | Derivative Liabilities | $(12) | $(113) | | Total | $(12) | $(113) | - In the third quarter of 2021, cross-currency swaps with a fair value of approximately $28 million were novated (transferred) to GXO in preparation for the spin-off[69] 7. Debt This note provides a detailed breakdown of XPO's debt, including ABL facilities, term loans, and senior notes. It highlights significant debt reduction activities in 2021, such as the redemption of senior notes and the amendment of the term loan credit agreement Total Debt (In millions): | Item | September 30, 2021 Carrying Value | December 31, 2020 Carrying Value | | :------------------------------------------------ | :-------------------------------- | :--------------------------------- | | ABL facility | $0 | $200 | | Term loan facilities | $1,975 | $1,974 | | 6.50% Senior notes due 2022 | $0 | $1,195 | | 6.125% Senior notes due 2023 | $0 | $531 | | 6.75% Senior notes due 2024 | $0 | $989 | | 6.25% Senior notes due 2025 | $1,140 | $1,138 | | 6.70% Senior debentures due 2034 | $213 | $210 | | Borrowings related to securitization program | $0 | $24 | | Finance leases, asset financing and other | $243 | $260 | | Total debt (carrying value) | $3,571 | $6,521 | | Long-term debt | $3,515 | $5,240 | - In the third quarter of 2021, XPO redeemed its outstanding 6.125% senior notes due 2023 and 6.75% senior notes due 2024, utilizing $794 million cash received from GXO, proceeds from an equity offering, and available cash[82] - XPO redeemed its outstanding 6.50% senior notes due 2022 in January 2021 with available cash[83] 8. Stockholders' Equity This note details changes in XPO's stockholders' equity, including a common stock offering, the exchange of preferred stock and warrants, and the status of the share repurchase authorization - In July 2021, XPO completed a registered underwritten offering of 5.75 million shares of common stock, generating approximately $384 million in net proceeds, used for debt repayment and general corporate purposes[85] - All Series A Convertible Perpetual Preferred Stock and warrants were exchanged for common stock by the second quarter of 2021, simplifying the equity capital structure[88] - As of September 30, 2021, the remaining share repurchase authorization was $503 million, with no share repurchases since the first quarter of 2020[90] 9. Earnings (Loss) per Share This note outlines the computation of basic and diluted earnings per share using the two-class method, providing detailed figures for both continuing and discontinued operations Earnings (Loss) per Share Data: | Item | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 | | :------------------------------------------------ | :------ | :------ | :------ | :------ | | Basic EPS from continuing operations | $0.19 | $0.30 | $1.78 | $(0.86) | | Basic EPS from discontinued operations | $(0.69) | $0.63 | $0.15 | $0.68 | | Basic EPS attributable to common shareholders | $(0.50) | $0.93 | $1.93 | $(0.18) | | Diluted EPS from continuing operations | $0.19 | $0.27 | $1.73 | $(0.86) | | Diluted EPS from discontinued operations | $(0.68) | $0.56 | $0.14 | $0.68 | | Diluted EPS attributable to common shareholders | $(0.49) | $0.83 | $1.87 | $(0.18) | 10. Legal and Regulatory Matters This note discusses XPO's involvement in various legal proceedings, including class action lawsuits regarding independent contractor misclassification and shareholder litigation. It highlights a tentative settlement for intermodal drayage claims and ongoing appeals for shareholder suits - XPO reached a tentative settlement in August 2021 for intermodal drayage classification claims in California, agreeing to pay $20 million in the Alvarez case and $9.5 million in the Arrellano case[99] - The settlements do not require XPO to reclassify its contractors as employees and release the plaintiff classes from all liability through December 31, 2021[100] - A shareholder class action (Labul v. XPO Logistics, Inc. et al.) was dismissed with prejudice in March 2021, with an appeal currently ongoing. A related shareholder derivative action is stayed pending the appeal's resolution[101][102] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on XPO's financial condition and results of operations, focusing on the post-spin-off business structure. It covers the performance of the North American LTL and Brokerage and Other Services segments, the impact of COVID-19 and supply chain challenges, liquidity, and capital resources Executive Summary This section introduces XPO's core freight transportation services, the GXO spin-off, and its current liquidity and leverage targets - XPO Logistics, Inc. is a leading provider of freight transportation services, primarily less-than-truckload (LTL) and truck brokerage, operating with two reportable segments: North American LTL and Brokerage and Other Services[108][109] - The spin-off of the Logistics segment (GXO Logistics, Inc.) was completed on August 2, 2021, with GXO's historical results presented as discontinued operations[110][111] - As of September 30, 2021, XPO had approximately $1.2 billion of total liquidity, including $254 million of cash and cash equivalents, and is committed to a target leverage of 1.0x to 2.0x by the first half of 2023[114] North American Less-Than-Truckload Segment Overview This section describes XPO's position as a leading LTL provider in North America, highlighting its market share, shipment volume, and technology-driven efficiency improvements - XPO is a top three provider of LTL services in North America, holding approximately 8% market share of the $42 billion market as of December 31, 2020[115] - The segment delivered approximately 13 million LTL shipments for the trailing 12 months ended September 30, 2021[116] - XPO is leveraging proprietary technology for intelligent route-building and visualization tools to improve LTL profitability and productivity, with ongoing software development for dynamic market pricing and XPO Smart® tools deployment[118] Brokerage and Other Services Segment Overview This section details XPO's role as a major truck brokerage and last-mile provider in North America and Europe, emphasizing its digital platform and global network - XPO is the third largest truck brokerage service provider in North America (3% market share of the $64 billion market as of December 31, 2020) and the second largest globally[119] - The global brokerage network includes approximately 91,000 independent carriers with access to over a million trucks on the XPO Connect® digital platform[121] - XPO is the largest provider of home delivery for heavy goods in North America and a leading truck broker and LTL provider in Europe (France, Iberia, UK)[122][123] Innovation and Sustainability This section outlines XPO's strategic investments in technology for supply chain innovation and its commitment to environmental sustainability initiatives - XPO has invested over $3 billion in technology since 2011 to innovate supply chain movement, focusing on automation, visibility, and creating 'smart' supply chains[124][125] - Environmental sustainability initiatives include substantial investments in fuel-efficient Freightliner Cascadia tractors, phased upgrades to LED lighting in LTL locations, and deployment of electric box trucks and natural gas trucks in Europe[127][128] - The company publishes an annual Sustainability Report detailing global progress in safety, employee engagement, diversity and inclusion, ethics and compliance, environmental protection, and governance[129] Impacts of COVID-19 and Supply Chain Challenges This section discusses the adverse effects of the pandemic on supply chains, labor, and costs, along with XPO's strategic responses to enhance LTL network efficiencies - The COVID-19 pandemic has led to supply chain disruptions, labor shortages (notably truck drivers), equipment shortages, and increased costs of transportation and services[131] - XPO is executing a company-specific action plan to enhance LTL network efficiencies and drive growth, including selective freight embargoes, pricing adjustments, expanding driver training, increasing trailer manufacturing capacity, and expanding LTL door count by 900 (approximately 6%) over the next 12 to 24 months[132][134] Impact of Inflation This section addresses how a constrained labor market led to higher transportation costs, partially mitigated by increased pricing to customers - For the third quarter and first nine months ended September 30, 2021, the constrained labor market resulted in higher third-party transportation costs to meet growing demand, which were partially offset by increased pricing to customers[133] Consolidated Summary Financial Table This table provides a high-level overview of XPO's consolidated financial performance, including revenue, expenses, and net income (loss) for specified periods Consolidated Summary Financial Table (In millions): | Item | Q3 2021 | Q3 2020 | Change % | 9M 2021 | 9M 2020 | Change % | | :------------------------------------------------ | :------ | :------ | :------- | :------ | :------ | :------- | | Revenue | $3,270 | $2,675 | 22.2% | $9,445 | $7,261 | 30.1% | | Cost of transportation and services | $2,306 | $1,814 | 27.1% | $6,545 | $4,919 | 33.1% | | Direct operating expense | $366 | $310 | 18.1% | $1,058 | $904 | 17.0% | | Sales, general and administrative expense | $339 | $294 | 15.3% | $1,001 | $915 | 9.4% | | Operating income | $112 | $138 | (18.8)% | $442 | $75 | NM | | Debt extinguishment loss | $46 | — | 100.0% | $54 | — | 100.0% | | Interest expense | $53 | $81 | (34.6)% | $176 | $226 | (22.1)% | | Income (loss) from continuing operations | $21 | $37 | (43.2)% | $197 | $(79) | NM | | Income (loss) from discontinued operations, net of taxes | $(78) | $61 | NM | $22 | $68 | (67.6)% | | Net income (loss) | $(57) | $98 | NM | $219 | $(11) | NM | Three and Nine Months Ended September 30, 2021 Compared with Three and Nine Months Ended September 30, 2020 This section analyzes XPO's financial performance, highlighting revenue growth, cost changes, and the impact of debt extinguishment and interest expense - Revenue increased by 22.2% to $3.3 billion for Q3 2021 and 30.1% to $9.4 billion for 9M 2021, driven by growth in LTL and truck brokerage and the negative impact of COVID-19 in 2020[136] - Cost of transportation and services increased as a percentage of revenue due to a constrained labor market and higher third-party transportation costs, partially offset by lower COVID-19-related costs[138] - SG&A decreased as a percentage of revenue due to lower self-insurance expense, third-party professional fees, and COVID-19-related costs, but was partially offset by $29 million in legal costs for independent contractor settlements in Q3 and 9M 2021[143] - Debt extinguishment losses totaled $46 million for Q3 2021 and $54 million for 9M 2021, primarily due to the redemption of senior notes and the amendment of the term loan credit agreement[150] - Interest expense decreased by 34.6% in Q3 2021 and 22.1% in 9M 2021, reflecting lower average debt balances due to debt redemptions[151] North American Less-Than-Truckload Segment Performance This section presents key financial and operational metrics for the North American LTL segment, including revenue, pounds per day, and Adjusted EBITDA North American LTL Key Revenue Metrics: | Metric | Q3 2021 | Q3 2020 | Change % | 9M 2021 | 9M 2020 | Change % | | :------------------------------------------------ | :------ | :------ | :------- | :------ | :------ | :------- | | Revenue (in millions) | $1,071 | $933 | 14.8% | $3,114 | $2,623 | 18.7% | | Pounds per day (thousands) | 72,152 | 69,952 | 3.1% | 73,138 | 66,730 | 9.6% | | Gross revenue per hundredweight, excluding fuel surcharges | $20.02 | $18.90 | 6.0% | $19.47 | $18.57 | 4.9% | | Adjusted EBITDA (in millions) | $222 | $238 | (6.7)% | $694 | $562 | 23.5% | - Adjusted EBITDA for 2021 included significantly lower year-over-year gains from LTL real estate transactions ($5 million in Q3 2021 vs. $26 million in Q3 2020; $27 million in 9M 2021 vs. $63 million in 9M 2020)[156] Brokerage and Other Services Segment Performance This section details the financial performance of the Brokerage and Other Services segment, focusing on revenue and Adjusted EBITDA growth drivers and challenges Brokerage and Other Services Segment Performance (In millions): | Metric | Q3 2021 | Q3 2020 | Change % | 9M 2021 | 9M 2020 | Change % | | :-------------------------- | :------ | :------ | :------- | :------ | :------ | :------- | | Revenue | $2,261 | $1,778 | 27.2% | $6,493 | $4,738 | 37.0% | | Adjusted EBITDA | $131 | $90 | 45.6% | $386 | $159 | 142.8% | - Revenue increases were driven by an increase in North American truck brokerage loads per day and improved pricing across segment services, enhanced by XPO's digital platform and improving market conditions[157] - Gains were partially offset by the impact of the global semiconductor shortage, which constrained customer demand, and a truck driver shortage in the U.K. and North America[157] Liquidity and Capital Resources This section assesses XPO's financial flexibility, including cash, available credit, and significant cash flow activities related to debt management and equity issuance - As of September 30, 2021, XPO had $254 million in cash and cash equivalents and $993 million available under its ABL Facility[159] - The ABL facility was amended in July 2021, reducing commitments from $1.1 billion to $1.0 billion[160] Sources and Uses of Cash (Nine Months Ended Sep 30, In millions): | Item | 2021 | 2020 | | :------------------------------------------------ | :----- | :----- | | Net cash provided by operating activities from continuing operations | $558 | $292 | | Net cash used in investing activities from continuing operations | $(143) | $(78) | | Net cash provided by (used in) financing activities from continuing operations | $(1,880) | $1,195 | - Primary uses of cash from financing activities in 9M 2021 included $2.8 billion to redeem senior notes and $200 million to repay ABL borrowings. Primary sources were $794 million from GXO distribution and $384 million from common stock issuance[182] Contractual Obligations This section clarifies XPO's current contractual obligations, noting the exclusion of GXO's former liabilities and providing anticipated capital expenditure targets - Following the spin-off, GXO's borrowing arrangements and obligations under finance and operating leases are no longer part of XPO's contractual obligations[183] - Anticipated full-year net capital expenditures for 2021 are between $250 million and $275 million[183] New Accounting Standards This section directs readers to Note 1 for details on recently adopted and pending accounting standards relevant to XPO's financial reporting - Information related to new accounting standards is included in Note 1—Organization, Description of Business and Basis of Presentation to the Condensed Consolidated Financial Statements[184] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to XPO's quantitative and qualitative disclosures about market risk related to its continuing operations during the nine months ended September 30, 2021, compared to the disclosures in the 2020 Annual Report on Form 10-K - No material changes to quantitative and qualitative disclosures about market risk (interest rates, foreign currency exchange rates, and commodity risk) for continuing operations during the nine months ended September 30, 2021[185] Item 4. Controls and Procedures This section reports on the effectiveness of XPO's disclosure controls and procedures and any changes in internal control over financial reporting Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures This section confirms the effectiveness of XPO's disclosure controls and procedures as assessed by its executive officers - XPO's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[186] Changes in Internal Control Over Financial Reporting This section reports that no material changes occurred in XPO's internal control over financial reporting during the quarter - There have been no material changes in XPO's internal control over financial reporting during the quarter ended September 30, 2021[187] Part II—Other Information This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, exhibits, and signatures Item 1. Legal Proceedings This section refers to the legal proceedings information detailed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and Note 10 of the current Quarterly Report on Form 10-Q - For information related to legal proceedings, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and Note 10—Legal and Regulatory Matters of Item 1 in this Quarterly Report[188] Item 1A. Risk Factors This section highlights material changes to previously disclosed risk factors, specifically addressing the potential negative impacts of ongoing unfavorable market conditions due to the COVID-19 pandemic and the effectiveness of the company's action plan for its North American LTL business - Unfavorable market conditions arising from the COVID-19 pandemic, including supply chain disruptions, labor and equipment shortages, and cost inflation, may negatively impact XPO's business, prospects, financial condition, and operating results[190] - There is a risk that XPO's company-specific action plan to enhance network efficiencies and drive growth in its North American LTL business may not be effective or timely, potentially failing to improve results of operations or cash flow as planned[191] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities to report for the period Item 4. Mine Safety Disclosures This section states that the disclosure requirements for mine safety are not applicable to XPO Logistics, Inc. Item 5. Other Information This section states that there is no other information to report for the period Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including various agreements related to the GXO spin-off, employment contracts, and certifications required by the Sarbanes-Oxley Act - Key exhibits include the Separation and Distribution Agreement, Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement, and Intellectual Property License Agreement, all related to the GXO Logistics, Inc. spin-off[193] - The exhibits also include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[193][195] Signatures This section contains the required signatures of XPO Logistics, Inc.'s Chief Executive Officer and Chief Financial Officer, certifying the accuracy and completeness of the Quarterly Report on Form 10-Q - The report is signed by Brad Jacobs, Chief Executive Officer, and Ravi Tulsyan, Chief Financial Officer, on November 3, 2021[197]