Attached files
| file | filename |
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| 8-K - 8-K - XPO Logistics, Inc. | d719134d8k.htm |
| EX-99.3 - EX-99.3 - XPO Logistics, Inc. | d719134dex993.htm |
| EX-99.1 - EX-99.1 - XPO Logistics, Inc. | d719134dex991.htm |
 Management Presentation
May 1, 2014
Exhibit 99.2 |
 2
Forward-Looking Statements Disclaimer
This document 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 the company’s full year 2014 and full year 2017 financial targets and
expected cost synergies from the Pacer integration. 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" 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, but are not limited to, those discussed in XPO’s filings
with the SEC and the following: economic conditions generally; competition; XPO’s ability to find
suitable acquisition candidates and execute its acquisition strategy; the expected impact of
acquisitions, including the expected impact on XPO’s results of operations; XPO’s
ability to raise debt and equity capital; XPO’s ability to attract and retain key employees to execute its growth
strategy; litigation, including litigation related to alleged misclassification of independent
contractors; the ability to develop and implement a suitable information technology
system; the ability to maintain positive relationships with XPO’s networks of third-party transportation providers;
the ability to retain XPO’s and acquired businesses’ largest customers; XPO’s ability
to successfully integrate acquired businesses and realize anticipated synergies and cost
savings; rail and other network changes; weather and other service disruptions; and governmental regulation. All
forward-looking statements set forth in this document are qualified by these cautionary statements
and there can be no assurance that the actual results or developments anticipated will be
realized or, even if substantially realized, that they will have the expected consequences to, or effects
on, XPO or its businesses or operations. Forward-looking statements set forth in this document
speak only as of the date hereof, and XPO undertakes no 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.
|
 3
One of the Largest 3PLs in North America
We facilitate over 25,000 deliveries per day
Sources for rankings: Transport Topics, Journal of Commerce and company data
#4 freight brokerage firm and Top 50 logistics company
#3 provider of intermodal services
#1 provider of cross-border Mexico intermodal
#1 manager of expedited shipments
#1 provider of last-mile logistics for heavy goods
International and domestic freight forwarder
Growing presence in managed transportation and LTL |
 4
Clearly Defined Strategy for Value Creation
Acquire companies that bring value and are highly scalable
Significantly scale up and optimize existing operations
Open cold-starts where sales recruitment can drive revenue
We continue to be on track or ahead of plan
with all three legs of our growth strategy |
 5
Completed 11 strategic acquisitions and established
24 cold-starts in two years
Created leading-edge recruiting and training programs
Introduced scalable IT platform
Added national operations centers for shared services, carrier
procurement and last-mile operations
Stratified customers, assigned a single point of contact to each
Created a culture of passionate on-time performance
Disciplined focus on operational excellence
Precise Execution of Growth Plan |
 6
Massive Commitment to Shipper Satisfaction
Integrated network across North America with global reach
–
Primarily in the manufacturing, industrial, retail, food and
beverage, commercial, life sciences and government sectors
123 locations in the U.S., Canada, Mexico, Asia and Europe
Approximately 3,000 employees
Over 14,000 customers
More than 1,000 owner-operator trucks under contract for
drayage and expedited subsidiaries
Relationships with an additional 26,000 vetted carriers
|
 7
Significant Growth Embedded in XPO’s Model
Strategic
accounts:
market
to
large
shippers
Cold-starts:
expand
footprint
in
markets
with
best
access
to sales talent
Scale
and
productivity:
recruit
sales
reps
and
provide
state-
of-the-art training and IT
Supply
chain
offering:
build
leadership
positions
in
the
fastest-growing areas of logistics
Performance:
become
the
logistics
partner
of
choice
due
to
our relentless focus on on-time pickup and delivery
M&A
program:
focus
on
the
top
100
pipeline
prospects |
 8
Leading Positions in High-Growth Sectors
Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR
Associates, SJ Consulting Group, Inc., Bureau of Economic Analysis, US
Department of Commerce Sector
Market
Size
($ billions)
Projected
Growth
(x GDP)
Growth Drivers
Truck brokerage
$50
2-3 times
Outsourcing and technology
Intermodal
$15
3-5 times
Long-haul rail efficiencies and
near-sourcing of
manufacturing in Mexico
Heavy goods,
last-mile
$13
5-6 times
Outsourcing and e-commerce |
 9
Comprehensive North American Network
Source: Company data
123 locations
Approximately 3,000
employees
Over 26,000 active,
vetted carriers
Access to 60,000 miles
of network rail routes |
 10
Acquired Pacer in March 2014
Provides instant scale in the $15 billion intermodal sector,
the fastest-growing freight mode in North America
–
Third largest provider of intermodal services
–
Largest provider of cross-border Mexico intermodal
Enhances XPO’s value proposition as a large, single-source
supply chain partner with deep capacity
Creates company-wide cross-selling opportunities in every
area of XPO service
Access to 60,000 miles of network rail routes
Sources: SJ Consulting Group, Inc., American Trucking
Associations and company data |
 11
Largest provider of heavy goods, last-mile logistics in
North America
High value, high margin business, growing rapidly due to
e-commerce and outsourcing
Strengthens XPO’s position with shippers as a large,
single-source provider
Industry-leading customer experience IT can be used by XPO
Acquired Optima Service Solutions in November 2013
–
Highly scalable supplier to 3PD, leader in last-mile delivery
of large appliances and electronics
Acquired 3PD in August 2013 |
 12
XPO NLM is the largest manager of expedited shipments
in North America
Acquired NLM in December 2013
#1 provider of web-based transportation management
for expedited
Managing over $1 billion of annual gross transportation spend
–
Online auction system proprietary to XPO
–
Carriers bid on loads that are awarded electronically
Benefits from trend toward just-in-time inventories, and supply
chain disruptions |
 13
Focused Sales and Marketing Effort
Differentiate XPO by providing a passionate commitment to
customer satisfaction across a range of services
Single point of contact for each customer
–
Strategic accounts team marketing to largest 2,000 shippers
–
National accounts team focused on next largest
5,000 companies
–
Branch network expands our reach to hundreds of
thousands of small and medium-sized shippers
Capture more of the $32 billion less-than-truckload opportunity
Sources: SJ Consulting Group, Inc., company data |
 14
One common IT platform for freight brokerage in all cold-starts
and acquired companies
Proprietary freight optimizer tools for pricing and load-covering
put in place in 2012
Highly scalable load execution and tendering via automated
load-to-carrier matching
Total IT budget of more than $70 million for 2014
(1)
Increasing Productivity through Technology
(1) Includes IT budget for Pacer |
 15
24 cold-starts
–
11 in freight brokerage, including Kansas City opened
in March; 12 in freight forwarding; one in expedited
Brokerage cold-starts on an annual revenue run rate of more
than $190 million
–
Nearly triple the run rate 12 months ago
Low capital investment can deliver outsized returns
Hire strong industry veterans as branch presidents
Position in prime recruitment areas and scale up
Growth through Cold-starts |
 16
Founded and led four highly successful companies,
including world-class public corporations
Amerex
Oil
Associates:
Built
one
of
world’s
largest
oil
brokerage
firms
Hamilton
Resources:
Grew
global
oil
trading
company
to
~$1
billion
United
Waste:
Created
5th
largest
solid
waste
business
in
North
America
United
Rentals:
Built
world’s
largest
equipment
rental
company
United Waste stock outperformed S&P 500 by 5.6x from 1992 to 1997
United Rentals stock outperformed S&P 500 by 2.2x from 1997 to 2007
CEO Bradley S. Jacobs |
 17
Highly Skilled Management Team
Partial list
The full management team can be found on www.xpologistics.com
Sean Fernandez
Chief Operating Officer
Tom Connolly
Senior Vice President, Acquisitions
Karl Meyer
Chief Executive Officer, 3PD division
Julie Luna
Chief Commercial Officer
John Hardig
Chief Financial Officer
Lou Amo
Vice President, Carrier Procurement
Dave Rowe
Chief Technology Officer
Mario Harik
Chief Information Officer
Gordon Devens
General Counsel
Scott Malat
Chief Strategy Officer
Troy Cooper
Senior Vice President, Operations and Finance
NCR, Avery Dennison, Arrow Electronics
EVE Partners
Pacer International, Union Pacific
Stifel Nicolaus, Alex. Brown
Electrolux, Union Pacific, Odyssey Logistics
Echo Global Logistics
Oakleaf Waste Management
United Rentals, United Waste
Goldman Sachs, UBS, JPMorgan Chase
AutoNation, Skadden Arps
3PD, Inc., Home Depot |
 18
Deep Bench of Industry Experience Partial list
Jake Schnell
Sr. Operational Process and Integration Manager
Jenna Sargent
Regional Sales and Operation Manager
Marie Fields
Director of Training
Evan Laskaris
Director of Operations, Chicago
Chris Healy
President, Expedited Transportation
Jim Commiskey
Strategic Accounts Manager
Gregory Ritter
Senior Vice President, Strategic Accounts
Doug George
Branch President, Dallas
Will O’Shea
Chief Sales and Marketing Officer, 3PD division
Andrew Armstrong
Sales and Operations Manager
Drew Wilkerson
Branch President, Charlotte
Boyd Brothers, Caliber Logistics, Roberts Express
C.H. Robinson
OHL, Schneider Logistics
C.H. Robinson, American Backhaulers
AFN, CEVA Logistics, Menlo
Pacer International, UPS, Menlo
Knight Brokerage, C.H. Robinson
AFN, Ryder Integrated Logistics
Livingston International, Echo Global Logistics
C.H. Robinson
Ryder Integrated Logistics, Cardinal Logistics |
 19
Revenue trajectory
–
2011 revenue of $177 million
–
Currently at approximately $2
billion annual revenue run rate
1Q growth company-wide, 2014
vs. 2013
–
Organic growth up 51%
–
Gross revenue up 148%
–
Net revenue up 259%
Revenue and Margin Growth
Source: Company data
Revenue ($ millions)
+148%
$114
$282
Q1 2013
Q1 2014 |
 20
Key Financial Statistics
Expedited
Transportation
Freight Brokerage
Freight Forwarding
+196%
+42%
+20%
1Q revenue growth by business unit, 2014 vs. 2013
Organic growth
up 75%
34% margin,
up from 16%
48% increase in
operating income
Revenue ($ millions)
$78
$232
Q1 '13
Q1 '14
$24
$34
Q1 '13
Q1 '14
$16
$20
Q1 '13
Q1 '14 |
 21
First 27 Months of Growth Strategy
Source: Company data
Revenue ($ millions)
2012
2013
2014
$45
$55
$71
$109
$114
$137
$194
$257
$282
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1 |
 22
Full year 2014
Annual revenue run rate of at least $2.75 billion by
December
31
Annual EBITDA run rate of at least $100 million by
December
31
At least $400 million of acquired historical annual revenue,
excluding the Pacer acquisition
Full year 2017
Revenue of $7.5 billion
EBITDA of $425 million
Financial Targets |
 23
Incentivized XPO Management
Equity ownership aligns management team with shareholders
Management
and
directors
own
approx.
29%
of
the
company
(1)
Common Stock Equivalent Capitalization as of 4/30/14
Common Shares
52.5 million
Preferred Shares
10.5 million
Warrants (Strike Price $7 per share)
10.6
million
(7.8
million
dilutive)
(2)
Convertible Senior Notes
7.3
million
shares
(3)
Stock Options and RSUs
2.3
million
shares
dilutive
(4)
Fully Diluted Shares Outstanding
80.4 million shares
Based on SEC beneficial ownership calculation as of April 30, 2014 Dilutive effect
of warrants calculated using treasury method (market close price of $27.14 as of 4/30/14); total warrant proceeds of $74.0 million
Assumes conversion in full of $120.7 million in aggregate principal amount of outstanding 4.50%
convertible senior notes due 2017
As of April 30, 2014, dilutive effect of outstanding RSUs and stock options calculated using treasury
method (market close price of $27.14 as of 4/30/14)
(1)
(2)
(3)
(4) |
 24
Significant growth embedded in XPO’s business model
Leading positions in fastest-growing areas of transportation
Compelling multi-modal value proposition for shippers of
all sizes
Passionate culture of on-time performance and productivity
Top management talent with skills that uniquely fit
growth strategy
Positioned as an irreplaceable, single-source provider
Clear Path for Significant Value Creation |