Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2015)
35 slides from Xpo's investor presentation, Feb 9, 2015
Slide 1: Investor Presentation
Exhibit 99.2 Investor Presentation February 2015
Slide 2: Disclaimers
Disclaimers Forward-Looking Statements This document includes forward-looking statements within the meaning of Section 27A of Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be
Slide 3: One of the Largest 3PLs in North America
One of the Largest 3PLs in North America We facilitate over 37,000 deliveries per day #3 freight brokerage firm and Top 50 logistics company #3 provider of intermodal services, and a leader in cross-border Mexico intermodal #1 manager of expedited shipments #1 provider of last mile logistics for hea
Slide 4: Clearly Defined Strategy for Value Creation
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 are committed to providing world class service to customers as the industry’s m
Slide 5: $700 Million Strategic Investment in XPO
$700 Million Strategic Investment in XPO Three global institutions invested a total of $700 million of equity to further XPO’s growth strategy – PSP Investments, GIC of Singapore and Ontario Teachers’ Pension Plan – Transaction completed September 17, 2014 Strong endorsement of XPO’s plan for value
Slide 6: $400 Million Senior Unsecured Notes
$400 Million Senior Unsecured Notes Capital primarily will be used to capitalize on acquisition pipeline Add-on to existing 7.875% senior notes due 2019 – Gross proceeds $416 million – Yield to maturity of 6.836% – Callable starting in September 2016 Settlement date February 13, 2015 XPO will have o
Slide 7: Precise Execution of Growth Plan
Precise Execution of Growth Plan Completed 14 strategic acquisitions and established 23 cold-starts in about three years Created leading-edge recruiting and training programs Introduced scalable IT platform Added national operations centers for shared services, carrier procurement and last-mile oper
Slide 8: Strong Commitment to Shipper Satisfaction
Strong Commitment to Shipper Satisfaction Integrated network with cross-company visibility 201 locations in the U.S., Canada, Mexico, Asia and Europe Approximately 11,500 employees More than 4,900 owner-operator trucks under contract for drayage, expedited and last mile subsidiaries Relationships wi
Slide 9: Major Coverage: U.S., Mexico and Canada
Major Coverage: U.S., Mexico and Canada Serving over 15,000 customers Manufacturing Retail, E-commerce Industrial Technology Aerospace Commercial Life Sciences Governmental Source: Company data 9
Slide 10: Significant Growth Embedded in XPO's Model
Significant Growth Embedded in XPO’s Model Strategic accounts: market multiple services to large shippers Cold-starts: expand footprint in markets with best access to sales talent Scale and productivity: recruit sales reps and provide state-of-the-art training and information technology Market deman
Slide 11: Secular Trends Driving Industry Growth
Secular Trends Driving Industry Growth Growth in e-commerce retailing Outsourcing of logistics services and capacity Conversion from over-the-road to intermodal rail Near-shoring of manufacturing in Mexico Just-in-time lean production Driver shortage Automation of the transportation logistics proces
Slide 12: Leading Positions in High-Growth Sectors
Leading Positions in High-Growth Sectors Market Projected Size Growth Sector ($ billions) (x GDP) Growth Drivers Truck brokerage $50 2-3 times Outsourcing and technology Long-haul rail efficiencies and Intermodal $15 3-5 times near-sourcing of manufacturing in Mexico Heavy goods, $13 5-6 times Outso
Slide 13: Acquired UX Specialized Logistics
Acquired UX Specialized Logistics Compelling reasons for the transaction Non-asset, highly scalable last mile logistics provider for heavy goods home delivery and e-commerce Long-term contracts with blue chip retailers and e-tailers who can use XPO’s full range of services 19% revenue CAGR for the p
Slide 14: Details of the UX Transaction
Details of the UX Transaction $59 million purchase price Adds approximately $113 million of revenue (full year 2014) Multiple of approximately seven times full year 2014 adjusted EBITDA of $8.2 million Transaction completed February 9, 2015 Expected to be immediately accretive to earnings before the
Slide 15: Acquired New Breed in September 2014
Acquired New Breed in September 2014 Leads the most desirable sector of contract logistics – Technology-enabled solutions for blue chip customers – Focus on industries with strong potential for outsourcing contract logistics: technology, telecom, e-commerce, aerospace and defense, medical equipment,
Slide 16: New Breed's Attractive Business Model
New Breed’s Attractive Business Model Very stable relationships with low cyclicality – Approximately 99% contractual revenue renewal rate over the past three years – Top 10 customers have utilized New Breed for an average of 10 years 38% return on invested capital (FY 2013)(1) Low capex requirements
Slide 17: Acquired Pacer in March 2014
Acquired Pacer in March 2014 Gained instant scale in North American intermodal – Third largest provider of intermodal services – A leading provider in cross-border Mexico intermodal, with 30 years’ experience – Access to 60,000 miles of network rail routes – Decades-deep relationships with the railr
Slide 18: Major Intermodal Market Opportunity
Major Intermodal Market Opportunity $15 billion sector in North America – Growing at three to five times GDP One of the fastest-growing areas of transportation logistics Enables shippers to lower transportation costs for freight traveling 600 miles or more – Rail is more fuel-efficient than truckloa
Slide 19: High-Growth Cross-Border Mexico Sector
High-Growth Cross-Border Mexico Sector Near-shoring in Mexico – fast becoming the manufacturing country of choice – Competitively priced labor force versus China – Faster speed-to-market than overseas locales – Can be more cost effective than cross-border truckload – Growth driven by billions of dol
Slide 20: Integration of Intermodal Is Driving Results
Integration of Intermodal Is Driving Results Strong value proposition as a large, single-source supply chain partner with deep capacity Energetically cross-selling intermodal to XPO customer base, and selling full service range to intermodal customers New Rail Optimizer technology platform in beta t
Slide 21: Acquired 3PD in August 2013
Acquired 3PD in August 2013 Rebranded as XPO Last Mile Largest provider of last-mile logistics for heavy goods home delivery in North America Facilitates approximately eight million last-mile deliveries per year Leading, proprietary software for workflow and customer experience management Strong cus
Slide 22: Last Mile's Expansive Market Potential
Last Mile’s Expansive Market Potential XPO Last Mile serves one of the fastest-growing sectors of non-asset, third party logistics – Heavy goods home delivery growing at five to six times GDP – Strong tailwinds from e-commerce and outsourcing $13 billion market for heavy goods home deliveries – Only
Slide 23: XPO Has a Strong Platform for Last Mile
XPO Has a Strong Platform for Last Mile Capitalizing on major advantages of scale and growing – Cost efficiencies, productivity, access to trucks, rigorous quality control systems, expertise Acquired Optima Service Solutions in November 2013 – Highly scalable supplier, leading arranger of last mile
Slide 24: Acquired NLM in December 2013
Acquired NLM in December 2013 Rebranded as XPO NLM #1 web-based expediter, made XPO the #1 manager of expedited shipments in North America Manages an annual run rate of more than three quarters of a billion dollars of gross transportation spend – Online auction system proprietary to XPO – Carriers b
Slide 25: Focused Sales and Marketing Effort
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
Slide 26: Increasing Productivity through Technology
Increasing Productivity through Technology 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
Slide 27: Growth through Cold-starts
Growth through Cold-starts 23 cold-starts – 12 freight brokerage; 10 freight forwarding; one expedited Freight brokerage cold-starts on an annual revenue run rate of more than $250 million Up from $120 million 12 months ago Low capital investment can deliver outsized returns Hire strong industry vet
Slide 28: CEO Bradley S. Jacobs
CEO Bradley S. Jacobs Founded and led four highly successful companies, including world-class public corporations United Rentals: Built world’s largest equipment rental company United Waste: Created 5th largest solid waste business in North America Hamilton Resources: Grew global oil trading company
Slide 29: Highly Skilled Management Team
Highly Skilled Management Team Partial list Troy Cooper United Rentals, United Waste Chief Operating Officer John Hardig Stifel Nicolaus, Alex. Brown Chief Financial Officer Scott Malat Goldman Sachs, UBS, JPMorgan Chase Chief Strategy Officer Gordon Devens AutoNation, Skadden Arps General Counsel L
Slide 30: Deep Bench of Industry Experience
Deep Bench of Industry Experience Partial list Dave Rowe Echo Global Logistics Chief Technology Officer Bud Workmon 3PD, Cardinal Logistics President, XPO Last Mile Will O’Shea 3PD, Ryder Integrated Logistics, Cardinal Logistics Chief Sales and Marketing Officer, XPO Last Mile Tom Connolly EVE Partn
Slide 31: 4Q Results Exceeded Expectations
4Q Results Exceeded Expectations Revenue ($ millions) EBITDA ($ millions) (2) $825 to $835 $39 to $42 +223% YOY (1) $257 $0.3 Q4 '13 Q4 '14 Q4 '13 Q4 '14 Achieved year-end 2014 targets for an annual revenue run rate of at least $3 billion and an EBITDA run rate of at least $150 million (1) Based on
Slide 32: First 36 Months of Growth Strategy
First 36 Months of Growth Strategy Revenue ($ millions) (1) $830 $662 $581 $295 $245 $194 $114 $137 $109 $55 $71 $45 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2013 2014 (1) Q4 2014 based on the midpoint of pre-released $825-$835 million in revenue 32
Slide 33: Incentivized XPO Management
Incentivized XPO Management Equity ownership aligns management team with shareholders Management and directors own approx. 22% of the company Common Stock Equivalent Capitalization as of 9/30/14 Common Shares 76.6 million (1) Preferred Shares 10.5 million Warrants (Strike Price $7 per share) 10.6 mi
Slide 34: Clear Path for Significant Value Creation
Clear Path for Significant Value Creation Significant growth embedded in XPO’s business model Leading positions in fastest-growing areas of transportation Compelling value proposition as a multi-modal, single-source provider Passionate culture of on-time performance and productivity Top management t
Slide 35: Appendix
Appendix The following table reconciles management’s estimated net loss available to common stockholders for the three months ended December 31, 2014, to management’s estimate for adjusted EBITDA for the same period. Reconciliation of Non-GAAP Measures XPO Logistics, Inc. Consolidated Reconciliation
XPO Logistics — Investor Presentation (February 2015) on 6ix