Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Merger or Acquisition (July 2014)
36 slides from Xpo's merger presentation, Jul 29, 2014
Slide 1: XPO to Acquire New Breed; Completes Acquisition of ACL
Exhibit 99.2 XPO to Acquire New Breed Completes Acquisition of ACL July 29, 2014
Slide 2: Forward-Looking Statements Disclaimer
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
Slide 3: One of the Largest 3PLs in North America
One of the Largest 3PLs in North America We facilitate over 31,000 deliveries per day #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
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 ahead of plan in transforming XPO Logistics into a leading multi-modal supp
Slide 5: Precise Execution of Growth Plan
Precise Execution of Growth Plan Completed 12 strategic acquisitions and established 23 cold-starts in less than 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
Slide 6: Massive Commitment to Shipper Satisfaction
Massive Commitment to Shipper Satisfaction Integrated network with cross-company visibility 148 locations in the U.S., Canada, Mexico, Asia and Europe Approximately 3,100 employees More than 3,600 owner-operator trucks under contract for drayage, expedited and last mile subsidiaries Relationships wi
Slide 7: Significant Growth Embedded in XPO's Model
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
Slide 8: 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 9: Major Coverage: U.S., Mexico and Canada
Major Coverage: U.S., Mexico and Canada Serving over 14,000 customers Manufacturing Retail Commercial Life Sciences Food and Beverage Governmental Source: Company data 9
Slide 10: Planned Acquisition of New Breed
Planned Acquisition of New Breed Compelling reasons for the transaction Will be transformational for XPO’s scale and value proposition – Combined company of approximately 10,000 employees and over 200 locations – Most differentiated supply chain offering for end-to-end solutions Capitalizes on trend
Slide 11: New Breed Is a Preeminent Provider
New Breed Is a Preeminent Provider Leads the most desirable sector of contract logistics Complex, highly engineered solutions for blue chip customers – Very stable relationships with low cyclicality Focuses on high-growth industries – Technology, telecom, e-commerce, aerospace and defense, medical e
Slide 12: New Breed's Attractive Financial Model
New Breed’s Attractive Financial Model Lucrative non-asset based model in line with XPO’s strategy 19% adjusted EBITDA CAGR over the past 10 years 38% return on invested capital (FY 2013) (1) 71% free cash flow conversion (FY 2013) (2) Approximately 99% contractual revenue renewal rate over the past
Slide 13: Industry-defining Technology
Industry-defining Technology Integration of proprietary IT will create strong differentiation Combination of two robust managed transportation solutions – XPO NLM is the largest web-based manager of expedited shipments in North America – New Breed’s transportation management system uses sophisticate
Slide 14: Details of the New Breed Transaction
Details of the New Breed Transaction $615 million cash purchase price Adds approximately $597 million of revenue and $77 million of adjusted EBITDA (trailing 12 months ended June 30, 2014) Multiple of approximately 8.0 times trailing 12 months adjusted EBITDA XPO has obtained committed transaction f
Slide 15: Acquisition of Atlantic Central Logistics
Acquisition of Atlantic Central Logistics Compelling reasons for the transaction Non-asset, multi-regional, last mile logistics provider Moves high volumes of e-commerce purchases for mega-companies Adds approximately 160 employees, 14 locations and 650 contracted trucks to XPO Complementary deliver
Slide 16: Details of the ACL Transaction
Details of the ACL Transaction $36.5 million cash purchase price Multiple of approximately 5.9 times trailing 12 months adjusted EBITDA Adds approximately $63 million of revenue and $6.2 million of adjusted EBITDA (trailing 12 months ended June 30, 2014) Transaction completed July 28, 2014 16
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 – #1 provider of cross-border Mexico intermodal, with 30 years’ experience – Access to 60,000 miles of network rail routes – Decades-deep relationships with the railroads Ad
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 truckload fo
Slide 19: High-Growth Cross-Border Mexico Sector
High-Growth Cross-Border Mexico Sector Mexico is fast becoming the manufacturers’ country of choice for near-shoring – Competitively priced labor force – Faster speed-to-market than overseas locales – Can be more cost effective than cross-border truckload – Growth driven by billions of dollars inves
Slide 20: Integration of Intermodal Is Driving Results
Integration of Intermodal Is Driving Results XPO now manages approximately 10% of all domestic intermodal loads in North America Stronger value proposition as a large, single-source supply chain partner with deep capacity Energetically cross-selling intermodal to XPO customer base, and selling full
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 7 million last-mile deliveries per year Leading, proprietary software for workflow and customer experience management Strong custome
Slide 22: Last Mile's Exciting Market Potential
Last Mile’s Exciting 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 – 11 in freight brokerage, including Kansas City opened in March; 11 in freight forwarding; one in expedited Freight brokerage cold-starts on an annual revenue run rate of more than $220 million – Up from $90 million 12 months ago Low capital investment can
Slide 28: CEO Bradley S. Jacobs
CEO Bradley S. Jacobs Founded and led four highly successful companies, including world-class public corporations United Rentals: Built world’s largest equipment rental company United Waste: Created 5th largest solid waste business in North America Hamilton Resources: Grew global oil trading company
Slide 29: Highly Skilled Management Team
Highly Skilled Management Team Partial list Troy Cooper United Rentals, United Waste Chief Operating Officer John Hardig Stifel Nicolaus, Alex. Brown Chief Financial Officer Scott Malat Goldman Sachs, UBS, JPMorgan Chase Chief Strategy Officer Gordon Devens AutoNation, Skadden Arps General Counsel J
Slide 30: Deep Bench of Industry Experience
Deep Bench of Industry Experience Partial list Bud Workmon 3PD, Inc., Cardinal Logistics President, XPO Last Mile Will O’Shea 3PD, Inc., Ryder Integrated Logistics, Cardinal Logistics Chief Sales and Marketing Officer, XPO Last Mile Greg Ritter Knight Brokerage, C.H. Robinson Senior Vice President,
Slide 31: Revenue and Margin Growth
Revenue and Margin Growth Revenue trajectory Gross Revenue ($ millions) – 2011 revenue of $177 million $581 – Currently at approximately $2.3 billion annual revenue run rate +324% Q2 growth company-wide, 2014 vs. 2013 – Organic growth up 49% – Gross revenue up 324% $137 – Net revenue up 530% Organic
Slide 32: Key Financial Statistics
Key Financial Statistics Q2 Revenue Growth by Business Unit, 2014 vs. 2013 Freight Brokerage Expedited Transportation Freight Forwarding $493 +417% +37% +180% $54 $36 $95 $26 $19 Q2 '13 Q2 '14 Q2 '13 Q2 '14 Q2 '13 Q2 '14 Revenue ($ millions) 32
Slide 33: First 30 Months of Growth Strategy
First 30 Months of Growth Strategy $581 $282 $257 $194 $137 $109 $114 $55 $71 $45 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2012 2013 2014 Revenue ($ millions) 33
Slide 34: Financial Targets
Financial Targets Full year 2014 Annual revenue run rate of at least $3 billion by December 31 Annual EBITDA run rate of at least $150 million by December 31 Full year 2017 EBITDA of at least $425 million 34
Slide 35: Incentivized XPO Management
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 6/30/14 Common Shares 52.6 million Preferred Shares 10.5 million Warrants (Strike Price $7 per share) 10.6 mi
Slide 36: 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