Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Merger or Acquisition (January 2014)
27 slides from Xpo's merger presentation, Jan 6, 2014
Slide 1: XPO to Acquire Pacer International
Exhibit 99.2 XPO to Acquire Pacer International January 6, 2014
Slide 2: Additional Information
Additional Information In connection with the Merger, XPO will file with the U.S. Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that will include a Proxy Statement of Pacer and a Prospectus of XPO, as well as other relevant documents concerning the proposed tran
Slide 3: One of the Largest 3PLs in North America
One of the Largest 3PLs in North America We facilitate over 20,000 shipments per day 4th largest freight brokerage firm, and Top 50 logistics company Largest manager of expedited shipments #1 heavy goods, white glove provider of last-mile logistics International and domestic freight forwarder Growin
Slide 4: Clearly Defined Strategy for Value Creation
Clearly Defined Strategy for Value Creation Significantly scale up and optimize existing operations Acquire companies that bring value and are highly scalable Open cold-starts where sales recruitment can drive revenue We are on track or ahead of plan with all three legs of our growth strategy 4
Slide 5: Planned Acquisition of Pacer International
Planned Acquisition of Pacer International Compelling reasons for the transaction Intermodal is one of the fastest-growing areas of transportation logistics in North America Pacer (NASDAQ: PACR) is the third largest provider of intermodal services Pacer is the largest provider of intermodal services
Slide 6: A Strong Entry into Intermodal
A Strong Entry into Intermodal XPO will gain instant scale and expertise in intermodal Pacer manages approximately 10% of all domestic intermodal loads in North America Trailing 12 months revenue of approximately $1.0 billion through November 2013 Approximately 950 employees at 30 locations serving
Slide 7: Major Intermodal Market Opportunity
Major Intermodal Market Opportunity $15 billion intermodal sector in North America One of the fastest-growing areas of transportation logistics – Growing at three to five times GDP Very attractive to shippers as a way to lower transportation costs for freight traveling 600 miles or more – Rail is mo
Slide 8: High-Growth Cross-border Mexico Sector
High-Growth Cross-border Mexico Sector Driven by increased near-shoring by manufacturers Mexico offers a highly attractive manufacturing environment – Competitively priced labor force – Faster speed-to-market than overseas locales – Can be more cost effective than cross-border truckload Large potent
Slide 9: Immediate Synergies of Service Offerings
Immediate Synergies of Service Offerings Combination will create company-wide cross-selling opportunities – XPO will sell intermodal to over 9,500 customers – Pacer’s intermodal customers will have access to XPO’s full range of services – Combined sales force will use strongest single point of conta
Slide 10: Details of the Pacer Transaction
Details of the Pacer Transaction $335 million market value, cash and stock Purchase price of $9.00 per share: $6.00 in cash, and $3.00 in stock subject to a price collar Enterprise value of $296 million: approximately 11.3 times Pacer’s 2013 consensus EBITDA of $26.1 million, and 9.1 times 2014 cons
Slide 11: Acquisition Aligns with XPO's Strategy
Acquisition Aligns with XPO’s Strategy XPO is committed to providing the services customers need most Will continue to acquire leading positions in the fastest-growing areas of logistics – Acquired 3PD and Optima in 2013: leaders in last-mile – Acquired NLM in 2013: leader in web-based managed trans
Slide 12: Precise Execution of Growth Plan
Precise Execution of Growth Plan Completed 10 strategic acquisitions and opened 23 cold-starts in two years Created leading edge recruiting and training programs Introduced scalable IT platform Established national operations centers in Atlanta, Charlotte and Chicago Raised $543 million in common st
Slide 13: Strong Industry Fundamentals
Strong Industry Fundamentals U.S. logistics is more than $1 trillion annual spend Over-the-road trucking is $350 billion Penetration rate estimated at 15% (approximately $50 billion) – 85% of shipments are not presently handled by brokers Brokers add efficiency to both shippers and carriers – Shippe
Slide 14: Massive Commitment to Shipper Satisfaction
Massive Commitment to Shipper Satisfaction Built integrated network across North America in two years Over 2,200 employees at 94 locations in the U.S. and Canada 9,500 customers in the manufacturing, industrial, retail, food and beverage, commercial, life sciences and government sectors Over 24,000
Slide 15: Strategy Part 1: Scale and Optimization
Strategy Part 1: Scale and Optimization Rapidly grow sales force with aggressive recruiting and training Expand freight brokerage branches capable of mega-growth Capture more of the $50 billion less-than-truckload (LTL) opportunity Continue intense focus on on-time pickup and delivery – We are exper
Slide 16: Accelerate Sales and Marketing
Accelerate Sales and Marketing Differentiate XPO by providing world-class customer service Single point of contact for each customer – Strategic accounts team marketing to largest 1,200 shippers – National accounts team focused on next largest 5,000 companies – Branch network expands our reach to hu
Slide 17: Scalable Technology Platform
Scalable Technology Platform One common platform for freight brokerage rolled out in all acquired companies Purchase transportation more efficiently as data pool grows Proprietary freight optimizer tools for pricing and load-covering put in place in 2012 Enhancements delivered to date include carrie
Slide 18: Increasing Productivity through Technology
Increasing Productivity through Technology Highly scalable load execution and tendering via automated load-to-carrier matching Dynamic load optimization on a transactional basis between full truckload, less-than-truckload, partials and intermodal Ability to automatically cover, execute and tender lo
Slide 19: Enhanced TMS Services
Enhanced TMS Services Our operating system can customize customer-specific tariffs and routing guides We can integrate an ERP system, warehouse management system or supply chain management system with XPO via electronic data interchange or web services Large customers can leverage our technology, bu
Slide 20: Strategy Part 2: Acquisitions
Strategy Part 2: Acquisitions Acquire attractive, highly scalable companies Gain capabilities, customers, carriers, lane and pricing histories with each acquisition Continue to grow carrier network, currently at over 24,000 10 acquisitions to date have added capabilities in LTL, last-mile, refrigera
Slide 21: Strategy Part 3: Cold-starts
Strategy Part 3: Cold-starts Hire strong industry veterans as branch presidents Position in prime recruitment areas Rapidly scale up by adding salespeople Low capital investment can deliver outsized returns Opened 23 cold-starts to date – 11 in freight brokerage, 11 in freight forwarding, one in exp
Slide 22: CEO Bradley S. Jacobs
CEO Bradley S. Jacobs 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 b
Slide 23: Highly Skilled Management Team
Highly Skilled Management Team Partial list Sean Fernandez NCR, Avery Dennison, Arrow Electronics 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 Gene
Slide 24: Deep Bench of Industry Experience
Deep Bench of Industry Experience Partial list Jake Schnell C.H. Robinson Sr. Operational Process and Integration Manager Will O’Shea Ryder Integrated Logistics, Cardinal Logistics Chief Sales and Marketing Officer, 3PD division Jenna Sargent OHL, Schneider Logistics Regional Sales and Operation Man
Slide 25: Key Financial Statistics
Key Financial Statistics 2011 revenue of $177 million Currently at approximately $1 billion annual revenue run rate 42% YOY organic revenue growth company-wide in Q3 – Freight brokerage organic growth – up 146.1% Q3 2013 total revenue: $194.0 million (1) – up 173.3% YOY – Freight brokerage: $152.6 m
Slide 26: Incentivized XPO Management
Incentivized XPO Management Equity ownership aligns management team with shareholders Management and directors own approx. 41% of the company (1) Common Stock Equivalent Capitalization as of 9/30/13 Common Shares 29.9 million Preferred Shares 10.6 million Warrants (Strike Price $7 per share) 10.7 mi
Slide 27: Clear Path for Significant Value Creation
Clear Path for Significant Value Creation Large, growing, fragmented logistics industry Well-defined process to scale up operations Planned acquisition of Pacer International Robust pipeline of further acquisition prospects Strong organic growth, including cold-starts Highly skilled management team