Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (September 2014)
41 slides from Xpo's investor presentation, Sep 19, 2014
Slide 1: Investor Presentation September 2014
Investor Presentation September 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: $700 Million Strategic Investment in XPO
$700 Million Strategic Investment in XPO Three global institutions have invested a total of $700 million of equity to further XPO’s growth strategy – PSP Investments, one of Canada's largest pension investment managers – GIC of Singapore, the fourth largest sovereign fund in the world – Ontario Teac
Slide 6: Updated 2017 Full Year Targets
Updated 2017 Full Year Targets Targets raised in light of the $700 million investment $9 billion of revenue $575 million of EBITDA
Slide 7: Precise Execution of Growth Plan
Precise Execution of Growth Plan Completed 13 strategic acquisitions and established 23 cold-starts in less than three years Created leading-edge recruiting and training programs Introduced scalable IT platform Added national operations centers for shared services, carrier procurement and last-mile
Slide 8: Strong Commitment to Shipper Satisfaction
Strong Commitment to Shipper Satisfaction Integrated network with cross-company visibility 203 locations in the U.S., Canada, Mexico, Asia and Europe Approximately 10,400 employees More than 3,600 owner-operator trucks under contract for Relationships with an additional 27,000 vetted carriers Access
Slide 9: Significant Growth Embedded in XPO’s Model
Significant Growth Embedded in XPO’s Model Strategic accounts : market to large shippers Cold-starts: expand footprint in markets with best access to sales talent Scale and productivity: recruit sales reps and provide state- of-the-art training and IT Supply chain offering: build leadership position
Slide 10: Secular Trends Driving Industry Growth
Secular Trends Driving Industry Growth Growth in e-commerce retailing Outsourcing of logistics services and capacity Conversion from over-the-road to intermodal rail Near-shoring of manufacturing in Mexico Just-in-time lean production Driver shortage Automation of the transportation logistics proces
Slide 11: Leading Positions in High-Growth Sectors
Leading Positions in High-Growth Sectors Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc., Bureau of Economic Analysis, US Department of Commerce Sector Market Size ($ billions) Projected Growth (x GDP) Growth Drivers Truck brokerage $50 2
Slide 12: Major Coverage: U.S., Mexico and Canada
Major Coverage: U.S., Mexico and Canada Source: Company data Serving over Manufacturing Retail, E-commerce Commercial Life Sciences Food and Beverage Governmental 14,000 customers
Slide 13: Acquisition of New Breed Logistics
Acquisition of New Breed Logistics Compelling reasons for the transaction Transformational for XPO’s scale and value proposition – Combined company of over 200 locations – Most differentiated supply chain offering for end-to-end solutions Capitalizes on trend toward outsourcing reverse logistics, tr
Slide 14: XPO Gains a Preeminent Platform for Growth
XPO Gains a Preeminent Platform for Growth Leads the most desirable sector of contract logistics Technology-enabled solutions for blue chip customers – Very stable relationships with low cyclicality – Top 10 customers have utilized New Breed for an average of 10 years Focuses on high-growth industri
Slide 15: New Breed’s Attractive Financial Model
New Breed’s Attractive Financial Model 16% revenue CAGR for the past 10 years 38% return on invested capital (FY 2013) (1) Approximately 99% contractual revenue renewal rate over the past three years Low capex requirements (4.2% of revenue in FY 2013) and largely devoted to IT development (1) Return
Slide 16: Industry-defining Technology
Industry-defining Technology Integration of proprietary IT will create strong differentiation – XPO NLM is the largest web-based manager of expedited shipments in North America – New Breed’s transportation management system uses sophisticated tools for dynamic freight optimization, routing guide man
Slide 17: Details of the New Breed Transaction
Details of the New Breed Transaction $615 million cash purchase price Adds approximately $597 million of revenue (trailing 12 months ended June 30, 2014) Multiple of approximately 8.0 times trailing 12 months adjusted EBITDA Financed with the proceeds from XPO’s August 2014 private placement of $500
Slide 18: $500 Million Senior Notes Issued August 2014
$500 Million Senior Notes Issued August 2014 Proceeds used to finance the acquisition of New Breed 7.875% senior notes maturing September 1, 2019 High yield market could present attractive avenue for additional growth capital Additive to $415 million accounts receivable facility Long-term leverage t
Slide 19: Acquired ACL in July 2014
Acquired ACL in July 2014 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 delivery schedules allo
Slide 20: Details of the ACL Transaction
Details of the ACL Transaction $36.5 million cash purchase price Adds approximately $63 million of revenue (trailing 12 months ended June 30, 2014) Multiple of approximately 5.9 times trailing 12 months adjusted EBITDA Transaction completed July 2014
Slide 21: 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 22: Major Intermodal Market Opportunity
Major Intermodal Market Opportunity $15 billion sector in North America Sources: SJ Consulting Group, Inc. , FTR Associates and company data – Growing at three to five times GDP One of the fastest-growing areas of transportation logistics Enables shippers to lower transportation costs for freight tr
Slide 23: 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 24: 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 25: 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 26: 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 27: 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 28: 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 29: 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 30: 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 31: 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 de
Slide 32: 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 33: Highly Skilled Management Team
Highly Skilled Management Team Partial list The full management team can be found on www.xpologistics.com Troy Cooper Chief Operating Officer Paul Smith President, Intermodal division Karl Meyer Chief Executive Officer, XPO Last Mile Chris Healy President, Expedited Transportation John Hardig Chief
Slide 34: Deep Bench of Industry Experience
Deep Bench of Industry Experience Partial list Lou Amo Vice President, Operational Initiatives Jake Schnell Sr. Operational Process and Integration Manager Jenna Sargent Regional Sales and Operation Manager Evan Laskaris Director of Operations, Chicago Bud Workmon President, XPO Last Mile Jim Commis
Slide 35: Revenue and Margin Growth
Revenue and Margin Growth Revenue trajectory – 2011 revenue of $177 million – Approximately $2.3 billion annual revenue run rate as of 6/30/14 (1) Q2 company-wide, 2014 vs. 2013 – Organic growth up 49% – Gross revenue up 324% – Net revenue up 530% Organic growth in freight brokerage up 67% Gross Rev
Slide 36: Key Financial Statistics
Key Financial Statistics Expedited Transportation Freight Brokerage Freight Forwarding Q2 Revenue Growth by Business Unit, 2014 vs. 2013 Revenue ($ millions) +417% +37% +180% $26 $36 $19 $54 $493 $95 Q2 ’ Q2 ’ Q2 ’ Q2 ’ Q2 ’ Q2 ’
Slide 37: First Months of Growth Strategy
First 30 Months of Growth Strategy Revenue ($ millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 $45 $55 $71 $109 $114 $137 $194 $257 $282 $581
Slide 38: 2014 Financial Targets
2014 Financial Targets As of December 31, 2014 Annual revenue run rate of at least $3 billion Annual EBITDA run rate of at least $150 million
Slide 39: Incentivized XPO Management
Incentivized XPO Management Equity ownership aligns management team with shareholders Management and directors own approx. 22% of the company (1) Common Stock Equivalent Capitalization as of 9/17/14 Common Shares 76.6 million (2) Preferred Shares 10.5 million Warrants (Strike Price $7 per share) 10.
Slide 40: 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 41: Additional Information about the Investment
Additional Information about the Investment XPO will file a proxy statement and other documents relating to the securities issued pursuant to the Investment Agreement, dated as of September 11, 2014, by and among XPO and the Purchasers named therein (the “Investment”) with the Securities and Exchang
XPO Logistics — Investor Presentation (September 2014) on 6ix