Xpo, Inc. · NYSE:XPO
Xpo — XPO Logistics — Investor Presentation (February 2013)
25 slides from Xpo's investor presentation, Feb 28, 2013
Slide 1: Management Presentation
Management Presentation February 27, 2013
Slide 2: Disclaimer
Disclaimer This presentation contains, and XPO Logistics, Inc. (the “Company”) may from time to time make, written or oral “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. All
Slide 3: A Large Market Opportunity
A Large Market Opportunity Worldwide logistics: >$3 trillion U.S. logistics: >$1 trillion U.S. trucking: ~$350 billion U.S. truck brokerage ~$50 billion Sources: American Trucking Association, Armstrong & Associates, EVE Partners LLC
Slide 4: Truck Brokerage Growing at 2x to 3x GDP
Truck Brokerage Growing at 2x to 3x GDP ƒ Long-term outsourcing trend ƒ Brokers add efficiency to both shippers and carriers – Shippers gain access to thousands of carriers – Carriers gain access to millions of loads ƒ 85% of shipments are not presently handled by brokers ƒ $300 billion untapped opp
Slide 5: Brokerage Is a Highly Fragmented Market
Brokerage Is a Highly Fragmented Market ƒ More than 10,000 licensed brokers in the U.S. ƒ Only about 25 brokers with more than $200 million in revenue ƒ Large potential acquisition universe ƒ Lack of working capital can motivate sellers Source: Armstrong & Associates
Slide 6: The XPO Growth Strategy
The XPO Growth Strategy ƒ Build a multi-billion dollar, non-asset, 3PL business in the transportation industry – Acquire attractive companies that are highly scalable – Open cold-starts in prime recruitment areas – Significantly scale up and optimize operations ƒ Instill a passionate, world-class cu
Slide 7: Major Accomplishments in Months
Major Accomplishments in 14 Months ƒ Completed six strategic acquisitions ƒ Opened 17 cold-starts, eight of them in truck brokerage ƒ Increased overall headcount from 208 to more than 900 ƒ Added over 550 sales and carrier procurement personnel ƒ Built up national operations center to 202 employees
Slide 8: Major Accomplishments in Months
Major Accomplishments in 14 Months ƒ Implemented leading edge training programs ƒ Introduced scalable IT platform and two major upgrades ƒ Established national accounts program ƒ Raised $289 million in common stock and convertible debt ƒ Dynamic team culture, hungry for growth Foundation in place fo
Slide 9: Strategy Part One: Acquisitions
Strategy Part One: Acquisitions ƒ Capitalize on attractive acquisition universe – Primarily truck brokerage and expedite ƒ Aggressively expand sales force ƒ Connect to entire organization via XPO technology ƒ Draw on shared carrier capacity ƒ Cross-sell services company-wide ƒ Gain carriers, custome
Slide 10: Acquired Covered Logistics
Acquired Covered Logistics ƒ Third-party logistics provider of freight brokerage services ƒ 7-year-old business, acquired in February 2013 ƒ 2012 revenue of $27 million ƒ Highly scalable, with deep roots in the industry ƒ Retained management to lead Illinois and Texas branches ƒ Strong customer rela
Slide 11: Acquired East Coast Air Charter
Acquired East Coast Air Charter ƒ Non-asset logistics provider of expedited air charter brokerage, North Carolina ƒ 16-year-old business, acquired in February 2013 ƒ 2012 revenue of $43 million ƒ Proprietary technology in place ƒ Long-time partner to our expedite division – Responds to expedite cust
Slide 12: Acquired Turbo Logistics
Acquired Turbo Logistics ƒ 28-year-old business, acquired in October 2012 ƒ Operated in Gainesville (Georgia), Reno, Chicago and Dallas ƒ $124 million in annual brokerage revenue ƒ Specializes in Fortune 500 customers ƒ Growing quickly, led by industry veterans
Slide 13: Acquired Kelron Logistics
Acquired Kelron Logistics ƒ 20-year-old business, acquired in August 2012 ƒ Highly scalable operations in Toronto, Montreal, Vancouver and Cleveland ƒ $100 million in annual brokerage revenue ƒ Strong base of over 1,000 customers, mostly tier one ƒ Extensive carrier and lane histories made available
Slide 14: Strategy Part Two: Cold-starts
Strategy Part Two: Cold-starts ƒ Opened 17 cold-starts to date – Eight in truck brokerage, three more than planned – Eight in freight forwarding – One in expedite ƒ Open branches with strong leaders from the industry ƒ Position in prime recruitment areas ƒ Scale up rapidly by adding salespeople
Slide 15: Strategy Part Three: Scale and Optimization
Strategy Part Three: Scale and Optimization ƒ Rapidly expand sales force with aggressive recruiting and on-boarding, including off-site training ƒ Identify branches capable of mega-growth: – Charlotte, led by Drew Wilkerson – Chicago, led by Abtin Hamidi – Gainesville, led by David Coker and Jeff Ba
Slide 16: Customers Will Drive Growth
Customers Will Drive Growth ƒ Diversified customer base of manufacturing, industrial, retail, commercial, life sciences, government-related ƒ Divisional cross-sell to new and existing customers ƒ Differentiate as a world-class customer service organization ƒ Single point of contact for each prospect
Slide 17: Scalable Technology Platform
Scalable Technology Platform ƒ Differentiate XPO through superior technology ƒ Purchase transportation more efficiently as data pool grows ƒ Introduced pricing tools in Q3 2012 ƒ Added truck-finding and advanced pricing tools in Q4 2012 with introduction of proprietary freight optimizer software ƒ 2
Slide 18: CEO Bradley S. Jacobs
CEO Bradley S. Jacobs Founded and led four highly successful companies ƒ Amerex Oil Associates: Built one of world’s largest oil brokerage firms ƒ Hamilton Resources: Grew global oil trading company to ~$1 billion ƒ United Waste: Created fifth largest solid waste business in North America ƒ United R
Slide 19: Highly Skilled Management Team
Highly Skilled Management Team Partial list below 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 Arp
Slide 20: Financial Overview
Financial Overview
Slide 21: Key Financial Statistics
Key Financial Statistics ƒ 2012 revenue of $278.6 million ƒ Currently in excess of $500 million annual revenue run rate ƒ Q4 2012 total revenue: $108.5 million* up 146% YOY – Freight brokerage: $71.1 million – up 760% – Expedited transportation: $22.1 million – up 9% – Freight forwarding: $18.5 mill
Slide 22: 2013 Outlook
2013 Outlook ƒ Annual revenue run rate of more than $1 billion as of December 31 ƒ At least $300 million of acquired historical annual revenue ƒ Positive Q4 2013 EBITDA ƒ At least three more cold-starts in freight brokerage
Slide 23: Incentivized Management
Incentivized Management ƒ Equity ownership aligns management team with shareholders ƒ Management and directors own 54% of the company (1) Common Stock Equivalent Capitalization (as of 12/31/12) Common Shares 17.7 million Preferred Shares 10.5 million Warrants (Strike Price $7 per share) 10.7 million
Slide 24: Conclusion
Conclusion
Slide 25: Strong Fundamentals for Value Creation
Strong Fundamentals for Value Creation ƒ Large, growing, fragmented industry ƒ Significant growth potential through cold-starts ƒ Well-defined process to scale up operations ƒ Passionate, world-class culture of customer service ƒ Highly skilled management team ƒ High employee morale due to growth in
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