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8-K - 8-K - XPO Logistics, Inc. | d493997d8k.htm |
EX-99.2 - EX-99.2 - XPO Logistics, Inc. | d493997dex992.htm |
Exhibit 99.1
Management Presentation
February 27, 2013
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 statements, other than statements of historical facts, made in this presentation that address activities, events or developments that the Company expects or anticipates will or may occur in the future, including such thingsas future capital expenditures (including the amount and nature thereof), finding suitable merger or acquisition candidates, expansion and growth of the Companys business and operations, the Companys 2013 outlook, and other such matters, are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. In some cases, forward-looking statements can be identified by the use of forward-looking terms such as may,will,should,expect, intend,plan,anticipate,believe,estimate,predict,potential or continue or the negative of these terms or other comparable terms. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements. Factors that could adversely affect actual results and performance include, among others, economic conditions generally; competition; the Companys ability to find suitable acquisition candidates and execute its acquisition strategy; the Companys ability to raise capital; the Companys ability to attract and retain key employees to execute its growth strategy; the Companys ability to develop and implement a suitable information technology system; the Companys ability to maintain positive relationships with its network of third-party transportation providers; litigation; and governmental regulation. Additional factors that could cause actual results to differ materially from those projected in the forward-looking statements can be found in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and in the Companys other filings with the Securities and Exchange Commission (the SEC). This presentation should beread inconjunction with the Companys filings with the SEC,which are available to thepublicover the Internet at www.sec.gov and the Companys website www.xpologistics.com. All forward-looking statements made in this presentation speak only as of the date of this presentation. All forward-looking statements made in this presentation are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligation to update any such forward-looking statements, including its 2013 outlook.
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
Truck Brokerage Growing at 2x to 3x GDP
Long-term outsourcing trend
Brokers add efficiency to both shippers and carriers
Shippers gain access to thousands of carriers
Carriers gain access to millions of loads
85% of shipments are not presently handled by brokers
$300 billion untapped opportunity
We expect 15% penetration to increase
Sources: American Trucking Association, Armstrong & Associates
Brokerage Is a Highly Fragmented Market
More than 10,000 licensed brokers in the U.S.
Only about 25 brokers with more than $200 million in revenue
Large potential acquisition universe
Lack of working capital can motivate sellers
Source: Armstrong & Associates
The XPO Growth Strategy
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
Instill a passionate, world-class culture of customer service
On track or ahead of plan with all parts of the strategy
Major Accomplishments in 14 Months
Completed six strategic acquisitions
Opened 17 cold-starts, eight of them in truck brokerage
Increased overall headcount from 208 to more than 900
Added over 550 sales and carrier procurement personnel
Built up national operations center to 202 employees
Grew footprint to 60 locations
Major Accomplishments in 14 Months
Implemented leading edge training programs
Introduced scalable IT platform and two major upgrades
Established national accounts program
Raised $289 million in common stock and convertible debt
Dynamic team culture, hungry for growth
Foundation in place for a much larger company
Strategy Part One: Acquisitions
Capitalize on attractive acquisition universe
Primarily truck brokerage and expedite
Aggressively expand sales force
Connect to entire organization via XPO technology
Draw on shared carrier capacity
Cross-sell services company-wide
Gain carriers, customers, lane and pricing histories with each acquisition
Acquired Covered Logistics
Third-party logistics provider of freight brokerage services
7-year-old business, acquired in February 2013
2012 revenue of $27 million
Highly scalable, with deep roots in the industry
Retained management to lead Illinois and Texas branches
Strong customer relationships in manufacturing, postal, consumer, and oil and gas sectors
Acquired East Coast Air Charter
Non-asset logistics provider of expedited air charter brokerage, North Carolina
16-year-old business, acquired in February 2013
2012 revenue of $43 million
Proprietary technology in place
Long-time partner to our expedite division
Responds to expedite customer demand for air charter
Rebranding as XPO Air Charter and selling across all divisions
Acquired Turbo Logistics
28-year-old business, acquired in October 2012
Operated in Gainesville (Georgia), Reno, Chicago and Dallas
$124 million in annual brokerage revenue
Specializes in Fortune 500 customers
Growing quickly, led by industry veterans
Acquired Kelron Logistics
20-year-old business, acquired in August 2012
Highly scalable operations in Toronto, Montreal, Vancouver and Cleveland
$100 million in annual brokerage revenue
Strong base of over 1,000 customers, mostly tier one
Extensive carrier and lane histories made available to all brokerage branches
Similar synergy with CFS and BirdDog acquisitions
Strategy Part Two: Cold-starts
Opened 17 cold-starts to date
Eight in truck brokerage, three more than planned
Eight in freight forwarding
One in expedite
Open branches with strong leaders from the industry
Position in prime recruitment areas
Scale up rapidly by adding salespeople
Strategy Part Three: Scale and Optimization
Rapidly expand sales force with aggressive recruiting and on-boarding, including off-site training
Identify branches capable of mega-growth:
Charlotte, led by Drew Wilkerson
Chicago, led by Abtin Hamidi
Gainesville, led by David Coker and Jeff Battle
Drive operational efficiency through shared services
Accelerate sales and marketing
Customers Will Drive Growth
Diversified customer base of manufacturing, industrial, retail, commercial, life sciences, government-related
Divisional cross-sell to new and existing customers
Differentiate as a world-class customer service organization
Single point of contact for each prospect in our database
3 million small to mid-sized companies, 1,000 large players
$50 billion addressable market and growing
Source: EVE Partners LLC
Scalable Technology Platform
Differentiate XPO through superior technology
Purchase transportation more efficiently as data pool grows
Introduced pricing tools in Q3 2012
Added truck-finding and advanced pricing tools in Q4 2012 with introduction of proprietary freight optimizer software
2013 enhancements include LTL upgrades, new carrier algorithms, new customer and carrier portals
CEO Bradley S. Jacobs
Founded and led four highly successful companies
Amerex Oil Associates: Built one of worlds largest oil brokerage firms
Hamilton Resources: Grew global oil trading company to ~$1 billion
United Waste: Created fifth largest solid waste business in North America
United Rentals: Built worlds largest equipment rental company
United Waste stock outperformed S&P 500 by 5.6x from 1992 to 1997 United Rentals stock outperformed S&P 500 by 2.2x from 1997 to 2007
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 Arps
General Counsel
Mario Harik
Oakleaf Waste Management
Chief Information Officer
David Rowe
Echo Global Logistics
Chief Technology Officer
Troy Cooper
United Rentals, United Waste
SVP, Operations
Greg Ritter
C.H. Robinson, Knight Brokerage
SVP, Strategic Accounts
Lou Amo
Electrolux, Union Pacific, Odyssey Logistics
VP, Carrier Procurement
John Tuomala
Compass Group
VP, Talent Management
Marie Fields
C.H. Robinson, American Backhaulers
Director of Training
The full management team can be found on www.xpologistics.com
Financial Overview
Key Financial Statistics
2012 revenue of $278.6 million
Currently in excess of $500 million annual revenue run rate
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 million up 10%
Approximately $250 million cash as of February 1, 2013
* |
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Net of intercompany eliminations Source: Company data |
2013 Outlook
Annual revenue run rate of more than $1 billion as of December 31
At least $300 million of acquired historical annual revenue
Positive Q4 2013 EBITDA
At least three more cold-starts in freight brokerage
Incentivized Management
Equity ownership aligns management team with shareholders
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 (5.5 million dilutive) (2) Convertible senior notes 8.6 million shares (3) Stock options and RSUs 0.7 million shares dilutive (4)
Fully Diluted Shares Outstanding 43.0 million shares
(1) |
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Based on SEC beneficial ownership calculation |
(2) Dilutive effect of warrants calculated using treasury method (avg. market close price of $14.52 for Q4 2012); total warrant proceeds of $75 million (3) Assumes conversion in full of $143.75 million in aggregate principal amount of convertible senior notes issued in September and October 2012
(4) Dilutive effect of Q4 2012 weighted average outstanding RSUs and stock options calculated using treasury method (avg. market close price of $14.52 for Q4 2012)
Conclusion
Strong Fundamentals for Value Creation
Large, growing, fragmented industry
Significant growth potential through cold-starts
Well-defined process to scale up operations
Passionate, world-class culture of customer service
Highly skilled management team
High employee morale due to growth initiatives and culture
99% of market available to XPO for penetration