Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - XPO Logistics, Inc. | d622886d8k.htm |
| EX-99.2 - EX-99.2 - XPO Logistics, Inc. | d622886dex992.htm |
 Management Presentation
November 2013
Exhibit 99.1 |
 2
Disclaimer
This
presentation
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,
without
limitation,
our
2013
outlook
with
respect
to
annual
revenue
and
fourth
quarter
2013
EBITDA,
and
2017
targets
for
EBITDA
and
revenue.
All
statements
other
than
statements
of
historical
fact
are,
or
may
be
deemed
to
be,
forward-looking
statements.
In
some
cases,
forward-looking
statements
can
be
identified
by
the
use
of
forward-looking
terms
such
as
"anticipate,"
"estimate,"
"believe,"
"continue,"
"could,"
"intend,"
"may,"
"plan,"
"potential,"
"predict,"
"should,"
"will,"
"expect,"
"objective,"
"projection,"
"forecast,"
"goal,"
"guidance,"
"outlook,"
"effort,"
"target"
or
the
negative
of
these
terms
or
other
comparable
terms.
However,
the
absence
of
these
words
does
not
mean
that
the
statements
are
not
forward-looking.
These
forward-looking
statements
are
based
on
certain
assumptions
and
analyses
made
by
us
in
light
of
our
experience
and
our
perception
of
historical
trends,
current
conditions
and
expected
future
developments,
as
well
as
other
factors
we
believe
are
appropriate
in
the
circumstances.
These
forward-looking
statements
are
subject
to
known
and
unknown
risks,
uncertainties
and
assumptions
that
may
cause
actual
results,
levels
of
activity,
performance
or
achievements
to
be
materially
different
from
any
future
results,
levels
of
activity,
performance
or
achievements
expressed
or
implied
by
such
forward-looking
statements.
Factors
that
might
cause
or
contribute
to
a
material
difference
include,
but
are
not
limited
to,
those
discussed
in
our
filings
with
the
SEC
and
the
following:
economic
conditions
generally;
competition;
our
ability
to
find
suitable
acquisition
candidates
and
execute
our
acquisition
strategy;
our
ability
to
raise
debt
and
equity
capital;
our
ability
to
attract
and
retain
key
employees
to
execute
our
growth
strategy;
litigation,
including
litigation
related
to
misclassification
of
independent
contractors;
our
ability
to
develop
and
implement
a
suitable
information
technology
system;
our
ability
to
maintain
positive
relationships
with
our
network
of
third-party
transportation
providers;
our
ability
to
retain
our
largest
customers;
our
ability
to
successfully
integrate
acquired
businesses;
and
governmental
regulation.
All
forward-looking
statements
set
forth
in
this
presentation
are
qualified
by
these
cautionary
statements
and
there
can
be
no
assurance
that
the
actual
results
or
developments
anticipated
by
us
will
be
realized
or,
even
if
substantially
realized,
that
they
will
have
the
expected
consequences
to
or
effects
on
us
or
our
business
or
operations.
Forward-looking
statements
set
forth
in
this
presentation
speak
only
as
of
the
date
hereof
and
we
do
not
undertake
any
obligation
to
update
forward-looking
statements
to
reflect
subsequent
events
or
circumstances,
changes
in
expectations
or
the
occurrence
of
unanticipated
events,
including
our
2013
outlook,
except
to
the
extent
required
by
law. |
 3
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’re on track or ahead of plan with every leg of our
strategy to achieve $5 billion of revenue in 2017 |
 4
Completed eight strategic acquisitions and opened
20 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 stock and convertible debt
offerings, and entered into a $125 million ABL facility
Stratified customers, assigned a single point of contact to each
Disciplined focus on operational excellence
Precise Execution of Growth Plan |
 5
One of the Fastest Growing 3PLs
Broad and expanding service offering in North America
4th largest truck brokerage firm
–
Up from 17th largest in 2012, unranked in 2011
Top 5 ground expediter, with integrated air charter capabilities
#1 heavy goods, white glove provider of last-mile logistics
International and domestic freight forwarder
Growing presence in LTL and intermodal
Relentless focus on world-class customer service
|
 6
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
–
Shippers gain access to thousands of carriers, carriers gain
access to millions of loads
Highly fragmented: more than 10,000 licensed brokers in the U.S.
–
Only about 25 brokers with more than $200 million in revenue
Strong Industry Fundamentals
Sources: American Trucking Association, Armstrong & Associates
|
 7
Massive Commitment to Shipper Satisfaction
Built integrated network across North America in two years
1,950 employees at 89 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 23,000 active, vetted carriers, and more than 400 trucks
driving under our authority
Constantly investing in growing capacity, technology, sales staff,
procurement staff and training
Our broad footprint provides customers with local support across
North America |
 8
We Excel at Managing Scale and Change
We currently manage 17,700 deliveries a day with an intense
focus on on-time pickup and delivery, and safety
We serve some of the most demanding shipper needs in
North America, including expedite and white glove last-mile
We’ve grown by almost $1 billion in the last two years and
successfully integrated numerous operations
In two years, we’ve hired, recruited and integrated 90% of our
total workforce –
over 1,750 employees, including many with
decades of industry experience |
 9
Rapidly grow sales force with aggressive recruiting and
training
Expand branches capable of mega-growth
–
Charlotte, North Carolina
–
Chicago, Illinois
–
Gainesville, Georgia
–
Salt Lake City, Utah
Drive operational efficiency through shared services
Strategy Part 1: Scale and Optimization |
 10
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 hundreds of thousands of
small and medium-sized shippers
Capitalize on significant less-than-truckload (LTL) opportunity
Cross-sell all services to new and existing customers
|
 11
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 carrier rating engine
and LTL upgrades, and new customer and carrier portals
Scalable Technology Platform |
 12
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 loads in a
short timeframe
Customer-specific business rules to manage carrier routing
and assignment, and operational execution |
 13
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, buying power,
automated load execution platform, freight audit and bill pay
services through the customer portal
Carriers can be monitored with detailed scorecards |
 14
Acquire attractive, highly scalable companies
Gain capabilities, customers, carriers, lane and pricing histories
with each acquisition
Continue to grow carrier network, currently at 23,000+
Eight acquisitions to date have added capabilities in LTL,
last-mile, refrigerated and air charter
3PD, Turbo, Kelron and Covered brought strong relationships
with Fortune 500 customers
Strategy Part 2: Acquisitions |
 15
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 20 cold-starts to date
–
9 in freight brokerage, 10 in freight forwarding,
one in expedited
–
Brokerage cold-starts on a combined annual revenue run
rate of over $120 million
Strategy Part 3: Cold-starts |
 16
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
business
in
North
America
United
Rentals:
Built
world’s
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
CEO Bradley S. Jacobs |
 17
Highly Skilled Management Team
Partial list
NCR, Avery Dennison, Arrow Electronics
AutoNation, Skadden Arps
Oakleaf Waste Management
Echo Global Logistics
Electrolux, Union Pacific, Odyssey Logistics
United Rentals, United Waste
Goldman Sachs, UBS, JPMorgan Chase
C.H. Robinson, Knight Brokerage
Stifel Nicolaus, Alex. Brown
C.H. Robinson, American Backhaulers
Sean Fernandez
Chief Operating Officer
Gordon Devens
General Counsel
Mario Harik
Chief Information Officer
Dave Rowe
Chief Technology Officer
Lou Amo
VP, Carrier Procurement
Troy Cooper
SVP, Operations
Scott Malat
Chief Strategy Officer
Greg Ritter
SVP, Strategic Accounts
John Hardig
Chief Financial Officer
Marie Fields
Director of Training
The full management team can be found on www.xpologistics.com
EVE Partners
Tom Connolly
SVP, Acquisitions |
 18
Deep Bench of Industry Experience Selected examples
C.H. Robinson
Crowley Maritime, Coyote Logistics
England Logistics, Freightquote
C.H. Robinson
C.H. Robinson
C.H. Robinson
AFN, CEVA Logistics
Ryder Supply Chain Solutions, BAX Global
OHL, Schneider National
Livingston International, Echo Global Logistics
Jake Schnell
Sr. Operational Process and Integration Manager
Kip Douglass
Regional Vice President
Joe Stevens
Branch President, Houston
Patrick Maguire
Branch President, Montgomery
Brandon Arnold
Carrier Procurement and Operations Manager
Drew Wilkerson
Branch President, Charlotte
Evan Laskaris
Director of Operations
Greg Tallant
National Account Manager
Jenna Sargent
Regional Sales and Operation Manager
Andrew Armstrong
Sales and Operations Manager
AFN, Ryder Integrated Logistics
Doug George
Branch President, Dallas |
 19
2011 revenue of $177 million
Currently approximately $940 million 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 million –
up 374.4%
–
Expedited transportation: $25.1 million –
up 5.7%
–
Freight forwarding: $19.1 million –
up 10.5%
Key Financial Statistics
(1)
Net of intercompany eliminations
Source: Company data |
 20
2013 outlook
–
EBITDA-positive in Q4
–
$1 billion annual revenue run rate by December 31
2017 targets
–
$300 million of EBITDA
–
$5 billion of revenue
(1)
Financial Goalposts
(1)
Includes $1.5 to $2.0 billion of acquired revenue
Source: Company data |
 21
Incentivized XPO Management
Equity ownership aligns management team with shareholders
Management and directors own approx. 41% of the company
(1)
(1)
Based on SEC beneficial ownership calculation as of September 30, 2013
(2)
Dilutive effect of warrants calculated using treasury method (avg. market close
price of $22.31 for Q3 2013); 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)
As of September 30, 2013, dilutive effect of Q3 2013 weighted average outstanding
RSUs and stock options calculated using treasury method (avg. market close
price of $22.31 for Q3 2013) 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 million (7.3 million dilutive)
(2)
Convertible Senior Notes
8.7 million shares
(3)
Stock Options and RSUs
1.3 million shares dilutive
(4)
Fully Diluted Shares Outstanding
57.9 million shares |
 22
Large, growing, fragmented logistics industry
Well-defined process to scale up operations
Robust acquisition pipeline
Strong organic growth, including cold-starts
Highly skilled management team incentivized to create
shareholder value
Passionate, world-class culture of customer service
Clear Path for Significant Value Creation |