Attached files
| file | filename |
|---|---|
| EX-10.1 - EXHIBIT 10.1 - XPO Logistics, Inc. | d774486dex101.htm |
| EX-99.1 - EXHIBIT 99.1 - XPO Logistics, Inc. | d774486dex991.htm |
| 8-K - FORM 8-K - XPO Logistics, Inc. | d774486d8k.htm |
 Investor Presentation
August 2014
Exhibit 99.2 |
 1
1
Forward-Looking Statements Disclaimer
This document contains “forward-looking statements” within the meaning of Section 27A of
the Securities Act, and Section 21E of the Exchange Act, including such things as the
anticipated closing date of the acquisition of New Breed, and the related financing, the expected impact of the acquisition of New Breed and New Breed’s
anticipated growth, the projected satisfaction of closing conditions to the acquisition of New Breed,
the retention of the New Breed management team, the expected ability to integrate operations
and technology platforms and to cross-sell services, future capital expenditures (including the amount and nature thereof), finding other
suitable merger or acquisition candidates, expansion and growth of the Company’s business and
operations and other such matters. All statements, other than statements of historical
facts, included or incorporated by reference in this offering memorandum, are 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 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 could adversely affect actual results and performance include, but are
not limited to, those discussed elsewhere in this offering memorandum, including the section
entitled “Risk Factors”, the risks set forth in our filings with the SEC and the following: economic conditions generally; competition; our ability to find
other suitable acquisition candidates and execute our acquisition strategy; the expected impact of the
acquisition of New Breed, including the expected impact on XPO’s results of operations; the
ability to obtain the requisite regulatory approvals and the satisfaction of other conditions to consummation of the transaction; the expected
closing date for the acquisition of New Breed; 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 alleged misclassification of independent contractors; our ability to develop, implement and maintain a suitable information
technology system; our ability to maintain positive relationships with our network of third party
transportation providers; our ability to retain our and New Breed’s largest customers;
XPO’s ability to successfully integrate New Breed and other acquired businesses and realize anticipated synergies and cost savings; rail and other network
changes; weather and other service disruptions; and governmental regulation. All forward-looking
statements included in this offering memorandum, or in any document incorporated by reference
herein or therein speak only as of the date of this offering memorandum or the document incorporated by reference, as the case may be. All
of the forward-looking statements made or incorporated by reference in this offering memorandum
are qualified by these cautionary statements and there can be no assurance that the actual
results or developments anticipated by XPO will be realized or, even if substantially realized, that they will have the expected consequence to,
or effects on, XPO or its respective businesses or operations and XPO will not undertake any
obligation to update forward-looking statements to reflect subsequent events or
circumstances, changes in expectations or the occurrence of unanticipated events except to the extent required by law.
This presentation contains certain non-GAAP financial measures. A “non-GAAP financial
measure” is defined as a numerical measure of a company’s financial performance that
excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in
the statement of income, balance sheet or statement of cash flows of the company. Pursuant to the
requirements of Regulation G, the company has provided a reconciliation of non-GAAP
financial measures to the most directly comparable GAAP financial measure.
The non-GAAP financial measures used are: EBITDA, Adjusted EBITDA and Unlevered Free Cash
Flow. These measures are presented because management uses this information to monitor
and evaluate financial results and trends. Therefore, management believes this information is also useful for investors.
|
 2
2
Management Team Presenters
Bradley Jacobs
Chairman and Chief Executive Officer –
XPO Logistics
John Hardig
Chief Financial Officer –
XPO Logistics
Scott Malat
Chief Strategy Officer –
XPO Logistics |
 3
3
Agenda
Transaction Overview
1
2
XPO Logistics Overview
3
Financial Overview
4
Appendix |
 1.
Transaction Overview |
 5
5
Executive Summary
XPO
Logistics,
Inc.
(NYSE:
XPO)
(the
“Company”
or
“XPO”)
is
a
leading
asset-light
provider
of
transportation logistics services, including truck brokerage, intermodal,
expedited transportation, last mile logistics and freight forwarding
services –
Current
equity
market
capitalization
of
$2.5
billion
as
of
August
8,
2014
(1)
XPO
announced
on
July
29,
2014
that
it
has
agreed
to
acquire
New
Breed
Holding
Company
(“New Breed”) for a purchase price of $615 million
–
The acquisition of New Breed expands XPO’s service offerings to include
desirable sectors of contract logistics services and provides the Company
with significant additional scale, diversified revenue, complementary
services and an enhanced value proposition for blue chip customers
–
Pro forma for the acquisition, XPO will have LTM June 30, 2014 revenues and
adjusted EBITDA
of
$2.7
billion
and
$144
million
(2)
,
respectively
To finance the acquisition, the Company intends to use proceeds from a $500
million senior unsecured notes offering, as well as an ABL draw and
available cash The New Breed transaction is subject to HSR clearance and
other customary conditions and is expected to close in the third
quarter (1)
Assumes conversion of the convertible senior notes into equity
(2)
EBITDA reconciliation is located in the Appendix |
 6
6
Sources and Uses and Pro Forma Capitalization
(1)
Atlantic
Central
Logistics
(“ACL”),
a
last
mile
logistics
provider,
was
acquired
on
July
28,
2014
in
an
all
cash
purchase
of
$36.5
million
(~6.1x purchase multiple); ACL has LTM EBITDA of $6 million
(2)
Subsequent to June 30, 2014, $14 million of restricted cash was released after
certain letters of credit were secured by the Company (3)
ABL is secured by all assets and matures on October 17, 2018; availability of $243
million as of June 30, 2014 (4)
Convertible Senior Notes due October 1, 2017 have conversion price of $16.43 per
share of common stock; current XPO share price is $30.74 as of August 8,
2014; Convertible Senior Notes do not have any subsidiary guarantees
(5)
As of August 8, 2014; Assumes the conversion of convertible senior notes into
equity (4)
(3)
(1)
(2)
(5)
(5)
($ in millions)
June 30, 2014
Cum. Mult. EBITDA
% of
Actual
Adj.
PF, as Adjusted
LTM 6/30/14
total cap
Cash and Cash Equivalents
$112
($82)
$30
Restricted Cash
17
(14)
3
$415m ABL Revolving Credit Facility
–
48
48
Senior Unsecured Notes
–
500
500
Miscellaneous Debt
2
–
2
Total Debt (excl. convert)
$2
$550
3.8x
18%
Net Debt (excl. convert)
(110)
520
3.6x
Convertible Senior Notes
121
–
121
Total Debt
$123
$671
4.7x
Net Debt
11
641
4.5x
Equity market capitalization
2,450
–
2,450
82%
Total market capitalization
$2,452
$3,000
100%
PF Adj. LTM EBITDA
$144
($ in millions)
Sources
Uses
ABL draw
$48
New Breed Acquisition
$615
Senior Unsecured Notes
500
ACL acquisition
37
Equity investment by New Breed CEO
30
Fees and Expenses
22
Cash from Balance Sheet
96
Total sources
$674
Total uses
$674 |
 2.
XPO Logistics Overview |
 8
8
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 goods
International and domestic freight forwarder
Growing presence in managed transportation and less-than-truckload
(LTL) After the New Breed acquisition, leading provider of engineered
outsourced logistics Sources for rankings: Transport Topics, Journal of
Commerce and company data |
 9
9
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 supply chain logistics provider
|
 10
10
Precise Execution of Growth Plan
Completed 12 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 operations
Created a culture of passionate on-time performance
Disciplined focus on operational excellence |
 11
11
Massive Commitment to Shipper Satisfaction
Integrated network with cross-company visibility
148 locations in the U.S., Canada, Mexico, Asia and Europe
Approximately 3,100 employees
More than 3,600 owner-operator trucks under contract for drayage, expedited
and last mile subsidiaries
Relationships with an additional 27,000 vetted carriers
Access to 60,000 miles of network rail routes
New Breed will add approximately 7,300 employees and 70 locations
|
 12
Founded and led four highly successful companies, including two world-class
public corporations, prior to XPO
United Rentals:
–
Grew EBITDA from $50 million at initial bond offering in May 1998 to $1.1 billion
in 2007 –
Issued over $4 billion in high yield debt through 2007
United Waste Systems:
–
Sold in 1997 for $2.5 billion
Hamilton Resources:
Amerex Oil Associates:
Chairman and CEO Bradley S. Jacobs
Global oil trading company with ~$1 billion revenue
Fifth largest solid waste management business in North America
World’s largest equipment rental company (NYSE: URI)
One of world’s largest oil brokerage firms |
 13
13
Brad Jacobs led a $75 million cash investment to assume control of XPO Logistics
in September 2011
Build a multi-billion dollar, non-asset based, third party logistics
business Large and underpenetrated $1 trillion U.S. transportation logistics
industry Scale is a competitive advantage with customers and carriers
Fragmented industry with many quality acquisition targets
Highly skilled management team with talents that fit the Company’s growth
strategy Intense focus on world-class operations to create value for all
stakeholders XPO Investment Premise |
 14
14
Sector
North
American
Market
Size
($ billions)
Projected
Growth
(x GDP)
Key
Competitors
XPO
Position
Truck
Brokerage
~$50
2-3 times
#4
Intermodal
~$15
3-5 times
#3
Last Mile –
Heavy Goods
~$13
5-6 times
#1
Expedited
Transportation
~$5
3-4 times
#1
Contract
Logistics
~$55
~3 times
Top 10
(Pro
Forma)
Outsourcing and
technology
Driver shortages increase
brokers’
value proposition
Long-haul rail efficiencies
and near-sourcing of
manufacturing in Mexico
Outsourcing and
e-commerce
Outsourcing trend
Technology advances
Just-in-time
management
Supply chain
complexity
Highly fragmented market
Technology advances favor
larger players with scale
Intermodal growth takes
volume from trucking sector
XPO is clear market leader in
heavy goods home delivery
logistics
Differentiated by end-consumer
experience management
Highly fragmented; top-10
players account for less than
25% of global market
Scale is less of a
competitive advantage
Highly fragmented
Highly-engineered services
create sticky, stable
customer relationships
Source: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR
Associates, SJ Consulting Group, Inc., Bureau of Economic Analysis, US
Department of Commerce. Strong Fundamentals Across Operating Sectors
Growth Drivers
Competitive Dynamic |
 15
15
Services includes truckload, less-than-truckload (LTL) and related
over-the-road logistics For-hire U.S. trucking is a $350 billion
industry –
Estimated 15% ($50 billion) penetration by brokers
Growing at two to three times GDP
–
Favorable shipper trend toward outsourcing
–
Regulatory pressure on shippers
–
Favorable carrier trend toward using brokers to eliminate in-house sales
cost –
Driver shortages are beneficial to brokers
Truck Brokerage: An Underpenetrated Sector
Sources: Armstrong & Associates and EVE Partners LLC
|
 16
16
Generated
organic
revenue
growth
of
67%
in
truck
brokerage
in
Q2
2014
YOY
11 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 deliver outsized returns
Proprietary IT platform provides cross-company visibility of market
conditions, capacity and carrier performance
–
Sophisticated analytical tools for pricing and load-covering
–
Sales force productivity climbing with technology investments and increase in
tenure Truck Brokerage: Strong Organic Growth
Lane densities and pricing histories added to database with each acquisition |
 17
17
XPO facilitates freight movements by rail, typically with truck components at both
ends $15 billion sector in North America
One of the fastest-growing areas of transportation logistics
–
Growing at three to five times GDP
Can lower transportation costs for freight traveling 600 miles or more
–
Rail is more fuel-efficient than truckload for long haul
–
Intermodal can lower shipper’s cost by up to 20%
Intermodal: A Major Market Opportunity
Sources: SJ Consulting Group, Inc. and FTR Associates
|
 18
18
XPO gained instant scale in North American intermodal
–
Third largest provider of intermodal services
–
–
Decades-deep relationships with the railroads enhance customer service
Transaction added $980 million of revenue (FY 2013), 31 locations and
approximately 800 employees
Asset-light model: XPO controls over 17,000 containers with access to more
capacity through rails
XPO now manages approximately 10% of all domestic intermodal loads in North
America Intermodal: Acquired Pacer in March 2014
Sources: Bureau of Economic Analysis and US Department of Commerce
#1 provider of cross-border Mexico intermodal, with 30 years’ experience
On track to realize $15 million of targeted synergies from Pacer integration |
 19
19
Mexico is fast-becoming the country of choice for manufacturing
near-shoring, compared with China
–
Competitively priced labor force
–
Favorable regulatory and tax environment
–
Faster speed-to-market than overseas locales
–
Supports just-in-time lean production trend
Growth driven by billions of dollars invested by major manufacturers, Mexican
government and the rails
Large opportunity to convert to intermodal: an estimated 2.8 million trucks move
cross- border each year
Intermodal: Cross-Border Mexico Growth
Sources: AlixPartners |
 20
20
Arranges delivery and installation of heavy goods to residences and
workplace –
Customers include nearly all of the top 30 big-box retailers
$13 billion market for heavy goods home deliveries
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
–
Only 30% currently going through 3PLs
Highly fragmented with many small, regional providers
Last Mile: XPO Leads Fast-Growing Sector
Source: Norbridge, Inc. and EVE Partners LLC |
 21
21
Extremely high level of end-customer satisfaction
–
Leading proprietary software for workflow and customer experience management
–
Real-time visibility into customer satisfaction
Strong customer-centric culture built by experienced leaders who now run the
business for XPO
Acquired Optima Service Solutions in November 2013
–
Highly scalable, leading facilitator of complex installations for appliances and
electronics
Acquired Atlantic Central Logistics in July 2014
–
Moves high volumes of e-commerce purchases for mega-companies
Last Mile: Acquired 3PD in August 2013 |
 22
22
Estimated $5 billion market
Benefits from toward just-in-time inventories, supply chain
disruptions XPO manages more expedited shipments than any other provider in
North America –
XPO Express –
over-the-road logistics, three decades of experience as
Express-1 –
XPO NLM –
#1 proprietary web-based auction technology
–
XPO Air Charter –
auction-driven, last-minute freight movements
Expedited: #1 Manager of Urgent Shipments
Source: Company data |
 23
23
XPO arranges domestic and international shipments, typically by air and
ocean Currently a $200 million player in a $150 billion market
Significant opportunity to grow market share through network of dedicated
offices –
19 Company-owned offices
–
16 independently-owned stations
Provides air transport support to expedited operations
Integrated former Pacer operations in US, Asia and Europe
Freight Forwarding: Global Network
Source: Company data |
 24
24
Compelling reasons for the transaction, expected to close in Q3 2014
Contract Logistics: Acquisition of New Breed
Source: XPO Logistics and New Breed company data
Will be transformational
for XPO’s scale and value proposition
Capitalizes on outsourcing trends for reverse logistics, omni-channel
distribution, transportation management, lean manufacturing and aftermarket
support, and supply chain optimization
Will create significant cross-selling opportunities with XPO strategic
accounts, New Breed customers and their vendors
–
Combined company of approximately 10,400 union-free employees and over 200
locations
–
XPO will gain over 300 IT professionals from the combination, doubling XPO’s
IT workforce
–
Gives XPO the industry’s most differentiated supply chain offering
|
 New
Breed Is a Preeminent Provider Source: New Breed company data
25
Leads the most desirable sector of contract logistics
Complex, highly engineered solutions for blue chip customers
Targets industries with growing demand for outsourced logistics
–
Technology/telecom, e-commerce/retail, aerospace and defense, medical
equipment, and select areas of manufacturing
Very stable relationships with low cyclicality – performed well in Great Recession
–
Approximately 99% contractual revenue renewal rate over the past three years
–
Weighted average remaining term of existing contracts is 5.5 years (6.5 years for
five largest customers) 25 |
 26
26
New Breed’s Attractive Financial Model
38% return on invested capital (FY 2013)
(1)
71% free cash flow conversion (FY 2013)
(2)
Low capex required to maintain business: approximately 2% of sales (total
including growth capex was 4.2% of revenue in FY 2013) and devoted
primarily to IT Majority of facility leases expire at the same time as the
customer contracts Asset-light
based
model
in
line
with
XPO’s
strategy
(1)
Return on invested capital equals ongoing operations EBIT divided by the sum of
net working capital and net PP&E
(2)
Free cash flow conversion equals EBITDA minus capex, divided by EBITDA
Source: New Breed company data |
 27
27
Integrated Multi-Modal Growth Model Offers
Attractive Earnings Diversification
No single division accounts for more than 30%
of gross revenue
XPO’s broad service portfolio mitigates
cyclicality, adapts to changes in demand
Large shippers increasingly favor single source
providers with a broad array of capabilities
(1)
Figures
reflect
inclusion
of
New
Breed
for
the
full
LTM
June
30,
2014
period
on
a
PF
basis
Truck
Brokerage
23%
Last Mile
13%
Intermodal
30%
Expedited
5%
Freight
Forwarding
7%
Contract
Logistics
22%
LTM
Pro
Forma
Gross
Revenue
(1) |
 Asset-light model allows flexibility to
manage costs in changing economic
climates
–
85% of cash operating costs are
variable
Operating facility rents largely co-
terminus with customer contracts
67% of New Breed contracts are either
fixed-variable or cost plus arrangements
PF Q2 2014
(1)
Cash Operating Expenses
Total
Variable
85%
Highly Variable Cost Base
XPO has a highly variable cost base
(1)
PF for New Breed acquisition
28
15%
19%
66%
Purchased
Transportation
Other Variable
Fixed
28 |
 29
29
PF 2013 Capex
(1)
Growth
63%
Low Maintenance Capex Requirements
63% of capex is invested in customer
growth
Growth investments enhance service
offerings and customer retention
Investment in contract logistics
customers only occurs after securing
long-term contract
Maintenance capex represents ~$4.5
million per quarter (~0.7% of sales)
The majority of XPO’s capital expenditures are used to fuel growth
(1)
PF for New Breed acquisition
37%
23%
40%
Capitalized
Software
Other Growth
Maintenance |
 30
30
Resilient to Economic Cycles
Freight
brokerage,
last
mile
and
contract
logistics
resistant
to
economic
downturns
Freight brokerage net revenue margins typically expand in economic downturns
XPO Last Mile gained market share as smaller providers struggled
New Breed grew sales and earnings during the Great Recession
|
 Longstanding and stable relationships with a
large, diversified base of blue-chip customers
–
More than 14,000 active customer accounts
ranging from Fortune 100 global leaders to
small, privately-held companies
Recognized by customers as leading provider
New Breed’s revenue is 100% contracted for
the rest of 2014 and 88% for 2015
–
Contract renewal has averaged ~99%
since 2007
Diversified Account Base with Low Customer
Concentration
Pro Forma Customers as % of Total Revenue
(1)
(1)
PF for the New Breed acquisition
31
Customer 1, 6%
Customer 2, 5%
Customer 3, 4%
Customer 4, 3%
Customer 5, 3%
Customers 6-10, 11%
Customers 11-20, 15%
All other customers, 53%
31 |
 32
32
Attractive cash flow fundamentals
Combined and PF Adjusted EBITDA
(1)
and Margin
Significant FCF Conversion
(2)
Asset-Light Model Generates Strong Cash Flow
($ in millions)
(1)
2012
calculated
based
on
combined
Company
and
New
Breed
metrics.
Such
metrics
do
not
represent
Regulation S-X compliant metrics, and accordingly do not take account of any
PF adjustments thereof. PF metrics (and actual results should New Breed
have been owned by the Company during the period shown) could substantially
differ (2)
Represents
Combined
and
PF
Adjusted
EBITDA
less
total
capex
as
a
percentage
of
EBITDA
$122
$151
$144
5%
6%
5%
2012
2013
LTM
46%
68%
65%
2012
2013
LTM
Asset-light 3PL business model has high
returns and high free cash flow conversion
Low capex requirements and a flexible cost
structure allow the Company to adapt to
prevailing market conditions
Cold-starts require limited initial investment,
typically less than $1 million
Investments in infrastructure and
IT have positioned the Company for
continued growth without significant
increase in capex |
 33
33
Common Shares
52.6 million
Preferred Shares
10.5 million
Warrants
7.8 million dilutive
(2)
Convertible Senior Notes
7.3 million shares
(3)
Stock Options and RSUs
1.2 million dilutive
(4)
Fully Diluted Shares Outstanding
79.4 million
Fully Diluted Market Capitalization
$2,450 million
(5)
New Senior Notes
$500 million
Debt-to-Cap
18.3%
(6)
Significant Equity Cushion:
Low Debt to Capitalization
Incentivized management team with ~29%
ownership of the company
(1)
Equity ownership aligns management team
with investors
Significant junior capital cushion
Substantial equity value creation since Brad
Jacobs’
investment in 2011 as company
delivered on its plan
–
Over 500% increase in market cap since
September 2011 investment
(5)
(1)
Based on SEC beneficial ownership calculation as of June 30, 2014; includes
management and directors (2)
Dilutive effect of warrants calculated using treasury method (avg. closing price
of $26.41 for the 3 months ending
6/30/14);
total
warrant
proceeds
of
$74.0
million
(3)
Assumes conversion in full of $120.7 million in aggregate principal amount of
outstanding 4.50% convertible senior
notes
due
2017
(4)
Dilutive
effect
of
outstanding
RSUs
and
stock
options
calculated
using
treasury
method
(avg.
closing
price
of
$26.41
for
the
3
months
ending
6/30/14)
(5)
As of 8/8/14
(6)
Includes $48 million ABL draw and $2 million other debt
Common Stock Equivalent Capitalization as of 6/30/14 |
 Management Excels at
Efficient Integrations Disciplined process for integration with minimal disruption to
operations Move acquired operations onto the Company’s IT platform to connect with carrier
and customer bases
Identify synergies in technology, real estate, sales and administrative functions and duplicative
personnel
Go to market as one integrated offering and cross-sell services
Maintain strong communications with employees, customers and carriers
XPO Service Offerings Used by Top 50 Customers
34
21
13
8
7
1
1 Service
2 Services
3 Services
4 Services
5 Services
Number of companies
34 |
 3.
Financial Overview |
 Combined and Pro Forma Historical Financials
EBITDA
Revenue
Unlevered FCF
(2)
Capex
(1)
Note:
2012
calculated
based
on
combined
Company
and
New
Breed
metrics.
Such
metrics
do
not
represent
Regulation S-X compliant metrics, and accordingly do not take account of any
PF adjustments thereof. PF metrics (and actual results should New Breed
have been owned by the Company during the period shown) could substantially
differ (1)
Does not reflect capex from ACL
(2)
Unlevered FCF calculated based on Combined and PF Adjusted EBITDA less capex
($ in millions)
($ in millions)
($ in millions)
($ in millions)
36
$2,257
$2,623
$2,769
2012
2013
LTM 6/30/14
$122
$151
$144
2012
2013
LTM 6/30/14
$66
$49
$50
2012
2013
LTM 6/30/14
$56
$102
$94
2012
2013
LTM 6/30/14
36 |
 37
37
LTM 6/30/14 EBITDA Bridge
($ in millions)
(1)
Note:
Detailed EBITDA reconciliation located in the Appendix; components do not sum to
totals due to rounding (1)
PF for acquisitions of 3PD, Pacer and New Breed, as well as associated
expenses $91
$144
$14
$7
$6
$14
$11
Adjusted Full-year impact of
EBITDA
certain other
acquisitions
Pacer
restructuring
charges
Non
-cash equity
compensation
Cost savings and
operational
improvement at
Pacer, Optima
and NLM
Non-recurring
costs at New
Breed
Pro Forma
Combined
EBITDA |
 38
38
Financial Policy Overview
Strong liquidity
–
Access
to
a
$415
million
revolving
credit
facility
secured
by
the
Company’s
assets
(1)
No current plans for dividend or return of capital
Low capital intensity
–
Asset-light model and flexible cost structure allow the Company to more easily
adapt to prevailing market conditions
Modest leverage appetite
–
Targeted long-term view of total leverage below 3.0x
–
Outstanding debt of $121 million convertible senior notes are trading deep in the
money (1)
Borrowing capacity was $243 million prior to New Breed acquisition
|
 4.
Appendix |
 40
40
Adjusted EBITDA Reconciliation
12 Months Ended
6 Months Ended
6 Months Ended
12 Months Ended
($ in thousands)
12/31/2013
6/30/2013
6/30/2014
6/30/2014
Net loss available to common shareholders
($51,502)
($33,392)
($43,372)
($96,240)
Preferred dividends
2,972
1,486
1,475
2,961
Net loss
($48,530)
($31,906)
($41,897)
($93,279)
Pacer debt commitment fee
–
–
4,624
4,624
Other interest expense
18,169
6,170
8,837
60,597
Income tax (benefit) provision expense
(22,442)
296
(5,070)
(21,940)
Accelerated amortization of Express-1 trade name
–
–
3,346
3,346
Other depreciation and amortization
20,795
3,349
33,197
137,529
EBITDA
($32,008)
($22,091)
$3,037
$90,877
Pacer transaction and restructuring costs
–
–
11,408
–
XPO Express and XPO Last Mile rebranding costs
–
–
321
321
Adjusted EBITDA
($32,008)
($22,091)
$14,766
$91,198 |
 41
41
Pro Forma Adjusted EBITDA Reconciliation
(1)
Includes Adjusted EBITDA from ACL of $6.2 million, from Optima of $1.7 million and
from NLM of $9.6 million prior to their respective dates of
acquisition (2)
Direct, transaction costs related to the acquisitions described in footnote (1)
above and acquisitions not consummated (3)
Restructuring charges related to the termination of employees and closure of
facilities primarily related to the Pacer acquisition in the
six
months
ended
June
30,
2014
and
other
acquisitions
in
the
year
ended
December
31,
2103
(4)
XPO employee non-cash stock compensation expense related to stock options and
restricted stock units (5)
Cost reductions attributable to Pacer for public company costs, executive
headcount reductions, IT headcount reductions; cost reductions have been
fully implemented at the time of this transaction (6)
Advisor costs related to New Breed's attempts at an initial public offering and
other capital market activities (7)
Non-cash compensation expense related to distributions to option holders
(8)
Losses on contracts that will be either terminated or amended such that they are
profitable (9)
Costs
related
to
a
single,
large
claim
that
is
not
normal
in
the
ordinary
course
of
business,
as
well
as
non-recurring
legal
fees
associated with two legal cases
12 Months Ended
6 Months Ended
6 Months Ended
12 Months Ended
($ in thousands)
12/31/2013
6/30/2013
6/30/2014
6/30/2014
Adjusted EBITDA
$100,740
$50,901
$41,359
$91,198
XPO Adjustments
EBITDA
from
certain
acquisitions
(1)
$17,482
$9,060
$3,301
$11,724
Other
acquisitions-related
transaction
costs
(2)
2,991
1,560
1,094
2,525
Restructuring
charges
(3)
365
–
6,546
6,911
Non-cash
stock
compensation
(4)
4,746
2,147
3,843
6,442
Net
cost
savings,
operating
improvement
synergies
(5)
17,328
8,354
4,704
13,677
New Breed Adjustments
Aborted
capital
markets
transactions
(6)
$1,459
$62
$1,678
$3,075
Option-holder
distribution
(7)
–
–
2,691
2,691
Contract
losses
(8)
3,635
1,306
2,221
4,550
Other
(9)
2,054
1,347
–
707
Pro Forma Adjusted EBITDA
$150,800
$74,737
$67,437
$143,500 |
 42
42
Combined EBITDA Reconciliation
12 Months Ended
($ in thousands)
12/31/2012
Net loss available to common shareholders
($23,332)
Preferred dividends
2,993
Net loss
($20,339)
Interest expense
3,207
Income tax (benefit) provision expense
(11,195)
Depreciation and amortization
2,508
Non-cash equity compensation expense
4,398
Adjusted EBITDA
($21,421)
Optima Adjusted EBITDA
2,982
NLM Adjusted EBITDA
6,789
ACL Adjusted EBITDA
2,559
New Breed Adjusted EBITDA
83,822
Pacer Adjusted EBITDA
16,841
3PD Adjusted EBITDA
30,492
Pro Forma Adjusted EBITDA
$122,064
Note:
2012 calculated based on combined Company and New Breed metrics.
Such metrics do not represent
Regulation S-X compliant metrics, and accordingly do not take account of any
PF adjustments thereof. PF metrics (and actual results should New Breed
have been owned by the Company during the period shown) could substantially
differ |
 43
43
XPO Logistics Corporate Structure
XPO Logistics, Inc. (DE)
XPO Global Logistics Inc.
(Canada, Federal)
Approximately
27 operating
subsidiaries
100%
100%
100%
100%
Approximately
7 operating
subsidiaries
Approximately
12 operating
subsidiaries
100%
100%
All of the Company’s domestic subsidiaries (subject to certain customary
exceptions) will be guarantors of the Notes
Foreign subsidiaries account for less than 4% of total revenues and EBITDA
Note:
The
senior
convertible
notes
due
2017
do
not
benefit
from
any
subsidiary
guarantees
Will be the issuer of the notes
Is the borrower under the ABL
revolver and issuer of the convertible
notes
New Breed Holding Co.
(DE)
3PD Holding, Inc. (DE)
Concert Group Logistics,
Inc. d/b/a XPO Global
Logistics (DE)
XPO Express, Inc.
(fka Express-1, Inc.) (MI)
Bounce Logistics, Inc.
(DE)
XPO Logistics Canada
Inc. (Canada, ON)
Pacer International, Inc.
(TN)
XPO NLM, Inc. (DE)
XPO Air Charter, LLC
(DE)
XPO Dedicated, LLC (DE)
XPO NLM, LLC (DE)
XPO AQ, Inc. (DE)
XPO Logistics, LLC (DE)
100%
100% |
 44
44
Skilled Management Team Driving
Performance-Based Culture
Brad Jacobs
Chairman & CEO
Unique track record of building well-run organizations that create dramatic
shareholder
value
–
started
four
highly
successful
companies
from
scratch
and
built each into a billion dollar or multi-billion dollar enterprise:
–
United Rentals (NYSE: URI): current market cap of $10.8 billion
–
United Waste Systems: sold for $2.5 billion in 1997
–
Hamilton Resources: annual revenue of $1 billion; Amerex Oil Associates:
annual gross contract volume of approximately $4.7 billion
Success generated by integrating large numbers of acquisitions and
cold-starts, focusing on organic growth, and delivering on a culture of
world-class service Vice President for United Rentals where he
successfully integrated over 200 acquisitions in the United States, Canada
and Mexico For United Waste Systems he worked with Mr. Jacobs to build an
integrated organization
of
86
collection
companies
and
119
facilities
in
25
states
Troy Cooper
COO |
 45
45
Skilled Management Team Driving
Performance-Based Culture (Cont’d)
Managing Director in the Transportation & Logistics investment banking group
with Stifel Nicolaus Weisel
Investment banker in the Transportation and Telecom groups at Alex. Brown &
Sons (now Deutsche Bank)
Has
completed
over
60
M&A
transactions
and
his
teams
have
raised
billions
of
dollars of capital for many of the industry's leading logistics companies
Senior transportation analyst covering air, rail, trucking and shipping at Goldman
Sachs
Analyst with UBS, and internal strategy manager with JPMorgan Chase, where
he worked with several of the bank's business units
Global advisor for The Sharma Group, focused on M&A opportunities
Scott Malat
Chief Strategy Officer
John Hardig
CFO
Vice
President
–
Corporate
Development
with
AutoNation,
Inc.,
where
he
previously
held
positions
as
Vice
President
–
Associate
General
Counsel and Senior Counsel for its Retail Automotive Group
Associate at the law firm of Skadden, Arps, Slate, Meagher & Flom LLP,
specializing in M&A and securities law
Gordon Devens
General Counsel |
 Skilled Management Team Driving
Performance-Based Culture (Cont’d)
Will join XPO upon the acquisition to lead the contract logistics operations
Transformed
New
Breed
from
a
regional
business
with
10
employees
into
the
preeminent U.S. provider of complex, industry-defining contract logistics
services Created outsized value by positioning New Breed as an innovator of
customized solutions for world-class companies
Louis DeJoy
CEO, New Breed
Responsible for New Breed’s overall financial management and human resource
function
Former Managing Partner for the Greensboro office of Ernst & Young
Over 35 years of experience with both private and public companies across
diverse industries
Rick Wimmer
CFO, New Breed
Global Controller with GE Energy Services, Inc., a $16 billion revenue division
of General Electric Company
Assistant Corporate Controller with The Home Depot, Inc., and Senior
Manager with PricewaterhouseCoopers
Kent Renner
Chief Accounting
Officer
46
46 |
 47
47
Skilled Management Team Driving
Performance-Based Culture (Cont’d)
Vice President of Network Profitability and Management for Pacer
International
Responsible for optimizing Pacer’s intermodal network
Led capacity flow and asset management, market-based pricing, and capacity
planning for rail relationships
More
than
30
years'
experience
in
leadership
positions
with
some
of
the
most
prominent expediters, serving the most demanding verticals in the
transportation industry
President and CEO of Active Aero, senior management positions with Boyd
Brothers Transportation, Caliber Logistics (now FedEx Supply Chain Services)
and Roberts Express (now FedEx Custom Critical)
Paul Smith
President, Intermodal
Chris Healy
President, Expedited
Founded 3PD and built it into an industry leader with an intense
commitment to innovation and service
Developed some of the last mile industry’s most groundbreaking mobile
technologies for real-time visibility and customer experience management
Led Home Depot’s multi-billion dollar delivery business and successfully
transitioned the operations from an in-house to an outsourced model
Karl Meyer
CEO, XPO Last Mile |
 48
48
Skilled Management Team Driving
Performance-Based Culture (Cont’d)
More than 25 years' experience in the transportation and logistics industry,
most
recently
as
Executive
Vice
President
of
Sales
and
Marketing
for
Pacer
International's Intermodal Business, acquired by XPO Logistics in 2014
Held senior positions in sales and marketing and national account
management with Union Pacific Railroad
Julie Luna
Chief Commercial
Officer |