Attached files
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| EX-99.2 - EX-99.2 - XPO Logistics, Inc. | d65496dex992.htm |
| 8-K - 8-K - XPO Logistics, Inc. | d65496d8k.htm |
 Exhibit
99.1 XPO Investor Presentation
and Transcript July 2015 |
 Disclaimers 2 | XPO Investor Presentation July 2015 Forward-Looking Statements
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 XPO Logistics, Inc.’s 2015 year-end run-rate performance targets, projected growth rates of industry sectors,
modes and geographies in which XPO operates, the expected impact of
the acquisitions of Norbert Dentressangle SA (ND) and Bridge Terminal Transport Services, Inc. (BTT), and the related financing, including the expected impact on XPO‘s results of
operations and EBITDA, the expected ability to integrate operations and technology
platforms and to cross-sell services, and the expected ability to retain acquired companies’ businesses and to grow XPO’s and the acquired companies’ businesses. 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 those discussed in XPO’s filings with the SEC and the following: economic conditions generally; competition; XPO’s ability to find suitable acquisition candidates and
execute its acquisition strategy; the expected impact of the Norbert Dentressangle and
BTT acquisitions, including the expected impact on XPO's results of operations; XPO’s ability to successfully complete the tender offer of Norbert Dentressangle’s publicly held shares; the ability to successfully integrate and realize
anticipated synergies and cost savings with respect to Norbert
Dentressangle, BTT and other acquired companies; XPO’s ability to raise debt and equity capital; XPO’s ability to attract and retain key employees to execute its growth strategy,
including retention of Norbert Dentressangle’s and BTT’s management teams;
litigation, including litigation related to alleged misclassification of independent contractors; the ability to develop and implement a suitable information technology system; the ability to maintain positive relationships with XPO’s, Norbert
Dentressangle’s and BTT’s networks of third-party transportation providers; the ability to retain XPO’s, Norbert Dentressangle’s, BTT’s and other acquired companies’ largest customers; rail
and other network changes; weather and other service disruptions;
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 will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on,
XPO or its businesses or operations. Forward-looking statements
set forth in this document speak only as of the date hereof, and XPO undertakes no 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. XPO Logistics France has obtained the visa of the French
Autorité des marchés financiers on the simplified tender offer launched by XPO Logistics France on the shares of ND at a price of
217.50 euros per share (the “Offer”). The information memorandum prepared by
XPO Logistics France received visa n° 15-290 of the AMF, dated June 23, 2015, further to the conformity decision rendered on the same date. Non-GAAP Financial Measures This presentation contains certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules,
such as pro forma adjusted earnings (loss) before interest, taxes,
depreciation and amortization (“pro forma adjusted EBITDA“) for the 12-month periods ended December 31, 2014 and March 31, 2015. As required by SEC rules, we provide
reconciliations of these measure to the most directly comparable measures under United
States generally accepted accounting principles ("GAAP"), which are set forth in the attachments to this presentation. We believe that pro forma adjusted EBITDA improves comparability from period to period by removing the impact of our capital
structure (interest expense from our outstanding debt), asset base
(depreciation and amortization) and tax consequences, in addition to reflecting anticipated pro forma adjustments relating to recent acquisitions as permitted by the instruments
governing our credit facility and senior notes. In addition to its use by management,
we believe that EBITDA is a measure widely used by securities analysts, investors and others to evaluate the financial performance of companies in our industry. Other companies may calculate EBITDA differently, and therefore our measure may not be
comparable to similarly titled measures of other companies. EBITDA
is not a measure of financial performance or liquidity under GAAP and should not be considered in isolation or as an alternative to net income, cash flows from operating activities and other measures determined in accordance with GAAP. Items excluded from EBITDA are significant and necessary components of the
operations of our business, and, therefore, EBITDA should only be
used as a supplemental measure of our operating performance. |
 A Global
Top Ten Transportation and Logistics Provider Many robust avenues for
growth One of the world’s largest contract logistics
companies #1 last mile logistics provider for heavy goods in North
America #1 manager of expedited shipments in North America
#2 global freight brokerage firm by net revenue
#3 provider of intermodal services in North America, and leader in cross-border
Mexico Largest owned fleet in Europe
Growing presence in global freight forwarding
Largest European platform for outsourced e-fulfillment
An increasing number of large customers want to consolidate
their 3PL relationships with multi-modal providers
3 Source: Industry publications and company filings | XPO Investor Presentation July 2015 |
 Highly
Efficient and Customer Focused Organization 4
863 locations globally across 27 countries
52,350 employees serving over 30,000 customers
Access to network of over 700,000 trucks in North America and Europe
129 million square feet of logistics facilities
Over 42,000 deliveries a day facilitated by XPO businesses in North
America Over 2 billion inventory units are tracked by XPO’s contract
logistics technology Operating worldwide under the single brand of XPO
Logistics Source: Company information
| XPO Investor Presentation July 2015 |
 XPO Is
Built to Serve Customers’ Growing Needs 5
Sector Market Size ($ billions) Projected Growth (x GDP) Contract Logistics (North America and Europe) $120 2 to 3 times Last Mile (North America) $13 5 to 6 times Truck Brokerage (North America) $50 2 to 3 times Road Transport (Europe) $85 ~ 2 times Expedite (North America) $5 3 to 4 times Intermodal Rail and Drayage (North America) $22 3 to 5 times Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc.,
Bureau of Economic Analysis, US Department of Commerce, A.T. Kearney, Transport
Intelligence and management estimates | XPO Investor Presentation
July 2015 XPO holds leadership positions in each of these fast-growing
sectors |
 Contract
Logistics: Long-term, Sticky Relationships 6
Significant barriers to entry
Largely non-commoditized
High value-add component
– In Europe: Full range of retail logistics, and specialized services for cold chain,
chemicals and e-commerce
– In North America: Deep relationships in technology, wireless, e-commerce, aerospace, medical equipment, and select areas of manufacturing Low cyclicality – Average contractual agreement is five years – Average contract renewal rate of over 97% | XPO Investor Presentation July 2015 Source: Company information |
 Major
Player in E-Commerce Leading e-commerce capabilities in
high-growth e-fulfillment, reverse logistics and last mile
–
Worldwide e-commerce is projected to grow at a rate of 13% to 21%
through at least 2018
North American market leader in last mile for heavy goods, with approximately
5% market share in an estimated $13 billion North American market
–
Untapped last mile opportunity in Europe
European market leader with approximately 5% market share in an estimated
€5 billion e-fulfillment market
– €242 million revenue in e-commerce logistics in 2014 – 31% year-over-year organic growth in 2014 7 Sources: Company and industry information | XPO Investor Presentation July 2015 |
 8 | XPO Company Overview and Capabilities Blue Chip Customers Any trademarks or logos used in this presentation are the property of their respective owners |
 9 | XPO Company Overview and Capabilities Blue Chip Customers Any trademarks or logos used in this presentation are the property of their respective owners |
 High
Productivity through Technology 10
IT team of about 1,000 professionals
Over 200 IT projects launching in 2015
Proprietary technology delivers world-class service
– Sophisticated contract logistics solutions for complex supply chain requirements – Rigorous inventory management technology – Freight Optimizer for cutting-edge pricing and load-covering – Real-time customer experience management solutions – Online bidding software – Powerful suite of Rail Optimizer tools Global IT budget of $225 million this year | XPO Investor Presentation July 2015 |
 Disciplined Selection Process from M&A Pipeline
11 Acquisition prospects must meet strategic criteria Provide services our customers highly value Highly scalable Technology-oriented, with a willingness to embrace additional technology Well-run operations that can be tightly integrated into XPO’s network Experienced management and enthusiastic employees Focus on world-class customer service that mirrors XPO’s culture | XPO Investor Presentation July 2015 |
 12 | XPO Investor Presentation July 2015 $1.7 billion in cash, in addition to an undrawn $415 million asset-backed loan
Positive and accelerating free cash flow
Low maintenance capex, with total net capex
of about 2% of revenue
Global access to the highest caliber institutional investors
Raised total of $2 billion of equity in two private offerings
– September 2014: three leading global investors endorsed XPO’s growth strategy – May 2015: same three investors expanded their positions, together with new institutional investors Rock Solid Financial Position |
 $180 $191 $214 $279 $348 $431 $554 $702 $871 $1,315 $1,783 $2,357 $2,777 $9,205 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 PF, March 2015 First Three Years of XPO’s Growth Strategy 13 TTM Revenue ($ millions) 2012 2013 2014 2015 | XPO Investor Presentation July 2015 |
 CEO
Bradley S. Jacobs Prior to XPO, founded and led four highly successful
companies, including two world-class publicly-traded
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 to ~$1 billion Amerex Oil Associates: Built one of
world’s largest oil brokerage firms United Rentals stock
outperformed S&P 500 by 2.2x from 1997 to 2007 United Waste stock
outperformed S&P 500 by 5.6x from 1992 to 1997 14
| XPO Investor Presentation July 2015 |
 Highly
Skilled Management Team 15
Ashfaque Chowdhury CIO, Contract Logistics, Americas Troy Cooper Chief Operating Officer Julie Luna Chief Commercial Officer John Hardig Chief Financial Officer Louis DeJoy CEO, Contract Logistics, Americas Gordon Devens General Counsel New Breed United Rentals, United Waste Pacer, Union Pacific AutoNation, Skadden Arps New Breed Oakleaf Waste Management Partial list Bill Fraine COO, Contract Logistics, Americas New Breed, FedEx Luis Angel Gómez Managing Director, Transport, Europe Norbert Dentressangle, Christian Salveson Stifel Nicolaus, Alex. Brown | XPO Investor Presentation July 2015 Mario Harik Chief Information Officer Angela Kirkby Senior Vice President, Human Resources Belk, Bank of America, Accenture |
 Highly
Skilled Management Team (Cont’d) 16
Will O’Shea Chief Sales and Marketing Officer, Last Mile Ludovic Oster Senior Vice President, Human Resources, Europe Greg Ritter Senior Vice President, Strategic Accounts Michael O’Donnell Executive VP, Expedite Managed Transportation Malcolm Wilson Managing Director, Logistics, Europe 3PD, Ryder, Cardinal Logistics Norbert Dentressangle, Delphi, Valeo Knight Transportation, C.H. Robinson Landstar, Penske, TNT Norbert Dentressangle, NYK Logistics Hervé Montjotin Chief Executive Officer, Europe Scott Malat Chief Strategy Officer Karl Meyer Chief Executive Officer, Last Mile Dominick Muzi President, Global Forwarding Norbert Dentressangle 3PD, Home Depot Priority Solutions, AIT Worldwide Goldman Sachs, UBS, JPMorgan Chase Paul Smith President, Intermodal Pacer | XPO Investor Presentation July 2015 Partial list |
 First
Quarter 2015 Financial Results |
 18 Pro Forma Adjusted EBITDA (1)(2) Pro Forma Revenue (1) Combined and Pro Forma Historical Financials ($ millions) ($ millions) $3,130 $9,205 2014 LTM 3/31/15 $177 $585 2014 LTM 3/31/15 (1) LTM figures are pro forma for acquisition of ND, 2014 figures are pro forma for all previously completed acquisitions ex-ND
(2) For the reconciliation of pro forma adjusted EBITDA to the net loss available to our common shareholders, refer to the Appendix
| XPO Investor Presentation July 2015 |
 Common Shares 107.7 million (1) Preferred Shares 10.5 million Warrants 10.5 million (9.0 million dilutive) (2) Convertible Senior Notes 4.4 million shares (3) Stock Options and RSUs 3.5 million shares dilutive (4) Fully Diluted Shares Outstanding 135.0 million shares Fully Diluted Market Capitalization $6,640 million (5) Pro-Forma Total Debt $3,294 million (6) Pro-Forma Net Debt $2,322 million (6) Net Debt-to-Cap 26% 19 Incentivized XPO Management Owns ~16% of Company Common Stock Equivalent (as of 5/29/2015) | XPO Investor Presentation July 2015 (1) Based on SEC beneficial ownership calculation as of March 31, 2015; includes new common shares issued in the May 2015 PIPE transaction,
including assumed conversion of all preferred shares into
common (2)
Dilutive effect of warrants calculated using treasury method (using XPO closing price of
$49.16 on May 29, 2015) (3)
Assumes conversion in full of $72 million in aggregate principal amount of 4.50%
convertible senior notes due 2017 outstanding at March 31, 2015
(4) Dilutive effect of RSUs and stock options outstanding at March 31, 2015, calculated using treasury method (using XPO closing price of $49.16 on May
29, 2015)
(5) Assumes XPO closing price of $49.16 on May 29, 2015 (6) Excludes $63 million carrying value of deep-in-the-money convertible |
 2015
Year-End Run Rate Targets Financial targets raised in light of M&A
announcements An annual revenue run rate of at least $9.5 billion by
December 31, 2015 An annual EBITDA run rate of at least $625 million by
December 31, 2015 XPO intends to update its long-term financial targets
with the announcement of second quarter results
20 | XPO Investor Presentation July 2015 |
 XPO’s Growth Plan Is Still in Early Innings
Leading positions in fastest-growing areas of transportation and
logistics Compelling value proposition as a multi-modal,
single-source provider of end-to-end supply change
solutions Significant potential to grow European platform
High-growth positions in contract logistics and e-commerce
Additional strategic acquisitions
Rock solid financial position
Culture driven by top talent for customer service, transportation and logistics
operations, P&L performance and M&A integration
As large as we are, we have captured less than 1% of
the opportunity represented by customer spend
21 | XPO Investor Presentation July 2015 |
 Acquired Norbert Dentressangle (ND) June 8, 2015 |
 Expansive Platform for Growth
23 Contract Logistics 2014 Revenue €2.6 billion 27,800 employees Leading outsourced European e-fulfillment platform Also provides reverse logistics, cold chain, chemicals handling, value-added warehousing Global Forwarding 2014 Revenue €0.2 billion 650 employees 54 offices Transportation 2014 Revenue €2.3 billion 13,900 employees Balanced non-asset and asset-based platform Largest owned truck fleet in Europe, including over €250 million of dedicated carriage Unique service capabilities from lane density covering approximately 90% of the EU’s GDP-producing regions (2) June 8 acquisition of Norbert Dentressangle added approximately €5.1 billion ($5.5 billion) of annual revenue as categorized below (1) (1) 2014 revenue (2) Management estimate | XPO Investor Presentation July 2015 Over €1 billion of freight brokerage revenue |
 Strategic Rationale for Acquisition
24 ND’s capabilities closely mirrored XPO’s North American offering – XPO gained global scale in three of its core services: contract logistics, freight brokerage and global freight forwarding Companies shared an asset-light model with low capital intensity: total net capex of
about 2% of revenue Combined blue chip customer base includes many of the world’s largest multinational companies Timing capitalized on start of eurozone economic rebound and strong US dollar Opened the door to significant future acquisition opportunities for XPO in highly
fragmented eurozone | XPO Investor Presentation July 2015 |
 Significant Synergy Potential
25 Massive cross selling potential to serve global clients as a single-source provider
Complementary contract logistics services in the U.S.
Opportunity to grow European freight brokerage business
Combined global forwarding volume allows XPO to buy transportation more
effectively Cross Selling: XPO Service Offerings Used by Top 25 Customers,
FY2014 4 Customers
8 Customers 5 Customers 5 Customers 3 Customers 1 Service 2 Services 3 Services 4 Services 5 Services | XPO Investor Presentation July 2015 |
 XPO
Gained Leadership in European E-Fulfillment €242 million revenue
in e-commerce logistics in 2014 –
31% organic growth compared to 2013
– Business focused in the UK, Spain and France Strong growth potential with approximately 5% market share in estimated €5 billion European e-fulfillment market – Expected to increase at 9% to 10% CAGR over the next several years Increasingly complex supply chains and customer requirements demand scale, which XPO has and few others can match – Serves both B2B and B2C customers Leading capabilities in high-growth reverse logistics Favorable historical performance and future growth opportunities 26 Source: Company information | XPO Investor Presentation July 2015 |
 Preeminent European Transportation Network
36-year history as global partner to blue chip customers
Combines non-asset, asset-light and asset-based operations
Rapid growth in freight brokerage, asset-light palletized service and dedicated
carriage
Unique service capabilities from lane density covering approximately 90% of the
EU’s GDP-producing regions
Ground transportation in primary markets of the UK, Spain and France is an
estimated €95 billion market
27 Source: Company information | XPO Investor Presentation July 2015 |
 Combination is a Growth Accelerator
28 Deploy cutting-edge technology to turbocharge growth in freight brokerage – Pricing and truck matching algorithms to accelerate growth and margins – Combined annual technology spend is among the highest in the industry Combine leading businesses in fast growth e-commerce – Top outsourced e-fulfillment provider in Europe, handling over 200 million units
per year – Leading capabilities in reverse logistics – Expand leadership position in last mile logistics for heavy goods to Europe Sharing best practices and capabilities across new global platform | XPO Investor Presentation July 2015 |
 Diversified portfolio of blue chip
customers Largest client under 4% of revenue 97% customer renewal rate in logistics Customer verticals include retail, food and beverage, manufacturing, chemicals, agriculture, e-commerce and high tech Loyal European Customer Base in Attractive Verticals 29 Highlights Top Customers Recent Wins Source: Company information | XPO Investor Presentation July 2015 |
 Transaction Overview 30 Purchase Price Enterprise Value: Approximately €3.24 billion ($3.53 billion) Transaction
Multiple: Approximately 9 times consensus 2015E EBITDA Consideration On June 8, 2015, ND’s founder and family sold their 67% ownership of the company to XPO
at €217.50 per share all cash
On June 25, 2015, following receipt of applicable regulatory clearance, XPO launched an all-cash tender offer
for minority shareholders at the same price ND stock is publicly listed
on Euronext Paris and London (Ticker: GND) Transaction was unanimously
approved by the boards of XPO and ND Financing Sources
$1.26 billion equity raise with current and new global institutional investors; a
private placement notes offering of approximately $2.16 billion
U.S.-dollar equivalent, including $1.6 billion U.S. dollar-
denominated senior notes due in 2022 and €500 million euro-denominated fixed
rate senior notes due 2021; and available cash on hand
Source: Consensus per Thompson
| XPO Investor Presentation July 2015 |
 Acquired Bridge Terminal Transport (BTT)
June 1, 2015 |
 Acquired
Bridge Terminal Transport (BTT) 32
One of the largest asset-light drayage providers in the United States
– Approximately 1,800 customers, including many longstanding, blue chip customer relationships Revenue of $232 million and EBITDA of $12.4 million for the trailing 12 months
ended March 31, 2015
Purchase price was $100 million, excluding any working capital adjustments, with
no assumption of debt
– Represents a consideration of 8.1 times EBITDA of $12.4 million Operations are being rebranded and integrated as XPO Logistics | XPO Investor Presentation July 2015 |
 Strategic Rationale and Synergies
33 XPO gained 1,300 independent owner operators and 28 terminals – Increased XPO’s total capacity under contract to its drayage, last mile and
expedite businesses to more than 6,200 independent owner operators
– Strengthened XPO’s drayage footprint on the East Coast XPO can take on more freight in tight markets when drayage capacity is scarce – More cost effective and more reliable to use contracted owner operators, rather than unaffiliated third-party carriers Well-run operations can be seamlessly integrated into XPO’s network | XPO Investor Presentation July 2015 |
 Supplemental Materials |
 XPO
Business Glossary Integrated services
Contract Logistics: An asset-light, technology-enabled business characterized by long-term contractual relationships with high renewal rates, low cyclicality, significant barriers to entry and a
high-value-add component that minimizes commoditization. Contracts are
typically structured as either fixed-variable, cost-plus or
gain-share. XPO services include highly engineered solutions,
e-fulfillment, reverse logistics, packaging, factory support, aftermarket support,
warehousing and distribution for customers in aerospace, manufacturing,
retail, life sciences, chemicals, food and beverage, and cold chain.
Expedite: A non-asset business that facilitates time-critical,
high-value or high-security
shipments, usually on very short notice. Revenue is either contractual or
transactional, primarily driven by unforeseen supply chain disruptions
or just-in-time inventory demand for raw materials, parts or
goods. XPO provides three types of expedite service: ground transportation via a network of independent contract carriers; air charter transportation facilitated by proprietary, web-based
technology that solicits bids and assigns loads to aircraft; and a managed
transportation network that is the largest web-based expedite
management technology in North America. Freight Brokerage: A variable cost business that facilitates the trucking of freight by procuring carriers through the use of proprietary technology. Freight brokerage net revenue is the spread
between the price to the shipper and the cost of purchased transportation. In North
America, XPO has a non-asset freight brokerage business, with a
network of 32,000 independent carriers. In Europe, XPO generates over
€1 billion in freight brokerage revenue annually, with capacity
provided by an asset-light mix of owned fleet and independent carriers.
35 | XPO Investor Presentation July 2015 |
 XPO
Business Glossary Integrated services, continued
Global Forwarding: A non-asset business that facilitates freight shipments by ground, air and
ocean. Shipments may have origins and destinations within North America, to or from
North America, or between foreign locations. Services are provided
through a network of market experts who provide local oversight in
thousands of key trade areas worldwide. XPO’s global forwarding
service can arrange shipments with no restrictions as to size, weight or mode, and is
OTI and NVOCC licensed.
Intermodal: An asset-light business that facilitates the movement of long-haul, containerized
freight by rail, often with a drayage (trucking) component at either end. Intermodal
is a variable cost
business, with revenue generated by a mix of contractual and spot market transactions. Net revenue equates to the spread between the price to the shipper and the cost of purchasing
rail and truck transportation. Two factors are driving growth in intermodal in North
America: rail transportation is less expensive and more fuel efficient
per mile than long-haul trucking, and rail is a key mode of
transportation in and out of Mexico, where the manufacturing base is booming due to a trend toward near-shoring. Last Mile: A non-asset
business that facilitates the delivery of goods to their final destination, most often to consumer households. XPO specializes in two areas of last mile service: arranging
the delivery and installation of heavy goods such as appliances, furniture and
electronics, often with a white glove component; and providing logistics
solutions to retailers and distributors to support their e-commerce
supply chains and omni-channel distribution strategies. Capacity is
sourced from a network of independent contract carriers and technicians.
36 | XPO Investor Presentation July 2015 |
 37 PF LTM Adjusted EBITDA Reconciliation | XPO Investor Presentation July 2015 |
 38 Historical PF Adjusted EBITDA Reconciliation | XPO Investor Presentation July 2015 Note: Excludes acquisition of ND |