Exhibit 99.1
Management Presentation
February 2014
Disclaimer
Additional Information
In connection with the pending acquisition by XPO Logistics, Inc. (“XPO”) of Pacer International, Inc. (“Pacer”), XPO has filed with the U.S. Securities and Exchange Commission (the
“SEC”) a Registration Statement on Form S-4 that includes a Proxy Statement of Pacer and a Prospectus of XPO, as well as other relevant documents concerning the proposed transaction (referred to herein as the “Merger”). XPO AND PACER SHAREHOLDERS ARE URGED TO READ THE PROXY STATEMENT / PROSPECTUS REGARDING THE MERGER AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE MERGER, PACER AND XPO. Investors and shareholders may obtain copies of these documents (when they are available) and other documents filed with the SEC at the SEC’s web site at www.sec.gov. Investors and shareholders may also obtain, free of charge, copies of these documents filed with the SEC by XPO through the investor relations page on XPO’s corporate website at www.xpocorporate.com or by contacting XPO Logistics, Inc. at Five Greenwich Office Park, Greenwich, CT 06831, Attention: Investor Relations. In addition, investors and shareholders may also obtain, free of charge, copies of these documents filed with the SEC by Pacer through the investor relations page on Pacer’s corporate website at www.pacer.com or by contacting Pacer International, Inc. at 6805 Perimeter Drive , Dublin, OH 43016, Attention: Investor Relations.
Participants in Solicitation
XPO, Pacer and their respective executive officers and directors may be deemed to be participants in the solicitation of proxies from Pacer shareholders with respect to the Merger.
Information about XPO’s executive officers and directors is available in XPO’s proxy statement on Schedule 14A for its 2013 annual meeting of shareholders, filed with the SEC on April 27, 2013. Information about (1) Pacer’s executive officers and directors is set forth in Pacer’s Annual Report on Form 10-K filed with the SEC on February 8, 2013 and (2) their ownership of the Pacer shares is set forth in Pacer’s proxy statement on Schedule 14A filed with the SEC on March 13, 2013. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of XPO, Pacer and their respective executive officers and directors in the Merger by reading the Proxy Statement/Prospectus regarding the merger. Copies of these documents may be obtained, free of charge, as described above. This document shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Forward Looking Statements
This document 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’s full year 2014 and full year 2017 financial targets. 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 XPO’s and Pacer’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 acquisition of Pacer, including the expected impact on XPO’s results of operations; the ability to obtain the requisite regulatory approvals, Pacer shareholder approval and the satisfaction of other conditions to consummation of the transaction; the ability to realize anticipated synergies and cost savings; 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 Pacer’s management team; 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 and Pacer’s networks of third-party transportation providers; the ability to retain XPO’s and Pacer’s largest customers; XPO’s ability to successfully integrate Pacer and other acquired businesses; and governmental regulation. All forward-looking statements set forth in this document 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, Pacer or their respective businesses or operations. Forward-looking statements set forth in this document speak only as of the date hereof, and neither XPO nor Pacer 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. 2
One of the Largest 3PLs in North America
We facilitate over 20,000 deliveries per day
4th largest freight brokerage firm and Top 50 logistics company Largest manager of expedited shipments #1 heavy goods, white glove provider of last-mile logistics International and domestic freight forwarder Growing presence in managed transportation and LTL
Will be #3 provider of intermodal services and largest provider of cross-border Mexico intermodal following Pacer acquisition
Sources for rankings: Transport Topics, Journal of Commerce and company data
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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 on track or ahead of plan with all three legs of our growth strategy
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Precise Execution of Growth Plan
Completed 10 strategic acquisitions and established 23 cold-starts in two 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
Stratified customers, assigned a single point of contact to each
Disciplined focus on operational excellence
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Massive Commitment to Shipper Satisfaction
Built integrated network across North America in two years
Over 2,200 employees at 94 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 24,000 active, vetted carriers
Approximately 400 additional trucks under exclusive contract
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Planned Acquisition of Pacer International
Compelling reasons for the transaction
Intermodal is one of the fastest-growing areas of transportation logistics in North America
Pacer (NASDAQ: PACR) is the third largest provider of intermodal services
Pacer is the largest provider of intermodal services in the high-growth cross-border U.S.-Mexico marketplace
The combination will create company-wide cross-selling opportunities in every area of XPO service
Sources: Transport Topics and Pacer International company data
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Strong Entry into Intermodal
With Pacer acquisition, XPO will gain instant scale and expertise in intermodal
Pacer manages approximately 10% of all domestic intermodal loads in North America
Trailing 12 months revenue of approximately $1.0 billion through December 2013
Approximately 950 employees at 30 locations serving over 3,000 customers
Source: Pacer International company data
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Major Intermodal Market Opportunity
$15 billion intermodal sector in North America
One of the fastest-growing areas of transportation logistics
Enables shippers to lower transportation costs for freight traveling 600 miles or more
– Rail can be more fuel-efficient than truckload
– Intermodal can lower shipper’s cost by up to 20%
Sources: SJ Consulting Group, Inc., FTR Associates and Pacer International company data
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High-Growth Cross-Border Mexico Sector
Mexico offers a highly attractive manufacturing environment
– Competitively priced labor force
– Faster speed-to-market than overseas locales
– Can be more cost effective than cross-border truckload
Large potential universe for conversion to intermodal: an estimated 2.8 million trucks move cross-border each year
Pacer has industry-leading cross-border expertise
Sources: AlixPartners and Pacer International company data
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Immediate Synergies of Service Offerings
Combination will create company-wide cross-selling opportunities
– XPO will market intermodal to our 9,500 customers
– Pacer’s intermodal customers will have access to XPO’s full range of services
– Combined sales force will use strongest single point of contact for each customer relationship
Will enhance XPO’s value proposition as a large, single-source logistics provider with deep capacity
Source: XPO Logistics company data
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Pacer Transaction Highlights
Terms Purchase price of $9.00 per share: $6.00 in cash, and
$3.00 in stock subject to a price collar
Enterprise value of approximately $296 million represents
11.5 times Pacer’s 2013 consensus EBITDA of $25.8 million,
and 8.9 times 2014 consensus EBITDA of $33.2 million
Financing XPO intends to fund cash portion of transaction consideration
with proceeds of recent common stock offering
Closing Expected April 2014
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Acquired 3PD in August 2013
Largest provider of heavy goods, last-mile logistics in North America
High value, high margin business serves a rapidly growing end market driven by growth in e-commerce and outsourcing
Strengthens XPO’s position with shippers as a large, single-source provider
Industry-leading customer experience IT can be used by XPO
Acquired Optima Service Solutions in November 2013
– Highly scalable supplier to 3PD, leader in last-mile delivery of large appliances and electronics
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Acquired NLM in December 2013
Largest web-based expeditor in North America
Manages approximately $500 million of annual gross transportation spend and facilitates over 450,000 loads a year
– Proprietary online auction system allows carriers to bid on loads that are then awarded electronically
Adds transportation management capabilities
Capitalizes on trend toward just-in-time inventories
Makes XPO the largest manager of expedited shipments in North America
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Significant Growth Embedded in XPO’s Model
Strategic accounts: market to large shippers
Cold-starts: expand footprint in markets with best access to sales talent
Scale and productivity: recruit sales reps and provide state-of-the-art training and IT
Service offering: build leadership positions in the fastest-growing areas of logistics
M&A program: focus on the top 100 pipeline prospects
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Leading Positions in High-Growth Sectors
Market Projected
Size Growth
Sector ($ billions) (x GDP) Growth Drivers
Truck brokerage $50 2-3 times Outsourcing and technology
Long-haul rail efficiencies and
Intermodal $15 3-5 times near-sourcing of
manufacturing in Mexico
Heavy goods, $13 5-6 times Outsourcing and e-commerce
last-mile
Sources: Armstrong & Associates, Norbridge, Inc., EVE Partners LLC, FTR Associates, SJ Consulting Group, Inc.,
Bureau of Economic Analysis, US Department of Commerce
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Focused Sales and Marketing Effort
Differentiate XPO by providing a complete suite of services
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
Capture more of the $32 billion less-than-truckload (LTL) opportunity
Source: SJ Consulting Group, Inc.
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Increasing Productivity through Technology
One common platform for freight brokerage rolled out in all acquired companies
Proprietary freight optimizer tools for pricing and load-covering put in place in 2012
Highly scalable load execution and tendering via automated load-to-carrier matching
IT budget of $36 million for 2014 (1)
(1) |
| $21 million of operating expense and $15 million of capital expenditures; excludes IT budget for Pacer |
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Growth through Cold-starts
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 23 cold-starts
– 10 in freight brokerage, 12 in freight forwarding, one in expedited
– Brokerage cold-starts on a combined annual revenue run rate of approximately $150 million
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CEO Bradley S. Jacobs
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
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Highly Skilled Management Team Partial list
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
Troy Cooper United Rentals, United Waste
Senior Vice President, Operations and Finance
Gordon Devens
General Counsel AutoNation, Skadden Arps
Mario Harik
Chief Information Officer Oakleaf Waste Management
Dave Rowe
Chief Technology Officer Echo Global Logistics
Karl Meyer
Chief Executive Officer, 3PD division 3PD, Inc., Home Depot
Bud Workmon Cardinal Logistics
President, 3PD division
Tom Connolly EVE Partners
Senior Vice President, Acquisitions
Lou Amo Electrolux, Union Pacific, Odyssey Logistics
Vice President, Carrier Procurement
The full management team can be found on www.xpologistics.com
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Deep Bench of Industry Experience Partial list
Chris Healy
President, Expedited Transportation Boyd Brothers, Caliber Logistics, Roberts Express
Will O’Shea Ryder Integrated Logistics, Cardinal Logistics
Chief Sales and Marketing Officer, 3PD division
Gregory Ritter
Senior Vice President, Strategic Accounts Knight, C.H. Robinson
Jake Schnell
Sr. Operational Process and Integration Manager C.H. Robinson
Jenna Sargent OHL, Schneider Logistics
Regional Sales and Operation Manager
Marie Fields C.H. Robinson, American Backhaulers
Director of Training
Kip Douglass Crowley Maritime, Coyote
Regional Vice President
Drew Wilkerson C.H. Robinson
Branch President, Charlotte
Doug George AFN, Ryder Integrated Logistics
Branch President, Dallas
Evan Laskaris AFN, CEVA Logistics, Menlo
Director of Operations, Chicago
Andrew Armstrong Livingston International, Echo Global Logistics
Sales and Operations Manager
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First 24 Months of New Growth Strategy
Revenue ($ millions)
28% quarter-over-quarter CACR $257
$194
$137
$109 $114
$71
$45 $55
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2012 2013
Source: Company data
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Transformational Impact of Pacer
XPO Now
94 locations
Over 24,000 active,
vetted carriers
20,000+ deliveries
a day
With Pacer
124 locations
Access to 60,000 miles
Locations of network rail routes
XPO
3PD
Pacer 22,000 freight
Interstate highways movements a day
Source for pro forma with acquisition of Pacer: Company data
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Key Financial Statistics
Revenue Trajectory
2011 revenue of $177 million
Currently at more than $1 billion annual revenue run rate
Expect to be at approximately $2 billion run rate with Pacer
Growth by Business Unit, 4Q 2013 vs. 2012
Freight brokerage: revenue up 202%, gross margin up 790 bps Expedited: revenue up 19%, gross margin up 100 bps Freight forwarding: revenue flat, gross margin up 80 bps
Source: Company data
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Financial Targets
Full year 2014
Annual revenue run rate of at least $2.75 billion by December 31
Annual EBITDA run rate of at least $100 million by December 31
At least $400 million of acquired historical annual revenue, excluding the Pacer acquisition
Full year 2017
Revenue of approximately $7.5 billion
EBITDA of approximately $425 million
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Incentivized XPO Management
Equity ownership aligns management team with shareholders
Management and directors own approx. 30% of the company (1)
Common Stock Equivalent Capitalization as of 2/21/14
Common Shares 48.7 million
Preferred Shares 10.5 million
Warrants (Strike Price $7 per share) 10.7 million (7.9 million dilutive) (2)
Convertible Senior Notes 7.3 million shares (3)
Stock Options and RSUs 1.7 million shares dilutive (4)
Fully Diluted Shares Outstanding 76.3 million shares (5)
(1) |
| Based on SEC beneficial ownership calculation as of February 21, 2014 |
(2) Dilutive effect of warrants calculated using treasury method (market close price of $27.37 as of 2/21/14); total warrant proceeds of $74.8 million
(3) Assumes conversion in full of $120.6 million in aggregate principal amount of outstanding 4.50% convertible senior notes due 2017
(4) As of February 21, 2014, dilutive effect of outstanding RSUs and stock options calculated using treasury method (market close price of $27.37 as
of 2/21/14)
(5) |
| Excludes the effect of the shares issued as consideration for Pacer |
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Clear Path for Significant Value Creation
Assembled top management talent with a skill set uniquely suited to our growth strategy
Built a $177 million company into the 4th largest freight broker in North America in two years
Established leading positions in some of the fastest-growing areas of logistics: last-mile, expedite, and soon intermodal
Scaled up to over 20,000 deliveries a day for 9,500+ customers
Focused on making XPO an irreplaceable supply chain partner
We’re making the best use of our resources to create long-term shareholder value
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