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Exhibit 99.1
Investor Presentation
November 2014
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Forward-Looking Statements Disclaimer
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 the company’s full year 2014 and 2017 financial targets, projected cost synergies from acquisitions and projected growth rates in industry sectors. 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 acquisitions, including the expected impact on XPO’s results of operations; the ability to realize anticipated synergies and cost savings with respect to 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 management teams; litigation, including litigation related to alleged misclassification of independent contractors; the ability to develop and implement suitable information technology systems; the ability to maintain positive relationships with XPO’s networks of third-party transportation providers; the ability to retain XPO’s and acquired companies’ largest customers; XPO’s ability to successfully integrate New Breed, ACL and other acquired businesses; rail and other network changes; weather and other service disruptions; 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 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.
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One of the Largest 3PLs in North America
We facilitate over 33,000 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
Leading provider of technology-enabled contract logistics
Growing presence in freight forwarding, LTL and managed
transportation
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 committed to providing world class service to customers as the industry’s most innovative and comprehensive multi-modal logistics provider
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$700 Million Strategic Investment in XPO
Three global institutions invested a total of $700 million of equity
to further XPO’s growth strategy
– PSP Investments, GIC of Singapore and Ontario Teachers’
Pension Plan
– Transaction completed September 17, 2014
Strong endorsement of XPO’s plan for value creation
Capital primarily will be used to capitalize on acquisition pipeline
2017 financial targets raised in light of the investment to
$9 billion of revenue and $575 million of EBITDA
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Precise Execution of Growth Plan
Completed 13 strategic acquisitions and established
23 cold-starts in approximately 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
Stratified customers, assigned a single point of contact to each
Created a culture of passionate on-time performance
Disciplined focus on operational excellence
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Strong Commitment to Shipper Satisfaction
Integrated network with cross-company visibility
199 locations in the U.S., Canada, Mexico, Asia and Europe
Approximately 10,700 employees
More than 4,000 owner-operator trucks under contract for
drayage, expedited and last mile subsidiaries
Relationships with an additional 28,000 vetted carriers
representing more than 667,000 trucks
Access to 60,000 miles of network rail routes
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Significant Growth Embedded in XPO’s Model
Strategic accounts: market multiple services 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 information technology
Market demand: build leadership positions in the fastest-
growing areas of logistics
Multi-modal: become the logistics partner of choice by offering
the most compelling range of transportation solutions
M&A program: focus on the top 100 pipeline prospects
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Secular Trends Driving Industry Growth
Growth in e-commerce retailing
Outsourcing of logistics services and capacity
Conversion from over-the-road to intermodal rail
Near-shoring of manufacturing in Mexico
Just-in-time lean production
Driver shortage
Automation of the transportation logistics process
We have positioned XPO’s service offering
to capitalize on each of these trends
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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,
last-mile $13 5-6 times Outsourcing and e-commerce
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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Major Coverage: U.S., Mexico and Canada
Serving over
15,000 customers
Manufacturing
Industrial
Retail, E-commerce
Technology
Aerospace
Commercial
Life Sciences
Governmental
Source: Company data
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Acquisition of New Breed Logistics
Compelling reasons for the transaction
Transformational for XPO’s scale and value proposition
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Combined company of approximately 200 locations
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Most differentiated supply chain offering for end-to-end solutions
Capitalizes on trend toward outsourcing reverse logistics,
transportation management, lean manufacturing and aftermarket
support, and other contract logistics services
Significant cross-selling opportunities with XPO strategic
accounts, New Breed customers and their vendors
Source: Company data
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XPO Gains a Preeminent Platform for Growth
Leads the most desirable sector of contract logistics
Technology-enabled solutions for blue chip customers
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Very stable relationships with low cyclicality
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Top 10 customers have utilized New Breed for an average of
10 years
Focuses on industries with strong potential for outsourcing
contract logistics
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Technology, telecom, e-commerce, aerospace and defense,
medical equipment and select areas of manufacturing
Sources: Company data
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New Breed’s Attractive Financial Model
16% revenue CAGR for the past 10 years
38% return on invested capital (FY 2013) (1)
Approximately 99% contractual revenue renewal rate over the
past three years
Low capex requirements (4.2% of revenue in FY 2013) and
largely devoted to IT development
(1) Return on invested capital equals ongoing operations EBIT divided by the sum of net working capital and net PP&E Source: Company data
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Industry-defining Technology
Integration of proprietary IT will create strong differentiation
Combination of two robust managed transportation solutions
– XPO NLM is the largest web-based manager of expedited shipments in North America
– New Breed’s transportation management system uses sophisticated tools for dynamic freight optimization, routing guide management and carrier selection
– New Breed acquisition has doubled XPO’s IT workforce to more than 600
Sources: Company data
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Details of the New Breed Transaction
$615 million cash purchase price
Adds approximately $597 million of revenue (trailing 12 months ended June 30, 2014)
Multiple of approximately 8.0 times trailing 12 months adjusted EBITDA
Transaction completed September 2, 2014
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$500 Million Senior Notes Issued August 2014
Proceeds used to finance the acquisition of New Breed
7.875% senior notes maturing September 1, 2019
– Callable at XPO’s option, September 2016
High yield market could present attractive avenue for additional growth capital
Additive to $415 million accounts receivable facility
Long-term leverage target: 3 to 4 times EBITDA
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Acquired ACL in July 2014
Compelling reasons for the transaction
Non-asset, multi-regional, last mile logistics provider
Moves high volumes of e-commerce purchases for mega-companies
Adds approximately 160 employees, 14 locations and contract carriers with 650 trucks to XPO
Complementary delivery schedules allow XPO Last Mile to leverage combined capacity
Pipeline active for last mile acquisitions
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Details of the ACL Transaction
$36.5 million cash purchase price
Adds approximately $63 million of revenue (trailing 12 months ended June 30, 2014)
Multiple of approximately 5.9 times trailing 12 months adjusted EBITDA
Transaction completed July 2014
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Acquired Pacer in March 2014
Gained instant scale in North American intermodal
– Third largest provider of intermodal services
– #1 provider of cross-border Mexico intermodal, with
30 years’ experience
– Access to 60,000 miles of network rail routes
– Decades-deep relationships with the railroads
Added $980 million of revenue (FY 2013), 31 locations and approximately 800 employees
Sources: SJ Consulting Group, Inc., Bureau of Economic Analysis, US Department of Commerce and company data
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Major Intermodal Market Opportunity
$15 billion sector in North America
Growing at three to five times GDP
One of the fastest-growing areas of transportation logistics
Enables shippers to 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%
Sources: SJ Consulting Group, Inc., FTR Associates and company data
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High-Growth Cross-Border Mexico Sector
Near-shoring in Mexico – fast becoming the manufacturing country of choice
Competitively priced labor force versus China
Faster speed-to-market than overseas locales
Can be more cost effective than cross-border truckload
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
Sources: AlixPartners and company data
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Integration of Intermodal Is Driving Results
Strong value proposition as a large, single-source supply chain partner with deep capacity
Energetically cross-selling intermodal to XPO customer base, and selling full service range to intermodal customers
Q3: Intermodal volume up 6% and revenue up 9.6% year-over-year
New Rail Optimizer technology platform in beta test
On track to realize $15 million of targeted cost synergies from integration
Source: Company data
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Acquired 3PD in August 2013
Rebranded as XPO Last Mile
Largest provider of last-mile logistics for heavy goods home delivery in North America
Facilitates approximately seven million last-mile deliveries per year
Leading, proprietary software for workflow and customer experience management
Strong customer-centric culture built by experienced leaders who now run the business for XPO
Source: Company data
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Last Mile’s Exciting Market Potential
XPO Last Mile serves 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 $13 billion market for heavy goods home deliveries
Only 30% currently going through 3PLs
Highly fragmented with many small, regional providers
Sources: Norbridge, Inc. and EVE Partners LLC
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XPO Has a Strong Platform for Last Mile
Capitalizing on major advantages of scale and growing
Cost efficiencies, productivity, access to trucks, rigorous quality control systems, expertise
Acquired Optima Service Solutions in November 2013
Highly scalable supplier, leading arranger of last mile installations of large appliances and electronics
Acquisition of ACL brought deep relationships in retail e-commerce channels
Source: Company data
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Acquired NLM in December 2013
Rebranded as XPO NLM
#1 web-based expediter, made XPO the #1 manager of expedited shipments in North America
Manages an annual run rate of more than three quarters of a billion dollars of gross transportation spend
Online auction system proprietary to XPO
Carriers bid on loads that are awarded electronically
Benefits from trend toward just-in-time inventories, and supply chain disruptions
Source: Company data
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Focused Sales and Marketing Effort
Differentiate XPO by providing a passionate commitment to customer satisfaction across a range of services
Single point of contact for each customer
Strategic accounts team marketing to largest 2,000 shippers
National accounts team focused on next largest 5,000 shippers
Branch network expands our reach to hundreds of thousands of small and medium-sized shippers
Capture more of the $32 billion less-than-truckload opportunity
72% of top 50 customers are using multiple XPO services
Sources: SJ Consulting Group, Inc., company data
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Increasing Productivity through Technology
One common IT platform for freight brokerage in all cold-starts and 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
Total IT budget of approximately $115 million for 2014(1)
(1) Includes full year IT budgets for Pacer and New Breed
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Growth through Cold-starts
23 cold-starts
12 freight brokerage; 10 freight forwarding; one expedited
Freight brokerage cold-starts on an annual revenue run rate of more than $250 million
Up from $120 million 12 months ago
Low capital investment can deliver outsized returns
Hire strong industry veterans as branch presidents
Position in prime recruitment areas and scale up
Source: Company data
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CEO Bradley S. Jacobs
Founded and led four highly successful companies, including world-class public 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
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Highly Skilled Management Team Partial list
Troy Cooper United Rentals, United Waste
Chief Operating Officer
John Hardig
Chief Financial Officer Stifel Nicolaus, Alex. Brown
Scott Malat
Chief Strategy Officer Goldman Sachs, UBS, JPMorgan Chase
Gordon Devens
General Counsel AutoNation, Skadden Arps
Louis DeJoy
Chief Executive Officer, New Breed New Breed Logistics
Karl Meyer
Chief Executive Officer, XPO Last Mile 3PD, Inc., Home Depot
Paul Smith
President, Intermodal division Pacer International
Dominick Muzi
President, Freight Forwarding division CGL, Priority Solutions Int., AIT Worldwide
Julie Luna Pacer International, Union Pacific
Chief Commercial Officer
Greg Ritter
Senior Vice President, Strategic Accounts Knight Brokerage, C.H. Robinson
Mario Harik
Chief Information Officer Oakleaf Waste Management
The full management team can be found on www.xpologistics.com
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Deep Bench of Industry Experience Partial list
Dave Rowe Echo Global Logistics
Chief Technology Officer
Bud Workmon 3PD, Inc., Cardinal Logistics
President, XPO Last Mile
Will O’Shea 3PD, Inc., Ryder Integrated Logistics, Cardinal Logistics
Chief Sales and Marketing Officer, XPO Last Mile
Tom Connolly EVE Partners
Senior Vice President, Acquisitions
Drew Wilkerson C.H. Robinson
Regional Vice President
Doug George AFN, Ryder Integrated Logistics
Regional Vice President
Jenna Sargent OHL, Schneider Logistics
Regional Sales and Operations Manager
Jake Schnell C.H. Robinson
Sr. Operational Process and Integration Manager
Lou Amo Electrolux, Union Pacific, Odyssey Logistics
Vice President, Operational Initiatives
Jim Commiskey Pacer International, UPS, Menlo
Strategic Accounts Manager
Chris Duffell United Rentals
Vice President, Strategic Initiatives
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Revenue and Margin Growth
Revenue trajectory
2011 revenue of $177 million
Approximately $2.6 billion annual revenue run rate as of 9/30/14(1)
Q3 company-wide, 2014 vs. 2013
Organic growth up 48%
Gross revenue up 242%
Net revenue up 403% Organic growth in freight brokerage up 58%
Gross Revenue ($ millions)
+242%
$194
Q3 ‘13 Q3 ‘14
$662
(1) Includes only partial benefit of ACL and New Breed acquisitions
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Key Financial Statistics
Q3 Revenue Growth by Business Unit, 2014 vs. 2013
Freight Brokerage Expedited Transportation Freight Forwarding
$519
+240%
+45% +212% $60
$153 $36
$25 $19
Q3 ‘13 Q3 ‘14 Q3 ‘13 Q3 ‘14 Q3 ‘13 Q3 ‘14
Revenue ($ millions)
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First 33 Months of Growth Strategy
31% Average Quarterly Growth Rate
$662
$581
$282
$257
$194
$109 $114 $137
$45 $55 $71
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2012 2013 2014
Revenue ($ millions)
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Financial Targets
As of December 31, 2014
Annual revenue run rate of at least $3 billion
Annual EBITDA run rate of at least $150 million
Full year 2017
$9 billion of revenue
$575 million of EBITDA
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Incentivized XPO Management
Equity ownership aligns management team with shareholders Management and directors own approx. 22% of the company(1)
Common Stock Equivalent Capitalization as of 9/30/14
Common Shares 76.6 million(2)
Preferred Shares 10.5 million
Warrants (Strike Price $7 per share) 10.6 million (8.6 million dilutive)(3)
Convertible Senior Notes 7.3 million shares(4)
Stock Options and RSUs 2.6 million shares dilutive(5)
Fully Diluted Shares Outstanding 105.7 million shares
(1) Based on SEC beneficial ownership calculation as of September 30, 2014; includes (i) 10.7 million shares issued pursuant to the September 2014 private placement (the “Private Placement”) and (ii) 12.1 million shares on a pro forma basis that are issuable upon conversion of preferred stock that was issued pursuant to the Private Placement (2) Includes the common shares described in clauses (i) and (ii) of note (1) above, assuming, on a pro forma basis, the conversion of preferred shares into common stock, which is subject to shareholder approval (3) Dilutive effect of warrants calculated using treasury method (using XPO closing price of $37.67 on September 30, 2014); total warrant proceeds of $74.0 million (4) Assumes conversion in full of $120.7 million in aggregate principal amount of outstanding 4.50% convertible senior notes due 2017 (5) Dilutive effect of outstanding RSUs and stock options calculated using treasury method (using XPO closing price of $37.67 on September 30, 2014)
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Clear Path for Significant Value Creation
Significant growth embedded in XPO’s business model
Leading positions in fastest-growing areas of transportation
Compelling value proposition as a multi-modal, single-source provider
Passionate culture of on-time performance and productivity
Top management talent with skills that uniquely fit XPO’s growth strategy
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Additional Information about the Investment
XPO will file a proxy statement and other documents relating to the securities issued pursuant to the Investment Agreement, dated as of September 11, 2014, by and among XPO and the Purchasers named therein (the “Investment”) with the Securities and Exchange Commission (the “SEC”). INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT AND OTHER DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE INVESTMENT. Investors and security holders may obtain these documents free of charge at the SEC’s website at www.sec.gov. You may also obtain these documents free of charge at www.xpo.com. You may also read and copy any reports, statements and other information filed by XPO with the SEC at the SEC public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549.
Participants in Solicitation
XPO and its executive officers and directors may be deemed to be participants in the solicitation of proxies from XPO shareholders with respect to the Investment. Information about XPO’s executive officers and directors is available in XPO’s proxy statement on Schedule 14A for its 2014 annual meeting of shareholders, filed with the SEC on April 25, 2014. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of XPO and its executive officers and directors in the Investment by reading the proxy statement regarding the Investment when it becomes available. 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.
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