Transportation & Logistics. Market Monitor Fall 2017

Transcription

1 Transportation & Logistics Market Monitor Fall 2017

2 Investment Banking & Advisory - Selected Recent Transportation & Logistics Companies 2

3 Economic and M&A Landscape: Fall Transaction activity for YTD has improved year-over-year ( YoY ). Consumer confidence is higher than has ever been as managers across all industries believe in optimistic short-term and medium term outlooks. Seventeen of 18 manufacturing subindustries reported growth in September 2017 as new orders, production, and employment continued growing M&A Volume Truck Driver Shortage YTD YTD 2017 Trucking tonnage has improved in the YTD, as shown by ATA data on the following slide. The truck driver shortage remains a challenge in 2017 and may cause operational delays and an upward pressure on costs. 200, , ,000 50, Source: Capital IQ, Cass Information Systems American Trucking Associations, Moss Adams Capital research

4 Macroeconomic Indicators ATA U.S. Trucking Tonnage Index ISM PMI & NMI Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 ATA Trucking Tonnage Index (Seasonally Adjusted) ATA Trucking Tonnage y/y Cass U.S. Freight Index (YoY % Change by Qtr.) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% 70.0% 65.0% 60.0% 55.0% 50.0% 45.0% 40.0% Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 ISM New Order ISM PMI ISM NMI U.S. Diesel Fuel Price & Consumer Confidence Index 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q YoY Change Quarterly Shipments YoY Change in Quarterly Expenditures Consumer Confidence Index Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Feb-13 Jul-13 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Consumer Confidence Index $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 Diesel Fuel Price ($/gal) Source: American Trucking Association, Institute for Supply Management, Cass Information Systems, U.S. Energy Information Administration, The Conference Board Diesel Fuel Price ($/gal)

5 Air Freight and Container Movement Continue Growth in 2017 IATA SA Global FTK (YoY % change) % 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Import/Export Monthly Container Volume Total TEU s (1) Global freight tonne kilometres ( FTKs ) posted double-digit annual growth for YoY (July) to signal that air freight is growing, according to the International Air Transport Association. 1,000, , , , , , , , ,000 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Port of Los Angeles Port of NY and NJ Feb-12 Sep-12 Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 Port of Long Beach May-17 Major ports throughout the U.S. are reporting an increase in shipping container movement. Source: IATA, Port of Los Angeles, Port of Long Beach, Port of New York, Port of New Jersey (1) TEU = Twenty-foot equivalent container unit

6 Traffic & Container Volume Growing in Positive growth year-over-year measured by carload and intermodal rail traffic shows stability in the industry. Total combined U.S. traffic for the first 39 weeks of 2017 was 20.5M carloads and intermodal units, an increase of 3.6 percent compared to last year. Average Total Carloads per Week 320, , , , , , ,000 U.S. Rail Traffic Total Carloads 15.0% 10.0% 5.0% 0.0% (5.0%) (10.0%) Y/Y % Change Average Total Intermodal per Week U.S. Rail Traffic - Intermodal Originated Rail Traffic 280, , , , , % 20.0% 15.0% 10.0% 5.0% 0.0% YoY % Change 180,000 (15.0%) 180,000 (5.0%) 160,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q (20.0%) 160,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q (10.0%) Source: Associations of American Railroads

7 Logistics Companies Lead Other Segments in Past Year Broader S&P 500 has outperformed the Transportation & Logistics Subsectors during the past year % % % 80.00% 60.00% 40.00% 20.00% S&P 500 Index Logistics Index Expedited & Air Railroad Index Trucking 0.00% % Note: The indices in the chart above are composed using the public companies included on the following pages. Source: Capital IQ

8 Valuations Next twelve months ( NTM ) Revenue and EBITDA for publicly-traded Freight Transport & Logistics companies are expected to grow 6.7% and 10.7%, respectively. In comparison, the S&P 500 s revenue and EBITDA are expected to grow 5.0% and 10.1%, respectively. All Freight Transport & Logistics Companies NTM Estimated Revenue Growth Logistics 6.7% 8.0% 10.7% 11.2% 16.0x 14.0x Trucking EBITDA valuations have continued rising throughout this year as margins have improved and expected growth in revenue and EBITDA for Trucking companies outpaces Air, Rail, and Logistics companies. Selected Public Market Valuations: EV / EBITDA 8 Expedited Air Railroad 5.3% 3.6% 6.2% 14.2% 12.0x 10.0x Trucking 6.5% 14.8% 8.0x SP % 10.1% 6.0x 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 4.0x Median Revenue Growth Median EBITDA Growth Note: The indices in the chart above are composed using the public companies included on the following pages. Source: Capital IQ Trucking Index Railroad Index Expedited & Air Index Logistics Index

9 Public Trucking Company Valuations 9 Trucking ($U.S. in millions, except per share data) 10/5/17 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA TTM Sales TTM NTM EBITDA Sales J.B. Hunt Transport Services, Inc. $ $ $76.20 $11,695 $12,631 $6,768 $1, % 9.6% 6.9% 1.9x 11.9x 1.7x 11.2x Old Dominion Freight Line, Inc ,897 8,958 3, % 9.2% 10.7% 2.9x 12.5x 2.6x 11.3x Knight-Swift Transportation Holdings Inc. $ $7,103 $7,017 $1,114 $ % NM NM 6.3x 28.8x 1.3x 8.4x Werner Enterprises, Inc ,573 2,625 2, % 4.9% 14.8% 1.3x 7.8x 1.2x 6.8x Heartland Express, Inc. $ $1,999 $1,828 $549 $ % 42.8% 33.1% 3.3x 11.1x 2.3x 8.3x TFI International Inc ,250 3,592 3, % 11.4% 19.6% 1.0x 9.5x 0.9x 7.9x Saia, Inc. $ $1,506 $1,654 $1,292 $ % 10.0% 16.6% 1.3x 9.8x 1.2x 8.4x Marten Transport, Ltd ,082 1, % 4.9% 10.5% 1.6x 8.0x 1.5x 7.3x ArcBest Corporation $ $846 $947 $2,774 $ % 6.9% 14.8% 0.3x 6.4x 0.3x 5.6x Covenant Transportation Group, Inc % 4.1% 9.8% 1.0x 7.2x 1.0x 6.6x Universal Logistics Holdings, Inc. $ $596 $830 $1,125 $72 6.4% 9.2% 36.7% 0.7x 11.5x 0.7x 8.4x Celadon Group, Inc , % (1.6%) (18.5%) 0.5x 6.3x 0.5x 7.8x YRC Worldwide Inc. $ $461 $1,234 $4,801 $ % 4.2% 30.3% 0.3x 4.9x 0.2x 3.7x P.A.M. Transportation Services, Inc % 0.6% 12.8% 0.7x 5.4x 0.6x 4.8x USA Truck, Inc. $ $111 $239 $418 $19 4.5% 6.2% 90.6% 0.6x 12.8x 0.5x 6.7x NTM EBITDA Median $1,234 $1,125 $ % 6.5% 14.8% 1.0x 9.5x 1.0x 7.8x Average $2,943 $2,023 $ % 8.8% 20.6% 1.6x 10.3x 1.1x 7.5x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings.

10 Public Railroad & Air Company Valuations 10 Railroads ($U.S. in millions, except per share data) 10/5/17 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA TTM Sales TTM NTM EBITDA Sales Union Pacific Corporation $ $ $87.06 $91,260 $105,644 $20,724 $9, % 3.6% 5.2% 5.1x 10.8x 4.9x 10.2x Canadian National Railway Company ,682 68,991 9,823 5, % 8.9% 8.4% 7.0x 13.0x 6.4x 12.0x Norfolk Southern Corporation $ $37,786 $47,297 $10,226 $4, % 3.5% 6.2% 4.6x 11.0x 4.5x 10.4x CSX Corporation ,812 58,554 11,549 5, % 0.8% 3.2% 5.1x 11.3x 5.0x 10.9x Kansas City Southern $ $11,323 $14,067 $2,469 $1, % 6.6% 9.9% 5.7x 11.9x 5.3x 10.9x Genesee & Wyoming Inc ,571 7,246 2, % 9.7% 17.2% 3.5x 11.8x 3.2x 10.0x The Greenbrier Companies, Inc. $ $1,448 $1,669 $2,153 $ % 2.9% (15.1%) 0.8x 4.8x 0.8x 5.7x American Railcar Industries, Inc , % (15.0%) (7.1%) 2.2x 7.9x 2.6x 8.5x FreightCar America, Inc. $ $247 $115 $507 $11 2.1% NM NM 0.2x 10.7x 0.3x NA USD Partners LP % 4.7% 7.0% 4.4x 8.6x 4.2x 8.0x Median $10,657 $2,311 $ % 3.6% 6.2% 4.5x 10.9x 4.3x 10.2x Average $30,527 $6,017 $2, % 2.9% 3.9% 3.9x 10.2x 3.7x 9.6x NTM EBITDA Expedited & Air United Parcel Service, Inc. $ $ $ $102,266 $115,784 $62,924 $7, % 5.3% 39.8% 1.8x 14.8x 1.7x 10.6x FedEx Corporation ,424 71,077 60,953 8, % 5.0% 9.5% 1.2x 8.6x 1.1x 7.9x Atlas Air Worldwide Holdings, Inc ,690 3,557 1, % 12.4% 14.2% 1.8x 9.0x 1.6x 7.9x Median $71,077 $60,953 $7, % 5.3% 14.2% 1.8x 9.0x 1.6x 7.9x Average $63,473 $41,949 $5, % 7.6% 21.2% 1.6x 10.8x 1.5x 8.8x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings.

11 Public Logistics Company Valuations Logistics ($U.S. in millions, except per share data) 10/5/17 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise EBITDA Company Name Price High - Low Cap Value Sales EBITDA Margin Sales EBITDA TTM Sales TTM NTM EBITDA Sales Expeditors International of Washington, Inc. $60.27 $ $47.23 $10,893 $9,781 $6,422 $ % 7.3% 2.4% 1.5x 13.9x 1.4x 13.6x C.H. Robinson Worldwide, Inc. $76.05 $ $63.41 $10,672 $11,741 $13,896 $ % 7.3% 3.8% 0.8x 13.8x 0.8x 13.3x Landstar System, Inc. $99.85 $ $65.05 $4,188 $4,068 $3,334 $ % 8.7% 9.4% 1.2x 15.0x 1.1x 13.7x Hub Group, Inc. $40.95 $ $33.18 $1,398 $1,412 $3,729 $ % 11.8% 11.2% 0.4x 9.6x 0.3x 8.7x XPO Logistics, Inc. $66.22 $ $31.68 $7,803 $12,856 $14,690 $1, % 4.9% 23.7% 0.9x 10.8x 0.8x 8.7x NTM EBITDA Forward Air Corporation $57.85 $ $40.07 $1,753 $1,764 $1,029 $ % 10.9% 12.1% 1.7x 12.2x 1.5x 10.9x Roadrunner Transportation Systems, Inc. $9.36 $ $6.05 $359 $758 $1,972 $ % 0.5% (1.0%) 0.4x 7.5x 0.4x 7.6x 11 Universal Logistics Holdings, Inc. $20.95 $ $11.65 $596 $830 $1,125 $72 6.4% 9.2% 36.7% 0.7x 11.5x 0.7x 8.4x Echo Global Logistics, Inc. $19.40 $ $13.00 $554 $741 $1,753 $32 1.8% 7.3% NM 0.4x 23.4x 0.4x 12.5x Radiant Logistics, Inc. $5.09 $ $2.48 $250 $285 $778 $29 3.7% 8.9% 18.6% 0.4x 10.0x 0.3x 8.4x Median $1,588 $2,653 $ % 8.0% 11.2% 0.8x 11.8x 0.7x 9.8x Average $4,424 $4,873 $ % 7.7% 13.0% 0.8x 12.8x 0.8x 10.6x All Freight Transportation & Logistics Companies Median $1,796 $2,063 $ % 6.7% 10.7% 1.3x 10.8x 1.1x 8.4x Average $15,370 $6,976 $1, % 6.9% 14.4% 2.0x 10.9x 1.7x 9.0x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Source: Capital IQ and company filings.

12 Selected Recent Freight Transport & Logistics M&A Activity 12 $ in millions Close Transaction EV/ EV/ Date Acquirer/Investor Target Target Description Value Revenue EBITDA Sep-17 Tenaris S.A. Garrett Bros., Inc. Sep-17 Sep-17 Radiant Logistics, Inc. The Carlyle Group L.P.; Carlyle US Equity Opportunity Fund II, L.P Sandifer-Valley Transportation and Logistics, Ltd. United Road Services, Inc. As of September 8, 2017, Garrett Bros., Inc. was acquired by Tenaris S.A. Garrett Bros., Inc., doing business as Garrett Trucking LLC, provides freight transportation services to oil industry. It offers line pipe, oil country transportation goods hauling and trailer services. The company was founded in 1972 and is based in Amber, Oklahoma. Sandifer-Valley Transportation and Logistics, Ltd. provides domestic and international logistics services. The company is based in Texas. As of September 5, 2017, Sandifer-Valley Transportation and Logistics, Ltd. operates as a subsidiary of Radiant Logistics, Inc. United Road Services Inc. provides automobile transport services in the United States and Canada. Its services include closed carrier/specialty vehicle transport, new vehicle logistics, remarketing, retail single vehicles and privately owned vehicles transport, and marshalling and storage services. The company also sells accessories, apparel, headwear, ladies apparel, and outer wear online. The company serves automakers, manufacturers, remarketers, financial institutions, leasing companies, auctioneers, dealers, retail, and single individuals. The company was founded in 1997 and is based in Romulus, Michigan. United Road Services Inc. is a former subsidiary of Urs Gores Holdings Corp. Aug-17 The Jordan Company, L.P. Odyssey Logistics & Technology Corporation Odyssey Logistics & Technology Corporation provides logistics solutions. Aug-17 Quick International Courier, Inc. Unitrans, Inc. Unitrans, Inc. provides international logistics services. It offers international ocean and air transportation management, customs house brokerage, and domestic solutions. The company is headquartered in Los Angeles, California. Unitrans, Inc. Unitrans, Inc. operates as a subsidiary of Roadrunner Transportation Systems Inc. As of September 15, 2017, $ Unitrans, Inc. operates as a subsidiary of Quick International Courier, Inc. Aug-17 Aerostar Global Logistics, Inc. Professional Freight Solutions, Inc. Professional Freight Solutions, Inc. provides third party logistics services. The company is based in Washington Township, Michigan. As of August 16, 2017, Professional Freight Solutions, Inc. Professional Freight Solutions, Inc. operates as a subsidiary of Aerostar Global Logistics, Inc. Aug-17 TPG Capital, L.P. Transplace Inc. Transplace Inc. provides transportation management and logistics technology services. Jul-17 LSC Communications, Inc. Fairrington Transportation Corporation Fairrington Transportation Corporation provides mailing logistic services in the United States. Jul-17 Kuehne + Nagel International AG Commodity Forwarders Inc. and Trillvane Ltd Jul-17 Heartland Express, Inc. Interstate Distributor Co., Inc. Jul-17 American Fast Freight, Inc. Grand Worldwide Logistics Corporation Jun-17 GlobalTranz Enterprises, Inc. Worthington Logistics Solutions, Inc. Commodity Forwarders Inc. and Trillvane Ltd represents the combined operations of Commodity Forwarders Inc. and Trillvane Ltd in their sale to Kuehne + Nagel International AG. Commodity Forwarders Inc. provides transportation, distribution, and consulting services for perishable products worldwide. Trillvane Ltd distributes flowers and vegetables. Commodity Forwarders Inc. is based in the United States. Trillvane Ltd is based in Kenya. Interstate Distributor Co., Inc. provides trucking services for Fortune 500 companies and other customers in the United States, Western Canada, and along the Mexican border. Its services include regional and trans-continental coverage, dedicated fleets, specialized and refrigerated equipment, and intermodal services. The company was founded in 1933 and is headquartered in Tacoma, Washington. As of July 6, 2017, Interstate Distributor Co., Inc. operates as a subsidiary of Heartland Express, Inc. Grand Worldwide Logistics Corporation offers logistics management, warehousing, and cross dock distribution services. The company was founded in 1970 and is headquartered in Chicago, Illinois. As of July 6, 2017, Grand Worldwide Logistics Corporation operates as a subsidiary of American Fast Freight, Inc. Worthington Logistics Solutions, Inc. offers freight brokerage and logistics services. The company was incorporated in 2010 and is based in Catonsville, Maryland. As of June 16, 2017, Worthington Logistics Solutions, Inc. operates as a subsidiary of GlobalTranz Enterprises, Inc. $ x - Discussed on next page.

13 Selected Recent Freight Transport & Logistics M&A Activity 13 $ in millions Close Transaction EV/ EV/ Date Acquirer/Investor Target Target Description Value Revenue EBITDA Jun-17 Radiant Logistics, Inc. Dedicated Logistics Technologies, Inc May-17 Summit Materials, Inc. Glasscock Company, Inc. May-17 Turbo Retail Management, Inc. Two GP Postal Store Franchises Dedicated Logistics Technologies, Inc provides logistics services. The company was founded in 2011 and is based in Edison, New Jersey. As of June 1, 2017, Dedicated Logistics Technologies, Inc operates as a subsidiary of Radiant Logistics, Inc. Glasscock Company, Inc. engages in the transportation, handling, and sales of mineral and mineral-based products in the Carolinas and Georgia. As of May 31, 2017, Two GP Postal Store Franchises was acquired by Turbo Retail Management, Inc. Two GP Postal Store Franchises comprises two postal, pack, and ship stores. The asset is located in the United States. May-17 CarsArrive Network, Inc. Dependable Auto Shippers, Inc. Dependable Auto Shippers, Inc. provides vehicle shipping services. May-17 GlobalTranz Enterprises, Inc. Logistics Planning Services, Inc. Logistics Planning Services, Inc., a third party logistics company, provides transportation management and logistics services. Apr-17 Magnate Worldwide, LLC Masterpiece International Limited Masterpiece International Limited provides fine art shipping and consultation, international/domestic logistics, and customs brokerage services in the United States and internationally. Apr-17 Coleman Worldwide Moving LLC A. Arnold Moving Company, Inc. A. Arnold Moving Company, Inc. operates as a moving and storage company. The company offers residential and commercial moving, and storage services. It serves individuals and corporations in the United States and internationally. The company was founded in 1905 and is based in Louisville, Kentucky with locations in Louisville, Kentucky; and Indianapolis, Indiana. Apr-17 Ace Industrial Properties, Inc Prairie Van & Storage, Inc. Prairie Van & Storage, Inc., a moving and storage company, provides relocation services. Apr-17 U-Haul Co. Door to Door Storage, Inc. Door to Door Storage, Inc. provides self-storage and moving services in the United States. It serves customers in their life transitions, such as changing jobs, buying or selling a home, combining households, remodeling, going away to school, and military transfers. The company was founded in 1995 and is based in Kent, $ Washington. Apr-17 Knight Transportation, Inc. (nka:knight- Swift Transportation Holdings Inc.) Swift Transportation Company Swift Transportation Company operates as a multi-faceted transportation services company in North America. $2, Apr-17 Bekins Moving & Storage Co. Crown Moving Co., Inc. Crown Moving Co., Inc. provides relocation and storage services in Seattle, Moses Lake, Spokane, and Boise. Mar-17 Turbo Global Partners, Inc. Turbo Retail Management, Inc. Turbo Retail Management, Inc. operates and franchises a chain of retail shipping and receiving stores. Mar-17 Magnate Worldwide, LLC Premium Transportation Logistics LLC Premium Transportation Logistics LLC provides logistics services for customers with time-critical logistics needs. The company was founded in 2002 and is headquartered in Toledo, Ohio. The company was founded in 2002 and is based in Toledo, Ohio. As of March 28, 2017, Premium Transportation Logistics LLC operates as a subsidiary of Magnate Worldwide, LLC. Mar-17 NA Worldnet International, London, Paris Worldnet International, London, Paris and Los Angeles Operations comprises logistics operations in London, and Los Angeles Operations Paris, and Los Angeles. The assets are located in the United States. Mar-17 CHS, Inc. Western Co-op Transport Association As of March 16, 2017, Western Co-op Transport Association was acquired by CHS, Inc. Western Co-op Transport Association provides transportation services primarily for hazardous materials. Mar-17 AgileX SC LLC Argo Turboserve Corporation, Argo Turboserve Corporation, Industrial Division comprises all the assets of the industrial supply chain Industrial Division division. The asset is located in the United States. Mar-17 Interstate Group Holdings, Inc. American Red Ball Transit Company, Inc. provides moving services for household goods. The company was American Red Ball Transit Company, founded in 1919 and is based in Indianapolis, Indiana. As of March 7, 2017, American Red Ball Transit Inc. Company, Inc. operates as a subsidiary of Interstate Group Holdings, Inc. Mar-17 CI Capital Partners LLC Simplified Logistics LLC SIMPLIFIED LOGISTICS LLC, a logistics company, provides a suite of services and technology solutions to meet the individual logistic needs of businesses. Discussed on next page.

14 Overview of Notable Transactions 14 Knight Transportation merges Swift Transportation as Knight-Swift Transportation Holdings April 10, 2017 Knight Transportation, Inc. and Swift Transportation Company announced the approval of a merger in an all-stock transaction that will create the industry s largest full truckload company with 23,000 tractors, 77,000 trailers, and 28,000 employees. Based on Knight s closing share price on April 7, 2017, the number of combined company shares expected to be outstanding after closing and the combined net debt of Swift and Knight as of December 31, 2016, the combined company would have an implied enterprise value of approximately $6 billion. Heartland Express acquires Interstate Distributor Company from Saltchuk Resources July 6, 2017 Heartland Express acquired 100% of the outstanding stock of Interstate Distributor Co. from Saltchuk Resources, which bought IDC in 2011 IDC is an excellent operational fit, as its terminal network has nearly direct overlap with our current locations. Heartland will gain significant additional traffic density in the West, and our stronger eastern network will improve service for IDC's customers in the East, said Michael Gerdin, President & CEO of Heartland Express. Source: Capital IQ and Company-issued press releases.

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