Transportation & Logistics. Market Monitor Spring 2018

Transcription

1 Transportation & Logistics Market Monitor Spring 2018

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

3 Economic and M&A Landscape: Spring 2018 Consumer confidence is at its highest level since 2000 (Feb. CCI: 130.8) as consumers are optimistic about short-term prospects for both business and labor market conditions. In 2017, trucking tonnage experienced the largest annual gain (3.7%) since 2013, as shown in the ATA data on the following page. Transaction activity for YTD has slightly decreased year-over-year ( YoY ). For 2018, merger & acquisition activity is expected to remain relatively flat, as compared to YoY Rising diesel fuel prices and interest rates are expected to put moderate pressure on T&L margins in The truck driver shortage continues to be a major challenge in 2018, due to the aging demographic among currentdrivers, This shortage hasled to rising operating costs and delays across the supply chain. 3 Truck Driver Shortage Sources: Capital IQ, Cass Information Systems, American Trucking Associations, Moss Adams Capital research

4 Macro Indicators Heading Up ATA U.S. Trucking Tonnage Index ISM PMI & NMI 4 Cass U.S. Freight Index (YoY % Change by Qtr.) U.S. Diesel Fuel Price & Consumer Confidence Index Sources: American Trucking Association, Institute for Supply Management, Cass Information Systems, U.S. Energy Information Administration, The Conference Board

5 Air Freight and Container Movement Continue Growth in 2017 IATA SA Global FTK (YoY % change) According to the International Air Transport Association, global air freight demand grew by 9.0% in 2017, more than double the annual growth recorded the year prior. 5 Import/Export Monthly Container Volume Total TEU s (1) 2017 was the most active year ever for U.S. ports, as total TEU s rose 7% from the previous year s record levels. Sources: 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 Grew in 2017 Positive growth year-over-year measured by carload and intermodal rail traffic shows stability in the industry. Total combined U.S. traffic for 2017 was 27.49M carloads and intermodal units, an increase of 3.4 percent over U.S. Rail Traffic Total Carloads U.S. Rail Traffic - Intermodal Originated Rail Traffic 6 Source: Associations of American Railroads

7 Logistics Companies Lead Other Transportation Sectors in Past Year However, all T&L sectors lagged the performance of the overall S&P 500 Index S&P 500 Index 7 Logistics Index Expedited & Air Index Railroad Index Trucking Index Note: The indices in the chart above are composed using the public companies included on the following pages. Source: Capital IQ

8 Valuations Freight Transport & Logistics companies are expected to grow revenue and, on average, by 9.0% and 16.4%, respectively. This outpaces the expected growth of the S&P 500 Index. Growth in the railroad industry is expected to lag the S&P500 due to weak expectations within the automotive sector. NTM Estimated Revenue Growth Logistics companies command the highest valuations in the space. Trucking, Railroad, Expedited & Air, and Logistics companies were all affected in the recent market correction. Selected Public Market Valuations: EV / 8 Note: The indices in the chart above are composed using the public companies included on the following pages. Source: Capital IQ

9 Public Trucking Company Valuations 9 Trucking ($U.S. in millions, except per share data) 4/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise Company Name Price High - Low Cap Value Sales Margin Sales TTM Sales TTM J.B. Hunt Transport Services, Inc. $ $ $83.35 $13,206 $14,199 $7,509 $1, % 14.2% 26.5% 1.9x 13.7x 1.7x 10.9x Old Dominion Freight Line, Inc ,225 12,193 3, % 16.2% 19.5% 3.6x 15.6x 3.1x 13.0x Knight-Swift Transportation Holdings Inc. $ $7,730 $8,627 $2,425 $ % NM NM 3.6x 19.7x 1.6x 8.8x Werner Enterprises, Inc ,597 2,634 2, % 11.4% 20.7% 1.2x 7.2x 1.1x 6.0x Heartland Express, Inc. $ $1,500 $1,425 $607 $ % 14.6% 30.3% 2.3x 10.1x 2.0x 7.8x TFI International Inc ,416 3,588 3, % 0.3% 9.1% 0.9x 8.6x 0.9x 7.9x Saia, Inc. $ $1,889 $2,018 $1,379 $ % 15.1% 26.1% 1.5x 11.1x 1.3x 8.8x Marten Transport, Ltd ,135 1, % 14.7% 21.4% 1.6x 8.3x 1.4x 6.9x ArcBest Corporation $ $874 $967 $2,826 $ % 5.9% 21.7% 0.3x 6.1x 0.3x 5.0x Covenant Transportation Group, Inc % 8.8% 24.7% 1.1x 7.5x 1.0x 6.0x Universal Logistics Holdings, Inc. $ $626 $857 $1,217 $74 6.1% NA NA 0.7x 11.6x NA NA Canadian General Investments, Limited (160) NA NA NA (1.5x) NA NA NA YRC Worldwide Inc. $ $298 $1,112 $4,891 $ % 4.5% 17.9% 0.2x 4.5x 0.2x 3.8x P.A.M. Transportation Services, Inc % NA NA 0.9x 7.1x NA NA USA Truck, Inc. $ $224 $331 $447 $27 5.9% 9.7% 90.2% 0.7x 12.5x 0.7x 6.6x NTM Sales NTM Median $1,125 $1,379 $ % 11.4% 21.7% 1.1x 9.4x 1.2x 7.3x Average $3,338 $2,172 $ % 10.5% 28.0% 1.3x 10.3x 1.3x 7.6x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Sources: Capital IQ and company filings.

10 Public Railroad & Air Company Valuations 10 Railroads ($U.S. in millions, except per share data) 4/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise Company Name Price High - Low Cap Value Sales Margin Sales TTM Sales TTM Union Pacific Corporation $ $ $ $105,502 $121,081 $21,240 $10, % 4.5% 3.3% 5.7x 11.8x 5.5x 11.4x Canadian National Railway Company ,700 64,793 10,104 5, % 5.7% 5.5% 6.4x 12.6x 6.1x 11.9x Norfolk Southern Corporation $ $39,028 $48,454 $10,551 $4, % 4.2% 0.3% 4.6x 10.4x 4.4x 10.4x CSX Corporation ,819 64,629 11,415 5, % 2.4% 6.7% 5.7x 12.1x 5.5x 11.3x Kansas City Southern $ $11,429 $14,314 $2,612 $1, % 7.7% 11.4% 5.5x 11.4x 5.1x 10.2x Genesee & Wyoming Inc ,424 7,008 2, % 8.6% 7.2% 3.2x 10.3x 2.9x 9.6x The Greenbrier Companies, Inc. $ $1,458 $1,620 $2,239 $ % 13.3% 20.3% 0.7x 6.0x 0.6x 5.0x American Railcar Industries, Inc , % 11.3% 3.0% 2.4x 8.4x 2.2x 8.2x FreightCar America, Inc. $ $173 $42 $409 -$14 NA NM NM 0.1x NA 0.1x NA USD Partners LP % 11.3% 12.7% 4.4x 9.1x 3.9x 8.1x Median $10,661 $2,426 $ % 7.7% 6.7% 4.5x 10.4x 4.2x 10.2x Average $32,359 $6,137 $2, % 7.7% 7.8% 3.9x 10.2x 3.6x 9.6x NTM Sales NTM Expedited & Air United Parcel Service, Inc. $ $ $ $93,989 $114,266 $65,872 $9, % 6.5% 13.3% 1.7x 11.6x 1.6x 10.3x FedEx Corporation ,488 81,279 63,864 8, % 6.5% 17.5% 1.3x 9.7x 1.2x 8.2x Atlas Air Worldwide Holdings, Inc ,627 3,560 2, % 16.4% 15.2% 1.7x 8.1x 1.4x 7.1x Median $81,279 $63,864 $8, % 6.5% 15.2% 1.7x 9.7x 1.4x 8.2x Average $66,369 $43,964 $6, % 9.8% 15.3% 1.6x 9.8x 1.4x 8.5x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Sources: Capital IQ and company filings.

11 Public Logistics Company Valuations Logistics ($U.S. in millions, except per share data) 4/23/18 TTM Data NTM Est. Growth EV Multiple Share 52 Week Market Enterprise Company Name Price High - Low Cap Value Sales Margin Sales TTM Sales TTM Expeditors International of Washington, Inc. $64.30 $ $51.96 $11,262 $10,213 $6,921 $ % 7.5% 8.1% 1.5x 13.7x 1.4x 12.7x C.H. Robinson Worldwide, Inc. $93.71 $ $63.41 $13,065 $14,196 $14,869 $ % 8.0% 15.1% 1.0x 16.6x 0.9x 14.4x Landstar System, Inc. $ $ $80.00 $4,543 $4,423 $3,649 $ % 22.0% 24.3% 1.2x 15.6x 1.0x 12.5x Hub Group, Inc. $43.70 $ $33.18 $1,502 $1,776 $4,035 $ % 9.2% 14.3% 0.4x 11.1x 0.4x 9.7x XPO Logistics, Inc. $ $ $48.68 $12,545 $17,262 $15,381 $1, % 8.3% 25.5% 1.1x 13.5x 1.0x 10.7x Forward Air Corporation $53.30 $ $48.90 $1,568 $1,605 $1,101 $ % 12.4% 9.5% 1.5x 10.8x 1.3x 9.8x Roadrunner Transportation Systems, Inc. $2.03 $ $2.01 $78 $510 $2,082 -$55 NA (1.8%) NM 0.2x NA 0.2x 4.4x NTM Sales NTM Universal Logistics Holdings, Inc. $22.05 $ $12.55 $626 $857 $1,217 $74 6.1% NA NA 0.7x 11.6x NA NA 11 Echo Global Logistics, Inc. $29.25 $ $13.00 $820 $1,007 $1,943 $43 2.2% 14.8% NM 0.5x 23.5x 0.5x 12.7x Radiant Logistics, Inc. $3.76 $ $3.51 $186 $229 $788 $25 3.2% 9.6% 32.6% 0.3x 9.2x 0.3x 6.9x Median $1,691 $2,866 $ % 9.2% 15.1% 0.8x 13.5x 0.9x 10.7x Average $5,208 $5,199 $ % 10.0% 18.5% 0.8x 13.9x 0.8x 10.4x All Freight Transportation & Logistics Companies Median $1,897 $2,224 $ % 9.0% 16.4% 1.2x 11.1x 1.3x 8.8x Average $16,443 $7,311 $1, % 9.5% 18.5% 1.9x 11.2x 1.8x 9.0x Next twelve months (NTM) figures are based on the median of Wall St. analysts. Sources: 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 Mar-18 Promus Equity Partners, LLC Quest Products, Inc. Quest Products, Inc. operates as a wholesale distributor of consumer packaged goods sold in retail stores and online Mar-18 Seldat Distribution Inc. Oceanstar, Inc. Provider of freight forwarding, customs brokerage, as well as ocean and air freight transportation services Feb-18 Seven Gables Real Estate Inc. Star Real Estate, LLC Star Real Estate, LLC provides residential real estate services for Southern California neighborhoods Feb-18 Brown Transfer Company Central Arizona Freight, Inc. Central Arizona Freight, Inc. engages in providing freight transportation services by road Feb-18 Patriot Defense Group, LLC Innovative Logistics, LLC Innovative Logistics, LLC provides ocean and air cargo transportation services Feb-18 Delmar International Inc. AIRTRADES Freight Forwarders Inc. AIRTRADES Freight Forwarders Inc. freight transportation services through air Feb-18 HEB Grocery Company, LP NeighborFavor, Inc. NeighborFavor, Inc. provides a food-delivery and all-purpose courier service Feb-18 Kirby Corporation Higman Marine Services, Inc. Higman Marine Services, Inc., provides marine transportation services for bulk liquid petroleum and chemical cargoes. $ Feb-18 Universal Logistics Holdings, Inc. Fore Transportation, Inc. Fore Transportation, Inc. offers local, regional, and long-haul intermodal trucking services. $ x - Feb-18 BaleForce Recycling Equipment Inc. Ready Machinery & Equipment (Canada) Inc Ready Machinery & Equipment transports, stores, stages and installs heavy equipment and machinery Feb-18 AZZ Inc. Rogers Brothers Galvanizing Co. Rogers Brothers Galvanizing Co. provides galvanizing services for various products Jan-18 Stallion Oilfield Services Ltd. All Assets of Al's Water Service, Inc. Al's Water Service, Inc. provides potable water transportation and services to the oil, gas, and mining industries Jan-18 Vectrus, Inc. SENTEL Corporation Provider of engineering, integrated logistics, information technology, and test and evaluation services. $ x - Jan-18 Nationwide Trailers, LLC Trailer Country, Inc. Trailer Country, Inc. operates a trailer dealership Jan-18 Loomis AB (publ) Sequel International Logistics (USA) Inc. Sequel International Logistics (USA) Inc. provides logistics services. $ x - Aug-17 Undisclosed Kelle's Transport Service, Inc. (nka:soar Transportation Group) SOAR Transportation Group provides temperature-controlled transportation and logistics services Jan-18 GlobalTranz Enterprises, Inc. AJR Transportation LLC AJR Transportation LLC offers freight brokerage and logistics services Jan-18 C.H. Powell Company The Irwin Brown Company The Irwin Brown Company provides customs brokerage and freight forwarding services Jan-18 Imprint Group AWG Ambassador, LLC Provides limousine private tours, corporate charters, airport shuttles, and Las Vegas hotel transportation car services Jan-18 Vertex Resource Group Ltd. Sonic Oilfield Service Ltd. Sonic Oilfield Service Ltd. offers material and fluid transportation services to the oil and gas industry. $ Jan-18 Simplified Logistics LLC Redwood Logistics, LLC Redwood Logistics, LLC provides integrated logistics and transportation services Jan-18 WMK, Inc. Accessible Mobility Center, LLC Engages in sales and rental service of wheelchair vans and other accessibility products Jan-18 Dec-17 Dircks Moving & Logistics IMC Companies LLC All Assets of Suddath Relocation Systems of Arizona, LLC All Assets of Suddath Relocation Systems of Arizona, LLC comprises a storage and moving business Drayage and depot operations of H & M International Transportation, Inc. Drayage and depot operations of H & M International Transportation, Inc. provides logistics services Oct-17 Stackry, LLC BedaBox, LLC BedaBox, LLC offers international package forwarding services Dec-17 DC Capital Partners, LLC Janus Global Operations Provides integrated stability operations support services to organizations worldwide Dec-17 St. George Trucking & Warehouse Inc. Channel Distribution Corporation Channel Distribution Corporation operates a full service air cargo warehouse and distribution center Dec-17 WillScot Corporation New Acton Mobile Industries LLC Provides modular space rental services to construction, commercial, industrial, education, and government markets. $ 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 Dec-17 Undisclosed MR Coal Marketing & Trading, LLC MR Coal Marketing & Trading, LLC provides logistic services. $ Dec-17 Cordy Environmental Inc. Assets and Business of Alberta Ltd. Alberta Ltd. comprises assets a business operation that provides trucking services for waste collection Dec-17 Wallenius Wilhelmsen Logistics ASA Keen Transport, Inc. Provides heavy-haul logistics and transportation services for construction, mining, and agriculture equipment markets. $ x 6.4x Dec-17 GlobalTranz Enterprises, Inc. APEX Logistics Group Provides logistics services including truckload shipping, transportation, and warehouse management services Dec-17 Salmon Capital Corporation Affinity Electronics of Canada Inc. Affinity Electronics of Canada Inc. distributes electronics and mobile phones Dec-17 Nellson Nutraceutical, LLC Genysis Brand Solutions Inc. Genysis Brand Solutions Inc. manufactures powdered nutritional supplements Dec-17 Daseke, Inc. Moore Freight Service, Inc. and Tennessee Steel Haulers, Inc. and Roadmaster Group Moore Freight Service, Inc. is a freight service company that specializes in flat glass transportation Nov-17 LSC Communications, Inc. The Clark Group, Inc. Provides third party logistics services for publishing, printing, distribution, and other highly service sensitive industries Nov-17 Becker Logistics LLC Savage Logistics, LLC Savage Logistics, LLC focuses on providing third-party logistics services in the United States and Canada Nov-17 CEDA International Corporation Joe Loomis Trucking Ltd. Joe Loomis Trucking Ltd. provides trucking services Nov-17 Market Express LLC Westco Express, Inc. Westco Express, Inc. operates as a trucking company Nov-17 Day & Ross Transportation Group Inc. REI Logistics And Korten Quality Systems, Ltd. REI Logistics and Korten Quality Systems, Ltd. provides road transportation services Oct-17 National Express LLC Queen City Transportation LLC Queen City Transportation LLC provides passenger bus transportation services Nov-17 SuperShuttle International, Inc. Supreme Airport Shuttle, LLC Supreme Airport Shuttle, LLC provides taxi cab services for travelling to airport Nov-17 Canada Cartage System Limited Ontario Inc. Offers fleet outsourcing, full truckload (FTL), and less than truckload (LTL) solutions Nov-17 OL International Holdings, LLC Transitainer, LLC Transitainer, LLC provides freight forwarding services in the United States Nov-17 Bureau Veritas SA Primary Integration, LLC Primary Integration, LLC offers integrated professional services Nov-17 Patrick Industries, Inc. Indiana Transport, Inc. Offers trucking services for the transportation of RV travel trailers, utility trailers, boats, buses, and cars. $ x - Oct-17 Direct ChassisLink, Inc. TRAC Intermodal LLC, Domestic Chassis Fleet Comprises intermodal chassis solutions for domestic and international transportation Oct-17 Marcou Transportation Group, LLC Boca Raton Transportation, Inc. Provides chauffer driven cars rental services for airport transfers, VIP movement, and for sightseeing tours Oct-17 Metropolitan Taxi Cab Corp. ABC Cab Company ABC Cab Company provides taxicab services. $ Oct-17 Vitol Holding B.V. Noble Americas Corporation Noble Americas Corporation markets and distributes energy, metals, and mineral products Oct-17 Schneider + Cie AG Prime Transport, Inc. Prime Transport, Inc. offers freight forwarding services Oct-17 AMP Capital Investors Limited ITS Technologies & Logistics, LLC Provides intermodal rail terminal services, auto loading and unloading, and container depot services Oct-17 Freight Brokers International Corp. Consolidated Carriers Inc. Consolidated Carriers Inc. operates as a non-asset-based freight broker Discussed on next page.

14 Overview of Notable Transactions Universal Logistics Holdings, Inc. acquires Fore Transportation, Inc. February 2, 2018 Universal Logistics Holdings, Inc., an asset-light provider of customized transportation and logistics solutions, announced its purchase of Fore Transportation, an Illinois-based provider of intermodal logistics solutions, including local and regional drayage services, yard services, chassis rental, repair, and maintenance. The cash purchase price was $34.9 million (1.1x Rev) and the transaction is expected to be immediately accretive. Fore Transportation operates more than 150 trucks and reported revenues of approximately $32.3 million in Fore is a strategic acquisition of a well-established brand we see a great deal of opportunities to gain market share and offer expanded services to Fore s already existing bluechip customer base. Jeff Rogers, Universal s CEO. 14 WWL ASA acquires Keen Transport, Inc. December 7, 2017 Wallenius Wilhelmsen Logistics ASA, a global logistics operator for the manufacturing industry, signed an agreement to acquire 100% of the shares of Keen Transport, Inc. from Platinum Equity for $64 million (0.8x Rev; 6.4x ). Keen operates 14 High & Heavy Equipment Processing Centers (EPCs) and a specialty trucking entity in the United States. With its 450 employees Keen provides value-added facility services, equipment modification, transportation and load consolidation for about 20 Original Equipment Manufacturers (OEMs). The company realized revenues of $82 million and of $10 million in The acquisition is a strong fit strategically and operationally, and should create significant synergies. The increased footprint represents a unique opportunity to capitalize on the improving fundamentals of the mining and construction sector in the U.S., as well as substantiate a trend where more advanced work and services are performed at EPCs - outsourced from OEM factories. Sources: Capital IQ and Company-issued press releases. Note: Middle Market M&A includes transactions w ith EV < $1000mm, and transactions w ith undisclosed EV. YTD as of April 24, 2018.

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