Echo Global Logistics

Transcription

1 Echo Global Logistics Investor Presentation May 2018 P E O P L E T E C H N O L O G Y R E S U L T S

2 Echo Global Logistics Leading provider of technology-enabled transportation and supply chain management solutions Proprietary technology platform linking over 35,000 clients with a network of over 49,000 carriers One of the largest growing 3PLs with TTM gross revenue over $2.1Bn Value Proposition to Shippers Transportation cost savings Access to extensive transportation network Centralized system to meet all transportation needs Dedicated account teams provide superior client service Web-based applications address entire shipment order and delivery process Value Proposition to Carriers Aligns demand with network capacity Increases utilization of assets Optimizes open lanes and backhauls Lower client service costs Shortens billing cycle, improving working capital 2

3 Unique Logistics Platform Echo s Key Attributes and Highlights 1 2 Differentiated Relationship-driven Customer and Carrier Network Proprietary Technology that Optimizes Brokerage Value Proposition 3 4 Stability and Consistency through Freight and Business Cycles Track Record of Significant Growth Projected to Continue 5 6 Favorable Long-term Industry Fundamentals Strong Culture and Management Team 3

4 Echo at a Glance Broad Cross-Country Employee Network Portland,OR Bend,OR Minneapolis,MN Green Bay,WI Port Sanilac, MI Boston,MA Sacramento,CA Sandy,UT San Ramon,CA Park City,UT San Francisco, CA Watsonville,CA Denver,CO Yorba Linda,CA Lake Havasu,AZ Long Beach,CA Scottsdale,AZ Kansas City,KS Dallas,TX Rochester,NY Detroit,MI Chicago,IL Lockport,IL Albany,IN St. Louis,MO Nashville,TN Atlanta,GA Houston,TX Jacksonville,FL Clearwater,FL Critical Component of Value Proposition for Shippers Service Market Transportation Spend TL Partial TL LTL Intermodal Expedited Domestic Air Internat l Small Parcel Transactional (Brokerage) SMB National $25K $50MM $50MM $2Bn+ Managed Transportation (Enterprise) SMB National $500K $10MM $10MM $200MM Indicates primary market need, offered by Echo Indicates secondary market need, offered by Echo 4

5 Product Offerings Diverse Multimodal Portfolio Truckload Brokerage TL Carrier Profile by Fleet Size (# of trucks) (1) Differentiated model to efficiently aggregate capacity in fragmented market Centralized, role-based execution >500 14% < 10 19% Highly scalable matching capability % Quick access to market information Highly automated leveraging internal and external data Smaller carriers increasingly interested in doing business with brokers % % < > 500 LTL Brokerage Industry and market share leader, a one-stop-shop for shippers Robust pricing engine capable of managing and simplifying complex pricing structures across multiple carriers and shippers Multi-channel automation Data capture and analytics tools to optimize pricing and carrier selection Efficient back office integration to manage billing and payments on high volume, transaction based systems Managed Transportation Managed service offering leverages transportation experts with robust TMS technology Ability to drive measureable savings by utilizing Echo s multi-modal capabilities Highly efficient execution with multiple automation points for both shippers and carriers Moving up market with fee based services Strong procurement capability across all modes of transportation 5 1. Fleet size available for 90% of loads as of Q1 2018

6 Building on a Strong Track Record of Growth 2018 Anticipated Revenue Exceeds $2B Gross Revenue CAGR 60% 2015 Echo acquires Command Transportation 2014 Echo exceeds $1Bn in gross revenue 1,716 1,943 2, Echo IPO 1, Doug Waggoner joins Echo from USF Bestway 884 1, Echo founded Gross Revenue ($MM) Note reflects the midpoint of revenue guidance given during the earnings call on April 25,

7 Industry Leading Technology Platform Analytics Pricing Engines Client Facing Portal Carrier Facing Portals Echo Technology Platform Proprietary technology designed in-house by engineering and transportation experts Integrated across multiple modes Aggregates supply and demand Analytics optimized marketplace Robust internal and external reporting Digital Freight Matching Artificial Intelligence Visibility Reporting

8 Echo s Culture Attracts Top Talent The Echo Way Our Core Values Bring Your Own Do What s Right Better is the Only Option Carry The Load Together Work Hard & Hustle Award-Winning Culture Employees 2, Q18 Connected Workforce The Hub Learning Management System: Live stream meetings, Social Groups, Knowledge Banks Echo News Network Intranet streamlining communication with real time updates & business collaboration tools Echo Engage Recognition, Sentiment Polling, Achievements, Performance & Career Discussions, Real time feedback, Goals Applicant Tracking Promoting internal movement, improve hiring manager experience and candidate selection effectiveness` Virtual Meet ups Live streaming and video chats 8

9 Attractive Market Growing US 3PL Market Gross Revenue ($Bn) 300 Echo outperformed through financial crisis ($MM) $203 $260 $426 The US 3PL market has grown meaningfully from $104 billion in 2005 to $167 billion for E 2018E Source Armstrong & Associates Research Highly Fragmented North American Broker and Carrier Market Carrier Market (Trucks/Trucking Companies) Approximately 3 million drivers in U.S., ~80% work for company with <10 trucks Top 10 truckload (TL) carriers represent 5% of U.S. market Shortage of drivers makes Echo s network of carriers more valuable Brokerage Market Only a handful of players of meaningful scale Industry customer service levels improving, but there is large opportunity to differentiate for companies that execute effectively Remains highly fragmented with hundreds of small brokers Significant Brokerage Opportunity Sources: Armstrong & Associates, Inc; U.S. Department of Transportation, Examining the Appropriateness of the Current Financial Responsibility for Motor Carriers, Brokers, and Freight Forwards Report to Congress, April 2014; CarrierDirect, Outlook for the Domestic Transport and Logistics Market in 2H2014 and Beyond, July

10 Multiple Growth Drivers 1 Leverage TL Scale and Technology Advanced matching and pricing technologies Superior access to capacity Client centric, and carrier s first choice 2 Continue Acquisitions Placeholder for EPS 2 Growth from future acquisitions Brokerage market is highly fragmented with hundreds of smaller players Echo has completed 20 acquisitions in 11 years 3 Grow and Enhance Sales Force Productivity and Sales Offering Productivity vs Tenure Placeholder for EPS 2 Growth of sales force and improvement in average tenure Technology enhancements drive efficient productivity gains Evolution of managed transportation business to reach larger accounts LTL SEO automated selling 4 Capitalize on Attractive Market Conditions Rising prices and volatility increase spot market opportunities Access to capacity and data analytics provide strategic value in dynamic freight markets Potential for a tight truckload market to continue for the foreseeable future 10

11 Sales Force Maturity Driving Productivity Gains Highlights Tenure is lengthening Client Rep Productivity by Months of Tenure (2) (3) Gross Profit (000s) Increasing share of wallet Expanding truckload national accounts 1,000 Months Sales Tenure (Months) (1) Apr15-Mar16 Apr16-Mar17 Apr17-Mar18 Notes 1. Headcount includes both client and carrier-facing sales representatives. Tenure shown is trailing twelve month average 2. Chart compares total annualized gross profit generated per average inside sales client representative by months of tenure 3. Includes all existing and ex-employees Months 11

12 Freight Cycle Dynamics Illustrative Freight Cycle Index of Supply and Demand A B C D A Strong Macro Environment Soft Market Reduced prices Plenty of capacity Weak Macro Environment Demand Exceeds Supply Good margins Significant volumes of spot at high margins Demand Exceeds Supply Good margins Significant volumes of spot at high margins Expanding margins as demand falls faster than supply Contracting margins as demand rises faster than supply Supply Demand 12

13 Awards and Recognition #1 Inbound Logistics Readers Choice Top 10 3PL Excellence Awards (2017) Inbound Logistics Top 10 3PLs ( ) Inbound Logistics Top 100 3PLs ( ) #4 Transport Topics Top Freight Brokerage Firms (2016, 2017) Transport Topics Top 50 Logistics Companies ( ) Global Trade s America s Leading 3PLs ( ) Built in Chicago s Top 100 Digital Companies ( ) Target Corp Outstanding Partnership Award (2015) Food Logistics Top Green Providers (2015, 2016) Food Logistics Top 3PL & Cold Storage Providers (2015, 2016) EPA SmartWay Transport Partner ( ) #47 Crain s Chicago Business s 50 Fastest-Growing Companies (2016) Quaker Oats: Regional Broker of the Year (2015) Chicago s 101 Best & Brightest Places to Work For (2016, 2017) 13

14 Financial Performance & 2018 Guidance Gross Revenue $ MM $ MM Net Revenue 3,000 2,250 1, ,173 1,512 1,716 1, % Growth 26% 17% 33% 29% 13% 13% % of Gross Revenue 19.4% 18.9% 17.6% 17.7% 19.2% 18.6% 17.4% Adjusted EBITDA (1) $ MM 2018 Guidance FY-2018 Q Gross Revenue $ B $ M Commission % % % % of Net Revenue G&A $ M $47 51M 24% 25% 24% 24% 23% 23% 18% Note 1. Adjusted EBITDA refers to EBITDA excluding the effects of changes in contingent consideration, acquisition related transaction costs, Term Loan B commitment fees, non-recurring settlement costs, loss related to Shipper Direct acquisition, stock compensation expense and other expense 14

15 Historical Financial Information Reconciliation of Non- GAAP Financial Measures dollars in millions, except per share data FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Net Income $ 12.0 $ 12.3 $ 14.2 $ 16.8 $ 7.8 $ 1.6 $ 12.6 Depreciation Amortization Non-cash interest expense Cash interest expense Income tax expense (benefit) (0.2) (8.3) EBITDA Change in contingent consideration (0.2) (0.1) (0.1) 1.0 Acquisition related transaction costs Term Loan B commitment fees (non-recurring interest expense) Non-recurring settlement costs Loss related to Shipper Direct acquisition Stock compensation expense Other expense Adjusted EBITDA $ 28.3 $ 35.6 $ 37.1 $ 49.5 $ 67.8 $ 60.8 $ 61.8 Fully diluted EPS $ 0.53 $ 0.54 $ 0.61 $ 0.71 $ 0.28 $ 0.05 $ 0.45 Change in contingent consideration (0.01) (0.00) 0.04 Amortization Acquisition-related transaction costs Non-cash interest expense Term Loan B commitment fees (non-recurring interest expense) Non-recurring settlement costs Loss related to Shipper Direct acquisition Stock Compensation Expense Tax effect of adjustments (0.06) (0.11) (0.09) (0.20) (0.52) (0.47) (0.75) Non-GAAP fully diluted EPS $ 0.63 $ 0.77 $ 0.76 $ 1.02 $ 1.16 $ 0.83 $