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Transportation & Logistics M&A Update November 2016

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Transportation & Logistics M&A Update November 2016 www.peakstone.com Transportation & Logistics M&A Update November 2016 Transportation & Logistics Industry Update | November 2016 Transportation & Logistics M&A Update . Transportation and logistics M&A continues to see strong activity. YTD 2016 transaction volume of 99 exceeded 2015 levels. During 2015, there were 93 transactions. For YTD 2016, strategic buyers accounted for 96% of the transportation and logistics M&A transactions with financial buyers making up the difference. During 2015, strategic buyers accounted for approximately 87% of the transactions. For announced transactions, transportation and logistics multiples saw 9.4x EBITDA and 0.7x revenue in YTD 2016. Peakstone equally weighted transportation and logistics index is slightly underperforming the S&P 500. Notable publicly announced transactions: o General Logistics Systems acquired Golden State Overnight Delivery Service Inc. for approximately $90 million. o Menzies Aviation Inc. entered into a definitive agreement to acquire Aircraft Service International Group, Inc. for approximately $200 million. o Genesee & Wyoming Inc. entered into a definitive agreement to acquire Providence and Worcester Railroad Company for approximately $130 million. o Matson Logistics, Inc. acquired Span-Alaska Transportation, Inc. for approximately $200 million. 1 Transportation & Logistics Industry Update | November 2016 Transportation & Logistics – U.S. M&A Market Overview U.S. Transportation & Logistics Transactions by Buyer Type U.S. Transportation & Logistics Transaction Multiples 160 12.0x 10.1x 140 9.4x 10.0x 32 8.6x 8.3x 120 NM 7.6x 8.0x 7.0x 6.7x 100 4 23 18 19 12 80 6.0x 16 16 60 106 4.0x 95 40 81 83 80 81 60 64 2.0x 0.7x 0.5x 0.5x 0.6x 0.7x 0.7x 20 0.4x 0.5x 0 0.0x 2009 2010 2011 2012 2013 2014 2015 YTD 2009 2010 2011 2012 2013 2014 2015 YTD 10/16 10/16 Strategic Buyer Financial Buyer EV/EBITDA EV/Revenue Source: Capital IQ 2 Transportation & Logistics Industry Update | November 2016 Peakstone Transportation Indices – Trading Statistics Transportation and logistics companies are trading at discounted valuations compared to the broader S&P 500 index Relative Stock Performance (1) 150% 130% 110% 90% 70% S&P 500: +22.91% 50% 30% Truckload Index: +15.87% 10% Asset-Light & Logistics Index: +5.03% -10% LTL Index: +1.07% -30% -50% Peakstone Truckload Index: CGI, PTSI, KNX, JBHT, WERN, MRTN, USAK, HTLD, SWFT, CVTI Peakstone Asset-Light & Logistics Index: FWRD, RRTS, LSTR, CHRW, EXPD, XPO, HUBG, ECHO Peakstone LTL Index: ARCB, SAIA, YRCW, ODFL (1) Equally weighted Source: Capital IQ 3 Transportation & Logistics Industry Update | November 2016 Peakstone Transportation Indices – Trading Statistics Transportation and logistics companies are trading at discounted valuations compared to the broader S&P 500 index Comparable Valuation Trends – Enterprise Value / EBITDA 20.0x 18.0x 16.0x 14.0x 12.0x S&P 500: 11.3x 10.0x Asset-Light & Logistics Index: 10.4x 8.0x Truckload Index: 7.2x 6.0x LTL Index: 7.2x 4.0x 2.0x 0.0x Peakstone Truckload Index: CGI, PTSI, KNX, JBHT, WERN, MRTN, USAK, HTLD, SWFT, CVTI Peakstone Asset-Light & Logistics Index: FWRD, RRTS, LSTR, CHRW, EXPD, XPO, HUBG, ECHO Peakstone LTL Index: ARCB, SAIA, YRCW, ODFL Source: Capital IQ 4 Transportation & Logistics Industry Update | November 2016 Selected Public Trading Comparables Transportation & Logistics – Peakstone LTL Index ($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin % Old Dominion Freight Line Inc. $6,352 $6,530 2.2x 9.9x 13.5x 20.0x 30.2% 22.3% YRC Worldwide Inc. $450 $1,214 0.3x 5.0x 14.2x - 10.8% 5.2% Saia, Inc. $870 $964 0.8x 6.3x 12.1x 16.9x 18.9% 12.7% ArcBest Corporation $527 $538 0.2x 3.8x 11.4x 16.0x 6.9% 5.3% Median 0.6x 5.7x 12.8x 16.9x 14.9% 9.0% As of October, 2016 Transportation & Logistics – Peakstone Truckload Index ($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin % JB Hunt Transport Services Inc. $9,090 $10,029 1.6x 9.3x 13.9x 20.0x 19.8% 16.7% Swift Transportation Company $2,990 $4,111 1.0x 7.1x 14.1x 15.7x 20.4% 14.1% Knight Transportation Inc. $2,317 $2,367 2.1x 8.9x 15.8x 22.9x 30.7% 23.6% Werner Enterprises Inc. $1,769 $1,905 0.9x 5.7x 14.8x 22.0x 26.5% 16.4% Heartland Express, Inc. $1,550 $1,450 2.2x 7.9x 18.7x 27.1x 37.4% 28.5% Marten Transport Ltd. $660 $668 1.0x 5.1x 13.3x 19.9x 28.7% 19.7% Celadon Group Inc. $195 $637 0.6x 5.8x 21.2x 12.6x 17.4% 10.3% Covenant Transportation Group, Inc. $299 $497 0.7x 4.3x 10.4x 17.5x 25.1% 16.4% P.A.M. Transportation Services, Inc. $130 $271 0.6x 4.9x 15.0x 8.6x 18.8% 13.1% USA Truck Inc. $70 $202 0.4x 4.6x 15.3x 27.6x 18.1% 9.6% Median 1.0x 5.8x 14.9x 19.9x 22.8% 16.4% As of October, 2016 Source: Capital IQ 5 Transportation & Logistics Industry Update | November 2016 Selected Public Trading Comparables (continued) Transportation & Logistics – Peakstone Asset-Light & Logistics Index ($ in millions) Market Enterprise Enterprise Value / Forward Gross EBITDA Company Name Cap Value Revenue EBITDA EBIT P/E Ratio Margin % Margin % CH Robinson Worldwide Inc. $9,615 $10,616 0.8x 11.6x 12.4x 18.5x 9.4% 7.1% XPO Logistics, Inc. $3,757 $9,253 0.7x 10.1x 29.0x 25.9x 14.4% 7.1% Expeditors International of Washington Inc. $9,196 $8,219 1.3x 11.0x 11.7x 20.5x 14.9% 12.2% Landstar System Inc. $2,994 $2,930 0.9x 11.5x 13.2x 21.0x 22.1% 8.2% Forward Air Corp. $1,244 $1,276 1.3x 9.1x 12.3x 17.6x 25.8% 14.4% Hub Group Inc. $1,210 $1,234 0.4x 7.2x 9.6x 16.3x 12.9% 4.9% Echo Global Logistics, Inc. $630 $797 0.5x 15.2x 26.8x 17.4x 19.0% 3.0% Roadrunner Transportation Systems, Inc. $290 $689 0.4x 7.2x 12.1x 8.1x 20.4% 5.0% Median 0.8x 10.6x 12.4x 18.0x 17.0% 7.1% As of October, 2016 Source: Capital IQ 6 Transportation & Logistics Industry Update | November 2016 Selected Precedent M&A Transactions Size EV/ Date Target Buyers/Investors ($mm) EBITDA Transaction Comments General Logistics Systems B.V. acquired Golden State Overnight Delivery Service Inc. from The Halifax Group and others for $90 million on October 4, 2016. Golden State Overnight Delivery Service is being Golden State Overnight Delivery 10/4/16 General Logistics Systems B.V. $90 N/A acquired on a debt free, cash free basis. The consideration will be funded from existing resources. Golden Service Inc. State Overnight Delivery Service will operate as separate entity. Golden State Overnight Delivery Service had generated revenue of $114 million in the year ended March 31, 2016. Menzies Aviation Inc. and Menzies Aviation plc entered into an agreement to acquire Aircraft Service Aircraft Service International Menzies Aviation plc; Menzies 9/16/16 $200 8.5x International Group, Inc. from BBA Holdings Limited and BBA Aviation Shared Services, Inc. for Group, Inc. Aviation Inc. approximately £150 million in cash on September 16, 2016. Genesee & Wyoming Inc. (NYSE:GWR) entered into a definitive merger agreement to acquire Providence Providence and Worcester Genesee & Wyoming Inc. and Worcester Railroad Company (NasdaqGM:PWX) for approximately $120 million on August 12, 2016. As 8/15/16 Railroad Company $131 22.6x (NYSE:GWR) reported, Genesee & Wyoming will acquire Providence and Worcester Railroad Company at a price of $25 (NasdaqGM:PWX) per share of common stock. Penske Automotive Group, Inc. (NYSE:PAG) signed a definitive agreement to acquire additional 14.4% stake Penske Automotive Group, Inc. 7/28/16 Penske Truck Leasing Co., L.P. $499 N/A in Penske Truck Leasing Co., L.P. from investment arm of GE Capital Global Holdings, LLC for approximately (NYSE:PAG) $500 million in cash on July 27, 2016. Matson Logistics, Inc. entered into a definitive agreement to acquire Span-Alaska Transportation, Inc. from Evergreen Pacific Partners and others for approximately $200 million in cash on July 18, 2016. Under the 7/18/16 Span-Alaska Transportation, Inc. Matson Logistics, Inc. $198 9.4x terms, the consideration to be paid incudes $197.6 million on a debt free, cash free basis, and is subject to working capital and other closing adjustments. The escrow amount is $2.96 million which will be paid post closing. Kerry Logistics Network Limited (SEHK:636) acquired 51% stake in Apex Maritime Co., Inc. for $87.9 million Kerry Logistics Network Limited 6/1/16 The Apex Group $88 N/A on June 1, 2016. The exiting management of Apex Maritime will remain in place for three years, providing (SEHK:636) the continuity required during the integration process. Kerry Logistics Holding (US) Kerry Logistics Holding (US) Limited agreed to acquire KLN Investment (US) LLC for $87.9 million on March 3/14/16 KLN Investment (US) LLC $88 N/A Limited 13, 2016. Post completion, KLN Investment will become a wholly owned subsidiary of Kerry. Atlas Air Worldwide Holdings, Inc. (Nasdaq:AAWW) entered into a definitive agreement to acquire Atlas Air Worldwide Holdings, Inc.
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