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TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 www.harriswilliams.com Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. 0 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 TRANSPORTATION AND LOGISTICS OVERVIEW CONTENTS HARRIS WILLIAMS & CO. DEAL SPOTLIGHT . M&A TRANSACTIONS Kenan Advantage Group, Inc. PUBLIC MARKETS OVERVIEW . STOCK PRICE PERFORMANCE Harris Williams & Co. announces the acquisition of The Kenan . OUR GROUP Advantage Group, a portfolio company of Goldman Sachs Capital Partners and Centerbridge Partners, by OMERS has acquired Private Equity (OPE). Kenan Advantage is North America’s largest tank truck transporter and logistics provider, delivering CONTACTS fuel, chemicals, industrial gasses, and food-grade products. HW&Co. acted as the buyside advisor for OPE. UNITED STATES Frank Mountcastle WHAT WE’RE READING Managing Director [email protected] +1 (804) 915-0124 LOGISTICS | FREIGHT STARTUPS ATTRACT SILICON VALLEY’S ATTENTION Jason Bass Managing Director Silicon Valley investors are piling into companies that want to drag the $160-billion- [email protected] a-year business of arranging cargo shipments into the internet age. Since the start +1 (804) 915-0132 of 2014, venture capital firms have pumped more than $1 billion into start-up freight forwarding companies, an industry that was not on most tech investors’ Joe Conner Managing Director radar two years ago. [email protected] Wall Street Journal +1 (804) 915-0151 TRUCKING | HOW THE U.S. TRUCKING INDUSTRY IS KEEPING UP Jeff Burkett Director [email protected] With the U.S. economy continuing to expand, trucking companies have had to +1 (804) 932-1334 keep up with growing freight demand while battling a significant shortage of licensed truck drivers. In order to meet demand, trucking companies have opted Jershon Jones to add more trailers to increase the capacity of each individual driver. According Director to CK Commercial Vehicle Research, approximately 70 percent of surveyed [email protected] trucking companies plan to buy more trailers, representing the highest level since +1 (804) 932-1356 2007. Jeff Kidd Bloomberg Vice President [email protected] MARINE | WESTBOUND TRANS-ATLANTIC TRANSFORMED +1 (804) 915-0178 Driven by a combination of the euro’s slide against the dollar and the EUROPE strengthening U.S. economy, traffic on the head-haul Europe-to-U.S. westbound trade grew 8.4 percent year-over-year in the first quarter. That growth matched Jeffery Perkins the growth experienced throughout all of 2014, making it the second-fastest Managing Director growing east-west route after the 12.6 percent jump in the Asia-Mediterranean [email protected] trade. +49 (0) 69 3650638 00 Journal of Commerce RAIL | RAIL SHIPPERS SEEK NEW RULES TO PROMOTE RATE COMPETITION The National Industrial Transportation League and other shipper groups have urged the Surface Transportation Board to create new rules that would foster lower rail prices through competitive switching or rate caps, now that carriers have become profitable enough to absorb a slight revenue decline. Transport Topics AIR | AIR FREIGHT SLOWDOWN CONTINUES The International Air Transport Association (IATA) released data for global air freight markets displaying air freight volumes, measured in freight tonne kilometers (FTM), rose only 1.2 percent compared to a year ago. This is consistent with falling trade activity and weaker than expected global growth. IATA www.harriswilliams.com PAGE | 1 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 M&A TRANSACTIONS RECENT M&A TRANSACTIONS1,2 Announced Sector Target Business Description Acquirer 8/17/2015 Logistics Ozburn-Hessey Logistics, Provides third party logistics services, including warehousing & Geodis S. A. LLC fulfillment, transportation management, custom brokerage, and international transportation. 8/10/2015 Trucking Hornady Transportation Provides flatbed trucking services to customers on the east coast of Daseke, Inc. LLC the United States. 8/4/2015 Logistics Hallcon Corporation Canadian provider of specialty outsourced services to the railway Novacap and transit sectors in North America. 8/4/2015 Logistics Courier Express Asset-free provider of B2B last mile services with over 1,000 Dicom Transportation Enterprises LLC dedicated delivery providers. Group, L.P. 7/31/2015 Logistics Coyote Logistics, LLC Non-asset based truckload, LTL, and intermodal service provider. United Parcel Service, Inc. 7/30/2015 Logistics North & South Logistics, Provides freight brokerage, focusing on LTL, truckload, and Transport United, Inc. Inc. intermodal freight logistics, throughout the continental United States. 7/28/2015 Trucking Stagecoach Cartage Provides regional, intermodal, and over-the-road truckload services Roadrunner Transportation and Distribution, LP. and warehousing and trans-loading solutions. Systems, Inc. 7/27/2015 Logistics SFO Shuttle Bus Provides employee commuter services as well as airport shuttle Hallcon Corporation Company and Loop services. Transportation 7/27/2015 Rail Faiveley Transport S.A. International manufacturer and supplier of equipment for the Westinghouse Air Brake railway industry. Technologies Corporation 7/22/2015 Logistics BearWare Inc. Provides freight tracking and related solutions for specialty retail The Descartes Systems shippers. Group Inc 7/21/2015 Logistics EXTRA Express Cerritos, Asset-light provider of B2B last mile services based in Los Angeles, Dicom Transportation Inc. CA. Group, L.P. 7/20/2015 Equipment Allstate Utility Trailers Inc. Provides utility trailers, cargo trailers, car trailers, and dump trailers, Mobile Mini, Inc. parts, and accessories nationwide. 7/16/2015 Logistics eBay Enterprise, Inc. eBay Enterprise handles warehousing and logistics for third-party Permira Advisers Ltd sellers. 7/16/2015 Logistics G4S International Provides secure transportation and delivery for high value goods. UPS Capital Corporation Logistics, Insured Parcel Services Business 7/14/2015 Rail Transportation Engineering and logistics company specializing in handling all aspects BNSF Logistics, LLC Technology Services, of shipping by rail. Inc. 7/8/2015 Air Fraport Cargo Services Provides independent cargo handling services at Frankfurt Airport, WFS Global SAS GmbH Europe's joint largest cargo airport alongside Paris CDG. 7/6/2015 Logistics TransForce, Inc. Specialized staffing and recruiting company that provides qualified Palladium Equity Partners commercial truck drivers to third-party logistics companies, private fleets, and trucking companies. 7/1/2015 Trucking Bulldog Hiway Express Provides truckload and intermodal carrier services in the U.S. and Daseke, Inc. Canada, operating several hundred power units and more than 400 trailers. 6/18/2015 Trucking The Kenan Advantage North America's largest tank truck transporter and logistics provider, OMERS Private Equity Group, Inc. delivering fuel, chemicals, industrial gases, and food-grade products. PAGE | 2 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 PUBLIC MARKETS OVERVIEW TEV / LTM EBITDA TEV / 2015E EBITDA Logistics Providers 10.6x Logistics Providers 10.7x Marine 9.8x Rail & Rail Services 8.2x Rail & Rail Services 8.2x Marine 8.1x Trucking 6.6x Trucking 6.5x Transportation Transportation 6.2x 5.3x Equipment Equipment AVERAGE REVENUE GROWTH (2011 – 2014) AVERAGE REVENUE GROWTH (2014 – 2016P) Rail & Rail Services 11.5% Trucking 8.5% Transportation 8.7% Rail & Rail Services 6.6% Equipment Trucking 7.7% Logistics Providers 6.1% Transportation Logistics Providers 6.4% 5.2% Equipment Marine 3.5% Marine (0.4%) AVERAGE EBITDA GROWTH (2011 – 2014) AVERAGE EBITDA GROWTH (2014 – 2016P) Rail & Rail Services 17.5% Marine 15.6% Trucking 13.0% Trucking 15.1% Marine 7.5% Logistics Providers 14.0% Transportation Transportation 7.4% 11.6% Equipment Equipment Logistics Providers 6.9% Rail & Rail Services 8.8% PAGE | 3 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 STOCK PRICE PERFORMANCE MEDIAN % CHANGE (1 MONTH) MEDIAN % CHANGE (12 MONTH) Rail & Rail Services 1.3% Trucking 2.7% Transportation (2.7%) Logistics Providers 2.6% Equipment Transportation Trucking (2.9%) (3.0%) Equipment Logistics Providers (5.9%) Rail & Rail Services (17.6%) Marine (8.0%) Marine (26.5%) TRAILING TWELVE MONTHS (Indexed to August 13, 2014) 30% 20% 10% 0% (10%) (20%) (30%) Aug-13-2014 Nov-13-2014 Feb-13-2015 May-13-2015 Aug-13-2015 Logistics Providers Trucking Rail & Rail Services Marine Transportation Equipment S&P 500 Index PAGE | 4 TRANSPORTATION & LOGISTICS INDUSTRY UPDATE │ AUGUST 2015 OUR GROUP Harris Williams & Co. is a leading advisor to the transportation and logistics M&A market. Our Transportation & Logistics Group serves companies in a broad range of attractive niches, including third-party logistics (3PL), truck, rail, marine and air transportation, transportation equipment, and the automotive and heavy duty vehicle market. RECENTLY CLOSED T&L TRANSACTIONS a portfolio company of a portfolio company of a portfolio company of a portfolio company of a portfolio company of has been acquired by has acquired has been acquired by has been acquired by has been acquired by has been acquired by a portfolio company of RCL Services