TRANSPORTATION & LOGISTICS Q3 2015 - … Transportation and...United Parcel Service acquires Coyote ... was preparing for an IPO during the second half of 2015 ... Transportation &

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Q3 2015TRANSPORTATION & LOGISTICS

CONTACTS

Len BatsevitskyDirector(617) [email protected]

Daniel SchultzDirector of Business Development(617) [email protected]

Matthew PersonAssociate(617) [email protected]

STATE OF THE TRANSPORATION M&A MARKET

Experts continue to view the Transportation & Logistics industry as a measure of the health of the

overall economy and thus far, 2015 has been a strong year for providers of commercial

transport. The industry has been aided by significantly lower oil prices, increased personal

consumption, expanded manufacturing and the continued rise of e-commerce as a viable retail

channel. As a result, many transportation companies are experiencing improved financial

performance which, coupled with a robust middle market M&A environment, has led to a

significant increase in deal activity. Furthermore, the industry’s high fragmentation will serve to

increase M&A activity as companies look to consolidate, increasing their efficiency through scale.

Overall, 2015 is shaping up to be a strong M&A year for the Transportation & Logistics industry

because thus far through Q4, there have been 104 transactions. If that pace continues

throughout the rest of calendar year, we could see nearly 140 M&A transactions during 2015,

which would near the record breaking high of 144 transactions in 2012.

In addition, valuations have remained stable over the past several years with recent transaction

multiples for asset-light logistics businesses generally north of 8x LTM EBITDA, while traditional

asset-heavy freight carriers (primarily in the trucking sub-industry) have traded at a range of 5x to

7x. Public transportation and logistics providers are currently trading at approximate valuations

of 6x for trucking companies, 10x for marine transport, 8x for air freight providers, 9x for rail

transport companies and 10x or above for dedicated logistics businesses. Values should remain

predominantly steady in the near-term as market conditions remain favorable.

80

108

144

113 108 104

0

20

40

60

80

100

120

140

160

2010 2011 2012 2013 2014 YTD9/30/2015

Transportation and Logistics Transactions

Sources: Capital IQ and Capstone Partners LLC research

Capstone Partners LLC 2

Transportation & LogisticsQ3 2015

“The impetus for much

of the deal activity has

been driven by the need

for providers to increase

capacity, expand

product offerings and

increase the efficiency of

their operations.”

- Len Batsevitsky

Director, Transportation

& Logistics Team

MARKET TRENDS

Trucking and Logistics Dominate Sector Activity: Trucking provider transactions (33%)

and Logistics provider transactions (41%) accounted for nearly three quarters of all

M&A transaction activity (by deal volume) in the Transportation & Logistics industry

for the nine-month YTD period that ended on 9/30/2015. As historically fragmented

sub-sectors, the impetus for much deal activity has been driven by the need for

providers to increase capacity, expand product offerings and increase the efficiency of

their operations through a combination of scale and utilization of acquired technology.

The rail and marine subsectors each accounted for nearly 13% of M&A deal volume

during the same period.

Financial Investor Activity Increases: Financial acquirers have played an increasingly

important role in the Transportation & Logistics industry as they account for nearly

15% of buyers/investors thus far in 2015, compared to just 11% in 2014. Financial

buyers have been especially aggressive in securing non-core assets divested by

companies. Most of these players have been executing a buy-and-build strategy by

aggregating multiple asset types with various geographic footprints and service

offerings to build critical mass and achieve scale. As commercial debt continues to be

extremely cost effective and readily available, financial investors are expected to

remain highly competitive in their acquisition strategies and will continue to make up a

larger percentage of transportation acquirers.

Large Transactions Prevalent: Thus far, 2015 has had its share of megadeals within the

Transportation & Logistics industry. The largest of these deals was FedEx Corporation’s

$4.8 billion offer in April to purchase Netherlands-based express carrier TNT Express

N.V., an acquisition that is expected to make FedEx one of the largest package delivery

providers in Europe (rivaling UPS for the top spot). Other megadeals included XPO

Logistics’ $3.5 billion acquisition of Con-way Inc. in September, the $1.8 billion

purchase of Coyote Logistics by UPS in July, XPO’s $3.5 billion purchase of French

trucker Norbert Dentressangle SA in June and Kintetsu World Express’ $1.2 billion

acquisition of APL Logistics in May.

Rise in International/Cross-border Buyers: So far in 2015, 25% of acquirers have been

international, which is significantly higher than the 18% of total Transportation &

Logistics acquirers in 2014. Despite the relative strength of the US dollar, cash-rich

foreign buyers have sought to secure domestic transportation & logistics businesses in

order to diversify revenue streams and end markets, expand service or technological

capabilities, or gain a foothold in an attractive and growing US market.

GROWTH DRIVERS

The M&A market for transportation and logistics providers appear both bright and

sustainable due to several important dynamics. We have identified some of the key

factors driving transactions below.

E-Commerce Growth: E-commerce has had a significant impact on the

Transportation & Logistics sector over the last few years as the increased rate of

online purchases has continued to put pressure on the transportation networks of

last mile delivery providers. In short, consumers are increasingly demanding faster

delivery times for their orders, yet remain unwilling to pay for expedited services.

While regional distribution centers have helped cut delivery costs by decreasing

length of haul, they have also reduced asset efficiency. The rise of E-commerce is

causing carriers to drastically reconfigure their delivery methodologies, leverage new

technology and utilize outsourced logistics providers if capabilities are not available

in-house.

Tons of Tonnage: Despite declining rail coal traffic, truck and rail tonnage has

increased significantly over the last few years. The truck tonnage index reached its

all-time high in January 2015 and has remained near record levels since. In July, the

truck tonnage index was 3.7% higher as compared to the same period in 2014,

boosted by increased retail sales, factory output and housing starts. The continued

demand has strained carriers who are looking for strategic acquisitions to augment

their capacity.

Marine Shipping Sustainability: While marine shipping remains stagnant, tightening

regulations and exposure to potential rising crude oil prices have ramped up M&A

activity amongst companies with clean shipping technology. Interest has been strong

for companies with sulfur oxide “scrubbers” that mitigate the impact of the bunker

fuel byproduct. Yara International acquired a controlling stake in Green Tech Marine

last year after rumors swirled over Rolls Royce’s potential takeover of market leader

Wartsila. M&A activity around “green” shipping technology should remain strong as

operators look to reduce costs and comply with environmental regulations.

Driver Shortage: According to the American Trucking Associations, there is a current

shortage of roughly 25,000 qualified truck drivers, in part due to an aging driver

force, which has reduced truckload capacity to the tightest it has been in a decade. In

addition, limits on the amount of hours that drivers can consecutively work is putting

pressure on the supply of available trucks. With decreased supply and increased

consumer demand, trucking prices are projected to increase upwards of 5%,

according to some estimates. Look for trucking companies to acquire local/regional

providers to augment their transportation networks. Additionally, many carriers that

are having difficulty finding qualified drivers are expanding the capacity of their

trucking fleets by adding incremental trailers to existing trucks.



“The rise of E-commerce is

causing carriers to

drastically reconfigure

their delivery

methodologies and has put

a greater emphasis on

leveraging technology to

improve efficiency.”

- Len Batsevitsky

Director, Transportation

& Logistics Team

SELECTED DEAL BRIEFS

XPO Logistics acquires Con-Way Inc. (September 2015)

XPO Logistics (NYSE:XPO) $3.5B acquisition of trucking company Con-Way Inc. puts

the transportation and logistics provider firmly in the trucking business in the US,

moving the company from primarily middleman services to one that now will

generate approximately one-third of its revenue from hard assets. This acquisition

runs contrary to the supposed competitive advantage asset-light companies have in

operating flexibility and mitigated exposure to fixed costs. Yet, XPO CEO Bradley

Jacobs said that in operating its own fleet, the Company can chase bigger contracts

with shippers whom prefer to work directly with carriers. The acquisition is part of a

sequence of transactions XPO has completed in 2015.

Absolute Worldwide Logistics acquires shipmymachinery.com (September 2015)

Global freight forwarder and third party logistics provider Absolute Worldwide

Logistics enhanced its lead generating capabilities through the acquisition of online

trucking portal shipmymachinery.com. Absolute aims to garner a larger market share

of the niche capital equipment and machinery transportation sector. The Company

will integrate the lead generation capabilities of the web portal with its operations

team to provide “an immediate and accessible way for customers to engage” with

Absolute. Based in Baltimore, Absolute Worldwide Logistics was formed in 2011.

Crowley Maritime acquires SeaFreight Agencies, Inc. (September 2015)

Crowley Maritime’s acquisition of fellow Florida based SeaFreight Agencies highlights

the consolidation trend occurring in the Caribbean Basin. De facto consolidation

occurred with Horizon Lines recent exit from the region and more consolidation is

expected with the acquisitions of Tropical Shipping by Saltchuck and Bernuth by King

Ocean. SeaFreight, who operates six ships with capacities of 1,100 twenty-foot-

equivalent units between Florida and the Caribbean and Central and South America,

“represents a great opportunity for Crowley to grow its footprint and capabilities”,

according to SVP Steve Collar. Crowley Maritime Corporation was formed in 1892

and is based in Jacksonville, Florida.

United Parcel Service acquires Coyote Logistics (July 2015)

Rumors that Coyote Logistics, a Chicago-based third-party freight and logistics

operator, was preparing for an IPO during the second half of 2015 have been put to

rest after the company was acquired in late July by UPS for $1.8B. Coyote Logistics

gained notoriety within the industry over the last few years due to its rapid growth,

with reported revenue of $2.0B in 2014. The acquisition increases UPS’s full-

truckload capacity, which had often been supplemented with contract transportation

providers, including Coyote, during the peak holiday shipping season. UPS has

identified revenue growth and fleet efficiency synergies and expects the transaction

to be accretive to UPS earnings in 2016.




SELECTED DEAL BRIEFS (CONTINUED)

TAGG Logistics acquires ABC Fulfillment (June 2015)

E-commerce’s impact on the transportation and logistics sector is exemplified in

TAGG Logistics acquisition of high volume direct-to-consumer order fulfillment

provider ABC Fulfillment. The acquisition provides TAGG with additional e-commerce

capabilities in the flash sales and daily deal segment, as well as the monthly

subscription box market. “Our combined companies are now better positioned to

handle the growing variety of e-commerce orders and the complexities of shipping

product direct to consumers” said Gary Patterson, President of TAGG Logistics.

Combined with current TAGG fulfillment facilities in St. Louis and Reno, ABC’s

Northeast location gives TAGG access to the entire East Coast and enables one to

two day transit times throughout the United States.

XPO Logistics acquires Bridge Terminal Transport (May 2015)

XPO Logistics’ (NYSE:XPO) $100mm (8.1x EBITDA) acquisition of Bridge Terminal

Transport, Inc. is further proof that capacity is tight and acquisitions have become

the quick solution. “Often we get requests from customers to move their freight”,

said CEO Bradly Jacobs, “and if you don’t have drayage capacity you could get into

bad situations.” The deal almost triples XPO Logistics drayage capacity to more than

2,000 independent owner operators, located mainly within the East Coast. XPO

Logistics has been very acquisitive, with the Bridge Terminal transaction coming just

after the acquisition of French firm Norbert Dentressangle for $3.5B a week earlier.

Echo Global Logistics acquires Command Transportation (April 2015)

Consolidation in the top end of the 3PL sector continues with the acquisition of

Command Transportation by Echo Global Logistics (Nasdaq:ECHO). The ~$410mm

transaction, which valued Command Transportation at 11.1x EBITDA, has been

viewed on the high end of the current market range but illustrates a premium paid

for the well-run and profitable company. The deal makes Echo Global Logistics the

fourth largest US-based truck brokerage and helps expand the company’s geographic

reach into the Northeast where Command has a competitive advantage. With the

top five players in 3PL controlling only approximately 15% of the market, expect

further acquisitions as competitors look to cement regional footholds and increase

market share.

Forward Air acquires Towne Air Freight (March 2015)

In a deal deemed “inevitable simply due to substantial synergies that clearly exist”,

the acquisition of Towne Air Freight by Forward Air (Nasdaq:FWRD) will see two of

the largest companies transporting cargo to and from airports combine. Company

Chairman Bruce Campbell stated that the transaction will allow Forward Air to move

goods more efficiently through its network of terminals in addition to reducing the

need to use high-cost outside carriers and independent owner operators. Forward

Air expects to add at least $140mm in revenue and boost profits by 26% as a result of

the deal valued at $125mm.




EnterpriseValue (mm)

EV / LTM

Date Target Acquiror Target Business Description Revenue EBITDA

09/30/15 Tango Transport Celadon Group Provides dry van and flatbed services. - - -

09/28/15 Shipmymachinery.comAbsolute Worldwide Logistics

Provides transportation services for machinery and capital equipment projects.

- - -

09/17/15Pacific Alaska Freightways

Span-Alaska Transportation

Offers freight transportation services to businesses and consumers. - - -

09/09/15 Con-way XPO Logistics Provides transportation, logistics and supply chain management services. $3,500.4 0.5x 6.2x

08/13/15Advance Hydrocarbon

Aqua Terra Water

Supplies salt water hauling services using trucks and tanks. - - -

08/18/15 Sawyers Transport AGRO Merchants Provides road haulage including chilled and frozen distribution and cold warehouse storage services.

- - -

08/10/15HornadyTransportation

Daseke Provides flatbed carrier trucking services. - - -

08/04/15 Courier ExpressDicomTransportation

Supplies last mile delivery services. - - -

07/28/15Stagecoach Cartage and Distribution

Roadrunner Transportation

Provides full trailer load and less than truckload transportation, public warehouse and distribution, bulk transfer and freight forwarding.

$40.0 1.2x 5.7x

07/28/15 ClearPointtCAI International

Offers intermodal, LTL and over-dimensional shipment services as a transportation and logistics company.

$4.1 0.1x -

07/27/15Charleston Freight Station

MainOceanOffers container freight station services, including warehousing, transportation and logistics.

- - -

07/21/15 T&R TransportGibson Energy

Provides fresh water transportation, flow back water transportation, oil transport and pipe hauling services.

$35.0 - -

07/16/15G4S International Logistics

UPS Offers secure transportation and delivery services for high value parcels. - - -

07/01/15Bulldog HiwayExpress

DasekeProvides truck load and intermodal carrier services in the United States and Canada.

- - -

06/18/15The Kenan Advantage

OMERS Supplies tank truck transportation and logistics services in North America. - - -

06/17/15 Orbis LogisticsDicomTransportation

Supplies products distribution and delivery services. - - -

06/17/15 P.M. TransportReliable Tank Line

Provides for-hire transportation of petroleum products. - - -

06/08/15 Twiss Transport Bulova Technologies Offers logistics, storage and transportation services. - - -

05/21/15Horizon Tank Lines

HeniffTransportation

Provides transportation of hazardous materials and chemicals in North Carolina.

- - -

05/25/15 Hodges Trucking Aveda Transportation

Supplies oilfield and heavy haul transportation company. $42.0 0.3x 3.0x

05/18/15 Baldwin Transfer Elite Logistics Operates warehouse spaces and handles regional van freight. - - -

05/13/15 Hazen Final Mile TransForce Offers co-mingled, dedicated and white glove delivery services. - - -

05/06/15Quality Distribution

Apax Transports bulk chemicals in North America. $783.4 0.8x 12.2x

05/06/15 Vallerie ServicePremier Trailer Leasing

Rents trailers for road freight, DIY moving and storage applications. - - -

04/07/15 TNT Express FedExProvides express delivery services of documents, parcels and palletized freight, as well as provides supply chain solutions.

$4,579.7 0.6x 35.1x

03/23/15 Bessemer Supply Aim ServicesOffers hauling services for building materials, oil and gas, steel and other industries.

- - -

03/03/15Post Transportation &Pacific Transportation

Haney Truck Line Operates dry-haul freight carriers. - - -

03/03/15Milestone Equipment

Wood Creek Supplies transportation equipment leasing and asset management. - - -

03/02/15Pegasus Transportation

CRST International Provides truckload/split truckload services in the United States. - - -

02/09/15UX Specialized Logistics

XPO Last MileProvides logistics services including single-item B2C delivery and assembly and large-scale B2B furniture installations.

$59.0 0.5x 7.2x

02/04/15 CLP Towne Forward AirOffers full-service trucking and time-sensitive, less- than-truckload shipments for air freight.

$125.0 - -

02/03/15Energy Transportation

NC Energy Services US

Offers oversized, overweight and specialized transportation that provides heavy-haul, crane and rigging, rail distribution and brokerage services.

- - -

01/30/15 Landis Express S & H Express Supplies outbound load-to-ride services. - - -

01/26/15 Taylor Express Celadon Provides bulk carbon-black, silica and dry-van transportation services. $43.0 1.1x -

TRUCKING: SELECT M&A TRANSACTIONS



AIR FREIGHT & LOGISTICS: SELECT M&A TRANSACTIONS


EV / LTM


09/17/15 M33 Integrated Transplace Provides logistics, supply chain and transportation management services. - - -

09/10/15 IJS Global GEFCO Provides freight forwarding and logistics services. - - -

08/27/15 TrumpCardMagnate Worldwide

Offers air freight services. - - -

08/17/15Liberty International

Janel Offers international freight forwarding services. - - -

08/17/15Ozburn-HesseyLogistics

Geodis Provides third party logistics services. - - -

08/04/15AirNet Systems

KalittaCharters

Supplies cargo charters and parcel shipping services. - - -

07/31/15 Coyote Logistics UPSProvides third-party transportation and logistics services for Fortune 100 companies.

$1,800.0 0.9x -

07/30/15North & South Logistics

Transport United

Supplies third party logistics services to the household goods industry. - - -

07/30/15FedEx Freight in West Jefferson, Ohio

Griffin Capital Comprises a truck terminal and is a regional hub for shipments. $28.0 - -

07/21/15EXTRA Express Cerritos

DicomTransportation

Offers logistics, transportation, distribution and warehousing services. - - -

06/25/15 ReTrans Kuehne + NagelProvides transportation and logistics management services ranging from load planning and scheduling to multimodal shipping.

- - -

06/19/15Armstrong Transportation

Logikor Offers logistics services. - - -

06/15/15 Parcel Pro UPS Capital Provides insured shipping and logistics services. - - -

06/12/15Pinnacle Workforce Logistics

Capstone Logistics Provides workforce logistics services in the United States. - - -

06/09/15Highways & Skyways

Radiant Logistics Offers logistics management. - - -

06/08/15 Service By Air Radiant Logistics Provides air freight shipping and global logistics. $11.9 0.1x -

06/08/15RoadOneIntermodaLogistics

Tritium Partners Provides intermodal transportation and related logistics services. - - -

06/01/15 ABC Fulfillment TAGG LogisticsSupplies logistics and fulfillment services for e-commerce, flash sales, product samples, marketing materials and more.

- - -

06/01/15 Haas IndustriesLynden International

Provides logistics services. It offers storage, distribution and order fulfillment services.

- - -

05/25/15Rock-It Cargo USA

Management BuyoutProvides freight forwarding and logistics services through air, sea and land.

- - -

05/21/15Despachos HuGo &Laredo Becnel

ScarbroughInternational

Offers customs brokerage, logistics services and freight forwarding. - - -

05/05/15 BorderfreePitney Bowes International

Provides cross-border ecommerce solutions, including international customs clearance, product classification, parcel fulfillment and returns.

$464.8 3.0x NM

04/27/15 WFS Global Platinum EquityProvides cargo handling services to airlines and airports in France and internationally.

- - -

04/28/15Norbert Dentressangle

XPO Logistics Supplies transport, logistics and air and sea freight forwarding services. $3,010.0 0.7x 10.4x

04/27/15Marketing Support Solutions

Integrated Distribution& Logistics

Provides logistics and fulfillment services to customers in the continental United States.

- - -

04/21/15Command Transportation

Echo Global Logistics

Provides freight brokerage services for Fortune 500 and other clients. $411.4 0.7x 11.2x

04/20/15MR Coal Marketing & Trading

Noble Americas Offers logistic services. $23.9 - -

03/24/15China Interocean Transport

Sinotrans AirProvides logistics services, international air freight forwarding and documentation and airport-to-airport and door-to-door services.

- - -

03/23/15Transfreight North America

Penske LogisticsProvides third-party logistics services, including lean logistics, supply chain and network optimization.

- - -

02/27/15 Prestige Delivery Lasership Supplies same day and next day delivery and logistics services. - - -

02/26/15 NEPW LogisticsHyde Park Holdings

Provides outsourced logistics services for customers to store, handle and transport their raw materials and finished products.

- - -

02/26/15 ITS LogisticsMcNally & Coughlin

Supplies third party logistics (3PL) services. - - -

02/18/15Florida West International Airways

Worldwide Air Logistics

Provides air cargo services in the United States and internationally. - - -

02/17/15 APL LogisticsKintetsu World Express

Provides supply chain solutions, including freight management, ocean freight forwarding and air freight forwarding.

$1,200.0 0.7x 15.0x



MARINE: SELECT M&A TRANSACTIONS


EV / LTM


09/22/15 SeaFreightCrowley Maritime

Provides ocean transportation services to North America, the Caribbean, South America and Central America.

- - -

09/10/15 Conquer Logistics MainOcean Provides marine freight transportation and logistics services. - - -

08/05/15 SPT Teekay TankersProvides ship to ship cargo transfer services in the United States and internationally.

$44.4 - -

07/21/15 Raven Energy SunCoke Energy Operates a marine export terminal on the US Gulf Coast. $412.0 - -

05/08/15Caribbean Shipping

AmericanFast Freight

Supplies refrigerated freight forwarding services in Puerto Rico. - - -

05/05/15S.C. NorthStar Shipping

Archer-DanielsMidland

Provides shipping agency, freight forwarding and chartering services in Romania.

- - -

05/04/15 Bridge Terminal XPO LogisticsOffers marine container transportation services in the United States and Canada.

$100.0 0.4x 8.1x

04/30/15Marathon Petroleum

MPLX Transports light products throughout the Midwest and Gulf Coast regions. - - -

04/08/15 Baltic TradingGenco Shipping & Trading

Ships in the drybulk industry and operates a fleet of drybulk ships that transport iron ore, coal, grain and steel products.

$295.1 4.9x 23.8x

03/13/15Marquette Transportation

BDT Capital Provides marine transportation solutions. - - -

02/05/15Horizon Lines of Puerto Rico

Luis A. Ayala Colón Sucrs

Provides cargo management and tracking services. $7.3 - -

01/20/15 United Maritime GS MaritimeTransports petroleum coke, phosphate, coal, grain and other bulk commodities in the US and internationally.

- - -

RAIL: SELECT M&A TRANSACTIONS


EV / LTM


09/30/15General Electric Capital Rail

First Union Rail Provides railcar fleet management services. - - -

09/30/15GE Rail, Railroad Tank Cars and Facilities

Marmon Comprises of a tank car fleet assets and railcar repair facilities. - - -

07/14/15Transportation Technology Services

BNSF Logistics Offers rail transportation of freight. - - -

06/25/15Carolina Southern Railroad

R.J. CormanRailraod

Operates an 80-mile shortline railroad in Eastern North and South Carolina.

$13.9 - -

06/17/15CSX, Framingham Secondary Rail Line

Massachusetts DOT Comprises a rail line. $23.0 - -

06/09/15Salt Lake Garfield & Western Railway

Buckaroo Provides railroad transportation services on 10 miles of track. - - -

05/18/15West Texas and Lubbock Railroad

Watco Provides railroad services to the oil fields of Texas and New Mexico and transports fertilizer, construction aggregates and other supplies.

- - -

04/06/15Rail Offloading Facility in El Dorado, Arkansas

Delek Logistics Comprises a rail loading facility. $42.5 - -

03/15/15 Penguin Logistics EnergySolutionsProvides integrated packaging, transportation and logistics solutions for generators and shippers of radioactive and hazardous waste.

- - -

03/03/15 Milestone EquipmentWood Creek Capital

Offers motor carrier and rail industry related intermodal equipment - - -

02/24/15 FreightlinerGenesee & Wyoming

Provides rail freight services for blue-chip organizations. $511.0 1.1x -

02/23/15 Peru Rail Line OmniTRAXComprises three miles of track in Peru, IL for the purpose of moving freight, including frac sand and industrial products.

- - -

02/04/15 Railroad ControlsWestinghouse AirBrake Technologies

Operates as a railroad signal construction and material integration company in North America.

- - -

01/21/1531 Terminal Operations of Kinder Morgan

Watco Comprises traditional rail to truck transload and switching facilities. - - -

PUBLIC COMPANY TRADING & OPERATING DATA



$ in millions, except per share data EV = enterprise value; LTM = last twelve months; NM = Not Meaningful Source: Capital IQ

Trucking Price % 52 Wk Market Enterprise LTM 1-Yr Rev EV / LTMCompany 10/6/15 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA

ArcBest Corporation $26.59 56.0% $690 $605 $2,686 $172 6.4% 10.1% 0.2x 3.5x

Celadon Group Inc. $16.25 55.7% 453 991 901 118 13.1% 18.6% 1.1x 8.4x

Con-way Inc. $47.47 92.6% 2,699 2,990 5,745 496 8.6% 2.3% 0.5x 6.0x

Covenant Transportation Group, Inc. $19.45 52.8% 355 495 727 112 15.4% 6.6% 0.7x 4.4x

Heartland Express, Inc. $20.69 74.0% 1,818 1,738 799 208 26.1% 4.4% 2.2x 8.3x

JB Hunt Transport Services Inc. $73.24 78.3% 8,514 9,402 6,191 1,003 16.2% 5.6% 1.5x 9.4x

Knight Transportation Inc. $24.71 71.1% 2,010 2,085 1,181 274 23.2% 17.8% 1.8x 7.6x

Marten Transport Ltd. $16.98 68.1% 571 566 670 123 18.4% 1.3% 0.8x 4.6x

Old Dominion Freight Line Inc. $63.16 77.5% 5,388 5,521 2,923 638 21.8% 15.4% 1.9x 8.7x

Saia, Inc. $31.70 55.0% 791 896 1,259 162 12.9% 4.6% 0.7x 5.5x

Swift Transportation Company $16.27 55.3% 2,316 3,675 4,289 620 14.4% 2.3% 0.9x 5.9x

Universal Truckload Services Inc. $16.00 55.1% 454 655 1,163 116 10.0% 5.0% 0.6x 5.7x

USA Truck Inc. $18.28 56.9% 192 277 570 62 10.8% (2.0)% 0.5x 4.5x

Werner Enterprises Inc. $25.52 76.4% 1,835 1,862 2,135 346 16.2% 3.5% 0.9x 5.4x

YRC Worldwide Inc. $14.73 58.0% 482 1,371 4,985 278 5.6% (0.1)% 0.3x 4.9x

Mean 14.6% 6.4% 1.0x 6.2x

Median 14.4% 4.6% 0.8x 5.7x

Harmonic Mean 12.1% NM 0.6x 5.7x

Rail Price % 52 Wk Market Enterprise LTM 1-Yr Rev EV / LTMCompany 10/6/15 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA

Canadian Pacific Railway Limited $150.97 80.6% $24,300 $29,297 $5,407 $3,053 56.5% 6.6% 5.4x 9.6x

Canadian National Railway Company $59.05 86.9% 47,151 54,227 10,057 6,089 60.5% 11.5% 5.4x 8.9x

CSX Corp. $27.83 73.3% 27,377 36,398 12,504 4,919 39.3% 1.9% 2.9x 7.4x

Genesee & Wyoming Inc. $65.86 62.4% 3,564 5,903 1,787 591 33.1% 12.9% 3.3x 10.0x

Kansas City Southern $95.62 75.6% 10,553 12,963 2,509 1,090 43.4% 0.6% 5.2x 11.9x

Norfolk Southern Corporation $79.98 68.0% 24,105 32,886 11,173 4,277 38.3% (2.3)% 2.9x 7.7x

Providence and Worcester Railroad Company $16.25 80.4% 79 72 35 7 18.9% 4.5% 2.0x 10.8x

Union Pacific Corporation $93.71 75.3% 81,311 92,609 23,378 10,587 45.3% 2.3% 4.0x 8.7x

Mean 41.9% 4.7% 3.9x 9.4x

Median 41.4% 3.4% 3.6x 9.3x

Harmonic Mean 37.4% NM 3.5x 9.2x

PUBLIC COMPANY TRADING & OPERATING DATA (CONTINUED)



$ in millions, except per share data EV = enterprise value; LTM = last twelve months; NM = Not Meaningful Source: Capital IQ

Marine Price % 52 Wk Market Enterprise LTM 1-Yr Rev EV / LTMCompany 10/6/15 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA

Costamare Inc. $13.21 62.2% $992 $2,494 $490 $318 64.9% 6.2% 5.1x 7.9x

Diana Shipping Inc. $6.84 74.5% 568 918 172 42 24.5% 3.7% 5.3x 21.8x

Kirby Corporation $64.83 57.0% 3,551 4,365 2,480 622 25.1% 6.1% 1.8x 7.0x

Matson, Inc. $41.05 93.6% 1,787 2,288 1,731 230 13.3% 4.6% 1.3x 9.9x

Nordic American Tankers Limited $16.79 99.7% 1,497 1,642 426 135 31.6% 50.2% 3.9x 12.2x

Rand Logistics, Inc. $2.13 37.5% 38 239 154 31 20.3% 2.5% 1.5x 7.6x

SEACOR Holdings Inc. $63.40 76.3% 1,135 1,702 1,223 184 15.0% (6.1)% 1.4x 9.2x

Mean 27.8% 9.6% 2.9x 10.8x

Median 24.5% 4.6% 1.8x 9.2x

Harmonic Mean

22.0% NM 2.1x 9.5x

Expedited & Air Price % 52 Wk Market Enterprise LTM 1-Yr Rev EV / LTMCompany 10/6/15 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA

Atlas Air Worldwide Holdings, Inc. $38.94 65.5% $976 $2,430 $1,855 $391 21.1% 7.8% 1.3x 6.2x

FedEx Corporation $149.92 81.0% 42,334 46,049 48,048 7,220 15.0% 3.9% 1.0x 6.4x

Forward Air Corp. $43.07 74.7% 1,337 1,407 871 133 15.2% 21.6% 1.6x 10.6x

United Parcel Service, Inc. $101.53 88.8% 90,990 97,980 58,257 8,292 14.2% 3.0% 1.7x 11.8x

Mean 16.4% 9.1% 1.4x 8.8x

Median 15.1% 5.9% 1.5x 8.5x

Harmonic Mean

16.0% 5.3% 1.3x 8.1x

Logistics Price % 52 Wk Market Enterprise LTM 1-Yr Rev EV / LTMCompany 10/6/15 High Cap Value Revenue EBITDA Margin Growth Revenue EBITDA

CH Robinson Worldwide Inc. $70.04 90.4% $10,142 $11,100 $13,671 $854 6.2% 4.2% 0.8x 13.0x

Echo Global Logistics, Inc. $21.26 61.9% $657 $820 $1,276 $41 3.2% 26.4% 0.6x 19.9x

Expeditors International of Washington Inc. $48.75 97.3% 9,222 8,192 6,843 716 10.5% 9.4% 1.2x 11.4x

Hub Group Inc. $38.45 87.4% 1,408 1,368 3,564 137 3.8% 1.5% 0.4x 10.0x

Landstar System Inc. $64.62 79.0% 2,816 2,809 3,314 263 7.9% 15.4% 0.8x 10.7x

Roadrunner Transportation Systems, Inc. $18.59 65.2% 711 1,135 2,038 136 6.7% 29.6% 0.6x 8.3x

TransForce Inc. $19.05 78.9% 1,914 3,195 3,353 487 14.5% 29.6% 1.0x 6.6x

UTi Worldwide Inc. $4.69 31.8% 497 1,047 3,929NM NA (10.0)% 0.3x NM

World Fuel Services Corp. $38.07 65.1% 2,733 3,026 37,330 309 0.8% (12.8)% 0.1x 9.8x

XPO Logistics, Inc. $27.55 54.1% 2,627 6,499 3,412 176 5.2% 159.6% 1.9x NM

Mean 6.5% 25.3% 0.8x 11.2x

Median 6.2% 12.4% 0.7x 10.3x

Harmonic Mean

3.5% NM 0.4x 10.2x

-50.00%

-30.00%

-10.00%

10.00%

30.00%

50.00%

70.00%

90.00%

Road Transportation of Freight Rail Transportation of Freight Marine Transportation of Freight

Air Transportation of Freight Transportation Logistics S&P 500 Index

TRANSPORTATION & LOGISTICS MACROECONOMIC INDICATORS



CAPSTONE

TRANSPORTATION &

LOGISTICS INDEXES

(VS. S&P 500)

Road, Rail and Air transportation of freight has consistently

outperformed the S&P 500, while Logistics and Marine

Transportation continue to see

performance declines.

TRUCK TONNAGE INDEX

(Seasonally Adjusted)

Source: American Trucking Associations

Truck tonnage grew 1.1% in July, rebounding from slow Spring and Summer months, on the strength of increased retail sales, factory

output and housing starts.

Rail Freight

Intermodal Traffic

(Seasonally Adjusted)

Source: US Department of Transportation

Intermodal traffic has declined since its significant rise in the

Spring on increased demand for grain, metallic ores and crushed

stone, sand and gravel. Weak rail coal traffic, down 12.5% in July

year-over-year, has heavily influenced the decline as

electricity producers leverage lower natural gas prices.

Source: CapIQ

90

100

110

120

130

140

Jan

-201

0

Mar

-201

0

May

-201

0

Jul-

2010

Sep

-201

0

No

v-20

10

Jan

-201

1

Mar

-201

1

May

-201

1

Jul-

2011

Sep

-201

1

No

v-20

11

Jan

-201

2

Mar

-201

2

May

-201

2

Jul-

2012

Sep

-201

2

No

v-20

12

Jan

-201

3

Mar

-201

3

May

-201

3

Jul-

2013

Sep

-201

3

No

v-20

13

Jan

-201

4

Mar

-201

4

May

-201

4

Jul-

2014

Sep

-201

4

No

v-20

14

Jan

-201

5

Mar

-201

5

May

-201

5

Jul-

2015

800,000

850,000

900,000

950,000

1,000,000

1,050,000

1,100,000

1,150,000

1,200,000

1,250,000

1,300,000

Jan

-201

0

Mar

-201

0

May

-201

0

Jul-

2010

Sep

-201

0

No

v-20

10

Jan

-201

1

Mar

-201

1

May

-201

1

Jul-

2011

Sep

-201

1

No

v-20

11

Jan

-201

2

Mar

-201

2

May

-201

2

Jul-

2012

Sep

-201

2

No

v-20

12

Jan

-201

3

Mar

-201

3

May

-201

3

Jul-

2013

Sep

-201

3

No

v-20

13

Jan

-201

4

Mar

-201

4

May

-201

4

Jul-

2014

Sep

-201

4

No

v-20

14

Jan

-201

5

Mar

-201

5

May

-201

5

Jul-

2015

Seasonally-Adjusted Rail Freight Intermodal Traffic



CAPSTONE PARTNERS: SELECT TRANSPORTATION & LOGISTICS TRANSACTIONS

Capstone Partners LLC has been engaged to facilitate the sale of two separate

operating divisions of a niche transportation services Company, its Heavy Haul and

Bulk transportation divisions. Operating from its Western US headquarters, the

Company’s trucks operate within 12 Western States, all 48 contiguous States and

Canada, through its various carrier relationships. Each division has long-standing

and repeat customers.

CAPSTONE PARTNERS: SELECT RELEVANT TRANSACTIONS

is pursuing a divestiture of

SPECIALTY HEAVY HAUL & BULK

TRANSPORTATION DIVISIONS

PROJECT HEAVY HAUL

(CONFIDENTIAL)

Capstone was retained by the shareholders of Rentacrate Inc., the largest US

provider of rental equipment and logistics solutions for the relocation of

commercial and residential property, to secure a financial or strategic partner to

recapitalize the Company. The Company’s niche leadership position was built

through a proprietary, engineered plastic crate system that is supported by a

network of moving affiliates and world class customer service. Capstone identified

a significant number of private equity sponsors and strategic investors, running a

full process. Through Capstone’s efforts, an individual investor, who recently sold

his own business to a national office products retailer, was brought in to work with

the shareholders to develop a solution which would be beneficial to all parties. The

shareholders sold approximately 85% of the Company and retained receivables.

has been

acquired by

BROWN INVESTMENTCOMPANY LLC

Capstone Partners LLC has been engaged to facilitate the sale of a leading

distributor of animal feed ingredients. The Company leverages an established

logistics team that utilizes real-time status updates via GPS and advanced

computer tracking systems to facilitate the shipment of the orders, including

intermodal shipping, full container load, less than container load, refrigerated

shipments and HAZMAT Shipping. Dedicated company equipment includes dry van

trailers, end dump trailers, tanker trailers, pneumatic trailers and flatbeds.

is pursuing a corporate sale

ANIMAL FEED DISTRIBUTION AND

LOGISTICS

PROJECT SAINT

(CONFIDENTIAL)

Capstone Partners LLC has been engaged to facilitate the sale of a Northeast US

based regional less-than-truckload carrier of industrial and commercial products.

The Company also offers direct service into and out of Canada, as well as air and

ocean inland trucking to and from multiple ports. HAZMAT endorsed, the Company

benefits from multiple terminals in key Northeast locations, a diversified customer

base in attractive industries and a highly specialized management technology

platform to drive revenue growth.

is pursuing a corporate sale

REGIONAL LESS-THAN-TRUCKLOAD

CARRIER

PROJECT SHEPHERD

(CONFIDENTIAL)


Len Batsevitsky, Director

[email protected] • (617) 619-3365

With over 15 years of investment banking and financial advisory experience, Len has

developed extensive M&A transaction expertise serving as an adviser to middle

market companies on the buy-side and sell-side as well as advising on capital raising

transactions. In the past several years, he has been successful in executing M&A or

capital raising transactions with an aggregate value of nearly half a billion dollars.

Len also has extensive financing knowledge having spent six years working in

commercial lending/underwriting for Santander Bank. Prior to investment banking

and commercial lending, Len began he career at PricewaterhouseCoopers LLP. Len is

a graduate of the University of Buffalo with a BS in Finance and Accounting. Len is a

Certified Public Accountant, CFA Charterholder and Registered Securities

Representative having passed the FINRA Series 79 and 63 examinations.

Daniel Schultz, Director of Business Development


Dan oversees Capstone’s national business development and industry coverage

activities, working closely with current and prospective clients of the firm on matters

related to corporate sales, recapitalizations, mergers & acquisitions and growth

financings. In his role, Dan is able to deliver specific market intelligence to clients

regarding M&A, financing, strategic, industry and competitive trends. Prior to

spearheading the firm’s business development and market initiatives, he was a Vice

President in Capstone’s M&A group, managing numerous successful transactions

across a variety of industries. Dan also gained hands-on transaction experience as an

investment banker at Headwaters MB. He started his career with Ernst & Young’s

National Professional AABS practice and later worked in Assurance and Advisory

Business Services in the Denver office. Dan received a BE in Biomedical Engineering

with a Business Minor from Vanderbilt University. He earned an MBA and a Master

of Accountancy from the Daniels College of Business at the University of Denver.

Matthew Person, Associate


Matthew works closely with senior team members while executing a variety of

corporate finance transactions. Prior to joining Capstone, Matthew worked as an

investment banker with a consumer products M&A boutique firm. He also worked

with Breakaway Innovation Group, a hybrid venture capital and strategy firm focused

on early to growth stage businesses. Before entering the finance industry, Matthew

enjoyed a long career in professional sports management with executive operations

responsibility for various Minor League Baseball franchises. He earned an MBA in

Entrepreneurship and an MS in Finance from the Carroll School of Management at

Boston College, graduating with honors as a member of Beta Gamma Sigma. He

holds a BA in Economics from Colgate University and is a Registered Securities

Representative having passed the FINRA Series 79 and 63 examinations.


THE TRANSPORTATION & LOGISTICS TEAM

ABOUT CAPSTONE PARTNERS

Capstone Partners LLC is a premier investment banking firm dedicated to serving

the corporate finance needs of middle market business owners, investors and

creditors. The firm provides M&A, corporate restructuring, private placement and

financial advisory services. Headquartered in Boston, Capstone has offices in

Chicago, London, Los Angeles, Philadelphia, San Diego, Silicon Valley and Tampa

with an international presence that spans 450+ professionals in close to 40

countries.

© 2015 Capstone Partners LLC. All rights reserved.

World Class Wall Street Expertise. Built for the Middle Market.

CAPSTONE’S OFFICE LOCATIONS

BOSTON

176 Federal Street

3rd Floor

Boston, MA 02110

(617) 619-3300

CHICAGO

200 South Wacker Drive

Suite 3100

Chicago, IL 60606

(312) 674-4531

LONDON

42 Brook Street

London W1K 5DB

United Kingdom

+44 (0) 203 427 5068

LOS ANGELES

23046 Avenida de la Carlota

Suite 600

Laguna Hills, CA 92653

(949) 460-6431

PHILADELPHA

1515 Market Street

12th Floor

Philadelphia, PA 19102

(215) 854-4063

SAN DIEGO

12707 High Bluff Drive

Suite 200

San Diego, CA 92130

(858) 926-5950

SILICON VALLEY

228 Hamilton Avenue

3rd Floor

Palo Alto, CA 94301

(650) 319-7370

TAMPA

1550 W Cleveland Street

Suite 10

Tampa, FL 33679

(813) 251-7285

For more information

about our expertise,

please visit

www.capstonellc.com

Documents

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