Echo Global Logistics Investor Presentation November 2018 P E O P L - - PowerPoint PPT Presentation

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Echo Global Logistics Investor Presentation November 2018 P E O P L - - PowerPoint PPT Presentation

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Echo Global Logistics Investor Presentation November 2018 P E O P L E T E C H N O L O G Y R E S U L T S Echo Global Logistics Leading provider of technology-enabled transportation and supply chain management solutions Proprietary

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SLIDE 1

P E O P L E • T E C H N O L O G Y • R E S U L T S

Echo Global Logistics

November 2018

Investor Presentation

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SLIDE 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

  • 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
  • rder and delivery process
  • Aligns demand with network capacity
  • Increases utilization of assets
  • Optimizes open lanes and backhauls
  • Lower client service costs
  • Shortens billing cycle, improving working capital

Value Proposition to Shippers Value Proposition to Carriers One of the largest growing 3PLs with TTM gross revenue over $2.4Bn

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Unique Logistics Platform

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

Echo’s Key Attributes and Highlights

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SLIDE 4

Broad Cross-Country Employee Network 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 $25K – $50MM National $50MM – $2Bn+ Managed Transportation (Enterprise) SMB $500K – $10MM National $10MM – $200MM Indicates primary market need, offered by Echo Indicates secondary market need, offered by Echo

Echo at a Glance

Detroit,MI Chicago,IL Bend,OR Boston,MA Green Bay,WI Jacksonville,FL Denver,CO Minneapolis,MN Houston,TX Yorba Linda,CA Rochester,NY Sacramento,CA Watsonville,CA Portland,OR San Ramon,CA Clearwater,FL Albany,IN Long Beach,CA San Francisco, CA Sandy,UT Lockport,IL Dallas,TX Kansas City,KS

  • St. Louis,MO

Atlanta,GA Nashville,TN Park City,UT Lake Havasu,AZ Scottsdale,AZ Port Sanilac, MI

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SLIDE 5
  • 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

Product Offerings

Diverse Multimodal Portfolio

Truckload Brokerage

  • Differentiated model to efficiently aggregate capacity in

fragmented market

  • Centralized, role-based execution
  • 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

  • 1. Fleet size available for 86% of loads as of Q3 2018

TL Carrier Profile by Fleet Size (# of trucks) (1) LTL Brokerage 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

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< 10 17% 10-50 35% 50-100 18% 100-500 14% >500 16% < 10 10 - 50 50 - 100 100 - 500 > 500

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SLIDE 6

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7 33 95 203 260 426 603 758 884 1,173 1,512 1,716 1,943 2,445 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Building on a Strong Track Record of Growth

2009 Echo IPO 2006 Doug Waggoner joins Echo from USF Bestway 2005 Echo founded

2005 – 2017 Gross Revenue CAGR

60%

Gross Revenue ($MM) 2014 Echo exceeds $1Bn in gross revenue

Note

  • 1. 2018 reflects the midpoint of revenue guidance given during the earnings call on October 24, 2018

2018 Anticipated Revenue Exceeds $2.4B 2015 Echo acquires Command Transportation

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SLIDE 7

Industry Leading Technology Platform

Pricing Engines Analytics

Client Facing Portal

  • 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

Echo Technology Platform

Digital Freight Matching Carrier Facing Portals Artificial Intelligence

Visibility Reporting

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SLIDE 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 and Hustle

“The Hub” Learning Management System: Live stream meetings, social groups, knowledge banks Echo Engage Recognition, sentiment polling, achievements, performance and career discussions, real-time feedback, goals Echo News Network Intranet streamlining communication with real-time updates and business collaboration tools Virtual Meetups Live streaming and video chats Applicant Tracking Promoting internal movement, improve hiring manager experience and candidate selection effectiveness

Award-Winning Culture Connected Workforce

Employees

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324 2,651 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 3Q18

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104 114 119 127 107 127 134 142 146 157 161 167 184 200 75 150 225 300 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E Echo outperformed through financial crisis ($MM)

Attractive Market

Gross Revenue ($Bn)

The US 3PL market has grown meaningfully from $104 billion in 2005 to $184 billion for 2017

Growing US 3PL Market

$203 $260 $426 Source Armstrong & Associates Research

  • 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 2014

Highly Fragmented North American Broker and Carrier Market

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Multiple Growth Drivers

Grow and Enhance Sales Force Productivity and Sales Offering

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

Productivity vs Tenure

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

Leverage TL Scale and Technology

  • Advanced matching and pricing technologies
  • Superior access to capacity
  • Client centric, and carrier’s first choice

1 4 3

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Continue Acquisitions

  • Growth from future acquisitions
  • Brokerage market is highly fragmented with hundreds of smaller players
  • Echo has completed 21 acquisitions in 12 years

Placeholder for EPS 2 2

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SLIDE 11

Months

Sales Force Maturity

Driving Productivity Gains

Sales Tenure (Months) (1)

Months

  • Tenure is lengthening
  • Increasing share of wallet
  • Expanding truckload national accounts

Client Rep Productivity by Months of Tenure (2) (3)

Gross Profit (000s)

Highlights

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

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16.0 17.3 18.6 20.6 21.2 20.2 20.7 25.6 28.9 30.8 31.7 32.2 33.6 34.4 10.0 15.0 20.0 25.0 30.0 35.0

250 500 750 1,000 Oct15-Sep16 Oct16-Sep17 Oct17-Sep18

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SLIDE 12

Freight Cycle Dynamics

Illustrative Freight Cycle

Index of Supply and Demand

Supply Demand

Strong Macro Environment Weak Macro Environment

Demand Exceeds Supply

  • Good margins
  • Significant

volumes of spot at high margins Expanding margins as demand falls faster than supply Soft Market

  • Reduced prices
  • Plenty of

capacity Contracting margins as demand rises faster than supply Demand Exceeds Supply

  • Good margins
  • Significant

volumes of spot at high margins

A B C D A

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SLIDE 13

Awards and Recognition

  • #1 – Inbound Logistics’ Readers’ Choice Top 10 3PL

Excellence Awards (2017, 2018)

  • Inbound Logistics’ Top 10 3PLs (2011–2018)
  • Inbound Logistics’ Top 100 3PLs (2007–2018)
  • #4 – Transport Topics’ Top Freight Brokerage Firms

(2016, 2017)

  • Transport Topics’ Top 50 Logistics Companies (2014–

2017)

  • Global Trade’s America’s Leading 3PLs (2013–2017)
  • Built in Chicago’s Top 100 Digital Companies (2012–

2017)

  • 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 (2010–2017)
  • #47 – Crain’s Chicago Business’s 50 Fastest-Growing

Companies (2016)

  • Quaker Oats: Regional Broker of the Year (2015)
  • Chicago’s 101 Best and Brightest Places to Work For

(2016–2018)

  • Fortune 1000 Company #969 (2018)
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SLIDE 14

Financial Performance & 2018 Guidance

Gross Revenue Net Revenue Adjusted EBITDA(1)

$ MM $ MM $ MM

603 758 884 1,173 1,512 1,716 1,943 750 1,500 2,250 3,000 2011 2012 2013 2014 2015 2016 2017 117 143 156 208 290 319 339 100 200 300 400 2011 2012 2013 2014 2015 2016 2017 28 36 37 50 70 72 62 23 45 68 90 2011 2012 2013 2014 2015 2016 2017 19.4% 18.9% 17.6% 17.7% 19.2% 18.6% 17.4%

% of Gross Revenue

24% 25% 24% 24% 23% 23% 18%

% of Net Revenue

26% 17% 33% 29% 13% 13%

% Growth

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

  • 2. 2018 Guidance reflects guidance given during the earnings call on October 24, 2018

2018 Guidance(2)

FY-2018 Q4-2018

Gross Revenue $2.425 - 2.465B $570 - 610M Commission % 30.0 – 31.0% 30.5% G&A $194 - 197M $46.5 – 49.5M

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Historical Financial Information

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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 5.8 7.0 8.2 10.0 12.4 16.3 18.5 Amortization 2.5 2.2 2.3 3.9 11.7 15.8 14.2 Non-cash interest expense

  • 4.9

7.6 8.1 Cash interest expense

  • 4.3

6.6 6.7 Income tax expense (benefit) 6.6 7.9 8.6 10.4 3.7 (0.2) (8.3) EBITDA 26.9 29.4 33.3 41.1 44.8 47.7 51.8 Change in contingent consideration (0.2) (0.1) 0.1 2.2 0.2 (0.1) 1.0 Acquisition related transaction costs

  • 1.5

6.6

  • Term Loan B commitment fees (non-recurring interest expense)
  • 2.0
  • Non-recurring settlement costs
  • 0.7
  • Loss related to Shipper Direct acquisition
  • 2.5
  • Stock compensation expense

1.3 2.7 3.3 4.4 14.0 13.1 9.0 Other expense 0.3 0.4 0.4 0.3 0.2

  • 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)

  • 0.09

0.01 (0.00) 0.04 Amortization 0.11 0.10 0.10 0.17 0.42 0.54 0.51 Acquisition-related transaction costs

  • 0.06

0.23

  • Non-cash interest expense
  • 0.17

0.26 0.29 Term Loan B commitment fees (non-recurring interest expense)

  • 0.07
  • Non-recurring settlement costs
  • 0.11
  • Loss related to Shipper Direct acquisition
  • 0.03
  • Stock Compensation Expense

0.06 0.12 0.14 0.19 0.50 0.45 0.32 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 $ 0.86 $