Robert Ullman Managing Director rullman@dinancapital.com 415.613.4114 NORTH AMERICAN LOGISTICS M&A Activity and Valuation Trends Q2 2016 William Downing Director wdowning@dinancapital.com 602.734.0682 Michael Pucci Vice President mpucci@dinancapital.com 602.734.0667 Michael Hilcove Associate mhilcove@dinancapital.com 602.734.0626 Michael Reister Analyst mreister@dinancapital.com 602.734.0663
Table of Contents Section Page I. Economic Indicators 3 II. Dinan Index Constituents 5 III. Capital Market Activity 6 IV. Public Sector Valuations 7 V. Mergers and Acquisitions Overview 8 VI. Second Quarter Transactions Overview 9 VII. Dinan Capital Advisors 10
Percent Change, Index Price 10% Economic Indicators Macroeconomic Overview Major Indices Performance 0% -10% -20% -30% S&P 500 Index (^SPX) - Index Value NASDAQ Composite Index (^COMP) - Index Value Dow Jones Industrial Average (^DJI) - Index Value Russell 2000 Index (^RUT) - Index Value As of As of As of As of Index 9/30/2015 12/31/2015 3/31/2016 6/30/2016 ^SPX 1,920.02 2,043.94 2,059.74 2,098.86 ^COMP 4,620.16 5,007.41 4,869.85 4,842.67 ^DJI 16,284.70 17,425.03 17,685.09 17,929.99 ^RUT 1,100.68 1,135.89 1,114.03 1,151.92 Major Economic Indicators Economic Indicator 2011 2012 2013 2014 2015 Real GDP (% change) 1.60% 2.30% 2.20% 2.40% 3.00% CPI (% change) 3.10% 2.10% 1.50% 1.62% 1.90% Cons. Spending (% change) 2.30% 1.80% 2.40% 2.50% 2.90% Nonfarm Productivity 0.10% 1.00% 0.90% 0.70% -2.20% Unemployment Rate 9.00% 8.10% 7.40% 6.20% 5.80% Interest Rates Interest Rates 9/30/2015 12/31/2015 3/31/2016 6/30/2016 United States Treasury - 2 Year 0.63% 1.05% 0.73% 0.59% United States Treasury - 5 Year 1.36% 1.76% 1.21% 1.00% United States Treasury - 10 Year 2.04% 2.27% 1.77% 1.43% United States Treasury - 30 Year 2.86% 3.02% 2.61% 2.29% United States Prime Rate 3.25% 3.25% 3.50% 3.50% Source: Capital IQ, S&P NetAdvantage 3
Housing Starts (Thou) Economic Indicators Performance Metrics 80 79 78 77 76 75 Industry Capacity Utilization Index 74 2011 2012 2013 2014 2015 2016 Year 115 110 105 100 95 90 Industrial Production Index 2011 2012 2013 2014 2015 2016 Year The Federal Reserve Board derives the Industrial Capacity Utilization Index through dividing an estimated monthly industrial production index by a related capacity index providing a more complete picture of industrial developments. The Industrial Production index is an economic indicator published by the Federal Reserve that measures the level of real production output of manufacturing, mining, and utilities. 115 110 105 100 95 Industrial Production Manufacturing (NAICS) Index 1,250 1,050 850 650 Housing Starts 90 2011 2012 2013 2014 2015 2016 Year The Industrial Production Manufacturing measures North American manufacturing output according to the NAICS. 450 2011 2012 2013 2014 2015 2016 Year The US Census Bureau along with the US Department of Housing and Urban Development release a monthly report on housing starts. A housing start is defined as the beginning of a new foundation of a home itself. Source: Federal Reserve Economic Data 4
Dinan Index Constituents Freight/ 5
Percent Change, Index Price Capital Market Activity 10% 5% 0% -5% -10% -15% -20% -25% -30% Dinan Freight Forwarding Index (Price) - Index Value S&P 500 Index (^SPX) - Index Value The Dinan Industrials Index, comprised of the publicly traded companies found on page 5, has declined 10.72% over the past 12 months. Source: Capital IQ Capitalization Number of % of Agg. Equity % of Agg. Equity Profile Companies Companies Mkt. Value Mkt. Value > $10B 1 14.29% $10,600.48 29.44% $5B - $10B 2 28.57% $18,045.29 50.11% $1B - $5B 2 28.57% $6,172.19 17.14% < $1B 2 28.57% $1,192.84 3.31% Total 7 100.00% $36,010.81 100.00% 6
Public Sector Valuations Industry / Last Twelve Months Next Twelve Months Company Name Ticker TEV (mm) Market Cap (mm) Rev (mm) EBITDA (mm) EBIT (mm) TEV/Rev TEV/EBIT TEV/EBITDA Forward TEV/Rev Forward TEV/EBITDA Air Transport Services Group, Inc. NasdaqGS:ATSG $1,158.58 $826.30 $649.62 $199.60 $70.61 1.78x 16.41x 5.80x 1.75x 5.54x CH Robinson Worldwide Inc. NasdaqGS:CHRW $11,391.08 $10,600.48 $13,249.14 $932.75 $875.34 0.86x 13.01x 12.21x 0.83x 11.59x Expeditors International of Washington NasdaqGS:EXPD $7,917.52 $8,928.17 $6,357.58 $750.24 $704.43 1.25x 11.24x 10.55x 1.21x 10.56x JB Hunt Transport Services Inc. NasdaqGS:JBHT $10,072.47 $9,117.12 $5,679.03 $1,074.95 $728.36 1.60x 13.83x 9.37x 1.61x 9.50x Ryder System, Inc. NYSE:R $8,826.06 $3,283.43 $6,634.41 $1,793.23 $643.63 1.33x 13.71x 4.92x 1.33x 4.95x Universal Holdings, Inc. NasdaqGS:ULH $575.13 $366.55 $1,125.61 $106.64 $72.26 0.51x 7.96x 5.39x 0.50x 5.20x XPO, Inc. NYSE:XPO $8,613.97 $2,888.77 $10,465.90 $612.60 $119.40 0.82x 72.14x 14.06x 0.58x 7.32x Median $8,613.97 $3,283.43 $6,357.58 $750.24 $643.63 1.2x 13.7x 9.4x 1.2x 7.3x Source: Capital IQ 7
Transaction Count Transaction Count Mergers & Acquisitions Overview Yearly Transaction Overview Quarterly M&A Transactions 180 160 140 120 100 80 60 40 20 0 143 163 120 123 134 34 2011 2012 2013 2014 2015 2016 40 35 30 25 20 15 10 5 0 9 8 11 6 9 7 12 10 11 8 9 27 29 3 24 26 26 28 7 20 19 21 19 16 14 10 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 Strategic Financial Transaction Multiples 10x 8x 8.4x 8.1x 7.5x 8.3x 8.9x 8.2x 6x 4x 2x 0x 0.7x 0.4x 0.7x 0.6x 0.6x 0.5x 2010 2011 2012 2013 2014 2015 TEV/REV TEV/EBITDA Source: Capital IQ 8
Second Quarter Transactions Overview Target LTM Enterprise Enterprise Value / LTM Date Acquirer Target Industry Segment Revenue EBITDA Value Revenue EBITDA 6/27/16 The Chefs' Warehouse, Inc. M.T. Food Service, Inc. Logisitics - - - - - 6/27/16 AAGEX Freight Group, LLC AGX Freight Carriers And AGX Freight Logisitics - - - - - 6/24/16 Train Travel Holdings, Inc. Continental Rail LLC Logisitics - - $2.60 - - 6/20/16 StorageVault Canada Inc. Self Storage Stores in British Columbia Logisitics - - $6.44 - - 6/15/16 TKG StorageMart Partners, LP StorageMart Logisitics - - - - - 6/15/16 Private Investors DMB Distribution alimentaire Inc. Logisitics - - - - - 6/9/16 Constitution Capital Partners, LLC American Global LLC Logisitics - - - - - 6/1/16 Kerry Network Limited The Apex Group Logisitics - - $172.35 - - 6/1/16 CAI International Inc. Hybrid, Inc. Logisitics $46.00 - $12.00 0.26x - 5/26/16 Creation Gardens, Inc. Delhi Foods, Inc. Logisitics - - - - - 5/18/16 Siem Offshore Inc. Secunda Canada LP Logisitics - - - - - 5/11/16 Lifestorage, LP Farm Road in Las Vegas, NV Logisitics - - $9.90 - - 4/21/16 Simply Storage Management, LLC Alacare Home Health Services, Inc. Logisitics - - - - - 4/21/16 Annex Brands, Inc. Pak Mail Centers of America, Inc. Logisitics - - - - - 4/14/16 Sealy & Company, Inc. Carter Distribution Center Logisitics - - - - - 4/7/16 Private Investors 2,291-Unit Self-storage Logisitics - - $47.93 - - 4/7/16 Atlas Air Worldwide Holdings, Inc. Southern Air Holdings, Inc. Logisitics - - $110.00 - - Source: Capital IQ 9
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Dinan Capital Advisors Dinan Capital Advisors delivers a highly tailored strategic approach for middle-market companies that seek to capitalize on merger and acquisition transactions. Our services are comparable in scope to those employed by Wall Street investment banks for the world's most profitable multinational corporations, while using methodologies, processes and cost-effective structures that make sense for middle-market companies. Based on a highly structured process that leverages our experience, research capabilities, and proprietary technology platforms, we initiate every engagement by first assessing the market climate, and then developing an understanding of the current situation and strategic objectives of each company. From there, we partner with our clients to develop a plan that maximizes shareholder value and delivers the optimal transaction outcome. Dinan is the registered FINRA member broker-dealer division of the Dinan Group of Companies, responsible for executing the securities related transactions of the firm. The Dinan Group is a leading diversified financial services company with over 25 years of advisory and merchant banking experience dedicated to middle-market transactions. For any query regarding this report, please contact: Robert Ullman Managing Director rullman@dinancapital.com 415.613.4114 William Downing Director wdowning@dinancapital.com 602.734.0682 Michael Pucci Vice President mpucci@dinancapital.com 602.734.0667 Michael Hilcove Associate mhilcove@dinancapital.com 602.734.0626 Michael Reister Analyst mreister@dinancapital.com 602.734.0663 11