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Grupo TRAXION
Corporate Presentation
Santander XXII Annual Latin America Conference
Cancun, Mexico
January, 2018
Disclaimer
The material that follows presents general background information about Grupo Traxion, S.A.B. de C.V. (the “Company”) as of the date of the presentation. This information consists of
information concerning the Company. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors and
does not form the basis for an informed investment decision. This presentation is strictly confidential and may not be disclosed to any other person.
The information in this presentation is preliminary in nature and subject to change. No representation or warranty, express or implied, is made concerning, and no reliance should be
placed on, the accuracy, fairness or completeness of the information presented herein. All information in this presentation is subject to verification, correction, completion and change
without notice. In giving this presentation, none of the Company, any of its affiliates, directors, officers, agents or employees, nor any placement agents, managers or initial purchasers
undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any inaccuracies in any such
information.
This presentation may contain statements that are forward-looking. Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are
cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business
environments of the Company and its subsidiaries that may cause the actual results of the Company to be materially different from any future results expressed or implied in such
forward-looking statements. None of the Company, any of its affiliates, directors, officers, agents or employees, nor any placement agents, managers or initial purchasers, shall be
liable to any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation
or for any consequential, special or similar damages.
Securities may not be offered or sold in the United States unless they are registered or exempt from registration under the U.S. Securities Act of 1933, as amended (the “Securities
Act”). This presentation is being made only to investors that, by means of their attendance at this presentation, represent that they are “qualified institutional buyers” as that term is
defined in Rule 144A under the Securities Act. Any offering of securities to be made outside of Mexico will be made by means of an offering memorandum that will be sent to you at
the address that you provided today. Such offering memorandum will contain, or incorporate by reference, detailed information about the Company and its business and financial
results, as well as its financial statements. Investment decisions should be solely made on the basis of the offering memorandum and not on the basis of this presentation.
This presentation does not constitute an offer, or an invitation or solicitation for an offer, to subscribe for or purchase any securities, nor shall any part of it nor the fact of its
dissemination form part of or be relied on in connection with any contract or investment decision relating thereto. Neither this presentation nor anything contained herein shall form the
basis of any contract or commitment. If the Company should at any time commence an offering of securities, any decision to invest in such offer to subscribe for or acquire securities of
the Company must be based wholly on the information contained in the offering memorandum to be issued by the Company in connection with any such offer and not on the contents
hereof.
By reading this presentation, you agree to be bound by terms and conditions set out above.
The Company’s management highly recommends the investment community to thoroughly review the information contained in the offering memorandum and consult with independent
advisors deemed necessary before making any investment decisions. A stock investment is complex, is subject to a variety of risks and uncertainties and may result in significant
losses, including the full amount invested.
Who is Traxion?
TRAXION: The largest transportation and logistics investment platform in Mexico
Core strategy
▪ Integrate a transportation and logistics platform in an accretive manner and maximize its efficiency
▪ Render a one-stop solution for cargo and logistics
▪ Operate companies under a best-practices approach to optimize performance
▪ Create sustainable long-term value for clients, investors, and stakeholders
Service Segments
Cargo & Logistics Passenger
3
5,319 Power units
5Leading companies
Ps. 6.7 billionLTM revenues1
+9,500
Employees
+365 Million kilometers driven annually
+900Clients
17.5xFleet growth in 6 years
Nationwide Footprint
1,562 power units
+307,000 sqm of logistics
space (3.2 mm sqft)
3,408 dry vans
~5.2 years avg. fleet age
(16.6 years avg. of sector)
Student transportation &
personnel commuting
3,758 power units
1 Last-twelve-months accumulated revenues
Financial and operating data as of September 30, 2017
Exceptional Growth Story
300 316
752 760 776
4,963
5,319
2011 2012 2013 2014 2015 2016 2017
IPO
17.5x
Fleet growth
2.3x
Larger than the immediate
competitor
5.7x
Larger than the average
company in the sector
Ps. 3.9 bn
Successfully invested in
M&A since 2011
Fleet(power units)
4Companies logos indicate the date of integration to Traxion
Fleet CAGR
61.5%
Undisputed Leadership
International Freight
AutoExpress
Frontera NorteTransportadora Egoba Grupo MyM Grupo SID LIPU Transporte Seguro
5
Domestic freight
Intermodal
Student transportation
Services
International freight
& border transfers
Logistics services
Relocation and moving
Less-than-truckload
(LTL)
Personnel commuting
Tourism
Domestic freight and
Moving
Logistics and Domestic
Freight
International Freight
and Intermodal
Personnel Commuting
and Student
Transportation
Leader Leader Leader Leader Leader
Unique Investment Opportunity
Attractive valuation relative to peers
Highly-fragmented sector provides accretive growth opportunities
Sound balance sheet: low leverage and stable margins
Proven M&A track record
Attractive sector with significant organic growth potential
We believe we are the only consolidator in the sector in Mexico
Only consolidator with financial capacity to seize growth opportunities in an accretive manner
6
Best-in-class operating platform, supported by market best practices, ensures high performance
Diversified Business Model
51%
11%
38%
Cargo Logistics Passenger
36%
23%
19%
6%
3%
3%
11%
Retail Auto Industrial
Education Electronics Government
Other sectors
Client Sector % of Revenue Segment served
1 Retail 5.0% Cargo
2 Food 2.8% Logistics
3 Pulp & paper 2.7% Cargo
4 Retail 2.7% Cargo
5 Government 2.4% Cargo
6 Auto 2.3% Passenger
7 Auto 2.2% Passenger
8 Retail 2.0% Cargo
9 Auto 2.0% Cargo
10 Electronics 1.7% Logistics
Top-10 client breakdown
Revenue Breakdown
by Segment
Revenue Breakdown
by SectorTop-50
57%
The top-50 clients represent 57% of
total revenues
Top-10 clients 26%
International alliances with top operators
+33 alliances with the best transportation players
Diversification contributes to a resilient business model
7Figures as of September 30, 2017
Sole Player Management Service Portfolio Track Record
…with extensive expertise in the sector through several buisness cycles
TRAXION is the leading transportation company in the country…
8
▪ Only publicly-traded company
within a family-owned sector
▪ First mover advantage
▪ Only consolidator in a highly
fragmented sector
▪ Seasoned management team;
extensive expertise in the
sector
▪ Sound corporate governance
bodies
▪ Industry best practices
▪ Premium, diversified service
portfolio
▪ Long-lasting relationships with
blue-chip clients
▪ Highest satisfaction levels and
retention rates
▪ Succesful growth track record
▪ Organic and inorganic growth
potential
▪ High efficiency in operations
and processes
Key Attributes
Proven M&A Track Record
AutoExpress
Frontera Norte
TRAXION has been able to successfully integrate several companies…
Transportadora Egoba Grupo MyM Grupo SID LIPU Transporte Seguro
Acquisition: Dec 2011
Fleet: 300
▪Commercial strategy
▪Administrative
insittutionalization
▪Business plan and
KPIs
Acquisition: Jun 2013
Fleet: 428
▪Commercial strategy
▪Administrative
insittutionalization
▪Business plan and
KPIs
9
Acquisition: May 2016
Fleet: 580
▪Fleet utilization
▪Optimize client base
Acquisition: Jun 2016
Fleet: 222
▪Boost fleet growth
▪Growth opportuities
with additional capital
Acquisition: Oct 2016
Fleet: 3,399
▪Client expansion
▪Achieve economies of
scale
▪Growth opportuities
with additional capital
Best practices conveyance Procurement efficiencies Commercial intelligence
…while maintaining financial discipline on each transaction
Balanced exposure to industries Diversification of service portfolio EBITDA efficiency
Competition Landscape
Cargo & Logistics Passenger Services
Truckload Intermodal Logistics Personnel Student Tourism
Company Power Units1 Domestic
Freight
Intnl
Freight &
Transfer
Relocation
& Moving
Less than
TruckloadInternodal
Logistics
Services
Personnel
CommutingStudent
TransportationTourism
4,9632
2,189
1,887
1,867
1,724
1,641
990
790
735
TRAXION provides the broadest and most complete offering of integrated transportation premium services
Large-scale Nationwide footprint Competitive cost structure
1 Includes trucks, buses and vans; excludes trailers
2 Proforma December 2016; Includes Egoba, MyM, Grupo SID, AFN and LIPU
Source: T21 Magazine, December 201610
Appealing Sector
11
Overview
▪ Trucking and bus transportation are essential components in an industrialized economy
▪ Virtually every manufactured or consumer product, and person is directly related to transportation
▪ Road is the main cargo method in Mexico
▪ Few companies offer premium, integrated services
▪ Large and fragmented industry (+865k power units)
▪ No player has even 1% market share
Opportunities
• Large companies outsourcing transportation services
• E-commerce expanding
• Fleet flexibility provides access to unattended markets
367 413 435 470 522
186
244284
273292
52
7790
105
120
1995 2000 2005 2010 2015
Road Maritime Rail
605
734809
848
934(excludes air freight)
Source: SCT
1 Includes all units as presented by SCT
2 CAGR includes all the units in the cargo and logistics segment
Million Tons Transported
191 203 194 199 206 215
207 221 226 235 245 260
112122 123 127 133
143148
170 186202
222246
2011 2012 2013 2014 2015 2016
Owner Operators (1-5 units) Small Companies (6-30 units)
Medium Companies (31-100 units) Large Companies (+100 units)
659716 729
763806
865Number of units (000s)1
Cargo Transportation Industry
Large companies have
growth faster than the rest
of the industry
2011-2016
CAGR
10.7%
4.9%
4.7%
2.4%
2011-2016
CAGR2
39.1%
Attractive Sector Fundamentals
Transportation is a very important component in the Mexican economy
Trasportation industry
in Mexico
Ps. 1,668 bn
Road
Air
Rail
Maritime
Ps. 1,432 bn
Ps. 153 bn
Ps. 64 bn
Ps. 19 bn
85.9% 9.2%
3.8%
1.1%
Road Air Rail Maritime
Transportation market
in Mexico
…and it is an extremely fragmented sector with tremendous consolidation potential
+140,000 Companies
+865,000 Power units
+900 M&A targets
Transportation industry
in Mexico contributes
5.9%
To annual GDP
12
Compelling Future Growth Drivers
Several variables are expected to fuel growth in the transportation industry
GDP Growth
▪ Mexico is the 15th largest economy in the world by GDP1
▪ It is expected that Mexico more than doubles its GDP by 20301
▪ The transportation sector has a strong correlation to GDP growth
1 Source: https://www.pwc.com/gx/en/world-2050/assets/pwc-the-world-in-2050-full-report-feb-2017.pdf;
https://data.worldbank.org/data-catalog/GDP-ranking-table
E-commerce
Infrastructure
Favorable demographics
▪ Virtually no logistics backbone to support e-commerce operations
▪ e-commerce is expected to consistently gain penetration
▪ Logistics and transportation must synchronize with e-commerce trends
▪ The best demographic bonus: increasing working-age population
▪ Emerging middle-class with increasing disposable income
▪ Healthy unemployment rates and underlevered population
▪ Mexican government has committed to invest in infrastructure
▪ Roads and highways to absorb the most infrastructure investments
▪ Mexico is a competitive investment destination
Positive macro
environment
▪ The largest manufacturing installed capacity in the region
▪ Structural reforms will be a paradigm shift in the mid-term
▪ Internal consumption is expected to continue to grow
13
Mexico is expected to
require more freight, logistics
and passenger services
Appendix
Nationwide Footprint
Total nationwide coverage and access with broad operations in the most dynamic economic regions of the country
Nuevo Leon
4.0%
Quintana
Roo
Baja
California
Sonora
3.9%
3.8%
Jalisco
San Luis Potosi
3.9%
Aguascalientes
5.4%
Guanajuato
5.0%
6.3%
Queretaro
5.4%
3.3%
Main Operations / Economic Regions
All Subsidiaries Presence No Presence
Average National GDP growth2.8%
Source: INEGI, Company information15
Long-Lasting Client Relationships
Blue-Chip client base
Customer Awards and Recognitions
65
2521 21 21 20 19 18
Average
26 years
16
• Truckload Provider of the
Year (‘05,’06, ‘07, ‘08)
• Logistics Provider of
Excellence (2012)
• Small International
Carrier of the Year in
Mexico (2013)
• Recognition of Effort and
Dedication for 38 years
of service (2013)
• Innovative Project (2013)
• Stellar Line (2014)
• Recognition for Contribution
to Operations (2015)
• Quality Week (2015)
• Fulfillment of Performance
and Service Indicators (2012)
• Best Supplier – Logistics and
Replenishment Category
• Recognition for Quality
Assurance and
Reliaility with Clients
• New Carrier of the Year
2016
• Distinguished
Provider 2003
Strategic Pillars
Operations Commercial M&A Finance
…through its well established strategy designed to maintain profitability
▪ Constant monitoring
▪ Continuous margin
improvement
▪ National footprint with
international capabilities
▪ Integral solutions
▪ High-quality, reliable
premium services
▪ Solid client relationships
▪ Brand differentiation
▪ Incremental share in
customers’ budgets
▪ Cross-selling
▪ Efficient capital
allocation
▪ Selective adquisitions
▪ Synergy and
implementation analisys
▪ Disciplined leverage
strategy
▪ Sound financial position
▪ Efficiencies and cost
controls
▪ Maximize returns
through capital
deployment
TRAXION has proven to grow successfully both organic and inorganically…
17
Best-In-Class Efficiency
Average Fleet
Age
Average Fleet
Utilization Rate
Logistics Facilities
Utilization Rate
5.8
years95% 96%
State-of-the-art systems
World-Class certifications
24/7 safety and monitoring
Continuous driver training
High-quality fleet maintenance
Commercial intelligence
+
Client Retention
Rate
95%
High efficiency in all metrics
18
Commercial Strategy
Highly differentiated comercial strategy fuels organic growth
19
Client relationships
▪ Highly-specialized client service team
▪ Focus on maintaining client base
▪ Capitalize our clients’ growth
Cross-selling
New clients
▪ Fully-dedicated corporate team focused on identifying opportunities
▪ Broad service offering
▪ Complementary service offering and business segments
▪ Highly-seasoned sales team
▪ Effective corporate strategy
▪ Servce offering contributes to attract potential clients
Integrated solutions for our clients’ needs Within our existing client base
Cargo LogisticsPassenger
M&A Criteria
TRAXION has a clear and thorough M&A selection criteria…
Additional
transportation-related
services
Increase our exposure
to current service
portfolio
Potential for synergies
and economies of scale
Opportunistic
transaction approach
Medium and large
companies
Well-run, succesful
and profitable
companies
Strong presence
and footprint in their
region or niche
Seasoned and
commited management
Focus on target companies with core abilities…
Key target selection criteria…
… that ensures that every transaction is accretive
Clearly identified opportunities
Dry vans, containers and flatbeds
Parcel and packaging
Logistics, warehousing and storage
LTL freight
Petrochemical and hydrocarbon
transportation
Refrigerated cargo
Personnel and student transportation
20
Intermodal
Unique Platform in the Market
Best practices in shared services
21
Procurement
Finance
IT Systems
Human
Resources
Commercial
Strategy
Corporate support
Work groups
Best practices sharing
Continuous improvement
Business knowledge sharing
Cost reduction
High-quality servicing
Efficient management
Integration of new companies
Constant growth
EBITDA
GROWTH
Increase synergies potential
Human Resources CommercialIT Procurement
▪ Designated IT Budget
▪ Plan of IT corporate
initiatives
▪ Most robust IT system in the
industry
▪ Integration culture
▪ Build management and
leadership development
programs
▪ Best processes and policies
of the industry
▪ Cost savings through scale:
fuel, tires, lubricants, and
other
▪ Cross selling
▪ Commercial strategy
Key Financial & Operating Data
2,223
5,211
1,026
1,746
9M16 9M17 3Q16 3Q17
445
971
219 341
9M16 9M17 3Q16 3Q17
1,554
5,268
1,560
5,319
9M16 9M17 3Q16 3Q17
97,192
281,130
45,137
92,360
9M16 9M17 3Q16 3Q17
Revenue (Ps. million) EBITDA (Ps. million)
Fleet (units) Kilometers Driven
19.5% 18.6% 21.4% 19.5%
EBITDA Margin
∆ 239%
▪ Kilometers driven in 3Q17 recorded an exogenous growth of 70.1%
due to the acquisition of LIPU, the Passenger business segment
▪ On a proforma basis, kilometers driven increased 7% mainly due to a
more efficient operation of the Passenger segment
PF
∆ 118%
22
∆ 56%
Key Financial & Operating Data per Segment
Cargo & Logistics Passenger
Financial Indicators 9M17 9M16 ∆%
Cargo & logistics revenue 2,990 2,223 34.5%
Total costs 2,218 1,589 39.6%
Operating expense 514 381 34.9%
Operating income 332 313 6.1%
EBITDA 563 474 18.8%
EBITDA margin 18.8% 21.3% -2.5 pp
Operating Indicators 9M17 9M16 ∆%
Kilometers driven (thousand) 130,378 97,192 34.1%
Avg. fleet size (units) 1,555 1,554 0.1%
Avg. fleet age (years) 5.2 5.2 -
Avg. revenues per kilometer (Ps.)1 19.37 19.32 0.3%
Avg. cost per kilometer (Ps.) 15.04 14.77 1.8%
Storage space (sqm) 302,844 304,265 -0.5%
Avg. revenue per sqm (Ps.) 134.84 134.61 0.2%
Cost per sqm 94.33 101.00 -6.6%
Financial Indicators 9M17
Passenger service revenue 2,221
Total costs 1,529
Operating expense 401
Operating income 314
EBITDA 424
EBITDA margin 19.1%
Operating Indicators 9M17
Kilometers driven (thousand) 150,752
Avg. fleet size (units) 3,713
Avg. fleet age (years) 6
Avg. revenues per kilometer (Ps.) 14.68
Avg. cost per kilometer (Ps.) 10.14
▪ The growth in the Cargo & Logistics segment is mainly due to
Price increases, and by the integration of the acquisitions of
Grupo SID and AFN
▪ Both Grupo SID and AFN strengthened our installed capscity
both in power units and warehousing space, allowing a broader
offering of value added services
▪ Since LIPU was integrated in 4Q16, there are no comparable
figures in this segment
23
Sound Balance Sheet
30-Sep-17
Current assets 6,803
Non-current assets 8,527
Total assets 15,330
Current liabilities 1,909
Long-term liabilities 3,780
Total liabilities 5,689
Shareholders' equity 9,641
Liabilities + Equity 15,330
Debt & Cash Analisys
16%
9%12%
63%
Up to 12 months 12-24 months 24-36 months >36 months
Debt Breakdown 3Q17 4Q16 ∆$ ∆%
Short-term debt 514 52 462 888.5%
Short-term capital leases 92 40 52 130.0%
Long-term debt 2,757 2,928 -171 -5.8%
Long-term capital leases 370 221 149 67.4%
Total debt 3,733 3,240 493 15.2%
Cash 526 468 58 12.4%
Net debt 3,207 2,772 435 15.7%
Post-IPO cash1 4,591 468 4,123 881.0%
Post-IPO net debt -858 2,772 -3,630 -131.0%
Financial Ratios 3Q17 4Q16
Total debt / EBITDA 2.53x 3.88x
Net debt / EBITDA 2.12x 3.27x
Post-IPO net debt / EBITDA -1.02x -
Total liabilities / Shareholders' equity 0.59x 1.12x
Debt Profile
Debt Maturity
24
Summary Balance Sheet
1 Does not consider (i) the exercise of the over-allotment option
(greenshoe), and (ii) the expenses related to the IPO