Investor PresentationMay, 2012
Forward Looking StatementsThis presentation contains or may contain forward-looking statements, including revenue and earn...
Topics Covered• Pacer International Company Overview• Intermodal Operation• International Logistics• Financial Update Q1 2...
Business Overview                    4
Pacer International Overview• Founded in 1997 through the acquisition of several logistics  companies and the APL Linertra...
Pacer Portfolio                                             PacerIntermodal ($1.2B)                                    Log...
Service Portfolio INTERMODAL                HIGHWAY               OCEAN/AIR             WAREHOUSING           LOGISTICS• A...
Customer Portfolio                         Intermodal                       Logistics                                     ...
Pacer Intermodal SegmentIntermodal Segment ($1.2B)•   "Retail" (Door-to-Door)•   Automotive•   Ocean Carrier Services•   D...
Intermodal Transformation                   Old Model (2009 & Prior)                              • Wholesale Focus    Ori...
Pacers Intermodal Journey                                                                                    IntermodalLiq...
Intermodal Conversion Opportunity                                            Moves                                        ...
Flexible Rail Capacity Strategy                  Domestic Container Capacity, by Provider andand Western Railroads        ...
Pacer Logistics SegmentLogistics Segment ($0.3B)•   International Freight Forwarding•   Warehouse, Port, & Transload Servi...
Logistics Segment Value Proposition                                 • Long Term Growth                                    ...
Logistics Improvement Actions                                                     TRACK & TRACE                           ...
Pacers Transformational Journey                                                                                       Inte...
Pacer International Freight Forwarding                     Business                                      Features• Ocean W...
Pacer Forwarding / NVOCC Under OWLOcean World Lines (OWL) High Level Business Overview                                    ...
Pacer Freight Forwarding Network                                                            Owned and Agent Offices       ...
Asia Freight Forwarding HistoryAug, 2009   OWL Hong Kong office opensSep, 2009   OWL Shanghai Rep. office opensSep, 2009  ...
Pacer Distribution Services (PDS)                                                         PDS Warehouses   Ports          ...
Pacer Highway Brokerage            Service Offerings                       Our AdvantageFull Truckload Services           ...
Pacer Highway Brokerage                    Business                                     Features• Non-Asset transportation...
Pacer Highway Brokerage                                                 Services Portfolio           Dedicated            ...
Financial Overview                     26
Revenue• 1Q12 Revenue (ongoing) up 4% to $346 million   – Intermodal (ongoing) +13%, Logistics (23%)• 2012 Guidance Reconf...
Earnings Per Share• 1Q12 Diluted EPS loss of ($0.01)    – Intermodal segment (ongoing) Operating Income +44%    – Logistic...
Balance Sheet• 1Q12 Remain debt free with $19m cash   – Operating cash flow impacted by working capital timing; Capex $3.4...
2012 Guidance• Revenue: $1.500 – $1.525 B                                                          • +7-9% (midpoint +8%) ...
Our 2012 Focus•   Continue Double-Digit Domestic Intermodal Growth     – Eastern and Mexico market growth opportunities•  ...
Our VisionTo be the customers’ preferred choice,earning customer confidence every day byreliably delivering best-in-class ...
Investor ContactsJohn HaffertyEVP and Chief Financial Officer(614) 923-1987Steve MarkoskyVP, Financial Planning & Analysis...
Upcoming SlideShare
Loading in …5
×

Pacer Investor Presentation

1,418 views

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
1,418
On SlideShare
0
From Embeds
0
Number of Embeds
522
Actions
Shares
0
Downloads
23
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Pacer Investor Presentation

  1. 1. Investor PresentationMay, 2012
  2. 2. Forward Looking StatementsThis presentation contains or may contain forward-looking statements, including revenue and earnings per share guidance,within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Actof 1934, as amended. These forward-looking statements are based on the companys current expectations and beliefs and aresubject to a number of risks, uncertainties and assumptions. Among the important factors that could cause actual results todiffer materially from those expressed or implied in the forward-looking statements are general economic and businessconditions including the continued effect of the current U.S. and global economic environment and the timing and strength ofeconomic recovery in the U.S. and internationally; industry trends, including changes in the costs of services from rail, motor,ocean and air transportation providers; changes resulting from our November 2009 arrangements with Union Pacific that havereduced revenues and have compressed margins; changes in the terms of new or replacement contracts with our underlyingrail carriers that are less favorable to us relative to our legacy contracts as these expire (including our legacy contract withUnion Pacific, expiring in 2011 which continues to apply to our automotive and international lines of business, and our legacycontract with CSX, expiring in 2014); our reliance on Union Pacific to provide us with, and to service and maintain, theequipment used in our business; our ability to borrow amounts under our credit agreement due to borrowing base limitationsand/or to comply with the covenants in our credit agreement; increases in interest rates; the loss of one or more of our majorcustomers; the effect of uncertainty surrounding the current economic environment on the transportation needs of ourcustomers; the impact of competitive pressures in the marketplace; the frequency and severity of accidents, particularlyinvolving our trucking operations; changes in, or the failure to comply with, government regulation; changes in our businessstrategy, development plans or cost savings plans; congestion, work stoppages, equipment and capacity shortages, weatherrelated issues and service disruptions affecting our rail and motor transportation providers; the degree and timing of changesin fuel prices, including changes in the fuel costs and surcharges that we pay to our vendors and those that we are able tocollect from our customers; changes in international and domestic shipping patterns; availability of qualified personnel;difficulties in selecting, developing and implementing applications and solutions to update or replace our diverse legacysystems; increases in our leverage; and terrorism and acts of war. Additional information about these and other factors thatcould affect the companys business is set forth in the companys various filings with the Securities and ExchangeCommission, including those set forth in the companys annual report on Form 10-K for the year ended December 31, 2011filed with the SEC on February 10, 2011 and the Company’s Quarterly Report on Form 10-Q for the three month period endedMarch 31, 2012 filed with the SEC on April 27, 20112 Should one or more of these risks or uncertainties materialize, or shouldunderlying assumptions or estimates prove incorrect, actual results may vary materially from those described herein asanticipated, believed, expected or intended. Except as otherwise required by federal securities laws, the company does notundertake any obligation to update such forward-looking statements whether as a result of new information, future events orotherwise. 2
  3. 3. Topics Covered• Pacer International Company Overview• Intermodal Operation• International Logistics• Financial Update Q1 2012• Summary 2012 Focus 3
  4. 4. Business Overview 4
  5. 5. Pacer International Overview• Founded in 1997 through the acquisition of several logistics companies and the APL Linertrain business, which was renamed Pacer Stacktrain• Leader in North American Intermodal transportation• Headquartered near Columbus, OH• 1,100 employees in our global operations• Comprehensive transportation and logistics portfolio• Best-in-class service delivery model• Publically traded (PACR on NASDAQ)• Financially sound and well positioned for growth 5
  6. 6. Pacer Portfolio PacerIntermodal ($1.2B) Logistics ($0.3B) • International freight • Door-to-door intermodal International "Retail" forwarding and shipping movements provided to Freight Forwarding (Ocean World Lines & RF BCOs International) • Transportation primarily for • Warehousing, consolidation, Warehouse, Port, & Automotive Auto OEMs and parts deconsolidation, and manufacturers Transload Services transloading • Inland intermodal for • Brokered truck-based freight Ocean Carrier incoming / outgoing ISO Highway Brokerage movements Services containers for Ocean Carriers • Drayage and repositioning • Supply chain management Drayage services sold externally and Logistics Solutions solutions to support other LOB’s 6
  7. 7. Service Portfolio INTERMODAL HIGHWAY OCEAN/AIR WAREHOUSING LOGISTICS• Access to 42% of • 3,000+ Truckload • NVOCC Contracts • Over 1m SQ.FT MANAGEMENT the Domestic Carrier base with 20+ major • 100+ trucks to • Load Control Equipment Fleet • 950+ Pacer ocean carriers cover pick and Center to manage• Over 100,000 mile Cartage owner • IATA Licensed with deliveries within customer’s and rail network in operators full air carrier Southern Pacer’s capacity North America • 2,000 + additional access California throughout your• Collaborative rail dray carrier base • OWL 360 for full • WMS for network operations with all • MobilCom shipment visibility inventory / • Complete dispatch carriers equipped visibility control and shipment visibility 7
  8. 8. Customer Portfolio Intermodal Logistics Highway Import / Warehouse, Logistics Customer Brokerage Export Transload Mgmt Big Lots Continental Tire Costco Ford General Electric JC Penney Oneida Osram SylvaniaP&G P&G Scotts Solae Toyota Vizio Walmart Zappos 8
  9. 9. Pacer Intermodal SegmentIntermodal Segment ($1.2B)• "Retail" (Door-to-Door)• Automotive• Ocean Carrier Services• Drayage 9
  10. 10. Intermodal Transformation Old Model (2009 & Prior) • Wholesale Focus Origin Zone Destination Zone – Rail and Dray sold separately Rail Wholesaler + Dray Wholesaler • IMC CustomersO – Hub, Alliance, etc… D • Retail Relatively Small – 24% of drays in house O R R – Network sub-optimized • Manage Network Thru D Spot Pricing, Per Diems O D • Strained Carrier Relations New Model (2010+) • Wholesale Transitioned O/D Zone O/D Zone • Retail, Door-to-Door, Retail, Door-to-Door Logistics FocusO Intermodal – Growing capacity and revenue D • Optimizing Our Network – Competitive pricing / allocation D R R – Network flow balancing – Converting to in-house dray – Reducing empty dray miles D O O – Maximize box turns – Mix of Pacer and rail boxes 10
  11. 11. Pacers Intermodal Journey IntermodalLiquidity  • Debt Agreements (2009, 2010), Positive Cash Flow, Debt Free (2011)Organization and Incentives • Business Leadership: Commercial, Finance, Capacity, Logistics  • Functional Excellence: Sales, Network, Operations, Capacity, Logistics Customer Service  • Logistics (95-98%, +/- 2 hours) vs. Railroad (70-80%, +/- 2 days) mindsetCarrier Relationships • Rail (UP, CSX, KCSM)  • Trucking (Dray Owner Operators & Core Carriers, Brokerage Carriers) Equipment Rightsizing Systems • Intermodal (Rail Ops: orders, scheduling, equipment)  • Drayage (Pegasus, Mobile Communications) l • Network decision support lSG&A • Rightsizing and Processing Efficiency l • Volume Leverage l  = completed (announced phases) l = in process / planned 11
  12. 12. Intermodal Conversion Opportunity Moves 12m +3.5m +29% 70m (3.5m) (5%) Source: FRA National Rail Plan, Union Pacific 12
  13. 13. Flexible Rail Capacity Strategy Domestic Container Capacity, by Provider andand Western Railroads Domestic Container Distribution By Provider Western Railroad Relationship30.0% 26.1%25.0% 54 % on the UP 20.2%20.0%15.0% 12.5% 11.6%10.0% 9.2% 6.6% 6.6% 5.0% Pacer controls or has access 3.9% to 42% of domestic containers 2.1% 1.2% 0.0% Pacer Fleet EMP UMAX Other JB Hunt Schnieder Swift NS- EMP Other BNSF CN/CP Private UP Fleet 13
  14. 14. Pacer Logistics SegmentLogistics Segment ($0.3B)• International Freight Forwarding• Warehouse, Port, & Transload Services• Highway Brokerage• Logistics Solutions 14
  15. 15. Logistics Segment Value Proposition • Long Term Growth – Attractive markets long term Long – Profitable on stand alone basis Term Growth • Customer Base – More touch points for existing Value customers Portfolio Customer – Entry point for new customersDifferentiation Base • Portfolio Differentiation – Full range of global door-to-door transportation solutions – Connects to Intermodal, Ocean Carrier, and Drayage offerings 15
  16. 16. Logistics Improvement Actions TRACK & TRACE WAREHOUSE, WAREHOUSE, Los Angeles Columbus CUSTOMS CUSTOMS Shanghai RAIL DRAYAGE HIGHWAY INTERMODAL OCEAN AIRImprovement Actions Warehousing & Import / Export Logistical Solutions Highway Brokerage • Leadership Changes • Leadership Changes • Leadership Changes - Business level - Business level - Business level - Station level • Strengthen Pipeline - Sales Teams • Station Incentives (customer moved in-house) • Growth Culture and Incentives • Systems • Systems • Strengthen Pipeline - Consolidate Platforms - Consolidate Platforms • Systems - Processing Efficiency - Capability Enhancements • Extend Geography - Processing EfficiencyWhy? Long Term Portfolio Customer Profitable Attractiveness Differentiator Base Growth 16
  17. 17. Pacers Transformational Journey Intermodal LogisticsLiquidity  • Debt Agreements (2009, 2010), Positive Cash Flow, Debt Free (2011)Organization and Incentives • Business Leadership: Commercial, Finance, Capacity, Logistics  • Functional Excellence: Sales, Network, Operations, Capacity, Logistics  l • Global presence (China WOFE, China offices, SE Asia) lCustomer Service  • Logistics (95-98%, +/- 2 hours) vs. Railroad (70-80%, +/- 2 days) mindsetCarrier Relationships • Rail (UP, CSX, KCSM)  • Trucking (Dray Owner Operators & Core Carriers, Brokerage Carriers) l  • Ocean Carriers lEquipment Rightsizing Systems • Intermodal (Rail Ops: orders, scheduling, equipment)  • Drayage (Pegasus, Mobile Communications) l • Network decision support l • Highway Brokerage l • International Freight Forwarding lSG&A • Rightsizing and Processing Efficiency l • Volume Leverage l  = completed (announced phases) l = in process / planned 17
  18. 18. Pacer International Freight Forwarding Business Features• Ocean World Lines (“OWL”) is an NVOCC • Well established • 3rd largest export NVOCC – Non-Vessel Operating Common Carrier • Large base of small / medium – Service similar to a Freight Forwarder customers – Authorized to issue its own tariff as carrier • Leverage inbound growth for better carrier rates• Freight Forwarding’s three main activities • Smaller customer base … an – Freight Forwarding arranges shipment of “Opportunity” goods for ex-/importers. Services includes air • Customers average 17 shipments and ocean freight, contract logistics, (41 TEUs) per year • Higher margins documentation, distribution, domestic ground transport, inbound logistics, and warehousing. – Customs Brokerage services involve preparing and filing documentation for customs clearance, customs bonds, and paying import duties on behalf of the importer. – VAF is standalone online tool that allows the customer to be their own freight forwarder. 18
  19. 19. Pacer Forwarding / NVOCC Under OWLOcean World Lines (OWL) High Level Business Overview IllustrativeOWL Suppliers OWL Customers Sample BCOs (Primarily OWL …and sells to Small & Medium Shippers) purchases over 3,000 capacity on Key Success Factors small & over 100 medium steamship • Good and flexible shippers & lines… customer-facing IT freight system • Annual forwarders contracts with • High-touch customer • Fragmented multiple carriers service customer base with volume commitments on • Focus on small and • Limited number specific lanes medium shippers/ of longer term freight forwarders, contracts • Limited FCL only liquidated • Most damages for not • Strong relationships customers meeting volume purchase on a Sample Freight Forwarders with steamship commitments carriers spot basis Similar levers being applied to growth in the air freight sector 19
  20. 20. Pacer Freight Forwarding Network Owned and Agent Offices Europe North America 5 Owned + 45 Agency 16 Owned + 7 Agency Asia Pacific 7 Owned + 37 Agency Owned – Europe Owned – USA HamburgAtlanta Berlin Owned – AsiaCharleston Bremen TokyoCharlotte Gdynia Hong KongCincinnati Warsaw SingaporeLong Beach XiamenLouisville ShenzhenNew Orleans QingdaoNorfolk ShanghaiPhoenixSeattleChicagoMiamiNew YorkSan FranciscoColumbusNew Jersey Latin America 0 Owned + 50 Agency Africa/ Middle East Office Key 0 Owned + 25 Agency Pacer and Agent Office Pacer Agent Office 20
  21. 21. Asia Freight Forwarding HistoryAug, 2009 OWL Hong Kong office opensSep, 2009 OWL Shanghai Rep. office opensSep, 2009 Commenced ocean freight operations in Hong KongOct, 2009 Commenced ocean freight operations in ShanghaiOct, 2009 Commenced air freight operations in ShanghaiNov, 2009 China NVOCC license approved by the MOT (former MOC)Jan, 2010 Commenced air freight operations in Hong KongFeb, 2010 Air capabilities extended to Ningbo, Tianjin, Dalian, Qingdao, Xiamen, BeijingMar, 2010 OWL Qingdao and Shenzhen OpensApr, 2010 Launched OWL’s Cargo Management offeringJul, 2010 First Cargo Management (TR) account deployedSep, 2010 Singapore office opensNov, 2010 WOFE(Class A) application process beginsApr, 2011 Class A Business License granted in ShanghaiOct, 2011 OWL Ningbo Office OpensApr, 2012 OWL Xiamen Office Opens 21
  22. 22. Pacer Distribution Services (PDS) PDS Warehouses Ports Local Warehousing Services Transportation Local • Distribution • Deconsolidation Transportation • Harbor drayage • Transloading (dry or refrigerated) Customer Airports • Storage (floor and rack, containers) • Local area Locations • Local area pick ups • Inventory management deliveries • Air freight pick ups Value Added Services Customer/ • Labeling / Retagging • Repackaging Illustrative Shipper • Pick / Pack Location • PalletizingSeattle 400K Sq. Ft. New York / These four locations account PDS’s growth plan will New Jersey increase its attractiveness for nearly 70% of and broaden Pacer’s overall all U.S. product and service portfolio containerizedL.A. / Imports/ExportsLong Beach Savannah Ga. Key3 locations, 763K Current Location available sq. ft. Future Location 22
  23. 23. Pacer Highway Brokerage Service Offerings Our AdvantageFull Truckload Services • Experienced and capable transportation• Van professionals at all levels• Flatbed • Over 3,000 providers to meet customer• Heavy Haul/Specialized capacity needs• Temperature controlled• Dedicated • Dedicated carrier procurement team• Cross-border focused on delivering the best possible• Pool distribution price and service package from our core carriersLess-Than-Truckload Services • Dedicated carrier compliance team• Door-to-door delivery solutions insuring Pacer carriers are capable, safe• Business to business and fully insured• White glove services• Home delivery • Operations and customer service• Guaranteed day of delivery available 24/7 365 days a yearJIT Trucking Services • Asset and non-asset based capacity to• Guaranteed time definite delivery expand our service reach and flexibility• Automotive industry recovery while reducing costs• Inventory shortage avoidance • Centralized operations improves• Air freight recovery efficiency and timeliness of invoicing 23
  24. 24. Pacer Highway Brokerage Business Features• Non-Asset transportation management • 4,000 plus contracted provider carriers• Coverage throughout North America • Newly implemented, best in• Leverage of all modes (Rail, Truck, LTL, class technology for Domestic Air, Expedite, and Specialty) optimization and visibility • 24X7 coverage for critical• Three Main Offerings shipments – Brokerage: Traditional brokerage serving transactional customers with TL, LTL, and Air • Leverage of intermodal solutions cartage empty moves for – Dedicated: Long term, outsourced short-haul opportunities contracted solution for customers who desire • One call solutions, offering more control over transportation pricing and delivery – JIT: Emergency freight solutions for line down capabilities across and or critical needs. between modes 24
  25. 25. Pacer Highway Brokerage Services Portfolio Dedicated Brokerage JIT • Leverage of • Inside sales driven • Emergency intermodal • Variable shipments customer base compensation based • High quality, high • Relatively low staff cost carriers used margin, steady • Rapid growth • “Backstop” for growth • Higher margins dedicated fleets and • Relationship and • Ad Hoc pricing with fixed route solutions RFQ driven customer • Serves automotive, • Negotiated pricing manufacturing and • Contracted carriers surge needs of with long term with carrier base retailers pricing secured • Identifies capacity availability from JIT • Steady growth, high and Dedicated margin business • 24x7 coverage • 24x7 coverageAll offerings leverage the same technology, carrier community, and visibility across networks 25
  26. 26. Financial Overview 26
  27. 27. Revenue• 1Q12 Revenue (ongoing) up 4% to $346 million – Intermodal (ongoing) +13%, Logistics (23%)• 2012 Guidance Reconfirmed: $1.500 – $1.525B, (+7-9% ongoing) – Domestic Intermodal (+15-20%) offsets international and Logistics softness $2,500 Ocean Customer Transition Wholesale E-W Big Box $2,088 International Military 1st Quarter Transport $2,000 391 $1,574 $1,503 129 $1,479 $1,500 249 18 92 75 65 54 $1,500 $1,000 to $1,567 $1,403 $1,525 $1,392 $1,207 $358 $346 $500 26 $332 $346 $0 2008 2009 2010 2011 2012 1Q11 1Q12 $s in millions • Adjusts GAAP revenues to ongoing revenues for: - Ocean customer transition (volume moved direct to railroads 4Q11) - Intermodal wholesale east-west big box business (transitioned away 4Q09 thru 3Q10) - International military (exited business in late 2010) - Transport business (certain assets sold in 2010) 27
  28. 28. Earnings Per Share• 1Q12 Diluted EPS loss of ($0.01) – Intermodal segment (ongoing) Operating Income +44% – Logistics segment loss of $3.2m• 2012 Guidance Reconfirmed: $0.35 – $0.41 … +9% at midpoint – Logistics profitable by 4th quarter $0.60 $0.40 1st Quarter $0.40 $0.05 $0.35 $0.20 $0.35 to $0.15 $0.41 $0.06 $0.00 ($0.01) ($0.20) ($0.60) ($0.40) ($0.60) 2009 2010 2011 2012 2009, 2010 adjusted, as reported in 2011 10K * 2011 adjusted GAAP results of $0.40 for: - 2011 gain on railcar sales (-$4.8m income / -8 cents EPS) - 2011 deferred tax adjustment (+$1.2m income / +3 cents EPS) 28
  29. 29. Balance Sheet• 1Q12 Remain debt free with $19m cash – Operating cash flow impacted by working capital timing; Capex $3.4m• 2012 Focus: maintain cash generation and debt free position – $8-10m of IT-focused Capital Expenditures $40 Net Debt (Debt) + Cash $30 1st Quarter $20 $10 $24.0 $19.1 $0 ($9.2) ($8.4) ($10) ($20.2) ($20) ($39.0) ($30) ($40) ($50) 2008 2009 2010 2011 1Q11 1Q12 29
  30. 30. 2012 Guidance• Revenue: $1.500 – $1.525 B • +7-9% (midpoint +8%) $1,600 $1,479 $75 – Cautious view of macro-economy $1,400 $1,200 – Strong core domestic Intermodal growth $1,000 continues (+15-20%) $1,500 $800 $1,403 * to – Slow international freight volumes $600 $1,525 continue (Intermodal and Logistics) $400 $200 $0 2011 2012• EPS: $0.35 – $0.41 • +0-17% (midpoint +9%) $0.45 $0.40 – Strong core domestic Intermodal growth $0.40 $0.35 $0.05 – Reduction of ocean carrier customer $0.30 $0.25 – End of UP gain amortization ($5m) $0.35 $0.20 to – Logistics segment a work-in-process; $0.35 * $0.41 $0.15 improvements by 4Q12 $0.10 $0.05 – Relatively flat SG&A $0.00 2011 2012 * Adjusted 2011 GAAP Revenue of $1,479 for Ocean customer transition direct to railroads 4Q11 * Adjusted 2011 GAAP EPS of $0.40 for: gain on railcar sales (-$4.8m income / -8 cents EPS), deferred tax adjustment (+$1.2m income / +3 cents EPS) 30
  31. 31. Our 2012 Focus• Continue Double-Digit Domestic Intermodal Growth – Eastern and Mexico market growth opportunities• Transform Logistics Segment for Profitable Growth – New leadership, organizational models, and incentives – Contributes on a stand alone basis and complements Intermodal• Retain a Competitive Cost Structure – Drayage conversion – in-house/dedicated (now 72%, goal 85%) – Network optimization, equipment turns, empty miles reduction – SG&A scaling• Enhance Pacer’s Core: People, Processes, and Technologies – Pegasus drayage and retail systems – Intermodal decision support systems – Highway brokerage organization model and operating system – International import/export organization model and systems 31
  32. 32. Our VisionTo be the customers’ preferred choice,earning customer confidence every day byreliably delivering best-in-class door-to-doortransportation services and logisticssolutions. 32
  33. 33. Investor ContactsJohn HaffertyEVP and Chief Financial Officer(614) 923-1987Steve MarkoskyVP, Financial Planning & Analysis andInvestor Relations(614) 923-1703 33

×