Chaos reigned behind the curtain.
Startup cement hauler Xcel Bulk Logistics (XBL) had just completed the whirlwind acquisition of 1845’s commercial bulk division assets but wasn’t granted the company’s McLeod software license, leaving the now transitory 1845 management team scrambling to run a 130-truck operation on paper and Excel spreadsheets. So they worked 18-hour shifts, only tagging in and out for a few hours of rest before returning to the office, to ensure every customer was properly invoiced, and every driver fairly compensated.
Randy Plotner, Xcel’s vice president of business development who came over from 1845, called the experience “harrowing,” and his team’s efforts “unbelievable”—but everyone outside their bubble was blissfully unaware.
“Nobody knew any of that was going on,” he said.
“It was the Wizard of Oz behind the curtain, pulling rods and spinning wheels, with fire and sparks shooting everywhere, and they were on the other side of that green velvet curtain saying everything looks fine over here.”
See also: XBL purchases 1845’s commercial bulk division
The passion, courage, and operational savvy they showed—despite not knowing if they’d still be employed when their act ended—convinced Xcel co-founder and president Rick Hoyle they deserved to join his highly connected team of tank truck professionals backed by the greenfield-minded Lilium Group and innovative partner Peterson Hawkins, who’s out to redefine how private equity supports and manages its portfolio.
Together, they’re turning heads across the dry bulk industry.
In less than two years, XBL—which now operates through XBL Construction Materials, the original cement startup, and XBL Industrial Materials, which grew from 1845’s commercial division—has evolved from concept to a $65 million operation, despite launching during the Covid-19 pandemic and dealing with ongoing supply-chain constraints. And it shows no signs of slowing down.
“We’re a unique player in the bulk logistics market,” Plotner said. “We’re investing heavily to diversify our product offerings, and there isn’t another company out there growing the way we are, and making this much noise.
“It’s a testament to our team, our shared vision, and our goal.”
Coming together
Relationships matter in any business, but particularly in the dry bulk industry, a niche market where “everybody knows everybody—almost on a first-name basis,” Plotner said. And those relationships, built on trust and mutual respect, and strengthened over time, are at the heart of these collaborators’ achievements.
Hoyle is the group’s keystone. He started Diamond Bulk Transportation in 1995 hauling lime in pneumatic tankers in Tennessee. After building up that business, he partnered with Vic Thompson and Bob Williamson, who started cement hauler StarTrans in Holly Hill, South Carolina. They eventually merged the companies, then sold to Trimac Transportation in 2009.
Thompson went on to work for liquid food-grade carrier Indian River Transport, then started Guaranteed Transport Service as a food-grade hauler. Now he’s president of Florida-based FlowTrans, the liquid food-grade hauler in Lilium’s portfolio of five transportation companies. He hired Galen Murphy—XBL’s co-founder and VP of strategy—while at StarTrans.
Murphy went to Trimac with Hoyle, and they re-teamed in 2019 to run Sterling Transport’s dry bulk division after Grammer Logistics acquired the North Carolina-based carrier through its private-equity partner, Stellex Capital Management. When Grammer opted to divest the business a year later, they tried to buy it but came up short to TFI International. So they teamed with Hawkins, and cement industry veterans Dan Moore and Paul Summers, to form Xcel Bulk Logistics, which delivered its first loads May 17, 2021.
Plotner previously worked in dry bulk with J&M Tank Lines and Bay & Bay Transportation after establishing Autumn Transport’s pneumatic division. He teamed with Jimmy Tuley and Mike Bowling at 1845, and they were instrumental in keeping the company’s drivers and customers on board with the transition to XBL. Tuley now is XBL’s VP of operations, and Bowling is VP of fleet services for XBL’s companies, as well as FlowTrans and Houston-based Optix, the Lilium Group’s intermodal operation.
Buddy Sexton co-founded Optix and serves as chief commercial officer. He and his partner connected with Hawkins through Hoyle. Sexton is the son of former National Tank Truck Carriers chairman Marvin E. “Buddy” Sexton, who led Montgomery Tank Lines, and Quality Carriers during his distinguished career.
“I can say with 100% certainty this group, from the equity level down, is the greatest group of people I’ve worked with,” Plotner said. “It’s an assembly of great personalities, great minds—and a completely aligned vision.
“It’s unlike anything I’ve seen.”
Long-term partners
Hawkins is unlike most private-equity partners in transportation. He previously handled distressed investments for Luminus Management, which spun off Lilium to build businesses, instead of buying existing companies with bad capital structures, reforming them, and exiting for a return. “Lilium was created to go the opposite direction,” Hawkins explained. “We find excellent management teams, provide strategic capital and back-office support, and help them build resilient companies in industrial markets.”
Hoyle sought private-equity backing to help raise capital and mitigate risk, and partnered with Hawkins because of the back-office support Lilium provides through its Lilium Portfolio Services organization, and its longer-term approach to investing. Hawkins said their funds aren’t structured to incentivize an imminent exit, and Lilium has the ability to “evergreen” individual investments, or an entire portfolio. “We’re trying to build more durable businesses, and focus on cash-flow generation and profitability,” Hawkins said.
The Houston-based Lilium Group also helps with budgeting, strategic initiatives, and mergers-and-acquisitions, in addition to “bringing a cash flow and return-on-capital mindset to asset-intensive and cyclical businesses,” Hawkins said. “We want to continue serving our customers’ needs, so we’re transparent about earning a fair return that ensures we can provide the assets and services required to deliver.” His team’s relationship with the American Trucking and Transportation Insurance Company helped XBL lock in favorable insurance rates, particularly for a startup; and their relationship with a major lender allowed XBL—only five months old at the time—to close the 1845 deal in 21 days from the seller’s initial outreach.
Tuley said he was disillusioned with private-equity owners after his experience at 1845. But Lilium’s willingness to reinvest in the business, and make it profitable again, and Hawkins’ hands-on approach to management, convinced him Lilium was different. “That’s what made me want to be a part of this,” he said. “I could prove my worth, and do it basically in the same office, but now with the support we weren’t getting before.”
Capturing the market
The XBL team targeted dry bulk because it’s a “gray area” where creative enterprises can earn reasonable returns without competing in larger, highly commoditized markets. The equipment is expensive, but the products are non-hazardous, and demand is dependable. “Moving product from Point A to Point B isn’t rocket science,” Murphy said. “But customers’ operations can fluctuate daily, requiring constant network realignment, so we differentiate ourselves by specializing in customized solutions and bundled services that solve their supply-chain challenges.”
Xcel Bulk Logistics was founded as a cement and fly ash hauler. Now it’s the construction division, delivering materials to plants that produce concrete. The 1845 acquisition—which didn’t include its “boom-or-bust” oilfield services division—provided immediate scale, and helped balance the more seasonal cement business. Now, as XBL Industrial Materials, it hauls sand and limestone to manufacturers of glass and roofing materials.
“We just haul dirt, so our job is to make it as sexy as possible,” Hoyle said. “How do you do that? You take care of the customer, and you do it for a profit. And you have to find customers who will allow you to be profitable, because it takes a lot to capitalize these fleets.” His team’s relationships with customers won Hawkins’ support, helping establish XBL as a business that’s “safety-driven, driver-focused, customer-centric, and value-positioned.”
Combined, XBL’s divisions now are running 250 trucks and 375 trailers in mostly regional lanes between Texas, Florida, and the Carolinas. They are headquartered in a brand-new facility in Weatherford, Texas; have terminals in Winston Salem, North Carolina, Atlanta, Georgia, and Holly Hill; and maintain 15 “satellite” yards.
The group also includes XBL Storage Solutions, a new business that aims to provide ready-mix operations with more efficient storage capacity by replacing antiquated “pig” trailers, or portable pneumatic storage bins, with self-contained “smart” silos outfitted with Paragon 858 blowers, air compressors, and rotary vane feeders. Each vertical silo holds 225 tons of cement in a much smaller footprint than a port-a-bulk unit. “It’s not just a big tin can that holds things,” Plotner said. “It unloads product when the regular silo is low, and automatically feeds into the next unit.”
Shared services
Lilium Group’s diversified portfolio—with combined revenues well into nine figures—provides the five individual Federal Motor Carrier Safety Administration-registered motor carriers with increased purchasing power, equipment synergies, and maintenance efficiency. For instance, FlowTrans uses XBL’s “breakdown” group for 24-7 repair assistance; and the group’s brokerage, Vircon Transport Solutions, can balance capacity across entities and coordinate multi-company services, like intermodal or bulk joint ventures.
“They all operate a little bit differently, but everyone wants maximum uptime and cost-effective maintenance procedures,” Bowling said.
Further advantages include the power to network with an accomplished group of plugged-in professionals, both to share best practices, and to help grow their respective customer bases, which often overlap. XBL and Optix, for example, both serve manufacturers in the tile flooring industry, like Daltile and Emser Tile. “We’re multiple companies, but we all work together to develop comprehensive solutions,” Sexton said.
While they’re taking care of customers, Lilium Portfolio Services is caring for them, delivering “world-class” human resources, legal, information technology, and accounting platforms, which Sexton says are challenging for new companies to build out. “Management can focus on running the business—the blocking and tackling of handling our customers’ loads each day,” Hoyle said.
Streamlined processes and transportation technologies, from providers like Comdata, Compcare Services, Fleetio, Precoro, and Samsara, also help reduce operating costs across the portfolio. Tuley said he’s most appreciative of Lilium’s ability to generate comprehensive, actionable reports with data visualization software. “I’m very thankful to have Lilium’s platform services as a resource,” Thompson emphasized.
Overcoming constraints
The group’s still bolstering those resources, too.
With equipment constraints as the biggest hindrance to expansion amid ongoing supply-chain disruptions, XBL opened full-service shops last year in Winston Salem, and Holly Hill. “We’re running an aging fleet like everybody else,” Bowling said. “Nobody’s running the fleet they want, and everybody’s complaining about the same things—the costs are getting higher, and they’re holding onto trucks longer, because new iron hasn’t been available.
“That two-year slowdown of production, and shutdown of facilities [during the pandemic,] had long-term ramifications for how folks manage their fleets.”
XBL recently had six trucks down while waiting for backordered parts; and long lead teams for new equipment forced the group to be “less picky” last year, and take on some “lightly used” equipment or add sleeper trucks where daycabs would do because that’s what was available. Still, by leaning on relationships and the group’s combined resources, XBL added 25 trucks in 2022 while focusing on “re-fleeting” over growth.
Newly added Peterbilts are Model 389s with 72-inch sleepers, Cummins X15 engines, and 13-speed Eaton transmissions. XBL also recently took delivery of several new Mack Anthems thanks to Hoyle’s stint as VP of national accounts at Mack Trucks. All power units feature the latest safety technology and disc brakes, and are rigged out with Tuthill T850 blowers for cement, and Tuthill T1055s and Paragon P1057s for sand.
Due to parts-supply issues, Tuley said they’re also considering adding grille guards to protect the cameras and sensors built into modern truck bumpers. “Animal strikes are taking that stuff out, and downing trucks for up to 18 weeks while we wait for a life-saving device, because the systems can’t be repaired,” he said. “They’ve got to be all new.”
Trailers primarily are Heil small-cube, three-hopper dry bulk trailers, with a few Polar and Vantage pneumatics mixed in. The Heil trailers boast Truck-Lite LED lighting, Hendrickson air-ride suspensions, and Bulk Tanks Inc. (BTI) components, including BTI’s SandHog Hopper Tees, which offer superior abrasion resistance, Bowling said.
Full speed ahead
Lilium’s portfolio includes roughly 500 trucks—and the plan is to add 300 more across the XBL, FlowTrans, and Optix fleets in 2023. “We’re going to focus on better uptime and utilization, and lower maintenance costs, and that starts with turning over our entire fleet,” Hawkins said. “We’re also investing in new warehousing, storage facilities, and technology assets like the silos, to bring customers across the portfolio a suite of integrated solutions.”
XBL will again be active in the mergers-and-acquisitions market as it continues to evolve, Hoyle said, pointing to three likely deals “in the pipeline” entering 2023. Further plans include placing new shops in “sweet spots” where they’re growing organically—and opening them to select outside business—diversifying into other dry bulk or adjacent segments, like flatbed or waste hauling; and rolling out new software solutions to integrate customer inventory and operations systems with XBL’s storage and dispatch program.
“We’ve done a good job in a challenging environment, so customers continue asking us for more,” Hawkins said. “As long as that doesn’t change, and rates support the equipment we’re buying, we’ll continue growing.” And with a solid core business in place, and the tailwinds from the historic bipartisan Infrastructure Investment and Jobs Act, Hoyle expects XBL’s companies to hit a run rate of $100 million by the end of the year.
“We will be the premier dry bulk hauler in the markets we serve,” vowed Hoyle—XBL’s wizard behind the curtain. “That’s the goal, and that’s what energizes me and keeps me excited about everything we’re doing here.”
