Attached files
| file | filename |
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| 8-K - FORM 8-K - C. H. ROBINSON WORLDWIDE, INC. | d669853d8k.htm |
| EX-99.1 - EX-99.1 - C. H. ROBINSON WORLDWIDE, INC. | d669853dex991.htm |
 Earnings Conference Call –
Fourth Quarter 2013
February 5, 2014
John Wiehoff, Chairman & CEO
Chad Lindbloom, CFO
Tim Gagnon, Director, Investor Relations
Exhibit 99.2 |
 2
Safe Harbor Statement
Except for the historical information contained herein, the matters set forth in this presentation and
the accompanying earnings release are forward-looking statements that represent our
expectations, beliefs, intentions or strategies concerning future events. These
forward-looking statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from our historical experience or our present expectations,
including, but not limited to such factors as changes in economic conditions, including
uncertain consumer demand; changes in market demand and pressures on the pricing for our
services; competition and growth rates within the third party logistics industry; freight
levels and increasing costs and availability of truck capacity or alternative means of transporting
freight, and changes in relationships with existing truck, rail, ocean and air carriers;
changes in our customer base due to possible consolidation among our customers; our ability to
integrate the operations of acquired companies with our historic operations successfully; risks
associated with litigation and insurance coverage; risks associated with operations outside of
the U.S.; risks associated with the potential impacts of changes in government regulations;
risks associated with the produce industry, including food safety and contamination issues;
fuel prices and availability; changes to our capital structure and termination of our
accelerated share repurchase program; and the impact of war on the economy; and other risks and
uncertainties detailed in our Annual and Quarterly Reports. We have included herein certain
non-GAAP financial information, including certain fiscal 2012 information adjusted to
reflect an acquisition and a divestiture that occurred during 2012. In addition to
helping us assess our operating performance, we believe that these non-GAAP financial measures
assist investors in understanding our operations and results. However, non-GAAP
results should not be regarded as a substitute for corresponding GAAP measures, and should be
viewed in conjunction with our consolidated financial statements prepared in accordance with
GAAP. Reconciliations of such non- GAAP information to actual results are set forth in
Appendices A, B and C. |
 3
Q4 2013 Results
2013
2012
% Change
2013
2012
% Change
Total revenues
$3,152,882
$2,970,876
6.1%
$12,752,076
$11,359,113
12.3%
Total net revenues
$444,465
$444,632
0.0%
$1,836,095
$1,717,571
6.9%
Income from operations
$155,113
$133,604
16.1%
$682,650
$675,320
1.1%
Net income
$92,952
$256,392
-63.7%
$415,904
$593,804
-30.0%
Earnings per share
(diluted)
$0.62
$1.58
-60.8%
$2.65
$3.67
-27.8%
Three months ended December 31,
Twelve months ended December 31,
in thousands, except per share amounts
•
2012 includes the gain on the sale of T-Chek Systems, Inc. and the acquisition
related costs for Phoenix International, Inc.
•
T-Chek Systems, Inc. was sold on October 16, 2012
•
Phoenix was acquired on November 1, 2012 |
 4
in thousands
2013
Actual
2012
Pro Forma
% Change
Pro Forma
Total revenues
$3,152,882
$3,038,595
3.8%
Total net revenues
$444,465
$453,782
-2.1%
Personnel expenses
203,619
198,307
2.7%
Selling, general & admin
80,718
75,006
7.6%
Acquisition amortization
5,015
5,022
-0.1%
Total operating expenses
289,352
278,335
4.0%
Income from operations
$155,113
$175,447
-11.6%
Percent of net revenue
34.9%
38.7%
-9.7%
2013 Actual Compared to 2012 Pro Forma
•
2012 Pro Forma includes the effects of the divestiture of T-Chek and
acquisition of Phoenix as if they
had
occurred
at
the
beginning
of
our
2012
fiscal
year.
A
reconciliation
of
actual
results
for the
fourth quarter and full year of 2012 to pro forma appears in Appendix A and
B •
Total revenue growth continues to outpace net revenue growth resulting from margin
compression •
Income from operations declined as a result of a 2.1% decrease in net revenues and
a four percent
increase
in
operating
expenses
(2013
Actual
compared
to
2012
Pro
Forma)
•
The Phoenix integration progressed as planned and the Global Forwarding results
were strong in the fourth quarter
Three months ended December 31,
2013 Actual
2012 Pro
Forma
% Change
Pro Forma
$12,752,076
$12,010,326
6.2%
$1,836,095
$1,812,631
1.3%
826,661
788,959
4.8%
306,656
279,744
9.6%
20,128
19,859
1.4%
1,153,445
1,088,562
6.0%
$682,650
$724,069
-5.7%
37.2%
39.9%
-6.8%
Twelve months ended December 31, |
 5
Transportation Results Q4 2013
•
Transportation net revenue margin compression continued in the fourth
quarter •
Truckload margin compression continued in the fourth quarter
2013
2012
% Change
2013
2012
% Change
Total revenues
$2,767,550
$2,585,930
7.0%
$11,069,710
$9,685,415
14.3%
Total net revenues
$416,020
$409,141
1.7%
$1,698,395
$1,528,137
11.1%
Net revenue margin
15.0%
15.8%
-5.0%
15.3%
15.8%
-2.8%
Three months ended December 31,
Twelve months ended December 31,
TRANSPORTATION in thousands
TRANSPORTATION NET REVENUE MARGIN PERCENTAGE
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1
17.7%
17.8%
16.8%
17.4%
18.3%
20.2%
18.2%
22.6%
17.4%
17.2%
16.9%
16.2%
Q2
16.1%
15.9%
15.4%
16.3%
17.1%
17.9%
15.4%
20.6%
15.8%
16.2%
14.9%
15.3%
Q3
15.6%
16.0%
15.9%
16.3%
17.5%
18.0%
15.9%
19.8%
16.6%
16.4%
15.6%
14.9%
Q4
16.2%
15.8%
16.0%
15.7%
18.3%
17.7%
19.0%
18.3%
17.6%
16.3%
15.8%
15.0%
Year
16.3%
16.3%
16.0%
16.3%
17.8%
18.4%
17.0%
20.2%
16.8%
16.5%
15.8%
15.3% |
 6
Truckload Results Q4 2013
2013
2012
2013
2012
% Change
$256,117
$271,248
-5.6%
$1,054,565
$1,060,120
-0.5%
Three months ended December 31,
Twelve months ended December 31,
TRUCKLOAD NET REVENUES in thousands
Quarter
Year to
Date
Volume
7%
10%
Pricing *
3.5%
2%
Net revenue margin
TRUCKLOAD
Year over year change
*Pricing measures represent North America only and
excludes estimated impact of the change in fuel
•
North
America
Truckload
volumes
grew
approximately
six
percent
in
the
fourth
quarter when compared to the fourth quarter of 2012
•
North America Truckload cost per mile, excluding the impact of the change in fuel,
increased approximately five percent in the fourth quarter of 2013 when
compared to the fourth quarter of 2012
•
North America Truckload price per mile, excluding the impact of the change in fuel,
increased approximately 3.5 percent in the fourth quarter of 2013 when
compared to the fourth quarter of 2012
% Change |
 7
LTL Results Q4 2013
2013
2012
% Change
2013
2012
% Change
$58,839
$57,025
3.2%
$239,477
$224,160
6.8%
Three months ended December 31,
Twelve months ended December 31,
LTL NET REVENUES in thousands
Quarter
Year to Date
Volume
4%
7%
Pricing
Net revenue margin
LTL
Year over year change
•
Net revenue growth rate slowed in the fourth quarter when compared to the growth
rate in the first three quarters of 2013
•
LTL experienced net revenue margin compression in the fourth quarter of 2013 when
compared to the fourth quarter of 2012
•
Carrier
costs
are
increasing
industry
wide,
customer
pricing
has
not
kept
up
with
the
increase in carrier costs
•
LTL marketplace remains very competitive |
 8
Intermodal Results Q4 2013
•
Net revenues increase was driven by a change in the mix of business and improved
customer pricing
•
Intermodal volume declined in the fourth quarter of 2013 when compared to the
fourth quarter of 2012
2013
2012
% Change
2013
2012
% Change
$9,861
$9,011
9.4%
$39,084
$38,815
0.7%
Three months ended December 31,
Twelve months ended December 31,
INTERMODAL NET REVENUES in thousands
Quarter
Year to
Date
Volume
Pricing
Net revenue margin
Year over year change |
 9
Global Forwarding Results Q4 2013
Ocean, Air and Customs
2013
2012
% Change
2013
2012
% Change
Ocean
$46,367
$33,707
37.6%
$187,671
$84,924
121.0%
Air
$17,982
$15,948
12.8%
$73,089
$44,444
64.5%
Customs
$9,271
$6,782
36.7%
$36,578
$18,225
100.7%
Three months ended December 31,
Twelve months ended December 31,
NET REVENUES in thousands
Quarter
Year to Date
Volume
Pricing
Net revenue margin
OCEAN
Quarter
Year to Date
Volume
Pricing
Net revenue margin
AIR
Year over year change
Year over year change
•
Net revenue growth across all Global Forwarding Services when compared to the
fourth quarter of 2012
•
In the fourth quarter, CHRW was again the #1 NVOCC from China, Eastbound and
finished the year at #1 (ranking based on TEU’s shipped in the fourth
quarter and full year of 2013) |
 10
Phoenix Integration Update
•
Global Forwarding results through four quarters on track with the acquisition
plan •
Offices,
agents,
gateways
&
operational
process
integrations
are
complete
•
Systems integration for Phoenix offices is under way and will continue through
2014 2013
2012
% Change
Actual C.H. Robinson net
revenue
$73,620
$56,437
30.4%
Phoenix net revenue *
$11,440
Total *
$73,620
$67,877
8.5%
Three months ended December 31,
OCEAN, AIR, AND CUSTOMS NET REVENUE
in thousands
* See
Appendices
A
and
B
for
reconciliation
information
for
2012
periods
2013
2012
% Change
$297,338
$147,593
101.5%
$136,683
$297,338
$284,276
4.6%
Twelve months ended December 31, |
 11
Other Logistics Services Results Q4 2013
•
Other Logistics Services net revenues include transportation management services,
warehousing and small parcel
•
These services continued to perform well and the sales pipeline is
strong 2013
2012
% Change
2013
2012
% Change
$17,583
$15,420
14.0%
$67,931
$57,449
18.2%
Three months ended December 31,
Twelve months ended December 31,
NET REVENUES in thousands
|
 12
Sourcing Results Q4 2013
•
Continued volume and net revenue decreases from a large customer, impact will
continue in 2014
•
Case volume decreased approximately two percent in the fourth quarter of 2013 when
compared to the fourth quarter of 2012
•
Sourcing margins were impacted by weather and a change in our commodity and
service mix 2013
2012
% Change
2013
2012
% Change
Total revenues
$382,098
$379,479
0.7%
$1,669,134
$1,620,183
3.0%
Total net revenues
$25,799
$30,543
-15.5%
$126,950
$136,438
-7.0%
Net revenue margin
6.8%
8.0%
-16.1%
7.6%
8.4%
-9.7%
Three months ended December 31,
Twelve months ended December
31,
SOURCING in thousands |
 13
Three months ended December 31
Twelve months ended December 31
December 31, 2013
Cash & investments
$162,047
Current assets
$1,664,485
Total assets
$2,802,818
Debt
$875,000
Current liabilities
$1,269,981
Stockholders’
investment
$939,724
CASH FLOW DATA
BALANCE SHEET DATA
Other Financial Information
in thousands
•
Strong operating cash flow
•
Total debt $875 million
•
$500 million, 15 year average
duration, 4.28% weighted
average coupon
•
$375 million drawn on revolver,
1.67% current rate
2013
2012
% Change
2013
2012
% Change
Net
cash
provided
by
operating
activities
-
actual/reported
$164,848
$193,186
-14.7%
$347,777
$460,342
-24.5%
Adjust: Impact of accrued income taxes
-11,830
103,853
-105,857
104,542
Net
cash
provided
by
operating
activities
-
adjusted
$176,678
$89,333
97.8%
$453,634
$355,800
27.5%
Capital expenditures, net
$13,970
$11,765
18.7%
$48,206
$50,656
-4.8% |
 14
Repurchases of Common Stock
in thousands, except per share
Q4 2013
YTD through December 31, 2013
ASR
Other
Activity
Total
ASR
Other Activity
Total
Shares
1,195
1,540
2,735
7,314
5,211
12,525
Average price per
share
$59.04
$59.57
Total cost of shares
$90,923
$310,449
•
Other activity includes the shares withheld on the delivery of restricted shares to
employees •
$500 million Accelerated Share Repurchase (ASR) initiated on August 26, 2013
•
6.1 million shares delivered upon initial purchase, approximately 70% of total
expected shares •
One
of
the
two
banks
terminated
their
ASR
plan
and
delivered
1.2
million
shares
•
The remaining ASR plan will terminate on or before April 16, 2014 at the banks
discretion •
Final number of shares delivered to CHR will be based upon the average of the
daily VWAP, less an agreed to discount of .94% during the duration of the
ASR plan •
Balance of shares under the ASR calculation will be delivered upon termination of
the plan |
 15
2014 Thoughts and Initiatives
•
Our long term growth targets assume margin stabilization, margins continued to
compress throughout 2013
•
Net revenues decreased in January 2014 when compared to January 2013
•
Pricing will be a high priority in 2014
•
Growth continues to be our top priority through leveraging our current resources
CAGR
1997-2007
CAGR
2007-2012
Long Term
Growth Target
Total revenue growth
15%
9%
6-11%
Net revenue growth
20%
7%
5-10%
Income from operations growth
25%
7%
5-10%
Diluted earnings per share growth
24%
8%
7-12% |
 16
Appendix A: Q4 2012 Actual to Pro Forma Reconciliation
in thousands
Three months ended December 31,
* See next slide for explanation of footnotes 1, 2 & 3
|
 17
Appendix A: Q4 2012 Actual to Pro Forma Reconciliation
1.
The adjustment to personnel consists of $33 million of incremental vesting expense of our equity awards
triggered by the gain on the divestiture of T-Chek. The balance consists of
transaction-related bonuses. The adjustments to other operating expenses reflect fees paid
to third parties for investment banking fees related to the acquisition of Phoenix and external
legal and accounting fees related to the acquisitions of Apreo and Phoenix and the divestiture
of T-Chek. The adjustment to investment and other income reflects the gain from the
divestiture of T-Chek. The adjustment to diluted weighted average shares outstanding
relates to the shares of C.H. Robinson stock issued as consideration paid to the sellers in the
acquisition of Phoenix and the additional vesting of performance-based restricted stock as
a result of the gain on sale recognized from the divestiture of T-Chek.
2.
Adjustments have been made to historical Phoenix operations for the addition of amortization expense
of finite-lived intangible assets recorded in connection with the acquisition ($1.4
million), rent expense for lease agreements entered into in connection with the acquisition
($28 thousand), depreciation on a building acquired in the acquisition ($12 thousand), and
incremental interest expense on the borrowings associated with the acquisition ($213 thousand).
Adjustments have been made for the elimination of additional bonuses ($1.4 million) and third
party advisory fees ($582 thousand) paid by Phoenix. An adjustment has also been made to reduce
purchased transportation and related services ($2.5 million) and other selling, general, and
administrative expenses ($5.0 million) and to increase personnel expenses ($7.5 million) to
conform to C.H. Robinson’s historical financial reporting presentation. The adjustment to
diluted weighted average shares outstanding relates to the shares of C.H. Robinson stock issued as
consideration paid to the sellers in the acquisition of Phoenix. There were no pro forma
adjustments to the T-Chek historical results.
3.
Net revenues are our total revenues less purchased transportation and related services, including
contracted motor carrier, rail, ocean, air, and other costs, and the purchased price and
services related to the products we source. |
 18
Appendix B: 2012 Actual to Pro Forma Reconciliation
in thousands
Twelve months ended December 31,
* See next slide for explanation of footnotes 1, 2 & 3
|
 19
Appendix B: Twelve Month 2012 Actual to Pro Forma Reconciliation
1.
The adjustment to personnel consists of $33 million of incremental vesting expense
of our equity awards triggered by the gain on the divestiture of T-Chek.
The balance consists of transaction-related
bonuses.
The
adjustments
to
other
operating
expenses
reflect
fees
paid to
third parties for investment banking fees related to the acquisition of Phoenix
and external legal and accounting fees related to the acquisitions of Apreo
and Phoenix and the divestiture of
T-Chek.
The
adjustment
to
investment
and
other
income
reflects
the
gain
from
the
divestiture of T-Chek. The adjustment to diluted weighted average shares
outstanding relates to the shares of C.H. Robinson stock issued as
consideration paid to the sellers in the acquisition of Phoenix and the
additional vesting of performance-based restricted stock as a result of
the gain on sale recognized from the divestiture of T-Chek. 2.
Adjustments have been made to historical Phoenix operations for addition of
amortization expense of finite-lived intangible assets recorded in
connection with the acquisition ($13.6 million), rent expense for lease
agreements entered into in connection with the acquisition ($280 thousand),
depreciation on a building acquired in the acquisition ($123 thousand), and
incremental interest expense on the borrowings associated with the acquisition
($2.1 million). Adjustments have been made for the elimination of
contractual changes in compensation ($5.1 million), and additional bonuses
($1.4 million) and third party advisory fees ($582 thousand) paid by
Phoenix. An adjustment has also been made to reduce purchased
transportation and related services ($24.4 million) and other selling, general,
and administrative expenses ($50.1 million) and to increase personnel
expenses ($74.5 million) to conform to C.H. Robinson’s historical
financial reporting presentation. The adjustment to diluted weighted average
shares outstanding relates to the shares of C.H. Robinson stock issued as
consideration paid to the sellers in the acquisition of Phoenix. There were no pro
forma adjustments to the T-Chek historical results.
3.
Net revenues are our total revenues less purchased transportation and related
services, including contracted motor carrier, rail, ocean, air, and other
costs, and the purchased price and services related to the products we
source. |
 |