Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - C. H. ROBINSON WORLDWIDE, INC. | ex991earningsrelease.htm |
| 8-K - 8-K - C. H. ROBINSON WORLDWIDE, INC. | chrw93017earnings8-k.htm |
1
Earnings Conference Call – Third Quarter 2017
November 1, 2017
John Wiehoff, Chairman & CEO
Andrew Clarke, CFO
Tim Gagnon, Director, Investor Relations
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 share repurchase activity; risk of unexpected or unanticipated
events or opportunities that might require additional capital expenditures; the
impact of war on the economy; and other risks and uncertainties detailed in our
Annual and Quarterly Reports.
2
3
Results Q3 2017
Three Months Ended September 30
in thousands, except per share amounts and headcount
▪ Total revenues increased as a result of volume increases across nearly all transportation services in the third
quarter of 2017 when compared to the third quarter of 2016.
▪ Net revenues increase of 6.3 percent was primarily the result of net revenues growth in Global Forwarding
partially offset by lower truckload net revenues. APC added approximately 2 percent to total company net
revenues in the third quarter of 2017.
▪ Average headcount increased 8.7 percent when compared to the third quarter of 2016. The acquisitions of APC
and Milgram increased headcount 5 percent.
3
Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues $3,784,451 $3,355,754 12.8% $10,909,594 $9,729,438 12.1%
Total Net Revenues $593,846 $558,462 6.3% $1,736,201 $1,716,012 1.2%
Net Revenue Margin % 15.7% 16.6% 15.9% 17.6%
Income from Operations $194,465 $211,267 (8.0%) $564,243 $643,966 (12.4%)
Operating Margin % 32.7% 37.8% 32.5% 37.5%
Net Income $119,186 $129,028 (7.6%) $352,337 $391,081 (9.9%)
Earnings Per Share (Diluted) $0.85 $0.90 (5.6%) $2.49 $2.73 (8.8%)
Weighted Average Shares
Outstanding (Diluted) 141,022 142,883 (1.3%) 141,403 143,245 (1.3%)
Depreciation and Amortization $23,963 $17,657 35.7% $69,340 $52,716 31.5%
Total Assets $4,175,588 $3,664,062 14.0% $4,175,588 $3,664,062 14.0%
Average Headcount(1) 14,903 13,706 8.7% 14,590 13,478 8.3%
Ending Headcount(1) 14,998 13,710 9.4% 14,998 13,710 9.4%
(1) Q3 2016 headcount metrics do not include employees of APC Logistics acquired on September 30, 2016.
‹#›
Summarized Income Statement
▪ Personnel expenses increased as a result of headcount additions and an increase
in variable compensation in the third quarter of 2017 when compared to the third
quarter of 2016.
▪ SG&A expenses increased as a result of costs related to the addition of APC and
Milgram, higher allowance for doubtful accounts, claims, and warehouse expenses
in the third quarter of 2017 when compared to the third quarter of 2016.
▪ The effective tax rate was 35.2 percent in the third quarter.
in thousands
4
Three Months Ended September 30 Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues $3,784,451 $3,355,754 12.8% $10,909,594 $9,729,438 12.1%
Total Net Revenues $593,846 $558,462 6.3% $1,736,201 $1,716,012 1.2%
Personnel Expenses $293,204 $256,883 14.1% $867,928 $804,631 7.9%
Selling, General, and Admin $106,177 $90,312 17.6% $304,030 $267,415 13.7%
Total Operating Expenses $399,381 $347,195 15.0% $1,171,958 $1,072,046 9.3%
Income from Operations $194,465 $211,267 (8.0%) $564,243 $643,966 (12.4%)
% of Net Revenue 32.7% 37.8% 32.5% 37.5%
Net Income $119,186 $129,028 (7.6%) $352,337 $391,081 (9.9%)
‹#›
Other Financial Information
▪ Total debt balance $1.47 billion
▪ $500 million long-term debt,
4.28% average coupon
▪ $719 million drawn on revolver,
2.36% current rate as of
September 30, 2017
▪ $250 million accounts receivable
securitization debt facility, 1.97%
as of September 30, 2017
in thousands
5
Three Months Ended September 30 Nine Months Ended September 30
Cash Flow Data 2017 2016 % Change 2017 2016 % Change
Net Cash Provided by
Operating Activities $68,338 $129,567 (47.3%) $218,349 $376,828 (42.1%)
Capital Expenditures $13,448 $27,135 (50.4%) $46,418 $71,111 (34.7%)
Balance Sheet Data September 30, 2017
Cash & Cash Equivalents $297,307
Current Assets $2,454,846
Total Assets $4,175,588
Debt $1,469,000
Stockholders' Investment $1,354,875
‹#›
Capital Distribution
▪ Capital returned to shareholders during the quarter
▪ $64.0 million cash dividends
▪ $60.6 million in cash for share repurchase activity
▪ 893,249 shares repurchased in the third quarter
▪ Average price of $70.66 for the shares repurchased in the third quarter
▪ Target is to return approximately 90% of net income to shareholders annually.
(a) 2012 Net Income is adjusted to excluded transaction related gains and expenses. A reconciliation of adjusted
results appears in Appendix A. 2012 Dividends exclude the fifth dividend payment made during the year.
(b) Includes a $500 million accelerated share repurchase.
in thousands
6
2012 (a) 2013 2014 2015 2016 Q3 2017 YTD 2017
Net Income $447,007 $415,904 $449,711 $509,699 $513,384 $119,186 $352,337
Capital Distribution
Cash Dividends Paid $219,313 $220,257 $215,008 $235,615 $245,430 $63,959 $192,765
Share Repurchases $255,849 $807,449 $176,645 $241,231 $209,603 $60,617 $129,991
Subtotal $475,162 $1,027,706 $391,653 $476,846 $455,033 $124,576 $322,756
Percent of Net Income
Cash Dividends Paid 49.1% 53.0% 47.8% 46.2% 47.8% 53.7% 54.7%
Share Repurchases 57.2% 194.1% 39.3% 47.3% 40.8% 50.9% 36.9%
Subtotal 106.3% 247.1% 87.1% 93.6% 88.6% 104.5% 91.6%
(b)
‹#›
Three Months Ended September 30 Nine Months Ended September 30
Net Revenue by Service Line Q3 2017
▪ Net revenues by service line for the enterprise (all segments).
in thousands
7
Net Revenue by
Service Line
2017 2016 % Change 2017 2016 % Change
Truckload $301,025 $309,027 (2.6%) $887,865 $960,451 (7.6%)
LTL $101,870 $96,447 5.6% $301,706 $287,518 4.9%
Intermodal $7,478 $7,676 (2.6%) $23,278 $25,961 (10.3%)
Ocean $81,182 $56,506 43.7% $217,495 $175,243 24.1%
Air $25,529 $19,897 28.3% $73,166 $58,424 25.2%
Customs $17,421 $12,320 41.4% $49,810 $34,649 43.8%
Other Logistics Services $29,580 $26,771 10.5% $87,563 $76,965 13.8%
Sourcing $29,761 $29,818 (0.2%) $95,318 $96,801 (1.5%)
Total $593,846 $558,462 6.3% $1,736,201 $1,716,012 1.2%
‹#›
T
R
A
NS
P
ORT
A
TION
NE
T
REVEN
U
E
M
A
R
G
I
N
▪ North America Truckload cost and price change chart
represents truckload shipments from all North America
segments. Transportation net revenue margin represents
total Transportation results from all segments.
▪ Purchase transportation costs increased throughout the
third quarter, negatively impacting the margins on
contractual truckload shipments.
(1) Cost and price change exclude the estimated impact of fuel.
North America Truckload Cost and Price Change(1)
8
Transportation Net Revenue Margin
YoY Price Change
YoY Cost Change
North America
Truckload Q3 YTD
Volume 1% 7%
Price 6.5% 1%
Cost 8.5% 3.5%
Net Revenue
Margin
‹#›
Transportation Results Q3 2017(1)
in thousands
(1) Includes results across all segments.
9
▪ Transportation net revenue margin decline in the third quarter of 2017 when
compared to the third quarter of 2016 was primarily the result of lower net
revenue margins in NAST.
Three Months Ended September 30 Nine Months Ended September 30
Transportation 2017 2016 % Change 2017 2016 % Change
Total Revenues $3,433,701 $2,998,583 14.5% $9,855,739 $8,593,767 14.7%
Total Net Revenues $564,085 $528,644 6.7% $1,640,883 $1,619,211 1.3%
Net Revenue Margin % 16.4% 17.6% 16.6% 18.8%
Transportation Net
Revenue Margin %
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Q1 18.2% 22.6% 17.4% 17.2% 16.9% 16.3% 15.3% 16.8% 19.7% 17.3%
Q2 15.4% 20.6% 15.8% 16.2% 14.9% 15.4% 16.0% 17.5% 19.3% 16.2%
Q3 15.9% 19.8% 16.6% 16.4% 15.6% 15.0% 16.2% 18.4% 17.6% 16.4%
Q4 19.0% 18.3% 17.6% 16.3% 15.8% 15.1% 15.9% 19.0% 17.2%
Total 17.0% 20.2% 16.8% 16.5% 15.8% 15.4% 15.9% 17.9% 18.4%
‹#›
North American Surface Transportation (“NAST”) Results Q3 2017
▪ Net revenues decreased primarily as a result of lower truckload margins when
compared to the third quarter of 2016. September 2017 NAST net revenues
increased when compared to September 2016 NAST net revenues.
▪ NAST operating expenses increased 9.5 percent in the third quarter of 2017
when compared to the third quarter of 2016. This increase was due to increases
in both personnel and SG&A expenses.
▪ NAST headcount increased 1.9 percent when compared to the third quarter of
2016 and was down 5 employees sequentially from the second quarter of 2017.
in thousands, except headcount
10
(1) Does not include intersegment revenues.
Three Months Ended September 30 Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $2,469,420 $2,252,187 9.6% $7,110,223 $6,456,281 10.1%
Total Net Revenues $377,403 $378,073 (0.2%) $1,109,749 $1,161,074 (4.4%)
Net Revenue Margin % 15.3% 16.8% 15.6% 18.0%
Income from Operations $151,392 $171,733 (11.8%) $447,553 $516,805 (13.4%)
Operating Margin % 40.1% 45.4% 40.3% 44.5%
Depreciation and Amortization $5,808 $5,547 4.7% $17,104 $16,551 3.3%
Total Assets $2,297,980 $2,115,467 8.6% $2,297,980 $2,115,467 8.6%
Average Headcount 6,998 6,869 1.9% 6,921 6,767 2.3%
‹#›
NAST Results by Service Line Q3 2017
Truckload, Less Than Truckload, and Intermodal
▪ Net revenues decrease in the third quarter was a result of lower margins when
compared to the third quarter of 2016.
▪ Net revenues increase in the third quarter was primarily the result of 6.5
percent volume growth offset by lower LTL margins.
▪ Net revenues decreased while volume increased in the third quarter driven by
contractual volume growth, partially offset by a decrease in transactional
business.
in thousands
TL
LTL
IMDL
11 (1) Represents price and cost YoY change for North America shipments across all segments.
(2) Pricing and cost measures exclude the estimated impact of the change in fuel prices.
Three Months Ended September 30 Nine Months Ended September 30
Net Revenues 2017 2016 % Change 2017 2016 % Change
Truckload $266,632 $272,398 (2.1%) $784,265 $847,222 (7.4%)
LTL $97,634 $93,118 4.8% $288,287 $275,508 4.6%
Intermodal $7,109 $7,207 (1.4%) $22,053 $24,170 (8.8%)
Other $6,028 $5,350 12.7% $15,144 $14,174 6.8%
Total $377,403 $378,073 (0.2%) $1,109,749 $1,161,074 (4.4%)
Truckload(1) Quarter YTD
Pricing(2) 6.5% 1%
Cost(2) 8.5% 3.5%
Volume 0% 6%
Net Revenue
Margin
LTL(1) Quarter YTD
Pricing(2)
Volume 6.5% 7%
Net Revenue
Margin
Intermodal(1) Quarter YTD
Pricing(2)
Volume 13% 14%
Net Revenue
Margin
‹#›
Global Forwarding Results Q3 2017
▪ The acquisitions of APC Logistics and Milgram added approximately 18 percent
to net revenues and 18 percent to average headcount when compared to the
third quarter of 2016.
▪ Global Forwarding operating expenses increased 29.3 percent when compared
to the third quarter of 2016.
in thousands, except headcount
12
(1) Does not include intersegment revenues.
(2) Q3 2016 average headcount does not include employees of APC Logistics acquired on September 30, 2016.
Three Months Ended September 30 Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $552,134 $390,830 41.3% $1,549,742 $1,098,715 41.1%
Total Net Revenues $129,842 $93,368 39.1% $357,411 $283,458 26.1%
Net Revenue Margin % 23.5% 23.9% 23.1% 25.8%
Income from Operations $31,125 $17,047 82.6% $75,006 $56,300 33.2%
Operating Margin % 24.0% 18.3% 21.0% 19.9%
Depreciation and Amortization $8,455 $5,073 66.7% $24,574 $15,231 61.3%
Total Assets $840,762 $625,267 34.5% $840,762 $625,267 34.5%
Average Headcount(2) 4,301 3,559 20.8% 4,113 3,523 16.7%
‹#›
Three Months Ended September 30 Nine Months Ended September 30
Global Forwarding Results by Service Line Q3 2017
Ocean, Air, and Customs
▪ APC and Milgram acquisitions added approximately 17 percent to ocean net revenues,
15 percent to air net revenues and 30 percent to customs net revenues.
▪ Achieved organic volume growth in each of the global forwarding services in the third
quarter of 2017 when compared to the third quarter of 2016.
in thousands
13
Net Revenues 2017 2016 % Change 2017 2016 % Change
Ocean $81,110 $56,309 44.0% $217,768 $174,907 24.5%
Air $23,992 $18,075 32.7% $68,850 $54,142 27.2%
Customs $17,419 $12,318 41.4% $49,804 $34,638 43.8%
Other $7,321 $6,666 9.8% $20,989 $19,771 6.2%
Total $129,842 $93,368 39.1% $357,411 $283,458 26.1%
Ocean Quarter YTD
Pricing
Volume
Net Revenue
Margin
Air Quarter YTD
Pricing
Volume
Net Revenue
Margin
‹#›
▪ Robinson Fresh results include revenues from sourcing and transportation
services.
▪ Net revenues decrease was primarily the result of lower truckload margin
when compared to the third quarter of 2016.
▪ Robinson Fresh operating expenses increased 8.6 percent when compared to
the third quarter of 2016. The increase was the result of an increase in both
personnel and SG&A expenses.
in thousands, except headcount
Robinson Fresh Results Q3 2017
14
(1) Does not include intersegment revenues.
Three Months Ended September 30 Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $613,646 $590,385 3.9% $1,821,094 $1,814,682 0.4%
Total Net Revenues $54,253 $57,036 (4.9%) $171,936 $183,041 (6.1%)
Net Revenue Margin % 8.8% 9.7% 9.4% 10.1%
Income from Operations $11,586 $17,733 (34.7%) $40,487 $62,777 (35.5%)
Operating Margin % 21.4% 31.1% 23.5% 34.3%
Depreciation and Amortization $1,190 $983 21.1% $3,534 $2,590 36.4%
Total Assets $413,520 $405,832 1.9% $413,520 $405,832 1.9%
Average Headcount 970 956 1.5% 966 939 2.9%
‹#›
Robinson Fresh Results Q3 2017
Sourcing
▪ Sourcing total revenues decrease was primarily the result of slightly lower
sourcing commodity pricing when compared to the third quarter of 2016.
▪ Sourcing net revenues were virtually flat when compared to last year's third
quarter. A slight increase in net revenue margin was offset by a case volume
decrease of 1 percent compared to the third quarter of 2016.
in thousands
15
(1) Does not include intersegment revenues.
Three Months Ended September 30 Nine Months Ended September 30
Sourcing 2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $350,750 $357,171 (1.8%) $1,053,855 $1,135,671 (7.2%)
Net Revenues $29,761 $29,818 (0.2%) $95,318 $96,801 (1.5%)
Net Revenue Margin % 8.5% 8.3% 9.0% 8.5%
‹#›
Robinson Fresh Results Q3 2017
Transportation
▪ Transportation net revenues decrease was primarily a result of lower truckload net
revenue margin when compared to the third quarter of 2016.
in thousands
16
(1) Does not include intersegment revenues.
(2) Represents price and cost YoY change for North America shipments across all segments.
(3) Pricing and cost measures exclude the estimated impact of the change in fuel prices.
Three Months Ended September 30 Nine Months Ended September 30
Transportation 2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $262,896 $233,214 12.7% $767,239 $679,011 13.0%
Net Revenues $24,492 $27,218 (10.0%) $76,618 $86,240 (11.2%)
Net Revenue Margin % 9.3% 11.7% 10.0% 12.7%
Net Revenues 2017 2016 % Change 2017 2016 % Change
Truckload $19,466 $22,607 (13.9%) $60,084 $70,531 (14.8%)
Other $5,026 $4,611 9.0% $16,534 $15,709 5.3%
Total $24,492 $27,218 (10.0%) $76,618 $86,240 (11.2%)
Truckload(2) Quarter YTD
Pricing(3) 6.5% 1%
Cost(3) 8.5% 3.5%
Volume 13% 17%
Net Revenue
Margin
‹#›
▪ Results represent business from Managed Services, Other Surface
Transportation outside of North America, and other miscellaneous
operations.
▪ Headcount includes personnel from shared services, Managed Services,
Other Surface Transportation, and other miscellaneous operations.
All Other and Corporate Results Q3 2017
in thousands, except headcount
17
(1) Does not include intersegment revenues.
Three Months Ended September 30 Nine Months Ended September 30
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $149,251 $122,352 22.0% $428,535 $359,760 19.1%
Total Net Revenues $32,348 $29,985 7.9% $97,105 $88,439 9.8%
Income from Operations $362 $4,754 NM $1,197 $8,084 NM
Depreciation and Amortization $8,510 $6,054 40.6% $24,128 $18,344 31.5%
Total Assets $623,326 $517,496 20.5% $623,326 $517,496 20.5%
Average Headcount 2,634 2,322 13.4% 2,590 2,249 15.2%
‹#›
All Other and Corporate Results by Service Line Q3 2017
Managed Services and Other Surface Transportation
▪ Managed Services net revenues growth was driven by new business
with new and existing customers.
▪ Other Surface Transportation includes surface transportation
outside of North America.
▪ Other Surface Transportation net revenues increase was primarily
the result of volume growth partially offset by margin compression
in the Surface Transportation business in Europe.
in thousands
18
Three Months Ended September 30 Nine Months Ended September 30
Net Revenues 2017 2016 % Change 2017 2016 % Change
Managed Services $18,487 $16,680 10.8% $53,844 $47,034 14.5%
Other Surface
Transportation
$13,861 $13,305 4.2% $43,261 $41,405 4.5%
Total $32,348 $29,985 7.9% $97,105 $88,439 9.8%
‹#›
Final Comments
▪ October to date total company net revenue per day has
increased approximately 8 percent when compared to
October 2016.
▪ Truckload volume growth is virtually flat on a year-over-year
basis in October
▪ Q4 priorities
▪ Milgram integration continues
▪ Price volatility will likely continue into 2018
▪ Account management disciplines will be critical to our success
▪ Focus on efficiency and operating expense control
▪ Continued focus on growth
19
‹#›
Appendix A: 2012 Summarized Adjusted Income Statement
To assist investors in understanding our financial performance, we supplement the financial results that are generated in accordance with the accounting principles
generally accepted in the United States, or GAAP, with non-GAAP financial measures, including non-GAAP operating expenses, non-GAAP income from operations,
non-GAAP net income and non-GAAP diluted net income per share. We believe that these non-GAAP measures provide meaningful insight into our operating
performance excluding certain event-specific charges, and provide an alternative perspective of our results of operations. We use non-GAAP measures to assess our
operating performance for the quarter. Management believes that these non-GAAP financial measures reflect an additional way of analyzing aspects of our ongoing
operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our business.
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.
2) The adjustments to other operating expenses reflect fees paid to third parties for:
a) Investment banking fees related to the acquisition of Phoenix
b) External legal and accounting fees related to the acquisitions of Apreo and Phoenix and the divestiture of T-Chek.
3) The adjustment to investment and other income reflects the gain from the divestiture of T-Chek.
4) 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.
5) The adjustment to diluted weighted average shares outstanding relates to the additional vesting of performance-based restricted stock as a result
of the gain on sale recognized from the divestiture of T-Chek.
in thousands, except per share amounts
20
2012 Actual Non-Recurring Acquisition Impacts
Non-Recurring
Divestiture Impacts Adjusted
Total Net Revenues $1,717,571 $1,717,571
Personnel Expenses(1) 766,006 (385) (34,207) 731,414
Other Operating Expenses(2) 276,245 (10,225) (379) 265,641
Total Operating Expenses 1,042,251 (10,610) (34,586) 997,055
Income from Operations 675,320 10,610 34,586 720,516
Investment & Other Income(3) 283,142 (281,551) 1,591
Income before Taxes 958,462 10,610 (246,965) 722,107
Provision for Income Taxes 364,658 2,745 (92,303) 275,100
Net Income $593,804 $7,865 ($154,662) $447,007
Net Income Per Share (Diluted) $3.67 $2.76
Weighted Average Shares (Diluted) 161,946 185 (4) 92 (5) 161,669
21