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. | chrw123117earnings8-k.htm |
1
Earnings Conference Call – Fourth Quarter 2017
January 31, 2018
John Wiehoff, Chairman & CEO
Andrew Clarke, CFO
Tim Gagnon, Vice President
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 Q4 2017
Three Months Ended December 31
in thousands, except per share amounts and headcount
▪ Total revenues increased as a result of increased pricing, volume, and fuel costs in most of our transportation
services in the fourth quarter of 2017 when compared to the fourth quarter of 2016.
▪ Realized one-time tax reduction of approximately $31.8 million in the fourth quarter primarily due to a domestic
manufacturing deduction and revaluation of deferred net tax liabilities.
▪ Headcount increased in the fourth quarter when compared to last year's fourth quarter as a result of the Milgram
acquisition and other talent investments across the business.
3
Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues $3,959,786 $3,414,975 16.0% $14,869,380 $13,144,413 13.1%
Total Net Revenues $631,849 $561,516 12.5% $2,368,050 $2,277,528 4.0%
Net Revenue Margin % 16.0% 16.4% (40 bps) 15.9% 17.3% (140 bps)
Income from Operations $210,876 $193,565 8.9% $775,119 $837,531 (7.5%)
Operating Margin % 33.4% 34.5% (110 bps) 32.7% 36.8% (410 bps)
Net Income $152,556 $122,303 24.7% $504,893 $513,384 (1.7%)
Earnings Per Share (Diluted) $1.08 $0.86 25.6% $3.57 $3.59 (0.6%)
Weighted Average Shares
Outstanding (Diluted) 140,724 142,164 (1.0%) 141,382 142,991 (1.1%)
Depreciation and Amortization $23,637 $21,953 7.7% $92,977 $74,669 24.5%
Total Assets $4,235,834 $3,687,758 14.9% $4,235,834 $3,687,758 14.9%
Average Headcount 15,036 14,074 6.8% 14,687 13,670 7.4%
Ending Headcount 15,074 14,125 6.7% 15,074 14,125 6.7%
‹#›
Summarized Income Statement
▪ Personnel expenses increased as a result of headcount additions and an increase
in variable compensation in the fourth quarter of 2017 when compared to the
fourth quarter of 2016.
▪ SG&A expenses increased as a result of higher warehousing, occupancy,
equipment rental and depreciation offset by lower claims expenses in the fourth
quarter of 2017 when compared to the fourth quarter of 2016.
▪ The effective tax rate was 21.1 percent in the fourth quarter. We expect the 2018
effective tax rate to be 24 – 25 percent.
in thousands
4
Three Months Ended December 31 Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues $3,959,786 $3,414,975 16.0% $14,869,380 $13,144,413 13.1%
Total Net Revenues $631,849 $561,516 12.5% $2,368,050 $2,277,528 4.0%
Personnel Expenses $311,599 $260,305 19.7% $1,179,527 $1,064,936 10.8%
Selling, General, and Admin $109,374 $107,646 1.6% $413,404 $375,061 10.2%
Total Operating Expenses $420,973 $367,951 14.4% $1,592,931 $1,439,997 10.6%
Income from Operations $210,876 $193,565 8.9% $775,119 $837,531 (7.5%)
% of Net Revenue 33.4% 34.5% (110 bps) 32.7% 36.8% (410 bps)
Net Income $152,556 $122,303 24.7% $504,893 $513,384 (1.7%)
‹#›
Other Financial Information
▪ Total debt balance $1.47 billion
▪ $500 million long-term debt,
4.28% average coupon
▪ $715 million drawn on revolver,
2.69% current rate as of
December 31, 2017
▪ $250 million accounts receivable
securitization debt facility, 2.21%
as of December 31, 2017
in thousands
5
Three Months Ended December 31 Twelve Months Ended December 31
Cash Flow Data 2017 2016 % Change 2017 2016 % Change
Net Cash Provided by
Operating Activities $162,152 $152,580 6.3% $380,501 $529,408 (28.1%)
Capital Expenditures $11,527 $20,326 (43.3%) $57,945 $91,437 (36.6%)
Balance Sheet Data December 31, 2017
Cash & Cash Equivalents $333,890
Current Assets $2,510,936
Total Assets $4,235,834
Debt $1,465,000
Stockholders' Investment $1,425,745
‹#›
Capital Distribution
▪ Capital returned to shareholders during the quarter
▪ $65.5 million cash dividends
▪ $52.8 million in cash for share repurchase activity
▪ 672,401 shares repurchased in the fourth quarter
▪ Average price of $78.53 for the shares repurchased in the fourth 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 2017
Net Income $447,007 $415,904 $449,711 $509,699 $513,384 $504,893
Capital Distribution
Cash Dividends Paid $219,313 $220,257 $215,008 $235,615 $245,430 $258,222
Share Repurchases $255,849 $807,449 $176,645 $241,231 $209,603 $203,542
Subtotal $475,162 $1,027,706 $391,653 $476,846 $455,033 $461,764
Percent of Net Income
Cash Dividends Paid 49.1 % 53.0 % 47.8 % 46.2 % 47.8 % 51.1 %
Share Repurchases 57.2 % 194.1 % 39.3 % 47.3 % 40.8 % 40.3 %
Subtotal 106.3 % 247.1 % 87.1 % 93.6 % 88.6 % 91.5 %
(b)
‹#›
Three Months Ended December 31 Twelve Months Ended December 31
Net Revenue by Service Line Q4 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 $342,134 $296,740 15.3% $1,229,999 $1,257,191 (2.2%)
LTL $105,306 $94,299 11.7% $407,012 $381,817 6.6%
Intermodal $5,867 $7,521 (22.0%) $29,145 $33,482 (13.0%)
Ocean $73,135 $69,033 5.9% $290,630 $244,276 19.0%
Air $27,595 $23,743 16.2% $100,761 $82,167 22.6%
Customs $21,142 $15,860 33.3% $70,952 $50,509 40.5%
Other Logistics Services $29,554 $28,404 4.0% $117,117 $105,369 11.1%
Sourcing $27,116 $25,916 4.6% $122,434 $122,717 (0.2%)
Total $631,849 $561,516 12.5% $2,368,050 $2,277,528 4.0%
‹#›
Transportation Results Q4 2017(1)
in thousands
(1) Includes results across all segments.
8
▪ Transportation net revenue margin decline in the fourth quarter of 2017 when
compared to the fourth quarter of 2016 was primarily the result of lower net
revenue margins in Global Forwarding.
Three Months Ended December 31 Twelve Months Ended December 31
Transportation 2017 2016 % Change 2017 2016 % Change
Total Revenues $3,647,167 $3,110,978 17.2% $13,502,906 $11,704,745 15.4%
Total Net Revenues $604,733 $535,600 12.9% $2,245,616 $2,154,811 4.2%
Net Revenue Margin % 16.6% 17.2% (60 bps) 16.6% 18.4% (180 bps)
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% 16.6%
Total 17.0% 20.2% 16.8% 16.5% 15.8% 15.4% 15.9% 17.9% 18.4% 16.6%
‹#›
T
R
ANSPORTA
T
ION
N
E
T
R
E
VE
N
U
E
MAR
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.
(1) Cost and price change exclude the estimated impact of fuel.
North America Truckload Cost and Price Change(1)
9
Transportation Net Revenue Margin
YoY Price Change
YoY Cost Change
North America
Truckload Q4 YTD
Volume (1.5%) 4.5%
Price 15.0% 4.5%
Cost 14.5% 6.5%
Net Revenue
Margin
‹#›
North American Surface Transportation (“NAST”) Results Q4 2017
▪ Net revenues increased primarily as a result of increased pricing in the truckload
service line and 10 percent volume growth in the less than truckload service line
when compared to the fourth quarter of 2016.
▪ NAST operating expenses increased 14.2 percent in the fourth quarter of 2017
when compared to the fourth quarter of 2016. This increase was primarily due
to increased personnel expenses.
▪ NAST headcount increased 1.0 percent when compared to the fourth quarter of
2016 and was down 120 employees sequentially from the third quarter of 2017.
in thousands, except headcount
10
(1) Does not include intersegment revenues.
Three Months Ended December 31 Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $2,618,587 $2,281,435 14.8% $9,728,810 $8,737,716 11.3%
Total Net Revenues $415,315 $363,281 14.3% $1,525,064 $1,524,355 0.0%
Net Revenue Margin % 15.9% 15.9% 0 bps 15.7% 17.4% (170 bps)
Income from Operations $180,557 $157,631 14.5% $628,110 $674,436 (6.9%)
Operating Margin % 43.5% 43.4% 10 bps 41.2% 44.2% (300 bps)
Depreciation and Amortization $6,126 $5,575 9.9% $23,230 $22,126 5.0%
Total Assets $2,277,252 $2,088,611 9.0% $2,277,252 $2,088,611 9.0%
Average Headcount 6,878 6,809 1.0% 6,907 6,773 2.0%
‹#›
NAST Results by Service Line Q4 2017
Truckload, Less Than Truckload, and Intermodal
▪ Net revenues increase in the fourth quarter was a result of improved pricing when
compared to the fourth quarter of 2016.
▪ Net revenues increase in the fourth quarter was a result of 10 percent volume
growth.
▪ Net revenues decreased in the fourth quarter as a result of lower intermodal
margins partially offset by an increase in volume.
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 December 31 Twelve Months Ended December 31
Net Revenues 2017 2016 % Change 2017 2016 % Change
Truckload $304,525 $261,065 16.6% $1,088,790 $1,108,287 (1.8%)
LTL $100,529 $90,629 10.9% $388,816 $366,137 6.2%
Intermodal $4,679 $7,138 (34.4%) $26,732 $31,308 (14.6%)
Other $5,582 $4,449 25.5% $20,726 $18,623 11.3%
Total $415,315 $363,281 14.3% $1,525,064 $1,524,355 0.0%
Truckload(1) Quarter YTD
Pricing(2) 15.0% 4.5%
Cost(2) 14.5% 6.5%
Volume (3%) 4.5%
Net Revenue
Margin
LTL(1) Quarter YTD
Pricing(2)
Volume 10.0% 8.0%
Net Revenue
Margin
Intermodal(1) Quarter YTD
Pricing(2)
Volume 7.0% 12.0%
Net Revenue
Margin
‹#›
Global Forwarding Results Q4 2017
▪ Net revenues increase in the fourth quarter was the result of growth across all
service lines.
▪ Global Forwarding operating expenses increased 24.1 percent when compared
to the fourth quarter of 2016.
▪ The acquisition of Milgram added approximately 5 percentage points to net
revenue and 7.5 percentage points to average headcount when compared to
the fourth quarter of 2016.
in thousands, except headcount
12
(1) Does not include intersegment revenues.
Three Months Ended December 31 Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $591,245 $475,971 24.2% $2,140,987 $1,574,686 36.0%
Total Net Revenues $127,869 $114,079 12.1% $485,280 $397,537 22.1%
Net Revenue Margin % 21.6% 24.0% (240 bps) 22.7% 25.2% (250 bps)
Income from Operations $16,836 $24,631 (31.6%) $91,842 $80,931 13.5%
Operating Margin % 13.2% 21.6% (840 bps) 18.9% 20.4% (150 bps)
Depreciation and Amortization $8,734 $7,868 11.0% $33,308 $23,099 44.2%
Total Assets $821,182 $703,741 16.7% $821,182 $703,741 16.7%
Average Headcount 4,683 3,934 19.0% 4,310 3,673 17.3%
‹#›
Three Months Ended December 31 Twelve Months Ended December 31
Global Forwarding Results by Service Line Q4 2017
Ocean, Air, and Customs
▪ Achieved organic volume growth in each of the global forwarding services in
the fourth quarter of 2017 when compared to the fourth quarter of 2016.
▪ Milgram & Company acquisition added approximately 3 percentage points to
ocean net revenues, 2 percentage points to air net revenues and 22
percentage points to customs net revenues.
in thousands
13
Net Revenues 2017 2016 % Change 2017 2016 % Change
Ocean $73,069 $69,270 5.5% $290,837 $244,177 19.1%
Air $25,668 $21,997 16.7% $94,518 $76,139 24.1%
Customs $21,145 $15,859 33.3% $70,949 $50,497 40.5%
Other $7,987 $6,953 14.9% $28,976 $26,724 8.4%
Total $127,869 $114,079 12.1% $485,280 $397,537 22.1%
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 increase was the result of increases in both sourcing and
transportation net revenues when compared to the fourth quarter of 2016.
▪ Robinson Fresh operating expenses increased 6.4 percent when compared to
the fourth quarter of 2016. The increase was the result of an increase in
personnel expenses partially offset by a decrease in SG&A.
in thousands, except headcount
Robinson Fresh Results Q4 2017
14
(1) Does not include intersegment revenues.
Three Months Ended December 31 Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $594,646 $529,449 12.3% $2,415,740 $2,344,131 3.1%
Total Net Revenues $54,123 $51,753 4.6% $226,059 $234,794 (3.7%)
Net Revenue Margin % 9.1% 9.8% (70 bps) 9.4% 10.0% (60 bps)
Income from Operations $12,887 $12,980 (0.7%) $53,374 $75,757 (29.5%)
Operating Margin % 23.8% 25.1% (130 bps) 23.6% 32.3% (870 bps)
Depreciation and Amortization $1,196 $1,192 0.3% $4,730 $3,782 25.1%
Total Assets $434,080 $376,654 15.2% $434,080 $376,654 15.2%
Average Headcount 935 951 (1.7%) 957 942 1.6%
‹#›
Robinson Fresh Results Q4 2017
Sourcing
▪ Sourcing total revenues increase was the result of higher sourcing commodity
pricing and case volume increase of 1 percent compared to the fourth quarter of
2016.
▪ Sourcing net revenues increased when compared to last year's fourth quarter due
to higher net revenue per case.
in thousands
15
(1) Does not include intersegment revenues.
Three Months Ended December 31 Twelve Months Ended December 31
Sourcing 2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $312,619 $303,997 2.8% $1,366,474 $1,439,668 (5.1%)
Net Revenues $27,116 $25,916 4.6% $122,434 $122,717 (0.2%)
Net Revenue Margin % 8.7% 8.5% 20 bps 9.0% 8.5% 50 bps
‹#›
Robinson Fresh Results Q4 2017
Transportation
▪ Transportation net revenues increase was driven by other transportation services and
higher margins in transactional business when compared to the fourth 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 December 31 Twelve Months Ended December 31
Transportation 2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $282,027 $225,452 25.1% $1,049,266 $904,463 16.0%
Net Revenues $27,007 $25,837 4.5% $103,625 $112,077 (7.5%)
Net Revenue Margin % 9.6% 11.5% (190 bps) 9.9% 12.4% (250 bps)
Net Revenues 2017 2016 % Change 2017 2016 % Change
Truckload $19,848 $20,485 (3.1%) $79,932 $91,016 (12.2%)
Other $7,159 $5,352 33.8% $23,693 $21,061 12.5%
Total $27,007 $25,837 4.5% $103,625 $112,077 (7.5%)
Truckload(2) Quarter YTD
Pricing(3) 15.0% 4.5%
Cost(3) 14.5% 6.5%
Volume 18.0% 17.0%
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 Q4 2017
in thousands, except headcount
17
(1) Does not include intersegment revenues.
Three Months Ended December 31 Twelve Months Ended December 31
2017 2016 % Change 2017 2016 % Change
Total Revenues(1) $155,308 $128,120 21.2% $583,843 $487,880 19.7%
Total Net Revenues $34,542 $32,403 6.6% $131,647 $120,842 8.9%
Income from Operations $596 ($1,677) NM $1,793 $6,407 NM
Depreciation and Amortization $7,581 $7,318 3.6% $31,709 $25,662 23.6%
Total Assets $703,320 $518,752 35.6% $703,320 $518,752 35.6%
Average Headcount 2,540 2,380 6.7% 2,513 2,282 10.1%
‹#›
All Other and Corporate Results by Service Line Q4 2017
Managed Services and Other Surface Transportation
▪ Managed Services net revenues growth was driven by new
business.
▪ 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 December 31 Twelve Months Ended December 31
Net Revenues 2017 2016 % Change 2017 2016 % Change
Managed Services $18,322 $17,667 3.7% $72,166 $64,701 11.5%
Other Surface
Transportation
$16,220 $14,736 10.1% $59,481 $56,141 5.9%
Total $34,542 $32,403 6.6% $131,647 $120,842 8.9%
‹#›
Final Comments
▪ January to date total company net revenue per day has
increased approximately 5 percent when compared to
January 2017.
▪ Truckload volume has decreased approximately 7 percent on
a year-over-year basis in January.
▪ 2018 outlook
▪ Capacity and price volatility will likely continue in 2018
▪ Tax reform will be a positive factor in our business
▪ We will win globally through people, process and
technology
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