C.h. Robinson Worldwide, Inc. · NASDAQ:CHRW
C.h. Robinson Worldwide — Investor Day (May 2017)
90 slides from C.h. Robinson Worldwide's investor day presentation, May 3, 2017
Slide 1: Analyst and Investor Day, May 3, 2017
Wednesday, May 3, 2017 1
Slide 2: Forward-looking statements
This presentation includes forward-looking statements which are subject to risk and uncertainties that could cause actual results to differ materially, including changes in market demand and pressures on the pricing for our services, freight levels and increasing costs and availability of trucking a
Slide 3: Tim Gagnon, Director of Investor Relations
Tim Gagnon Director of Investor Relations 3
Slide 4: Investor Day agenda
• 9:00 – 9:10 AM Welcome and Agenda Review (Tim Gagnon) • 9:10 – 9:30 AM Investor Day Objectives and Enterprise Update (John Wiehoff) • 9:30 – 10:00 AM Business Performance and Financial Outlook (Andrew Clarke) • 10:00 – 10:30 AM North American Surface Transportation (Bob Biesterfeld) • 10:30 – 10:4
Slide 5: John Wiehoff
John Wiehoff Chairman, President, and Chief Executive Officer 5
Slide 6: Our people, processes and technology improve the world's transportation and supply chains
Our people, processes and Accelerating commerce through the technology improve the world’s world’s most powerful supply chain transpor tation and supply chains, platform. delivering exceptional value to our customers and suppliers. 6
Slide 7: How we do it: Technology
HOW WE DOIT TECHNOLOGY
Slide 8: Strategic plans
STRATEGIC PLANS Grow our market share Innovate: create new solutions Expand and optimize our global networks
Slide 9: Executive leadership team
John Wiehoff Chairman, President, Bob Biesterfeld Andrew Clarke and CEO President, North American Surface Transportation Chief Financial Officer Mike Short Chris O’Brien President, Global Freight Forwarding Chief Commercial Officer Jim Lemke Chad Lindbloom President, Robinson Fresh Chief Information
Slide 10: Andrew Clarke, Chief Financial Officer
Andrew Clarke Chief Financial Officer 10
Slide 11: Financial health
FINANCIAL HEALTH FREE CASH FLOW & SHAREHOLDER RETURNS HISTORICAL DEBT & EQUITY RETURN ACCUMULATED CAPITAL ALLOCATION SEGMENT RATIONALE ENTERPRISE STRATEGY AND M&A BUSINESS OUTLOOK - GROWTH TARGETS i
Slide 12: Financial health
FINANCIAL HEALTH 7.7% 10-YEAR CAGR (IN MILLIONS) $2,750 $ 2,278 $2,250 $1,750 $1,250 $750 06 07 08 O9 10 11 12 13 14 15 16 DILUTED EPS FROM CONTINUING OPERATIONS 8.9% 10-YEAR CAGR $5.00 $3.59 $4.00 $3.00 $2.00 $1.50 06 07 08 O9 10 11 12 13 14 15 16 IN E FROM OPERATIONS 7.2% 10-YEAR CAGR (IN MILLIONS
Slide 13: Free cash flow and shareholder returns
(1). Free Cash Flow: Operating Cash Flow - CapEx (2). Shareholder Returns: Dividends + Share Repurchases (3). Free Cash Flow Conversion Ratio: Net Income / Free Cash Flow
Slide 14: Historical debt and equity return
(1). Net Debt: Total Debt - Cash (2). Return on Equity: Net Income / Average Shareholders’ Equity
Slide 15: Accumulated capital allocation
IN MILLIONS ACCUMULATED CAPITAL ALLOCATION $4,900 $4,500 $4,100 $3,700 $3,200 Waa $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 + + Since 2006, $1.3B has been spent onacquisitions. 2006 2007 2008 2009 —= Acquisitions 2010 2011 —= Capex ACQUIRED APREO 2012 2013 2014
Slide 16: Segment rationale
(1). Other includes Managed Services, European Surface Transportation, and all other services.
Slide 17: Enterprise strategy and M&A
• Acquire attractive and accretive companies across all business segments and geographies • Invest in technology to offer additional ser vices to customers aligning with enterprise growth strategy • Capture synergies and value creation through cross selling, cost efficiencies, and network growth
Slide 18: Business outlook: growth targets
• Operating income growth equal to or greater than net revenue growth • EPS growth: 10%+ (1). Long-term growth targets represent an over time perspective and do not necessarily represent an expected annual growth rate. (2). Other includes Managed Services, European Surface Transportation, and all ot
Slide 19: Bob Biesterfeld
Bob Biesterfeld President, North American Surface Transportation 19
Slide 20: NAST truckload, LTL and intermodal customers
Active truckload customers Most powerful truckload network in North America of NAST 2016 net revenue Active LTL customers Largest LTL 3PL of NAST 2016 net revenue Active intermodal customers Direct programs on all Class 1 Railroads of NAST 2016 net revenue 20
Slide 21: For-hire motor carriers and truck tractors
for-hire motor carriers truck tractors Distribution of for hire carriers in the U.S. C.H.Robinson 2015 analysis of May 2015 FMCSA’s MCMIS Census Data • Carriers included: For hire, USA 48 State, active status updated in 2014 and 2015 • Carriers excluded: Bus companies, LTL carriers, parcel, governme
Slide 22: Scaled regions
Scaled Regions 2016 Total Revenues Billion Million Shipments Employees 22
Slide 23: Job family specialization and digital transformation
Job family specialization to enhance the CEES Digital transformation and automation of the a customer experience and increase = business is well underway. productivity. * Sales Calls / Sales Rep +43% Shipments / Person +11% Books / Carrier Rep + 23% ‘ » 6,000 carriers per day using Navisphere Carrie
Slide 24: The opportunity
THE OPPORTUNITY (In BILLIONS) PRIVATE FLEET $252 FOR HIRE TRUCKLOAD 300 LESS THAN TRUCKLOAD 67 PARCEL 85 INTERMODAL 21 ESTIMATED US TRUCKING & IMDL cosTS C.H. ROBINSON ESTIMATES IN BILLIONS 24
Slide 25: Industry trends
• E-commerce changes consumer behavior & supply chain • Data asymmetr y • Technology will enable new models of ser vice & will increase efficiency • Smar t people matter • 3PL share grows 25
Slide 26: NAST vision
NAST VISION BUILD UPON OUR HISTORY AS THE ORIGINAL 3PL TO CREATE CAPABILITIES THAT RELENTLESSLY REINVENT THE INDUSTRY REINVENT DELIVER INVEST LEVERAGE Our model World class execution & In our core services Our data advantage customer experience 26
Slide 27: What you should expect
WHAT YOU SHOULD EXPECT TAKE MARKET SHARE HEADCOUNT < VOLUME GROWTH DIGITAL PROCESSES INVESTMENTS IN M&A VALUE CREATION INVESTMENT IN TECHNOLOGY SELF SERVICE 27
Slide 28: Mike Short
Mike Short President, Global Freight Forwarding 28
Slide 29: Global Forwarding overview
¢ 2016 Revenue: $1.6 Billion ¢ 125 Offices ¢ 31 Countries KEY . C.H. ROBINSON OFFICE ~ AGENT LOCATION ‘™| GLOBAL CONTROL TOWER 29
Slide 30: Global Forwarding acquisitions
Acquired Meyer Acquired Frank M. Viet Acquired Hirdes Group Acquired Transera Acquired Phoenix Customs Brokerage GmbH International Worldwide in Germany International Logistics, International (U.S., (Minneapolis, MN) Spedition (Germany) & Bussini Transport S.R.L. Ltd., a global project Asia, Europe)
Slide 31: Global Forwarding market positions
Customer count • #1 NVOCC Transpacific Eastbound China to U.S. of Q1 2017 Global Forwarding net revenue • #2 NVOCC U.S. to Oceania • #2 NVOCC Transpacific Eastbound India to U.S. Customer count • Air Volume growth of 22% in 2016 of Q1 2017 Global Forwarding net revenue Customer count • Leading North
Slide 32: Global freight lanes: ocean volume
GLOBAL FREIGHT LANES OCEAN VOLUME a 47,000rteu 32,000reu -. e L. AMERICA TRANS-TASMAN 10,000reu G. 13,000teu KEY LANES: 689, 000reu TOTAL: 698,000reu 2016 CHRW VOLUME DATA 32
Slide 33: Global freight lanes: air tonnage
GLOBAL FREIGHT LANES Gy AIR TONNAGE INTRA-NORTH AMERICA > 4 10,000 e@ L. AMERICA KEY LANES: 137,900mt TOTAL: 144,000mt 2016 CHRW VOLUME DATA 33
Slide 34: Strategic initiatives
STRATEGIC INITIATIVES LONG-TERM GOALS ¢ Accelerate global commerce YS APC ¢ Leverage scale INTEGRATION GLOBAL EXPANSION CROSS- AIRFREIGHT SELLING DIGITALIZATION 34
Slide 35: Jim Lemke
Jim Lemke President, Robinson Fresh 35
Slide 36: Our value proposition
OUR VALUE PROPOSITION 2@e0e0 RAW MATERIALS PRODUCER TRANSPORTATION DISTRIBUTION RECEIVER CONSUMER JUST-IN-TIME LOGISTICS & SERVICES
Slide 37: Global presence
GLOBAL PRESENCE TRANSPORTATION 2,000 SHIPMENTS r . ) PRODUCT e@ 100M Ibs. WEEKLY DAILY FRUIT & VEG © . e SERVICES e $18 ANNUALLY e MANAGED PROCUREMENT SPEND r ,
Slide 38: Segment financials
SEGMENT FINANCIALS © $2.38 235M $76 EMPLOYEES: 942 s ame 61,700 GROWERS 122 MILLION CASES OF FRESH PRODUCE SOLD ANNUALLY SOURCING: oO 2016 TOTAL REVENUES: $1.4B 2016 NET REVENUES: $123M NET REVENUE MARGIN: 8.5% TRANSPORTATION: 2016 TOTAL REVENUES: $904M 2016 NET REVENUES: $112M NET REVENUE MARGIN: 1
Slide 39: Market trends
(1) Source: World Bank, IGD Research
Slide 40: Food industry trends
(1) National Restaurant Association (2) Source: Specialty Food Association
Slide 41: Our value proposition in action
OUR VALUE PROPOSITION IN ACTION OGSOC RAW MATERIALS PRODUCER TRANSPORTATION DISTRIBUTION RECEIVER © CONSUMER
Slide 42: Our people lead the fresh food industry
—_— — * Our people lead the fresh food industry in providing exceptional products & services 42
Slide 43: Jordan Kass
Jordan Kass President, Managed Services 43
Slide 44: TMC: history, mega trends, innovation
TMC HISTORY MEGA TRENDS INNOVATION
Slide 45: TMC: insource, 3PL, outsource
TMC INSOURCE 3PL OUTSOURCE "Direct carrier relationships No direct carrier relationships No technology No technology 45
Slide 46: TMC overview
TMC $3.1 BILLION in freight under Find the answers you re management looking for Deliver results Shipments across 170 COUNTRIES Continue your leadership position 10.4 MILLION Shipments UTILIZING ALL MODES of transportation Oo 46
Slide 47: TMC
TMC 47
Slide 48: TMC
TMC 7 BILLION 9 BILLION
Slide 49: TMC
TMC
Slide 50: TMC
TMC
Slide 51: TMC
TMC SUPPLIERS MANUFACTURERS DISTRIBUTORS CUSTOMERS Ey [EJ Pon as ay ne Ye WAGBAN' ee ino 51
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Slide 53: Navisphere
* NAVISPHERE”
Slide 54: Navisphere services
* NAVISPHERE* —— ™e SERVICES
Slide 55: 55
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Slide 56: TMC
TMC 56
Slide 57: Freightview
> Freightview°
Slide 58: TMC: history, mega trends, innovation
TMC HISTORY MEGA TRENDS INNOVATION 58
Slide 59: Jeroen Eijsink
Jeroen Eijsink President of Europe 59
Slide 60: Europe overview
• 13 Countries • 22 Offices • 564 Employees • In Europe since 1993; major acquisitions being Norminter (1999) | Apreo (2012) • Headquarters in Amsterdam 60
Slide 61: Focus on truckload market
Focus on truckload market X-Border is outgrowing domestic transportation market 61
Slide 62: Fragmented truckload market
Fragmented TL market with top 10 market share below 30% CHRE generates 83% of its net revenue in 43% of total market 62
Slide 63: Integrated service providers
Integrated service providers Vertically integrated customers • Gain scale faster • Stay focused Asset-heavy Software • Enhance technology (AI/machine carriers companies learning, convenient interaction) • Strategic M&A to enhance geographical scope and/or enhance Asset-free brokers Freight exchanges
Slide 64: Europe strategy roadmap
EST STRATEGY ROADMAP ACCELERATE GROWTH GAIN CRITICAL MASS BASELINING Expand Footprint Technology Innovation Expand Services Organic Growth Focus on Core Services Sales Driven Culture Navisphere Talent Organization 64
Slide 65: Chad Lindbloom
Chad Lindbloom Chief Information Officer 65
Slide 66: Digital transactions per month
Digital transactions per month of shipments are tendered to us electronically of shipments powered by Navisphere are fully automated More than connected companies 66
Slide 67: Global connectivity
GLOBAL CONNECTIVITY RATING DOCUMENTS C SEARCHING TENDERING DOCUMENTS Q SEARCHING {J CQ sTENDERING OQ TRACKING EXTERNAL DATA SUPPLY Lt DEMAND
Slide 68: Extending the platform
EXTENDING THE PLATFORM DEMAND [ranvat] [Mose] [wes] UNFILLED UNUSED DEMAND SHIPMENTS SUPPLY DATA ¢op MACHINE LEARNING [AUTOMATION 6& SELF SERVICE 68
Slide 69: Machine learning and AI in supply chain
As the supply chain industry moves forward and the Internet of Things continues its expansion, the ability to consume, combine, and analyze data from growing number of inte- grations is essential. Machine Learning and Artificial In- telligence methodologies need to be incorporated to create predicti
Slide 70: Carrier 12:00 PM Carrier
Carrier 12:00 PM 100% Carrier 12:00 PM 100% 70
Slide 71: Chris O'Brien
Chris O’Brien Chief Commercial Officer 71
Slide 72: Industry leading in size and diversification
Industry leading in size and diversification
Slide 73: Diversified and deep expertise
• Diversified across industries • Deep expertise • Invested in industry leadership 73
Slide 74: Demand is growing beyond e-commerce
• Demand is growing • Touches many segments beyond e-commerce • Challenges traditional supply chains Involves all of our divisons Consolidation and fulfillment services Reverse logistics, special handling, and final mile 74
Slide 75: Program to deliver value for supply chains
A program to deliver immediate and sustained Navisphere Insight: Top level Account value for supply chains Management Enhanced analytics suite delivering delivering continuous actionable insights improvement Regular benchmarking A strategy roadmap Provide to understand to drive immediate customers w
Slide 76: North America customer segmentation
North America CHR Share of NA Customer Size % of CHR Active Estimated Wallet Share Market Addressable Segmenting Customers of Current Customers Company Count 76
Slide 77: We are uniquely positioned to win
Demand is increasing for more services globally from one provider Professional procurement expansion Efficiency: doing more with less Risk management/contracts Convenience Visibility • We are uniquely positioned to win • Less competition • We win more often in these opportunities 77
Slide 78: Winning more
WINNING MORE Multi division customers up [—5B% Customers with business on multiple continents: 2010 ———— __ 27] 2016 ———— 9,911 78
Slide 79: Supported by our industry leading service
Supported by our industry leading service 79
Slide 80: Pulling this together for customers isn't easy
Pulling this together for customers isn’t easy and we have a big head start Long standing Leverage Great Leading customer experience to people technology relationships innovate All key All key Award winning Deep vertical services geographies solutions expertise 80
Slide 81: Angie Freeman
Angie Freeman Chief Human Resources Officer 81
Slide 82: Who we are: great people and winning culture
cS) WHO WE ARE: GREAT PEOPLE & WINNING CULTURE “In a world that’s automated, my account manager gives the personal touch. You can have the best of both worlds—plenty of tools to reach out and get the information you need plus personal attention. In a nutshell, that makes a big difference for a vendo
Slide 83: Employees by region
O 1 7 COUNTRIES y 1 21 5 EMPLOYEES Bp [asta } > Ke a 1748 EMPLOYEES. ) ° 39 Countries 2 COUNTRIES N. AMERICA O | 0, 970 EMPLOYEES o 6 6 % Millennial
Slide 84: Culture values
• Perfomance driven • Customer centric • Supply chain e xperts • Empowered front-line leaders • Relationship focused • Constantly evolving • Hustle • Integrity and professionalism • Community impact 84
Slide 85: Employee testimonial
“A little advice... choose a company that encourages you to pursue your dreams. Tomorrow, my Expedition Team will begin our push up Mount Everest and despite being in the middle of the Himalayas, I know that I will have my C.H. Robinson family by my side, every step of the way. Thank you to all my c
Slide 86: Evolving talent profile
Evolving talent Performance based Increased training profile compensation and development Industry-leading Role specialization supply chain and and clear career logistics expertise paths 86
Slide 87: Talent strategy
• Recognized by customers • One global common culture • Performance driven • Smart talent strategy 87
Slide 88: C.H. Robinson team
— QEA C.H. ROBINSON TEAM
Slide 89: Andrew Clarke, Chief Financial Officer
Andrew Clarke Chief Financial Officer 89
Slide 90: Accelerate your advantage
ACCELERATE YOUR ADVANTAGE®