C.h. Robinson Worldwide, Inc. · NASDAQ:CHRW
C.h. Robinson Worldwide — Q2 2018 Earnings Presentation
27 slides from C.h. Robinson Worldwide's earnings presentation, Aug 1, 2018
Slide 1: Earnings Conference Call – Second Quarter 2018
Earnings Conference Call – Second Quarter 2018 August 1, 2018 John Wiehoff, Chairman & CEO Andrew Clarke, CFO Robert Biesterfeld, COO & President of NAST Robert Houghton, VP of Investor Relations 1
Slide 2: Safe Harbor Statement
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-loo
Slide 3: Q2 2018 – Key Themes
Q2 2018 – Key Themes ▪ Improved financial performance including net revenue and operating margin expansion ▪ Strong demand and tight capacity driving robust freight market ▪ Double-digit increase in truckload cost and price ▪ Disciplined approach to volume 3 3
Slide 4: Results Q2 2018
Results Q2 2018 in thousands, except per share amounts and headcount Three Months Ended June 30 Six Months Ended June 30 2018 2017 % Change 2018 2017 % Change Total Revenues $4,276,037 $3,710,018 15.3% $8,201,364 $7,125,143 15.1% Total Net Revenues $671,483 $573,789 17.0% $1,297,408 $1,142,355 13.6%
Slide 5: Q2 2018 Other Income Statement Items
Q2 2018 Other Income Statement Items ▪ Q2 effective tax rate of 25.6% vs. 35.6% last year ▪ Interest expense increase due to higher debt levels and an increase in variable interest rates ▪ $8 million favorable impact from currency revaluation ▪ Weighted average diluted shares outstanding down 0.7 pe
Slide 6: 2018 Cash Flow
2018 Cash Flow Q2 Cash Flow from Operations YTD Cash Flow from Operations + 88.3% + 105.6% $107.9M $308.5M $57.3M $150.0M ▪ $50.6 million increase in cash flow ▪ $158.5 million increase in cash flow driven by higher net income driven by higher net income and ▪ $14.6 million in capital expenditures i
Slide 7: 2018 Capital Distribution
2018 Capital Distribution Q2 Capital Distribution YTD Capital Distribution + 29.8% + 26.3% $270.8M $136.2M $214.4M $104.9M Cash Dividends Share Repurchases ▪ $136.2 million of net income returned ▪ $270.8 million of net income to shareholders returned to shareholders ▪ $65.2 million cash dividends ▪
Slide 8: Q2 2018 Balance Sheet
Q2 2018 Balance Sheet in thousands June 30, December 31, 2018 2017 % Change Accounts Receivable, Net $2,202,460 $2,113,930 Contract Assets(1) $182,247 — Accounts Payable and O/S Checks $1,133,837 $1,096,664 Accrued Transportation Expense(1) $140,231 — Net Operating Working Capital(2) $1,110,639 $1,0
Slide 9: Third Quarter Trends – July
Third Quarter Trends – July ▪ July to date total company net revenue per day has increased approximately 20 percent when compared to July 2017 ▪ Truckload volume per day has declined approximately 2 percent on a year-over-year basis in July ▪ Expect net revenue per business day growth to moderate as
Slide 10: Transportation Net Revenue Margin
North America Truckload Cost and Price Change(1) TRANSPORTATION NET REVENUE MARGIN YoY Price Change YoY Cost Change Transportation Net Revenue Margin North America ▪ North America Truckload cost and price change chart Truckload Q2 represents truckload shipments from all North America Volume (5.0%) s
Slide 11: North America Truckload Cost and Price Per Mile
North America Truckload Cost and Price Per Mile(1) Price per Mile Cost per Mile ▪ North America Truckload cost and price per mile chart represents truckload shipments from all North America segments ▪ 2018 second quarter represents the fifth consecutive quarter of sequential cost and price increases
Slide 12: NAST Results by Service Line
Q2 2018 NAST Results by Service Line Truckload, Less Than Truckload and Intermodal in thousands Three Months Ended June 30 Net Revenues 2018 2017 % Change ▪ Double-digit price Truckload $307,249 $250,028 22.9% increases in truckload, LTL, LTL $114,400 $97,136 17.8% and intermodal Intermodal $9,115 $
Slide 13: NAST Operating Income
Q2 2018 NAST Operating Income Q2 Operating Income Q2 Operating Margin % + 31.6% + 330 bps $184.6M 42.3% $140.3M 39.0% ▪ Increased net revenues ▪ Progress against productivity initiatives ▪ Optimizing network footprint ▪ Headcount down 0.7 percent ‹#› 13
Slide 14: Global Forwarding Results by Service Line
Q2 2018 Global Forwarding Results by Service Line Ocean, Air and Customs in thousands Three Months Ended June 30 Net Revenues 2018 2017 % Change ▪ Volume increases in all Ocean $86,820 $73,239 18.5% service lines Air $28,722 $24,462 17.4% Customs $20,793 $16,308 27.5% ▪ Milgram & Company Other $7,69
Slide 15: Global Forwarding Operating Income
Q2 2018 Global Forwarding Operating Income Q2 Operating Income Q2 Operating Margin % + 7.6% (220 bps) $29.8M $27.7M 22.9% 20.7% ▪ Increased net revenues ▪ Investments in headcount and variable compensation ▪ 17.8 percent headcount increase ▪ Milgram headcount impact of 7.5 percentage points to Globa
Slide 16: Global Forwarding Operating Income – Sequential
Q2 2018 Global Forwarding Operating Income Sequential (Versus Q1 2018) Q2 Operating Income Q2 Operating Margin % + 262.3% + 1,400 bps $29.8M 20.7% $8.2M 6.7% ▪ Sequential net revenue increase in all service lines ▪ Average headcount down 31 people sequentially ▪ Sequential SG&A decline of 8 percent
Slide 17: Robinson Fresh Results
Q2 2018 Robinson Fresh Results Transportation and Sourcing in thousands Three Months Ended June 30 Sourcing 2018 2017 % Change ▪ Sourcing case volume Total Revenues(1) $322,898 $390,023 (17.2%) decline of 6 percent Net Revenues $31,540 $35,149 (10.3%) Net Revenue Margin % 9.8% 9.0% 80 bps ▪ Reduced
Slide 18: Robinson Fresh Operating Income
Q2 2018 Robinson Fresh Operating Income Q2 Operating Income Q2 Operating Margin % (35.2%) (680 bps) 23.4% $14.2M 16.6% $9.2M ▪ Decline in net revenues ▪ Operating expense reduction initiatives underway ▪ Headcount reduction ▪ Service center closure ▪ Operating expense controls ‹#› 18
Slide 19: All Other and Corporate Results
Q2 2018 All Other and Corporate Results Managed Services and Other Surface Transportation in thousands Three Months Ended June 30 Net Revenues 2018 2017 % Change Managed Services $20,074 $18,164 10.5% Other Surface Transportation $15,028 $13,850 8.5% Total $35,102 $32,014 9.6% Managed Services ▪ Nea
Slide 20: Final Comments
Final Comments ▪ Expect current freight market fundamentals to continue ▪ Closely monitoring tariff activity ▪ Continued investment in people, processes and technology ‹#› 20
Slide 21: Appendix
Appendix 21
Slide 22: Transportation Results
Q2 2018 Transportation Results(1) in thousands Three Months Ended June 30 Six Months Ended June 30 Transportation 2018 2017 % Change 2018 2017 % Change Total Revenues $3,953,139 $3,319,995 19.1% $7,590,779 $6,422,038 18.2% Total Net Revenues $639,943 $538,640 18.8% $1,235,981 $1,076,798 14.8% Net Re
Slide 23: NAST Results
Q2 2018 NAST Results in thousands, except headcount Three Months Ended June 30 Six Months Ended June 30 2018 2017 % Change 2018 2017 % Change Total Revenues(1) $2,878,904 $2,381,551 20.9% $5,541,915 $4,640,803 19.4% Total Net Revenues $436,813 $359,906 21.4% $851,582 $732,346 16.3% Net Revenue Margi
Slide 24: Global Forwarding Results
Q2 2018 Global Forwarding Results in thousands, except headcount Three Months Ended June 30 Six Months Ended June 30 2018 2017 % Change 2018 2017 % Change Total Revenues(1) $617,597 $528,820 16.8% $1,171,351 $997,608 17.4% Total Net Revenues $144,031 $121,023 19.0% $267,068 $227,569 17.4% Net Revenu
Slide 25: Robinson Fresh Results
Q2 2018 Robinson Fresh Results in thousands, except headcount Three Months Ended June 30 Six Months Ended June 30 2018 2017 % Change 2018 2017 % Change Total Revenues(1) $621,024 $657,003 (5.5%) $1,171,493 $1,207,448 (3.0%) Total Net Revenues $55,537 $60,846 (8.7%) $109,407 $117,683 (7.0%) Net Reven
Slide 26: All Other and Corporate Results
Q2 2018 All Other and Corporate Results in thousands, except headcount Three Months Ended June 30 Six Months Ended June 30 2018 2017 % Change 2018 2017 % Change Total Revenues(1) $158,512 $142,644 11.1% $316,605 $279,284 13.4% Total Net Revenues $35,102 $32,014 9.6% $69,351 $64,757 7.1% Income from
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