C.h. Robinson Worldwide, Inc. · NASDAQ:CHRW
C.h. Robinson Worldwide — Q1 2018 Earnings Presentation
25 slides from C.h. Robinson Worldwide's earnings presentation, May 2, 2018
Slide 1: Earnings Conference Call – First Quarter 2018
Earnings Conference Call – First Quarter 2018 May 2, 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: Q1 2018 – Key Themes
Q1 2018 – Key Themes ▪ Created Chief Operating Officer role to drive operating efficiencies and accelerate digital transformation ▪ Strong demand and tight capacity driving robust freight market ▪ Double-digit increase in truckload cost and price ▪ Acceleration in spot market freight opportunities ▪
Slide 4: Results Q1 2018
Results Q1 2018 in thousands, except per share amounts and headcount Three Months Ended March 31 2018 2017 % Change Total Revenues $3,925,327 $3,415,125 14.9% Total Net Revenues $625,925 $568,566 10.1% Net Revenue Margin % 15.9% 16.6% (70 bps) Personnel Expenses $328,297 $290,504 13.0% Selling, Gene
Slide 5: Other Income Statement Items
Q1 2018 Other Income Statement Items ▪ Q1 effective tax rate of 21.3% vs. 31.7% last year ▪ Adopted new revenue recognition accounting policy in 2018 Q1 ▪ Interest expense increase due to higher debt levels and an increase in variable interest rates ▪ Weighted average diluted shares outstanding is a
Slide 6: Cash Flow and Capital Distribution
Q1 2018 Cash Flow and Capital Distribution Q1 Operating Cash Flow ▪ $107.9 million increase in cash flow driven by improved working + 116.4% capital ▪ $134.7 million of net income $200.6M returned to shareholders ▪ $65.4 million cash dividends ▪ Dividend payout ratio of 45.9% $92.7M ▪ $69.3 million
Slide 7: Balance Sheet
Q1 2018 Balance Sheet in thousands March 31, December 31, % Change 2018 2017 Accounts Receivable, Net $2,019,333 $2,113,930 Contract Assets(1) $161,028 — Accounts Payable and O/S Checks $1,064,961 $1,096,664 Accrued Transportation Expense(1) $111,920 — Net Operating Working Capital(2) $1,003,480 $1,
Slide 8: Inaugural Bond Offering
Inaugural Bond Offering ▪ Inaugural public debt offering on April 9, 2018 ▪ $600 million of 10-year senior unsecured notes due April 2028 ▪ 4.2% fixed rate ▪ Investment grade rated by both S&P and Moody's ▪ Proceeds used to repay outstanding balance on credit facility ▪ Provides additional capital s
Slide 9: Second Quarter Trends – April
Second Quarter Trends – April ▪ April to date total company net revenue per day has increased approximately 11 percent when compared to April 2017 ▪ Truckload volume has declined approximately 6 percent on a year-over-year basis in April 9 9
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 Q1 represents truckload shipments from all North America Volume (7.0%) s
Slide 11: NAST Results by Service Line
Q1 2018 NAST Results by Service Line Truckload, Less Than Truckload and Intermodal in thousands Three Months Ended March 31 Net Revenues 2018 2017 % Change ▪ Double-digit price Truckload $294,757 $267,605 10.1% increases in most service LTL $107,348 $93,517 14.8% lines Intermodal $6,182 $7,175 (13.8
Slide 12: NAST Operating Margin
Q1 2018 NAST Operating Margin Q1 Operating Margin ▪ Prior year period includes $8.75 million favorable legal + 10 bps settlement 41.9% 42.0% ▪ Technology investments driving labor productivity ▪ Selective office consolidation ▪ Flat headcount ‹#› 12
Slide 13: Global Forwarding Results by Service Line
Q1 2018 Global Forwarding Results by Service Line Ocean, Air and Customs in thousands Three Months Ended March 31 Net Revenues 2018 2017 % Change ▪ Double-digit volume Ocean $68,694 $63,419 8.3% increases in all service Air $26,037 $20,396 27.7% lines Customs $20,655 $16,077 28.5% Other $7,651 $6,65
Slide 14: Global Forwarding Operating Margin
Q1 2018 Global Forwarding Operating Margin ▪ Investments in headcount, Q1 Operating Margin technology and leased warehouses (850 bps) ▪ 21.4 percent headcount increase 15.2% ▪ Milgram headcount impact of 7.5 percentage points to Global Forwarding 6.7% ▪ Margin improvement plan underway ▪ Technology
Slide 15: Robinson Fresh Results
Q1 2018 Robinson Fresh Results Transportation and Sourcing in thousands Three Months Ended March 31 Sourcing 2018 2017 % Change ▪ Sourcing net revenue decline due to strategic Total Revenues(1) $287,687 $313,082 (8.1%) Net Revenues $29,887 $30,408 (1.7%) customer exiting fresh Net Revenue Margin % 1
Slide 16: Robinson Fresh Operating Margin
Q1 2018 Robinson Fresh Operating Margin Q1 Operating Margin ▪ Increased variable compensation expenses (850 bps) ▪ Write-off of a supplier 25.8% advance 17.3% ▪ Operating expense reduction initiatives underway ▪ Headcount reduction ▪ Service center closure ▪ Operating expense controls ‹#› 16
Slide 17: All Other and Corporate Results
Q1 2018 All Other and Corporate Results Managed Services and Other Surface Transportation in thousands Three Months Ended March 31 Net Revenues 2018 2017 % Change Managed Services $18,317 $17,193 6.5% Other Surface Transportation $15,932 $15,550 2.5% Total $34,249 $32,743 4.6% Managed Services ▪ $1
Slide 18: Final Comments
Final Comments ▪ Expect current freight market fundamentals to continue ▪ Strong demand ▪ Tight capacity ▪ Increased costs and pricing ▪ Continued investment in people, processes and technology ▪ Digital transformation ▪ Increased insights and capabilities ▪ Improved efficiency ‹#› 18
Slide 19: Appendix
Appendix 19
Slide 20: Transportation Results
Q1 2018 Transportation Results(1) in thousands Three Months Ended March 31 Transportation 2018 2017 % Change Total Revenues $3,637,640 $3,102,043 17.3% Total Net Revenues $596,038 $538,158 10.8% Net Revenue Margin % 16.4% 17.3% (90 bps) Transportation Net 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 21: NAST Results
Q1 2018 NAST Results in thousands, except headcount Three Months Ended March 31 2018 2017 % Change Total Revenues(1) $2,663,011 $2,259,252 17.9% Total Net Revenues $414,769 $372,440 11.4% Net Revenue Margin % 15.6% 16.5% (90 bps) Income from Operations $174,078 $155,877 11.7% Operating Margin % 42.0
Slide 22: Global Forwarding Results
Q1 2018 Global Forwarding Results in thousands, except headcount Three Months Ended March 31 2018 2017 % Change Total Revenues(1) $553,754 $468,788 18.1% Total Net Revenues $123,037 $106,546 15.5% Net Revenue Margin % 22.2% 22.7% (50 bps) Income from Operations $8,221 $16,206 (49.3%) Operating Margi
Slide 23: Robinson Fresh Results
Q1 2018 Robinson Fresh Results in thousands, except headcount Three Months Ended March 31 2018 2017 % Change Total Revenues(1) $550,469 $550,445 0.0% Total Net Revenues $53,870 $56,837 (5.2%) Net Revenue Margin % 9.8% 10.3% (50 bps) Income from Operations $9,307 $14,652 (36.5%) Operating Margin % 17
Slide 24: All Other and Corporate Results
Q1 2018 All Other and Corporate Results in thousands, except headcount Three Months Ended March 31 2018 2017 % Change Total Revenues(1) $158,093 $136,640 15.7% Total Net Revenues $34,249 $32,743 4.6% Income from Operations ($21) $1,223 NM Depreciation and Amortization $8,026 $7,675 4.6% Total Assets
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