Attached files
| file | filename |
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| 8-K - FORM 8-K - C. H. ROBINSON WORLDWIDE, INC. | d623132d8k.htm |
| EX-99.1 - EX-99.1 - C. H. ROBINSON WORLDWIDE, INC. | d623132dex991.htm |
 Earnings Conference Call –
Third Quarter 2013
November 6, 2013
John Wiehoff, Chairman & CEO
Chad Lindbloom, CFO
Tim Gagnon, Director, Investor Relations
Exhibit 99.2 |
 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
capital structure and termination of our accelerated share repurchase program; and the impact
of war on the economy; and other risks and uncertainties detailed in our Annual and Quarterly
Reports. We have included herein certain
non-GAAP financial information, including certain fiscal 2012 information adjusted to
reflect an acquisition and a divestiture that occurred during 2012. In addition to helping us assess
our operating performance, we believe that these non-GAAP financial measures assist investors in
understanding our operations and results. However, non-GAAP results should not be
regarded as a substitute for corresponding GAAP measures, and should be viewed in conjunction
with our consolidated financial statements prepared in accordance with GAAP.
Reconciliations of such non-GAAP information to actual results are set forth in Appendices
A, B and C. |
 3
Q3 2013 Results
2013
2012
% Change
2013
2012
% Change
Total revenues
$3,316,665
$2,880,409
15.1%
$9,599,194
$8,388,237
14.4%
Total net revenues
$463,306
$432,670
7.1%
$1,391,630
$1,272,939
9.3%
Income from operations
$176,355
$187,257
-5.8%
$527,537
$541,716
-2.6%
Net income
$107,737
$116,330
-7.4%
$322,952
$337,412
-4.3%
Earnings per share
(diluted)
$0.69
$0.72
-4.2%
$2.03
$2.08
-2.4%
Three months ended September 30
Nine months ended September 30
In thousands, except per share amounts
•
Total revenue growth is primarily a result of acquired business and market share
gains •
Net revenue margin compression continues to be a challenge
•
We
continue
to
invest
in
the
business
and
have
confidence
in
our
long
term
strategy
•
Accelerated Share Repurchases, made in late August 2013, had no EPS impact in the
third quarter. We expect an approximate $.02 per quarter EPS impact
in the future |
 4
In thousands
2013 Actual
2012
Actual
T-Chek
Operations
Phoenix
Operations
2012 Pro
Forma
% Change
Pro Forma
Total revenues
$3,316,665
$2,880,409
-$13,204
$216,219
$3,083,424
7.6%
Total net revenues
$463,306
$432,670
-$13,204
$42,323
$461,789
0.3%
Personnel expenses
204,388
179,342
-3,470
20,799
196,671
3.9%
Selling, general & admin
77,523
65,112
-2,855
7,602
69,859
11.0%
Acquisition amortization
5,040
959
-
4,067
5,026
0.3%
Total operating expenses
286,951
245,413
-6,325
32,468
271,556
5.7%
Income from operations
$176,355
$187,257
-$6,879
$9,855
$190,233
-7.3%
Percent of net revenue
38.1%
43.3%
52.1%
23.3%
41.2%
-7.5%
Q3 2013 Actual Compared to Q3 2012 Pro Forma
•
2012 Pro Forma includes the effects of the disposition of T-Chek and
acquisition of Phoenix as if they had occurred at the beginning of our 2012
fiscal year. A reconciliation of actual results for the third quarter of 2012 to pro forma
appears in Appendix A
•
Excluding the employees of Phoenix, Apreo and T-Chek, average headcount
increased approximately eight percent in the third quarter of 2013 compared
to the third quarter of 2012. Headcount increases were partially offset by
declines in variable incentive plans based on earnings growth
•
Income from operations as a percent of net revenue has been generally consistent
through the first three quarters of 2013
•
(Q1 2013 37.0%, Q2 2013 38.6%, Q3 2013 38.1%)
•
See Appendix B for the nine months ending September 30, 2012.
Three months ended September 30 |
 5
Transportation Results Q3 2013
•
Total revenue growth is primarily attributed to the Phoenix acquisition and
Truckload volume growth •
Significant net revenue margin compression in Truckload, partially offset by
margin expansion in the Global Forwarding services
2013
2012
% Change
2013
2012
% Change
Total revenues
$2,880,901
$2,445,883
17.8%
$8,302,160
$7,099,485
16.9%
Total net revenues
$429,978
$382,774
12.3%
$1,282,375
$1,118,996
14.6%
Net revenue margin
14.9%
15.6%
-4.6%
15.4%
15.8%
-2.0%
Three months ended September 30
Nine months ended September 30
TRANSPORTATION in thousands
TRANSPORTATION NET REVENUE MARGIN PERCENTAGE
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Q1
17.7%
17.8%
16.8%
17.4%
18.3%
20.2%
18.2%
22.6%
17.4%
17.2%
16.9%
16.2%
Q2
16.1%
15.9%
15.4%
16.3%
17.1%
17.9%
15.4%
20.6%
15.8%
16.2%
14.9%
15.3%
Q3
15.6%
16.0%
15.9%
16.3%
17.5%
18.0%
15.9%
19.8%
16.6%
16.4%
15.6%
14.9%
Q4
16.2%
15.8%
16.0%
15.7%
18.3%
17.7%
19.0%
18.3%
17.6%
16.3%
15.8% |
 6
Truckload Results Q3 2013
2013
2012
% Change
2013
2012
% Change
$265,509
$269,097
-1.3%
$798,448
$788,872
1.2%
Three months ended September 30
Nine months ended September 30
TRUCKLOAD NET REVENUES in thousands
Quarter
Year to
Date
Volume
13%
10%
Pricing *
2%
1%
Net revenue margin
TRUCKLOAD
Year over year change
*Excluding estimated impact of fuel
•
North America Truckload volumes grew approximately nine percent in the third
quarter when compared to the third quarter of 2012
•
North America Truckload cost per mile, excluding the impact of fuel, increased
approximately four percent in the third quarter of 2013 when compared to the
third quarter of 2012 •
North America Truckload price per mile, excluding the impact of fuel, increased
approximately two percent in the third quarter of 2013 when compared to the
third quarter of 2012 |
 7
LTL Results Q3 2013
2013
2012
% Change
2013
2012
% Change
$61,436
$58,863
4.4%
$180,638
$167,135
8.1%
Three months ended September 30
Nine months ended September 30
LTL NET REVENUES in thousands
Quarter
Year to Date
Volume
5%
8%
Pricing
Net revenue margin
LTL
Year over year change
•
Net revenue growth rate slowed in the third quarter when compared to the growth
rate in the first two quarters of 2013
•
LTL experienced net revenue margin compression in the third quarter of 2013 when
compared to the third quarter of 2012
•
Carrier
costs
are
increasing
industry
wide,
customer
pricing
has
not
kept
up
with
the
increase in carrier costs
•
LTL marketplace remains very competitive |
 8
Intermodal Results Q3 2013
•
Net revenues up slightly based on price increases and slightly higher margins
offset by reduced volume from customers.
•
The
mix
of
business
was
improved
in
the
third
quarter
of
2013
by
eliminating
some
low
or
unprofitable lanes and added volume from truckload conversion.
2013
2012
% Change
2013
2012
% Change
$10,202
$10,074
1.3%
$29,223
$29,804
-1.9%
Three months ended September 30
Nine months ended September 30
INTERMODAL NET REVENUES in thousands
Quarter
Year to
Date
Volume
Pricing
Net revenue margin
Year over year change |
 9
Global Forwarding Results Q3 2013
Ocean, Air and Customs
2013
2012
% Change
2013
2012
% Change
Ocean
$49,692
$18,498
168.6%
$141,304
$51,217
175.9%
Air
$18,137
$9,046
100.5%
$55,107
$28,496
93.4%
Customs
$8,932
$4,109
117.4%
$27,307
$11,443
138.6%
Three months ended September 30
Nine months ended September 30
NET REVENUES in thousands
Quarter
Year to Date
Volume
Pricing
Net revenue margin
OCEAN
Quarter
Year to Date
Volume
Pricing
Net revenue margin
AIR
Year over year change
Year over year change
•
Significant
net
revenue
increases
resulting
from
the
acquisition
of
Phoenix
International
•
In the third quarter, CHRW was the #1 NVOCC from China, Eastbound (ranking based on
TEU’s shipped in the third quarter of 2013)
|
 10
Phoenix Integration Update
•
Global Forwarding results through three quarters on track with the acquisition
plan •
Year one integration plan, on track with good results to date
•
Year two integration initiatives include, systems conversions and sales activities
from the combined global forwarding network
2013
2012
% Change
Actual C.H. Robinson
net revenue
$76,761
$31,653
142.5%
Phoenix net revenue *
$42,323
Total *
$76,761
$73,976
3.8%
Three months ended September 30
OCEAN, AIR, AND CUSTOMS NET REVENUE
In thousands
* See Appendices A and C for
reconciliation information for
2012 periods
2013
2012
% Change
$223,718
$91,156
145.4%
$125,243
$223,718
$216,399
3.4%
Nine months ended September 30 |
 11
Other Logistics Services Results Q3 2013
•
Other Logistics Services net revenues include transportation management services,
warehousing and small parcel
•
These services continue to perform well and the sales pipeline is
strong 2013
2012
% Change
2013
2012
% Change
$16,070
$13,087
22.8%
$50,348
$42,029
19.8%
Three months ended September 30
Nine months ended September 30
NET REVENUES in thousands
|
 12
Sourcing Results Q3 2013
•
Low crop yields due primarily to weather drove higher cost of goods sold and a
disruption in planned supply
•
Lost certain commodity business with a significant customer
•
Case volume decreased approximately one percent in the third quarter of 2013
compared to the third quarter of 2012
•
Our foodservice business segment experiencing growth with existing customers and
through the addition of new customers in the third quarter of 2013 compared
to the third quarter of 2012 2013
2012
% Change
2013
2012
% Change
Total revenues
$432,373
$418,377
3.3%
$1,287,036
$1,240,704
3.7%
Total net revenues
$30,553
$33,747
-9.5%
$101,151
$105,895
-4.5%
Net revenue margin
7.1%
8.1%
-12.4%
7.9%
8.5%
-7.9%
Three months ended September 30
Nine months ended September 30
SOURCING in thousands |
 13
2013
2012
% Change
2013
2012
% Change
Net cash provided by operating
activities
$124,658
$157,128
-20.7%
$182,929
$267,156
-31.5%
Capital expenditures, net
$11,659
$13,921
-16.2%
$34,236
$38,891
-12.0%
Three months ended September 30
Nine months ended September 30
September 30, 2013
Cash &
investments
$129,723
Current assets
$1,753,441
Total assets
$2,891,568
Debt
$850,000
Current liabilities
$1,306,231
Stockholders’
investment
$988,563
CASH FLOW DATA
BALANCE SHEET DATA
Other Financial Information
In thousands, except share and per share amounts
•
Strong operating cash flow quarter
•
Total debt $850 million
•
Borrowed $500 million during the
quarter
•
Average duration 15 years
•
Average coupon 4.28% |
 14
Repurchases of Common Stock
in thousands except per share
Q3 2013
YTD through Sept. 30, 2013
ASR
Other Activity
Total
ASR
Other Activity
Total
Shares
6,119
1,219
7,338
6,119
3,671
9,790
Average price per share
$59.24
$59.80
Total cost of shares
$72,198
$219,556
•
Year to date total includes the shares withheld on the delivery of restricted
shares to employees •
$500 million Accelerated Share Repurchase (ASR) initiated on August 26, 2013
•
6.1 million shares delivered upon initial purchase, approximately 70% of total
expected shares •
Share repurchases under the ASR program will terminate between December 11, 2013
and April 16, 2014 at the discretion of the participating banks
•
Final number of shares acquired will be based upon the average of the daily VWAP,
less and agreed to discount, during the duration or the share repurchase
program •
Balance of shares purchased, will be delivered upon termination of the
program |
 15
A look ahead
•
The truckload environment remains challenging and it will be difficult to grow our
earnings in the fourth quarter of 2013
•
We will continue to invest in our business, including our focus on;
•
Market Share Gains
•
Global Forwarding network
•
European Network
•
Management Services
•
Share repurchases and evaluation of potential M&A opportunities
•
We have confidence in our long term strategy and will discuss key initiatives
during the Investor Day event on November 19 |
 16
Appendix A: Q3 2012 Actual to Pro Forma Reconciliation
In thousands
Three months ended September 30
1.
Adjustments have been made to historical Phoenix operations for addition of
amortization expense of finite- lived intangible assets recorded in
connection with the acquisition ($4.1 million), rent expense for lease
agreements entered into in connection with the acquisition ($84 thousand), and
depreciation on a building acquired in the acquisition ($37 thousand). An
adjustment has also been made to reduce purchased transportation and
related services ($7.3 million) and other selling, general, and administrative expenses
($13.5 million) and to increase personnel expenses ($20.8 million) to conform to
C.H. Robinson’s historical financial reporting presentation. There
were no pro forma adjustments to the T-Chek historical results. 2.
Net revenues are our total revenues less purchased transportation and related
services, including contracted
motor
carrier,
rail,
ocean,
air,
and
other
costs,
and
the
purchased
price
and
services
related
to
the products we source. |
 17
In thousands
2013 Actual
2012
Actual
T-Chek
Operations
Phoenix
Operations
2012 Pro
Forma
% Change
Pro Forma
Total net revenues
$1,391,630
$1,272,939
-$39,333
$125,243
$1,358,849
2.4%
Personnel expenses
623,042
539,964
-11,176
61,899
590,687
5.5%
Selling, general & admin
225,938
188,622
-8,781
26,352
206,193
9.6%
Acquisition amortization
15,113
2,637
-
12,200
14,837
1.9%
Total operating expenses
864,093
731,223
-19,957
100,451
811,717
6.5%
Income from operations
$527,537
$541,716
-$19,376
$24,792
$547,132
-3.6%
Percent of net revenue
37.9%
42.6%
49.3%
19.8%
40.3%
-6.0%
Appendix B: Nine Month 2013 Actual Compared to Nine Month 2012 Pro Forma
•
2012 Pro Forma includes the effects of the disposition of T-Chek and
acquisition of Phoenix as if they had occurred at the beginning of our 2012
fiscal year. A reconciliation of actual 2012 results to pro forma appears
in Appendix C Nine months ended September 30 |
 18
Appendix C: Nine Month 2012 Actual to Pro Forma Reconciliation
In thousands
Nine months ended September 30
1.
Adjustments have been made to historical Phoenix operations for addition of amortization expense
of finite-lived intangible assets recorded in connection with the acquisition ($12.2
million), rent expense for lease agreements entered into in connection with the acquisition
($252 thousand), and depreciation on a building acquired in the
acquisition ($111 thousand). An adjustment has also been made for the elimination of
contractual changes in compensation ($5.1 million). An adjustment has also been made to reduce
purchased transportation and related services ($21.9 million) and other selling, general, and
administrative expenses ($45.1 million) and to increase personnel expenses ($67.0 million) to
conform to C.H. Robinson’s historical financial reporting presentation. There were no pro
forma adjustments to the T-Chek historical results.
2.
Net revenues are our total revenues less purchased transportation and related services, including
contracted motor carrier, rail, ocean, air, and other costs, and the purchased price and
services related to the products we source. |
 |