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EX-99.1 - EX-99.1 - C. H. ROBINSON WORLDWIDE, INC.ex991earningsreleaseq41231.htm
8-K - 8-K - C. H. ROBINSON WORLDWIDE, INC.chrw-20210126.htm
1 Q4 2020 January 27, 2021 Earnings Presentation Bob Biesterfeld, CEO Mike Zechmeister, CFO Chuck Ives, Director of IR


 
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; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to successfully integrate the operations of acquired companies with our historic operations; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with operations outside of the United States; risks associated with the potential impact of changes in government regulations; risks associated with the produce industry, including food safety and contamination issues; fuel price increases or decreases, or fuel shortages; cyber-security related risks; the impact of war on the economy; changes to our capital structure; risks related to the elimination of LIBOR; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports.


 
▪ 51% improvement in Operating Income ▪ 48% improvement in Dilutive EPS ▪ Global forwarding business sustaining its strong execution ▪ Repricing our contractual truckload business to reflect the changing market conditions ▪ Capturing more spot market opportunities ▪ Technology and transformation initiatives providing meaningful growth opportunities and efficiencies Q4 2020 Opening Remarks


 
Technology Advancements & Transformation Efforts Providing Meaningful Efficiencies


 
Strategies Creating Shareholder Value • Creating better outcomes for our customers and carriers • Utilizing our unmatched combination of experience, scale and information advantage • Leveraging our broad service portfolio • Focusing on profitable market share growth • Delivering industry leading technology to unlock growth and efficiency • Fostering sustainability and an inclusive culture that is supportive of our employees and the communities we serve


 
Results Q4 2020 ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands, except per share amounts 2020 2019 % CHANGE 2020 2019 % CHANGE Total Revenues $4,549,452 $3,793,326 19.9 % $16,207,106 $15,309,508 5.9 % Total Adjusted Gross Profits(1) $640,578 $578,863 10.7 % $2,412,257 $2,586,310 (6.7) % Adjusted Gross Profit Margin % 14.1 % 15.3 % (120 bps) 14.9 % 16.9 % (200 bps) Personnel Expenses $309,260 $298,981 3.4 % $1,242,867 $1,298,528 (4.3) % Selling, General, and Admin $124,516 $143,076 (13.0) % $496,122 $497,806 (0.3) % Income from Operations $206,802 $136,806 51.2 % $673,268 $789,976 (14.8) % Adjusted Operating Margin % 32.3 % 23.6 % 870 bps 27.9 % 30.5 % (260 bps) Depreciation and Amortization $24,660 $25,327 (2.6) % $101,727 $100,449 1.3 % Net Income $147,807 $99,106 49.1 % $506,421 $576,968 (12.2) % Earnings Per Share (Diluted) $1.08 $0.73 47.9 % $3.72 $4.19 (11.2) % Average Headcount 14,791 15,540 (4.8) % 15,119 15,551 (2.8) % • Increase in adjusted gross profits driven primarily by higher pricing and higher volume in our ocean and air service lines and contributions from the acquisition of Prime Distribution Services • Decrease in operating expenses driven by cost reduction initiatives (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.


 
Q4 effective tax rate of 24.1% vs. 21.4% in Q4 2019 Increase was primarily due to one-time items related to the tax provision in Mexico Expect 2021 effective tax rate to be 20% - 22% Q4 2020 Other Income Statement Items $1.1 million favorable impact from currency revaluation, versus a $0.9 million unfavorable impact in Q4 2019 Interest expense declined $0.1 million versus Q4 2019 due to a lower average debt balance


 
Q4 2020 Cash Flow and Capital Distribution • $49.5 million decrease in cash flow driven by an increase in accounts receivable that coincided with an increase in total revenues • $13.7 million in capital expenditures • Expect 2021 capital expenditures to be $55-65 million Cash Flow from Operations Capital Distribution • $112.8 million returned to shareholders • Opportunistic share repurchase program resumed in Q4 • Dividends declared in Q4 were paid on January 4, 2021 Q4 2019 Q4 2020 Q4 2019 Q4 2020 $162.1M $211.6M (23.4%) $137.3M $112.8M (17.8%) Cash Dividends Share Repurchases


 
Q4 2020 Balance Sheet ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor $ in thousands December 31, 2020 December 31, 2019 % CHANGE Accounts Receivable, Net(1) $2,646,753 $2,107,255 25.6% Accounts Payable(2) $1,436,938 $1,164,029 23.4% Net Operating Working Capital(3) $1,209,815 $943,226 28.3% • Increases in accounts receivable and accounts payable driven primarily by increases in gross sales and purchased transportation, respectively • Total debt balance $1.09 billion • $600 million senior unsecured notes maturing April 2028, 4.20% coupon • $500 million private placement debt, 4.28% average coupon • $175 million maturing in August 2023, $150 million maturing in August 2028 and $175 million maturing in August 2033 • 4.2% weighted average interest rate in the quarter (1) Accounts receivable amount includes contract assets, net of allowance for credit loss. (2) Accounts payable amount includes outstanding checks and accrued transportation expense. (3) Net operating working capital is defined as net accounts receivable less accounts payable.


 
• 55% / 45% truckload contractual to transactional volume mix compared to 70% / 30% in Q4 last year • Average routing guide depth of 1.8 in Managed Services business vs. 1.2 in Q4 last year Truckload Price and Cost Change(1)(2)(3) Y oY % C ha ng e in P ri ce a nd C os t 2013 2014 2015 2016 2017 2018 2019 2020 -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% YoY Price Change YoY Cost Change Truckload Q4 Volume(2)(4) -3.5% Pricing(1)(2)(3) +29.0% Cost(1)(2)(3) +32.5% Adjusted Gross Profit Margin (1) Price and cost change represents YoY change for North America truckload shipments across all segments. (2) Growth rates are rounded to the nearest 0.5 percent. (3) Pricing and cost measures exclude fuel surcharges and costs. (4) Truckload volume growth represents YoY change for NAST truckload shipments.


 
Q4 2020 NAST Results by Service Line Truckload and Less Than Truckload ("LTL") ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Adjusted Gross Profits ($ in thousands) Three Months Ended December 31 2020 2019 % Change Truckload $258,577 $264,191 (2.1) % LTL $116,673 $112,213 4.0 % Other(1) $21,564 $14,237 51.5 % Total Adjusted Gross Profits $396,814 $390,641 1.6 % Adjusted Gross Profit Margin % 12.8 % 14.0 % (120 bps) • Adjusted gross profit margin compression in truckload due to rising cost environment • Added 4,100 new carriers in the quarter • Increase in other adjusted gross profit due primarily to Prime Distribution's value- added warehouse services • Prime Distribution adjusted gross profit impact to NAST(4): • LTL +5 ppts • Other +67 ppts • Total NAST +4 ppts Truckload LTL Pricing(2)(3) Cost(2)(3) Volume Adjusted Gross Profit per Transaction (1) Intermodal service line now included in Other. (2) Represents price and cost YoY change for North America shipments across all segments. (3) Pricing and cost measures exclude fuel surcharges and costs. (4) Growth rates are rounded to the nearest percent.


 
Q4 2020 NAST Operating Income • Increase in adjusted gross profits due to contributions from Prime Distribution acquisition • Operating expenses reduced by 5.3% • Average headcount decreased 8.4% • Prime Distribution acquisition contributed 4.0 percentage points of growth to NAST headcount(1) Operating Income Adjusted Operating Margin % Q4 2019 Q4 2020 450 bps 15.3% $130.5M $150.6M 33.4% 37.9% Q4 2019 Q4 2020 (1) Growth rates are rounded to the nearest 0.5 percent.


 
ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Q4 2020 Global Forwarding Results by Service Line Ocean, Air and Customs Adjusted Gross Profits ($ in thousands) Three Months Ended December 31 2020 2019 % Change Ocean $112,446 $73,445 53.1 % Air $33,802 $24,448 38.3 % Customs $23,977 $22,941 4.5 % Other $9,832 $8,155 20.6 % Total Adjusted Gross Profits $180,057 $128,989 39.6 % Adjusted Gross Profit Margin % 17.5 % 21.5 % (400 bps) • Ocean and air adjusted gross profit increased due to higher pricing and market share gains • Air market impacted by reduced air cargo capacity, increased charter flights and larger shipment sizes • Air shipments declined, but air tonnage increased • Customs adjusted gross profit increased due to higher volume Ocean Air Pricing Volume Adjusted Gross Profit per Transaction


 
Q4 2020 Global Forwarding Operating Income • Improved operating leverage from • 39.6% increase in adjusted gross profits ◦ Higher pricing in ocean and air, higher ocean volumes and higher air tonnage • 4.1% decrease in average headcount • 3.2% decrease in SG&A expenses Operating Income Adjusted Operating Margin % Q4 2019 Q4 2020 11.7% 32.5% 2,080 bps Q4 2019 Q4 2020 $15.0M $58.5M289.1%


 
Q4 2020 All Other and Corporate Results Robinson Fresh, Managed Services and Other Surface Transportation ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Adjusted Gross Profits ($ in thousands) Three Months Ended December 31 2020 2019 % Change Robinson Fresh $23,591 $22,907 3.0% Managed Services $24,738 $21,380 15.7% Other Surface Transportation $15,378 $14,946 2.9% Total $63,707 $59,233 7.6% Robinson Fresh • 3% increase in adjusted gross profit driven by volume growth and margin expansion in our retail vertical • Cost controls led to improved operating income and 370 bps improvement in adjusted operating margin Managed Services • 27% increase in volume and 650 bps improvement in adjusted operating margin • Continued strong growth from both new customers and existing customers Other Surface Transportation • 2% increase in Europe adjusted gross profit due to a 7% volume increase and strength of the Euro


 
16 Appendix


 
Q4 2020 Transportation Results(1) Three Months Ended December 31 Twelve Months Ended December 31 Transportation ($ in thousands) 2020 2019 % Change 2020 2019 % Change Total Revenues $4,311,852 $3,570,405 20.8% $15,147,562 $14,322,295 5.8% Total Adjusted Gross Profits(2) $618,598 $557,205 11.0% $2,312,954 $2,482,862 (6.8%) Adjusted Gross Profit Margin % 14.3% 15.6% (130 bps) 15.3% 17.3% (200 bps) Transportation Adjusted Gross Profit Margin % 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1 17.2% 16.9% 16.3% 15.3% 16.8% 19.7% 17.3% 16.4% 18.6% 15.3% Q2 16.2% 14.9% 15.4% 16.0% 17.5% 19.3% 16.2% 16.2% 18.3% 17.5% Q3 16.4% 15.6% 15.0% 16.2% 18.4% 17.6% 16.4% 16.6% 16.9% 14.4% Q4 16.3% 15.8% 15.1% 15.9% 19.0% 17.2% 16.6% 17.7% 15.6% 14.3% Total 16.5% 15.8% 15.4% 15.9% 17.9% 18.4% 16.6% 16.7% 17.3% 15.3% (1) Includes results across all segments. (2) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.


 
Q4 2020 NAST Results Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2020 2019 % Change 2020 2019 % Change Total Revenues $3,089,674 $2,788,547 10.8% $11,312,553 $11,283,692 0.3% Total Adjusted Gross Profits(1) $396,814 $390,641 1.6% $1,517,091 $1,797,369 (15.6%) Adjusted Gross Profit Margin % 12.8% 14.0% (120 bps) 13.4% 15.9% (250 bps) Income from Operations $150,577 $130,548 15.3% $508,475 $722,763 (29.6%) Adjusted Operating Margin % 37.9% 33.4% 450 bps 33.5% 40.2% (670 bps) Depreciation and Amortization $5,764 $6,384 (9.7%) $25,314 $24,508 3.3% Total Assets $2,946,409 $2,550,010 15.5% $2,946,409 $2,550,010 15.5% Average Headcount 6,555 7,154 (8.4%) 6,811 7,354 (7.4%) (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.


 
Q4 2020 Global Forwarding Results Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2020 2019 % Change 2020 2019 % Change Total Revenues $1,030,364 $600,168 71.7% $3,100,525 $2,327,913 33.2% Total Adjusted Gross Profits(1) $180,057 $128,989 39.6% $628,988 $533,976 17.8% Adjusted Gross Profit Margin % 17.5% 21.5% (400 bps) 20.3% 22.9% (260 bps) Income from Operations $58,480 $15,030 289.1% $175,513 $80,527 118.0% Adjusted Operating Margin % 32.5% 11.7% 2,080 bps 27.9 % 15.1 % 1,280 bps Depreciation and Amortization $6,810 $9,293 (26.7%) $34,550 $36,720 (5.9%) Total Assets $1,392,411 $1,021,592 36.3% $1,392,411 $1,021,592 36.3% Average Headcount 4,626 4,824 (4.1%) 4,708 4,766 (1.2%) (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.


 
Q4 2020 All Other and Corporate Results Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2020 2019 % Change 2020 2019 % Change Total Revenues $429,414 $404,611 6.1% $1,794,028 $1,697,903 5.7% Total Adjusted Gross Profits(1) $63,707 $59,233 7.6% $266,178 $254,965 4.4% Income from Operations ($2,255) ($8,772) NM ($10,720) ($13,314) NM Depreciation and Amortization $12,086 $9,650 25.2% $41,863 $39,221 6.7% Total Assets $805,438 $1,069,458 (24.7%) $805,438 $1,069,458 (24.7%) Average Headcount 3,610 3,562 1.3% 3,600 3,431 4.9% (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.


 
Non-GAAP Reconciliations Three Months Ended December 31 Twelve Months Ended December 31 2020 2019 2020 2019 Revenues: Transportation $ 4,311,852 $ 3,570,405 $ 15,147,562 $ 14,322,295 Sourcing 237,600 222,921 1,059,544 987,213 Total Revenues 4,549,452 3,793,326 16,207,106 15,309,508 Costs and expenses: Purchased transportation and related services 3,693,254 3,013,200 12,834,608 11,839,433 Purchased products sourced for resale 215,620 201,263 960,241 883,765 Direct internally developed software amortization 4,510 3,366 16,634 11,492 Total direct costs 3,913,384 3,217,829 13,811,483 12,734,690 Gross profit & Gross profit margin 636,068 14.0 % 575,497 15.2 % 2,395,623 14.8 % 2,574,818 16.8 % Plus: Direct internally developed software amortization 4,510 3,366 16,634 11,492 Adjusted gross profit / Adjusted gross profit margin $ 640,578 14.1 % $ 578,863 15.3 % $ 2,412,257 14.9 % $ 2,586,310 16.9 % Our adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profit divided by total revenues. We believe adjusted gross profit and adjusted gross profit margin are useful measures of our ability to source, add value, and sell services and products that are provided by third parties, and we consider adjusted gross profit to be a primary performance measurement. The reconciliation of gross profit to adjusted gross profit and gross profit margin to adjusted gross profit margin are presented below (in thousands):


 
Non-GAAP Reconciliations Three Months Ended December 31 Twelve Months Ended December 31, 2020 2019 2020 2019 Total Revenues $ 4,549,452 $ 3,793,326 $ 16,207,106 $ 15,309,508 Operating income 206,802 136,806 673,268 789,976 Operating margin 4.5 % 3.6 % 4.2 % 5.2 % Adjusted gross profit $ 640,578 $ 578,863 $ 2,412,257 $ 2,586,310 Operating income 206,802 136,806 673,268 789,976 Adjusted operating margin 32.3 % 23.6 % 27.9 % 30.5 % Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below:


 
23 Thank you