 Earnings Conference Call –
First Quarter 2012
April 24, 2012
John Wiehoff, Chairman & CEO
Chad Lindbloom, CFO
Angie Freeman, VP Investor Relations |
 Safe
Harbor Statement 1
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; and the impact of war on the economy; and
other risks and uncertainties detailed in our Annual and Quarterly Reports. |
 In
thousands, except per share amounts 2012
2011
% Change
Total revenues
$2,552,114
$2,365,472
7.9%
Total net revenues
$414,746
$390,341
6.3%
Income from operations
$169,545
$156,715
8.2%
Net income
$106,500
$97,028
9.8%
Earnings per share
(diluted)
$0.65
$0.59
10.2%
FIRST QUARTER
Q1 2012 Results
2 |
 Transportation Results Q1 2012
Transportation margin percentage history
•
Volumes up in all services in Q1 2012.
•
In the quarter, pricing changes varied by service line.
•
Consolidated transportation net revenue margin declined in the quarter.
In thousands
FIRST QUARTER
2012
2011
% Change
Total revenues
$2,176,797
$1,991,022
9.3%
Total net revenues
$367,216
$342,920
7.1%
Net revenue margin
16.9%
17.2%
-2.1%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Q1
17.7%
17.8%
16.8%
17.4%
18.3%
20.2%
18.2%
22.6%
17.4%
17.2%
16.9%
Q2
16.1%
15.9%
15.4%
16.3%
17.1%
17.9%
15.4%
20.6%
15.8%
16.2%
Q3
15.6%
16.0%
15.9%
16.3%
17.5%
18.0%
15.9%
19.8%
16.6%
16.4%
Q4
16.2%
15.8%
16.0%
15.7%
18.3%
17.7%
19.0%
18.3%
17.6%
16.3%
3 |
 Truck Results Q1 2012
•
Truckload net revenue growth was driven by volume growth, partially offset by
decreased net revenue margin.
•
Decline in Truckload net revenue margin due to cost per mile rising faster than
price per mile, and the higher cost of fuel.
•
Pricing decisions are decentralized and driven by customer-specific account
management strategies. •
Less-than-Truckload (LTL) net revenue growth was driven primarily by
increased volumes and increased pricing, offset partially by a decreased net
revenue margin. In thousands
Quarter
Volume
8%
Pricing *
1%
Net revenue margin
Quarter
Volume
13%
Pricing
Net revenue margin
*Excluding estimated impact of fuel
FIRST QUARTER
2012
2011
% Change
$315,409
$294,500
7.1%
Truck net revenues
Truckload year over year change
LTL year over year change
4 |
 Intermodal Results Q1 2012
•
Net revenue growth was driven by volume growth, largely offset by decreased net
revenue margin. •
Net revenue margin decline due to changing mix of business, including a shift to
increased dedicated intermodal business and shorter haul lanes, and rising
rail carrier pricing. •
Our containers are exceeding our performance expectations and are supporting new
customer opportunities.
In thousands
2012
2011
% Change
$9,711
$9,600
1.2%
FIRST QUARTER
Quarter
Volume
Pricing
Net revenue margin
Net revenues
Year over year change
5 |
 Ocean & Air Results Q1 2012
•
Ocean net revenue growth was driven by increased volumes, largely offset by
decreased pricing. •
Air net revenue decline was driven by lower pricing and net revenue margin
compression, partially offset by increased volumes.
•
Significant price volatility.
In thousands
2012
2011
% Change
Ocean
$15,761
$15,570
1.2%
Air
$8,873
$9,185
-3.4%
FIRST QUARTER
Quarter
Volume
Pricing
Net revenue margin
Quarter
Volume
Pricing
Net revenue margin
Ocean year over year change
Air year over year change
Net revenues
6 |
 Other Logistics Services Results Q1 2012
•
Other Logistics Services includes Transportation Management Services, Customs,
Warehousing, and Small Parcel.
•
Q1 2012 net revenue growth primarily due to increases in our Management services
and Customs services.
•
Integrated, outsourced logistics arrangements, including Transportation Management
services, are providing continued growth in Other Logistics Services.
In thousands
2012
2011
% Change
$17,462
$14,065
24.2%
FIRST QUARTER
Net revenues
7 |
 Sourcing Results Q1 2012
Net revenues
•
Volume growth offset by decreased net revenue margin.
•
Net
revenue
margin
comparisons
challenging
due
to
weather
issues
in
Q1
2011.
•
Sourcing net revenues continue to be impacted by change in product, service, and
customer mix. In thousands
2012
2011
% Change
Total revenues
$359,730
$360,028
-0.1%
Total net revenues
$31,943
$32,999
-3.2%
Net revenue margin
8.9%
9.2%
-3.1%
FIRST QUARTER
8 |
 Payment Services Results Q1 2012
•
Volume
growth
was
driven
by
increase
in
MasterCard
®
and
other
fuel
card
services.
•
Increased
fees
were
driven
by
higher
fuel
prices
and
changes
to
merchant
agreements.
In thousands
2012
2011
% Change
$15,587
$14,422
8.1%
FIRST QUARTER
Quarter
Volume
Pricing
Net revenues
Year over year change
9 |
 Summarized Income Statement
•
Overall, operating expenses grew slower than net revenues
•
Average headcount increased approximately 9%
•
For the quarter, personnel expense decreased as a percentage of net revenues. This
decrease was driven by a reduction in certain incentive compensation plans
that are based on growth in earnings, including our restricted stock
program. •
Other operating expense growth was driven primarily by an increase in the provision
for doubtful accounts and travel expenses.
In thousands, except per share amounts
2012
2011
% Change
Total net revenues
$414,746
$390,341
6.3%
Operating expenses:
Personnel expenses
$183,438
$175,109
4.8%
Percent of net revenues
44.2%
44.9%
Other operating expenses
$61,763
$58,517
5.5%
Percent of net revenues
14.9%
15.0%
Total Operating expenses
$245,201
$233,626
5.0%
Income from Operations
$169,545
$156,715
8.2%
Percent of net revenues
40.9%
40.1%
FIRST QUARTER
10 |
 2012
2011
% Change
Net cash provided by
operating activities
$77,084
$52,613
46.5%
Capital expenditures, net
$13,820
$9,630
43.5%
FIRST QUARTER
Quarter
Shares repurchased
1,067,717
Average price per
share
$65.55
Total cost of shares
repurchased
$69,990,401
March 31, 2012
Cash & investments
$311,365
Current assets
$1,601,131
Total assets
$2,134,285
Current liabilities
$871,867
Stockholder’s equity
$1,248,113
Long term debt
$0
Other Financial Information
In thousands, except per share amounts
Cash flow data
Balance sheet data
Repurchases of common stock
11 |
 Current Period Comments
Through April 23:
•
North American Truckload volume growth per business day was approximately 10%
•
Total net revenue growth per business day was approximately 1%
•
We are pleased with our execution.
•
We
continue
to
invest
in
growth,
hiring
people
and
expanding
our
global
IT
capabilities.
•
We are aggressively selling and developing our relationships through our account
management strategies.
•
Our variable cost disciplines enable us to stay efficient and react to changing
market conditions. •
We remain confident in our long-term market opportunities, growth strategy, and
competitive advantages.
12 |
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