 Earnings Conference Call –
Fourth Quarter 2014
February 4, 2014
John Wiehoff, Chairman & CEO
Chad Lindbloom, CFO & CIO
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 share repurchase activity; the impact of war on the economy; and other risks
and uncertainties detailed in our Annual and Quarterly Reports.
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 3
Results Q4 2014
Three months ended December 31
in thousands, except per share amounts
•
Net revenue growth in the fourth quarter was primarily driven by
double
digit net revenue increases in the truckload and global forwarding
services
•
Income from operations growth in the fourth quarter was driven by net
revenue growth and a year over year decline in SG&A expenses, more
than offsetting higher personnel expenses
•
Share repurchases positively impacted EPS growth in the fourth quarter
2014
2013
% Change
2014
2013
% Change
Total revenues
$3,357,202
$3,152,882
6.5%
$13,470,067
$12,752,076
5.6%
Total net revenues
$501,816
$444,465
12.9%
$2,007,652
$1,836,095
9.3%
Income from operations
$187,728
$155,113
21.0%
$748,418
$682,650
9.6%
Net income
$112,947
$92,952
21.5%
$449,711
$415,904
8.1%
Earnings per share (diluted)
$0.77
$0.62
24.2%
$3.05
$2.65
15.1%
Weighted average shares
outstanding
146,650
151,130
-3.0%
147,542
157,080
-6.1%
Average headcount
11,532
11,605
-0.6%
11,617
11,316
2.7%
Ending headcount
11,521
11,676
-1.3%
11,521
11,676
-1.3%
Twelve months ended December 31 |
 4
Transportation Results Q4 2014
Net revenue growth exceeded total revenue growth as a result of margin
expansion, declining fuel prices and a change in our mix of business
Transportation net revenue margin improvement in the fourth quarter of 2014
when
compared
to
the
fourth
quarter
of
2013
was
driven
primarily
by
the
truckload, ocean and air results
2014
2013
% Change
Total revenues
$3,010,291
$2,767,550
8.8%
Total net revenues
$474,306
$416,020
14.0%
Net revenue margin
15.8%
15.0%
4.8%
Three months ended December 31
TRANSPORTATION in thousands
TRANSPORTATION NET REVENUE MARGIN PERCENTAGE
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Q1
17.4%
18.3%
20.2%
18.2%
22.6%
17.4%
17.2%
16.9%
16.2%
15.3%
Q2
16.3%
17.1%
17.9%
15.4%
20.6%
15.8%
16.2%
14.9%
15.3%
15.9%
Q3
16.3%
17.5%
18.0%
15.9%
19.8%
16.6%
16.4%
15.6%
14.9%
16.1%
Q4
15.7%
18.3%
17.7%
19.0%
18.3%
17.6%
16.3%
15.8%
15.0%
15.8%
Year
16.3%
17.8%
18.4%
17.0%
20.2%
16.8%
16.5%
15.8%
15.3%
15.8%
2014
2013
% Change
$11,921,974
$11,069,710
7.7%
$1,879,724
$1,698,395
10.7%
15.8%
15.3%
2.8%
Twelve months ended December 31 |
 5
Truckload Results Q4 2014
2014
2013
% Change
$295,216
$256,117
15.3%
Three months ended Dec 31
TRUCKLOAD NET REVENUES in thousands
North America
Truckload
Year over year change
*Pricing and cost measures exclude the estimated impact
of the change in fuel
Truckload net revenue margins expanded in the fourth quarter
when compared to the fourth quarter of 2013 driven by increased
pricing and a change in our mix of freight
The truckload capacity environment remained constrained in the
fourth quarter of 2014
Total truckload volume increased approximately four percent in the
fourth quarter when compared to the fourth quarter of 2013
2014
2013
% Change
$1,177,990
$1,054,565
11.7%
Twelve months ended Dec 31
Quarter
YTD
Volume
3%
2%
Approximate pricing*
12%
11%
Approximate cost*
11%
10%
Net revenue margin |
 6
LTL Results Q4 2014
2014
2013
% Change
$63,402
$58,839
7.8%
Three months ended Dec 31
LTL NET REVENUES in thousands
LTL
Year over year change
Total shipments increased approximately four percent in the
fourth quarter of 2014 when compared to the fourth quarter of
2013
LTL net revenue growth primarily driven by volume growth and
increased customer pricing partially offset by higher capacity
costs
2014
2013
% Change
$258,884
$239,477
8.1%
Twelve months ended Dec 31
Quarter
YTD
Volume
4%
7%
Pricing
Net revenue margin |
 7
Quarter
YTD
Volume
1%
-1%
Pricing
Net revenue margin
Intermodal Results Q4 2014
Net revenue growth was primarily driven by operational
improvements and increased customer pricing
Intermodal volumes were negatively impacted by rail capacity
and west coast port congestion
The intermodal market continues to support price increases
2014
2013
% Change
$10,235
$9,861
3.8%
Three months ended Dec 31
INTERMODAL NET REVENUES in thousands
Year over year change
2014
2013
% Change
$40,631
$39,084
4.0%
Twelve months ended Dec 31
INTERMODAL |
 8
Global Forwarding Results Q4 2014
Ocean, Air and Customs
2014
2013
% Change
Ocean
$56,944
$46,367
22.8%
Air
$19,404
$17,982
7.9%
Customs
$10,824
$9,271
16.8%
Three months ended Dec 31
NET REVENUES in thousands
OCEAN
AIR
Year over year change
Year over year change
Combined Global Forwarding services net revenues increased 18.4% in the
fourth quarter when compared to the fourth quarter of 2013
Global Forwarding net revenue growth was driven by margin expansion and
volume growth
Cross selling initiatives are producing the intended results
2014
2013
% Change
$208,422
$187,671
11.1%
$79,125
$73,089
8.3%
$41,575
$36,578
13.7%
Twelve months ended Dec 31
Quarter
Volume
Pricing
Net revenue margin
Quarter
Volume
Pricing
Net revenue margin
YTD
YTD |
 9
Other Logistics Services Results Q4 2014
Other Logistics Services net revenues include transportation
management services, warehousing and small parcel
Managed Services provided continued growth in Other Logistics
Services
2014
2013
% Change
$18,281
$17,583
4.0%
Three months ended Dec 31
NET REVENUES in thousands
2014
2013
% Change
$73,097
$67,931
7.6%
Twelve months ended Dec 31 |
 10
Sourcing Results Q4 2014
Sourcing net revenues were impacted by a change in customer,
product, and service mix
2014
2013
% Change
Total revenues
$342,951
$382,098
-10.2%
Total net revenues
$24,005
$25,799
-7.0%
Net revenue margin
7.0%
6.8%
3.7%
Three months ended Dec 31
SOURCING NET REVENUES in thousands
2014
2013
% Change
$1,533,555
$1,669,134
-8.1%
$115,546
$126,950
-9.0%
7.5%
7.6%
-0.9%
Twelve months ended Dec 31 |
 11
in thousands
Summarized Income Statement
•
Growth in personnel expense in the fourth quarter was primarily the
result of our variable compensation plans that are driven by
changes in net revenue and profitability
•
Average headcount was down approximately .6 percent when
compared to the fourth quarter of 2013
•
SG&A expenses decreased 7.9 percent when compared to the
fourth quarter of 2013, primarily driven by a decrease in our
allowance for bad debt, travel, and claims expenses
Three months ended December 31
2014
2013
% Change
Total revenues
$3,357,202
$3,152,882
6.5%
Total net revenues
501,816
444,465
12.9%
Personnel expenses
235,117
203,619
15.5%
Selling, general & admin
78,971
85,733
-7.9%
Total operating expenses
314,088
289,352
8.5%
Income from operations
$187,728
$155,113
21.0%
Percent of net revenue
37.4%
34.9%
7.2%
2014
2013
% Change
$13,470,067
$12,752,076
5.6%
2,007,652
1,836,095
9.3%
939,021
826,661
13.6%
320,213
326,784
-2.0%
1,259,234
1,153,445
9.2%
$748,418
$682,650
9.6%
37.3%
37.2%
0.3%
Twelve months ended December 31 |
 12
Three months ended Dec 31
Dec 31, 2014
Cash & investments
$128,940
Restricted cash
$359,388
Current assets
$2,105,459
Total assets
$3,214,338
Debt
$1,105,000
Stockholders’
investment
$1,047,015
CASH FLOW DATA
BALANCE SHEET DATA
Other Financial Information
in thousands
Net cash provided by operating activities
Capital expenditures, net
Strong cash flow quarter
Total debt balance $1.105 billion
$500 million, 4.28% average coupon
$605 million drawn on new revolver,
1.29% current rate as of 12/31/14
2014
2013
% Change
$208,104
$ 164,848
26.2%
-68.7%
$4,366
$13,970 |
 13
in thousands
Capital Distribution
•
Capital returned to shareholders during the quarter
•
$57.4 million cash dividend
•
$39.7 million in cash for repurchase activity
•
517,000 shares
•
Average price of $69.41 for shares repurchased
•
Target is to return approximately 90% of net income to shareholders
annually
2009
2010
2011
2012 (a)
2013
Q4 2014
YTD 2014
Net income
$360,830
$387,026
$431,612
$447,007
$415,904
$112,947
$449,711
Capital distribution
Cash dividends paid
$162,865
$168,902
$194,697
$219,313
$220,257
$57,418
$215,008
Share repurchases
266,906
157,381
250,274
255,849
807,449 (b)
39,726
176,645
Subtotal
$429,771
$326,283
$444,971
$475,162
$1,027,706
$97,144
$391,653
Percent of net income
Cash dividends paid
45%
44%
45%
49%
53%
51%
48%
Open market share repurchases
74%
41%
58%
57%
194%
35%
39%
Subtotal
119%
84%
103%
106%
247%
86%
87%
(b) Includes a $500 million accelerated share repurchase.
(a) 2012 Net Income is adjusted to exclude transaction-related gains and expenses. A
reconciliation of adjusted results appears in Appendix A. 2012 Dividends exclude the
fifth dividend payment made during the year. |
 14
A look ahead
Truckload performance is important to our success in 2015
Strategic initiatives in 2015 and beyond
Freightquote integration
Global trade expansion
Sales execution with all types of customers
We will continued to invest in our business
Talent
Technology
Network
Driving towards our long term growth goals
Double digit E.P.S. growth
Growing market share |
 15
Appendix A: 2012 Summarized Adjusted Income Statement
In thousands, except per share amounts
Twelve months ended December 31, 2012
2012 Actual
Non-recurring
Acquisition Impacts
Non-recurring
Divestiture Impacts
Adjusted
Total net revenues
$1,717,571
$1,717,571
Personnel expenses (1)
766,006
-385
-34,207
731,414
Other operating expenses (2)
276,245
-10,225
-379
265,641
Total operating expenses
1,042,251
-10,610
-34,586
997,055
Income from operations
675,320
10,610
34,586
720,516
Investment & other income (3)
283,142
-281,551
1,591
Income before taxes
958,462
10,610
-246,965
722,107
Provision for income taxes
364,658
2,745
-92,303
275,100
Net income
$593,804
7,865
-$154,662
$447,007
Net income per share (diluted)
3.67
2.76
Weighted average shares (diluted)
161,946
185 (4)
92 (5)
161,669
To assist investors in understanding our financial performance, we supplement the financial results
that are generated in accordance with the accounting principles generally accepted in the
United States, or GAAP, with non-GAAP financial measures, including non-GAAP operating
expenses, non-GAAP income from operations, non-GAAP net income and non-GAAP diluted net
income per share. We believe that these non- GAAP measures provide meaningful insight into
our operating performance excluding certain event-specific charges, and provide an alternative
perspective of our results of operations. We use non-GAAP measures to assess our operating
performance for the quarter. Management believes that these non-GAAP financial measures
reflect an additional way of analyzing aspects of our ongoing operations that, when viewed with
our GAAP results, provides a more complete understanding of the factors and trends affecting our business.
1)
The adjustment to personnel consists of $33 million of incremental vesting expense of our equity
awards triggered by the gain on the divestiture of T-Chek. The balance
consists of transaction related bonuses.
2)
The adjustments to other operating expenses reflect fees paid to third parties for: a)
Investment banking fees related to the acquisition of Phoenix b)
External legal and accounting fees related to the acquisitions of Apreo and Phoenix and the
divestiture of T-Chek.
3)
The adjustment to investment and other income reflects the gain from the divestiture of T-Chek. 4)
The adjustment to diluted weighted average shares outstanding relates to the shares of C.H. Robinson
stock issued as consideration paid to the sellers in the acquisition of Phoenix. 5)
The adjustment to diluted weighted average shares outstanding relates to the additional vesting of
performance-based restricted stock as a result of the gain on sale recognized from the
divestiture of T-Chek.
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