Form 8-K C. H. ROBINSON WORLDWIDE For: Apr 27
 | C.H. Robinson 14701 Charlson Rd. Eden Prairie, MN 55347 www.chrobinson.com | ||||
FOR INQUIRIES, CONTACT: Chuck Ives, Director of Investor Relations Email: chuck.ives@chrobinson.com | |||||
FOR IMMEDIATE RELEASE
C.H. Robinson Reports 2022 First Quarter Results
Eden Prairie, MN, April 27, 2022 - C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended March 31, 2022.
First Quarter Key Metrics:
•Gross profits increased 29.1% to $900.5 million
•Adjusted gross profits(1) increased 29.0% to $906.2 million
•Income from operations increased 54.7% to $345.5 million
•Adjusted operating margin(1) increased 630 basis points to 38.1%
•Diluted earnings per share (EPS) increased 60.2% to $2.05
•Cash used by operations improved by $42.8 million to $13.9 million
(1) Adjusted gross profits and adjusted operating margin are Non-GAAP financial measures. The same factors described in this release that impacted these Non-GAAP measures also impacted the comparable GAAP measures. Refer to page 8 for further discussion and a GAAP to Non-GAAP reconciliation.
"In our first quarter, we delivered record quarterly profits," said Bob Biesterfeld, President and Chief Executive Officer of C.H. Robinson. "Sequential improvement was driven by significant operating margin expansion in our North American Surface Transportation business, as we improved the health of our contractual truckload business, continued to grow our truckload volume, and improved the profitability of our LTL business. Our Global Forwarding team continued delivering excellent service to our customers and collaborating with our carriers, driving more business to our platform. And finally, our Robinson Fresh, Managed Services and Europe Surface Transportation businesses all improved their top line growth and operating income on a year-over-year basis."
1
Summary of First Quarter Results Compared to the First Quarter of 2021
•Total revenues increased 41.9% to $6.8 billion, driven primarily by both higher pricing and higher volume across most of our services.
•Gross profits increased 29.1% to $900.5 million. Adjusted gross profits increased 29.0% to $906.2 million, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
•Operating expenses increased 17.0% to $560.7 million. Personnel expenses increased 14.6% to $413.4 million, primarily due to higher headcount, which increased 15.1%. Selling, general and administrative ("SG&A") expenses of $147.4 million increased 24.7%, primarily due to higher purchased and contracted services, a non-recurring legal expense, and increased travel expenses.
•Income from operations totaled $345.5 million, up 54.7% due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 38.1% increased 630 basis points.
•Interest and other income/expense totaled $14.2 million, consisting primarily of $14.5 million of interest expense, which increased $2.3 million versus last year due to a higher average debt balance.
•The effective tax rate in the quarter was 18.4% compared to 18.3% in the first quarter last year.
•Net income totaled $270.3 million, up 56.0% from a year ago. Diluted EPS of $2.05 increased 60.2%.
2
North American Surface Transportation Results
Summarized financial results of our NAST segment are as follows (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Total revenues | $ | 4,114,889 | $ | 3,211,423 | 28.1 | % | |||||||||||
Adjusted gross profits(1) | 506,100 | 421,108 | 20.2 | % | |||||||||||||
| Income from operations | 182,354 | 136,784 | 33.3 | % | |||||||||||||
____________________________________________
(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.
First quarter total revenues for C.H. Robinson's NAST segment totaled $4.1 billion, an increase of 28.1% over the prior year, primarily driven by higher truckload and less-than truckload ("LTL") pricing and an increase in truckload shipments. NAST adjusted gross profits increased 20.2% in the quarter to $506.1 million. Adjusted gross profits in truckload increased 19.5% due to a 15.0% increase in adjusted gross profit per load and a 4.0% increase in shipments. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 20.5% in the quarter, while truckload linehaul cost per mile, excluding fuel surcharges, increased approximately 21.0%, resulting in a 17.0% increase in truckload adjusted gross profit per mile. LTL adjusted gross profits increased 25.5% versus the year-ago period, as adjusted gross profit per order increased 27.0% and LTL volumes declined 1.0%, mainly driven by a normalization of business levels as our LTL volumes in the first quarter of 2021 continued to be bolstered by a few large customers that benefitted from the stay-at-home trend during COVID. NAST overall volume growth was up 1.0% for the quarter. Operating expenses increased 13.9% primarily due to increased salaries, incentive compensation, and technology expenses. Income from operations increased 33.3% to $182.4 million, and adjusted operating margin expanded 350 basis points to 36.0%. NAST average headcount was up 12.4% in the quarter.
3
Global Forwarding Results
Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Total revenues | $ | 2,194,397 | $ | 1,156,039 | 89.8 | % | |||||||||||
Adjusted gross profits(1) | 321,848 | 214,300 | 50.2 | % | |||||||||||||
| Income from operations | 167,638 | 90,589 | 85.1 | % | |||||||||||||
____________________________________________
(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.
First quarter total revenues for the Global Forwarding segment increased 89.8% to $2.2 billion, primarily driven by higher pricing and higher volume in both our ocean and air services, reflecting the strong demand environment, market share gains, and strained capacity. Adjusted gross profits increased 50.2% in the quarter to $321.8 million. Ocean adjusted gross profits increased 63.5%, driven by a 52.5% increase in adjusted gross profit per shipment and a 7.0% increase in volumes. Adjusted gross profits in air increased 33.9% driven by a 10.0% increase in metric tons shipped and a 21.5% increase in adjusted gross profit per metric ton. Customs adjusted gross profits increased 13.5%, driven by a higher mix of value-added services and a 5.0% increase in transaction volume. Operating expenses increased 24.7%, primarily driven by increased salaries, incentive compensation and technology expenses. First quarter average headcount increased 18.5%. Income from operations increased 85.1% to $167.6 million, and adjusted operating margin expanded 980 basis points to 52.1% in the quarter.
4
All Other and Corporate Results
Total revenues and adjusted gross profits for Robinson Fresh, Managed Services and Other Surface Transportation are summarized as follows (dollars in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Total revenues | $ | 506,667 | $ | 436,407 | 16.1 | % | |||||||||||
Adjusted gross profits(1): | |||||||||||||||||
| Robinson Fresh | $ | 30,505 | $ | 24,948 | 22.3 | % | |||||||||||
| Managed Services | 28,082 | 25,556 | 9.9 | % | |||||||||||||
| Other Surface Transportation | 19,661 | 16,468 | 19.4 | % | |||||||||||||
____________________________________________
(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.
First quarter Robinson Fresh adjusted gross profits increased 22.3% to $30.5 million, due to a 7.5% increase in case volume and an increase in integrated supply chain and technology services. Managed Services adjusted gross profits increased 9.9% in the quarter, due to growth in business with both new and existing customers. Other Surface Transportation adjusted gross profits increased 19.4% to $19.7 million, primarily due to a 21.7% increase in Europe truckload adjusted gross profits.
Other Income Statement Items
The first quarter effective tax rate was 18.4%, up from 18.3% last year. We expect our 2022 full-year effective tax rate to be 19 to 21 percent. The first quarter rate is typically lower than our full-year rate due to the tax benefits related to delivery of annual stock-based compensation in the quarter.
Interest and other income/expense totaled $14.2 million, consisting primarily of $14.5 million of interest expense, which increased $2.3 million versus last year due to a higher average debt balance.
Diluted weighted average shares outstanding in the quarter were down 2.6% due primarily to share repurchases over the past twelve months.
5
Cash Flow Generation and Capital Distribution
Cash used by operations totaled $13.9 million in the first quarter, compared to $56.7 million in the first quarter of 2021. The $42.8 million improvement was primarily due to a $97.0 million increase in net income, partially offset by a $288.5 million sequential increase in net operating working capital in the first quarter of 2022, compared to a $251.8 million sequential increase in the first quarter of 2021. The increase in net operating working capital in the first quarter of 2022 resulted primarily from a $479.0 million sequential increase in accounts receivable and contract assets, compared to a $190.4 million sequential increase in total accounts payable and accrued transportation expense.
In the first quarter of 2022, $250.6 million of cash was returned to shareholders, with $177.7 million in total repurchases of common stock and $72.9 million in cash dividends.
Capital expenditures totaled $26.2 million in the quarter. Capital expenditures for 2022 are expected to be $90 million to $100 million, primarily driven by technology investments in our digital platform.
Outlook
"As questions linger about the impact on global economic growth from the Russian invasion of Ukraine, higher energy prices and inflationary pressures, among other impacts, we believe that our global suite of multimodal services, our growing digital platform, and our resilient and flexible non-asset-based business model will continue to deliver strong financial results through the cycle," Biesterfeld stated. "We will continue to benefit from our product and technology investments while delivering on opportunities to integrate our services to help our customers solve their complex global supply chain issues. We are uniquely positioned to orchestrate end-to-end supply chain success for our customers and to help them not only navigate uncertain market conditions, but to succeed in doing so. One of the core values we live by is to evolve constantly. To advance our industry leadership in a more digital environment, we are evolving to a product-led organization by reorienting the intersection of our growth strategy and our engineering and technology teams with the needs of our customers and carriers, and we'll continue to differentiate ourselves in the market by having great people that our customers can rely on. I’m excited by the initial results from the enhancements that were rolled out in February for our Navisphere Carrier product. We’ll continue to build on our customer-centric commitment by continuing to invest in smart, customer and carrier-focused products, and we’ll launch several new products that we believe will benefit our customers and carriers as we continue to build out the most powerful supply chain platform."
6
About C.H. Robinson
C.H. Robinson solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With $28 billion in freight under management and 20 million shipments annually, we are one of the world’s largest logistics platforms. Our global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, we use our information advantage to deliver smarter solutions for our 100,000 customers and 85,000 contract carriers. Our technology is built by and for supply chain experts to bring faster, more meaningful improvements to our customers’ businesses. As a responsible global citizen, we are also proud to contribute millions of dollars to support causes that matter to our company, our Foundation and our employees. For more information, visit us at www.chrobinson.com (Nasdaq: CHRW).
Except for the historical information contained herein, the matters set forth in this 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; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; risks with reliance on technology to operate our business; cyber-security related risks; risks associated with operations outside of the United States; our ability to identify or complete suitable acquisitions; 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 the potential impact of changes in government regulations; our ability to hire and retain a sufficient number of qualified personnel; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of war on the economy; changes to our capital structure; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update such statement to reflect events or circumstances arising after such date. All remarks made during our financial results conference call will be current at the time of the call, and we undertake no obligation to update the replay.
Conference Call Information:
C.H. Robinson Worldwide First Quarter 2022 Earnings Conference Call
Wednesday, April 27, 2022; 5:00 p.m. Eastern Time
Presentation slides and a simultaneous live audio webcast of the conference call may be accessed through the Investor Relations link on C.H. Robinson’s website at www.chrobinson.com.
To participate in the conference call by telephone, please call ten minutes early by dialing: 877-269-7756
International callers dial +1-201-689-7817
7
Adjusted Gross Profit by Service Line
(in thousands)
This table of summary results presents our service line adjusted gross profits on an enterprise basis. The service line adjusted gross profits in the table differ from the service line adjusted gross profits discussed within the segments as our segments have revenues from multiple service lines.
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
Adjusted gross profits(1): | |||||||||||||||||
| Transportation | |||||||||||||||||
| Truckload | $ | 359,787 | $ | 300,023 | 19.9 | % | |||||||||||
| LTL | 152,312 | 121,553 | 25.3 | % | |||||||||||||
| Ocean | 221,463 | 135,510 | 63.4 | % | |||||||||||||
| Air | 61,434 | 45,894 | 33.9 | % | |||||||||||||
| Customs | 27,495 | 24,222 | 13.5 | % | |||||||||||||
| Other logistics services | 55,636 | 51,740 | 7.5 | % | |||||||||||||
| Total transportation | 878,127 | 678,942 | 29.3 | % | |||||||||||||
| Sourcing | 28,069 | 23,438 | 19.8 | % | |||||||||||||
| Total adjusted gross profits | $ | 906,196 | $ | 702,380 | 29.0 | % | |||||||||||
____________________________________________
(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.
8
GAAP to Non-GAAP Reconciliation
(unaudited, in thousands)
Our adjusted gross profit is a non-GAAP financial measure. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. We believe adjusted gross profit is a useful measure 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. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profit. The reconciliation of gross profit to adjusted gross profit is presented below (in thousands):
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Revenues: | |||||||||||||||||
| Transportation | $ | 6,528,351 | $ | 4,560,227 | 43.2 | % | |||||||||||
| Sourcing | 287,602 | 243,642 | 18.0 | % | |||||||||||||
| Total revenues | 6,815,953 | 4,803,869 | 41.9 | % | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Purchased transportation and related services | 5,650,224 | 3,881,285 | 45.6 | % | |||||||||||||
| Purchased products sourced for resale | 259,533 | 220,204 | 17.9 | % | |||||||||||||
| Direct internally developed software amortization | 5,734 | 4,647 | 23.4 | % | |||||||||||||
| Total direct expenses | 5,915,491 | 4,106,136 | 44.1 | % | |||||||||||||
| Gross profit | $ | 900,462 | $ | 697,733 | 29.1 | % | |||||||||||
| Plus: Direct internally developed software amortization | 5,734 | 4,647 | 23.4 | % | |||||||||||||
| Adjusted gross profit | $ | 906,196 | $ | 702,380 | 29.0 | % | |||||||||||
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 comparison of operating margin to adjusted operating margin is presented below:
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Total revenues | $ | 6,815,953 | $ | 4,803,869 | 41.9 | % | |||||||||||
| Operating income | 345,474 | 223,329 | 54.7 | % | |||||||||||||
| Operating margin | 5.1 | % | 4.6 | % | 50 bps | ||||||||||||
| Adjusted gross profit | $ | 906,196 | $ | 702,380 | 29.0 | % | |||||||||||
| Operating income | 345,474 | 223,329 | 54.7 | % | |||||||||||||
| Adjusted operating margin | 38.1 | % | 31.8 | % | 630 bps | ||||||||||||
9
Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | % change | |||||||||||||||
| Revenues: | |||||||||||||||||
| Transportation | $ | 6,528,351 | $ | 4,560,227 | 43.2 | % | |||||||||||
| Sourcing | 287,602 | 243,642 | 18.0 | % | |||||||||||||
| Total revenues | 6,815,953 | 4,803,869 | 41.9 | % | |||||||||||||
| Costs and expenses: | |||||||||||||||||
| Purchased transportation and related services | 5,650,224 | 3,881,285 | 45.6 | % | |||||||||||||
| Purchased products sourced for resale | 259,533 | 220,204 | 17.9 | % | |||||||||||||
| Personnel expenses | 413,361 | 360,835 | 14.6 | % | |||||||||||||
| Other selling, general, and administrative expenses | 147,361 | 118,216 | 24.7 | % | |||||||||||||
| Total costs and expenses | 6,470,479 | 4,580,540 | 41.3 | % | |||||||||||||
| Income from operations | 345,474 | 223,329 | 54.7 | % | |||||||||||||
| Interest and other income/expense, net | (14,174) | (11,260) | 25.9 | % | |||||||||||||
| Income before provision for income taxes | 331,300 | 212,069 | 56.2 | % | |||||||||||||
| Provision for income taxes | 60,952 | 38,764 | 57.2 | % | |||||||||||||
| Net income | $ | 270,348 | $ | 173,305 | 56.0 | % | |||||||||||
| Net income per share (basic) | $ | 2.07 | $ | 1.29 | 60.5 | % | |||||||||||
| Net income per share (diluted) | $ | 2.05 | $ | 1.28 | 60.2 | % | |||||||||||
| Weighted average shares outstanding (basic) | 130,499 | 134,508 | (3.0) | % | |||||||||||||
| Weighted average shares outstanding (diluted) | 132,155 | 135,745 | (2.6) | % | |||||||||||||
10
Business Segment Information
(unaudited, in thousands, except average headcount)
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Three Months Ended March 31, 2022 | ||||||||||||||||||||||||||
| Total revenues | $ | 4,114,889 | $ | 2,194,397 | $ | 506,667 | $ | 6,815,953 | ||||||||||||||||||
Adjusted gross profits(1) | 506,100 | 321,848 | 78,248 | 906,196 | ||||||||||||||||||||||
| Income (loss) from operations | 182,354 | 167,638 | (4,518) | 345,474 | ||||||||||||||||||||||
| Depreciation and amortization | 6,239 | 5,555 | 10,692 | 22,486 | ||||||||||||||||||||||
Total assets (2) | 3,701,164 | 2,940,486 | 879,688 | 7,521,338 | ||||||||||||||||||||||
| Average headcount | 7,348 | 5,610 | 4,300 | 17,258 | ||||||||||||||||||||||
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||
| Total revenues | $ | 3,211,423 | $ | 1,156,039 | $ | 436,407 | $ | 4,803,869 | ||||||||||||||||||
Adjusted gross profits(1) | 421,108 | 214,300 | 66,972 | 702,380 | ||||||||||||||||||||||
| Income (loss) from operations | 136,784 | 90,589 | (4,044) | 223,329 | ||||||||||||||||||||||
| Depreciation and amortization | 6,625 | 5,649 | 11,004 | 23,278 | ||||||||||||||||||||||
Total assets (2) | 3,218,084 | 1,582,967 | 795,572 | 5,596,623 | ||||||||||||||||||||||
| Average headcount | 6,537 | 4,735 | 3,725 | 14,997 | ||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained above. The difference between adjusted gross profits and gross profits is not material.
(2) All cash and cash equivalents are included in All Other and Corporate.
11
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
| March 31, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 242,809 | $ | 257,413 | |||||||
| Receivables, net of allowance for credit loss | 4,391,512 | 3,963,487 | |||||||||
| Contract assets, net of allowance for credit loss | 504,604 | 453,660 | |||||||||
| Prepaid expenses and other | 140,306 | 129,593 | |||||||||
| Total current assets | 5,279,231 | 4,804,153 | |||||||||
| Property and equipment, net of accumulated depreciation and amortization | 139,926 | 139,831 | |||||||||
| Right-of-use lease assets | 297,425 | 292,559 | |||||||||
| Intangible and other assets, net of accumulated amortization | 1,804,756 | 1,791,569 | |||||||||
| Total assets | $ | 7,521,338 | $ | 7,028,112 | |||||||
| Liabilities and stockholders’ investment | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and outstanding checks | $ | 2,066,915 | $ | 1,919,301 | |||||||
| Accrued expenses: | |||||||||||
| Compensation | 121,768 | 201,421 | |||||||||
| Transportation expense | 385,603 | 342,778 | |||||||||
| Income taxes | 143,656 | 100,265 | |||||||||
| Other accrued liabilities | 182,754 | 171,266 | |||||||||
| Current lease liabilities | 68,507 | 66,311 | |||||||||
| Current portion of debt | 572,000 | 525,000 | |||||||||
| Total current liabilities | 3,541,203 | 3,326,342 | |||||||||
| Long-term debt | 1,593,756 | 1,393,649 | |||||||||
| Noncurrent lease liabilities | 244,302 | 241,369 | |||||||||
| Noncurrent income taxes payable | 28,617 | 28,390 | |||||||||
| Deferred tax liabilities | 17,244 | 16,113 | |||||||||
| Other long-term liabilities | 714 | 315 | |||||||||
| Total liabilities | 5,425,836 | 5,006,178 | |||||||||
| Total stockholders’ investment | 2,095,502 | 2,021,934 | |||||||||
| Total liabilities and stockholders’ investment | $ | 7,521,338 | $ | 7,028,112 | |||||||
12
Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 270,348 | $ | 173,305 | |||||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||||||
| Depreciation and amortization | 22,486 | 23,278 | |||||||||
| Provision for credit losses | 1,672 | (1,250) | |||||||||
| Stock-based compensation | 24,606 | 23,989 | |||||||||
| Deferred income taxes | (2,916) | 3,869 | |||||||||
| Excess tax benefit on stock-based compensation | (4,965) | (7,853) | |||||||||
| Other operating activities | 42 | 488 | |||||||||
| Changes in operating elements, net of acquisitions: | |||||||||||
| Receivables | (424,025) | (437,862) | |||||||||
| Contract assets | (51,439) | (43,495) | |||||||||
| Prepaid expenses and other | (11,924) | (26,692) | |||||||||
| Accounts payable and outstanding checks | 143,980 | 206,237 | |||||||||
| Accrued compensation | (79,885) | (27,977) | |||||||||
| Accrued transportation expenses | 42,825 | 24,044 | |||||||||
| Accrued income taxes | 48,502 | 34,087 | |||||||||
| Other accrued liabilities | 8,099 | (1,959) | |||||||||
| Other assets and liabilities | (1,334) | 1,099 | |||||||||
| Net cash used in operating activities | (13,928) | (56,692) | |||||||||
| Investing activities: | |||||||||||
| Purchases of property and equipment | (10,046) | (5,435) | |||||||||
| Purchases and development of software | (16,183) | (8,071) | |||||||||
| Other investing activities | 2,250 | — | |||||||||
| Net cash used for investing activities | (23,979) | (13,506) | |||||||||
| Financing activities: | |||||||||||
| Proceeds from stock issued for employee benefit plans | 25,366 | 17,709 | |||||||||
| Total repurchases of common stock | (177,741) | (150,916) | |||||||||
| Cash dividends | (72,855) | (70,030) | |||||||||
| Proceeds from long-term borrowings | 200,000 | — | |||||||||
| Proceeds from short-term borrowings | 1,062,000 | 816,000 | |||||||||
| Payments on short-term borrowings | (1,015,000) | (566,000) | |||||||||
| Net cash provided by (used for) financing activities | 21,770 | 46,763 | |||||||||
| Effect of exchange rates on cash | 1,533 | (2,750) | |||||||||
| Net change in cash and cash equivalents | (14,604) | (26,185) | |||||||||
| Cash and cash equivalents, beginning of period | 257,413 | 243,796 | |||||||||
| Cash and cash equivalents, end of period | $ | 242,809 | $ | 217,611 | |||||||
| As of March 31, | |||||||||||
| Operational Data: | 2022 | 2021 | |||||||||
| Employees | 17,640 | 15,105 | |||||||||
Source: C.H. Robinson
CHRW-IR
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1 Q1 2022 April 27, 2022 Earnings Presentation Bob Biesterfeld, CEO Arun Rajan, CPO 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; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; risks with reliance on technology to operate our business; cyber- security related risks; risks associated with operations outside of the United States; our ability to identify or complete suitable acquisitions; 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 the potential impact of changes in government regulations; our ability to hire and retain a sufficient number of qualified personnel; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of war on the economy; changes to our capital structure; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports. 2©2022 C.H. Robinson Worldwide, Inc. All Rights Reserved.
Q1 Highlights: Record Quarterly Financial Results 3 • Grew operating margins year-over-year in all segments • Improved the health of our contractual Truckload portfolio and grew Truckload volume 4% year-over-year • Truckload AGP per mile improved in each month of the quarter, through our repricing efforts and a softening in the cost of purchased transportation • Global Forwarding continues to deliver excellent service to our customers and collaborate with our carriers, driving more business to our platform $6.8B Total Revenues +42% Y/Y $906.2M Adj. Gross Profit +29% Y/Y $345.5M Income from Ops. +55% Y/Y $2.05 Diluted Earnings/Share +60% Y/Y Q1 2022
All Other & Corporate ■ Robinson Fresh case volume up 7.5% in Q1 ■ Managed Services Q1 FUM (2) up 18% Y/Y ■ Europe Surface Transportation continues to grow truckload AGP Global Forwarding (GF) ■ Eight consecutive quarters of year-over-year growth in total revenues, AGP and operating income ■ Continuing to add new commercial relationships with strategic, multi- national customers ■ Continuing to make investments in technology, data and analytics & our global network North American Surface Transportation (NAST) ■ Load-to-truck ratios declined in February & March as more capacity entered the market and demand began to soften in March ■ Repriced more of our contractual portfolio, and continued to focus on profitable market share ■ Adjusted gross profit (AGP) per load continued to improve in both TL and LTL ■ Digital investments continue to deliver customer value and unlock growth ■ Q1 volume delivered through real-time, dynamic pricing tools up 65% Y/Y Segment Highlights: Diversified, Global Suite of Services 4 Q1 2022 Adjusted Gross Profit (1) +20.2% Y/Y +16.8% Y/Y +50.2% Y/Y 1. 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. 2. FUM = Freight under Management Over half of TTM total revenues and approximately half of TTM transportation adjusted gross profits came from customers to whom we provide both surface transportation and global forwarding services.
NAST Q1’22 Results by Service 5 ▪ Truckload volume up 4.0% (2) ▪ Truckload AGP per shipment increased 15.0% primarily due to a higher AGP per shipment on contractual volume (2) ▪ Continued to reprice contractual portfolio with focus on profitable market share ▪ LTL volume down 1.0% and AGP per order increased 27.0% (2) ▪ 444,000 fully automated truckload bookings in Q1 ▪ Added 11,300 new carriers in Q1 1Q22 1Q21 %▲ Truckload (“TL”) $334.9 $280.3 19.5% Less than Truckload (“LTL”) $150.7 $120.1 25.5% Other $20.4 $20.7 (1.2)% Total Adjusted Gross Profits $506.1 $421.1 20.2% Adjusted Gross Profit Margin % 12.3% 13.1% (80 bps) Adjusted Gross Profit (1) ($ in millions) 1. 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. 2. Growth rates are rounded to the nearest 0.5 percent.
Truckload Price and Cost Change (1)(2)(3) 6 Truckload Q1 Volume(2)(4) +4.0% Pricing(1)(2)(3) +20.5% Cost(1)(2)(3) +21.0% Adjusted Gross Profit(4) +19.5% (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. • 60% / 40% truckload contractual to transactional volume mix, up from 55% / 45% in Q1 last year • Average routing guide depth of 1.7 in Managed Services business vs. 1.7 in Q1 last year; however, it declined throughout Q1 to 1.5 at the end of March (3) Pricing and cost measures exclude fuel surcharges and costs. (4) Truckload volume and adjusted gross profit growth represents YoY change for NAST truckload. Yo Y % C ha ng e in P ric e an d C os t YoY Price Change YoY Cost Change 2016 2017 2018 2019 2020 2021 2022 -20% -10% 0% 10% 20% 30% 40% 50%
Improving the Health of our Truckload Portfolio 7 • AGP $ per Truckload Shipment reflects business performance better than AGP Margin % (1) • While NAST AGP Margin % has declined 90 bps compared to Q1 2020, AGP $ per Truckload Shipment has grown 42% over the same timeframe N A ST A dj us te d G ro ss P ro fit $ p er T ru ck lo ad Sh ip m en t N A ST A djusted G ross Profit M argin % NAST Adjusted Gross Profit $ per Truckload Shipment NAST Adjusted Gross Profit Margin % Average AGP $ per Truckload Shipment 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 1. 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.
Global Forwarding Q1’22 Results by Service 8 1Q22 1Q21 %▲ Ocean $221.4 $135.4 63.5% Air $60.6 $45.2 33.9% Customs $27.5 $24.2 13.5% Other $12.4 $9.4 31.3% Total Adjusted Gross Profits $321.8 $214.3 50.2% Adjusted Gross Profit Margin % 14.7% 18.5% (380 bps) Adjusted Gross Profit (1) ($ in millions) ▪ Ocean AGP increased due to a 52.5% increase in AGP per shipment and a 7.0% increase in shipments (2) ▪ Ocean market impacted by strong demand and capacity shortages ▪ Air AGP increased due to a 21.5% increase in AGP per metric ton shipped(2) and a 10.0% increase in metric tons shipped ▪ Air market impacted by strong demand, and air cargo capacity continues to be strained ▪ Customs AGP increased due to a higher mix of value-added services and a 5.0% increase in volume (2) 1. 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. 2. Growth rates are rounded to the nearest 0.5 percent.
All Other & Corporate Q1’22 Results 9 Robinson Fresh ▪ 7.5% increase in case volume, across all verticals (2) ▪ Increased revenue tied to integrated supply chain and technology services Managed Services ▪ AGP growth driven by new customer business, as well as growth with existing customers ▪ Total freight under management up 18% to $1.7B in Q1 (2) Other Surface Transportation ▪ 21.7% increase in Europe truckload AGP 1Q22 1Q21 %▲ Robinson Fresh $30.5 $24.9 22.3% Managed Services $28.1 $25.6 9.9% Other Surface Transportation $19.7 $16.5 19.4% Total $78.2 $67.0 16.8% Adjusted Gross Profit (1) ($ in millions) 1. 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. 2. Growth rates are rounded to the nearest 0.5 percent.
Tech-Plus Strategy: Unlocking Growth Across Suite of Services • Diversified, global suite of services • Technology built by and for supply chain experts • Proven, tailored, market-leading solutions that drive better outcomes • Delivering smarter solutions, through our data, scale and experience • Providing clear information advantage that help our carriers and clients win/succeed • The “Plus” is delivered through people you can rely on as an extension of your team 10 Best-in-class solutions delivered through a global network of experts that you can rely on
Delivering Compelling Products & Solutions 11 • 65% year-over-year increase in volume driven through our real- time, dynamic pricing tools in Q1 • Following enhancements to Navisphere Carrier in early February: ◦ Visits per day to Navisphere Carrier grew 45% from January to March ◦ Carriers booking loads via Navisphere Carrier increased 51% from January to March ◦ Loads booked digitally by carriers increased 100% from January to March and 346% year-over-year in March • 444,000 fully automated bookings in NAST truckload business, an increase of 123% compared to Q1 2021; $831 million of revenue through this digital channel
Financial Performance: Record Quarterly Results 12 ■ Changes in cash flow have been driven primarily by increases in operating working capital, partially offset by improvement in net income ■ When the cost of purchased transportation (inclusive of fuel surcharges), and subsequently prices, come down from their current all-time highs, we expect a commensurate benefit to net operating working capital and operating cash flow
Capital Allocation Priorities: Balanced and Opportunistic 13 ■ Prioritize high-return, close-in investments to drive organic growth ■ Opportunistically use M&A to drive total shareholder return by advancing tools, services and global skillset ■ Maintain $600M-750M of liquid assets (cash & equivalents) ■ Stagger debt maturities to reduce refinancing risk ■ Grow dividends in alignment with long-term EBITDA ■ Opportunistic approach to share buybacks ■ 20.0M of share repurchase authorization remaining ■ Optimize WACC by maintaining investment grade credit ratings ■ Efficiently repatriate cash, resulting in holding only the cash needed to fund operations Optimize Balance SheetSustain & Drive Growth Min Risk, Max Cash Usage Return Capital Capital Distribution ($M) Share Repurchases Cash Dividends ■ $251 million of cash returned to shareholders in Q1 2022, up 13.4% ■ Equates to 93% of our Q1 net income ■ Uninterrupted dividends, without decline, paid for more than 20 years ■ 1.7 million shares repurchased at an average price of $101.93
Sustainable Growth Strategy 14 Take Share Grow Globally Digital Commitment Optimize Processes Spend Strategically Leverage position as world’s most powerful supply chain platform to sustainably outpace industry growth ■ Expand Global Forwarding business as provider of choice for multinational customers ■ Leverage scale to exploit secularly growing market and unique global footprint ■ Grow capabilities and presence in key trade lanes and geographies ■ Provide customers & carriers the digital products they value ■ Leverage data, scale and information advantage ■ Bring meaningful products, features and insights to both sides of the two-sided marketplace ■ Digitize more internal tools and processes ■ Free customer and carrier reps’ capacity for higher-value touchpoints ■ Drive more revenue synergy across business units ■ Support organic growth by leveraging strong consistent cash flow ■ Modernize core for future integrations ■ Complement with opportunistic M&A ■ Leverage integrated service model to take share and expand globally ■ Utilize “Tech Plus” strategy to out service competitors ■ Expand modal capabilities
2022 Priorities 15 • Continue driving long-term diversified growth across an intentional combination of modes, services and geographic footprint • Advance our tech-plus strategy to enhance, expand and leverage the most connected supply chain platform and deliver best-in-class, comprehensive solutions for our customers and carriers • Maintain a healthy financial profile and attractive margins across the business by leveraging technology advantages and competitive pricing • Uphold balanced approach to capital allocation to drive growth and return capital to shareholders • Invest in talent and capabilities, as customers and carriers rely on our teams and digital products
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Q1 2022 Transportation Results(1) 17 Three Months Ended March 31 $ in thousands 2022 2021 % Change Total Revenues $6,528,351 $4,560,227 43.2 % Total Adjusted Gross Profits(2) $878,127 $678,942 29.3 % Adjusted Gross Profit Margin % 13.5 % 14.9 % (140 bps) Transportation Adjusted Gross Profit Margin % 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q1 16.3% 15.3% 16.8% 19.7% 17.3% 16.4% 18.6% 15.3% 14.9% 13.5% Q2 15.4% 16.0% 17.5% 19.3% 16.2% 16.2% 18.3% 17.5% 13.8% Q3 15.0% 16.2% 18.4% 17.6% 16.4% 16.6% 16.9% 14.4% 13.7% Q4 15.1% 15.9% 19.0% 17.2% 16.6% 17.7% 15.6% 14.3% 13.3% Total 15.4% 15.9% 17.9% 18.4% 16.6% 16.7% 17.3% 15.3% 13.8% 1. Includes results across all segments. 2. Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material.
Q1 2022 NAST Results 181. Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material. Three Months Ended March 31 $ in thousands 2022 2021 % Change Total Revenues $4,114,889 $3,211,423 28.1 % Total Adjusted Gross Profits(1) $506,100 $421,108 20.2 % Adjusted Gross Profit Margin % 12.3 % 13.1 % (80 bps) Income from Operations $182,354 $136,784 33.3 % Adjusted Operating Margin % 36.0 % 32.5 % 350 bps Depreciation and Amortization $6,239 $6,625 (5.8) % Total Assets $3,701,164 $3,218,084 15.0 % Average Headcount 7,348 6,537 12.4 %
Q1 2022 Global Forwarding Results 191. Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material. Three Months Ended March 31 $ in thousands 2022 2021 % Change Total Revenues $2,194,397 $1,156,039 89.8 % Total Adjusted Gross Profits(1) $321,848 $214,300 50.2 % Adjusted Gross Profit Margin % 14.7 % 18.5 % (380 bps) Income from Operations $167,638 $90,589 85.1 % Adjusted Operating Margin % 52.1 % 42.3 % 980 bps Depreciation and Amortization $5,555 $5,649 (1.7) % Total Assets $2,940,486 $1,582,967 85.8 % Average Headcount 5,610 4,735 18.5 %
Q1 2022 All Other and Corporate Results 201. Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material. Three Months Ended March 31 $ in thousands 2022 2021 % Change Total Revenues $506,667 $436,407 16.1 % Total Adjusted Gross Profits(1) $78,248 $66,972 16.8 % Income from Operations -$4,518 -$4,044 NM Depreciation and Amortization $10,692 $11,004 (2.8) % Total Assets $879,688 $795,572 10.6 % Average Headcount 4,300 3,725 15.4 %
21 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: Three Months Ended March 31 $ in thousands 2022 2021 Revenues: Transportation $6,528,351 $4,560,227 Sourcing 287,602 243,642 Total Revenues 6,815,953 4,803,869 Costs and expenses: Purchased transportation and related services 5,650,224 3,881,285 Purchased produced sourced for resale 259,533 220,204 Direct internally developed software amortization 5,734 4,647 Total direct costs 5,915,491 4,106,136 Gross profit & Gross profit margin $900,462 13.2 % $697,733 14.5 % Plus: Direct internally developed software amortization 5,734 4,647 Adjusted gross profit/Adjusted gross profit margin $906,196 13.3 % $702,380 14.6 % Non-GAAP Reconciliations
Non-GAAP Reconciliations 22 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: Three Months Ended March 31 $ in thousands 2022 2021 Total Revenues $ 6,815,953 $ 4,803,869 Operating income 345,474 223,329 Operating margin 5.1 % 4.6 % Adjusted gross profit $ 906,196 $ 702,380 Operating income 345,474 223,329 Adjusted operating margin 38.1 % 31.8 %
