chrw-20200128
0001043277false00010432772020-01-282020-01-28


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: January 28, 2020
(Date of earliest event reported)
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C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 000-23189
Delaware 41-1883630
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

14701 Charlson Road
Eden Prairie, Minnesota 55347
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: 952-937-8500

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 par valueCHRWNasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐




Item 2.02 Results of Operations and Financial Condition.

The following information is being "furnished" in accordance with the General Instruction B.2 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Furnished herewith as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein are the text of C.H. Robinson Worldwide, Inc.'s announcement regarding its financial results for the quarter ended December 31, 2019 and its earnings conference call slides.


Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Number  Description
99.1  
99.2  
104The cover page from the Current Report on Form 8-K formatted in Inline XBRL




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

C.H. ROBINSON WORLDWIDE, INC.
By:/s/ Ben G. Campbell
Ben G. Campbell
Chief Legal Officer and Secretary
Date: January 28, 2020




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C.H. Robinson
14701 Charlson Rd.
Eden Prairie, MN 55347
www.chrobinson.com

FOR INQUIRIES, CONTACT:
Robert Houghton, VP of Corporate Finance

FOR IMMEDIATE RELEASE

C.H. Robinson Reports 2019 Fourth Quarter Results
MINNEAPOLIS, MN, January 28, 2020 - C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended December 31, 2019.
Fourth Quarter Key Metrics:
•Total revenues decreased 8.3 percent to $3.8 billion
•Net revenues decreased 18.9 percent to $578.9 million
•Income from operations decreased 46.5 percent to $136.8 million
•Operating margin decreased 1,220 basis points to 23.6 percent
•Diluted earnings per share (EPS) decreased 45.5 percent to $0.73
•Cash flow from operations decreased 19.9 percent to $211.6 million

Full-Year Key Metrics:
•Total revenues decreased 7.9 percent to $15.3 billion
•Net revenues decreased 4.4 percent to $2.6 billion
•Income from operations decreased 13.4 percent to $790.0 million
•Operating margin decreased 320 basis points to 30.5 percent
•Diluted earnings per share (EPS) decreased 11.4 percent to $4.19
•Cash flow from operations increased 5.4 percent to $835.4 million

“Despite a quarter of challenging operating results, I do believe we took important steps in the quarter. Pricing adjustments to reflect the current market enabled us to deliver flat volume in NAST truckload, including a mid-single-digit increase in contractual volume, and 4.5 percent volume growth in LTL,
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healthy market share gains in a quarter where volumes as measured by the Cass Freight Index declined approximately 6 percent. We are starting to see our increased investments in technology drive operating efficiency in our business, including a 330-basis point favorable spread between truckload volume growth and headcount growth in our NAST business,” said Bob Biesterfeld, Chief Executive Officer of C.H. Robinson.
Biesterfeld continued, “While our fourth quarter financial results demonstrate that we are not immune to large cyclical swings in the freight environment, we firmly believe that our continued investments through cycles will drive the alignment between net revenue growth and operating costs needed to drive operating margin expansion through freight cycles over the long term.”
In a separate press release issued today, C.H. Robinson also announced the acquisition of Prime Distribution Services, a leading provider of retail consolidation services in North America. Biesterfeld added, “We are excited about the scale and value-added warehouse capabilities that Prime will bring to our retail consolidation platform. Prime has a strong leadership team that is experienced in retail consolidation and warehouse operations. We are thrilled to welcome the employees, customers and carriers of Prime to C.H. Robinson.”



Fourth Quarter Results Summary

•Total revenues decreased 8.3 percent to $3.8 billion, driven by lower pricing across most transportation service lines.
•Net revenues decreased 18.9 percent to $578.9 million, primarily driven by lower margin in truckload services.
•Operating expenses decreased 3.5 percent to $442.1 million. Personnel expenses decreased 11.9 percent to $299.0 million, driven primarily by declines in performance-based compensation, partially offset by a 1.9 percent increase in average headcount. Selling, general and administrative (“SG&A”) expenses increased 20.3 percent to $143.1 million. The largest contributors to the SG&A expense increase were increased technology spend and purchased services related to accelerating our growth and cost savings initiatives.
•Income from operations totaled $136.8 million, down 46.5 percent from last year due to declining net revenues and increased SG&A expenses. Operating margin of 23.6 percent declined 1,220 basis points.
•Interest and other expenses totaled $10.8 million, which primarily consists of interest expense. The fourth quarter also included a $0.9 million unfavorable impact from currency revaluation.
•The effective tax rate in the quarter was 21.4 percent compared to 23.9 percent last year. The lower effective tax rate was due primarily to one-time items resulting in a benefit of $3.2 million versus the prior year.
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•Net income totaled $99.1 million, down 47.0 percent from a year ago. Diluted EPS of $0.73 decreased 45.5 percent.


Full-Year Results Summary

•Total revenues decreased 7.9 percent to $15.3 billion, driven by declines across most transportation service lines.
•Net revenues decreased 4.4 percent to $2.6 billion, primarily driven by lower margin in truckload services.
•Operating expenses increased 0.2 percent to $1.8 billion. Personnel expenses decreased 3.4 percent to $1.3 billion, driven primarily by declines in performance-based compensation, partially offset by a 2.3 percent increase in average headcount. SG&A expenses increased 10.7 percent to $497.8 million, due primarily to increases in purchased services, particularly commercial off-the-shelf software and occupancy, partially offset by a reduction in bad debt expense.
•Income from operations totaled $790.0 million, down 13.4 percent from last year due to declining net revenues and increased SG&A expenses. Operating margin of 30.5 percent decreased 320 basis points.
•Interest and other expenses totaled $47.7 million, which primarily consists of interest expense. The twelve-month period also included a $4.2 million unfavorable impact from currency revaluation.
•The effective tax rate for the full year was 22.3 percent compared to 24.5 percent in the year-ago period.
•Net income totaled $577.0 million, down 13.2 percent from a year ago. Diluted EPS of $4.19 decreased 11.4 percent.

North American Surface Transportation Results
Summarized financial results of our NAST segment are as follows (dollars in thousands):

Three Months Ended December 31,Twelve Months Ended December 31,
20192018% change20192018% change
Total revenues$2,788,547  $3,050,247  (8.6)%$11,283,692  $12,346,757  (8.6)%
Net revenues390,641  508,690  (23.2)%1,797,369  1,906,261  (5.7)%
Income from operations130,548  230,070  (43.3)%722,763  821,844  (12.1)%


Fourth quarter total revenues for C.H. Robinson's NAST segment totaled $2.8 billion, a decrease of 8.6 percent over the prior year, primarily driven by decreased pricing. NAST net revenues decreased 23.2 percent in the quarter to $390.6 million. Net revenues in truckload decreased 29.6 percent, less than truckload (“LTL”) net revenues decreased 3.4 percent, and intermodal net revenues decreased 3.1 percent
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versus the year-ago period. Excluding the impact of the change in fuel prices, average North America truckload rate per mile charged to customers decreased approximately 11 percent in the quarter, while truckload transportation cost per mile decreased approximately 7.5 percent. Truckload volume was flat in the quarter, as mid-single-digit growth in contractual volume was offset by significant declines in spot market opportunities in the current environment. LTL volumes grew 4.5 percent, and intermodal volumes declined 16 percent versus the prior year. Operating expenses decreased 6.6 percent due to decreased personnel expenses, partially offset by increased SG&A expenses. Income from operations decreased 43.3 percent to $130.5 million, and operating margin declined 1,180 basis points to 33.4 percent. NAST average headcount was down 3.3 percent in the quarter. As a reminder, fourth quarter and full-year NAST results include Robinson Fresh transportation, which was previously reported under the Robinson Fresh segment.

Global Forwarding Results
Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):

Three Months Ended December 31,Twelve Months Ended December 31,
20192018% change20192018% change
Total revenues$600,168  $677,125  (11.4)%$2,327,913  $2,487,744  (6.4)%
Net revenues128,989  142,737  (9.6)%533,976  543,906  (1.8)%
Income from operations15,030  29,782  (49.5)%80,527  91,626  (12.1)%


Fourth quarter total revenues for the Global Forwarding segment decreased 11.4 percent to $600.2 million, primarily driven by lower pricing and volumes in ocean and air. Net revenues decreased 9.6 percent in the quarter to $129.0 million, with the acquisition of The Space Cargo Group (“Space Cargo”) contributing 3 percentage points of net revenue growth in the quarter. Ocean net revenues decreased 10.6 percent driven primarily by lower pricing. Net revenues in air decreased 12.8 percent driven by declines in shipments and pricing. Customs net revenues decreased 3.5 percent, primarily driven by reduced transaction volume. Operating expenses increased 0.9 percent, driven by increased SG&A expenses. Fourth quarter average headcount increased 3.4 percent, with Space Cargo contributing 3.5 percentage points to the growth. Income from operations decreased 49.5 percent to $15.0 million, and operating margin declined 920 basis points to 11.7 percent in the quarter.


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All Other and Corporate Results

Net revenues for Robinson Fresh, Managed Services and Other Surface Transportation are summarized as follows (dollars in thousands):

Three Months Ended December 31,Twelve Months Ended December 31,
Net revenues20192018% change20192018% change
Robinson Fresh$22,907  $27,003  (15.2)%$109,183  $116,283  (6.1)%
Managed Services21,380  20,318  5.2 %83,365  78,789  5.8 %
Other Surface Transportation14,946  15,035  (0.6)%62,417  59,996  4.0 %


Fourth quarter Robinson Fresh net revenues decreased 15.2 percent to $22.9 million. Managed Services net revenues increased 5.2 percent in the quarter. Other Surface Transportation net revenues decreased 0.6 percent to $14.9 million, with the acquisition of Dema Service contributing 9 percentage points of net revenue growth.


Other Income Statement Items
The fourth quarter effective tax rate was 21.4 percent, down from 23.9 percent last year. The lower effective tax rate was due primarily to one-time items resulting in a benefit of $3.2 million versus the prior year. In the fourth quarter, we removed our assertion to indefinitely reinvest earnings of foreign subsidiaries. The resulting increase in income tax expense was almost entirely offset by foreign tax credits. We expect our 2020 full-year effective tax rate to be in the range of 22 to 24 percent.
Interest and other expenses totaled $10.8 million, which primarily consists of interest expense. Interest expense declined in the quarter driven by a reduction in our overall debt balance. The fourth quarter also included a $0.9 million unfavorable impact from currency revaluation.
Diluted weighted average shares outstanding in the quarter were down 1.8 percent due primarily to $67.4 million in share repurchases.


5

Cash Flow Generation and Capital Distribution
Cash from operations totaled $211.6 million in the fourth quarter, down 19.9 percent versus the prior year, primarily due to decreased earnings versus the year-ago period, partially offset by improved working capital performance.
In the fourth quarter, $137.3 million was returned to shareholders, with $69.9 million in cash dividends and $67.4 million in share repurchases. This represents a decrease of 18.5 percent over the prior year.
Capital expenditures totaled $19.5 million in the quarter. We expect full-year 2020 capital expenditures to be between $60 and $70 million, with the majority dedicated to technology.

Outlook
“With a continued focus on lowering our cost to serve and cost to sell, we expect to deliver $100 million in operating expense reduction across the enterprise over the next three years. These initiatives will leverage our technology investments to further optimize our office network and business operations while at the same time continuing to expand the benefits and services we offer to our customers and our carriers. And with nearly 10 million shares still outstanding on our share repurchase authorization, we will continue to opportunistically repurchase our shares to create value for our shareholders,” Biesterfeld stated. “Regardless of the freight environment, we remain firmly committed to leveraging our technology to deliver smarter solutions to our customers and our carriers. We are also firmly committed to the focus areas for our investors, including generating market share gains across all of our service lines, leveraging our technology investments to reduce our operating costs while continuing to deliver industry-leading levels of quality service, and delivering operating margin expansion over time.”




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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 nearly $20 billion in freight under management and 18 million shipments annually, we are the world’s largest logistics platform. 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 more than 119,000 customers and 78,000 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 such 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; 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 Fourth Quarter 2019 Earnings Conference Call
Wednesday, January 29, 2020; 8:30 a.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

We invite call participants to submit questions in advance of the conference call, and we will respond to as many of the questions as we can in the time allowed. To submit your question(s) in advance of the call, please email [email protected].




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Summarized Financial Results
($ in thousands, except per share data)

This table of summary results presents our service line net revenues consistent with our historical presentation and is on an enterprise basis. The service line net revenues in the table differ from the service line net revenues discussed within the segments as our segments have revenues from multiple service lines.

Three Months Ended December 31,Twelve Months Ended December 31,
20192018% change20192018% change
Total revenues$3,793,326  $4,137,908  (8.3)%$15,309,508  $16,631,172  (7.9)%
Net revenues:
  Transportation
     Truckload$281,544  $395,611  (28.8)%$1,348,878  $1,445,916  (6.7)%
     LTL113,605  117,326  (3.2)%477,348  471,275  1.3 %
     Intermodal8,186  8,595  (4.8)%27,670  32,469  (14.8)%
     Ocean73,483  82,234  (10.6)%308,367  312,952  (1.5)%
     Air25,940  30,761  (15.7)%106,777  120,540  (11.4)%
     Customs22,925  23,761  (3.5)%91,828  88,515  3.7 %
     Other logistics services31,522  30,603  3.0 %121,994  122,077  (0.1)%
     Total transportation557,205  688,891  (19.1)%2,482,862  2,593,744  (4.3)%
  Sourcing21,658  24,892  (13.0)%103,448  111,491  (7.2)%
Total net revenues578,863  713,783  (18.9)%2,586,310  2,705,235  (4.4)%
Operating expenses442,057  458,266  (3.5)%1,796,334  1,793,152  0.2 %
Income from operations136,806  255,517  (46.5)%789,976  912,083  (13.4)%
Net income$99,106  $187,150  (47.0)%$576,968  $664,505  (13.2)%
Diluted EPS$0.73  $1.34  (45.5)%$4.19  $4.73  (11.4)%


Our total revenues represent the total dollar value of services and goods we sell to our customers. Net revenues are a non-GAAP financial measure calculated as total revenues less the cost of purchased transportation and related services and the cost of purchased products sourced for resale. We believe net revenues are a useful measure of our ability to source, add value, and sell services and products that are provided by third parties, and we consider net revenues to be our primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our net revenues. The reconciliation of total revenues to net revenues is presented below (in thousands):

 Three Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Revenues:
Transportation$3,570,405  $3,896,750  $14,322,295  $15,515,921  
Sourcing222,921  241,158  987,213  1,115,251  
Total revenues3,793,326  4,137,908  15,309,508  16,631,172  
Costs and expenses:
Purchased transportation and related services3,013,200  3,207,859  11,839,433  12,922,177  
Purchased products sourced for resale201,263  216,266  883,765  1,003,760  
Total costs and expenses3,214,463  3,424,125  12,723,198  13,925,937  
Net revenues$578,863  $713,783  $2,586,310  $2,705,235  

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Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)

Three Months Ended December 31,Twelve Months Ended December 31,
2019201820192018
Revenues:
 Transportation$3,570,405  $3,896,750  $14,322,295  $15,515,921  
 Sourcing222,921  241,158  987,213  1,115,251  
   Total revenues3,793,326  4,137,908  15,309,508  16,631,172  
Costs and expenses:
 Purchased transportation and related services3,013,200  3,207,859  11,839,433  12,922,177  
 Purchased products sourced for resale201,263  216,266  883,765  1,003,760  
 Personnel expenses298,981  339,316  1,298,528  1,343,542  
 Other selling, general, and administrative expenses143,076  118,950  497,806  449,610  
   Total costs and expenses3,656,520  3,882,391  14,519,532  15,719,089  
Income from operations136,806  255,517  789,976  912,083  
Interest and other expense(10,784) (9,456) (47,719) (31,810) 
Income before provision for income taxes126,022  246,061  742,257  880,273  
Provision for income taxes26,916  58,911  165,289  215,768  
Net income$99,106  $187,150  $576,968  $664,505  
Net income per share (basic)$0.73  $1.36  $4.21  $4.78  
Net income per share (diluted)$0.73  $1.34  $4.19  $4.73  
Weighted average shares outstanding (basic)135,997  137,797  136,955  139,010  
Weighted average shares outstanding (diluted)136,621  139,182  137,735  140,405  

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Business Segment Information
(unaudited, dollars in thousands)

NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended December 31, 2019
Total revenues$2,788,547  $600,168  $404,611  $3,793,326  
Net revenues390,641  128,989  59,233  578,863  
Income (loss) from operations130,548  15,030  (8,772) 136,806  
Depreciation and amortization6,384  9,293  9,650  25,327  
Total assets (1)
2,550,010  1,021,592  1,069,458  4,641,060  
Average headcount7,154  4,824  3,562  15,540  
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended December 31, 2018 (2)
Total revenues$3,050,247  $677,125  $410,536  $4,137,908  
Net revenues508,690  142,737  62,356  713,783  
Income (loss) from operations230,070  29,782  (4,335) 255,517  
Depreciation and amortization6,385  8,751  9,191  24,327  
Total assets (1)
2,567,120  969,736  890,556  4,427,412  
Average headcount7,396  4,664  3,183  15,243  

____________________________________________
(1) All cash and cash equivalents are included in All Other and Corporate.
(2) Amounts have been reclassified to reflect the segment reorganization announced in the first quarter of 2019.
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Business Segment Information
(unaudited, dollars in thousands)

NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Twelve Months Ended December 31, 2019
Total revenues$11,283,692  $2,327,913  $1,697,903  $15,309,508  
Net revenues1,797,369  533,976  254,965  2,586,310  
Income (loss) from operations722,763  80,527  (13,314) 789,976  
Depreciation and amortization24,508  36,720  39,221  100,449  
Total assets (1)
2,550,010  1,021,592  1,069,458  4,641,060  
Average headcount7,354  4,766  3,431  15,551  
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Twelve Months Ended December 31, 2018 (2)
Total revenues$12,346,757  $2,487,744  $1,796,671  $16,631,172  
Net revenues1,906,261  543,906  255,068  2,705,235  
Income (loss) from operations821,844  91,626  (1,387) 912,083  
Depreciation and amortization25,290  35,148  36,291  96,729  
Total assets (1)
2,567,120  969,736  890,556  4,427,412  
Average headcount7,387  4,711  3,106  15,204  
____________________________________________
(1) All cash and cash equivalents are included in All Other and Corporate.
(2) Amounts have been reclassified to reflect the segment reorganization announced in the first quarter of 2019.




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Condensed Consolidated Balance Sheets
(unaudited, in thousands)
December 31, 2019December 31, 2018
Assets
   Current assets:
     Cash and cash equivalents$447,858  $378,615  
     Receivables, net of allowance for doubtful accounts1,974,381  2,162,438  
     Contract assets132,874  159,635  
Prepaid expenses and other85,005  52,386  
        Total current assets2,640,118  2,753,074  
 
  Property and equipment, net208,423  228,301  
Right-of-use lease assets310,860  —  
  Intangible and other assets1,481,659  1,602,283  
Total assets$4,641,060  $4,583,658  
Liabilities and stockholders’ investment
  Current liabilities:
     Accounts payable and outstanding checks$1,062,835  $1,063,107  
     Accrued expenses:
        Compensation112,784  153,626  
        Transportation expense101,194  119,820  
        Income taxes12,354  28,360  
        Other accrued liabilities62,706  63,410  
Current lease liabilities61,280  —  
Current portion of debt142,885  5,000  
        Total current liabilities1,556,038  1,433,323  
Long-term debt1,092,448  1,341,352  
Noncurrent lease liabilities259,444  —  
Noncurrent income taxes payable22,354  21,463  
Deferred tax liabilities39,776  35,757  
  Other long-term liabilities270  430  
Total liabilities2,970,330  2,832,325  
Total stockholders’ investment1,670,730  1,595,087  
Total liabilities and stockholders’ investment$4,641,060  $4,427,412  

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Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
Twelve Months Ended December 31,
20192018
Operating activities:
  Net income$576,968  $664,505  
  Depreciation and amortization100,449  96,729  
  Provision for doubtful accounts5,853  15,634  
  Stock-based compensation39,083  87,791  
  Deferred income taxes(2,407) (15,315) 
  Excess tax benefit on stock-based compensation(8,492) (10,388) 
  Other operating activities(3,830) 1,815  
Changes in operating elements, net of acquisitions:
  Receivables208,312  (190,048) 
  Contract assets 26,761  (11,871) 
  Prepaid expenses and other(29,871) 16,029  
  Accounts payable and outstanding checks(17,968) 36,083  
  Accrued compensation(40,757) 47,011  
  Accrued transportation expenses(18,626) 25,175  
  Accrued income taxes(12,636) 21,176  
  Other accrued liabilities8,937  7,200  
  Other assets and liabilities3,643  1,370  
      Net cash provided by operating activities835,419  792,896  
Investing activities:
  Purchases of property and equipment(36,290) (45,000) 
  Purchases and development of software(34,175) (18,871) 
  Acquisitions, net of cash acquired(59,200) (5,315) 
  Other investing activities16,636  (3,622) 
       Net cash used for investing activities(113,029) (72,808) 
Financing activities:
  Proceeds from stock issued for employee benefit plans63,092  51,285  
  Net repurchases of common stock(324,559) (322,255) 
  Cash dividends(277,786) (265,219) 
  Proceeds from long-term borrowings1,298,000  591,012  
  Payments on long-term borrowings(1,505,000) —  
  Proceeds from short-term borrowings185,000  2,674,000  
  Payments on short-term borrowings(90,000) (3,384,000) 
      Net cash used for financing activities(651,253) (655,177) 
Effect of exchange rates on cash(1,894) (20,186) 
      Net change in cash and cash equivalents69,243  44,725  
Cash and cash equivalents, beginning of period378,615  333,890  
Cash and cash equivalents, end of period$447,858  $378,615  
As of December 31,
Operational Data:20192018
  Employees 15,427  15,262  

Source: C.H. Robinson
CHRW-IR
13
Earnings Conference Call – Fourth Quarter 2019 January 29, 2020 Bob Biesterfeld, CEO Mike Zechmeister, CFO Bob Houghton, VP of Corporate Finance 1

 
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; and other risks and uncertainties detailed in our Annual and Quarterly Reports. 2 2

 
Q4 2019 Summary ▪ Fourth quarter results below our long-term targets ▪ Improving volume trends in truckload ▪ Entered a definitive agreement to acquire Prime Distribution Services 3 3

 
Results Q4 2019 in thousands, except per share amounts and headcount Three Months Ended December 31 Twelve Months Ended December 31 2019 2018 % Change 2019 2018 % Change Total Revenues $3,793,326 $4,137,908 (8.3%) $15,309,508 $16,631,172 (7.9%) Total Net Revenues $578,863 $713,783 (18.9%) $2,586,310 $2,705,235 (4.4%) Net Revenue Margin % 15.3% 17.2% (190 bps) 16.9% 16.3% 60 bps Personnel Expenses $298,981 $339,316 (11.9%) $1,298,528 $1,343,542 (3.4%) Selling, General, and Admin $143,076 $118,950 20.3% $497,806 $449,610 10.7% Income from Operations $136,806 $255,517 (46.5%) $789,976 $912,083 (13.4%) Operating Margin % 23.6% 35.8% (1,220 bps) 30.5% 33.7% (320 bps) Depreciation and Amortization $25,327 $24,327 4.1% $100,449 $96,729 3.8% Net Income $99,106 $187,150 (47.0%) $576,968 $664,505 (13.2%) Earnings Per Share (Diluted) $0.73 $1.34 (45.5%) $4.19 $4.73 (11.4%) Average Headcount 15,540 15,243 1.9% 15,551 15,204 2.3% ▪ Decline in net revenues driven primarily by margin compression in truckload ▪ Decrease in personnel expenses driven by a decline in variable compensation expense and partially offset by increased IT spend ▪ The largest contributors to the SG&A expense increase were increased technology spend and purchased services related to accelerating our growth and cost savings initiatives 4 4

 
Q4 2019 Other Income Statement Items ▪ Q4 effective tax rate of 21.4% vs. 23.9% last year ▪ $3.2 million benefit from one-time items ▪ Expect full-year 2020 effective tax rate to be 22.0-24.0% ▪ $0.9 million unfavorable impact from currency revaluation ▪ Interest expense decline due to lower debt levels ▪ Weighted average diluted shares outstanding down 1.8 percent ‹#› 5

 
Q4 2019 Cash Flow and Capital Distribution Cash Flow from Operations Capital Distribution (19.9%) (18.5%) $264.0M $168.4M $211.6M $137.3M Share Repurchases Cash Dividends Q4 2018 Q4 2019 Q4 2018 Q4 2019 ▪ $52.4 million decrease in cash flow ▪ $137.3 million returned to primarily driven by lower net income shareholders ▪ $19.5 million in capital expenditures ▪ $69.9 million in cash dividends ▪ Expect full-year 2020 capital ▪ $67.4 million in share expenditures to be $60-70 million repurchases ▪ 863,096 shares repurchased in the fourth quarter at an average price of $78.07 per share ‹#› 6 ◦ Dividend payout ratio of

 
Q4 2019 Balance Sheet in thousands December 31, December 31, 2019 2018 % Change Accounts Receivable, Net(1) $2,107,255 $2,322,073 (9.3%) Accounts Payable(2) $1,164,029 $1,182,927 (1.6%) Net Operating Working Capital(3) $943,226 $1,139,146 (17.2%) ▪ Total debt balance $1.24 billion ▪ $600 million senior unsecured notes, 4.20% coupon ▪ $500 million private placement debt, 4.28% average coupon ▪ $143 million accounts receivable securitization debt facility, 2.5% borrowing rate ▪ 4.1% weighted average interest rate in the quarter (1) Accounts receivable amount includes contract assets. (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. ‹#› 7

 
First Quarter 2020 Trends – January ▪ January to date total company net revenue per business day has decreased approximately 18 percent when compared to January 2019 ▪ North America truckload volume per business day has increased 6 percent on a year-over-year basis in January 8 8

 
NAST Truckload Cost and Price Change(1) 25% 20% 15% 10% 5% 0% -5% -10% YoY Price Change YoY Cost Change -15% YO Y % CHANGE IN COST AND PRICE -20% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 NAST Q4 Truckload ▪ North American Surface Transportation ("NAST") truckload (1) cost and price change chart represents truckload Volume 0.0% shipments in North America Pricing(1)(2)(3) (11.0%) (1)(2)(3) ▪ Includes the impact of the truckload service line previously Cost (7.5%) reported in the Robinson Fresh segment Net Revenue Margin (1) Growth rates are rounded to the nearest 0.5 percent. (2) Pricing and cost measures exclude the estimated impact of the change in fuel prices. ‹#› 9 (3) Represents price and cost YoY change for North America shipments across all segments.

 
Q4 2019 NAST Results by Service Line Truckload, Less Than Truckload and Intermodal in thousands Three Months Ended December 31 ▪ Year-over-year price Net Revenues 2019 2018 % Change declines in truckload, LTL Truckload $264,191 $375,289 (29.6%) and intermodal LTL $112,213 $116,195 (3.4%) Intermodal $8,217 $8,483 (3.1%) ▪ Net revenue margin Other $6,020 $8,723 (31.0%) compression in truckload Total Net Revenues $390,641 $508,690 (23.2%) and LTL Net Revenue Margin % 14.0% 16.7% (270 bps) ▪ 4.5 percent volume Truckload LTL Intermodal increase(3) in LTL Pricing(1)(2) Cost(1)(2) ▪ Added 3,800 new carriers Volume in the quarter Net Revenue Margin (1) Represents price and cost YoY change for North America shipments across all segments. (2) Pricing and cost measures exclude the estimated impact of the change in fuel prices. ‹#› 10 (3) Growth rate is rounded to the nearest 0.5 percent.

 
Q4 2019 NAST Operating Income Q4 Operating Income Q4 Operating Margin % (43.3%) (1,180 bps) $230.1M 45.2% 33.4% $130.5M Q4 2018 Q4 2019 Q4 2018 Q4 2019 ▪ Decreased net revenues ▪ Average headcount decreased 3.3 percent ▪ Lower variable compensation ‹#› 11

 
Q4 2019 Global Forwarding Results by Service Line Ocean, Air and Customs in thousands Three Months Ended December 31 ▪ Ocean, air and customs net Net Revenues 2019 2018 % Change revenue declines due to Ocean $73,445 $82,113 (10.6%) lower pricing and volume Air $24,448 $28,051 (12.8%) ▪ Space Cargo acquisition net Customs $22,941 $23,762 (3.5%) revenue impact to Global (1) Other $8,155 $8,811 (7.4%) Forwarding : Total Net Revenues $128,989 $142,737 (9.6%) ▪ Ocean +2 ppts Net Revenue Margin % 21.5% 21.1% 40 bps ▪ Air +6 ppts ▪ Customs +1 ppt Ocean Air Pricing Volume Net Revenue Margin ‹#› 12 (1) Growth rates are rounded to the nearest percent.

 
Q4 2019 Global Forwarding Operating Income Q4 Operating Income Q4 Operating Margin % (49.5%) (920 bps) $29.8M 20.9% 11.7% $15.0M Q4 2018 Q4 2019 Q4 2018 Q4 2019 ▪ Decreased net revenues ▪ 3.4 percent increase in average headcount ▪ Space Cargo acquisition contributed 3.5 percentage points to Global Forwarding headcount growth(1) ▪ Increased SG&A expenses ‹#› 13 (1) Growth rates are rounded to the nearest 0.5 percent.

 
Q4 2019 All Other and Corporate Results Robinson Fresh, Managed Services and Other Surface Transportation in thousands Three Months Ended December 31 Net Revenues 2019 2018 % Change Robinson Fresh $22,907 $27,003 (15.2%) Managed Services $21,380 $20,318 5.2% Other Surface Transportation $14,946 $15,035 (0.6%) Total $59,233 $62,356 (5.0%) Robinson Fresh ▪ Case volume decline of 6.0 percent(1) Managed Services ▪ Over $4 billion in annual freight under management Other Surface Transportation ▪ Dema Service acquisition added 9.0 percentage points of net revenue growth(1) ‹#› 14 (1) Growth rates are rounded to the nearest 0.5 percent.

 
Final Comments ▪ Expectations for 2020: ▪ Expect net revenue per load headwinds through the first half of 2020 ▪ Leverage technology investments to drive productivity gains and increasing levels of automation ▪ Three-year $100 million cost reduction initiative ▪ Opportunistic share repurchases ‹#› 15

 
Appendix 16

 
Q4 2019 Transportation Results(1) in thousands Three Months Ended December 31 Twelve Months Ended December 31 Transportation 2019 2018 % Change 2019 2018 % Change Total Revenues $3,570,405 $3,896,750 (8.4%) $14,322,295 $15,515,921 (7.7%) Total Net Revenues $557,205 $688,891 (19.1%) $2,482,862 $2,593,744 (4.3%) Net Revenue Margin % 15.6% 17.7% (210 bps) 17.3% 16.7% 60 bps Transportation Net Revenue Margin % 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 17.4% 17.2% 16.9% 16.3% 15.3% 16.8% 19.7% 17.3% 16.4% 18.6% Q2 15.8% 16.2% 14.9% 15.4% 16.0% 17.5% 19.3% 16.2% 16.2% 18.3% Q3 16.6% 16.4% 15.6% 15.0% 16.2% 18.4% 17.6% 16.4% 16.6% 16.9% Q4 17.6% 16.3% 15.8% 15.1% 15.9% 19.0% 17.2% 16.6% 17.7% 15.6% Total 16.8% 16.5% 15.8% 15.4% 15.9% 17.9% 18.4% 16.6% 16.7% 17.3% ‹#› 17 (1) Includes results across all segments.

 
Q4 2019 NAST Results in thousands, except headcount Three Months Ended December 31 Twelve Months Ended December 31 2019 2018 % Change 2019 2018 % Change Total Revenues $2,788,547 $3,050,247 (8.6%) $11,283,692 $12,346,757 (8.6%) Total Net Revenues $390,641 $508,690 (23.2%) $1,797,369 $1,906,261 (5.7%) Net Revenue Margin % 14.0% 16.7% (270 bps) 15.9% 15.4% 50 bps Income from Operations $130,548 $230,070 (43.3%) $722,763 $821,844 (12.1%) Operating Margin % 33.4% 45.2% (1,180 bps) 40.2% 43.1% (290 bps) Depreciation and Amortization $6,384 $6,385 0.0% $24,508 $25,290 (3.1%) Total Assets $2,550,010 $2,567,120 (0.7%) $2,550,010 $2,567,120 (0.7%) Average Headcount 7,154 7,396 (3.3%) 7,354 7,387 (0.4%) ‹#› 18

 
Q4 2019 Global Forwarding Results in thousands, except headcount Three Months Ended December 31 Twelve Months Ended December 31 2019 2018 % Change 2019 2018 % Change Total Revenues $600,168 $677,125 (11.4%) $2,327,913 $2,487,744 (6.4%) Total Net Revenues $128,989 $142,737 (9.6%) $533,976 $543,906 (1.8%) Net Revenue Margin % 21.5% 21.1% 40 bps 22.9% 21.9% 100 bps Income from Operations $15,030 $29,782 (49.5%) $80,527 $91,626 (12.1%) Operating Margin % 11.7% 20.9% (920 bps) 15.1 % 16.8 % (170 bps) Depreciation and Amortization $9,293 $8,751 6.2% $36,720 $35,148 4.5% Total Assets $1,021,592 $969,736 5.3% $1,021,592 $969,736 5.3% Average Headcount 4,824 4,664 3.4% 4,766 4,711 1.2% ‹#› 19

 
Q4 2019 All Other and Corporate Results in thousands, except headcount Three Months Ended December 31 Twelve Months Ended December 31 2019 2018 % Change 2019 2018 % Change Total Revenues $404,611 $410,536 (1.4%) $1,697,903 $1,796,671 (5.5%) Total Net Revenues $59,233 $62,356 (5.0%) $254,965 $255,068 0.0% Income from Operations ($8,772) ($4,335) NM ($13,314) ($1,387) NM Depreciation and Amortization $9,650 $9,191 5.0% $39,221 $36,291 8.1% Total Assets $1,069,458 $890,556 20.1% $1,069,458 $890,556 20.1% Average Headcount 3,562 3,183 11.9% 3,431 3,106 10.5% ‹#› 20

 
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