C.H. Robinson Reports Fourth Quarter Results Business Wire MINNEAPOLIS -- February 5, 2013 C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended December 31, 2012. Summarized financial results for the quarter ended December 31 are as follows (dollars in thousands, except per share data): Three months ended Twelve months ended December 31, December 31, % % 2012 2011 change 2012 2011 change Total revenues $ 2,970,876 $ 2,568,284 15.7 % $ 11,359,113 $ 10,336,346 9.9 % Net revenues: Transportation Truck $ 328,273 $ 306,443 7.1 % $ 1,284,280 $ 1,236,611 3.9 % Intermodal 9,011 10,189 -11.6 % 38,815 41,189 -5.8 % Ocean 33,707 17,022 98.0 % 84,924 66,873 27.0 % Air 15,948 8,811 81.0 % 44,444 39,371 12.9 % Other logistics 22,202 16,207 37.0 % 75,674 59,872 26.4 % services Total 409,141 358,672 14.1 % 1,528,137 1,443,916 5.8 % transportation Sourcing 30,543 27,431 11.3 % 136,438 128,448 6.2 % Payment 4,948 15,282 -67.6 % 52,996 60,294 -12.1 % Services Total net 444,632 401,385 10.8 % 1,717,571 1,632,658 5.2 % revenues Operating 311,028 229,430 35.6 % 1,042,251 939,928 10.9 % expenses Income from 133,604 171,955 -22.3 % 675,320 692,730 -2.5 % operations Investment and 282,166 1,373 20451.1 % 283,142 1,974 14243.6 % other income Net income $ 256,392 $ 109,214 134.8 % $ 593,804 $ 431,612 37.6 % Diluted EPS $ 1.58 $ 0.67 135.8 % $ 3.67 $ 2.62 40.1 % Adjusted Results Excluding Non-Recurring Transaction Impacts (a reconciliation of these adjusted Non-GAAP measures is described in detail in Note 1 to the condensed consolidated financial information attached hereto) Adjusted 2011 (GAAP) Adjusted 2011 (GAAP) Income from $ 177,311 $ 171,955 3.1 % $ 720,516 $ 692,730 4.0 % operations Net income 108,571 109,214 -0.6 % 447,007 431,612 3.6 % Diluted EPS $ 0.68 $ 0.67 1.5 % $ 2.76 $ 2.62 5.3 % On October 1, 2012, we completed the acquisition of Apreo Logistics S.A. (“Apreo”), a freight forwarder based in Warsaw, Poland. On November 1, 2012, we completed the acquisition of Phoenix International Freight Services, Ltd. (“Phoenix”), an international freight forwarder based in Chicago, Illinois. The Phoenix acquisition was reported on a Form 8-K filed on November 1, 2012, as amended on Form 8-K/A filed on January 14, 2013. The purchase price allocations for both acquisitions, as reflected in the attached condensed consolidated financial information, are considered preliminary and subject to revision. On October 16, 2012, we completed the divestiture of substantially all of our T-Chek Systems Payment Services business (“T-Chek”). The Form 8-K, announcing this transaction, filed on October 17, 2012, includes historical net revenues and income from operations for T-Chek. In the fourth quarter of 2011, T-Chek had net revenues of $12.5 million and income from operations of $6.4 million. Our truck net revenues, which consist of truckload and less-than-truckload (“LTL”) services, increased 7.1 percent in the fourth quarter of 2012. Our truckload volumes increased approximately 12 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. Our North American truckload volumes increased eight percent. We estimate that our acquisition of Apreo contributed approximately four percent to our volume growth in the fourth quarter of 2012. The Apreo business has a large number of short haul shipments in Poland. Our truckload net revenue margin decreased in the fourth quarter of 2012 compared to the fourth quarter of 2011, due to increased cost per mile. In North America, excluding the estimated impacts of the change in fuel, our average truckload rate per mile charged to our customers increased approximately one percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. In North America, our truckload transportation costs increased approximately two percent, excluding the estimated impacts of the change in fuel. Our LTL net revenues increased approximately 15 percent. The increase was driven by an increase in total shipments of approximately 16 percent, partially offset by decreased net revenue margin. Our intermodal net revenues decreased 11.6 percent in the fourth quarter of 2012. This was due to decreased net revenue margin, offset partially by volume growth. Our net revenue margin decline was due to a change in our mix of business and increased cost of capacity. Our ocean transportation net revenues increased 98.0 percent in the fourth quarter of 2012. Excluding the estimated impact of two months of Phoenix operations, our ocean transportation net revenues increased approximately three percent in the fourth quarter of 2012. This increase, excluding Phoenix, was due to increased pricing, partially offset by decreased volumes. Our air transportation net revenues increased 81.0 percent in the fourth quarter of 2012. Excluding the estimated impact of two months of Phoenix operations, we estimate that air transportation net revenues increased 19 percent in the fourth quarter of 2012. This increase, excluding Phoenix, was due to decreased cost of capacity and increased pricing, partially offset by decreased volumes. Other logistics services net revenues, which include transportation management services, customs, warehousing, and small parcel, increased 37.0 percent in the fourth quarter of 2012. Excluding Phoenix, we estimate that other logistics services net revenues increased approximately 15 percent in the fourth quarter of 2012. This was primarily due to transaction increases in our transportation management and customs services. Sourcing net revenues increased 11.3 percent in the fourth quarter of 2012. This was due to increased net revenue margin. Our payment services net revenues decreased 67.6 percent in the fourth quarter of 2012 due to the T-Chek divestiture. We have recorded a gain of $281.6 million related to this divestiture in the fourth quarter. For the fourth quarter, operating expenses increased 35.6 percent to $311.0 million in 2012 from $229.4 million in 2011.This was due to an increase of 37.8 percent in personnel expense and an increase of 30.0 percent in other selling, general, and administrative expenses. For the fourth quarter, operating expenses as a percentage of net revenues increased to 70.0 percent in 2012 from 57.2 percent in 2011. During the fourth quarter of 2012, operating expenses grew faster than net revenues due to the increased performance-based stock vesting expense as a result of the sale of T-Chek. Excluding certain non-recurring items from acquisitions and divestitures, adjusted operating expenses increased 16.5 percent in the fourth quarter of 2012 compared to the fourth quarter of 2011. This includes an increase in adjusted personnel expenses of 16.7 percent and an increase in adjusted selling, general and administrative expenses of 16.1 percent. During the fourth quarter of 2012, adjusted operating expenses grew faster than net revenues primarily as a result of the acquisition of Phoenix. Phoenix has a higher operating expense to net revenue ratio than C.H. Robinson. Our adjusted personnel expense increase was driven by an increase in our average headcount of approximately 20 percent, partially offset by declines in various incentive plans that are designed to keep expenses variable based on growth in earnings. Adjusted other operating expense growth was driven primarily by an increase in amortization of intangible assets acquired, travel, and warehouse expenses. Founded in 1905, C.H. Robinson Worldwide, Inc., is one of the largest non-asset based third party logistics companies in the world. C.H. Robinson is a global provider of multimodal transportation services and logistics solutions, currently serving over 42,000 active customers through a network of offices in North America, South America, Europe, Asia, and Australia. C.H. Robinson maintains one of the largest networks of motor carrier capacity in North America and works with approximately 56,000 transportation providers worldwide. 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; 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; the impact of war on the economy; 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. Non-GAAP vs. GAAP Financial Measures 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, including those set forth in this release, 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. A reconciliation of adjusted results, reflecting the exclusion of certain non-recurring transaction impacts, to our GAAP results is set forth in Note 1 to the attached Condensed Consolidated Financial Information. Conference Call Information: C.H. Robinson Worldwide Fourth Quarter 2012 Earnings Conference Call Tuesday February 5, 2013 5:00 p.m. Eastern Time The call will be limited to 60 minutes, including questions and answers. 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: 877-941-6010 Callers should reference the conference ID, which is 4594691 Webcast replay available through Investor Relations link at www.chrobinson.com Telephone audio replay available until 12:59 a.m. Eastern Time on February 8: 800-406-7325; passcode: 4594691# CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share data) Three months ended Twelve months ended December 31, December 31, 2012 2011 2012 2011 Revenues: Transportation $ 2,585,930 $ 2,200,258 $ 9,685,415 $ 8,740,524 Sourcing 379,479 352,744 1,620,183 1,535,528 Payment Services 5,467 15,282 53,515 60,294 Total revenues 2,970,876 2,568,284 11,359,113 10,336,346 Costs and expenses: Purchased transportation and 2,176,789 1,841,586 8,157,278 7,296,608 related services Purchased products 348,936 325,313 1,483,745 1,407,080 sourced for resale Purchased payment 519 - 519 - services Personnel expenses 226,042 164,062 766,006 696,233 Other selling, general, and 84,986 65,368 276,245 243,695 administrative expenses Total costs and 2,837,272 2,396,329 10,683,793 9,643,616 expenses Income from 133,604 171,955 675,320 692,730 operations Investment and other 282,166 1,373 283,142 1,974 income Income before provision for income 415,770 173,328 958,462 694,704 taxes Provision for income 159,378 64,114 364,658 263,092 taxes Net income $ 256,392 $ 109,214 $ 593,804 $ 431,612 Net income per share $ 1.59 $ 0.67 $ 3.68 $ 2.63 (basic) Net income per share $ 1.58 $ 0.67 $ 3.67 $ 2.62 (diluted) Weighted average shares outstanding 160,880 162,919 161,557 164,114 (basic) Weighted average shares outstanding 161,799 163,825 161,946 164,741 (diluted) CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands) December 31, December 31, 2012 2011 Assets Current assets: Cash and cash equivalents $ 210,019 $ 373,669 Receivables, net 1,412,136 1,189,637 Other current assets 50,135 48,237 Total current assets 1,672,290 1,611,543 Property and equipment, net 149,851 126,830 Intangible and other assets 982,084 399,668 Total Assets $ 2,804,225 $ 2,138,041 Liabilities and stockholders’ investment Current liabilities: Accounts payable and outstanding checks $ 707,476 $ 704,734 Accrued compensation 103,343 117,541 Other accrued expenses 167,752 54,357 Current portion of debt 253,646 - Total current liabilities 1,232,217 876,632 Long term liabilities 67,636 12,935 Total liabilities 1,299,853 889,567 Total stockholders’ investment 1,504,372 1,248,474 Total liabilities and stockholders’ investment $ 2,804,225 $ 2,138,041 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands, except operational data) Twelve months ended December 31, 2012 2011 Operating activities: Net income $ 593,804 $ 431,612 Stock-based compensation 59,381 38,601 Depreciation and amortization 38,090 32,498 Provision for doubtful accounts 10,459 9,052 Gain on divestiture of T-Chek (281,551 ) - Other non-cash expenses, net (10,721 ) 7,363 Net changes in operating elements 50,880 (89,414 ) Net cash provided by operating activities 460,342 429,712 Investing activities: Purchases of property and equipment (36,096 ) (35,932 ) Purchases and development of software (14,560 ) (16,874 ) Sale of T-Chek, net of cash sold 274,802 - Cash paid for acquisitions, net of cash acquired (583,631 ) - Sales/maturities of available-for-sale - 9,311 securities Restricted cash - 5,000 Other 419 182 Net cash used for investing activities (359,066 ) (38,313 ) Financing activities: Borrowings on line of credit 738,051 - Repayments on line of credit (489,688 ) - Payment of contingent purchase price (12,661 ) (4,318 ) Net repurchases of common stock (236,981 ) (231,338 ) Excess tax benefit on stock-based compensation 12,294 15,255 Cash dividends (275,353 ) (194,697 ) Net cash used for financing activities (264,338 ) (415,098 ) Effect of exchange rates on cash (588 ) (1,239 ) Net change in cash and cash equivalents (163,650 ) (24,938 ) Cash and cash equivalents, beginning of period 373,669 398,607 Cash and cash equivalents, end of period $ 210,019 $ 373,669 As of December 31, 2012 2011 Operational Data: Employees 10,929 8,353 Note 1. Use of Non-GAAP Financial Measures To provide investors with information to assist them in assessing our financial results on a comparable basis with historical results, we have provided financial measures in this press release that exclude the effects of certain non-recurring items related to recent acquisition and divestiture activities. Throughout this release, the term “Reported” refers to information prepared in accordance with GAAP, the term “Non-Recurring Acquisition Impact” refers to items related to the acquisitions of Phoenix and Apreo, the term “Non-Recurring Divestiture Impact” refers to items related to the divestiture of T-Chek, and the term “Adjusted” refers to non-GAAP financial information, adjusted to exclude the Non-Recurring Acquisition Impact and the Non-Recurring Divestiture Impact. A reconciliation of our reported results to adjusted results for the quarter and year ended December 31 are as follows (dollars in thousands, except per share data): Three months ended December 31, 2012 Non- Non- Recurring Recurring Acquisition Divestiture Reported Impact Impact Adjusted Net revenues $ 444,632 $ 444,632 Operating expenses Personnel expenses ^ 226,042 (385 ) (34,207 ) 191,450 (1) Other selling, general and administrative 84,986 (8,736 ) (379 ) 75,871 expenses ^(2) Total operating 311,028 (9,121 ) (34,586 ) 267,321 expenses Income from operations 133,604 9,121 34,586 177,311 Investment and other 282,166 (281,551 ) 615 income ^(3) Income before provision for income 415,770 9,121 (246,965 ) 177,926 taxes Provision for income 159,378 2,280 (92,303 ) 69,355 taxes Net income $ 256,392 $ 6,841 $ (154,662 ) $ 108,571 Net income per share $ 1.58 $ 0.68 (diluted) Weighted average (735) shares outstanding 161,799 ^(4) (455) ^(5) 160,609 (diluted) Twelve months ended December 31, 2012 Non Non Recurring Recurring Acquisition Divestiture Reported Impact Impact Adjusted Net revenues $ 1,717,571 $ 1,717,571 Operating expenses Personnel expenses 766,006 (385 ) (34,207 ) 731,414 ^(1) Other selling, general and 276,245 (10,225 ) (379 ) 265,641 administrative expenses ^(2) Total operating 1,042,251 (10,610 ) (34,586 ) 997,055 expenses Operating income 675,320 10,610 34,586 720,516 Investment and 283,142 (281,551 ) 1,591 other income ^(3) Income before provision for 958,462 10,610 (246,965 ) 722,107 income taxes Provision for 364,658 2,745 (92,303 ) 275,100 income taxes Net income $ 593,804 $ 7,865 $ (154,662 ) $ 447,007 Net income per $ 3.67 $ 2.76 share (diluted) Weighted average (185) shares outstanding 161,946 ^(4) (92) ^(5) 161,669 (diluted) The adjustment to personnel consists of $33 million of incremental 1. 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. The adjustment to diluted weighted average shares outstanding relates to 4. the shares of C.H. Robinson stock issued as consideration paid to the sellers in the acquisition of Phoenix. The adjustment to diluted weighted average shares outstanding relates to 5. the additional vesting of performance-based restricted stock as a result of the gain on sale recognized from the divestiture of T-Chek. Contact: C.H. Robinson Worldwide, Inc. Chad Lindbloom, chief financial officer, 952-937-7779 or Tim Gagnon, director, investor relations, 952-683-5007
C.H. Robinson Reports Fourth Quarter Results
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