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C.H. Robinson Reports Fourth Quarter Results



  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
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