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C.H. Robinson Reports First Quarter Results



  C.H. Robinson Reports First Quarter Results

Business Wire

MINNEAPOLIS -- May 07, 2013

C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported
financial results for the quarter ended March 31, 2013. Summarized financial
results for the quarter ended March 31 are as follows (dollars in thousands,
except per share data):

                           Three months ended
                           March 31,
                                                       %
                           2013          2012          change
                                                        
Total revenues             $ 2,994,267   $ 2,552,114   17.3  %
                                                        
Net revenues:
Transportation
Truckload                  $ 268,604     $ 263,582     1.9   %
LTL                          58,491        51,827      12.9  %
Intermodal                   9,101         9,711       -6.3  %
Ocean                        42,488        15,761      169.6 %
Air                          16,768        8,873       89.0  %
Customs                      8,606         3,400       153.1 %
Other logistics services     17,194        14,062      22.3  %
Total transportation         421,252       367,216     14.7  %
Sourcing                     31,846        31,943      -0.3  %
Payment Services             2,624         15,587      -83.2 %
Total net revenues           455,722       414,746     9.9   %
                                                              
Operating expenses           287,016       245,201     17.1  %
Income from operations       168,706       169,545     -0.5  %
Net income                 $ 103,343     $ 106,500     -3.0  %
Diluted EPS                $ 0.64        $ 0.65        -1.5  %
                                                              

Pro Forma Comparison - The following shows the effects of the disposition of
the Company’s T-Chek Payment Services business, which was completed in October
2012, and the acquisition of Phoenix International Freight Services, Ltd.
(“Phoenix”), which was completed in November 2012, as if these transactions
had occurred at the beginning of 2012.  A reconciliation of these pro forma
measures for the first quarter of 2012 is described on page 4.

                          2013        2012        %
                          Reported    Pro Forma   change
Total net revenues ^(2)   $ 455,722   $ 438,852   3.8  %
Income from operations      168,706     168,199   0.3  %
                                                        

Discussion of First Quarter 2013 Results

“Our results for the first quarter of 2013 reflect the slower growth and
continued margin contraction that we have seen in the markets we serve. They
also reflect our continued investments in our future and adjusting to the
changes we see. We remain positive in our long term performance outlook. Our
investments, including the acquisitions executed last year, continue to drive
our revenue growth and ability to service the global supply chain needs of our
customers,” said John P. Wiehoff, chairman and chief executive officer of C.H.
Robinson.

Our truckload net revenues increased 1.9 percent in the first quarter of 2013
compared to the first quarter of 2012. Our truckload volumes increased
approximately nine percent in the first quarter of 2013 compared to the first
quarter of 2012. Our North American truckload volumes increased approximately
five percent. We estimate that our acquisition of Apreo Logistics S.A.
(“Apreo”), which was completed in October 2012, contributed approximately four
percent to our volume growth in the first quarter of 2013. The Apreo business
has a large number of short haul shipments in Poland. Our truckload net
revenue margin decreased in the first quarter of 2013 compared to the first
quarter of 2012, due primarily 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 1.5 percent in
the first quarter of 2013 compared to the first quarter of 2012. In North
America, our truckload transportation costs increased approximately 2.5
percent, excluding the estimated impacts of the change in fuel.

Our less-than-truckload (“LTL”) net revenues increased 12.9 percent in the
first quarter of 2013 compared to the first quarter of 2012. The increase was
driven by an increase in total shipments of approximately 12 percent.

Our intermodal net revenues decreased 6.3 percent in the first quarter of 2013
compared to the first quarter of 2012. This was primarily due to decreased net
revenue margin and slight decline in volume. 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 169.6 percent in the first
quarter of 2013 compared to the first quarter of 2012. This increase was
primarily due to our acquisition of Phoenix in November 2012.

Our air transportation net revenues increased 89.0 percent in the first
quarter of 2013 compared to the first quarter of 2012. This increase was
primarily due to our acquisition of Phoenix.

Our customs net revenues increased 153.1 percent in the first quarter of 2013
compared to the first quarter of 2012. This increase was primarily due to our
acquisition of Phoenix.

Other logistics services net revenues, which include transportation management
services, warehousing, and small parcel, increased 22.3 percent in the first
quarter of 2013 compared to the first quarter of 2012. This was primarily due
to transaction increases in our transportation management services.

Sourcing net revenues decreased 0.3 percent in the first quarter of 2013
compared to the first quarter of 2012. This was due to decreased net revenue
margin, partially offset by increased volumes.

Our payment services net revenues decreased 83.2 percent in the first quarter
of 2013 due to the T-Chek divestiture in the fourth quarter of 2012.

For the first quarter, operating expenses increased 17.1 percent to $287.0
million in 2013 from $245.2 million in 2012. Operating expenses as a
percentage of net revenues increased to 63.0 percent in 2013 from 59.1 percent
in 2012. During the first quarter of 2013, operating expenses grew faster than
net revenues primarily as a result of the impact of Phoenix operations.
Phoenix has a higher operating expense to net revenue ratio than C.H. Robinson
has historically experienced.

For the first quarter, personnel expenses increased 15.9 percent to $212.6
million in 2013 from $183.4 million in 2012. This was due to an increase in
our average headcount of approximately 31 percent, related primarily to the
acquisitions of Phoenix and Apreo in the fourth quarter of 2012, partially
offset by declines in incentive plans that are designed to keep expenses
variable with changes in net revenues and profitability. The increase in
personnel expenses was also partially offset by the divestiture of T-Chek in
October 2012.

For the first quarter, other selling, general, and administrative expenses
increased 20.4 percent to $74.4 million in 2013 from $61.8 million in 2012.
This increase was driven primarily by Phoenix operations, partially offset by
the divestiture of T-Chek. For the first quarter, acquisition amortization
expense increased to $5.0 million in 2013 from $0.8 million in 2012 primarily
as a result of the definite-lived intangible assets recorded in connection
with the acquisition of Phoenix.

For the first quarter, we used cash of $111.8 million to fund income taxes
primarily related to the gain on the divestiture of T-Chek.

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
276 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 and Pro Forma 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 from time to time. 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. However, non-GAAP results should
not be regarded as a substitute for corresponding GAAP measures, and should be
viewed in conjunction with our consolidated financial statements prepared in
accordance with GAAP. 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 include the
effects of the disposition of T-Chek and the acquisition of Phoenix as if they
had occurred at the beginning of our 2012 fiscal year.

A reconciliation of our reported results to pro forma financial measures for
the quarter ended March 31, 2012 is as follows (dollars in thousands):

                                    T-Chek           Phoenix      
                      Reported      Operations       Operations    Pro Forma
                                    ^(1)             ^(1)
Total revenues        $ 2,552,114   $  (12,775  )    $  187,192    $ 2,726,531
                                                                    
Purchased
transportation and      1,809,581      -                150,311      1,959,892
related services
Purchased products      327,787        -                -            327,787
sourced for resale
Total purchased
services and            2,137,368      -                150,311      2,287,679
products
Net revenues ^ (2)      414,746        (12,775  )       36,881       438,852
                                                                    
Personnel expenses      183,438        (4,105   )       19,681       199,014
Selling, general
and administrative      60,921         (2,988   )       8,798        66,731
expenses
Amortization of
acquisition             842            -                4,066        4,908
intangibles
Total other             245,201        (7,093   )       32,545       270,653
operating expenses
                                                                    
Income from           $ 169,545     $  (5,682   )    $  4,336      $ 168,199
operations
                                                                    

 1. Adjustments have been made to historical Phoenix operations for the
    amortization expense of finite-lived intangible assets recorded in
    connection with the acquisition ($4.1 million), rent expense for lease
    agreements entered into in connection with the acquisition ($84 thousand),
    and depreciation on a building acquired in the acquisition ($37 thousand).
    There were no pro forma adjustments to the T-Chek historical results.
 2. Net revenues are our total revenues less purchased transportation and
    related services, including contracted motor carrier, rail, ocean, air,
    and other costs, and the purchased price and services related to the
    products we source.

Conference Call Information:
C.H. Robinson Worldwide First Quarter 2013 Earnings Conference Call
Tuesday May 7, 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: 877-941-6009
Callers should reference the conference ID, which is 4613551
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on May 10:
800-406-7325; passcode: 4613551#

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
 
                                                   Three months ended
                                                   March 31,
                                                   2013            2012
                                                                    
Revenues:
Transportation                                     $ 2,603,182     $ 2,176,797
Sourcing                                             387,852         359,730
Payment Services                                     3,233           15,587
Total revenues                                       2,994,267       2,552,114
Costs and expenses:
Purchased transportation and related services        2,181,930       1,809,581
Purchased products sourced for resale                356,006         327,787
Purchased payment services                           609             -
Personnel expenses                                   212,645         183,438
Other selling, general, and administrative           74,371          61,763
expenses
Total costs and expenses                             2,825,561       2,382,569
                                                                    
Income from operations                               168,706         169,545
                                                                    
Investment and other (expense) income                (60       )     214
                                                                    
Income before provision for income taxes             168,646         169,759
Provision for income taxes                           65,303          63,259
Net income                                         $ 103,343       $ 106,500
                                                                    
Net income per share (basic)                       $ 0.64          $ 0.65
Net income per share (diluted)                     $ 0.64          $ 0.65
                                                                    
Weighted average shares outstanding (basic)          160,637         162,693
Weighted average shares outstanding (diluted)        160,690         163,023
                                                                    

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
                                                 March 31,     December 31,
                                                 2013          2012
Assets
Current assets:
Cash and cash equivalents                        $ 159,900     $  210,019
Receivables, net                                   1,469,826      1,412,136
Other current assets                               60,853         50,135
Total current assets                               1,690,579      1,672,290
                                                                
Property and equipment, net                        150,896        149,851
Intangible and other assets                        989,085        982,084
Total Assets                                     $ 2,830,560   $  2,804,225
                                                                
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks          $ 758,729     $  707,476
Accrued compensation                               52,400         103,343
Income taxes                                       9,964          121,581
Other accrued expenses                             37,705         46,171
Current portion of debt                            390,629        253,646
Total current liabilities                          1,249,427      1,232,217
                                                                
Noncurrent income taxes payable                    20,402         20,590
Deferred tax liabilities                           70,101         45,113
Other long term liabilities                        945            1,933
Total liabilities                                  1,340,875      1,299,853
                                                                
Total stockholders’ investment                     1,489,685      1,504,372
Total liabilities and stockholders’ investment   $ 2,830,560   $  2,804,225
                                                                   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
 
                                                  Three months ended
                                                  March 31,
                                                  2013            2012
Operating activities:
Net income                                        $ 103,343       $ 106,500
Stock-based compensation                            5,115           9,766
Depreciation and amortization                       13,807          8,417
Provision for doubtful accounts                     2,293           4,846
Deferred income taxes                               27,303          4,152
Other                                               40              210
Changes in operating elements, net of effects
of acquisitions:
Receivables                                         (74,267   )     (60,588  )
Prepaid expenses and other                          (12,158   )     800
Accounts payable and outstanding checks             51,238          43,138
Accrued compensation and profit-sharing             (49,920   )     (69,664  )
contribution
Accrued income taxes                                (111,805  )     37,936
Other accrued liabilities                           (13,039   )     (8,429   )
Net cash (used in) provided by operating            (58,050   )     77,084
activities
                                                                   
Investing activities:
Purchases of property and equipment                 (8,745    )     (9,888   )
Purchases and development of software               (1,432    )     (3,932   )
Other                                               43              4         
Net cash used for investing activities              (10,134   )     (13,816  )
                                                                   
Financing activities:
Borrowings on line of credit                        1,008,000       -
Repayments on line of credit                        (871,017  )     -
Payment of contingent purchase price                (927      )     (11,613  )
Net repurchases of common stock                     (84,510   )     (64,991  )
Excess tax benefit on stock-based compensation      23,554          5,999
Cash dividends                                      (56,473   )     (54,725  )
Net cash provided by (used for) financing           18,627          (125,330 )
activities
Effect of exchange rates on cash                    (562      )     (242     )
                                                                   
Net change in cash and cash equivalents             (50,119   )     (62,304  )
Cash and cash equivalents, beginning of period      210,019         373,669   
Cash and cash equivalents, end of period          $ 159,900       $ 311,365   
                                                                   
                                                  As of March 31,
                                                  2013            2012
Operational Data:
Employees                                           11,144          8,491
Branches                                            276             235

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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