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 theT-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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C.H. Robinson Reports First Quarter Results
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