C.H. Robinson Reports Second Quarter Results

  C.H. Robinson Reports Second Quarter Results

Business Wire

MINNEAPOLIS -- August 6, 2013

C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported
financial results for the quarter ended June 30, 2013. Summarized financial
results for the quarter ended June 30 are as follows (dollars in thousands,
except per share data):

                                                           
                   Three months ended June 30,                   Six months ended June 30,
                                               %                                         %
                   2013          2012          change        2013          2012          change
                                                                                                 
Total revenues     $ 3,288,262     $ 2,955,714     11.3  %       $ 6,282,529     $ 5,507,828     14.1  %
                                                                                                 
Net revenues:
Transportation
Truckload          $ 264,335       $ 256,193       3.2   %       $ 532,939       $ 519,775       2.5   %
LTL                  60,711          56,445        7.6   %         119,202         108,272       10.1  %
Intermodal           9,920           10,019        -1.0  %         19,021          19,730        -3.6  %
Ocean                49,124          16,958        189.7 %         91,612          32,719        180.0 %
Air                  20,202          10,577        91.0  %         36,970          19,450        90.1  %
Customs              9,769           3,934         148.3 %         18,375          7,334         150.5 %
Other
logistics           17,084       14,880        14.8  %        34,278       28,942        18.4  %
services
Total                431,145         369,006       16.8  %         852,397         736,222       15.8  %
transportation
Sourcing             38,752          40,205        -3.6  %         70,598          72,148        -2.1  %
Payment             2,705        16,312        -83.4 %        5,329        31,899        -83.3 %
services
Total net            472,602         425,523       11.1  %         928,324         840,269       10.5  %
revenues
                                                                                                       
Operating           290,126      240,609       20.6  %        577,142      485,810       18.8  %
expenses
Operating            182,476         184,914       -1.3  %         351,182         354,459       -0.9  %
income
Net income         $ 111,872     $ 114,582       -2.4  %       $ 215,215     $ 221,082       -2.7  %
Diluted EPS        $ 0.70          $ 0.71          -1.4  %       $ 1.34          $ 1.36          -1.5  %
                                                                                                       

Pro Forma Comparison - The following shows the effects of the disposition of
the Company’s T-Chek Payment Services business (“T-Chek”), 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 is described on page 4.

                                                  
               Three months ended June 30,              Six months ended June 30,
               2013        2012        %            2013        2012        %
            Reported    Pro Forma   change       Reported    Pro Forma   change
Total net      $ 472,602     $ 458,208     3.1  %       $ 928,324     $ 897,060     3.5  %
revenues
Income
from             182,476       188,700     -3.3 %         351,182       356,899     -1.6 %
operations
                                                                                         

Discussion of Second Quarter 2013 Results

Our truckload net revenues increased 3.2 percent in the second quarter of 2013
compared to the second quarter of 2012. Our truckload volumes increased
approximately nine percent in the second quarter of 2013 compared to the
second 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 second quarter of 2013.
Our truckload net revenue margin decreased in the second quarter of 2013
compared to the second quarter of 2012, due primarily to the net revenue
margin decline of our European truckload business. In North America, our
truckload net revenue margin was relatively flat as rates charged to our
customers and truckload transportation costs increased approximately one
percent.

Our less-than-truckload (“LTL”) net revenues increased 7.6 percent in the
second quarter of 2013 compared to the second quarter of 2012. The increase
was driven by an increase in total shipments of approximately eight percent,
partially offset by decreased net revenue margin.

Our intermodal net revenues decreased 1.0 percent in the second quarter of
2013 compared to the second quarter of 2012. This was due to decreased
volumes, partially offset by increased net revenue margin. Our net revenue
margin increase was due to a change in our mix of business.

Our ocean transportation net revenues increased 189.7 percent, our air
transportation net revenues increased 91.0 percent, and our customs net
revenues increased 148.3 percent in the second quarter of 2013 compared to the
second quarter of 2012. These increases were primarily due to our acquisition
of Phoenix in November 2012.

Sourcing net revenues decreased 3.6 percent in the second quarter of 2013
compared to the second quarter of 2012. This was due to decreased net revenue
margin as a result of a change in our commodity and service mix due to
weather.

Our Payment Services net revenues decreased 83.4 percent in the second quarter
of 2013 compared to the second quarter of 2012 due to the T-Chek divestiture
in the fourth quarter of 2012.

For the second quarter, operating expenses increased 20.6 percent to $290.1
million in 2013 from $240.6 million in 2012. Operating expenses as a
percentage of net revenues increased to 61.4 percent in the second quarter of
2013 from 56.5 percent in 2012. During the second quarter of 2013, operating
expenses grew faster than net revenues primarily as a result of the impact of
Phoenix acquisition, including amortization of acquisition-related intangible
assets. Phoenix has a higher expense to net revenue ratio than C.H. Robinson
has historically experienced.

For the second quarter, personnel expenses increased 16.3 percent to $206.0
million in 2013 from $177.2 million in 2012. This was due to an increase in
our average headcount of approximately 30 percent, related primarily to the
acquisitions of the Phoenix and Apreo in the fourth quarter of 2012, partially
offset by declines in the expenses related to 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 second quarter, other selling, general, and administrative expenses
increased 32.6 percent to $84.1 million in 2013 from $63.4 million in 2012.
This increase was driven primarily by Phoenix operations, partially offset by
the divestiture of T-Chek. For the second quarter, acquisition amortization
expense increased to $5.0 million in 2013 from $0.8 million in 2012 primarily
as a result of the finite-lived intangible assets recorded in connection with
the acquisition of Phoenix.

During the quarter we also recorded a $5.0 million charge related to the
settlement of a contingent auto liability claim.The $5.0 million represents
the amount of our retained risk under the terms of our contingent auto
liability insurance policy. Although we remain a party to several contingent
auto liability cases, it should be noted that this is only the fourth case in
the last ten years in which we have been required to contribute in excess of
$1.0 million in settlement or satisfaction of a contingent auto liability
claim.

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 certain non-GAAP 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 June 30, 2012 is as follows (dollars in thousands):

                                                              
                                 T-Chek           Phoenix
                   Reported      Operations       Operations       Pro Forma
                                 ^(1)             ^(1)
Total revenues     $ 2,955,714   $  (13,354  )    $  223,408       $ 3,165,768
                                                                   
Purchased
transportation       2,107,799      -                177,369         2,285,168
and related
services
Purchased
products sourced    422,392       -              -             422,392
for resale
Total purchased
services and        2,530,191     -              177,369       2,707,560
products
Net revenues         425,523        (13,354  )       46,039          458,208
^(2)
                                                                   
Personnel            177,184        (3,601   )       21,419          195,002
expenses
Selling, general
and                  62,589         (2,938   )       9,952           69,603
administrative
expenses
Amortization of
acquisition         836           -              4,067         4,903
intangibles
Total other
operating           240,609       (6,539   )      35,438        269,508
expenses
                                                                   
Income from        $ 184,914     $  (6,815   )    $  10,601       $ 188,700
operations
                                                                     

1.Adjustments have been made to historical Phoenix operations for the
    addition of 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). An adjustment has also been made for the elimination of
    contractual changes in compensation ($5.1 million). 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.

A reconciliation of our reported results to pro forma financial measures for
the six months ended June 30, 2012 is as follows (dollars in thousands):

                               T-Chek          Phoenix        
                   Reported      Operations       Operations       Pro Forma
                                 ^(1)             ^(1)
Total revenues     $ 5,507,828   $  (26,129  )    $  406,608       $ 5,888,307
                                                                   
Purchased
transportation       3,917,380      -                323,688         4,241,068
and related
services
Purchased
products sourced    750,179       -              -             750,179
for resale
Total purchased
services and        4,667,559     -              323,688       4,991,247
products
Net revenues         840,269        (26,129  )       82,920          897,060
^(2)
                                                                   
Personnel            360,622        (7,706   )       41,100          394,016
expenses
Selling, general
and                  123,510        (5,926   )       18,750          136,334
administrative
expenses
Amortization of
acquisition         1,678         -              8,133         9,811
intangibles
Total other
operating           485,810       (13,632  )      67,983        540,161
expenses
                                                                   
Income from        $ 354,459     $  (12,497  )    $  14,937       $ 356,899
operations
                                                                     

1.Adjustments have been made to historical Phoenix operations for addition
    of amortization expense of finite-lived intangible assets recorded in
    connection with the acquisition ($8.1 million), rent expense for lease
    agreements entered into in connection with the acquisition ($168
    thousand), and depreciation on a building acquired in the acquisition ($75
    thousand). An adjustment has also been made for the elimination of
    contractual changes in compensation ($5.1 million). 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 Second Quarter 2013 Earnings Conference Call
Tuesday August 6, 2013 6:00 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: 888-549-7750
Callers should reference the conference ID, which is 4630440
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on August 9:
800-406-7325; passcode: 4630440#


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
                                                                             
                Three months ended             Six months ended
                 June 30,                        June 30,
                 2013           2012            2013           2012
                                                                             
Revenues:
Transportation   $ 2,818,077     $ 2,476,805     $ 5,421,259     $ 4,653,602
Sourcing           466,811         462,597         854,663         822,327
Payment           3,374         16,312        6,607         31,899    
Services
Total revenues    3,288,262     2,955,714     6,282,529     5,507,828 
Costs and
expenses:
Purchased
transportation     2,386,932       2,107,799       4,568,862       3,917,380
and related
services
Purchased
products           428,059         422,392         784,065         750,179
sourced for
resale
Purchased
payment            669             -               1,278           -
services
Personnel          206,009         177,184         418,654         360,622
expenses
Other selling,
general, and      84,117        63,425        158,488       125,188   
administrative
expenses
Total costs       3,105,786     2,770,800     5,931,347     5,153,369 
and expenses
                                                                             
Income from       182,476       184,914       351,182       354,459   
operations
                                                                             
Investment,
interest, and
other             (589      )    686           (649      )    900       
(expense)
income
                                                                             
Income before
provision for      181,887         185,600         350,533         355,359
income taxes
Provision for     70,015        71,018        135,318       134,277   
income taxes
Net income       $ 111,872      $ 114,582      $ 215,215      $ 221,082   
                                                                             
Net income per   $ 0.70          $ 0.71          $ 1.34          $ 1.36
share (basic)
Net income per
share            $ 0.70          $ 0.71          $ 1.34          $ 1.36
(diluted)
Weighted
average shares     159,818         161,887         160,137         162,290
outstanding
(basic)
Weighted
average shares     159,917         162,200         160,198         162,643
outstanding
(diluted)
                                                                             

                                                                             
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
                                                                             
                                             June 30,        December 31,
                                               2013              2012
Assets                                                                       
Current assets:
Cash and cash equivalents                      $ 150,017         $ 210,019
Receivables, net                                 1,570,886         1,412,136
Other current assets                            62,065          50,135    
Total current assets                             1,782,968         1,672,290
                                                                             
Property and equipment, net                      153,327           149,851
Intangible and other assets                     985,250         982,084   
Total Assets                                   $ 2,921,545      $ 2,804,225 
                                                                             
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks        $ 807,972         $ 707,476
Accrued compensation                             67,518            103,343
Accrued income taxes                             51,919            121,581
Other accrued expenses                           37,926            46,171
Current portion of debt                         365,652         253,646   
Total current liabilities                        1,330,987         1,232,217
                                                                             
Noncurrent income taxes payable                  20,621            20,590
Deferred tax liabilities                         69,928            45,113
Other long term liabilities                     944             1,933     
Total liabilities                                1,422,480         1,299,853
                                                                             
Total stockholders’ investment                  1,499,065       1,504,372 
Total liabilities and stockholders’            $ 2,921,545      $ 2,804,225 
investment
                                                                             


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)

                                             Six months ended
                                               June 30,
                                               2013             2012
Operating activities:
Net income                                     $ 215,215          $ 221,082
Stock-based compensation                         9,885              16,559
Depreciation and amortization                    27,952             17,208
Provision for doubtful accounts                  5,635              3,608
Deferred income taxes                            25,993             3,543
Other                                            143                2,414
Changes in operating elements
Receivables                                      (198,669   )       (229,361 )
Prepaid expenses and other                       (12,146    )       (5,631   )
Accounts payable and outstanding checks          100,481            130,457
Accrued compensation                             (35,277    )       (51,556  )
Accrued income taxes                             (69,631    )       9,058
Other accrued liabilities                       (11,310    )      (7,353   )
Net cash provided by operating activities        58,271             110,028
                                                                  
Investing activities:
Purchases of property and equipment              (18,316    )       (17,403  )
Purchases and development of software            (4,261     )       (7,567   )
Acquisitions, net of cash                        19,126             -
Other                                           107              192      
Net cash used for investing activities           (3,344     )       (24,778  )
                                                                  
Financing activities:
Borrowings on line of credit                     2,134,023          -
Repayments on line of credit                     (2,022,017 )       -
Payment of contingent purchase price             (927       )       (11,613  )
Net repurchases of common stock                  (134,043   )       (102,767 )
Excess tax benefit on stock-based                24,755             7,654
compensation
Cash dividends                                  (113,031   )      (109,151 )
Net cash used for financing activities           (111,240   )       (215,877 )
Effect of exchange rates on cash                (3,689     )      (2,415   )
                                                                  
Net change in cash and cash equivalents          (60,002    )       (133,042 )
Cash and cash equivalents, beginning of         210,019          373,669  
period
Cash and cash equivalents, end of period       $ 150,017         $ 240,627  
                                                                  
                                               As of June 30,
                                               2013              2012
Operational Data:
Employees                                        11,297             8,743
Branches                                         276                234
                                                                             

Contact:

C.H. Robinson Worldwide, Inc.
Chad Lindbloom, chief financial officer, 952-937-7779
or
Tim Gagnon, director, investor relations, 952-683-5007
 
Press spacebar to pause and continue. Press esc to stop.