C.H. Robinson Reports Fourth Quarter Results

  C.H. Robinson Reports Fourth Quarter Results

Business Wire

MINNEAPOLIS -- February 4, 2014

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

                Three months ended December 31,         Twelve months ended December 31,
                 2013           2012         % change   2013            2012          % change
                                                                                     
Total revenues   $ 3,152,882     $ 2,970,876   6.1    %   $ 12,752,076     $ 11,359,113   12.3   %
Net revenues:
Transportation
Truckload        $ 256,117       $ 271,248     -5.6   %   $ 1,054,565      $ 1,060,120    -0.5   %
LTL                58,839          57,025      3.2    %     239,477          224,160      6.8    %
Intermodal         9,861           9,011       9.4    %     39,084           38,815       0.7    %
Ocean              46,367          33,707      37.6   %     187,671          84,924       121.0  %
Air                17,982          15,948      12.8   %     73,089           44,444       64.5   %
Customs            9,271           6,782       36.7   %     36,578           18,225       100.7  %
Other
logistics         17,583       15,420      14.0   %    67,931        57,449       18.2   %
services
Total              416,020         409,141     1.7    %     1,698,395        1,528,137    11.1   %
transportation
Sourcing           25,799          30,543      -15.5  %     126,950          136,438      -7.0   %
Payment           2,646        4,948       -46.5  %    10,750        52,996       -79.7  %
services
Total net          444,465         444,632     0.0    %     1,836,095        1,717,571    6.9    %
revenues
                                                                                                 
Operating         289,352      311,028     -7.0   %    1,153,445     1,042,251    10.7   %
expenses
Income from        155,113         133,604     16.1   %     682,650          675,320      1.1    %
operations
Investment and
other              (6,005    )     282,166     -102.1 %     (9,289     )     283,142      -103.3 %
(expense)
income
                                                                                                 
Net income       $ 92,952      $ 256,392     -63.7  %   $ 415,904      $ 593,804      -30.0  %
Diluted
earnings per     $ 0.62          $ 1.58        -60.8  %   $ 2.65           $ 3.67         -27.8  %
share
                                                                                          

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 3.

                Three months ended December 31,  Twelve months ended December 31,
                 2013       2012 Pro   %         2013         2012 Pro     %
                 Reported   Forma      change    Reported     Forma        change
Total net        $ 444,465   $ 453,782   -2.1  %   $ 1,836,095   $ 1,812,631   1.3   %
revenues
Personnel          203,619     198,307   2.7   %     826,661       788,959     4.8   %
expenses
Selling,
general, and       80,718      75,006    7.6   %     306,656       279,744     9.6   %
administrative
expenses
Amortization
of acquisition    5,015     5,022     -0.1  %    20,128      19,859      1.4   %
intangibles
Total
operating         289,352   278,335   4.0   %    1,153,445   1,088,562   6.0   %
expenses
Income from        155,113     175,447   -11.6 %     682,650       724,069     -5.7  %
operations
Net income       $ 92,952   $ 106,567   -12.8 %   $ 415,904    $ 466,179     -10.8 %
Diluted
earnings per     $ 0.62      $ 0.66      -6.1  %   $ 2.65        $ 2.74        -3.3  %
share
                                                                               

Discussion of Fourth Quarter 2013 Results

Our truckload net revenues decreased 5.6 percent in the fourth quarter of 2013
compared to the fourth quarter of 2012. Our truckload volumes increased
approximately seven percent in the fourth quarter of 2013 compared to the
fourth quarter of 2012. Our North American truckload volumes increased
approximately six percent. Our truckload net revenue margin decreased in the
fourth quarter of 2013 compared to the fourth 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 3.5 percent in the fourth quarter of 2013
compared to the fourth quarter of 2012. In North America, our truckload
transportation costs increased approximately five percent, excluding the
estimated impacts of the change in fuel.

Our less-than-truckload (“LTL”) net revenues increased 3.2 percent in the
fourth quarter of 2013 compared to the fourth quarter of 2012. The increase
was driven by an increase in total shipments of approximately four percent,
partially offset by decreased net revenue margin.

Our intermodal net revenues increased 9.4 percent in the fourth quarter of
2013 compared to the fourth quarter of 2012. This was due to increased net
revenue margin, partially offset by decreased volumes. Our net revenue margin
increase was due to a change in our mix of business and improved customer
pricing.

Our ocean transportation net revenues increased 37.6 percent, our air
transportation net revenues increased 12.8 percent, and our customs net
revenues increased 36.7 percent in the fourth quarter of 2013 compared to the
fourth quarter of 2012. These increases were primarily due to our acquisition
of Phoenix in November 2012.

Sourcing net revenues decreased 15.5 percent in the fourth quarter of 2013
compared to the fourth quarter of 2012. We continued to experience volume and
net revenue declines from a large customer and expect this to continue
throughout 2014. Sourcing net revenue margins declined due to weather and
changes in our commodity and service mix. Case volumes decreased approximately
two percent in the fourth quarter of 2013 compared to the fourth quarter of
2012.

Our Payment Services net revenues decreased 46.5 percent in the fourth quarter
of 2013 compared to the fourth quarter of 2012 due to the T-Chek divestiture
in the fourth quarter of 2012.

For the fourth quarter, operating expenses decreased 7.0 percent to $289.4
million in 2013 from $311.0 million in 2012. This was due to a decrease of 9.9
percent in personnel expense and an increase of 0.9 percent in other selling,
general, and administrative expenses. Operating expenses as a percentage of
net revenues decreased to 65.1 percent in the fourth quarter of 2013 from 70.0
percent in 2012. During the fourth quarter of 2012, operating expenses were a
higher percentage of net revenues primarily due to $33.0 million of
incremental performance-based stock vesting expense as a result of the sale of
T-Chek.

For the fourth quarter, personnel expenses decreased 9.9 percent to $203.6
million in 2013 from $226.0 million in 2012. This decrease was primarily due
to the performance-based stock vesting expense as a result of sale of T-Chek
in 2012. On a pro forma basis, personnel expense increased 2.7 percent in the
fourth quarter of 2013 compared to the fourth quarter of 2012. This increase
was due to growth in our average headcount of approximately 32 percent,
related primarily to the acquisitions of the Phoenix in the fourth quarter of
2012. We estimate that our average headcount, excluding acquisitions and
divestitures, increased approximately eight percent in the fourth quarter of
2013 compared to 2012. The increase in personnel expense from headcount growth
was partially offset by declines in expenses related to incentive plans that
are designed to keep expenses variable with changes in net revenues and
profitability.

For the fourth quarter, other selling, general, and administrative expenses
increased 0.9 percent to $85.7 million in 2013 from $85.0 million in 2012. In
the fourth quarter of 2012, we had approximately $9.1 million of non-recurring
acquisition and divestiture expenses. On a pro forma basis, selling, general,
and administrative expense increased 7.1 percent in the fourth quarter of 2013
compared to the fourth quarter of 2012. This increase was primarily due to
Phoenix operations and a higher provision for bad debt.

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 46,000 active customers through a network of
285 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 63,000 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 December 31, 2012 is as follows (dollars in thousands):

                             Non-                                 
                               Recurring
                               Acquisition    T-Chek       Phoenix
                 Reported      Impact ^(1)    Operations   Operations   Pro Forma
                                              ^(2)         ^(2)
Total revenues   $ 2,970,876   $ -            $ (2,290 )   $ 70,009     $ 3,038,595
                                                                        
Purchased
transportation     2,176,789     -              -            58,569       2,235,358
and related
services
Purchased
products           348,936       -              -            -            348,936
sourced for
resale
Purchased
payment           519          -            -          -          519       
services
Total
purchased         2,526,244    -            -          58,569     2,584,813 
services and
products
Net revenues ^     444,632       -              (2,290 )     11,440       453,782
(3)
                                                                        
Personnel          226,042       (34,592  )     (609   )     7,466        198,307
expenses
Selling,
general and        81,319        (9,115   )     (479   )     3,281        75,006
administrative
expenses
Amortization
of acquisition    3,667        -            -          1,355      5,022     
intangibles
Total other
operating         311,028      (43,707  )    (1,088 )    12,102     278,335   
expenses
                                                                        
Income from        133,604       43,707         (1,202 )     (662   )     175,447
operations
                                                                        
Investment and    282,166      (281,551 )    1          (1,369 )    (753      )
other income
Income before
provision for      415,770       (237,844 )     (1,201 )     (2,031 )     174,694
income taxes
Provision for     159,378      (90,023  )    (480   )    (748   )    68,127    
income taxes
Net income       $ 256,392     $ (147,821 )   $ (721   )   $ (1,283 )   $ 106,567   
                                                                        
Net income per
share            $ 1.58                                                 $ 0.66
(diluted)
Weighted
average shares     161,799       (1,190   )     -            1,108        161,717
outstanding
                                                                                    

     The adjustment to personnel consists of $33 million of incremental
     vesting expense of our equity awards triggered by the gain on the
     divestiture of T-Chek. The balance consists of transaction-related
     bonuses. The adjustments to other operating expenses reflect fees paid to
     third parties for investment banking fees related to the acquisition of
     Phoenix and external legal and accounting fees related to the
1.  acquisitions of Apreo Logistics S.A. (“Apreo”) and Phoenix International
     Freight Services, Ltd. (“Phoenix”) and the divestiture of T-Chek. 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 the shares of C.H. Robinson stock issued as
     consideration paid to the sellers in the acquisition of Phoenix and the
     additional vesting of performance-based restricted stock as a result of
     the gain on sale recognized from the divestiture of T-Chek.

     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 ($1.4 million), rent expense
     for lease agreements entered into in connection with the acquisition ($28
     thousand), depreciation on a building acquired in the acquisition ($12
     thousand), and incremental interest expense on the borrowings associated
     with the acquisition ($213 thousand). Adjustments have been made for the
     elimination of additional bonuses ($1.4 million) and third party advisory
2.   fees ($582 thousand) paid by Phoenix. An adjustment has also been made to
     reduce purchased transportation and related services ($2.5 million) and
     other selling, general, and administrative expenses ($5.0 million) and to
     increase personnel expenses ($7.5 million) to conform to C.H. Robinson’s
     historical financial reporting presentation. The adjustment to diluted
     weighted average shares outstanding relates to the shares of C.H.
     Robinson stock issued as consideration paid to the sellers in the
     acquisition of Phoenix. There were no pro forma adjustments to the T-Chek
     historical results.

     Net revenues are our total revenues less purchased transportation and
3.   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 twelve months ended December 31, 2012 is as follows (dollars in
thousands):

                              Non-                                   
                                Recurring                   
                                Acquisition    T-Chek        Phoenix
                 Reported       Impact ^(1)    Operations    Operations    Pro Forma
                                               ^(2)          ^(2)
Total revenues   $ 11,359,113   $ -            $ (41,623 )   $ 692,836     $ 12,010,326
                                                                           
Purchased
transportation     8,157,278      -              -             556,153       8,713,431
and related
services
Purchased
products           1,483,745      -              -             -             1,483,745
sourced for
resale
Purchased
payment           519           -            -           -           519        
services
Total
purchased         9,641,542     -            -           556,153     10,197,695 
services and
products
Net revenues ^     1,717,571      -              (41,623 )     136,683       1,812,631
(3)
                                                                           
Personnel          766,006        (34,592  )     (11,819 )     69,364        788,959
expenses
Selling,
general and        269,941        (10,604  )     (9,226  )     29,633        279,744
administrative
expenses
Amortization
of acquisition    6,304         -            -           13,555      19,859     
intangibles
Total other
operating         1,042,251     (45,196  )    (21,045 )    112,552     1,088,562  
expenses
                                                                           
Income from        675,320        45,196         (20,578 )     24,131        724,069
operations
                                                                           
Investment and    283,142       (281,551 )    (67     )    (5,348  )    (3,824     )
other income
Income before
provision for      958,462        (236,355 )     (20,645 )     18,783        720,245
income taxes
Provision for     364,658       (89,558  )    (7,841  )    6,807       274,066    
income taxes
Net income       $ 593,804      $ (146,797 )   $ (12,804 )   $ 11,976     $ 446,179    
                                                                           
Net income per
share            $ 3.67                                                    $ 2.74
(diluted)
Weighted
average shares     161,946        (277     )     -             1,108         162,777
outstanding
                                                                           

     The adjustment to personnel consists of $33 million of incremental
     vesting expense of our equity awards triggered by the gain on the
     divestiture of T-Chek. The balance consists of transaction-related
     bonuses. The adjustments to other operating expenses reflect fees paid to
     third parties for investment banking fees related to the acquisition of
     Phoenix and external legal and accounting fees related to the
1.  acquisitions of Apreo and Phoenix and the divestiture of T-Chek. 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 the shares of C.H. Robinson stock issued as
     consideration paid to the sellers in the acquisition of Phoenix and the
     additional vesting of performance-based restricted stock as a result of
     the gain on sale recognized from the divestiture of T-Chek.

     Adjustments have been made to historical Phoenix operations for addition
     of amortization expense of finite-lived intangible assets recorded in
     connection with the acquisition ($13.6 million), rent expense for lease
     agreements entered into in connection with the acquisition ($280
     thousand), depreciation on a building acquired in the acquisition ($123
     thousand), and incremental interest expense on the borrowings associated
     with the acquisition ($2.1 million). Adjustments have been made for the
     elimination of contractual changes in compensation ($5.1 million), and
2.   additional bonuses ($1.4 million) and third party advisory fees ($582
     thousand) paid by Phoenix. An adjustment has also been made to reduce
     purchased transportation and related services ($24.4 million) and other
     selling, general, and administrative expenses ($50.1 million) and to
     increase personnel expenses ($74.5 million) to conform to C.H. Robinson’s
     historical financial reporting presentation. The adjustment to diluted
     weighted average shares outstanding relates to the shares of C.H.
     Robinson stock issued as consideration paid to the sellers in the
     acquisition of Phoenix. There were no pro forma adjustments to the T-Chek
     historical results.

     Net revenues are our total revenues less purchased transportation and
3.   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 Fourth Quarter 2013 Earnings Conference Call
Wednesday February 5, 2014 8:30 a.m. Eastern Time
The call will be limited to 60 minutes, including questions and answers. We
invite call participants to submit questions in advance of the conference call
and we will respond to as many of the questions as we can in the time allowed.
If time permits, we will accept live questions. To submit your question(s) in
advance of the call, please email tim.gagnon@chrobinson.com.

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: 877-941-0844
Callers should reference the conference ID, which is 4660962#
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on February 7:
800-406-7325; passcode: 4660962#

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)

                  Three months ended           Twelve months ended
                   December 31,                  December 31,
                   2013           2012          2013            2012
                                                                  
Revenues:
Transportation     $ 2,767,550     $ 2,585,930   $ 11,069,710     $ 9,685,415
Sourcing             382,098         379,479       1,669,134        1,620,183
Payment Services    3,234         5,467        13,232         53,515
Total revenues      3,152,882     2,970,876    12,752,076     11,359,113
Costs and
expenses:
Purchased
transportation       2,351,530       2,176,789     9,371,315        8,157,278
and related
services
Purchased
products sourced     356,299         348,936       1,542,184        1,483,745
for resale
Purchased            588             519           2,482            519
payment services
Personnel            203,619         226,042       826,661          766,006
expenses
Other selling,
general, and        85,733        84,986       326,784        276,245
administrative
expenses
Total costs and     2,997,769     2,837,272    12,069,426     10,683,793
expenses
                                                                  
Income from         155,113       133,604      682,650        675,320
operations
                                                                  
Investment,
interest, and       (6,005    )    282,166      (9,289     )    283,142
other (expense)
income
                                                                  
Income before
provision for        149,108         415,770       673,361          958,462
income taxes
Provision for       56,156        159,378      257,457        364,658
income taxes
Net income         $ 92,952       $ 256,392     $ 415,904       $ 593,804
                                                                  
Net income per     $ 0.62          $ 1.59        $ 2.65           $ 3.68
share (basic)
Net income per     $ 0.62          $ 1.58        $ 2.65           $ 3.67
share (diluted)
Weighted average
shares               150,856         160,880       156,915          161,557
outstanding
(basic)
Weighted average
shares               151,130         161,799       157,080          161,946
outstanding
(diluted)
                                                                  

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

                                                December 31,  December 31,
                                                 2013           2012
Assets
Current assets:
Cash and cash equivalents                        $  162,047     $  210,019
Receivables, net                                    1,449,581      1,412,136
Other current assets                               52,857        50,135
Total current assets                                1,664,485      1,672,290
                                                                
Property and equipment, net                         160,703        149,851
Intangible and other assets                        977,630       982,084
Total assets                                     $  2,802,818   $  2,804,225
                                                                
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks          $  755,007     $  707,476
Accrued compensation                                85,247         103,343
Accrued income taxes                                11,681         121,581
Other accrued expenses                              43,046         46,171
Current portion of debt                            375,000       253,646
Total current liabilities                           1,269,981      1,232,217
                                                                
Noncurrent income taxes payable                     21,584         20,590
Deferred tax liabilities                            70,618         45,113
Long-term debt                                      500,000        -
Other long term liabilities                        911           1,933
Total liabilities                                   1,863,094      1,299,853
                                                                
Total stockholders’ investment                     939,724       1,504,372
Total liabilities and stockholders’ investment   $  2,802,818   $  2,804,225
                                                                   

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

                                                Twelve months ended
                                                 December 31,
                                                 2013            2012
Operating activities:
Net income                                       $ 415,904        $ 593,804
Stock-based compensation                           9,094            59,381
Depreciation and amortization                      56,882           38,090
Provision for doubtful accounts                    15,587           10,459
Gain on divestiture                                -                (281,551 )
Deferred income taxes                              25,226           (14,442  )
Other                                              319              3,721
Changes in operating elements
Receivables                                        (87,316    )     (88,107  )
Prepaid expenses and other                         (5,254     )     5,260
Accounts payable and outstanding checks            47,488           61,732
Accrued compensation                               (15,097    )     (19,064  )
Accrued income taxes                               (105,857   )     104,542
Other accrued liabilities                         (9,199     )    (13,483  )
Net cash provided by operating activities          347,777          460,342
                                                                  
Investing activities:
Purchases of property and equipment                (40,354    )     (36,096  )
Purchases and development of software              (7,852     )     (14,560  )
Sale of T-Chek, net of cash sold                   -                274,802
Cash paid for acquisitions, net of cash            19,126           (583,631 )
acquired
Other                                             221            419      
Net cash used for investing activities             (28,859    )     (359,066 )
                                                                  
Financing activities:
Borrowings on line of credit                       4,165,023        324,051
Repayments on line of credit                       (4,043,669 )     (75,688  )
Borrowings of long-term debt                       500,000          -
Payment of contingent purchase price               (927       )     (12,661  )
Net repurchases of common stock                    (792,283   )     (236,981 )
Excess tax benefit on stock-based compensation     27,209           12,294
Cash dividends                                    (220,257   )    (275,353 )
Net cash used for financing activities             (364,904   )     (264,338 )
Effect of exchange rates on cash                  (1,986     )    (588     )
                                                                  
Net change in cash and cash equivalents            (47,972    )     (163,650 )
Cash and cash equivalents, beginning of period    210,019        373,669  
Cash and cash equivalents, end of period         $ 162,047       $ 210,019  
                                                                  
                                                 As of December 31,
                                                 2013             2012
Operational Data:
Employees                                          11,676           10,929
Branches                                           285              276

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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