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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