C.H. Robinson Reports First Quarter Results

  C.H. Robinson Reports First Quarter Results  Business Wire  MINNEAPOLIS -- April 29, 2014  C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended March 31, 2014. Summarized financial results for the quarter ended March 31 are as follows (dollars in thousands, except per share data):                                                          Three months ended March 31,                                                          %                              2014            2013            change                                                               Total revenues               $ 3,142,585     $ 2,994,267     5.0   %                                                               Net revenues: Transportation Truckload                    $ 269,837       $ 268,604       0.5   % LTL                            60,138          58,491        2.8   % Intermodal                     8,940           9,101         -1.8  % Ocean                          43,612          42,488        2.6   % Air                            17,454          16,768        4.1   % Customs                        9,332           8,606         8.4   % Other logistics services      18,566         17,194        8.0   % Total transportation           427,879         421,252       1.6   % Sourcing                       26,846          31,846        -15.7 % Payment Services              2,510          2,624         -4.3  % Total net revenues             457,235         455,722       0.3   %                                                                     Operating expenses            300,264        287,016       4.6   % Income from operations         156,971         168,706       -7.0  % Net income                   $ 93,187        $ 103,343       -9.8  %                                                               Diluted EPS                  $ 0.63          $ 0.64          -1.6  %                                                                Our total net revenues decreased through the first two months of 2014 compared to the first two months of 2013. Our total net revenues increased significantly in March 2014 compared to March 2013 primarily due to growth in North American truckload net revenues.  Our truckload net revenues increased 0.5 percent in the first quarter of 2014 compared to the first quarter of 2013. Our truckload volumes increased approximately four percent in the first quarter of 2014 compared to the first quarter of 2013. Our North American truckload volumes increased approximately three percent. Volume growth was impacted by the capacity constraints caused by the many weather events across North America during the first quarter of 2014. Our truckload net revenue margin decreased in the first quarter of 2014 compared to the first quarter of 2013, 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 10 percent in the first quarter of 2014 compared to the first quarter of 2013. In North America, our truckload transportation costs increased approximately 12 percent, excluding the estimated impacts of the change in fuel.  Our less-than-truckload (“LTL”) net revenues increased 2.8 percent in the first quarter of 2014 compared to the first quarter of 2013. Our LTL net revenue growth rate slowed in the first quarter of 2014 compared to the first quarter of 2013 partially as a result of weather related issues. LTL net revenue margin decreased slightly in the first quarter of 2014 compared to the first quarter of 2013, primarily due to carrier price increases.  Our intermodal net revenues decreased 1.8 percent in the first quarter of 2014 compared to the first quarter of 2013. This was primarily due to a decline in volume partially offset by an increase in net revenue margin.  Our ocean transportation net revenues increased 2.6 percent in the first quarter of 2014 compared to the first quarter of 2013. This increase in net revenues was primarily due to volume increases partially offset by a decrease in net revenue margin, which was driven by market volatility and strong competition.  Our air transportation net revenues increased 4.1 percent in the first quarter of 2014 compared to the first quarter of 2013. This increase was primarily due to an increase in net revenue margin and increased volumes.  Our customs net revenues increased 8.4 percent in the first quarter of 2014 compared to the first quarter of 2013. This increase was primarily due to higher transaction volumes.  Other logistics services net revenues, which include transportation management services, warehousing, and small parcel, increased 8.0 percent in the first quarter of 2014 compared to the first quarter of 2013. This increase was primarily due to increases in both warehousing and management services.  Sourcing net revenues decreased 15.7 percent in the first quarter of 2014 compared to the first quarter of 2013. We continued to experience volume and net revenue declines from a large customer. We expect the revenue declines with this large customer to continue throughout 2014. Sourcing net revenue margins declined due to weather, a lack of product availability with some key commodities, and market volatility.  For the first quarter, operating expenses increased 4.6 percent to $300.3 million in 2014 from $287.0 million in 2013.Operating expenses as a percentage of net revenues increased to 65.7 percent in 2014 from 63.0 percent in 2013.  For the first quarter, personnel expenses increased 3.6 percent to $220.3 million in 2014 from $212.6 million in 2013. This was due to an increase in our average headcount of approximately six percent, 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 first quarter, other selling, general, and administrative expenses increased 7.5 percent to $80.0 million in 2014 from $74.4 million in 2013. This change was primarily driven by an increase in our allowance for bad debt.  For the first quarter, investment and other (expense) income was an expense of $6.1 million in 2014 compared to an expense of $60,000 in the first quarter of 2013. The increase was primarily driven by the interest expense on our notes payable, issued during the third quarter of 2013 and used to fund the accelerated share repurchase agreements.  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 282 offices in North America, South America, Europe, and Asia. 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.  Conference Call Information: C.H. Robinson Worldwide First Quarter 2014 Earnings Conference Call Wednesday, April 30, 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 4676571 Webcast replay available through Investor Relations link at www.chrobinson.com Telephone audio replay available until 12:59 a.m. Eastern Time on May 2: 800-406-7325; passcode: 4676571#   CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share data)                                               Three months ended                                                March 31,                                                2014            2013                                                                   Revenues: Transportation                                 $ 2,803,704       $ 2,603,182 Sourcing                                         335,808           387,852 Payment Services                                3,073           3,233      Total revenues                                  3,142,585       2,994,267  Costs and expenses: Purchased transportation and related             2,375,825         2,181,930 services Purchased products sourced for resale            308,962           356,006 Purchased payment services                       563               609 Personnel expenses                               220,297           212,645 Other selling, general, and administrative      79,967          74,371     expenses Total costs and expenses                        2,985,614       2,825,561                                                                    Income from operations                          156,971         168,706                                                                      Investment and other (expense) income           (6,131    )      (60       )                                                                   Income before provision for income taxes         150,840           168,646 Provision for income taxes                      57,653          65,303     Net income                                     $ 93,187         $ 103,343                                                                      Net income per share (basic)                   $ 0.63            $ 0.64 Net income per share (diluted)                 $ 0.63            $ 0.64                                                                   Weighted average shares outstanding              148,517           160,637 (basic) Weighted average shares outstanding              149,008           160,690 (diluted)                                                                     CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands)                                                  March 31,     December 31,                                                   2014            2013 Assets Current assets: Cash and cash equivalents                         $ 142,813       $  162,047 Receivables, net                                    1,612,034        1,449,581 Other current assets                               68,235          52,857 Total current assets                                1,823,082        1,664,485                                                                    Property and equipment, net                         163,957          160,703 Intangible and other assets                        973,129         977,630 Total Assets                                      $ 2,960,168     $  2,802,818                                                                    Liabilities and stockholders’ investment Current liabilities: Accounts payable and outstanding checks           $ 843,061       $  755,007 Accrued compensation                                46,576           85,247 Income taxes                                        44,905           11,681 Other accrued expenses                              35,947           43,046 Current portion of debt                            410,000         375,000 Total current liabilities                           1,380,489        1,269,981                                                                    Noncurrent income taxes payable                     20,583           21,584 Deferred tax liabilities                            76,587           70,618 Long-term debt                                      500,000          500,000 Other long term liabilities                        912             911 Total liabilities                                   1,978,571        1,863,094                                                                    Total stockholders’ investment                     981,597         939,724 Total liabilities and stockholders’               $ 2,960,168     $  2,802,818 investment                                                                      CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands, except operational data)                                              Three months ended                                               March 31,                                               2014             2013 Operating activities: Net income                                    $ 93,187           $ 103,343 Stock-based compensation                        4,793              5,115 Depreciation and amortization                   14,549             13,807 Provision for doubtful accounts                 6,270              2,293 Deferred income taxes                           6,757              27,303 Other                                           (1,476     )       40 Changes in operating elements: Receivables                                     (168,723   )       (74,267   ) Prepaid expenses and other                      (16,286    )       (12,158   ) Other non-current assets                        201                - Accounts payable and outstanding checks         88,052             51,238 Accrued compensation and profit-sharing         (38,008    )       (49,920   ) contribution Accrued income taxes                            32,223             (111,805  ) Other accrued liabilities                      (7,099     )      (13,039   ) Net cash provided by (used for) operating       14,440             (58,050   ) activities                                                                   Investing activities: Purchases of property and equipment             (11,124    )       (8,745    ) Purchases and development of software           (1,471     )       (1,432    ) Other                                          268              43         Net cash used for investing activities          (12,327    )       (10,134   )                                                                   Financing activities: Borrowings on line of credit                    1,225,000          1,008,000 Repayments on line of credit                    (1,190,000 )       (871,017  ) Payment of contingent purchase price            -                  (927      ) Net repurchases of common stock                 (8,264     )       (84,510   ) Excess tax benefit on stock-based               4,253              23,554 compensation Cash dividends                                 (52,420    )      (56,473   ) Net cash (used for) provided by financing       (21,431    )       18,627 activities Effect of exchange rates on cash               84               (562      )                                                                   Net change in cash and cash equivalents         (19,234    )       (50,119   ) Cash and cash equivalents, beginning of        162,047          210,019    period Cash and cash equivalents, end of period      $ 142,813         $ 159,900                                                                                                                    As of March 31,                                               2014               2013 Operational Data: Employees                                       11,703             11,144 Branches                                        282                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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