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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