C.H. Robinson Reports Fourth Quarter Results

C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended December 31, 2014. Summarized financial results for the quarter and twelve months ended December 31 are as follows (dollars in thousands, except per share data):

Three months ended December 31, Twelve months ended December 31,

2014

2013

%
change

2014

2013

%
change

Total revenues $ 3,357,202 $ 3,152,882 6.5 % $ 13,470,067 $ 12,752,076 5.6 %

Net revenues:

Transportation
Truckload $ 295,216 $ 256,117 15.3 % $ 1,177,990 $ 1,054,565 11.7 %
LTL 63,402 58,839 7.8 % 258,884 239,477 8.1 %
Intermodal 10,235 9,861 3.8 % 40,631 39,084 4.0 %
Ocean 56,944 46,367 22.8 % 208,422 187,671 11.1 %
Air 19,404 17,982 7.9 % 79,125 73,089 8.3 %
Customs 10,824 9,271 16.8 % 41,575 36,578 13.7 %
Other logistics services 18,281 17,583 4.0 % 73,097 67,931 7.6 %
Total transportation 474,306 416,020 14.0 % 1,879,724 1,698,395 10.7 %
Sourcing 24,005 25,799 -7.0 % 115,546 126,950 -9.0 %
Payment services 3,505 2,646 32.5 % 12,382 10,750 15.2 %
Total net revenues 501,816 444,465 12.9 % 2,007,652 1,836,095 9.3 %

Operating expenses

314,088

289,352

8.5

%

1,259,234

1,153,445

9.2

%

Operating income 187,728 155,113 21.0 % 748,418 682,650 9.6 %
Net income $ 112,947 $ 92,952 21.5 % $ 449,711 $ 415,904 8.1 %
Diluted EPS $ 0.77 $ 0.62 24.2 % $ 3.05 $ 2.65 15.1 %

“2014 was a very good year for us. We were successful in achieving our long term target of double digit earnings per share growth and we made good progress with many strategic initiatives. We did a great job of adjusting to very significant changes in North America surface transportation market conditions. Global forwarding was able to continue earning more market share and expanding our global offerings to our customers. We were able to drive positive change and productivity, to serve our customers and providers in more efficient ways,” said John P. Wiehoff, chairman and chief executive officer of C.H. Robinson.

Our truckload net revenues increased 15.3 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. Our North American truckload volumes increased approximately three percent. Our truckload net revenue margin increased in the fourth quarter of 2014 compared to the fourth quarter of 2013, due primarily to increased rate 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 twelve percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. In North America, our truckload transportation costs increased approximately eleven percent, excluding the estimated impacts of the change in fuel. These increases were largely the result of market conditions and a change in the mix of our business.

Our less-than-truckload (“LTL”) net revenues increased 7.8 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase was driven by a four percent increase in total shipments, and increased customer pricing, partially offset by higher costs.

Our intermodal net revenues increased 3.8 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase in net revenues was primarily driven by increased operational improvements and customer pricing.

Our ocean transportation net revenues increased 22.8 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase in net revenues was primarily due to increased net revenue margin and volumes.

Our air transportation net revenues increased 7.9 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase was primarily due to increased net revenue margin and volumes.

Our customs net revenues increased 16.8 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase was due to increased transaction volumes.

Our other logistics services revenues, which includes managed services, warehousing, and small parcel, increased 4.0 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. The increase was primarily due to increases in managed services.

Sourcing net revenues decreased 7.0 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. This decrease was due to a change in customer, product, and service mix.

Payment services net revenues increased 32.5 percent in the fourth quarter of 2014 compared to the fourth quarter of 2013. This was primarily due to a rate increase on our cash advance option in July 2014.

For the fourth quarter, operating expenses increased 8.5 percent to $314.1 million in 2014 from $289.4 million in 2013. Operating expenses as a percentage of net revenues decreased to 62.6 percent in the fourth quarter of 2014 from 65.1 percent in the fourth quarter of 2013.

For the fourth quarter, personnel expenses increased 15.5 percent to $235.1 million in 2014 from $203.6 million in 2013. This was primarily due to an increase in the expenses related to incentive plans that are designed to keep expenses variable with changes in net revenues and profitability, partially offset by a decrease in our average headcount of 0.6 percent.

For the fourth quarter, other selling, general, and administrative expenses decreased 7.9 percent to $79.0 million in 2014 from $85.7 million in 2013. This was primarily due to a decrease in our allowance for bad debt. During the fourth quarter, we had improvements in our overall accounts receivable portfolio. Additionally, we there were decreases in travel and claims expenses.

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 281 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 66,000 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 Fourth Quarter 2014 Earnings Conference Call
Wednesday, February 4, 2015 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. 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: 888-378-4361
International callers dial +1-719-457-2652
Callers should reference the conference ID, which is 7290001
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 11:30 a.m. Eastern Time on February 11: 800-203-1112;
passcode: 7290001#
International callers dial +1-719-457-0820

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

Three months ended
December 31,

Twelve months ended
December 31,

2014 2013 2014 2013
Revenues:
Transportation $ 3,010,291 $ 2,767,550 $ 11,921,974 $ 11,069,710
Sourcing 342,951 382,098 1,533,555 1,669,134
Payment Services 3,960 3,234 14,538 13,232
Total revenues 3,357,202 3,152,882 13,470,067 12,752,076
Costs and expenses:
Purchased transportation and related services 2,535,985 2,351,530 10,042,250 9,371,315
Purchased products sourced for resale 318,946 356,299 1,418,009 1,542,184
Purchased payment services 455 588 2,156 2,482
Personnel expenses 235,117 203,619 939,021 826,661
Other selling, general, and administrative expenses 78,971 85,733 320,213 326,784
Total costs and expenses 3,169,474 2,997,769 12,721,649 12,069,426
Income from operations 187,728 155,113 748,418 682,650
Interest and other expense (6,400 ) (6,005 ) (24,987 ) (9,289 )
Income before provision for income taxes 181,328 149,108 723,431 673,361
Provision for income taxes 68,381 56,156 273,720 257,457
Net income $ 112,947 $ 92,952 $ 449,711 $ 415,904
Net income per share (basic) $ 0.77 $ 0.62 $ 3.06 $ 2.65
Net income per share (diluted) $ 0.77 $ 0.62 $ 3.05 $ 2.65
Weighted average shares outstanding (basic) 145,856 150,856 147,202 156,915
Weighted average shares outstanding (diluted) 146,650 151,130 147,542 157,080
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

December 31,
2014

December 31,
2013

Assets
Current assets:
Cash and cash equivalents $ 128,940 $ 162,047
Restricted cash 359,388 -
Receivables, net 1,571,591 1,449,581
Other current assets 45,540 52,857
Total current assets 2,105,459 1,664,485
Property and equipment, net 152,471 160,703
Intangible and other assets 956,408 977,630
Total Assets $ 3,214,338 $ 2,802,818
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks $ 795,255 $ 755,007
Accrued compensation 125,624 85,247
Accrued income taxes 4,616 11,681
Other accrued expenses 45,365 43,046
Current portion of debt 605,000 375,000
Total current liabilities 1,575,860 1,269,981
Noncurrent income taxes payable 24,279 21,584
Deferred tax liabilities 66,961 70,618
Long-term debt 500,000 500,000
Other long term liabilities 223 911
Total liabilities 2,167,323 1,863,094
Total stockholders’ investment 1,047,015 939,724
Total liabilities and stockholders’ investment $ 3,214,338 $ 2,802,818
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)

Twelve months ended
December 31,

2014 2013
Operating activities:
Net income $ 449,711 $ 415,904
Stock-based compensation 47,861 9,094
Depreciation and amortization 57,009 56,882
Provision for doubtful accounts 15,092 15,587
Deferred income taxes (3,117 ) 25,226
Other (1,138 ) 319
Changes in operating elements, net of acquisitions:
Receivables (137,102 ) (87,316 )
Prepaid expenses and other 6,294 (5,254 )
Other non-current assets 380 -
Accounts payable and outstanding checks 40,251 47,488
Accrued compensation and profit-sharing contribution 40,236 (15,097 )
Accrued income taxes (4,370 ) (105,857 )
Other accrued liabilities 2,319 (9,199 )
Net cash provided by operating activities 513,426 347,777
Investing activities:
Purchases of property and equipment (22,364 ) (40,354 )
Purchases and development of software (7,138 ) (7,852 )
Restricted cash (359,388 ) -
Acquisitions, net of cash - 19,126
Other (6 ) 221
Net cash used for investing activities (388,896 ) (28,859 )
Financing activities:
Borrowings on line of credit 4,823,000 4,165,023
Repayments on line of credit (4,593,000 ) (4,043,669 )
Debt issuance costs (1,484 ) -
Borrowings of long-term debt - 500,000
Payment of contingent purchase price - (927 )
Net repurchases of common stock (164,703 ) (792,283 )
Excess tax benefit on stock-based compensation 7,558 27,209
Cash dividends (215,008 ) (220,257 )
Net cash used for financing activities (143,637 ) (364,904 )
Effect of exchange rates on cash (14,000 ) (1,986 )
Net change in cash and cash equivalents (33,107 ) (47,972 )
Cash and cash equivalents, beginning of period 162,047 210,019
Cash and cash equivalents, end of period $ 128,940 $ 162,047

As of December 31,
2014 2013
Operational Data:
Employees 11,521 11,676
Branches 281 285

Contacts:

C.H. Robinson Worldwide, Inc.
Chad Lindbloom, 952-937-7779
Chief Financial Officer and Chief Information Officer
or
Tim Gagnon, 952-683-5007
Director, Investor Relations

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