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 |
% | 2014 | 2013 |
% | |||||||||||||||
| 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 |
Twelve months ended | |||||||||||||||
| 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, |
December 31, | |||||
| 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 | ||||||||
| 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:
Chad
Lindbloom, 952-937-7779
Chief Financial Officer and Chief
Information Officer
or
Tim Gagnon, 952-683-5007
Director,
Investor Relations
