C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ:CHRW), today reported financial results for the quarter ended March 31, 2015. Summarized financial results for the quarter ended March 31 are as follows (dollars in thousands, except per share data):
| Three months ended March 31, | ||||||||||||
| % | ||||||||||||
| 2015 | 2014 | change | ||||||||||
| Total revenues | $ | 3,300,890 | $ | 3,142,585 | 5.0 | % | ||||||
Net revenues: | ||||||||||||
| Transportation | ||||||||||||
| Truckload (1) | $ | 298,380 | $ | 272,347 | 9.6 | % | ||||||
| LTL | 85,370 | 60,138 | 42.0 | % | ||||||||
| Intermodal | 10,512 | 8,940 | 17.6 | % | ||||||||
| Ocean | 50,190 | 43,612 | 15.1 | % | ||||||||
| Air | 20,639 | 17,454 | 18.2 | % | ||||||||
| Customs | 10,263 | 9,332 | 10.0 | % | ||||||||
| Other logistics services | 19,791 | 18,566 | 6.6 | % | ||||||||
| Total transportation | 495,145 | 430,389 | 15.0 | % | ||||||||
| Sourcing | 29,965 | 26,846 | 11.6 | % | ||||||||
| Total net revenues | 525,110 | 457,235 | 14.8 | % | ||||||||
Operating expenses | 343,185 | 300,264 | 14.3 | % | ||||||||
| Operating income | 181,925 | 156,971 | 15.9 | % | ||||||||
| Net income | $ | 106,476 | $ | 93,187 | 14.3 | % | ||||||
| Diluted EPS | $ | 0.73 | $ | 0.63 | 15.9 | % | ||||||
| (1) Includes Payment Services revenues which were previously reported separately. | ||||||||||||
Our truckload net revenues increased 9.6 percent in the first quarter of 2015 compared to the first quarter of 2014. Our acquisition of Freightquote.com (“Freightquote”) on January 1, 2015 contributed approximately three percentage points to our truckload net revenue growth. Our North American truckload volumes increased approximately six percent. Approximately half of this increase was due to the acquisition of Freightquote. Our truckload net revenue margin increased in the first quarter of 2015 compared to the first quarter of 2014, due primarily to the lower cost of fuel. In North America, excluding the estimated impacts of the change in fuel, our average truckload rate per mile charged to our customers increased approximately six percent in the first quarter of 2015 compared to the first quarter of 2014. In North America, our truckload transportation costs increased approximately six 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 42.0 percent in the first quarter of 2015 compared to the first quarter of 2014. Freightquote contributed approximately 34 percentage points to our LTL net revenue growth in the first quarter of 2015. LTL volumes increased approximately 28 percent in the first quarter of 2015 compared to the first quarter of 2014. Freightquote contributed approximately 19 percentage points to our LTL volume growth in the first quarter of 2015. Net revenue margin increased in the first quarter of 2015 compared to the first quarter of 2014. This was primarily the result of a change in our freight mix with more small customers from the Freightquote business.
Our intermodal net revenues increased 17.6 percent in the first quarter of 2015 compared to the first quarter of 2014. Freightquote contributed approximately 10 percentage points to our intermodal net revenue growth in the first quarter of 2015.
Our ocean transportation net revenues increased 15.1 percent in the first quarter of 2015 compared to the first quarter of 2014. The increase in net revenues was primarily due to increased volumes and net revenue margin.
Our air transportation net revenues increased 18.2 percent in the first quarter of 2015 compared to the first quarter of 2014. The increase was primarily due to increased volumes and net revenue margin.
Our customs net revenues increased 10.0 percent in the first quarter of 2015 compared to the first quarter of 2014. The increase was due to increased transaction volumes.
Our other logistics services revenues, which includes managed services, warehousing, and small parcel, increased 6.6 percent in the first quarter of 2015 compared to the first quarter of 2014 primarily from growth in managed services. Freightquote contributed approximately two percentage points to our other logistics services net revenue growth in the first quarter of 2015.
Sourcing net revenues increased 11.6 percent in the first quarter of 2015 compared to the first quarter of 2014. This increase was primarily due to a case volume increase of approximately nine percent across a variety of commodities and services.
For the first quarter, operating expenses increased 14.3 percent to $343.2 million in 2015 from $300.3 million in 2014. Operating expenses as a percentage of net revenues decreased to 65.4 percent in the first quarter of 2015 from 65.7 percent in the first quarter of 2014.
For the first quarter, personnel expenses increased 15.8 percent to $255.1 million in 2015 from $220.3 million in 2014. This was primarily due to increased expenses related to incentive plans that are designed to keep expenses variable with changes in net revenues and profitability. Personnel expenses also increased due to additional headcount related to our acquisition of Freightquote. For the first quarter, our average headcount grew 7.5 percent compared to the first quarter of 2014.
For the first quarter, other selling, general, and administrative expenses increased 10.1 percent to $88.0 million in 2015 from $80.0 million in 2014. This increase was primarily due to our acquisition of Freightquote including amortization expense of approximately $1.9 million, and an increase in claims expenses, partially offset by a decrease in our provision for doubtful accounts.
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 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 First Quarter 2015 Earnings Conference Call
Tuesday,
April 28, 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: 800-479-9001
International callers dial
+1-719-457-2644
Callers should reference the conference ID,
which is 1733625
Webcast replay available through Investor
Relations link at www.chrobinson.com
Telephone
audio replay available until 11:30 a.m. Eastern Time on May 5, 2015:
888-203-1112;
passcode: 1733625#
International
callers dial +1-719-457-0820
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Revenues: | ||||||||||
| Transportation (1) | $ | 2,947,257 | $ | 2,806,777 | ||||||
| Sourcing | 353,633 | 335,808 | ||||||||
| Total revenues | 3,300,890 | 3,142,585 | ||||||||
| Costs and expenses: | ||||||||||
| Purchased transportation and related services (1) | 2,452,112 | 2,376,388 | ||||||||
| Purchased products sourced for resale | 323,668 | 308,962 | ||||||||
| Personnel expenses | 255,144 | 220,297 | ||||||||
| Other selling, general, and administrative expenses | 88,041 | 79,967 | ||||||||
| Total costs and expenses | 3,118,965 | 2,985,614 | ||||||||
| Income from operations | 181,925 | 156,971 | ||||||||
| Interest and other expense | (9,605 | ) | (6,131 | ) | ||||||
| Income before provision for income taxes | 172,320 | 150,840 | ||||||||
| Provision for income taxes | 65,844 | 57,653 | ||||||||
| Net income | $ | 106,476 | $ | 93,187 | ||||||
| Net income per share (basic) | $ | 0.73 | $ | 0.63 | ||||||
| Net income per share (diluted) | $ | 0.73 | $ | 0.63 | ||||||
| Weighted average shares outstanding (basic) | 146,204 | 148,517 | ||||||||
| Weighted average shares outstanding (diluted) | 146,383 | 149,008 | ||||||||
(1) Includes Payment Services revenues and related costs which were previously reported separately. | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited, in thousands) | ||||||||
March 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 135,783 | $ | 128,940 | ||||
| Restricted cash | - | 359,388 | ||||||
| Receivables, net | 1,651,427 | 1,571,591 | ||||||
| Other current assets | 59,705 | 45,540 | ||||||
| Total current assets | 1,846,915 | 2,105,459 | ||||||
| Property and equipment, net | 191,141 | 152,471 | ||||||
| Intangible and other assets | 1,271,168 | 956,408 | ||||||
| Total assets | $ | 3,309,224 | $ | 3,214,338 | ||||
| Liabilities and stockholders’ investment | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and outstanding checks | $ | 858,257 | $ | 795,255 | ||||
| Accrued compensation | 62,563 | 125,624 | ||||||
| Accrued income taxes | 52,797 | 4,616 | ||||||
| Other accrued expenses | 47,479 | 45,365 | ||||||
| Current portion of debt | 630,000 | 605,000 | ||||||
| Total current liabilities | 1,651,096 | 1,575,860 | ||||||
| Noncurrent income taxes payable | 22,622 | 24,279 | ||||||
| Deferred tax liabilities | 77,256 | 66,961 | ||||||
| Long-term debt | 500,000 | 500,000 | ||||||
| Other long term liabilities | 230 | 223 | ||||||
| Total liabilities | 2,251,204 | 2,167,323 | ||||||
| Total stockholders’ investment | 1,058,020 | 1,047,015 | ||||||
| Total liabilities and stockholders’ investment | $ | 3,309,224 | $ | 3,214,338 | ||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||
| (unaudited, in thousands, except operational data) | ||||||||||
| Three months ended | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Operating activities: | ||||||||||
| Net income | $ | 106,476 | $ | 93,187 | ||||||
| Stock-based compensation | 15,336 | 4,793 | ||||||||
| Depreciation and amortization | 16,243 | 14,549 | ||||||||
| Provision for doubtful accounts | 3,991 | 6,270 | ||||||||
| Deferred income taxes | 426 | 6,757 | ||||||||
| Other | 429 | (1,476 | ) | |||||||
| Changes in operating elements, net of acquisitions: | ||||||||||
| Receivables | (27,599 | ) | (168,723 | ) | ||||||
| Prepaid expenses and other | (12,639 | ) | (16,286 | ) | ||||||
| Other non-current assets | 1,435 | 201 | ||||||||
| Accounts payable and outstanding checks | 21,105 | 88,052 | ||||||||
| Accrued compensation and profit-sharing contribution | (64,709 | ) | (38,008 | ) | ||||||
| Accrued income taxes | 48,390 | 32,223 | ||||||||
| Other accrued liabilities | (8,489 | ) | (7,099 | ) | ||||||
| Net cash provided by operating activities | 100,395 | 14,440 | ||||||||
| Investing activities: | ||||||||||
| Purchases of property and equipment | (3,895 | ) | (11,124 | ) | ||||||
| Purchases and development of software | (2,771 | ) | (1,471 | ) | ||||||
| Restricted cash | 359,388 | - | ||||||||
| Acquisitions, net of cash | (369,143 | ) | - | |||||||
| Other | 462 | 268 | ||||||||
| Net cash used for investing activities | (15,959 | ) | (12,327 | ) | ||||||
| Financing activities: | ||||||||||
| Borrowings on line of credit | 2,025,000 | 1,225,000 | ||||||||
| Repayments on line of credit | (2,000,000 | ) | (1,190,000 | ) | ||||||
| Net repurchases of common stock | (40,340 | ) | (8,264 | ) | ||||||
| Excess tax benefit on stock-based compensation | 4,842 | 4,253 | ||||||||
| Cash dividends | (57,335 | ) | (52,420 | ) | ||||||
| Net cash used for financing activities | (67,833 | ) | (21,431 | ) | ||||||
| Effect of exchange rates on cash | (9,760 | ) | 84 | |||||||
| Net change in cash and cash equivalents | 6,843 | (19,234 | ) | |||||||
| Cash and cash equivalents, beginning of period | 128,940 | 162,047 | ||||||||
| Cash and cash equivalents, end of period | $ | 135,783 | $ | 142,813 | ||||||
| As of March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Operational Data: | ||||||||||
| Employees | 12,632 | 11,703 | ||||||||
Contacts:
Chad Lindbloom, 952-937-7779
Chief
Financial Officer and Chief Information Officer
or
Tim Gagnon,
952-683-5007
Director, Investor Relations
