C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended June 30, 2014. Summarized financial results for the quarter ended June 30 are as follows (dollars in thousands, except per share data):
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2014 | 2013 |
% | 2014 | 2013 |
% | ||||||||||||||
| Total revenues | $ | 3,502,918 | $ | 3,288,262 | 6.5 | % | $ | 6,645,503 | $ | 6,282,529 | 5.8 | % | |||||||
Net revenues: | |||||||||||||||||||
| Transportation | |||||||||||||||||||
| Truckload | $ | 305,561 | $ | 264,335 | 15.6 | % | $ | 575,398 | $ | 532,939 | 8.0 | % | |||||||
| LTL | 67,376 | 60,711 | 11.0 | % | 127,514 | 119,202 | 7.0 | % | |||||||||||
| Intermodal | 10,863 | 9,920 | 9.5 | % | 19,803 | 19,021 | 4.1 | % | |||||||||||
| Ocean | 50,486 | 49,124 | 2.8 | % | 94,098 | 91,612 | 2.7 | % | |||||||||||
| Air | 21,747 | 20,202 | 7.6 | % | 39,201 | 36,970 | 6.0 | % | |||||||||||
| Customs | 10,312 | 9,769 | 5.6 | % | 19,644 | 18,375 | 6.9 | % | |||||||||||
Other logistics services | 17,207 | 17,084 | 0.7 | % | 35,773 | 34,278 | 4.4 | % | |||||||||||
| Total transportation | 483,552 | 431,145 | 12.2 | % | 911,431 | 852,397 | 6.9 | % | |||||||||||
| Sourcing | 34,894 | 38,752 | -10.0 | % | 61,740 | 70,598 | -12.5 | % | |||||||||||
| Payment services | 2,591 | 2,705 | -4.2 | % | 5,101 | 5,329 | -4.3 | % | |||||||||||
| Total net revenues | 521,037 | 472,602 | 10.2 | % | 978,272 | 928,324 | 5.4 | % | |||||||||||
Operating expenses | 320,655 | 290,126 | 10.5 | % | 620,919 | 577,142 | 7.6 | % | |||||||||||
| Operating income | 200,382 | 182,476 | 9.8 | % | 357,353 | 351,182 | 1.8 | % | |||||||||||
| Net income | $ | 118,596 | $ | 111,872 | 6.0 | % | $ | 211,783 | $ | 215,215 | -1.6 | % | |||||||
| Diluted EPS | $ | 0.80 | $ | 0.70 | 14.3 | % | $ | 1.43 | $ | 1.34 | 6.7 | % | |||||||
Our truckload net revenues increased 15.6 percent in the second quarter of 2014 compared to the second quarter of 2013. Our truckload volumes increased approximately four percent in the second quarter of 2014 compared to the second quarter of 2013. Our North American truckload volumes increased approximately three percent. Our truckload net revenue margin increased in the second quarter of 2014 compared to the second 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 ten percent in the second quarter of 2014 compared to the second quarter of 2013. In North America, our truckload transportation costs increased approximately nine percent, excluding the estimated impacts of the change in fuel.
Our less-than-truckload (“LTL”) net revenues increased 11.0 percent in the second quarter of 2014 compared to the second quarter of 2013. The increase was driven by an eight percent increase in total shipments and a slight increase in net revenue margin.
Our intermodal net revenues increased 9.5 percent in the second quarter of 2014 compared to the second quarter of 2013. This increase was primarily driven by improved purchased transportation costs, a change in business mix, and a volume increase of one percent. Intermodal volumes were adversely impacted by railroad service levels.
Our ocean transportation net revenues increased 2.8 percent in the second quarter of 2014 compared to the second quarter of 2013. This increase in net revenues was primarily due to volume increases partially offset by a decrease in net revenue margin.
Our air transportation net revenues increased 7.6 percent in the second quarter of 2014 compared to the second quarter of 2013. This increase was primarily due to increased volumes and an increase in net revenue margin.
Our customs net revenues increased 5.6 percent in the second quarter of 2014 compared to the second quarter of 2013. This increase was primarily due to higher transaction volumes.
Our other logistics services revenues increased 0.7 percent in the second quarter of 2014 compared to the second quarter of 2013. This increase was primarily due to increases in transportation management services, partially offset by declines in other logistics services.
Sourcing net revenues decreased 10.0 percent in the second quarter of 2014 compared to the second quarter of 2013. We continued to experience volume and net revenue declines from a large customer. We expect these declines with this large customer to continue throughout 2014. Volumes were also negatively impacted by the west coast drought which affected product availability.
For the second quarter, operating expenses increased 10.5 percent to $320.7 million in 2014 from $290.1 million in 2013. Operating expenses as a percentage of net revenues increased slightly to 61.5 percent in the second quarter of 2014 from 61.4 percent in the second quarter of 2013.
For the second quarter, personnel expenses increased 16.0 percent to $239.0 million in 2014 from $206.0 million. 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 and an increase in our average headcount of approximately four percent.
For the second quarter, other selling, general, and administrative expenses decreased 2.9 percent to $81.7 million in 2014 from $84.1 million in 2013. This was due to a decrease in claims and travel expenses, partially offset by an increase in the provision for doubtful accounts. In the second quarter of 2013, we recorded a $5.0 million charge related to the settlement of a contingent auto liability claim.
For the second quarter, interest and other expense was an expense of $6.3 million in 2014 compared to an expense of $589,000 in the second quarter of 2013. This 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 Second Quarter 2014 Earnings Conference Call
Wednesday,
July 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. 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: 888-740-6137
International callers dial
+1-913-312-1495
Callers should reference the conference ID,
which is 5181255
Webcast replay available through Investor
Relations link at www.chrobinson.com
Telephone
audio replay available until 11:30 a.m. Eastern Time on August 6:
800-203-1112;
passcode: 5181255#
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues: | ||||||||||||||||
| Transportation | $ | 3,038,923 | $ | 2,818,077 | $ | 5,842,627 | $ | 5,421,259 | ||||||||
| Sourcing | 460,816 | 466,811 | 796,624 | 854,663 | ||||||||||||
| Payment Services | 3,179 | 3,374 | 6,252 | 6,607 | ||||||||||||
| Total revenues | 3,502,918 | 3,288,262 | 6,645,503 | 6,282,529 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Purchased transportation and related services | 2,555,371 | 2,386,932 | 4,931,196 | 4,568,862 | ||||||||||||
| Purchased products sourced for resale | 425,922 | 428,059 | 734,884 | 784,065 | ||||||||||||
| Purchased payment services | 588 | 669 | 1,151 | 1,278 | ||||||||||||
| Personnel expenses | 238,986 | 206,009 | 459,283 | 418,654 | ||||||||||||
| Other selling, general, and administrative expenses | 81,669 | 84,117 | 161,636 | 158,488 | ||||||||||||
| Total costs and expenses | 3,302,536 | 3,105,786 | 6,288,150 | 5,931,347 | ||||||||||||
| Income from operations | 200,382 | 182,476 | 357,353 | 351,182 | ||||||||||||
| Interest and other expense | (6,252 | ) | (589 | ) | (12,383 | ) | (649 | ) | ||||||||
| Income before provision for income taxes | 194,130 | 181,887 | 344,970 | 350,533 | ||||||||||||
| Provision for income taxes | 75,534 | 70,015 | 133,187 | 135,318 | ||||||||||||
| Net income | $ | 118,596 | $ | 111,872 | $ | 211,783 | $ | 215,215 | ||||||||
| Net income per share (basic) | $ | 0.80 | $ | 0.70 | $ | 1.43 | $ | 1.34 | ||||||||
| Net income per share (diluted) | $ | 0.80 | $ | 0.70 | $ | 1.43 | $ | 1.34 | ||||||||
| Weighted average shares outstanding (basic) | 147,826 | 159,818 | 148,167 | 160,137 | ||||||||||||
| Weighted average shares outstanding (diluted) | 147,974 | 159,917 | 148,293 | 160,198 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (unaudited, in thousands) | ||||||
| June 30, | December 31, | |||||
| 2014 | 2013 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 144,215 | $ | 162,047 | ||
| Receivables, net | 1,699,787 | 1,449,581 | ||||
| Other current assets | 65,199 | 52,857 | ||||
| Total current assets | 1,909,201 | 1,664,485 | ||||
| Property and equipment, net | 160,268 | 160,703 | ||||
| Intangible and other assets | 967,637 | 977,630 | ||||
| Total Assets | $ | 3,037,106 | $ | 2,802,818 | ||
| Liabilities and stockholders’ investment | ||||||
| Current liabilities: | ||||||
| Accounts payable and outstanding checks | $ | 876,113 | $ | 755,007 | ||
| Accrued compensation | 78,917 | 85,247 | ||||
| Accrued income taxes | 25,682 | 11,681 | ||||
| Other accrued expenses | 50,286 | 43,046 | ||||
| Current portion of debt | 400,000 | 375,000 | ||||
| Total current liabilities | 1,430,998 | 1,269,981 | ||||
| Noncurrent income taxes payable | 20,281 | 21,584 | ||||
| Deferred tax liabilities | 75,502 | 70,618 | ||||
| Long-term debt | 500,000 | 500,000 | ||||
| Other long term liabilities | 224 | 911 | ||||
| Total liabilities | 2,027,005 | 1,863,094 | ||||
| Total stockholders’ investment | 1,010,101 | 939,724 | ||||
| Total liabilities and stockholders’ investment | $ | 3,037,106 | $ | 2,802,818 | ||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||
| (unaudited, in thousands, except operational data) | ||||||||
Six months ended | ||||||||
| 2014 | 2013 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 211,783 | $ | 215,215 | ||||
| Stock-based compensation | 16,423 | 9,885 | ||||||
| Depreciation and amortization | 29,349 | 27,952 | ||||||
| Provision for doubtful accounts | 11,128 | 5,635 | ||||||
| Deferred income taxes | 5,894 | 25,993 | ||||||
| Other | (1,348 | ) | 143 | |||||
| Changes in operating elements | ||||||||
| Receivables | (261,334 | ) | (198,669 | ) | ||||
| Prepaid expenses and other | (14,214 | ) | (12,146 | ) | ||||
| Other non-current assets | 270 | - | ||||||
| Accounts payable and outstanding checks | 121,109 | 100,481 | ||||||
| Accrued compensation and profit-sharing contribution | (6,137 | ) | (35,277 | ) | ||||
| Accrued income taxes | 12,698 | (69,631 | ) | |||||
| Other accrued liabilities | 2,747 | (11,310 | ) | |||||
| Net cash provided by operating activities | 128,368 | 58,271 | ||||||
| Investing activities: | ||||||||
| Purchases of property and equipment | (14,860 | ) | (18,316 | ) | ||||
| Purchases and development of software | (3,964 | ) | (4,261 | ) | ||||
| Acquisitions, net of cash | - | 19,126 | ||||||
| Other | 268 | 107 | ||||||
| Net cash used for investing activities | (18,556 | ) | (3,344 | ) | ||||
| Financing activities: | ||||||||
| Borrowings on line of credit | 2,435,000 | 2,134,023 | ||||||
| Repayments on line of credit | (2,410,000 | ) | (2,022,017 | ) | ||||
| Payment of contingent purchase price | - | (927 | ) | |||||
| Net repurchases of common stock | (52,740 | ) | (134,043 | ) | ||||
| Excess tax benefit on stock-based compensation | 5,198 | 24,755 | ||||||
| Cash dividends | (104,909 | ) | (113,031 | ) | ||||
| Net cash used for financing activities | (127,451 | ) | (111,240 | ) | ||||
| Effect of exchange rates on cash | (193 | ) | (3,689 | ) | ||||
| Net change in cash and cash equivalents | (17,832 | ) | (60,002 | ) | ||||
| Cash and cash equivalents, beginning of period | 162,047 | 210,019 | ||||||
| Cash and cash equivalents, end of period | $ | 144,215 | $ | 150,017 | ||||
| As of June 30, | ||||||||
| 2014 | 2013 | |||||||
| Operational Data: | ||||||||
| Employees | 11,645 | 11,297 | ||||||
| Branches | 282 | 276 | ||||||
Contacts:
Chad Lindbloom, 952-937-7779
Chief
Financial Officer
or
Tim Gagnon, 952-683-5007
Director,
Investor Relations
