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C.H. Robinson Reports Second Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)--Jul. 24, 2012-- C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended June 30, 2012.

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,
        %         %
2012     2011     change 2012     2011     change
 
Total revenues $ 2,955,714 $ 2,707,662 9.2 % $ 5,507,828 $ 5,073,134 8.6 %
 

Net revenues:

Transportation
Truck $ 312,638 $ 314,302 -0.5 % $ 628,047 $ 608,802 3.2 %
Intermodal 10,019 10,862 -7.8 % 19,730 20,462 -3.6 %
Ocean 16,958 16,400 3.4 % 32,719 31,970 2.3 %
Air 10,577 11,435 -7.5 % 19,450 20,620 -5.7 %
Other logistics services   18,814       14,848 26.7 %   36,276       28,913 25.5 %
Total transportation 369,006 367,847 0.3 % 736,222 710,767 3.6 %
Sourcing 40,205 34,929 15.1 % 72,148 67,928 6.2 %
Payment services   16,312       15,090 8.1 %   31,899       29,512 8.1 %
Total net revenues 425,523 417,866 1.8 % 840,269 808,207 4.0 %
 

Operating expenses

 

240,609

     

237,771

1.2

%

 

485,810

     

471,397

3.1

%

Operating income 184,914 180,095 2.7 % 354,459 336,810 5.2 %
Net income $ 114,582     $ 111,023 3.2 % $ 221,082     $ 208,051 6.3 %
Diluted EPS $ 0.71 $ 0.67 6.0 % $ 1.36 $ 1.26 7.9 %
 

Our truck net revenues, which consist of truckload and less-than-truckload (“LTL”) services, decreased 0.5 percent in the second quarter of 2012. Our truckload volumes increased approximately ten percent in the second quarter of 2012 compared to the second quarter of 2011. Our truckload net revenue margin decreased in the second quarter of 2012 compared to the second quarter of 2011, due to our cost per mile rising faster than our price per mile. Excluding the estimated impacts of the change in fuel, our truckload pricing to our customers increased approximately one percent in the second quarter of 2012 compared to the second quarter of 2011. Our truckload transportation costs increased approximately three percent, excluding the estimated impacts of the change in fuel. Our LTL net revenues increased approximately 12 percent. The increase was driven by an increase in total shipments of approximately 17 percent, partially offset by decreased net revenue margin.

Our intermodal net revenues decreased 7.8 percent in the second quarter of 2012. This was due to decreased net revenue margin, offset partially by volume growth. Our net revenue margin decline was due to a change in our mix of business and increased cost of capacity. We have purchased an additional 500 intermodal containers and expect that all will be in service by the end of the third quarter. These will replace our 350 leased containers.

Our ocean transportation net revenues increased 3.4 percent in the second quarter of 2012, driven by increased pricing, partially offset by decreased volumes.

Our air transportation net revenues decreased 7.5 percent in the second quarter of 2012 due to pricing declines, partially offset by volume increases.

Other logistics services net revenues, which include transportation management services, customs, warehousing, and small parcel, increased 26.7 percent in the second quarter of 2012. This was primarily due to increases in our transportation management and customs net revenues.

Sourcing net revenues increased 15.1 percent in the second quarter of 2012. This was due to volume growth and increased net revenue margin due to commodity and service mix. Excluding Timco Worldwide, which was acquired on September 26, 2011, we estimate that Sourcing net revenues increased approximately eight percent in the second quarter of 2012.

Our Payment Services net revenues increased 8.1 percent in the second quarter of 2012 primarily due to an increase in transactions.

For the second quarter, operating expenses increased 1.2 percent to $240.6 million in 2012 from $237.8 million in 2011. This was due to a decrease of 1.0 percent in personnel expense and an increase of 7.8 percent in other selling, general, and administrative expenses. For the second quarter, operating expenses as a percentage of net revenues declined to 56.5 percent in 2012 from 56.9 percent in 2011.

Our personnel expense decrease was driven by declines in various incentive plans that are designed to keep expenses variable based on growth in earnings, offset partially by an increase in our average headcount of approximately nine percent. Other operating expense growth was driven primarily by an increase in travel expenses and claims, partially offset by a decrease in the provision for doubtful accounts.

From July 1 through July 23, 2012, our North American truckload volume growth per business day was approximately 11 percent. Through the same period, our total net revenue per business day declined approximately 1.5 percent.

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 37,000 active customers through a network of 234 offices in North America, South America, Europe, Asia, and Australia. C.H. Robinson maintains one of the largest networks of motor carrier capacity in North America and works with approximately 53,000 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 2012 Earnings Conference Call
Tuesday July 24, 2012 5:00 p.m. Eastern Time
The call will be limited to 60 minutes, including questions and answers.

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: 800-762-8779
Callers should reference the conference ID, which is 4548964
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on April 27: 800-406-7325; passcode: 4548964#

 
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
 
    Three months ended     Six months ended
June 30, June 30,
2012     2011 2012     2011
 
Revenues:
Transportation $ 2,476,805 $ 2,269,036 $ 4,653,602 $ 4,260,058
Sourcing 462,597 423,536 822,327 783,564
Payment Services   16,312   15,090   31,899   29,512
Total revenues   2,955,714   2,707,662   5,507,828   5,073,134
Costs and expenses:
Purchased transportation and related services 2,107,799 1,901,189 3,917,380 3,549,291
Purchased products sourced for resale 422,392 388,607 750,179 715,636
Personnel expenses 177,184 178,945 360,622 354,054
Other selling, general, and administrative expenses   63,425   58,826   125,188   117,343
Total costs and expenses   2,770,800   2,527,567   5,153,369   4,736,324
 
Income from operations   184,914   180,095   354,459   336,810
 
Investment and other income   686   326   900   551
 
Income before provision for income taxes 185,600 180,421 355,359 337,361
Provision for income taxes   71,018   69,398   134,277   129,310
Net income $ 114,582 $ 111,023 $ 221,082 $ 208,051
 
Net income per share (basic) $ 0.71 $ 0.67 $ 1.36 $ 1.26
Net income per share (diluted) $ 0.71 $ 0.67 $ 1.36 $ 1.26
Weighted average shares outstanding (basic) 161,887 164,607 162,290 164,847
Weighted average shares outstanding (diluted) 162,200 165,194 162,643 165,461
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
    June 30,     December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 240,627 $ 373,669
Receivables, net 1,415,390 1,189,637
Other current assets   51,584   48,237
Total current assets 1,707,601 1,611,543
 
Property and equipment, net 132,255 126,830
Intangible and other assets   400,143   399,668
Total Assets $ 2,239,999 $ 2,138,041
 
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks $ 834,692 $ 704,734
Accrued compensation 65,265 117,541
Other accrued expenses   49,384   54,357
Total current liabilities 949,341 876,632
 
Long term liabilities   12,468   12,935
Total liabilities 961,809 889,567
 
Total stockholders’ investment   1,278,190   1,248,474
Total liabilities and stockholders’ investment $ 2,239,999 $ 2,138,041
 
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
 
    Six months ended
June 30,
2012     2011
Operating activities:
Net income $ 221,082 $ 208,051
Stock-based compensation 16,559 22,609
Depreciation and amortization 17,208 15,299
Provision for doubtful accounts 3,608 4,062
Other non-cash expenses, net 5,957 (618 )
Net changes in operating elements   (154,386 )   (170,549 )
Net cash provided by operating activities 110,028 78,854
 
Investing activities:
Purchases of property and equipment (17,403 ) (11,733 )
Purchases and development of software (7,567 ) (8,052 )
Sales/maturities of available-for-sale securities - 9,311
Other   192     5  
Net cash used for investing activities (24,778 ) (10,469 )
 
Financing activities:
Payment of contingent purchase price (11,613 ) (4,318 )
Net repurchases of common stock (102,767 ) (59,583 )
Excess tax benefit on stock-based compensation 7,654 11,053
Cash dividends   (109,151 )   (97,562 )
Net cash used for financing activities (215,877 ) (150,410 )
Effect of exchange rates on cash   (2,415 )   (685 )
 
Net change in cash and cash equivalents (133,042 ) (82,710 )
Cash and cash equivalents, beginning of period   373,669     398,607  
Cash and cash equivalents, end of period $ 240,627   $ 315,897  
 
 
As of June 30,
2012   2011
Operational Data:
Employees 8,743 8,013
Branches 234 232
 

Source: C.H. Robinson Worldwide, Inc.

C.H. Robinson Worldwide, Inc.
Chad Lindbloom, 952-937-7779
chief financial officer
or
Angie Freeman, 952-937-7847
vice president, investor relations

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding C.H. Robinson Worldwide Inc's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.