C.H. Robinson Beats on Earnings, Down Y-o-Y - Analyst Blog

C.H. Robinson Worldwide Inc. CHRW reported first quarter 2014 adjusted earnings per share of 63 cents, beating the Zacks Consensus Estimate by a penny. However, adjusted earnings dropped 1.6% from 64 cents in the year-ago quarter.

Total revenue in the first quarter increased 5% year over year to $3.14 billion, but missed the Zacks Consensus Estimate of $3.20 billion.

Total operating expenses increased 4.6% year over year to $300.3 million in the first quarter, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 65.7%, down from 63.0%.

Segment Details

Transportation: The segment (comprising Truck, Intermodal, less-than-truckload, Ocean, Air and Other logistics services) reported net revenue of $457.2 million in the first quarter, up 0.3% from the year-ago period.

Net revenue from Truck (comprising truckload and less-than-truckload services) grew 0.5% year over year to $269.8 million, attributable to increased volumes.

Net revenue from Intermodal fell 1.8% year over year to $8.9 million.               

Net revenue from Less-than Truckload LTL increased 2.8% year over year to $60.1 million owing to increase in total shipments, partially affected by a decline in net revenue margin.   

Net revenue from Ocean increased 2.6% year over year to $43.6 million. Air transportation net revenue grew 4.1% year over year to $17.5 million while customs net revenue climbed 8.4% to $9.3 million.

Net revenue from Other logistics services grew 8.0%  year over year to $18.6 million.

Sourcing: The segment's net revenue decreased 15.7% year over year to $26.8 million based on volume and net revenue decline from a large client, unfavorable weather conditions and changes in commodity and service mix.

Payment Services: The segment  saw gross revenue decline of 4.3% year over year to $2.5 million due to divesture of T-Chek system.

Liquidity & Debt Position

C.H. Robinson ended the first quarter with cash and cash equivalents of $142.8 million against $162.0 million in 2013 and had $500.0 million in long-term debt on its balance sheet, unchanged from last year. Cash from operations increased to $14.4 million at the end of the quarter from a negative $58.1 million a year ago.

Our Analysis

We believe C.H. Robinson's asset light model with diversified freight forwarding solutions provide earnings flexibility in an economic downturn. However, factors like competitive freight market with peers like Expeditors International of Washington Inc. EXPD and JB Hunt Transport Services Inc. JBHT, declining truckload market share and limited margin expansion opportunities could restrict near-term growth. Further, the increasing cost of transportation and volume loss from a large sourcing client could also weigh on the stock in the coming months.

 C.H. Robinson has Zacks Rank #3 (Hold).

 Other Stocks

Better-ranked stocks in this sector include Dynagas LNG Partners LP DLNG, which has a Zacks Rank #2 (Buy).