C.H. Robinson Reports Third Quarter Results

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MINNEAPOLIS--(BUSINESS WIRE)--

C.H. Robinson Worldwide, Inc. ("C.H. Robinson") CHRW, today reported financial results for the quarter ended September 30, 2015. Summarized financial results are as follows (dollars in thousands, except per share data):

       
Three months ended September 30, Nine months ended September 30,
        %         %
2015     2014     change 2015     2014     change
 
Total revenues $ 3,419,253 $ 3,467,362 -1.4 % $ 10,265,231 $ 10,112,865 1.5 %
 

Net revenues:

Transportation
Truckload (1) $ 344,715 $ 311,152 10.8 % $ 977,641 $ 891,651 9.6 %
LTL 94,190 67,968 38.6 % 271,084 195,482 38.7 %
Intermodal 10,168 10,593 -4.0 % 32,219 30,396 6.0 %
Ocean 58,322 57,380 1.6 % 167,578 151,478 10.6 %
Air 20,248 20,520 -1.3 % 60,483 59,721 1.3 %
Customs 12,012 11,107 8.1 % 33,248 30,751 8.1 %
Other logistics services   20,436       19,043 7.3 %   61,331       54,816 11.9 %
Total transportation 560,091 497,763 12.5 % 1,603,584 1,414,295 13.4 %
Sourcing   28,484       29,801 -4.4 %   94,119       91,541 2.8 %
Total net revenues 588,575 527,564 11.6 % 1,697,703 1,505,836 12.7 %
 

Operating expenses

 

355,864

     

324,227

9.8

%

 

1,053,972

     

945,146

11.5

%

Operating income 232,711 203,337 14.4 % 643,731 560,690 14.8 %
Net income $ 139,432     $ 124,981 11.6 % $ 383,116     $ 336,764 13.8 %
Diluted EPS $ 0.96 $ 0.85 12.9 % $ 2.63 $ 2.28 15.4 %
 

(1) Includes Payment Services revenues which were previously reported separately.

 

"We are proud of our results across our global business in the third quarter," said John Wiehoff, CEO and Chairman. "We were able to continue to take market share in the third quarter while maintaining discipline and focus on our customer service and efficiency initiatives."

Our truckload net revenues increased 10.8 percent in the third quarter of 2015 compared to the third quarter of 2014. Organic truckload net revenues increased approximately eight percent in the third quarter of 2015 compared to the third quarter of 2014. Our acquisition of Freightquote.com ("Freightquote") on January 1, 2015 contributed approximately three percentage points to our truckload net revenue growth in the third quarter of 2015. Our North American truckload volumes increased approximately seven percent in the third quarter of 2015 compared to the same period of 2014. North American truckload volumes, excluding Freightquote, increased approximately four percent in the third quarter of 2015 compared to the third quarter of 2014. Our truckload net revenue margin increased in the third quarter of 2015 compared to the third quarter of 2014, due primarily to lower transportation costs, including fuel. In North America, excluding the estimated impacts of the reduction in fuel costs, our average truckload rate per mile charged to our customers was flat in the third quarter of 2015 compared to the third quarter of 2014. In North America, our truckload transportation costs decreased approximately one percent, excluding the estimated impacts of the reduction in fuel costs.

Our less-than-truckload ("LTL") net revenues increased 38.6 percent in the third quarter of 2015 compared to the third quarter of 2014. Freightquote contributed approximately 33 percentage points to our LTL net revenue growth in the third quarter of 2015. LTL volumes increased approximately 32 percent in the third quarter of 2015 compared to the third quarter of 2014. Organic LTL volume increased approximately 13 percent in the third quarter of 2015 compared to the third quarter of 2014. Net revenue margin increased in the third quarter of 2015 compared to the third quarter of 2014. This was primarily the result of a change in our freight mix with more small customers from the higher margin Freightquote business.

Our intermodal net revenues decreased 4.0 percent in the third quarter of 2015 compared to the third quarter of 2014, notwithstanding the increase in intermodal net revenues attributed to Freightquote. Conversion to truckload from intermodal negatively impacted intermodal volumes and net revenues in the third quarter of 2015.

Our ocean transportation net revenues increased 1.6 percent in the third quarter of 2015 compared to the third quarter of 2014. The increase in net revenues was primarily due to increased net revenue margin and a small volume increase.

Our air transportation net revenues decreased 1.3 percent in the third quarter of 2015 compared to the third quarter of 2014. The decrease was due to lower rates charged to our customers, partially offset by increased net revenue margin and an increase in volumes.

Our customs net revenues increased 8.1 percent in the third quarter of 2015 compared to the third 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 7.3 percent in the third quarter of 2015 compared to the third 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 third quarter of 2015.

Sourcing net revenues decreased 4.4 percent in the third quarter of 2015 compared to the third quarter of 2014. This decrease was primarily due to a decline in net revenue per case, offset partially by a case volume increase of 2.5 percent across a variety of commodities and services.

For the third quarter, operating expenses increased 9.8 percent to $355.9 million in 2015 from $324.2 million in 2014. Operating expenses as a percentage of net revenues decreased to 60.5 percent in the third quarter of 2015 from 61.5 percent in the third quarter of 2014.

For the third quarter, personnel expenses increased 8.0 percent to $264.1 million in 2015 from $244.6 million in 2014. This was primarily due to an average headcount increase of 13.1 percent compared to the third quarter of 2014. Our acquisition of Freightquote contributed approximately nine percentage points of the growth in average headcount during the third quarter of 2015. Total personnel expenses did not grow as fast as average headcount in the quarter as the expenses related to variable compensation plans were relatively flat compared to the third quarter of 2014.

For the third quarter, other selling, general, and administrative expenses increased 15.3 percent to $91.8 million in 2015 from $79.6 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 and travel expenses.

About C.H. Robinson

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 Third Quarter 2015 Earnings Conference Call
Wednesday, October 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: 800-768-6490
International callers dial +1-785-830-7987
Callers should reference the conference ID, which is 359696
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 11:30 a.m. Eastern Time on November 4, 2015: 888-203-1112;
passcode: 359696#
International callers dial +1-719-457-0820

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
 
   

Three months ended
September 30,

   

Nine months ended
September 30,

2015     2014 2015     2014
 
Revenues:
Transportation (1) $ 3,044,500 $ 3,073,382 $ 9,122,479 $ 8,922,261
Sourcing   374,753     393,980     1,142,752     1,190,604  
Total revenues   3,419,253     3,467,362     10,265,231     10,112,865  
 
Costs and expenses:
Purchased transportation and related services (1) 2,484,409 2,575,619 7,518,895 7,507,966
Purchased products sourced for resale 346,269 364,179 1,048,633 1,099,063
Personnel expenses 264,077 244,621 783,220 703,904
Other selling, general, and administrative expenses   91,787     79,606     270,752     241,242  
Total costs and expenses   3,186,542     3,264,025     9,621,500     9,552,175  
 
Income from operations   232,711     203,337     643,731     560,690  
 
Interest and other expense   (6,559 )   (6,204 )   (22,058 )   (18,587 )
 
Income before provision for income taxes 226,152 197,133 621,673 542,103
Provisions for income taxes   86,720     72,152     238,557     205,339  
Net income $ 139,432   $ 124,981   $ 383,116   $ 336,764  
 
Net income per share (basic) $ 0.96 $ 0.85 $ 2.63 $ 2.28
Net income per share (diluted) $ 0.96 $ 0.85 $ 2.63 $ 2.28
 
Weighted average shares outstanding (basic) 144,578 146,646 145,423 147,661
Weighted average shares outstanding (diluted) 144,782 146,856 145,601 147,819
 

(1) Includes Payment Services revenues and related costs which were previously reported separately.

 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
   

 September 30, 

   

 December 31, 

2015 2014
Assets
Current assets:
Cash and cash equivalents $ 143,087 $ 128,940
Restricted cash - 359,388
Receivables, net 1,651,794 1,571,591
Other current assets   61,330   45,540
Total current assets 1,856,211 2,105,459
 
Property and equipment, net 190,244 152,471
Intangible and other assets   1,266,110   956,408
Total assets $ 3,312,565 $ 3,214,338
 
Liabilities and stockholders' investment
Current liabilities:
Accounts payable and outstanding checks $ 860,192 $ 795,255
Accrued compensation 124,011 125,624
Accrued income taxes 21,215 4,616
Other accrued expenses 45,841 45,365
Current portion of debt   530,000   605,000
Total current liabilities 1,581,259 1,575,860
 
Noncurrent income taxes payable 23,588 24,279
Deferred tax liabilities 76,144 66,961
Long-term debt 500,000 500,000
Other long term liabilities   211   223
Total liabilities 2,181,202 2,167,323
 
Total stockholders' investment   1,131,363   1,047,015
Total liabilities and stockholders' investment $ 3,312,565 $ 3,214,338
 
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
 
  Nine months ended
September 30,
2015     2014
Operating activities:
Net income $ 383,116 $ 336,764
Stock-based compensation 43,512 33,561
Depreciation and amortization 49,513 43,442
Provision for doubtful accounts 11,975 15,917
Deferred income taxes (8,356 ) 901
Other 459 (1,280 )
Changes in operating elements, net of acquisitions:
Receivables (39,051 ) (206,970 )
Prepaid expenses and other (6,347 ) (4,081 )
Other non-current assets 124 270
Accounts payable and outstanding checks 23,037 67,125
Accrued compensation and profit-sharing contribution (3,585 ) 23,058
Accrued income taxes 17,774 2,690
Other accrued liabilities   (7,728 )   (6,075 )
Net cash provided by operating activities 464,443 305,322
 
Investing activities:
Purchases of property and equipment (19,317 ) (19,291 )
Purchases and development of software (13,494 ) (5,845 )
Restricted cash 359,388 -
Acquisitions, net of cash (367,108 ) -
Other   535     428  
Net cash used for investing activities (39,996 ) (24,708 )
 
Financing activities:
Borrowings on line of credit 5,508,000 3,498,000
Repayments on line of credit (5,583,000 ) (3,528,000 )
Net repurchases of common stock (159,059 ) (127,106 )
Excess tax benefit on stock-based compensation 7,298 6,202
Cash dividends   (171,448 )   (157,590 )
Net cash used for financing activities (398,209 ) (308,494 )
Effect of exchange rates on cash   (12,091 )   (6,451 )
 
Net change in cash and cash equivalents 14,147 (34,331 )
Cash and cash equivalents, beginning of period   128,940     162,047  
Cash and cash equivalents, end of period $ 143,087   $ 127,716  
 
As of September 30,
2015 2014
Operational Data:
Employees 13,156 11,542
 

C.H. Robinson Worldwide, Inc.
Andrew Clarke, 952-683-3474
Chief Financial Officer
or
Tim Gagnon, 952-683-5007
Director, Investor Relations

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