C.H. Robinson Reports Fourth Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)--

C.H. Robinson Worldwide, Inc. ("C.H. Robinson") CHRW, today reported financial results for the quarter ended December 31, 2015. Summarized financial results are as follows (dollars in thousands, except per share data):

		Three months ended December 31,									Twelve months ended December 31,
								%									%
		2015			2014			change			2015			2014			change
Total revenues		$	3,210,853		$	3,357,202		-4.4	%		$	13,476,084		$	13,470,067		0.0	%
Net revenues:
Transportation
Truckload (1)		$	338,892		$	298,721		13.4	%		$	1,316,533		$	1,190,372		10.6	%
LTL			89,622			63,402		41.4	%			360,706			258,884		39.3	%
Intermodal			8,835			10,235		-13.7	%			41,054			40,631		1.0	%
Ocean			56,065			56,944		-1.5	%			223,643			208,422		7.3	%
Air			18,613			19,404		-4.1	%			79,096			79,125		0.0	%
Customs			10,681			10,824		-1.3	%			43,929			41,575		5.7	%
Other logistics services			21,217			18,281		16.1	%			82,548			73,097		12.9	%
Total transportation			543,925			477,811		13.8	%			2,147,509			1,892,106		13.5	%
Sourcing			26,852			24,005		11.9	%			120,971			115,546		4.7	%
Total net revenues			570,777			501,816		13.7	%			2,268,480			2,007,652		13.0	%
Operating expenses			356,198			314,088		13.4	%			1,410,170			1,259,234		12.0	%
Operating income			214,579			187,728		14.3	%			858,310			748,418		14.7	%
Net income		$	126,583		$	112,947		12.1	%		$	509,699		$	449,711		13.3	%
Diluted EPS		$	0.88		$	0.77		14.3	%		$	3.51		$	3.05		15.1	%
(1) Includes Payment Services revenues which were previously reported separately.

"Our team delivered great results in the fourth quarter and the full year in 2015," said John Wiehoff, CEO and Chairman. "The growth in net revenue, net income and earnings per share represent the effectiveness of our network and the positive outcomes we are delivering for customers."

Our truckload net revenues increased 13.4 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Organic truckload net revenues increased approximately ten percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Our acquisition of Freightquote.com ("Freightquote") on January 1, 2015 contributed approximately 3.5 percentage points to our truckload net revenue growth in the fourth quarter of 2015. Our North American truckload volumes increased approximately five percent in the fourth quarter of 2015 compared to the same period of 2014. North American truckload volumes, excluding Freightquote, increased approximately two percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Our truckload net revenue margin increased in the fourth quarter of 2015 compared to the fourth 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 decreased approximately three percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. In North America, our truckload transportation costs decreased approximately five percent, excluding the estimated impacts of the reduction in fuel costs.

Our less-than-truckload ("LTL") net revenues increased 41.4 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Freightquote contributed approximately 32 percentage points to our LTL net revenue growth in the fourth quarter of 2015. LTL volumes increased approximately 36 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Organic LTL volume increased approximately 17 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. Net revenue margin increased in the fourth quarter of 2015 compared to the fourth 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 13.7 percent in the fourth quarter of 2015 compared to the fourth 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 fourth quarter of 2015.

Our ocean transportation net revenues decreased 1.5 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. The decrease in net revenues was primarily due to lower rates charged to our customers, offset partially by decreased costs and higher volumes.

Our air transportation net revenues decreased 4.1 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. The decrease was due to lower rates charged to our customers, partially offset by increased net revenue margin.

Our customs net revenues decreased 1.3 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. The decrease was due to lower rates, partially offset by higher volume.

Our other logistics services revenues, which includes managed services, warehousing, and small parcel, increased 16.1 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014 primarily from volume growth in managed services. Freightquote contributed approximately two percentage points to our other logistics services net revenue growth in the fourth quarter of 2015.

Sourcing net revenues increased 11.9 percent in the fourth quarter of 2015 compared to the fourth quarter of 2014. This increase was primarily due to an increase in net revenue per case and a case volume increase of 4.5 percent across a variety of commodities and services.

For the fourth quarter, operating expenses increased 13.4 percent to $356.2 million in 2015 from $314.1 million in 2014. Operating expenses as a percentage of net revenues decreased to 62.4 percent in the fourth quarter of 2015 from 62.6 percent in the fourth quarter of 2014.

For the fourth quarter, personnel expenses increased 14.1 percent to $268.2 million in 2015 from $235.1 million in 2014. This was primarily due to an average headcount increase of 14.1 percent compared to the fourth quarter of 2014. Our acquisition of Freightquote contributed approximately nine percentage points of the growth in average headcount during the fourth quarter of 2015.

For the fourth quarter, other selling, general, and administrative expenses increased 11.4 percent to $88.0 million in 2015 from $79.0 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 travel expenses.

Interest and other expense increased during the fourth quarter of 2015 by $7.1 million. During the fourth quarter, we wrote off an indemnification asset related to the acquisition of Phoenix International Freight Services, Ltd., as the indemnifications expired. The impact of this write off was partially offset within the provision for income taxes by related tax liabilities that expired under applicable statute of limitations. These items decreased earnings per share by $0.02 in the fourth quarter.

About C.H. Robinson

Founded in 1905, C.H. Robinson Worldwide, Inc. is one of the largest non-asset based fourth party logistics companies in the world. C.H. Robinson is a global provider of multimodal transportation services and logistics solutions, currently serving over 110,000 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 68,000 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 fourth 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 Fourth Quarter 2015 Earnings Conference Call
Wednesday, February 3, 2016, 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: 800-723-6751
International callers dial +1-785-830-7980
Callers should reference the conference ID, which is 4722702
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 11:30 a.m. Eastern Time on February 10, 2016: 888-203-1112;
passcode: 4722702#
International callers dial +1-719-457-0820

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
		Three months ended December 31,								Twelve months ended December 31,
		2015				2014				2015				2014
Revenues:
Transportation (1)		$	2,867,301			$	3,014,251			$	11,989,780			$	11,936,512
Sourcing			343,552				342,951				1,486,304				1,533,555
Total revenues			3,210,853				3,357,202				13,476,084				13,470,067
Costs and expenses:
Purchased transportation and related services (1)			2,323,376				2,536,440				9,842,271				10,044,406
Purchased products sourced for resale			316,700				318,946				1,365,333				1,418,009
Personnel expenses			268,190				235,117				1,051,410				939,021
Other selling, general, and administrative expenses			88,008				78,971				358,760				320,213
Total costs and expenses			2,996,274				3,169,474				12,617,774				12,721,649
Income from operations			214,579				187,728				858,310				748,418
Interest and other expense			(13,471	)			(6,400	)			(35,529	)			(24,987	)
Income before provision for income taxes			201,108				181,328				822,781				723,431
Provisions for income taxes			74,525				68,381				313,082				273,720
Net income		$	126,583			$	112,947			$	509,699			$	449,711
Net income per share (basic)		$	0.88			$	0.77			$	3.52			$	3.06
Net income per share (diluted)		$	0.88			$	0.77			$	3.51			$	3.05
Weighted average shares outstanding (basic)			143,484				145,856				144,967				147,202
Weighted average shares outstanding (diluted)			144,144				146,650				145,349				147,542
(1) Includes Payment Services revenues and related costs which were previously reported separately.

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
		December 31,			December 31,
		2015			2014
Assets
Current assets:
Cash and cash equivalents		$	168,229		$	128,940
Restricted cash			-			359,388
Receivables, net			1,505,620			1,571,591
Other current assets			56,849			45,540
Total current assets			1,730,698			2,105,459
Property and equipment, net			190,874			152,471
Intangible and other assets			1,262,786			956,408
Total assets		$	3,184,358		$	3,214,338
Liabilities and stockholders' investment
Current liabilities:
Accounts payable and outstanding checks		$	783,883		$	795,255
Accrued compensation			146,666			125,624
Accrued income taxes			12,573			4,616
Other accrued expenses			55,475			45,365
Current portion of debt			450,000			605,000
Total current liabilities			1,448,597			1,575,860
Noncurrent income taxes payable			19,634			24,279
Deferred tax liabilities			78,105			66,961
Long-term debt			500,000			500,000
Other long term liabilities			217			223
Total liabilities			2,046,553			2,167,323
Total stockholders' investment			1,137,805			1,047,015
Total liabilities and stockholders' investment		$	3,184,358		$	3,214,338

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
		Twelve months ended
		December 31,
		2015				2014
Operating activities:
Net income		$	509,699			$	449,711
Stock-based compensation			57,661				47,861
Depreciation and amortization			66,409				57,009
Provision for doubtful accounts			11,538				15,092
Deferred income taxes			(17,095	)			(3,117	)
Other			7,409				(1,138	)
Changes in operating elements, net of acquisitions:
Receivables			107,560				(137,102	)
Prepaid expenses and other			(228	)			6,294
Other non-current assets			741				380
Accounts payable and outstanding checks			(53,272	)			40,251
Accrued compensation and profit-sharing contribution			18,580				40,236
Accrued income taxes			5,178				(4,370	)
Other accrued liabilities			4,156				2,319
Net cash provided by operating activities			718,336				513,426
Investing activities:
Purchases of property and equipment			(28,115	)			(22,364	)
Purchases and development of software			(16,527	)			(7,138	)
Restricted cash			359,388				(359,388	)
Acquisitions, net of cash			(369,833	)			-
Other			641				(6	)
Net cash used for investing activities			(54,446	)			(388,896	)
Financing activities:
Borrowings on line of credit			6,833,000				4,823,000
Repayments on line of credit			(6,988,000	)			(4,593,000	)
Debt issuance costs			-				(1,484	)
Net repurchases of common stock			(225,674	)			(164,703	)
Excess tax benefit on stock-based compensation			8,548				7,558
Cash dividends			(235,615	)			(215,008	)
Net cash used for financing activities			(607,741	)			(143,637	)
Effect of exchange rates on cash			(16,860	)			(14,000	)
Net change in cash and cash equivalents			39,289				(33,107	)
Cash and cash equivalents, beginning of period			128,940				162,047
Cash and cash equivalents, end of period		$	168,229			$	128,940
		As of December 31,
		2015				2014
Operational Data:
Employees			13,159				11,521

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