C.H. Robinson Reports Third Quarter Results

C.H. Robinson Reports Third Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)-- C.H. Robinson Worldwide, Inc. ("C.H. Robinson") (NAS: CHRW) , today reported financial results for the quarter ended September 30, 2012.

Summarized financial results for the quarter ended September 30 are as follows (dollars in thousands, except per share data):

Three months ended September 30,

Nine months ended September 30,

%

%

2012

2011

change

2012

2011

change

Total revenues

$

2,880,409

$

2,694,928

6.9

%

$

8,388,237

$

7,768,062

8.0

%

Net revenues:

Transportation

Truck

$

327,960

$

321,366

2.1

%

$

956,007

$

930,168

2.8

%

Intermodal

10,074

10,538

-4.4

%

29,804

31,000

-3.9

%

Ocean

18,498

17,881

3.5

%

51,217

49,851

2.7

%

Air

9,046

9,940

-9.0

%

28,496

30,560

-6.8

%

Other logistics services

17,196

14,752

16.6

%

53,472

43,665

22.5

%

Total transportation

382,774

374,477

2.2

%

1,118,996

1,085,244

3.1

%

Sourcing

33,747

33,089

2.0

%

105,895

101,017

4.8

%

Payment Services

16,149

15,500

4.2

%

48,048

45,012

6.7

%

Total net revenues

432,670

423,066

2.3

%

1,272,939

1,231,273

3.4

%

Operating expenses

245,413

239,101

2.6

%

731,223

710,498

2.9

%

Income from operations

187,257

183,965

1.8

%

541,716

520,775

4.0

%

Net income

$

116,330

$

114,347

1.7

%

$

337,412

$

322,398

4.7

%

Diluted EPS

$

0.72

$

0.70

2.9

%

$

2.08

$

1.95

6.7

%


Our truck net revenues, which consist of truckload and less-than-truckload ("LTL") services, increased 2.1 percent in the third quarter of 2012. Our truckload volumes increased approximately eight percent in the third quarter of 2012 compared to the third quarter of 2011. Our truckload net revenue margin decreased in the third quarter of 2012 compared to the third quarter of 2011, due to increased cost per mile. Excluding the estimated impacts of the change in fuel, our average truckload rate per mile to our customers was unchanged in the third quarter of 2012 compared to the third quarter of 2011. Our truckload transportation costs increased approximately one percent, excluding the estimated impacts of the change in fuel. Our LTL net revenues increased approximately 11 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 4.4 percent in the third 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.

Our ocean transportation net revenues increased 3.5 percent in the third quarter of 2012, due to increased pricing, partially offset by volume declines.

Our air transportation net revenues decreased 9.0 percent in the third 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 16.6 percent in the third quarter of 2012. This was primarily due to transaction increases in our transportation management and customs net revenues.

Sourcing net revenues increased 2.0 percent in the third quarter of 2012. This was due to volume growth, partially offset by decreased net revenue margin. Excluding Timco Worldwide, which was acquired on September 26, 2011, we estimate that Sourcing net revenues decreased approximately two percent in the third quarter of 2012.

Our payment services net revenues increased 4.2 percent in the third quarter of 2012 primarily due to an increase in transactions. On October 16, 2012, we completed the sale of our payment services business, T-Chek Systems, Inc., to Electronic Funds Source, LLC. The related assets and liabilities that were sold are classified as "held for sale" on the balance sheet as of September 30, 2012.

For the third quarter, operating expenses increased 2.6 percent to $245.4 million in 2012 from $239.1 million in 2011. This was due to an increase of 0.7 percent in personnel expense and an increase of 8.3 percent in other selling, general, and administrative expenses. For the third quarter, operating expenses as a percentage of net revenues increased to 56.7 percent in 2012 from 56.5 percent in 2011.

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

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 Third Quarter 2012 Earnings Conference Call
Tuesday October 23, 2012 5:00 pm. 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 atwww.chrobinson.com
To participate in the conference call by telephone, please call ten minutes early by dialing: 877-941-6009
Callers should reference the conference ID, which is 4568762
Webcast replay available through Investor Relations link atwww.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on October 26: 800-406-7325; passcode: 4568762#

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in thousands, except per share data)

Three months ended

Nine months ended

September 30,

September 30,

2012

2011

2012

2011

Revenues:

Transportation

$

2,445,883

$

2,280,208

$

7,099,485

$

6,540,266

Sourcing

418,377

399,220

1,240,704

1,182,784

Payment Services

16,149

15,500

48,048

45,012

Total revenues

2,880,409

2,694,928

8,388,237

7,768,062

Costs and expenses:

Purchased transportation and related services

2,063,109

1,905,731

5,980,489

5,455,022

Purchased products sourced for resale

384,630

366,131

1,134,809

1,081,767

Personnel expenses

179,342

178,117

539,964

532,171

Other selling, general, and administrative expenses

66,071

60,984

191,259

178,327

Total costs and expenses

2,693,152

2,510,963

7,846,521

7,247,287

Income from operations

187,257

183,965

541,716

520,775

Investment and other income

76

50

976

601

Income before provision for income taxes

187,333

184,015

542,692

521,376

Provision for income taxes

71,003

69,668

205,280

198,978

Net income

$

116,330

$

114,347

$

337,412

$

322,398

Net income per share (basic)

$

0.72

$

0.70

$

2.09

$

1.96

Net income per share (diluted)

$

0.72

$

0.70

$

2.08

$

1.95

Weighted average shares outstanding (basic)

160,782

163,948

161,784

164,512

Weighted average shares outstanding (diluted)

161,003

164,471

162,042

165,094

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

September 30,

December 31,

2012

2011

Assets

Current assets:

Cash and cash equivalents

$

272,955

$

373,669

Receivables, net

1,334,577

1,189,637

Other current assets

46,399

48,237

Assets held for sale (excluding $24.3 million of cash)

72,235

-

Total current assets

1,726,166

1,611,543

Property and equipment, net

134,437

126,830

Intangible and other assets

382,664

399,668

Total Assets

$

2,243,267

$

2,138,041

Liabilities and stockholders' investment

Current liabilities:

Accounts payable and outstanding checks

$

729,744

$

704,734

Accrued compensation

86,473

117,541

Other accrued expenses

34,514

54,357

Liabilities held for sale

87,324

-

Total current liabilities

938,055

876,632

Long term liabilities

14,337

12,935

Total liabilities

952,392

889,567

Total stockholders' investment

1,290,875

1,248,474

Total liabilities and stockholders' investment

$

2,243,267

$

2,138,041

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited, in thousands, except operational data)

Nine months ended

September 30,

2012

2011

Operating activities:

Net income

$

337,412

$

322,398

Stock-based compensation

21,077

32,074

Depreciation and amortization

26,081

23,714

Provision for doubtful accounts

8,143

6,916

Other non-cash expenses, net

6,346

94

Net changes in operating elements

(131,903

)

(91,641

)

Net cash provided by operating activities

267,156

293,555

Investing activities:

Purchases of property and equipment

(28,096

)

(17,402

)

Purchases and development of software

(10,795

)

(11,679

)

Sales/maturities of available-for-sale securities

-

9,311

Restricted cash

-

5,000

Other

206

161

Net cash used for investing activities

(38,685

)

(14,609

)

Financing activities:

Payment of contingent purchase price

(11,613

)

(4,318

)

Net repurchases of common stock