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C.H. Robinson Reports Fourth Quarter Results

Non-GAAP vs. GAAP Financial MeasuresTo assist investors in understanding our financial performance, we supplement the financial results that are generated in accordance with the accounting principles generally accepted in the United States, or GAAP, with non-GAAP financial measures, including non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income and non-GAAP diluted net income per share. We believe that these non-GAAP measures provide meaningful insight into our operating performance excluding certain event-specific charges, and provide an alternative perspective of our results of operations. We use non-GAAP measures, including those set forth in this release, to assess our operating performance for the quarter. Management believes that these non-GAAP financial measures reflect an additional way of analyzing aspects of our ongoing operations that, when viewed with our GAAP results, provides a more complete understanding of the factors and trends affecting our business. A reconciliation of adjusted results, reflecting the exclusion of certain non-recurring transaction impacts, to our GAAP results is set forth in Note 1 to the attached Condensed Consolidated Financial Information.

Conference Call Information: C.H. Robinson Worldwide Fourth Quarter 2012 Earnings Conference Call Tuesday February 5, 2013 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: 877-941-6010 Callers should reference the conference ID, which is 4594691 Webcast replay available through Investor Relations link at www.chrobinson.com Telephone audio replay available until 12:59 a.m. Eastern Time on February 8: 800-406-7325; passcode: 4594691#

 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands, except per share data)
 
  Three months ended   Twelve months ended
December 31, December 31,
2012   2011 2012   2011
 
Revenues:
Transportation $ 2,585,930 $ 2,200,258 $ 9,685,415 $ 8,740,524
Sourcing 379,479 352,744 1,620,183 1,535,528
Payment Services   5,467   15,282   53,515   60,294
Total revenues   2,970,876   2,568,284   11,359,113   10,336,346
Costs and expenses:
Purchased transportation and related services 2,176,789 1,841,586 8,157,278 7,296,608
Purchased products sourced for resale 348,936 325,313 1,483,745 1,407,080
Purchased payment services 519 - 519 -
Personnel expenses 226,042 164,062 766,006 696,233
Other selling, general, and administrative expenses   84,986   65,368   276,245   243,695
Total costs and expenses   2,837,272   2,396,329   10,683,793   9,643,616
 
Income from operations   133,604   171,955   675,320   692,730
 
Investment and other income   282,166   1,373   283,142   1,974
 
Income before provision for income taxes 415,770 173,328 958,462 694,704
Provision for income taxes   159,378   64,114   364,658   263,092
Net income $ 256,392 $ 109,214 $ 593,804 $ 431,612
 
Net income per share (basic) $ 1.59 $ 0.67 $ 3.68 $ 2.63
Net income per share (diluted) $ 1.58 $ 0.67 $ 3.67 $ 2.62
Weighted average shares outstanding (basic) 160,880 162,919 161,557 164,114
Weighted average shares outstanding (diluted) 161,799 163,825 161,946 164,741
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
  December 31,   December 31,
2012 2011
Assets
Current assets:
Cash and cash equivalents $ 210,019 $ 373,669
Receivables, net 1,412,136 1,189,637
Other current assets   50,135   48,237
Total current assets 1,672,290 1,611,543
 
Property and equipment, net 149,851 126,830
Intangible and other assets   982,084   399,668
Total Assets $ 2,804,225 $ 2,138,041
 
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks $ 707,476 $ 704,734
Accrued compensation 103,343 117,541
Other accrued expenses 167,752 54,357
Current portion of debt   253,646   -
Total current liabilities 1,232,217 876,632
 
Long term liabilities   67,636   12,935
Total liabilities 1,299,853 889,567
 
Total stockholders’ investment   1,504,372   1,248,474
Total liabilities and stockholders’ investment $ 2,804,225 $ 2,138,041
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
 
  Twelve months ended
December 31,
2012   2011
Operating activities:
Net income $ 593,804 $ 431,612
Stock-based compensation 59,381 38,601
Depreciation and amortization 38,090 32,498
Provision for doubtful accounts 10,459 9,052
Gain on divestiture of T-Chek (281,551 ) -
Other non-cash expenses, net (10,721 ) 7,363
Net changes in operating elements   50,880     (89,414 )
Net cash provided by operating activities 460,342 429,712
 
Investing activities:
Purchases of property and equipment (36,096 ) (35,932 )
Purchases and development of software (14,560 ) (16,874 )
Sale of T-Chek, net of cash sold 274,802 -
Cash paid for acquisitions, net of cash acquired (583,631 ) -
Sales/maturities of available-for-sale securities - 9,311
Restricted cash - 5,000
Other   419     182  
Net cash used for investing activities (359,066 ) (38,313 )
 
Financing activities:
Borrowings on line of credit 738,051 -
Repayments on line of credit (489,688 ) -
Payment of contingent purchase price (12,661 ) (4,318 )
Net repurchases of common stock (236,981 ) (231,338 )
Excess tax benefit on stock-based compensation 12,294 15,255
Cash dividends   (275,353 )   (194,697 )
Net cash used for financing activities (264,338 ) (415,098 )
Effect of exchange rates on cash   (588 )   (1,239 )
 
Net change in cash and cash equivalents (163,650 ) (24,938 )
Cash and cash equivalents, beginning of period   373,669     398,607  
Cash and cash equivalents, end of period $ 210,019   $ 373,669  
 
 
As of December 31,
2012   2011
Operational Data:
Employees 10,929 8,353
 

Note 1. Use of Non-GAAP Financial MeasuresTo provide investors with information to assist them in assessing our financial results on a comparable basis with historical results, we have provided financial measures in this press release that exclude the effects of certain non-recurring items related to recent acquisition and divestiture activities. Throughout this release, the term “Reported” refers to information prepared in accordance with GAAP, the term “Non-Recurring Acquisition Impact” refers to items related to the acquisitions of Phoenix and Apreo, the term “Non-Recurring Divestiture Impact” refers to items related to the divestiture of T-Chek, and the term “Adjusted” refers to non-GAAP financial information, adjusted to exclude the Non-Recurring Acquisition Impact and the Non-Recurring Divestiture Impact.

A reconciliation of our reported results to adjusted results for the quarter and year ended December 31 are as follows (dollars in thousands, except per share data):

 
Three months ended December 31, 2012
    Non-   Non-  
Recurring Recurring
Acquisition Divestiture
Reported Impact Impact Adjusted
Net revenues $ 444,632 $ 444,632
 
Operating expenses
Personnel expenses (1) 226,042 (385 ) (34,207 ) 191,450
Other selling, general and administrative expenses (2)   84,986   (8,736 )   (379 )   75,871
Total operating expenses 311,028 (9,121 ) (34,586 ) 267,321
 
Income from operations 133,604 9,121 34,586 177,311
 
Investment and other income (3)   282,166     (281,551 )   615
Income before provision for income taxes 415,770 9,121 (246,965 ) 177,926
 
Provision for income taxes   159,378   2,280     (92,303 )   69,355
Net income $ 256,392 $ 6,841   $ (154,662 ) $ 108,571
Net income per share (diluted) $ 1.58 $ 0.68
 
Weighted average shares outstanding (diluted) 161,799

(735) (4)

 

(455) (5)

 

160,609
 
Twelve months ended December 31, 2012
    Non   Non  
Recurring Recurring
Acquisition Divestiture
Reported Impact Impact Adjusted
Net revenues $ 1,717,571 $ 1,717,571
 
Operating expenses
Personnel expenses (1) 766,006 (385 ) (34,207 ) 731,414
Other selling, general and administrative expenses (2)   276,245   (10,225 )   (379 )   265,641
Total operating expenses 1,042,251 (10,610 ) (34,586 ) 997,055
 
Operating income 675,320 10,610 34,586 720,516
 
Investment and other income (3)   283,142     (281,551 )   1,591
Income before provision for income taxes 958,462 10,610 (246,965 ) 722,107
 
Provision for income taxes   364,658   2,745     (92,303 )   275,100
Net income $ 593,804 $ 7,865   $ (154,662 ) $ 447,007
Net income per share (diluted) $ 3.67 $ 2.76
 
Weighted average shares outstanding (diluted) 161,946

(185) (4)

 

(92) (5)

 

161,669
 
1.   The adjustment to personnel consists of $33 million of incremental vesting expense of our equity awards triggered by the gain on the divestiture of T-Chek. The balance consists of transaction- related bonuses.
2. The adjustments to other operating expenses reflect fees paid to third parties for:
a. Investment banking fees related to the acquisition of Phoenix
b. External legal and accounting fees related to the acquisitions of Apreo and Phoenix and the divestiture of T-Chek.
3. The adjustment to investment and other income reflects the gain from the divestiture of T-Chek.
4. The adjustment to diluted weighted average shares outstanding relates to the shares of C.H. Robinson stock issued as consideration paid to the sellers in the acquisition of Phoenix.
5. The adjustment to diluted weighted average shares outstanding relates to the additional vesting of performance-based restricted stock as a result of the gain on sale recognized from the divestiture of T-Chek.




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