C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended June 30, 2012. Summarized financial results for the quarter ended June 30 are as follows (dollars in thousands, except per share data):
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
| % | % | |||||||||||||||||||||||
| 2012 | 2011 | change | 2012 | 2011 | change | |||||||||||||||||||
| Total revenues | $ | 2,955,714 | $ | 2,707,662 | 9.2 | % | $ | 5,507,828 | $ | 5,073,134 | 8.6 | % | ||||||||||||
| Net revenues: | ||||||||||||||||||||||||
| Transportation | ||||||||||||||||||||||||
| Truck | $ | 312,638 | $ | 314,302 | -0.5 | % | $ | 628,047 | $ | 608,802 | 3.2 | % | ||||||||||||
| Intermodal | 10,019 | 10,862 | -7.8 | % | 19,730 | 20,462 | -3.6 | % | ||||||||||||||||
| Ocean | 16,958 | 16,400 | 3.4 | % | 32,719 | 31,970 | 2.3 | % | ||||||||||||||||
| Air | 10,577 | 11,435 | -7.5 | % | 19,450 | 20,620 | -5.7 | % | ||||||||||||||||
| Other logistics services | 18,814 | 14,848 | 26.7 | % | 36,276 | 28,913 | 25.5 | % | ||||||||||||||||
| Total transportation | 369,006 | 367,847 | 0.3 | % | 736,222 | 710,767 | 3.6 | % | ||||||||||||||||
| Sourcing | 40,205 | 34,929 | 15.1 | % | 72,148 | 67,928 | 6.2 | % | ||||||||||||||||
| Payment services | 16,312 | 15,090 | 8.1 | % | 31,899 | 29,512 | 8.1 | % | ||||||||||||||||
| Total net revenues | 425,523 | 417,866 | 1.8 | % | 840,269 | 808,207 | 4.0 | % | ||||||||||||||||
| Operating expenses | 240,609 | 237,771 | 1.2 | % | 485,810 | 471,397 | 3.1 | % | ||||||||||||||||
| Operating income | 184,914 | 180,095 | 2.7 | % | 354,459 | 336,810 | 5.2 | % | ||||||||||||||||
| Net income | $ | 114,582 | $ | 111,023 | 3.2 | % | $ | 221,082 | $ | 208,051 | 6.3 | % | ||||||||||||
| Diluted EPS | $ | 0.71 | $ | 0.67 | 6.0 | % | $ | 1.36 | $ | 1.26 | 7.9 | % | ||||||||||||
Our intermodal net revenues decreased 7.8 percent in the second 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. We have purchased an additional 500 intermodal containers and expect that all will be in service by the end of the third quarter. These will replace our 350 leased containers.
Our ocean transportation net revenues increased 3.4 percent in the second quarter of 2012, driven by increased pricing, partially offset by decreased volumes. Our air transportation net revenues decreased 7.5 percent in the second 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 26.7 percent in the second quarter of 2012. This was primarily due to increases in our transportation management and customs net revenues. Sourcing net revenues increased 15.1 percent in the second quarter of 2012. This was due to volume growth and increased net revenue margin due to commodity and service mix. Excluding Timco Worldwide, which was acquired on September 26, 2011, we estimate that Sourcing net revenues increased approximately eight percent in the second quarter of 2012. Our Payment Services net revenues increased 8.1 percent in the second quarter of 2012 primarily due to an increase in transactions. For the second quarter, operating expenses increased 1.2 percent to $240.6 million in 2012 from $237.8 million in 2011. This was due to a decrease of 1.0 percent in personnel expense and an increase of 7.8 percent in other selling, general, and administrative expenses. For the second quarter, operating expenses as a percentage of net revenues declined to 56.5 percent in 2012 from 56.9 percent in 2011.Our personnel expense decrease was driven by declines in various incentive plans that are designed to keep expenses variable based on growth in earnings, offset partially by an increase in our average headcount of approximately nine percent. Other operating expense growth was driven primarily by an increase in travel expenses and claims, partially offset by a decrease in the provision for doubtful accounts.
From July 1 through July 23, 2012, our North American truckload volume growth per business day was approximately 11 percent. Through the same period, our total net revenue per business day declined approximately 1.5 percent. 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 Second Quarter 2012 Earnings Conference Call Tuesday July 24, 2012 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: 800-762-8779 Callers should reference the conference ID, which is 4548964 Webcast replay available through Investor Relations link at www.chrobinson.com Telephone audio replay available until 12:59 a.m. Eastern Time on April 27: 800-406-7325; passcode: 4548964#| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (unaudited, in thousands, except per share data) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| Revenues: | ||||||||||||||||
| Transportation | $ | 2,476,805 | $ | 2,269,036 | $ | 4,653,602 | $ | 4,260,058 | ||||||||
| Sourcing | 462,597 | 423,536 | 822,327 | 783,564 | ||||||||||||
| Payment Services | 16,312 | 15,090 | 31,899 | 29,512 | ||||||||||||
| Total revenues | 2,955,714 | 2,707,662 | 5,507,828 | 5,073,134 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Purchased transportation and related services | 2,107,799 | 1,901,189 | 3,917,380 | 3,549,291 | ||||||||||||
| Purchased products sourced for resale | 422,392 | 388,607 | 750,179 | 715,636 | ||||||||||||
| Personnel expenses | 177,184 | 178,945 | 360,622 | 354,054 | ||||||||||||
| Other selling, general, and administrative expenses | 63,425 | 58,826 | 125,188 | 117,343 | ||||||||||||
| Total costs and expenses | 2,770,800 | 2,527,567 | 5,153,369 | 4,736,324 | ||||||||||||
| Income from operations | 184,914 | 180,095 | 354,459 | 336,810 | ||||||||||||
| Investment and other income | 686 | 326 | 900 | 551 | ||||||||||||
| Income before provision for income taxes | 185,600 | 180,421 | 355,359 | 337,361 | ||||||||||||
| Provision for income taxes | 71,018 | 69,398 | 134,277 | 129,310 | ||||||||||||
| Net income | $ | 114,582 | $ | 111,023 | $ | 221,082 | $ | 208,051 | ||||||||
| Net income per share (basic) | $ | 0.71 | $ | 0.67 | $ | 1.36 | $ | 1.26 | ||||||||
| Net income per share (diluted) | $ | 0.71 | $ | 0.67 | $ | 1.36 | $ | 1.26 | ||||||||
| Weighted average shares outstanding (basic) | 161,887 | 164,607 | 162,290 | 164,847 | ||||||||||||
| Weighted average shares outstanding (diluted) | 162,200 | 165,194 | 162,643 | 165,461 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (unaudited, in thousands) | ||||||||
| June 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 240,627 | $ | 373,669 | ||||
| Receivables, net | 1,415,390 | 1,189,637 | ||||||
| Other current assets | 51,584 | 48,237 | ||||||
| Total current assets | 1,707,601 | 1,611,543 | ||||||
| Property and equipment, net | 132,255 | 126,830 | ||||||
| Intangible and other assets | 400,143 | 399,668 | ||||||
| Total Assets | $ | 2,239,999 | $ | 2,138,041 | ||||
| Liabilities and stockholders’ investment | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and outstanding checks | $ | 834,692 | $ | 704,734 | ||||
| Accrued compensation | 65,265 | 117,541 | ||||||
| Other accrued expenses | 49,384 | 54,357 | ||||||
| Total current liabilities | 949,341 | 876,632 | ||||||
| Long term liabilities | 12,468 | 12,935 | ||||||
| Total liabilities | 961,809 | 889,567 | ||||||
| Total stockholders’ investment | 1,278,190 | 1,248,474 | ||||||
| Total liabilities and stockholders’ investment | $ | 2,239,999 | $ | 2,138,041 | ||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||
| (unaudited, in thousands, except operational data) | ||||||||||
| Six months ended | ||||||||||
| June 30, | ||||||||||
| 2012 | 2011 | |||||||||
| Operating activities: | ||||||||||
| Net income | $ | 221,082 | $ | 208,051 | ||||||
| Stock-based compensation | 16,559 | 22,609 | ||||||||
| Depreciation and amortization | 17,208 | 15,299 | ||||||||
| Provision for doubtful accounts | 3,608 | 4,062 | ||||||||
| Other non-cash expenses, net | 5,957 | (618 | ) | |||||||
| Net changes in operating elements | (154,386 | ) | (170,549 | ) | ||||||
| Net cash provided by operating activities | 110,028 | 78,854 | ||||||||
| Investing activities: | ||||||||||
| Purchases of property and equipment | (17,403 | ) | (11,733 | ) | ||||||
| Purchases and development of software | (7,567 | ) | (8,052 | ) | ||||||
| Sales/maturities of available-for-sale securities | - | 9,311 | ||||||||
| Other | 192 | 5 | ||||||||
| Net cash used for investing activities | (24,778 | ) | (10,469 | ) | ||||||
| Financing activities: | ||||||||||
| Payment of contingent purchase price | (11,613 | ) | (4,318 | ) | ||||||
| Net repurchases of common stock | (102,767 | ) | (59,583 | ) | ||||||
| Excess tax benefit on stock-based compensation | 7,654 | 11,053 | ||||||||
| Cash dividends | (109,151 | ) | (97,562 | ) | ||||||
| Net cash used for financing activities | (215,877 | ) | (150,410 | ) | ||||||
| Effect of exchange rates on cash | (2,415 | ) | (685 | ) | ||||||
| Net change in cash and cash equivalents | (133,042 | ) | (82,710 | ) | ||||||
| Cash and cash equivalents, beginning of period | 373,669 | 398,607 | ||||||||
| Cash and cash equivalents, end of period | $ | 240,627 | $ | 315,897 | ||||||
| As of June 30, | ||||||||||
| 2012 | 2011 | |||||||||
| Operational Data: | ||||||||||
| Employees | 8,743 | 8,013 | ||||||||
| Branches | 234 | 232 | ||||||||