C.H. Robinson Reports Second Quarter Results

MINNEAPOLIS--()--C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended June 30, 2016. Summarized financial results are as follows (dollars in thousands, except per share data):

   
Three months ended June 30, Six months ended June 30,

2016

 

2015

   

%
change

2016

 

2015

   

%
change

           
Total revenues $ 3,299,741 $ 3,545,088 -6.9% $ 6,373,684 $ 6,845,978 -6.9%

Net revenues:

Transportation
Truckload $ 329,740 $ 334,546 -1.4% $ 651,424 $ 632,926 2.9%
LTL 99,778 91,524 9.0% 191,071 176,894 8.0%
Intermodal 9,021 11,539 -21.8% 18,285 22,051 -17.1%
Ocean 60,068 59,066 1.7% 118,737 109,256 8.7%
Air 20,118 19,596 2.7% 38,527 40,235 -4.2%
Customs 11,605 10,973 5.8% 22,329 21,236 5.1%
Other logistics services   26,171     21,104   24.0%   50,194     40,895   22.7%
Total transportation 556,501 548,348 1.5% 1,090,567 1,043,493 4.5%
Sourcing   37,714     35,670   5.7%   66,983     65,635   2.1%
Total net revenues 594,215 584,018 1.7% 1,157,550 1,109,128 4.4%
 

Operating expenses

 

360,468

   

354,923

 

1.6%

 

724,851

   

698,108

 

3.8%

Operating income 233,747 229,095 2.0% 432,699 411,020 5.3%
Net income $ 143,090   $ 137,208   4.3% $ 262,053   $ 243,684   7.5%
Diluted EPS $ 1.00 $ 0.94 6.4% $ 1.83 $ 1.67 9.6%
 

Our truckload net revenues decreased 1.4 percent in the second quarter of 2016 compared to the second quarter of 2015. Our total truckload volumes increased approximately three percent in the second quarter of 2016 compared to the second quarter of 2015. North American truckload volumes also increased approximately three percent over the same period. Our truckload net revenue margin increased in the second quarter of 2016 compared to the second quarter of 2015, due primarily to lower transportation costs. In North America, excluding the estimated impacts of the change in fuel prices, our average truckload rate per mile charged to our customers decreased approximately 7.5 percent in the second quarter of 2016 compared to the second quarter of 2015. In North America, our truckload transportation costs decreased approximately eight percent, excluding the estimated impacts of the change in fuel prices.

Our less than truckload (“LTL”) net revenues increased nine percent in the second quarter of 2016 compared to the second quarter of 2015. LTL volumes increased approximately seven percent in the second quarter of 2016 compared to the second quarter of 2015. Net revenue margin increased in the second quarter of 2016 compared to the second quarter of 2015.

Our intermodal net revenues decreased 21.8 percent in the second quarter of 2016 compared to the second quarter of 2015. This was primarily due to decreased volumes and net revenue margin declines. During the second quarter of 2016, intermodal opportunities were negatively impacted by the alternative lower cost truck market.

Our ocean transportation net revenues increased 1.7 percent in the second quarter of 2016 compared to the second quarter of 2015. The increase in net revenues was primarily due to increased net revenue margin and volumes, offset partially by pricing declines.

Our air transportation net revenues increased 2.7 percent in the second quarter of 2016 compared to the second quarter of 2015. The increase was due to increased net revenue margin and an increase in volumes, offset partially by pricing declines.

Our customs net revenues increased 5.8 percent in the second quarter of 2016 compared to the second quarter of 2015. The increase was primarily due to increased transaction volumes.

Our other logistics services net revenues, which includes managed services, warehousing, and small parcel, increased 24.0 percent in the second quarter of 2016 compared to the second quarter of 2015 primarily from growth in managed services.

Sourcing net revenues increased 5.7 percent in the second quarter of 2016 compared to the second quarter of 2015. This increase was primarily due to a case volume increase across a variety of commodities and services and an increase in net revenue per case.

For the second quarter, operating expenses increased 1.6 percent to $360.5 million in 2016 from $354.9 million in 2015. Operating expenses as a percentage of net revenues decreased to 60.7 percent in the second quarter of 2016 from 60.8 percent in the second quarter of 2015.

For the second quarter, personnel expenses increased 2.4 percent to $270.3 million in 2016 from $264.0 million in 2015. For the second quarter, our average headcount grew 5.2 percent compared to the second quarter of 2015. The increase in personnel expense was less than the increase in average headcount due to decreased expenses related to incentive plans that are designed to keep expenses variable with changes in net revenues and profitability.

For the second quarter, other selling, general, and administrative expenses decreased 0.8 percent to $90.2 million in 2016 from $90.9 million in 2015. This was primarily due to a decrease in the allowance for doubtful accounts, partially offset by increases in other areas including 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 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 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 2016 Earnings Conference Call
Wednesday, July 27, 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: 877-269-7756
International callers dial +1-201-689-7817
Callers should reference the conference ID, which is 13640751
Webcast replay available through Investor Relations link at www.chrobinson.com
Telephone audio replay available until 11:30 a.m. Eastern Time on August 4, 2016: 877-660-6853; passcode: 13640751#
International callers dial +1-201-612-7415

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

Three months ended

June 30,

 

Six months ended

June 30,

2016   2015 2016   2015
 
Revenues:
Transportation $ 2,881,496 $ 3,130,722 $ 5,595,184 $ 6,077,979
Sourcing   418,245     414,366     778,500     767,999  
Total revenues   3,299,741     3,545,088     6,373,684     6,845,978  
 
Costs and expenses:
Purchased transportation and related services 2,324,995 2,582,374 4,504,617 5,034,486
Purchased products sourced for resale 380,531 378,696 711,517 702,364
Personnel expenses 270,251 263,999 547,748 519,143
Other selling, general, and administrative expenses   90,217     90,924     177,103     178,965  
Total costs and expenses   3,065,994     3,315,993     5,940,985     6,434,958  
 
Income from operations   233,747     229,095     432,699     411,020  
 
Interest and other expense   (6,265 )   (5,894 )   (15,037 )   (15,499 )
 
Income before provision for income taxes 227,482 223,201 417,662 395,521
Provisions for income taxes   84,392     85,993     155,609     151,837  
Net income $ 143,090   $ 137,208   $ 262,053   $ 243,684  
 
Net income per share (basic) $ 1.00 $ 0.94 $ 1.83 $ 1.67
Net income per share (diluted) $ 1.00 $ 0.94 $ 1.83 $ 1.67
 
Weighted average shares outstanding (basic) 142,998 145,515 143,259 145,856
Weighted average shares outstanding (diluted) 143,216 145,679 143,437 146,020
 
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
 
 

June 30,
2016

 

December 31,
2015

Assets
Current assets:
Cash and cash equivalents $ 207,083 $ 168,229
Receivables, net 1,602,631 1,505,620
Other current assets   69,388     56,849  
Total current assets 1,879,102 1,730,698
 
Property and equipment, net 211,905 190,874
Intangible and other assets   1,258,063     1,262,786  
Total assets $ 3,349,070   $ 3,184,358  
 
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks $ 836,721 $ 783,883
Accrued compensation 84,648 146,666
Accrued income taxes 42,094 12,573
Other accrued expenses 62,994 55,475
Current portion of debt   465,000     450,000  
Total current liabilities 1,491,457 1,448,597
 
Noncurrent income taxes payable 18,615 19,634
Deferred tax liabilities 75,937 65,460
Long-term debt 500,000 500,000
Other long term liabilities   221     217  
Total liabilities 2,086,230 2,033,908
 
Total stockholders’ investment   1,262,840     1,150,450  
Total liabilities and stockholders’ investment $ 3,349,070   $ 3,184,358  
 
 
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands, except operational data)
 
 

Six months ended
June 30,

2016   2015
Operating activities:
Net income $ 262,053 $ 243,684
Stock-based compensation 25,785 31,019
Depreciation and amortization 35,059 32,682
Provision for doubtful accounts 2,144 9,053
Deferred income taxes 17,004 (1,780 )
Other 366 438
Changes in operating elements, net of acquisitions:
Receivables (94,030 ) (87,663 )
Prepaid expenses and other (19,066 ) (19,802 )
Other non-current assets (1,615 ) 736
Accounts payable and outstanding checks 52,843 56,891

Accrued compensation and profit-sharing contribution

(61,029 ) (32,027 )
Accrued income taxes 28,502 21,230
Other accrued liabilities   (755 )   (3,265 )
Net cash provided by operating activities 247,261 251,196
 
Investing activities:
Purchases of property and equipment (33,483 ) (11,542 )
Purchases and development of software (10,493 ) (8,063 )
Restricted cash - 359,388
Acquisitions, net of cash - (369,143 )
Other   (405 )   361  
Net cash used for investing activities (44,381 ) (28,999 )
 
Financing activities:
Borrowings on line of credit 2,840,000 3,893,000
Repayments on line of credit (2,825,000 ) (3,868,000 )
Net repurchases of common stock (66,249 ) (90,255 )
Excess tax benefit on stock-based compensation 15,104 6,040
Cash dividends   (127,520 )   (114,517 )
Net cash used for financing activities (163,665 ) (173,732 )
Effect of exchange rates on cash   (361 )   (5,954 )
 
Net change in cash and cash equivalents 38,854 42,511
Cash and cash equivalents, beginning of period   168,229     128,940  
Cash and cash equivalents, end of period $ 207,083   $ 171,451  
 
As of June 30,
2016 2015
Operational Data:
Employees 13,701 13,068

Contacts

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

Release Summary

C.H. Robinson Worldwide, Inc. today reported financial results for the quarter ended June 30, 2016.

$Cashtags

Contacts

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