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Press release from Business Wire

C.H. Robinson Reports Third Quarter Results

Tuesday, October 26, 2010

C.H. Robinson Reports Third Quarter Results16:15 EDT Tuesday, October 26, 2010 MINNEAPOLIS (Business Wire) -- C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended September 30, 2010. 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,         %         % 2010 2009 change 2010 2009 change   Total revenues $ 2,420,357 $ 1,954,803 23.8 % $ 6,948,956 $ 5,568,823 24.8 % Net revenues: Transportation Truck $ 284,200 $ 268,055 6.0 % $ 785,782 $ 790,640 -0.6 % Intermodal 9,188 8,350 10.0 % 27,109 26,608 1.9 % Ocean 17,057 13,404 27.3 % 44,049 40,578 8.6 % Air 11,453 8,309 37.8 % 31,559 23,394 34.9 % Other logistics services   14,666   11,714 25.2 %   42,857   32,529 31.8 % Total transportation 336,564 309,832 8.6 % 931,356 913,749 1.9 % Sourcing 31,921 30,860 3.4 % 107,673 95,447 12.8 % Information services   14,095   11,874 18.7 %   40,785   33,647 21.2 % Total net revenues 382,580 352,566 8.5 % 1,079,814 1,042,873 3.5 % Operating expenses   216,247   197,765 9.3 %   621,019   600,820 3.4 % Operating income 166,333 154,801 7.4 % 458,795 442,053 3.8 % Net income $ 102,627 $ 95,460 7.5 % $ 283,865 $ 273,096 3.9 % Diluted EPS $ 0.62 $ 0.57 8.8 % $ 1.71 $ 1.61 6.2 %   Our Transportation revenue increased 29.6 percent in the third quarter of 2010. Transportation net revenues increased 8.6 percent to $336.6 million in the third quarter of 2010 from $309.8 million in the third quarter of 2009. Our Transportation net revenue margin decreased to 16.6 percent in 2010 from 19.8 percent in 2009. Our truck net revenues, which consist of truckload and less-than-truckload (“LTL”) services, increased 6.0 percent in the third quarter of 2010. Our truckload volumes increased approximately 14 percent in the third quarter of 2010 compared to the third quarter of 2009. Our truckload net revenue margins decreased due to higher transportation costs and higher fuel prices, partially offset by increased pricing to our customers. Excluding the estimated impacts of the change in fuel, our truckload pricing to our customers increased approximately eight percent in the third quarter of 2010 compared to the third quarter of 2009. Our truckload transportation costs increased approximately 12 percent, excluding the estimated impacts of fuel. Our LTL net revenues increased approximately 18 percent. The increase was driven by an increase in total shipments of approximately 17 percent and increased pricing, partially offset by a small decline in our net revenue margin. Our intermodal net revenue increase of 10.0 percent in the third quarter of 2010 was driven by increased volume. Our ocean transportation net revenues increased 27.3 percent in the third quarter of 2010, driven by large volume increases. We experienced a net revenue margin decline due to increased cost of capacity, which was partially offset by increased pricing to our customers. Our air transportation net revenue increased 37.8 percent in the third quarter of 2010 due to higher volumes. Other logistics services net revenues consist primarily of transportation management fees and customs brokerage fees. The increase of 25.2 percent was driven primarily by an increase in management fees. For the third quarter, our Sourcing revenues increased 0.1 percent, including the previously announced acquisition of Rosemont Farms, Inc. (“Rosemont”) on September 15, 2009. Sourcing net revenues increased 3.4 percent to $31.9 million in 2010 from $30.9 million in 2009. Excluding the Rosemont acquisition, Sourcing net revenues decreased approximately 11 percent in the third quarter of 2010, primarily due to decreased volumes with a large customer. Our Information Services revenues increased 18.7 percent in the third quarter of 2010 due to an increase in transactions and increases in some fees that are impacted by fuel prices. For the third quarter, operating expenses increased 9.3 percent to $216.2 million in 2010 from $197.8 million in 2009. This was due to an increase of 8.9 percent in personnel expense and an increase of 10.8 percent in other selling, general, and administrative expenses. Personnel expenses related to our restricted stock program and various other incentive plans increased as many are variable, based on growth in our earnings. We also increased average headcount by three percent in the quarter. A significant portion of the increase in our other selling, general, and administrative expenses was related to our acquisition of Rosemont. As a percentage of net revenues, total operating expenses increased slightly to 56.5 percent in the third quarter of 2010 from 56.1 percent in the third quarter of 2009. 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 35,000 customers through a network of 232 offices in North America, South America, Europe, Asia, Australia, and the Middle East. C.H. Robinson maintains one of the largest networks of motor carrier capacity in North America and works with over 47,000 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 such as the strength of the current recovery and 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; and the impact of war on the economy; and other risks and uncertainties detailed in our Annual and Quarterly Reports.   Conference Call Information:C.H. Robinson Worldwide Third Quarter 2010 Earnings Conference CallTuesday, October 26, 2010 5:00 pm. Eastern timeLive webcast available through Investor Relations link at www.chrobinson.comTelephone access: 877-941-6011; conference ID 4371919Webcast replay available through Investor Relations link at www.chrobinson.comTelephone audio replay available until 12:59 a.m. Eastern Time on October 29, 2010: 800-406-7325;passcode: 4371919#       CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited, in thousands, except per share data)       Three months ended       Nine months ended September 30, September 30, 2010       2009 2010       2009   Revenues: Transportation $ 2,026,154 $ 1,563,335 $ 5,629,334 $ 4,369,438 Sourcing 380,108 379,594 1,278,837 1,165,738 Information Services   14,095   11,874   40,785   33,647 Total revenues   2,420,357   1,954,803   6,948,956   5,568,823 Costs and expenses: Purchased transportation and related services 1,689,590 1,253,503 4,697,978 3,455,689 Purchased products sourced for resale 348,187 348,734 1,171,164 1,070,261 Personnel expenses 161,947 148,750 462,793 453,716 Other selling, general, and administrative expenses   54,300   49,015   158,226   147,104 Total costs and expenses   2,254,024   1,800,002   6,490,161   5,126,770   Income from operations   166,333   154,801   458,795   442,053   Investment and other income   149   439   986   1,658   Income before provision for income taxes 166,482 155,240 459,781 443,711 Provision for income taxes   63,855   59,780   175,916   170,615 Net income $ 102,627 $ 95,460 $ 283,865 $ 273,096   Net income per share (basic) $ 0.62 $ 0.57 $ 1.72 $ 1.62 Net income per share (diluted) $ 0.62 $ 0.57 $ 1.71 $ 1.61 Weighted average shares outstanding (basic) 164,691 167,191 164,968 168,168 Weighted average shares outstanding (diluted) 165,576 168,648 165,985 169,746     CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited, in thousands)       September 30,       December 31, 2010 2009 Assets Current assets: Cash and cash equivalents $ 249,433 $ 337,308 Available-for-sale securities 34,123 48,310 Receivables, net 1,142,457 885,543 Other current assets   40,927   36,108 Total current assets 1,466,940 1,307,269   Property and equipment, net 116,259 117,699 Intangible and other assets   398,885   409,280 Total Assets $ 1,982,084 $ 1,834,248   Liabilities and stockholders' investment Current liabilities: Accounts payable and outstanding checks $ 670,910 $ 606,514 Accrued compensation 77,092 90,855 Other accrued expenses   41,483   34,438 Total current liabilities 789,485 731,807   Long term liabilities   22,019   22,541 Total liabilities 811,504 754,348   Total stockholders' investment   1,170,580   1,079,900 Total liabilities and stockholders' investment $ 1,982,084 $ 1,834,248     CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited, in thousands, except operational data)         Nine months ended September 30, 2010       2009 Operating activities: Net income $ 283,865 $ 273,096 Stock-based compensation 22,568 17,187 Depreciation and amortization 22,113 22,195 Provision for doubtful accounts 11,442 13,626 Other non-cash expenses, net 10,782 (2,238 ) Net changes in operating elements   (213,634 )   (81,495 ) Net cash provided by operating activities 137,136 242,371   Investing activities: Net property additions (14,000 ) (26,120 ) Purchases and development of software (7,715 ) (2,873 ) Purchases of available-for-sale securities (10,752 ) (11,915 ) Sales/maturities of available-for-sale securities 28,230 2,763 Cash paid for acquisition, net - (43,537 ) Restricted cash (5,000 ) - Other investing activities   (12 )   213   Net cash used for investing activities (9,249 ) (81,469 )   Financing activities: Net repurchases of common stock (96,822 ) (162,723 ) Excess tax benefit from stock-based compensation plans 9,497 8,052 Cash dividends   (126,709 )   (122,023 ) Net cash used for financing activities (214,034 ) (276,694 ) Effect of exchange rates on cash   (1,728 )   (2,677 )   Net change in cash and cash equivalents (87,875 ) (118,469 ) Cash and cash equivalents, beginning of period   337,308     494,743   Cash and cash equivalents, end of period $ 249,433   $ 376,274       As of September 30, 2010       2009 Operational Data: Employees 7,589 7,370 Branches 232 235   C.H. Robinson Worldwide, Inc.Chad Lindbloom, 952-937-7779Senior Vice President and Chief Financial OfficerorAngie Freeman, 952-937-7847Vice President, Investor Relations and Public Affairs