C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ:CHRW), today reported financial results for the quarter ended June 30, 2007.
Summarized financial results for the quarter ended June 30 are as follows (dollars in thousands, except per share data):
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| 2007 | 2006 | % Change | 2007 | 2006 | % Change | |||||||||||||
| Gross profits | $ | 310,898 | $ | 270,619 | 14.9 | % | $ | 607,828 | $ | 525,676 | 15.6 | % | ||||||
| Operating income | 129,794 | 103,918 | 24.9 | % | 244,983 | 196,352 | 24.8 | % | ||||||||||
| Net income | 82,299 | 66,594 | 23.6 | % | 155,264 | 124,708 | 24.5 | % | ||||||||||
| Diluted EPS | $ | 0.47 | $ | 0.38 | 23.7 | % | $ | 0.89 | $ | 0.71 | 25.4 | % | ||||||
Total Transportation gross profits increased 16.4 percent to $271.1 million in the second quarter of 2007 from $233.0 million in the second quarter of 2006. Our Transportation gross profit margin increased to 17.9 percent in 2007 from 17.1 percent in 2006.
The increase in our Transportation gross profit margin in the second quarter was due to an increase in our truck transportation gross profit margins and to our mix of business. We had faster growth in our miscellaneous transportation management services business, which has a higher gross profit margin than our Transportation business overall.
Our truck transportation gross profits increased 15.6 percent in the second quarter of 2007. Our growth was driven by increased volumes and an increase in our gross profit margin, which expanded due to more widely available capacity in the marketplace compared to the second quarter of 2006.
Our intermodal gross profit growth of 6.5 percent in the second quarter was due to an increase in volumes, driven primarily by new customer growth.
In our international freight forwarding business, our combined air and ocean gross profits increased 26.6 percent in the second quarter of 2007. Our growth in international forwarding resulted from margin expansion and volume growth. Our volumes grew due to new customer growth in both ocean and air, and from increased project-based airfreight business with existing customers.
Miscellaneous transportation gross profits consist primarily of transportation management fees, customs brokerage fees, and warehouse and cross-dock services. The increase of 30.4 percent in the second quarter was driven primarily by increases in our transportation management business.
For the second quarter, Sourcing gross profits increased 5.7 percent to $28.3 million in 2007 from $26.8 million in 2006. Our Sourcing gross profit margins declined from 8.2 percent in 2006 to 7.9 percent in 2007 due to higher market prices for certain produce commodities, caused primarily by weather issues through the growing season.
For the second quarter, operating expenses increased 8.6 percent to $181.1 million in 2007 from $166.7 million in 2006. This was due to an increase of 9.0 percent in personnel expenses and an increase of 7.5 percent in selling, general and administrative expenses.
As a percentage of gross profits, operating expenses decreased to 58.3 percent in the second quarter of 2007 from 61.6 percent in the second quarter of 2006. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 47.9 percent to 45.4 percent. Expenses related to our restricted stock program and various other incentive plans are based on growth in our earnings. Our slower earnings growth in the second quarter of 2007 compared to the second quarter of 2006 resulted in a decrease in expense related to some of these incentives plans. This contributed to our personnel expenses growing slower than our gross profits.
In addition, during the second quarter of 2007 the C.H. Robinson Board of Directors authorized management to repurchase up to an additional 10 million shares for our future, variable share repurchase activities. We have approximately 1.7 million shares remaining on the previous share repurchase authorization.
Subsequent to the end of the quarter, we completed the acquisition of LXSI Services, Inc., a third-party domestic air and expedited services provider based in Los Angeles, California. LXSI has approximately 50 employees and had gross revenues of approximately $25 million in 2006.
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 25,000 customers through a network of 217 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 45,000 carriers 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 market demand and pressures on the pricing for our services; competition and growth rates within the third-party logistics industry; freight levels 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 produce industry, including food safety and contamination issues; changing economic conditions such as general economic slowdown, decreased consumer confidence, fuel shortages 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 Second Quarter 2007 Earnings Conference CallTuesday, July 24, 2007 5:00 p.m. Eastern timeLive webcast available through Investor Relations link atwww.chrobinson.comTelephone access: 800-218-9073Webcast replay available through August 9, 2007; Investor Relationslink at www.chrobinson.comTelephone audio replay available until 12:59 a.m. Eastern Time onJuly 27, 2007: 800-405-2236;passcode: 11092490#
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (unaudited) | ||||||||||||
| (In thousands, except per share data) | ||||||||||||
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| 2007 | 2006 | 2007 | 2006 | |||||||||
| Gross Revenues: | ||||||||||||
| Transportation | $ | 1,511,173 | $ | 1,363,246 | $ | 2,811,591 | $ | 2,579,155 | ||||
| Sourcing | 357,062 | 326,853 | 665,359 | 600,275 | ||||||||
| Information Services | 11,491 | 10,898 | 22,101 | 20,682 | ||||||||
| Total gross revenues | 1,879,726 | 1,700,997 | 3,499,051 | 3,200,112 | ||||||||
| Gross Profits: | ||||||||||||
| Transportation | ||||||||||||
| Truck | 232,892 | 201,431 | 462,031 | 396,564 | ||||||||
| Intermodal | 10,190 | 9,572 | 19,570 | 17,503 | ||||||||
| Ocean | 10,799 | 8,595 | 20,045 | 17,419 | ||||||||
| Air | 8,224 | 6,433 | 15,058 | 11,477 | ||||||||
| Miscellaneous | 8,983 | 6,891 | 16,811 | 12,926 | ||||||||
| Total transportation | 271,088 | 232,922 | 533,515 | 455,889 | ||||||||
| Sourcing | 28,319 | 26,799 | 52,212 | 49,105 | ||||||||
| Information Services | 11,491 | 10,898 | 22,101 | 20,682 | ||||||||
| Total gross profits | 310,898 | 270,619 | 607,828 | 525,676 | ||||||||
| Operating costs and expenses: | ||||||||||||
| Personnel expenses | 141,231 | 129,609 | 283,007 | 256,820 | ||||||||
| Selling, general, and administrative expenses | 39,873 | 37,092 | 79,838 | 72,504 | ||||||||
| Total operating expenses | 181,104 | 166,701 | 362,845 | 329,324 | ||||||||
| Income from operations | 129,794 | 103,918 | 244,983 | 196,352 | ||||||||
| Investment and other income | 3,430 | 2,877 | 7,026 | 5,542 | ||||||||
| Income before provision for income taxes | 133,224 | 106,795 | 252,009 | 201,894 | ||||||||
| Provision for income taxes | 50,925 | 40,201 | 96,745 | 77,186 | ||||||||
| Net income | $ | 82,299 | $ | 66,594 | $ | 155,264 | $ | 124,708 | ||||
| Net income per share (basic) | $ | 0.48 | $ | 0.39 | $ | 0.91 | $ | 0.73 | ||||
| Net income per share (diluted) | $ | 0.47 | $ | 0.38 | $ | 0.89 | $ | 0.71 | ||||
| Weighted average shares outstanding (basic) | 170,942 | 171,215 | 171,062 | 171,051 | ||||||||
| Weighted average shares outstanding (diluted) | 174,200 | 175,198 | 174,725 | 175,070 | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (unaudited) | ||||||
| (In thousands) | ||||||
June 30, 2007 | December 31, 2006 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 288,692 | $ | 348,592 | ||
| Available-for-sale securities | 131,652 | 124,767 | ||||
| Receivables, net | 880,595 | 764,995 | ||||
| Other current assets | 25,432 | 17,794 | ||||
| Total current assets | 1,326,371 | 1,256,148 | ||||
| Property and equipment, net | 93,776 | 82,071 | ||||
| Intangible and other assets | 308,795 | 293,474 | ||||
| $ | 1,728,942 | $ | 1,631,693 | |||
| Liabilities and stockholders’ investment | ||||||
| Current liabilities: | ||||||
| Accounts payable and outstanding checks | $ | 614,781 | $ | 540,129 | ||
| Accrued compensation | 59,587 | 98,408 | ||||
| Other accrued expenses | 36,149 | 48,412 | ||||
| Total current liabilities | 710,517 | 686,949 | ||||
| Long term liabilities | 9,674 | 1,022 | ||||
| Total liabilities | 720,191 | 687,971 | ||||
| Total stockholders’ investment | 1,008,751 | 943,722 | ||||
| $ | 1,728,942 | $ | 1,631,693 | |||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (In thousands, except operational data) | ||||||
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Six months ended
June 30, | ||||||
| 2007 | 2006 | |||||
| Operating activities: | ||||||
| Net income | $ | 155,264 | $ | 124,708 | ||
| Stock-based compensation | 23,988 | 26,856 | ||||
| Depreciation and amortization | 13,162 | 11,547 | ||||
| Other non-cash expenses, net | (2,699) | (3,009) | ||||
| Net changes in operating elements | (94,062) | (47,265) | ||||
| Net cash provided by operating activities | 95,653 | 112,837 | ||||
| Investing activities: | ||||||
| Net property additions | (23,501) | (15,662) | ||||
| Cash paid for acquisitions | (9,261) | (33,974) | ||||
| Purchases of available-for-sale securities | (85,725) | (55,116) | ||||
| Sales/maturities of available-for-sale securities | 79,131 | 54,512 | ||||
| Other assets, net | (53) | 1,778 | ||||
| Net cash used for investing activities | (39,409) | (48,462) | ||||
| Financing activities: | ||||||
| Net repurchases of common stock | (65,665) | (21,560) | ||||
| Excess tax benefit from stock based compensation plans | 10,336 | 9,367 | ||||
| Cash dividends | (62,724) | (45,370) | ||||
| Net cash used for financing activities | (118,053) | (57,563) | ||||
| Effect of exchange rates on cash | 1,909 | 1,966 | ||||
| Net change in cash and cash equivalents | (59,900) | 8,778 | ||||
| Cash and cash equivalents, beginning of period | 348,592 | 230,628 | ||||
| Cash and cash equivalents, end of period | $ | 288,692 | $ | 239,406 | ||
| As of June 30 | ||||||
| 2007 | 2006 | |||||
| Operational Data: | ||||||
| Employees | 6,996 | 6,382 | ||||
| Branches | 217 | 203 | ||||
Contacts:
Chad Lindbloom, 952-937-7779
vice
president and chief financial officer
or
Angie Freeman,
952-937-7847
investor relations
