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C.H. Robinson Reports Fourth Quarter Results

C.H. Robinson Worldwide, Inc. (C.H. Robinson) (NASDAQ:CHRW), today reported financial results for the quarter ended December 31, 2007.

Summarized financial results for the quarter ended December 31 are as follows (dollars in thousands, except per share data):

Three months ended

December 31,

Twelve months ended

December 31,

2007 2006

%
Change

2007 2006

%
Change

Gross revenues $ 1,952,022 $ 1,642,591 18.8 % $ 7,316,223 $ 6,556,194 11.6 %
Gross profits 322,754 278,522 15.9 % 1,243,778 1,082,544 14.9 %
Operating income 132,873 110,375 20.4 % 509,684 417,845 22.0 %
Net income 85,254 71,827 18.7 % 324,261 266,925 21.5 %
Diluted EPS $ 0.49 $ 0.41 19.5 % $ 1.86 $ 1.53 21.6 %

Total Transportation gross profits increased 17.0 percent to $288.0 million in the fourth quarter of 2007 from $246.2 million in the fourth quarter of 2006. Our Transportation gross profit margin decreased to 17.7 percent in 2007 from 18.3 percent in 2006 due to gross profit margin declines in several of our transportation modes.

In our North American truck business, our volume growth approximated our gross profit growth of 16.4 percent in the fourth quarter of 2007. Our gross profit margins declined slightly. Inclusive of fuel, our truckload rates increased approximately 3 percent; excluding estimated impacts of fuel, rates decreased approximately 3 percent.

Our intermodal gross profit decrease of 4.3 percent in the fourth quarter was due to a decline in our gross profit margins, partially offset by an increase in volumes. Our gross profit margin decline was due to a change in our mix of business from higher-margin, transactional opportunities to more contractual intermodal business.

The increase of 24.4 percent in our ocean transportation gross profits in the fourth quarter of 2007 was driven by volume growth. Our air transportation gross profit growth of 64.6 percent in the fourth quarter of 2007 includes approximately $1.3 million of domestic air gross profits from our previously-disclosed acquisition of LXSI Services Inc. on July 13, 2007. Our international air business had significant volume growth in all regions, especially Asia.

Miscellaneous transportation gross profits consist primarily of transportation management fees and customs brokerage fees. The increase of 14.4 percent in the fourth quarter was driven by an increase in our transportation management business, offset by a decline in our customs business. Our customs brokerage gross profits declined due to a decrease in our fee per transaction, offset in part by an increase in our transaction volumes.

For the fourth quarter, Sourcing gross profits increased 5.9 percent to $23.1 million in 2007 from $21.8 million in 2006. We continued to have success growing our business with retailers and foodservice providers. Our gross profit margin declined primarily because of higher prices for certain commodities, related to weather and higher labor and fuel costs.

Our Information Services gross profits grew 10.9 percent in the fourth quarter of 2007. Our growth was driven primarily by volume growth in our core fuel card and cash advance services. In addition, our revenue per transaction was up slightly due to the price of fuel. With certain merchants our fee is based on a percentage of the sale amount. Approximately one-third of the growth was related to other services, such as fleet card and carrier compliance services.

For the fourth quarter, operating expenses increased 12.9 percent to $189.9 million in 2007 from $168.1 million in 2006. This was due to an increase of 11.9 percent in personnel expenses and an increase of 16.4 percent in selling, general and administrative expenses.

As a percentage of gross profits, total operating expenses decreased to 58.8 percent in the fourth quarter of 2007 from 60.4 percent in the fourth quarter of 2006. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 46.4 percent to 44.8 percent, offset by a slight increase in our selling, general and administrative expenses as a percentage of gross profits. Expenses related to our restricted stock program and various other incentive plans are variable, based on growth in our earnings. Our slower earnings growth in the fourth quarter of 2007 compared to the fourth 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.

Our selling, general, and administrative expenses grew faster than our gross profits, due primarily to increases in our legal, travel, and occupancy expenses.

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 29,000 customers through a network of 218 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 48,000 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 Fourth Quarter 2007 Earnings Conference Call

Tuesday, January 29, 2008 5:00 p.m. Eastern time

Live webcast available through Investor Relations link at www.chrobinson.com

Telephone access: 800-240-2134

Webcast replay available through February 11, 2008; Investor Relations link at www.chrobinson.com

Telephone audio replay available until 12:59 a.m. Eastern Time on February 1, 2008: 800-405-2236;

passcode: 11105696#

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(In thousands, except per share data)
Three months ended

December 31,

Twelve months ended

December 31,

2007 2006 2007 2006
Gross Revenues:
Transportation $ 1,622,533 $ 1,347,413 $ 5,971,784 $ 5,321,547
Sourcing 317,799 284,638 1,298,913 1,192,297
Information Services 11,690 10,540 45,526 42,350
Total gross revenues 1,952,022 1,642,591 7,316,223 6,556,194
Gross Profits:
Transportation
Truck 248,442 213,375 949,277 822,954
Intermodal 9,209 9,620 38,670 36,176
Ocean 11,924 9,587 43,530 37,150
Air 9,361 5,686 31,315 21,533
Miscellaneous 9,027 7,892 35,240 28,152
Total transportation 287,963 246,160 1,098,032 945,965
Sourcing 23,101 21,822 100,220 94,229
Information Services 11,690 10,540 45,526 42,350
Total gross profits 322,754 278,522 1,243,778 1,082,544
Operating costs and expenses:
Personnel expenses 144,486 129,146 567,986 515,947
Selling, general, and administrative expenses 45,395 39,001 166,108 148,752
Total operating expenses 189,881 168,147 734,094 664,699
Income from operations 132,873 110,375 509,684 417,845
Investment and other income 3,337 3,330 13,830 11,843
Income before provision for income taxes 136,210 113,705 523,514 429,688
Provision for income taxes 50,956 41,878 199,253 162,763
Net income $ 85,254 $ 71,827 $ 324,261 $ 266,925
Net income per share (basic) $ 0.50 $ 0.42 $ 1.90 $ 1.56
Net income per share (diluted) $ 0.49 $ 0.41 $ 1.86 $ 1.53
Weighted average shares outstanding (basic) 169,591 170,555 170,493 170,888
Weighted average shares outstanding (diluted) 174,269 174,104 174,040 174,787
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands)
December 31,

2007

December 31,

2006

Assets
Current assets:
Cash and cash equivalents $ 338,885 $ 348,592
Available-for-sale securities 115,842 124,767
Receivables, net 911,780 764,995
Other current assets 22,649 17,794
Total current assets 1,389,156 1,256,148
Property and equipment, net 101,665 82,071
Intangible and other assets 320,486 293,474
$ 1,811,307 $ 1,631,693
Liabilities and stockholders investment
Current liabilities:
Accounts payable and outstanding checks $ 618,195 $ 540,129
Accrued compensation 101,926 98,408
Other accrued expenses 37,498 48,412
Total current liabilities 757,619 686,949
Long term liabilities 11,439 1,022
Total liabilities 769,058 687,971
Total stockholders investment 1,042,249 943,722
$ 1,811,307 $ 1,631,693

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

(In thousands, except operational data)

Twelve months ended

December 31,

2007 2006
Operating activities:
Net income $ 324,261 $ 266,925
Stock-based compensation 38,002 47,292
Depreciation and amortization 27,366 23,932
Other non-cash expenses, net 199 (1,718 )
Net changes in operating elements (81,398 ) 6,946
Net cash provided by operating activities 308,430 343,377
Investing activities:
Net property additions (43,713 ) (41,543 )
Cash paid for acquisitions (22,220 ) (39,724 )
Purchases of available-for-sale securities (204,020 ) (119,864 )
Sales/maturities of available-for-sale securities 214,299 118,838
Other assets, net (68 ) 1,056
Net cash used for investing activities (55,722 ) (81,237 )
Financing activities:
Net repurchases of common stock (153,582 ) (67,086 )
Excess tax benefit from stock based compensation plans 16,667 12,078
Cash dividends (125,183 ) (90,837 )
Net cash used for financing activities (262,098 ) (145,845 )
Effect of exchange rates on cash (317 ) 1,669
Net change in cash and cash equivalents (9,707 ) 117,964
Cash and cash equivalents, beginning of period 348,592 230,628
Cash and cash equivalents, end of period $ 338,885 $ 348,592
As of December 31
2007 2006
Operational Data:
Employees 7,332 6,768
Branches 218 214

Contacts:

C.H. Robinson Worldwide, Inc.
Chad Lindbloom, 952-937-7779
Senior Vice President and Chief Financial Officer
or
Angie Freeman, 952-937-7847
Investor Relations

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