C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (NASDAQ: CHRW), today reported financial results for the quarter ended March 31, 2008.
Summarized financial results for the quarter ended March 31 are as follows (dollars in thousands, except per share data):
|
Three months ended
March 31, | |||||||||||||||
| 2008 | 2007 | % Change | |||||||||||||
| Gross revenues | $ | 1,985,212 | $ | 1,619,325 | 22.6 | % | |||||||||
| Gross profits | 338,029 | 296,930 | 13.8 | % | |||||||||||
| Operating income | 136,077 | 115,189 | 18.1 | % | |||||||||||
| Net income | 86,318 | 72,965 | 18.3 | % | |||||||||||
| Diluted EPS | $ | 0.50 | $ | 0.42 | 19.0 | % | |||||||||
Total Transportation gross profits increased 13.8 percent to $298.7 million in the first quarter of 2008 from $262.4 million in the first quarter of 2007. Our Transportation gross profit margin decreased to 18.2 percent in 2008 from 20.2 percent in 2007 due to gross profit margin declines in several of our transportation modes.
Our truck gross profits consist of truckload and less-than-truckload (“LTL”) services. Our truck gross profit growth of 13.2 percent in the first quarter of 2008 was driven by volume growth, offset by declines in our truckload gross profit margins. Our truckload volumes increased approximately 15 percent. Including fuel, our truckload rates increased approximately 8 percent; excluding estimated impacts of fuel, underlying linehaul rates decreased approximately 2 percent. Our truckload gross profit margins declined due to higher fuel prices and declining truckload rates. Our LTL shipments increased approximately 30 percent. Our LTL gross profit margins were consistent with the first quarter of 2007.
Our intermodal gross profit decrease of 2.2% percent in the first quarter was due to a decline in our gross profit margins, partially offset by a double-digit 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, and also increased cost of capacity in certain lanes.
The increase of 32.5 percent in our ocean transportation gross profits in the first quarter of 2008 was driven by double-digit volume growth and price increases, offset partially by a decline in gross profit margins. Our volume growth was driven in part by project-based business.
In our air transportation business, approximately two-thirds of our gross profit growth of 17.8 percent in the first quarter of 2008 came from our domestic air business, which includes our previously-disclosed acquisition of LXSI Services Inc. on July 13, 2007.
Miscellaneous transportation gross profits consist primarily of transportation management fees and customs brokerage fees. The increase of 26.0 percent in the first quarter was driven primarily by volume growth in transportation management.
For the first quarter, Sourcing gross profits increased 13.2 percent to $27.1 million in 2008 from $23.9 million in 2007, due to higher volumes and an increase in our gross profit margin. We continued to have success growing our business with retailers and foodservice providers.
Our Information Services gross profits grew 16.0 percent in the first quarter of 2008. Our growth was driven by volume growth in our core fuel card and cash advance services and an increase in our revenue per transaction, 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 first quarter, operating expenses increased 11.1 percent to $202.0 million in 2008 from $181.7 million in 2007. This was due to an increase of 8.4 percent in personnel expenses and an increase of 20.6 percent in selling, general and administrative expenses.
As a percentage of gross profits, total operating expenses decreased to 59.7 percent in the first quarter of 2008 from 61.2 percent in the first quarter of 2007. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 47.7 percent to 45.5 percent, offset partially by an 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 first quarter of 2008 compared to the first quarter of 2007 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.
The increase in our selling, general, and administrative expenses was driven by increased spending in most expense categories, including occupancy and travel, to support our future plans.
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 220 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 First Quarter 2008 Earnings Conference Call
Tuesday, April 22, 2008 5:00 p.m. Eastern time
Live webcast available through Investor Relations link at www.chrobinson.com
Telephone access: 800-218-0530
Webcast replay available through May 5, 2008; Investor Relations link at www.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on April 25, 2008: 800-405-2236;
passcode: 11111110#
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
| (unaudited) | ||||||||||||||
| (In thousands, except per share data) | ||||||||||||||
|
Three months ended
March 31, | ||||||||||||||
| 2008 | 2007 | |||||||||||||
| Gross Revenues: | ||||||||||||||
| Transportation | $ | 1,641,612 | $ | 1,300,418 | ||||||||||
| Sourcing | 331,297 | 308,297 | ||||||||||||
| Information Services | 12,303 | 10,610 | ||||||||||||
| Total gross revenues | 1,985,212 | 1,619,325 | ||||||||||||
| Gross Profits: | ||||||||||||||
| Transportation | ||||||||||||||
| Truck | 259,323 | 229,139 | ||||||||||||
| Intermodal | 9,178 | 9,380 | ||||||||||||
| Ocean | 12,255 | 9,246 | ||||||||||||
| Air | 8,050 | 6,834 | ||||||||||||
| Miscellaneous | 9,867 | 7,828 | ||||||||||||
| Total transportation | 298,673 | 262,427 | ||||||||||||
| Sourcing | 27,053 | 23,893 | ||||||||||||
| Information Services | 12,303 | 10,610 | ||||||||||||
| Total gross profits | 338,029 | 296,930 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||
| Personnel expenses | 153,754 | 141,776 | ||||||||||||
Selling, general, and administrative expenses | 48,198 | 39,965 | ||||||||||||
| Total operating expenses | 201,952 | 181,741 | ||||||||||||
| Income from operations | 136,077 | 115,189 | ||||||||||||
| Investment and other income | 2,474 | 3,596 | ||||||||||||
| Income before provision for income taxes | 138,551 | 118,785 | ||||||||||||
| Provision for income taxes | 52,233 | 45,820 | ||||||||||||
| Net income | $ | 86,318 | $ | 72,965 | ||||||||||
| Net income per share (basic) | $ | 0.51 | $ | 0.43 | ||||||||||
| Net income per share (diluted) | $ | 0.50 | $ | 0.42 | ||||||||||
| Weighted average shares outstanding (basic) | 169,858 | 171,183 | ||||||||||||
| Weighted average shares outstanding (diluted) | 174,028 | 174,888 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (unaudited) | ||||||||||
| (In thousands) | ||||||||||
March 31, |
December 31, | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 379,846 | $ | 338,885 | ||||||
| Available-for-sale securities | 34,888 | 115,842 | ||||||||
| Receivables, net | 1,006,355 | 911,780 | ||||||||
| Other current assets | 30,779 | 22,649 | ||||||||
| Total current assets | 1,451,868 | 1,389,156 | ||||||||
| Property and equipment, net | 102,164 | 101,665 | ||||||||
| Intangible and other assets | 319,754 | 320,486 | ||||||||
| $ | 1,873,786 | $ | 1,811,307 | |||||||
| Liabilities and stockholders’ investment | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable and outstanding checks | $ | 672,623 | $ | 618,195 | ||||||
| Accrued compensation | 41,262 | 101,926 | ||||||||
| Other accrued expenses | 68,853 | 37,498 | ||||||||
| Total current liabilities | 782,738 | 757,619 | ||||||||
| Long term liabilities | 12,110 | 11,439 | ||||||||
| Total liabilities | 794,848 | 769,058 | ||||||||
| Total stockholders’ investment | 1,078,938 | 1,042,249 | ||||||||
| $ | 1,873,786 | $ | 1,811,307 | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (In thousands, except operational data) | |||||||||||||||
Three months ended March 31, | |||||||||||||||
| 2008 | 2007 | ||||||||||||||
| Operating activities: | |||||||||||||||
| Net income | $ | 86,318 | $ | 72,965 | |||||||||||
| Stock-based compensation | 8,255 | 12,197 | |||||||||||||
| Depreciation and amortization | 7,663 | 6,552 | |||||||||||||
| Other non-cash expenses, net | 3,602 | 4,454 | |||||||||||||
| Net changes in operating elements | (80,106 | ) | (40,989 | ) | |||||||||||
| Net cash provided by operating activities | 25,732 | 55,179 | |||||||||||||
| Investing activities: | |||||||||||||||
| Net property additions | (5,928 | ) | (10,038 | ) | |||||||||||
| Cash paid for acquisitions | - | (9,261 | ) | ||||||||||||
| Purchases of available-for-sale securities | (99,944 | ) | (37,322 | ) | |||||||||||
| Sales/maturities of available-for-sale securities | 181,254 | 35,933 | |||||||||||||
| Other assets, net | 500 | 167 | |||||||||||||
| Net cash provided by (used for) investing activities | 75,882 | (20,521 | ) | ||||||||||||
| Financing activities: | |||||||||||||||
| Net repurchases of common stock | (31,847 | ) | (22,646 | ) | |||||||||||
| Excess tax benefit from stock based compensation plans | 7,711 | 5,630 | |||||||||||||
| Cash dividends | (37,996 | ) | (31,348 | ) | |||||||||||
| Net cash used for financing activities | (62,132 | ) | (48,364 | ) | |||||||||||
| Effect of exchange rates on cash | 1,479 | 1,104 | |||||||||||||
| Net change in cash and cash equivalents | 40,961 | (12,602 | ) | ||||||||||||
| Cash and cash equivalents, beginning of period | 338,885 | 348,592 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 379,846 | $ | 335,990 | |||||||||||
| As of March 31 | |||||||||||||||
| 2008 | 2007 | ||||||||||||||
| Operational Data: | |||||||||||||||
| Employees | 7,505 | 6,834 | |||||||||||||
| Branches | 220 | 214 | |||||||||||||
Contacts:
Chad Lindbloom, 952-937-7779
senior
vice president and chief financial officer
or
Angie Freeman,
952-937-7847
investor relations
