C.H. Robinson Misses Rev, Beats EPS
C.H. Robinson Worldwide Inc. (NASDAQ:CHRW) has reported first quarter 2012 earnings per share of 65 cents, in line with the Zacks Consensus Estimate. Reported earnings also increased 8.1% from 62 cents in the year-ago quarter, primarily driven by Intermodal and trucking revenues.
Total revenue in the first quarter escalated 7.9% year over year to $2.55 billion, but lagged the Zacks Consensus Estimate of $2.61 billion.
Total operating expenses rose 5.0% year over year to $245.2 million, primarily due to 4.8% and 5.5% increases in personnel and selling, general and administrative expenses, respectively.
Total operating ratio (operating expenses as a percentage of net revenue) was 57.2% in the reported quarter, reflecting an improvement of 80 basis points (bps) from 59.1% in the year-ago quarter.
Transportation: The segment (comprising Truck, Intermodal, Ocean, Air and Other logistics services) reported gross profit of $401.4 million in the first quarter, up 7.1% from the year-ago period.
Gross profit from Truck (comprising truckload and less-than-truckload services) upped 7.1% to $315.4 million, attributable to volume growth and higher pricing.
Gross profit from Intermodal increased 1.2% year over year to $9.7 million on higher shipments as well as prices and fuel surcharges, offsetting the declines in net revenue margin due to a change business mix.
Gross profit from Ocean also inched up 1.2% to $15.8 million based on higher loads, offsetting price declines.
Air transportation gross profit plunged 3.4% year over year to $8.9 million, primarily due to lower pricing that offset volume growth.
Gross profit from Other logistics services registered a 24.2% year-over-year growth to $17.5 million on better transportation management and higher customs net revenues.
Sourcing: The segment’s gross profit decreased 3.2% year over year to $31.9 million primarily due to a decline in net revenue margin that remained an overhang on volume growth.
Payment Services: The segment’s (comprising income from subsidiary, T-Chek Systems Inc.) gross profit climbed 8.1% year over year to $15.6 million in the first quarter, driven by an increase in fees, arising from higher fuel prices and transaction alongside changes in commercial contracts.
Liquidity & Debt Position
C.H. Robinson ended the quarter with cash and cash equivalents of $311.4 million as against $359.3 million in the year-ago period and had no debt on its balance sheet. Cash from operation rose to $77 million at the end of the quarter from $52.6 million in the year-ago period.
We believe the company remains well positioned to benefit from its freight transportation business as evident by strong shipments and pricing in Intermodal and Truck. Further, the cash-rich balance sheet with no debt and increasing shareholder returns make it more attractive for long-term investment.
However, the company remains significantly challenged by higher operating costs followed by regulatory issues and competitive threats from logistics services companies such as Expeditors International of Washington Inc. (NASDAQ:EXPD).
Thus, we are currently maintaining our long-term Neutral recommendation on C.H. Robinson. For the short term, the company holds a Zacks #3 Rank (Hold).