C.H. Robinson Reports Fourth Quarter and Annual Results
MINNEAPOLIS--Feb. 8, 2005--C.H. Robinson Worldwide, Inc. ("C.H. Robinson") , today reported financial results for the three months and twelve months ended December 31, 2004.For the fourth quarter, gross profits increased 29.5 percent to $181.2 million in 2004 from $139.9 million in 2003. Income from operations increased 36.7 percent to $62.1 million in the fourth quarter of 2004 from $45.4 million in the fourth quarter of 2003. Net income increased 38.7 percent to $38.6 million in the fourth quarter of 2004 from $27.8 million in the fourth quarter of 2003. Diluted net income per share increased 37.5 percent to $0.44 per share in the fourth quarter of 2004 from $0.32 per share in the fourth quarter of 2003.
For the year ended December 31, 2004, gross profits increased 21.3 percent to $661.0 million from $544.8 million in 2003. Income from operations increased 26.5 percent to $222.8 million from $176.0 million in 2003. Net income increased 27.8 percent to $137.3 million from $107.4 million in 2003. Diluted net income per share increased 27.2 percent to $1.59 per share from $1.25 per share in 2003.
"Freight demand remained strong through the end of the year, which enabled us to have another quarter of exceptional growth," said John P. Wiehoff, chief executive officer of C.H. Robinson. "Escalating transportation costs were challenging for us and for many of our customers in 2004. Our people worked hard to meet our customers' logistics needs and find ways to help them adapt to an environment of significant rate increases and fuel volatility."
Wiehoff continued, "We are investing in our people and expanding our branch office network, and remain committed to our flexible, multimodal business model which we believe is an advantage in this very transactional transportation market."
For the fourth quarter, total Transportation gross profits increased 34.2 percent to $161.5 million in 2004 from $120.4 million in 2003. Consistent with historical patterns, the tight capacity market created additional business for us. Our Transportation gross profit margin increased slightly from the fourth quarter of 2003.
The increase in our truck transportation gross profits of 37.6 percent in the fourth quarter of 2004 was driven by volume growth in both truckload and less-than-truckload transactions and an increase in gross profit margin.
Our intermodal gross profits increase of 5.1 percent in the fourth quarter of 2004 resulted from an increase in volumes offset by a decrease in margin per load. Our margin per load was impacted by increased rail prices, service changes, and tighter capacity. These changes also drove higher-margin transactional business back to truck service.
Miscellaneous transportation gross profits consist of customs brokerage fees, transportation management fees, warehouse and cross-dock services, and other miscellaneous transportation related services. The increase of 47.0 percent in the fourth quarter was driven by increases in our transportation management fees and customs brokerage business.
For the fourth quarter, Sourcing gross profits decreased 8.7 percent to $10.8 million in 2004 from $11.8 million in 2003. Our Sourcing gross profit margin decreased compared to the fourth quarter of 2003 due to market conditions and product mix.
For the fourth quarter, Information Services gross profits increased 15.1 percent to $8.9 million in 2004 from $7.7 million in 2003, primarily due to transaction growth.
For the quarter, personnel expense as a percentage of gross profits decreased to 49.3 percent in 2004 from 50.8 percent in 2003. Average gross profits per employee, a key measure of productivity, increased approximately 8 percent in 2004 compared to 2003. While many of our personnel expenses are variable, we gain leverage in periods of growth.
For the quarter, selling, general, and administrative expenses increased 26.7 percent to $29.8 million in 2004 from $23.5 million in 2003. Selling, general, and administrative expenses as a percentage of gross profits decreased for the fourth quarter of 2004 to 16.4 percent compared to 16.8 percent in 2003.
In the fourth quarter, we acquired all of the ongoing operations and certain assets of U.S. Traffic, Inc., a Utah-based third party logistics company that provides domestic truckload and intermodal transportation brokerage services. U.S. Traffic has 11 employees and had gross revenues of approximately $27 million in 2004. The new office will operate as the C.H. Robinson-Provo branch.
Founded in 1905, C.H. Robinson Worldwide, Inc., is one of the largest third-party logistics companies in North America. C.H. Robinson is a global provider of multimodal transportation services and logistics solutions, currently serving 20,000 customers through a network of 176 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 35,000 carriers worldwide. C.H. Robinson is one of the largest third-party providers of intermodal services in the United States.
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; the impact of new Hours of Service regulations adopted by the United States Department of Transportation Federal Motor Carrier Safety Administration; 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.; changing economic conditions such as general economic slowdown, decreased consumer confidence, fuel shortages and the impact of war on the economy; and other risk and uncertainties detailed under "Cautionary Statement" in Exhibit 99.1 to C.H. Robinson's Annual Report on Form 10-K filed on March 15, 2004.
Conference Call Information:
C.H. Robinson Worldwide Fourth Quarter 2004 Earnings Conference Call
Wednesday, February 9, 2005; 11:00 a.m. Eastern time
Live webcast available through Investor Relations at
www.chrobinson.com
Telephone access: 800-240-7305
Webcast replay available through February 23, 2005: Investor Relations
at www.chrobinson.com
Telephone audio replay available through February 11, 2005:
800-405-2236; passcode: 11022327#
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(In thousands, except per share data)
Three months ended Twelve months ended
December 31, December 31,
--------------------- -----------------------
2004 2003 (1) 2004 2003 (1)
----------- --------- ----------- -----------
Gross revenues:
Transportation $1,009,866 $760,587 $3,597,249 $2,845,934
Sourcing 175,294 174,074 710,807 737,939
Information Services 8,861 7,696 33,482 29,772
----------- --------- ----------- -----------
Total gross
revenues 1,194,021 942,357 4,341,538 3,613,645
----------- --------- ----------- -----------
Gross profits:
Transportation
Truck 141,856 103,109 501,940 401,709
Intermodal 8,041 7,651 29,960 28,103
Ocean 5,283 4,863 20,558 19,027
Air 2,158 1,927 8,570 4,891
Miscellaneous 4,195 2,853 14,709 10,973
----------- --------- ----------- -----------
Total
transportation 161,533 120,403 575,737 464,703
Sourcing 10,785 11,812 51,772 50,373
Information Services 8,861 7,696 33,482 29,772
----------- --------- ----------- -----------
Total gross profits 181,179 139,911 660,991 544,848
----------- --------- ----------- -----------
Operating costs and
expenses:
Personnel expenses 89,341 71,009 334,118 279,008
Selling, general and
administrative
expenses 29,769 23,501 104,105 89,794
----------- --------- ----------- -----------
Total operating
costs and expenses 119,110 94,510 438,223 368,802
----------- --------- ----------- -----------
Income from operations 62,069 45,401 222,768 176,046
Investment and other
income:
Interest income and
other 1,135 647 3,116 2,141
Nonqualified deferred
compensation
investment gain 203 203 154 447
----------- --------- ----------- -----------
Investment and other
income 1,338 850 3,270 2,588
----------- --------- ----------- -----------
Income before provision
for income Taxes 63,407 46,251 226,038 178,634
Provision for income
taxes 24,852 18,455 88,784 71,265
----------- --------- ----------- -----------
Net income $38,555 $27,796 $137,254 $107,369
=========== ========= =========== ===========
Net income per share
(basic) $0.46 $0.33 $1.62 $1.27
Net income per share
(diluted) $0.44 $0.32 $1.59 $1.25
Weighted average shares
outstanding (basic) 84,543 84,425 84,614 84,387
Weighted average shares
outstanding (diluted) 86,763 86,299 86,572 86,069
(1) The three months and twelve months ended December 31, 2003 results
have been restated for retroactive adoption of the fair value
recognition provisions of SFAS 123, Accounting for Stock Based
Compensation.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands)
December 31, December 31,
2004 2003 (1)
------------ ------------
Assets
Current assets:
Cash and cash equivalents $241,776 $198,513
Available-for-sale securities 46,300 45,736
Receivables 544,274 457,455
Other current assets 13,637 15,625
------------ ------------
Total current assets 845,987 717,329
Net property and equipment 51,122 25,625
Intangible and other assets 183,587 165,195
------------ ------------
$1,080,696 $908,149
============ ============
Liabilities and stockholders' investment
Current liabilities:
Accounts payable $358,928 $311,927
Accrued compensation 60,261 46,582
Other accrued expenses 33,630 22,692
------------ ------------
Total current liabilities 452,819 381,201
Long term liabilities:
Deferred tax liability 4,153 5,598
Nonqualified deferred compensation
obligation 2,868 2,603
------------ ------------
Total long term liabilities 7,021 8,201
------------ ------------
Total liabilities 459,840 389,402
Total stockholders' investment 620,856 518,747
------------ ------------
$1,080,696 $908,149
============ ============
(1) December 31, 2003 balance sheet has been restated for retroactive
adoption of the fair value recognition provisions of SFAS 123.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands, except operational data)
Twelve months ended
December 31,
-------------------
2004 2003 (1)
--------- ---------
Operating activities:
Net income $137,254 $107,369
Depreciation and amortization 11,814 10,992
Other non-cash expenses 32,578 31,609
Net changes in operating elements (26,430) (38,716)
--------- ---------
Net cash provided by operating activities 155,216 111,254
Investing activities:
Net property additions (34,741) (8,265)
Insurance proceeds 1,590 -
Cash paid for acquisitions (19,112) (2,089)
Net purchases of investments (573) (521)
Other assets, net (1,780) (2,198)
--------- ---------
Net cash used for investing activities (54,616) (13,073)
Financing activities:
Net repurchases of common stock (18,395) (7,709)
Cash dividends (40,902) (27,046)
--------- ---------
Net cash used for financing activities (59,297) (34,755)
Effect of exchange rates on cash 1,960 2,088
--------- ---------
Net increase in cash and cash equivalents 43,263 65,514
Cash and cash equivalents, beginning of period 198,513 132,999
--------- ---------
Cash and cash equivalents, end of period $241,776 $198,513
========= =========
(1) December 31, 2003 cash flow statement has been restated for
retroactive adoption of the fair value recognition provisions of
SFAS 123.
As of December 31,
---------------------
Operational Data: 2004 2003
---------- ----------
Employees 4,806 4,112
Branches 176 158