C.H. Robinson Worldwide, Inc.
8100 Mitchell Road, Suite 200
Eden Prairie, Minnesota 55344
Chad Lindbloom, vice president and chief financial officer (952) 937-7779
Angie Freeman, investor relations (952) 937-7847
FOR IMMEDIATE RELEASE
C.H. ROBINSON REPORTS SECOND QUARTER RESULTS
MINNEAPOLIS, July 25, 2006 -- C.H. Robinson Worldwide, Inc. ("C.H. Robinson") (NASDAQ: CHRW), today reported financial results for the three months and six months ended June 30, 2006. As previously reported, all share and per share data is reflective of a two-for-one stock split, effective October 14, 2005.
For the second quarter, gross profits increased 25.6 percent to $270.6 million from $215.4 million in 2005. Income from operations increased 29.4 percent to $103.9 million in the second quarter of 2006 from $80.3 million in the second quarter of 2005. Net income increased 35.0 percent to $66.6 million in the second quarter of 2006 from $49.3 million in the second quarter of 2005. Diluted net income per share increased 35.7 percent to $0.38 per share in the second quarter of 2006 from $0.28 per share in the second quarter of 2005.
For the six months ended June 30, 2006, gross profits increased 26.7 percent to $525.7 million from $414.8 million in 2005. Income from operations increased 32.6 percent to $196.4 million
from $148.1 million in 2005. Net income increased 36.9 percent to $124.7 million from $91.1 million in 2005. Diluted net income per share increased 36.5 percent to $0.71 per share from $0.52 per share in 2005.
For the second quarter, total Transportation gross profits increased 27.6 percent to $232.9 million in 2006 from $182.6 million in 2005. Our transportation gross profit margin increased to 17.1 percent in 2006 from 16.3 percent in 2005.
Our truck transportation gross profits increased 24.4 percent in the second quarter of 2006. Approximately half of the growth was driven by increased volumes, with the remainder of the growth due to a small increase in gross profit margins and increased transportation rates.
Our intermodal gross profit increase of 30.9 percent in the second quarter of 2006 resulted from an increase in gross profit margins, offset by a slight decrease in volume. Our gross profit margin expanded due to rate increases and the elimination of some lower margin business.
In our international freight forwarding business, our ocean gross profits increased 40.6 percent and our air gross profits increased 177.4 percent in the second quarter of 2006. Excluding the impact of the acquisitions of Bussini Transport S.r.l.("Bussini") and Hirdes Group Worldwide ("Hirdes"), announced in the third quarter of 2005, we estimate our ocean gross profits would have increased approximately 25 percent in the second quarter of 2006. Our growth was driven by increased volumes and expanded margins, due to increased availability of capacity in the marketplace. Excluding the acquisitions, our air gross profits would have increased approximately 70 percent in the second quarter of 2006, due to increased volumes with project-related business and increased volume in the Asia Pacific region.
Miscellaneous transportation gross profits consist primarily of transportation management fees, customs brokerage fees, and warehouse and cross-dock services. The increase of 42.4 percent in the second quarter was driven by increases in our transportation management fees and customs brokerage business. Excluding the impact of the acquisitions of Bussini and Hirdes, we estimate our miscellaneous transportation gross profits increased approximately 35 percent.
For the second quarter, Sourcing gross profits increased 13.8 percent to $26.8 million in 2006 from $23.6 million in 2005. This increase was due to higher volumes with retail and foodservice customers through integrated programs.
For the second quarter, Information Services gross profits increased 17.3 percent to $10.9 million in 2006 from $9.3 million in 2005, due to transaction volume growth.
For the quarter, operating expenses increased 23.4 percent to $166.7 million in 2006 from $135.1 million in 2005. This was due to an increase of 22.1 percent in personnel expenses and an increase of 28.1 percent in selling, general and administrative expenses. In the second quarter of 2005 we announced the recovery of $2.8 million from our insurance companies, as a result of a previously disclosed lawsuit to recover a settlement payment made by C.H. Robinson in a prior wrongful death action. Excluding that recovery, our selling, general and administrative expenses would have increased 16.8 percent in the second quarter of 2006.
As a percentage of gross profits, operating expenses decreased to 61.6 percent in 2006 from 62.7 percent in 2005. This decrease was due to a decline in personnel expenses as a percentage of gross profits from 49.3 percent to 47.9 percent, offset by an increase in selling, general and administrative expenses as a percentage of gross profits from 13.4 percent to 13.7 percent. Excluding the recovery from our insurance companies in the second quarter of 2005, our selling, general and administrative expenses would have decreased as a percentage of gross profits from 14.7 percent in the second quarter of 2005 to 13.7 percent in the second quarter of 2006. We gain leverage in periods of strong gross profit growth in our personnel expenses and also in several categories of our selling, general and administrative expenses.
On May 18, 2006, we acquired Payne, Lynch & Associates, Inc ("Payne Lynch"), a non-asset based, third party logistics company that specializes in flat bed and over dimensional freight brokerage. Payne Lynch has 48 employees and is located in Sartell, Minnesota.
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 20,500 customers through a network of 203 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 40,000 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 associ ated 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 risks and uncertainties detailed in our Annual and Quarterly Reports.
Conference Call Information:
C.H. Robinson Worldwide Second Quarter 2006 Earnings Conference Call
Wednesday, July 26, 2006 10:00 a.m. Eastern time
Live webcast available through Investor Relations link atwww.chrobinson.com
Telephone access:800-240-5318
Webcast replay available through August 9, 2006; Investor Relations link atwww.chrobinson.com
Telephone audio replay available until 12:59 a.m. Eastern Time on July 29, 2006: 800-405-2236; passcode:11065323#
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
(unaudited) |
(In thousands, except per share data) |
| | | |
| Three months ended June 30, | | Six months ended June 30, |
| 2006 | | 2005 | | 2006 | | 2005 |
Gross Revenues: | | | | | | | |
Transportation | $ 1,363,246 | | $ 1,122,305 | | $ 2,579,155 | | $ 2,122,241 |
Sourcing | 326,853 | | 273,549 | | 600,275 | | 479,658 |
Information Services | 10,898 | | 9,288 | | 20,682 | | 18,183 |
Total gross revenues | 1,700,997 | | 1,405,142 | | 3,200,112 | | 2,620,082 |
Gross Profits: | | | | | | | |
Transportation | | | | | | | |
Truck | 201,431 | | 161,983 | | 396,564 | | 316,003 |
Intermodal | 9,572 | | 7,312 | | 17,503 | | 14,268 |
Ocean | 8,595 | | 6,114 | | 17,419 | | 11,774 |
Air | 6,433 | | 2,319 | | 11,477 | | 4,986 |
Miscellaneous | 6,891 | | 4,840 | | 12,926 | | 9,383 |
Total transportation | 232,922 | | 182,568 | | 455,889 | | 356,414 |
Sourcing | 26,799 | | 23,556 | | 49,105 | | 40,197 |
Information Services | 10,898 | | 9,288 | | 20,682 | | 18,183 |
Total gross profits | 270,619 | | 215,412 | | 525,676 | | 414,794 |
| | | | | | | |
Operating costs and expenses: | | | | | | | |
Personnel expenses | 129,609 | | 106,138 | | 256,820 | | 207,067 |
Selling, general, and administrative expenses | 37,092 | | 28,945 | | 72,504 | | 59,606 |
Total operating expenses | 166,701 | | 135,083 | | 329,324 | | 266,673 |
Income from operations | 103,918 | | 80,329 | | 196,352 | | 148,121 |
| | | | | | | |
Investment and other income | 2,877 | | 1,287 | | 5,542 | | 2,418 |
| | | | | | | |
Income before provision for income taxes | 106,795 | | 81,616 | | 201,894 | | 150,539 |
Provision for income taxes | 40,201 | | 32,269 | | 77,186 | | 59,416 |
Net income | $ 66,594 | | $ 49,347 | | $ 124,708 | | $ 91,123 |
| | | | | | | |
Net income per share (basic) | $ 0.39 | | $ 0.29 | | $ 0.73 | | $ 0.54 |
Net income per share (diluted) | $ 0.38 | | $ 0.28 | | $ 0.71 | | $ 0.52 |
Weighted average shares outstanding (basic) | 171,215 | | 170,236 | | 171,051 | | 170,056 |
Weighted average shares outstanding (diluted) | 175,198 | | 174,394 | | 175,070 | | 174,264 |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(In thousands) |
|
| | June 30, 2006 | | December 31, 2005 |
| | |
Assets | | | | |
Current assets: | | | | |
Cash and cash equivalents | | $ 239,406 | | $ 230,628 |
Available-for-sale securities | | 123,155 | | 122,551 |
Receivables, net | | 788,467 | | 716,725 |
Other current assets | | 22,650 | | 14,877 |
Total current assets | | 1,173,678 | | 1,084,781 |
| | | | |
Property and equipment, net | | 66,108 | | 60,721 |
Intangible and other assets | | 287,664 | | 249,566 |
| | $ 1,527,450 | | $ 1,395,068 |
| | | | |
Liabilities and stockholders' investment | | | | |
Current liabilities | | | | |
Accounts payable and outstanding checks | | $ 539,188 | | $ 473,882 |
Accrued compensation | | 57,932 | | 94,333 |
Other accrued expenses | | 51,181 | | 44,268 |
Total current liabilities | | 648,301 | | 612,483 |
| | | | |
Long term liabilities | | 1,243 | | 2,548 |
Total liabilities | | 649,544 | | 615,031 |
| | | | |
Total stockholders' investment | | 877,906 | | 780,037 |
| | $ 1,527,450 | | $ 1,395,068 |
| | | | |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) (In thousands, except operational data) |
| Six months ended June 30, |
|
| 2006 | | 2005 |
Operating activities: | | | |
Net income | $ 124,708 | | $ 91,123 |
Stock-based compensation | 26,856 | | 18,982 |
Depreciation and amortization | 11,547 | | 8,613 |
Other non-cash expenses, net | (163) | | 962 |
Net changes in operating elements | (47,265) | | (42,105) |
Net cash provided by operating activities | 115,683 | | 77,575 |
| | | |
Investing activities: | | | |
Net property additions | (15,802) | | (12,455) |
Cash paid for acquisitions | (33,974) | | (43,590) |
Purchases of available-for-sale securities | (55,116) | | (51,620) |
Sales/maturities of available-for-sale securities | 54,512 | | 50,824 |
Other assets, net | (928) | | (1,609) |
Net cash used for investing activities | (51,308) | | (58,450) |
| | | |
Financing activities: | | | |
Net repurchases of common stock | (21,560) | | (4,560) |
Excess tax benefit from stock based compensation plans | 9,367 | | 2,273 |
Cash dividends | (45,370) | | (25,703) |
Net cash used for financing activities | (57,563) | | (27,990) |
Effect of exchange rates on cash | 1,966 | | (664) |
| | | |
Net increase (decrease) in cash and cash equivalents | 8,778 | | (9,529) |
Cash and cash equivalents, beginning of period | 230,628 | | 166,476 |
Cash and cash equivalents, end of period | $ 239,406 | | $ 156,947 |
| | | |
| | | |
| As of June 30, |
| 2006 | | 2005 |
Operational Data: | | | |
Employees | 6,382 | | 5,368 |
Branches | 203 | | 178 |
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