C.H. Robinson Worldwide Inc. ( CHRW ) reported second-quarter 2014 adjusted earnings per share of 80 cents, beating the Zacks Consensus Estimate of 77 cents. However, adjusted earnings jumped 14.3% from 70 cents per share in the year-ago quarter.
C H Robinson Worldwide, Inc - Earnings Surprise | FindTheBest
Total revenue in the second quarter increased 6.5% year over year to $3,502.9 million, steering ahead of the Zacks Consensus Estimate of $3,470 million. Revenues from the Transportation segment grew 7.8%, while in the Sourcing and Payment Services segments, the top line declined 1.3% and 5.8%, respectively.
Total operating expenses increased 10.5% year over year to $320.7 million in the quarter, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 61.5%, up from 61.4%.
Transportation: The segment (comprising Truck, Intermodal, Less-than-Truckload, Ocean, Air and Other logistics services) reported net revenue of $483.6 million in the second quarter, up 12.2% from the year-ago period.
Net revenue from Truck (comprising truckload and less-than-truckload services) grew 15.6% year over year to $305.6 million, attributable to a 4% increase in volumes.
Net revenue from Intermodal increased 9.5% year over year to $10.9 million. The improvement was driven by improved purchased transportation costs, a change in business mix, and a 1% rise in volume, but was partly offset by adverse railroad service levels.
Net revenue from Less-than-Truckload (LTL) increased 11.0% year over year to $67.4 million owing to 8% increase in total shipments and marginal rise in net revenue margin.
Net revenue from Ocean increased 2.8% year over year to $50.5 million. Rise in volume was partially offset by a decline in net revenue margin.
Air transportation net revenue grew 7.6% year over year to $21.7 million owing to rise in volumes and net revenue margin. Meanwhile, customs net revenue climbed 5.6% to $10.3 million due to higher transaction volumes.
Net revenue from Other logistics services grew 0.7% year over year to $17.2 million. The increase was due to rise in transportation management services, partially mitigated by decline in other logistics services.
Sourcing: The segment's net revenue decreased 10.0% year over year to $34.9 million based on volume and net revenue decline from a large client. Volumes were also negatively impacted by the West coast drought which affected product availability.
Payment Services: The segment saw net revenue decline of 4.2% year over year to $2.6 million.
Liquidity & Debt Position
C.H. Robinson ended the second quarter with cash and cash equivalents of $144.2 million against $162.0 million in 2013 and had $500.0 million in long-term debt on its balance sheet, unchanged from last year. Cash from operations increased to $128.4 million at the end of the first half of 2014 from $58.3 million a year ago.
We believe that the company's array of customers, advanced technology and service levels, and superior brand value will help in winning market share over the long term. Expansion of business through investments and its go-to-market strategy will also help enhance its performance. However, increasing cost of transportation and volume loss from a large sourcing client could weigh on the stock in the coming months.
C.H. Robinson has Zacks Rank #3 (Hold).
Better-ranked stocks in this sector include Dynagas LNG Partners LP ( DLNG ), Echo Global Logistics Inc. ( ECHO ) and Expeditors International of Washington Inc. ( EXPD ). All the three stocks bear a Zacks Rank #2 (Buy).
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