C.H. Robinson Worldwide Inc.
) has reported second quarter 2012 earnings per share of 71 cents,
in line with the Zacks Consensus Estimate. Reported earnings
also increased 6% from 67 cents in the year-ago quarter.
Total revenue in the second quarter escalated 9.2% year over
year to $2.96 billion, surpassing the Zacks Consensus Estimate of
Total operating expenses increased 1.2% year over year to $240.6
million, primarily due to 10.9% rise in purchased transportation
and related services expenses.
Total operating ratio (operating expenses as a percentage of net
revenue) was 56.5% in the reported quarter, reflecting an
improvement of 40 basis points (bps) from 56.9% in the year-ago
The segment (comprising Truck, Intermodal, Ocean, Air and Other
logistics services) reported gross profit of $369 million in the
second quarter, up 0.3% from the year-ago period.
Gross profit from Truck (comprising truckload and
less-than-truckload services) declined 0.5% to $312.6 million due
to higher transportation cost.
Gross profit from Intermodal fell 7.8% year over year to $10
million due to declines in net revenue margin that clouded volume
growth. Net revenue margins were affected by higher capacity cost
and change in business mix. The company purchased 500 containers
and expects delivery by the third quarter, replacing 350 leased
Gross profit from Ocean grew 3.4% year over year to $17 million
based on higher pricing, offsetting volume decline.
Air transportation gross profit plunged 7.5% year over year to
$10.6 million, primarily due to lower pricing that offset volume
Gross profit from Other logistics services registered 26.7%
year-over-year growth to $18.8 million on better transportation
management and higher customs net revenues.
The segment's gross profit increased 15.1% year over year to $40.2
million primarily on higher volumes and increased net revenue
margin due to commodity and service mix. Additionally, the
acquisition of Timco Worldwide last year also aided the segment's
The segment's gross profit (comprising income from subsidiary,
T-Chek Systems Inc.) climbed 8.1% year over year to $16.3 million
in the second quarter, driven by an increase in transactions.
Liquidity & Debt Position
C.H. Robinson ended the quarter with cash and cash equivalents
of $240.6 million as against $315.9 million in the year-ago period
and had no debt on its balance sheet. Cash from operation rose to
$110 million at the end of the quarter from $78.9 million in the
We believe the company remains well positioned to benefit from
its freight transportation business as evident by strong shipments
and pricing in Intermodal and less than truckload market. 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
transportation costs followed by regulatory issues and competitive
threats from logistics services companies such as
Expeditors International of Washington Inc.
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).
CH ROBINSON WWD (CHRW): Free Stock Analysis
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