C.H. Robinson Worldwide Inc. (CHRW) reported second-quarter 2013 adjusted earnings per share of 70 cents, which fell short of the Zacks Consensus Estimate of 74 cents. Adjusted earnings fell 1.4% from 71 cents in the year-ago quarter.
Total revenue in the second quarter of 2013 escalated 11.3% year over year to $3.29 billion, but missed the Zacks Consensus Estimate of $3.34 billion.
Total operating expenses rose 20.6% year over year to $290.1 million, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 61.4%, up from 56.5%.
Segment Details
Transportation: The segment (comprising Truck, Intermodal, Ocean, Air and Other logistics services) reported net revenue of $431.1 million in the second quarter, up 16.8% from the year-ago period.
Net revenue from Truck (comprising truckload and less-than-truckload services) increased 4.0% to $325.0 million in the reported quarter, attributable to volume growth from the acquisition of Apreo Logistics S.A. in Oct 2012 as well as increased shipments.
Net revenue from Intermodal fell 1.0% year over year to $9.9 million due to lower volumes, partially offset by increased net revenue margin. Net revenue margin increased due to change in business mix.
Net revenue from Ocean soared a massive 189.7% to $49.1 million aided by the acquisition of Phoenix operations in Nov 2012.
Air transportation net revenue grew 91.0% year over year to $20.2 million primarily attributable to the Phoenix acquisition.
Net revenue from Customs leaped 148.3% year over year to $9.8 million primarily attributable to the Phoenix acquisition.
Net revenue from other logistics services registered a 14.8% year-over-year growth to $17.1 million on the back of synergies arising from acquisitions.
Sourcing: The segment’s net revenue decreased 3.6% year over year to $38.7 million primarily due to lower net revenue margin.
Payment Services: The segment’s (comprising income from subsidiary, T-Chek Systems Inc.) net revenue reduced 83.4% year over year to $2.7 million in the second quarter, driven by divesture in T-Chek system.
Liquidity & Debt Position
C.H. Robinson ended the second quarter of 2013 with cash and cash equivalents of $150.0 million as against $210.0 million at the end of 2012. The company had $365.6 million in debt on its balance sheet at the end of second-quarter 2013 compared with $253.6 million at the end of 2012. Cash from operations decreased to $58.3 million at the end of first half of 2013 as compared to $110.0 million at the end of first half of 2012.
Other Stocks
Another logistic company, Expeditors International of Washington Inc. (EXPD), reported second-quarter results on Aug 6, 2013 after the market closes. The company’s adjusted earnings of 45 cents beat the Zacks Consensus Estimate of 43 cents.
Currently, C.H. Robinson has a Zacks Rank #3 (Hold). Other stocks worth considering in this sector include Arkansas Best Corporation (ABFS) and Con-Way Inc. (CNW). Both these companies have a Zacks Rank #2 (Buy).
Our Analysis
Although we remain optimistic on the company’s ability to achieve its long-term growth goal, we believe that the competitive freight market, declining truckload market share, and limited margin expansion opportunities could restrict near-term growth. However, the company’s flexible business structure, efficient cost control measures along with revenue growth from strong pricing will prove beneficial in the near future.
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