C.H. Robinson Worldwide Inc. (CHRW) has reported fourth quarter 2013 adjusted earnings per share of 62 cents, which fell short of the Zacks Consensus Estimate of 68 cents. Adjusted earnings plunged 60.8% from $1.58 in the year-ago quarter. For 2013, earnings per share declined 27.8% year over year to $2.65 and missed the Zacks Consensus Estimate of $2.71. The weak result affected the share price as the stock declined 6.21% in aftermarket trade on Nasdaq on Tuesday.
Total revenue in the fourth quarter escalated 6.1% year over year to $3.15 billion, but missed the Zacks Consensus Estimate of $3.26 billion. Total revenue in the full year increased 12.3% year over year to $12.8 billion.
Total operating expenses decreased 7.0% year over year to $289.3 million in the fourth quarter, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 65.1%, down from 70.0%. Total operating expenses for the year increased 10.7% year over year to $1,153 million. Total operating ratio in 2013 was 62.8%, up from 60.7% a year ago.
Segment Details
Transportation: The segment (comprising Truck, Intermodal, less-than-truckload, Ocean, Air and Other logistics services) reported net revenue of $416.0 million in the fourth quarter, up 1.7% from the year-ago period.
Net revenue from Truck (comprising truckload and less-than-truckload services) decreased 5.6% year over year to $256.1 million in the reported quarter, attributable to increased cost per mile.
Net revenue from Intermodal improved 9.4% year over year to $9.9 million due to change in business mix and improved customer pricing, partially offset by decreased volumes.
Net revenue from Less-than Truckload (LTL) increased 3.2% year over year to $58.8 million owing to increase in total shipments, partially affected by a decline in net revenue margin.
Net revenue from Ocean surged 37.6% to $46.4 million. Air transportation net revenue grew 12.8% year over year to $17.9 million while customs net revenue climbed 36.7% to $9.3 million. All the increases were aided by Phoenix operations acquired in Nov 2012.
Net revenue from Other logistics services registered 14.0% year-over-year growth to $17.6 million.
Sourcing: The segment’s net revenue decreased 15.5% year over year to $25.8 million based on volume and net revenue decline from a large client, unfavorable weather condition and changes in commodity and service mix.
Payment Services: The segment (comprising income from subsidiary, T-Chek Systems Inc.) saw gross profit decline of 46.5% year over year to $2.6 million in the fourth quarter, driven by divesture in T-Chek system.
Liquidity & Debt Position
C.H. Robinson ended 2013 with cash and cash equivalents of $162.0 million against $210.0 million in 2012 and had $375.0 million in debt on its balance sheet compared to $253.6 million in debts last year. Cash from operations declined to $347.8 million at the end of the year from $460.3 million a year ago.
Our Analysis
We believe C.H. Robinson’s asset light model with diversified freight forwarding solutions provide earnings flexibility in an economic downturn. However, factors like competitive freight market, declining truckload market share and limited margin expansion opportunities could restrict near-term growth. Further, the increasing cost of transportation and volume loss from a large sourcing client could also weigh on the stock in the coming months.
C.H. Robinson has Zacks Rank #4 (Sell).
Other Stocks
Another logistic company, Expeditors International of Washington Inc. (EXPD) is expected to report its fourth-quarter results on Feb 25, before the opening bell. The company has a Zacks Consensus Estimate of 46 cents for its fourth-quarter earnings.
Better-ranked stocks in this sector include Grupo Aeroportuario del Pacifico S.A.B. de CV (PAC) and American Railcar Industries Inc. (ARII). Both have a Zacks Rank #2 (Buy).
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