CHRWD C.H. Robinson Worldwide (MM)

C.H. Robinson Worldwide, Inc. ("C.H. Robinson") (NASDAQ:CHRWD), today reported financial results for the three months and nine months ended September 30, 2005. As previously reported, all share and per share data is reflective of a two-for-one stock split, effective October 14, 2005. For the third quarter, gross profits increased 32.9 percent to $228.9 million in 2005 from $172.2 million in 2004. Income from operations increased 40.3 percent to $85.6 million in the third quarter of 2005 from $61.0 million in the third quarter of 2004. Net income increased 44.8 percent to $54.1 million in the third quarter of 2005 from $37.3 million in the third quarter of 2004. Diluted net income per share increased 40.9 percent to $0.31 per share in the third quarter of 2005 from $0.22 per share in the third quarter of 2004. For the nine months ended September 30, 2005, gross profits increased 34.2 percent to $643.7 million from $479.8 million in 2004. Income from operations increased 45.5 percent to $233.7 million from $160.7 million in 2004. Net income increased 47.1 percent to $145.2 million from $98.7 million in 2004. Diluted net income per share increased 45.6 percent to $0.83 per share from $0.57 per share in 2004. For the third quarter, total Transportation gross profits increased 31.9 percent to $198.0 million in 2005 from $150.1 million in 2004. Our transportation gross profit margin increased to 16.3 percent in 2005 from 15.9 percent in 2004. The increase in our truck transportation gross profits of 31.4 percent in the third quarter of 2005 was driven by volume growth and price increases in both truckload and less-than-truckload transactions. Tight capacity created opportunities with new and existing customers. We are adding new carriers and expanding our existing carrier relationships, both of which gave us the capacity we needed to efficiently meet these needs. Our intermodal gross profits increase of 19.6 percent in the third quarter of 2005 resulted from an increase in gross profit margins, offset by a decrease in volume. Our volume was impacted by market conditions that continue to drive business back to truck in certain lanes. Our gross profit margin increase resulted from the elimination of some lower margin business and some rate increases to offset increased costs. Our international ocean and air gross profits increased 50.0 percent in the third quarter of 2005. This growth includes the impact of our acquisitions of Bussini Transport S.r.l. and Hirdes Group Worldwide during the quarter. Our ocean gross profits increased 48.8 percent and our air gross profits increased 53.0 percent in the third quarter of 2005. Excluding the impact of the acquisitions above, our growth rates in ocean and air gross profits would have been 38.2 percent and 17.3 percent in the third quarter of 2005. We continue to add new customers and broaden our relationships with existing customers to include international transportation. Miscellaneous transportation gross profits consist of transportation management fees, customs brokerage fees, warehouse and cross-dock services, and other miscellaneous transportation related services. The increase of 32.5 percent in the third quarter was driven by increases in our transportation management fees and customs brokerage business. For the third quarter, Sourcing gross profits increased 55.3 percent to $21.0 million in 2005 from $13.5 million in 2004. Excluding the impact of the acquisitions of FoodSource and Epic Roots, announced in the first quarter, our Sourcing gross profits increased 0.6 percent. For the third quarter, Information Services gross profits increased 16.5 percent to $9.9 million in 2005 from $8.5 million in 2004, primarily due to transaction volume growth. For the quarter, personnel expense as a percentage of gross profits decreased to 48.3 percent in 2005 from 49.9 percent in 2004. While many of our personnel expenses are variable, we gain leverage in periods of growth. For the quarter, selling, general, and administrative expenses increased 29.7 percent to $32.7 million in 2005 from $25.2 in 2004. Selling, general, and administrative expenses as a percentage of gross profits decreased for the third quarter of 2005 to 14.3 percent compared to 14.6 percent in 2004. 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 18,000 customers through a network of 195 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 35,000 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 associated 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. -0- *T Conference Call Information: C.H. Robinson Worldwide Third Quarter 2005 Earnings Conference Call Wednesday, October 26, 2005 10:00 a.m. Eastern time Live webcast available through Investor Relations link at www.chrobinson.com Telephone access:1-800-219-6110 Webcast replay available through November 9, 2005; Investor Relations link at www.chrobinson.com Telephone audio replay available until 12:59 a.m. Eastern Time on October 29, 2005: 800-405-2236; passcode:11040861# CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) (In thousands, except per share data) (All share and per share data is reflective of a two-for-one stock split effective October 14, 2005) ---------------------- ----------------------- Three months ended Nine months ended September 30, September 30, ---------------------- ----------------------- 2005 2004 2005 2004 ---------------------- ----------------------- Gross Revenues: Transportation $1,218,026 $943,256 $3,340,267 $2,587,383 Sourcing 257,409 172,026 737,067 535,513 Information Services 9,934 8,524 28,117 24,621 ----------- ---------- ----------- ----------- Total gross revenues 1,485,369 1,123,806 4,105,451 3,147,517 ----------- ---------- ----------- ----------- Gross Profits: Transportation Truck 172,435 131,248 488,438 360,084 Intermodal 8,469 7,083 22,737 21,919 Ocean 8,638 5,806 20,412 15,275 Air 3,495 2,284 8,481 6,412 Miscellaneous 4,938 3,727 14,321 10,514 ----------- ---------- ----------- ----------- Total transportation 197,975 150,148 554,389 414,204 Sourcing 20,965 13,501 61,162 40,987 Information Services 9,934 8,524 28,117 24,621 ----------- ---------- ----------- ----------- Total gross profits 228,874 172,173 643,668 479,812 ----------- ---------- ----------- ----------- Operating costs and expenses: Personnel expenses 110,595 85,978 317,662 244,777 Selling, general, and administrative expenses 32,661 25,184 92,267 74,336 ----------- ---------- ----------- ----------- Total operating expenses 143,256 111,162 409,929 319,113 ----------- ---------- ----------- ----------- Income from operations 85,618 61,011 233,739 160,699 Investment and other income: Interest income and other 1,726 637 4,129 1,981 Nonqualified deferred compensation investment gain (loss) 139 (80) 154 (49) ----------- ---------- ----------- ----------- Investment and other income 1,865 557 4,283 1,932 ----------- ---------- ----------- ----------- Income before provision for income taxes 87,483 61,568 238,022 162,631 Provision for income taxes 33,394 24,219 92,810 63,932 ----------- ---------- ----------- ----------- Net income $54,089 $37,349 $145,212 $98,699 =========== ========== =========== =========== Net income per share (basic) $0.32 $0.22 $0.85 $0.58 Net income per share (diluted) $0.31 $0.22 $0.83 $0.57 Weighted average shares outstanding (basic) 170,105 169,232 170,072 169,276 Weighted average shares outstanding (diluted) 174,533 173,096 174,357 173,017 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands) September 30, December 31, 2005 2004 ------------- ------------ Assets Current Assets: Cash and cash equivalents $191,942 $166,476 Available-for-sale securities 123,181 121,600 Receivables, net 698,254 544,274 Other current assets 15,666 13,637 ------------- ------------ Total current assets 1,029,043 845,987 Property and equipment, net 58,595 51,122 Intangible and other assets 249,311 183,587 ------------- ------------ $1,336,949 $1,080,696 ============= ============ Liabilities and stockholders' investment Current liabilities Accounts payable and outstanding checks $469,132 $358,929 Accrued compensation 71,969 60,261 Other accrued expenses 38,253 33,629 ------------- ------------ Total current liabilities 579,354 452,819 Long term liabilities: Deferred tax liability 4,871 4,153 Nonqualified deferred compensation obligation 3,030 2,868 ------------- ------------ Total long term liabilities 7,901 7,021 ------------- ------------ Total liabilities 587,255 459,840 Total stockholders' investment 749,694 620,856 ------------- ------------ $1,336,949 $1,080,696 ============= ============ CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands, except operational data) Nine months ended September 30, ------------------- 2005 2004 --------- --------- Operating activities: Net income $145,212 $98,699 Depreciation and amortization 13,326 8,461 Net changes in operating elements (1,907) (44,178) --------- --------- Net cash provided by operating activities 156,631 62,982 Investing activities: Net property additions (16,151) (22,575) Insurance proceeds - 1,590 Cash paid for acquisitions (60,124) (9,112) Purchases of available-for-sale securities (99,791) (37,050) Sales/maturities of available-for-sale securities 98,225 36,569 Other assets, net (1,891) (1,050) --------- --------- Net cash used for investing activities (79,732) (31,628) Financing activities: Net repurchases of common stock (12,720) (10,694) Cash dividends (38,578) (30,648) --------- --------- Net cash used for financing activities (51,298) (41,342) Effect of exchange rates on cash (135) (1,000) --------- --------- Net increase (decrease) in cash and cash equivalents 25,466 (10,988) Cash and cash equivalents, beginning of period 166,476 123,413 --------- --------- Cash and cash equivalents, end of period $191,942 $112,425 ========= ========= As of September 30, ------------------- 2005 2004 --------- --------- Operational Data: Employees 5,605 4,671 Branches 195 170 *T