C.H. Robinson Misses 4Q, Revs Up

C.H. Robinson Worldwide Inc. ( CHRW - Analyst Report ) has reported fourth quarter 2012 adjusted earnings per share of 68 cents, which fell short of the Zacks Consensus Estimate by a couple of cents.Adjusted earnings inched up 1.5% from 67 cents in the year-ago quarter. For fiscal 2012, earnings per share climbed 5.3% year over year to $2.76.

Total revenue in the fourth quarter escalated 15.7% year over year to $2.97 billion, surpassing the Zacks Consensus Estimate of $2.86 billion. Total revenue in the full year increased 9.9% year over year to $11.4 billion.

Total operating expenses rose 35.6% year over year to $311 million in the fourth quarter, resulting in an operating ratio (operating expenses as a percentage of net revenue) of 70%, up from 57.5%. Total operating expenses for the year increased 10.9% year over year to $1,042 million. Total operating ratio in fiscal 2012 was 60.7%, up from 57.6% a year ago.

Segment Details

Transportation: The segment (comprising Truck, Intermodal, Ocean, Air and Other logistics services) reported gross profit of $444.6 million in the fourth quarter, up 10.8% from the year-ago period.

Gross profit from Truck (comprising truckload and less-than-truckload services) increased 7.1% to $328.3 million in the reported quarter, attributable to volume growth and synergies arising from the acquisition of Apreo Logistics S.A. in Oct 2012.

Gross profit from Intermodal fell 11.6% year over year to $9 million due to lower net revenue margin, which was affected by increased cost of capacity.

Gross profit from Ocean soared 98% to $33.7 million aided by Phoenix operations acquired in Nov 2012.

Air transportation gross profit grew 81.1% year over year to $15.9 million primarily attributable to decreased cost of capacity and increased pricing and Phoenix acquisition.

Gross profit from other logistics services registered a 37% year-over-year growth to $22.2 million on the back of higher transaction fees and synergies arising from acquisitions.

Sourcing: The segment’s gross profit increased 11.3% year over year to $30.5 million primarily on higher net revenue margin.

Payment Services: The segment’s (comprising income from subsidiary, T-Chek Systems Inc.) gross profit climbed 67.6% year over year to $4.9 million in the fourth quarter, driven by divesture in T-Chek system.

Liquidity & Debt Position

C.H. Robinson ended the year with cash and cash equivalents of $210 million as against $373.7 million in the year-ago period and had $253.6 million in debt on its balance sheet compared to no debts last year. Cash from operations rose to $460 million at the end of the year from $430 million a year ago.

Other Stocks

Another logistic company, Expeditors International of Washington Inc. ( EXPD - Analyst Report ) , is expected to report its fourth-quarter results on Feb 26, before the opening bell. The company has a Zacks Consensus Estimate of 43 cents for its fourth-quarter earnings.

Other stocks worth considering in this sector include Grupo Aeroportuario del Pacifico S.A.B. de CV ( PAC - Snapshot Report ) and Matson, Inc. ( MATX - Snapshot Report ) . Both these companies have a Zacks Rank #2 (Buy) rating.

Our Analysis

We believe C.H. Robinson’s asset light model with diversified freight forwarding solutions provide earnings flexibility in an economic downturn. The company’s near-term growth is expected to be driven by synergies arising from its acquisitions, expansion of US truckload brokerage, penetration in the less-than-truckload and intermodal markets, expansion of Transportation Management Center offerings and international freight forwarding. However, factors like competitive freight market, declining truckload market share and limited margin expansion opportunities could restrict near-term growth.

C.H. Robinson Has Zacks Rank #3 (Hold).