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C.H. Robinson (CHRW) Q1 Earnings Top, Revenues Lag Estimates

Zacks Equity Research

C.H. Robinson Worldwide’s CHRW first-quarter 2019 earnings of $1.16 per share surpassed the Zacks Consensus Estimate of $1.13. The bottom line also improved 14.9% year over year.

Total revenues came in at $3,751.2 million, which fell short of the Zacks Consensus Estimate of $3,968.7 million and also declined 4.4% year over year. The downturn can be attributed to unfavorable pricing across most transportation service lines.

Total operating expenses increased 4.6% year over year to $454.3 million owing to higher personnel costs and selling, general and administrative expenses. However, the operating ratio (operating expenses as a percentage of net revenues) of 66.9% compared favorably with 69.3% in the year-ago period. Notably, lower the value of the metric the better.

Impressively, the company returned $146.4 million to its shareholders through a combination of cash dividends ($69.7 million) and share repurchases ($76.7 million), reflecting an increase of 8.7% year over year. Capital expenditures totaled $13.9 million in the quarter under review.

Segmental Results  

At North American Surface Transportation (NAST), total revenues were $2.8 billion (down 3.8%) in the first quarter, down 3.8%. Net revenues at the segment increased 11%.Notably, NAST results include those of Robinson Fresh transportation, which were previously reported under a separate segment.

Total revenues at Global Forwarding summed $537.6 million, down 2.9%. Net revenues at the segment increased 3.4%.

A historical presentation of results on an enterprise basis is given below:

Transportation: The unit (comprising Truckload, Intermodal, Less-than-Truckload, Ocean, Air, Customs and Other logistics services) delivered net revenues of $651.7 million in the quarter under consideration, up 9.3% from the prior-year period’s figure.

Truckload net revenues grew 14.4% year over year to $378 million. Additionally, net revenues at Less-than-Truckload improved 3.6% year over year to $116.3 million.

At the Intermodal segment, net revenues decreased 4% year over year to $6.1 million.

Net revenues at the Ocean transportation segment climbed 3.9% year over year to $71.5 million. The same at the Air transportation division declined 4.5% year over year to $27.6 million. Customs net revenues augmented 5.9% to $21.9 million.

Other logistics services’ net revenues inched up 5.2% year over year to $30.4 million.

Sourcing: Net revenues at the segment decreased 9.2% year over year to approximately $27.1 million.

Liquidity

This Zacks Rank #3 (Hold) company exited the first quarter with cash and cash equivalents of $445.5 million compared with $378.6 million at the end of 2018. Long-term debt was $1,341.61 million compared with $1,341.35 million at 2018 end. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

2019 Outlook

C.H. Robinson anticipates capital expenditures between $80 million and $90 million for 2019, with the majority to be spent on technology. Additionally, the effective tax rate is estimated in the 24-25% band for the year.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting earnings reports from key players namely Hertz Global Holdings HTZ, Expeditors International of Washington EXPD and Air Lease Corporation AL. While Hertz Global will report first-quarter 2019 earnings on May 6, Expeditors and Air Lease will announce the same on May 7 and 9, respectively.

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