Zacks_Analysts' Blog : C.H. Robinson Reports In Line - Analyst Blog

C.H. Robinson Worldwide Inc. (CHRW) has reported third quarter 2011 earnings per share of 70 cents, at par with the Zacks Consensus Estimate.  Results increased 12.9% from 62 cents in year-ago quarter primarily driven by Intermodal and trucking revenues.

Total revenue in the third quarter increased 11.3% year over year to $2,694.9 million, but missed the Zacks Consensus Estimate of $2, 696 million.

Total operating expenses rose 10.6% year over year to $239.1 million in the third quarter primarily due to 10.0% and 12.0% increases in personnel as well as selling, general and administrative expenses, respectively.

Total operating ratio (operating expenses as a percentage of net revenue) remained flat year over year at 56.5% in the reported quarter.

Segment Details

Transportation: The segment (comprising Truck, Intermodal, Ocean, Air and Other logistics services) reported gross profit of $374.5 million, up 11.3% from the comparable year-ago period.

Gross profit from Truck (comprising truckload and less-than-truckload services) rose 13.1% to $321.5 million in the reported quarter, attributable to year-over-year volume growth and higher pricing.

Gross profit from Intermodal increased 14.7% year over year to $10.5 million attributable to higher shipments as well as prices on higher fuel costs.

Gross profit from Ocean also increased a modest 4.8% to $17.9 million on higher pricing, partially offset by decline in volumes.

Air transportation gross profit plunged 13.2% year over year to $9.9 million primarily due to volume declines.

Gross profit from Other logistics services registered a 0.6% year-over-year growth to $14.8 million.

Sourcing: The segment’s gross profit climbed 3.7% year over year to $33.1 million primarily on increased value-added services. Additionally, the segments growth was also aided by the acquisition of Timco Worldwide, provider and marketer of melons.

Payment Services: The segment’s (comprising income from subsidiary, T-Chek Systems Inc.) gross profit climbed 10.0% year over year to $15.5 million in the third quarter largely driven by an increase in fees, which resulted from higher fuel prices and increased transaction.

Liquidity & Debt Position

C.H. Robinson ended the third quarter with cash and cash equivalents of $382.7 million as against $249.4 million in the comparable year-ago period.

Our Analysis

We believe the company’s remains well positioned to benefit from its freight transportation business as evident by strong shipments and pricing in Intermodal and Truck. Further, the cash-rich balance sheet with no debt and increasing shareholder returns make it more attractive for long-term investment. However company remains significantly challenged by higher operating costs followed by regulatory issues and competitive threats from logistics services companies such as Expeditors International of Washington Inc. (EXPD).

Thus, we are currently maintaining our long-term Neutral recommendation on C.H. Robinson supported by the Zacks #3 (Hold) Rank