C.H. Robinson (CHRW) Q2 Earnings Beat, Revenues Miss Mark

C.H. Robinson Worldwide’s (NASDAQ:CHRW) second-quarter 2019 earnings of $1.22 per share surpassed the Zacks Consensus Estimate by a penny. The bottom line also improved approximately 8% year over year.

Total revenues came in at $3,908.8 million, falling short of the Zacks Consensus Estimate of $4,044.8 million. Moreover, the top line declined 8.6% year over year. The downturn can be attributed to unfavorable pricing across most transportation service lines.

The revenue miss and its year-over-year decline perhaps disappointed investors. Consequently, the stock shed 4.5% of value in after-hours trading on Jul 30.

Total operating expenses increased 3.4% year over year to $467.68 million due to higher selling, general and administrative expenses. Meanwhile, operating ratio (operating expenses as a percentage of net revenues) improved marginally to 67.3% from 67.4% in the year-ago quarter. Notably, lower the value of the metric the better.

Impressively, the company returned $179.8 million to its shareholders through a combination of cash dividends ($69.3 million) and share repurchases ($110.5 million), reflecting an increase of 32% year over year. Capital expenditures totaled $17.7 million in the quarter under review.

Segmental Results

At North American Surface Transportation (NAST), total revenues were $2.87 billion (down 9.2%) in the second quarter. The downside was due to weak pricing. Net revenues at the segment rose 5.8%. Notably, NAST results include those of Robinson Fresh transportation, which were previously reported under a separate segment.

Total revenues at Global Forwarding summed $592.48 million, down 4.1%. Low pricing in ocean and air as well as contracted air volumes affected results. Net revenues at the segment also dipped 1.5%.

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 $665.61 million in the quarter under consideration, up 4% from the prior-year period’s figure.

Truckload net revenues grew 8.8% year over year to $371.35 million. Additionally, net revenues at Less-than-Truckload inched up 3.2% year over year to $122.99 million.

At the Intermodal segment, net revenues plunged 31.4% year over year to $6.3 million.

Net revenues at the Ocean transportation segment slid 1.8% year over year to $85.47 million. The same at the Air transportation division dropped 15.4% year over year to $26.13 million. Customs net revenues augmented 12.1% to $23.31 million.

Other logistics services’ net revenues decreased 4.3% year over year to $30.06 million.

Sourcing: Net revenues at the segment declined 6.1% year over year to approximately $29.6 million.

Liquidity

This Zacks Rank #3 (Hold) company exited the second quarter with cash and cash equivalents of $355.31 million compared with $378.6 million at the end of 2018. Long-term debt was $1.25 billion compared with $1.34 billion at 2018 end. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

2019 Outlook

C.H. Robinson reiterates capital expenditures between $80 million and $90 million for 2019 with the majority to be spent on technology. Additionally, effective tax rate is still estimated in the 24-25% band for the year. Meanwhile, the company expects the sluggish freight scenario to persist through the remaining months of 2019.

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, such as Expeditors International of Washington, Inc. (NASDAQ:EXPD) , Air Lease Corporation (NYSE:AL) and Hertz Global Holdings, Inc (NYSE:HTZ) . While Expeditors and Hertz will report earnings numbers on Aug 6, Air Lease will release the same on Aug 8.

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