CH Robinson Worldwide Management Discusses Q4 2012 Results - Earnings Call Transcript
February 5, 2013 9:10 PM ET
CH Robinson Worldwide (CHRW)
Q4 2012 Earnings Call
February 05, 2013 5:00 pm ET
Tim Gagnon - Director of Investor Relations and Analytics
Chad M. Lindbloom - Chief Financial Officer, Principal Accounting Officer and Senior Vice President
John P. Wiehoff - Chairman, Chief Executive Officer and President
Nathan Brochmann - William Blair & Company L.L.C., Research Division
John G. Larkin - Stifel, Nicolaus & Co., Inc., Research Division
Thomas R. Wadewitz - JP Morgan Chase & Co, Research Division
Elizabeth Mielke - UBS Investment Bank, Research Division
Christian Wetherbee - Citigroup Inc, Research Division
Jason H. Seidl - Dahlman Rose & Company, LLC, Research Division
Scott H. Group - Wolfe Trahan & Co.
Christopher J. Ceraso - Crédit Suisse AG, Research Division
Thomas Kim - Goldman Sachs Group Inc., Research Division
William J. Greene - Morgan Stanley, Research Division
Good afternoon, ladies and gentlemen, and welcome to the C.H. Robinson Fourth Quarter 2012 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Tuesday, February 5, 2013. I'd like to turn the conference over to Tim Gagnon, Director of Investor Relations. Please go ahead, sir.
On our call today will be John Wiehoff, Chief Executive Officer; and Chad Lindbloom, Chief Financial Officer. Chad and John will provide some prepared comments on the highlights of our fourth quarter and full year performance and we will follow that with a question-and-answer session. [Operator Instructions]
Please note that there are presentation slides that accompany our call to facilitate our discussion. The slides can be accessed in the Investor Relations section of our website, which is located at chrobinson.com. Chad and John will be referring to these slides in their prepared comments.
Finally, I'd like to remind you that comments made by Chad, John or others representing C.H. Robinson may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations.
With that, I'll turn it over to Chad.
Chad M. Lindbloom
Thanks, Tim and, thank all of you for taking the time to listen to our fourth quarter earnings call. We released our earnings after market today. Our release contains adjusted numbers and provides a reconciliation of these numbers to GAAP. On today's call, we are going to focus on these adjusted numbers so we thought we should start with an explanation of the adjustments. Slide 3 shows our fourth quarter and year actual GAAP results, then a column showing the nonrecurring transaction amounts and finally, the third column for each of those time periods is the adjusted amounts, which we will be focusing today's conversations on. Moving to explain each of the adjustments, the $34.6 million adjustment to personnel expense is made up primarily of $33 million of incremental vesting expense of our equity awards triggered by the gain on the sale of T-Chek. The majority of our equity expense is based on the average of operating income growth and earnings per share growth. The gain had a significant impact to earnings per share as shown on our GAAP financial statements. The balance of the non recurring personnel expense is made up entirely of transaction-related bonuses, primarily made to T-Chek employees. The adjustments to other operating expenses are made up entirely of fees paid to third parties. These fees covered the investment banking fees related to the acquisition of T-Chek, external legal and accounting fees related to the acquisitions of Phoenix -- I'm sorry, the investment banking fees were related to the acquisition of Phoenix, the external legal and accounting fees were related to the acquisitions of Phoenix, Apreo and the divestiture of T-Chek. The adjustments to investment and other income is the gain from the divestiture of T-Chek. When comparing Q4 2012 adjusted to Q4 2011, the results still are not entirely comparable. Quarter 4 of 2012 includes 16 days of T-Chek's operations and 2 months of Phoenix operations. Quarter 4 of 2011 includes T-Chek operations for the full quarter and obviously no Phoenix activity. With that explanation of the adjusted results, I will turn it over to John to review the results of the service lines for the quarter.
John P. Wiehoff
Okay, thank you, Chad. So my prepared comments will start on Page 4 and as Chad indicated, I'll be comparing last year to our adjusted numbers for 2012. I'll start by pointing out that our total revenues for the quarter grew 15.7% and the consolidated net revenues grew 10.8% for the quarter.
Similar to the past several quarters, the difference between that gross revenue and net revenues was driven by net revenue margin compression. Our income from operations grew 3.3% for the quarter. As Chad mentioned, some of the unusual factors to reconcile to that and he will comment again later on some of the impacts to income from operations in our SG&A analysis.
From an overall results standpoint, I guess I want to highlight a few of the enterprise metrics that we focus on, since a key part of our growth story and strategy is to continue to take market share, the fact that our full year 2012 truckload volume growth was 10% is meaningful to us and does reflect our belief that we continue to take market share. We also track the scope of our relationships in terms of the active number of customers, which you see increased to 42,000 and the active number of carriers and suppliers that we engaged with during the year, that increased to 56,000. Chad commented on the fact that there's still, in these adjusted numbers, is some variances in the comparisons, largely due to Phoenix and T-Chek. Leaving Phoenix in the 2012 numbers as an ongoing operations, if you did exclude T-Chek from both the 2011 and '12 numbers, those adjusted net revenue numbers would have grown net revenues by 14% for the quarter, year-over-year and it would have grown income from operations as 6.5%. There's a lot of different ways to analyze our results for the quarters, given the transactions that we have, but we think those are the relevant ways to think about it.
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