The third-party logistics provider’s earnings per share for Q3 2016 fell short of analyst expectations, largely due to net revenue margin pressure as contractual sell rates fell faster than spot buy rates, William Blair Equity Research said.
C.H. Robinson reported a net income of $129 million for the third quarter of 2016, a 7.5 percent decline from last year’s third quarter.
The Eden Prairie, Minn.-based third-party logistics provider’s earnings per share (EPS) for the quarter fell short of analyst expectations, totaling $0.90 per share compared to $0.96 per share for the third quarter of 2015.
William Blair Equity Research estimated C.H. Robinson’s EPS for the third quarter would total $0.97 per share. William Blair attributed the shortfall largely to net revenue margin pressure as contractual sell rates fell faster than spot buy rates.
Analysts polled by Thompson Reuters expected C.H. Robinson’s EPS to total $0.96 per share on revenues of $3.33 billion.
However, C.H. Robinson’s revenues for the quarter slipped 1.9 percent year-over-year to $3.36 billion.
C.H. Robinson’s third quarter truckload net revenues stood at $309 million, a 10.4 percent decline from the third quarter of 2015, but total truckload volumes rose about 7.5 percent.
Less-than-truckload net revenues for the quarter inched up 2.4 percent year-over-year to $96.4 million, while the segment’s volumes rose about 4.5 percent.
Intermodal net revenues for the quarter were driven down 24.5 percent year-over-year to $7.7 million by net revenue margin declines. “During the third quarter of 2016, intermodal opportunities were negatively impacted by the alternative lower cost truck market,” C.H. Robinson said.
Ocean transportation net revenues for the quarter dipped 3.1 percent from the third quarter of 2015 to $56.5 million, primarily due to the higher cost of capacity and pressured margins on fixed price business, which largely resulted from South Korean ocean carrier Hanjin filing for bankruptcy.
Meanwhile, air transportation net revenues for the quarter remained fairly steady from a year prior, as decreased net revenue margin was partially offset by increased volumes. Consequently, the segment’s net revenues fell just 1.7 percent to $19.9 million.
Custom’s net revenues for the quarter ticked up 2.6 percent from the third quarter of 2015 to $12.3 million, primarily due to increased transaction volumes.
Net revenues in the other logistics services segment, which comprises managed services, warehousing, and small parcel, surged 31 percent year-over-year during the quarter to $26.8 million, mostly due to growth in managed services.
Sourcing net revenues for the quarter rose 4.7 percent from the third quarter of 2015 to $29.8 million, resulting from a case volumes increase across a variety of commodities and services, which was partially offset by a decline in net revenue per case.
“We expected a challenging pricing environment in 2016 as shippers focus on reducing their transportation costs. Despite the decrease in some of our key financial metrics in the third quarter, we feel confident that we are making good progress on our long-term plans,” C.H. Robinson CEO and Chairman John Wiehoff said. “We are adapting to the market conditions by achieving profitable volume growth and continuing to focus on improving our customers’ supply chain outcomes.”
C.H. Robinson completed the $229 million APC Logistics acquisition at the close of business on Sept. 30, adding Oceania as a new region to its Global Forwarding division. Looking ahead, Investment bank and analyst Stifel’s rating on the company’s shares remains “buy,” but Stifel did decrease its 2016, 2017 and 2018 EPS estimates from $3.79, $4.10 and $4.50 to $3.65, $3.80 and $4.15, respectively.
C.H. Robinson’s net income drops 7.5% in Q3
