C. H. Robinson Worldwide (NASDAQ: CHRW) reported Q4 EPS of $1.34, $0.13 better than the analyst estimate of $1.21. Revenue for the quarter came in at $4.1 billion versus the consensus estimate of $4.27 billion.

“We are pleased with our financial results in 2018. We achieved record levels of net revenues and operating income and a 100 basis point increase in operating income margin. Led by our strong operating performance, we more than doubled our cash flow from operations and returned nearly $600 million to shareholders in 2018,” said John Wiehoff, Chairman and Chief Executive Officer of C.H. Robinson. “Our strong 2018 financial results reflect the strength and hard work of our global network.”

Fourth Quarter Results Summary

• Total revenues increased 4.5 percent to $4.1 billion, driven by growth across most transportation service lines.
• Net revenues increased 13.0 percent to $713.8 million, driven by growth across all transportation service lines.
• Operating expenses increased 8.9 percent to $458.3 million. Personnel expenses increased 8.9 percent to $339.3 million, driven primarily by higher variable compensation expense and a 1.4 percent increase in average headcount. Selling, general and administrative (“SG&A”) expenses increased 8.8 percent to $119.0 million, due primarily to increases in purchased services, occupancy and travel and entertainment.
• Income from operations totaled $255.5 million, up 21.2 percent from last year due to growth in North American Surface Transportation (“NAST”), Global Forwarding and Robinson Fresh, partially offset by a decline in All Other and Corporate. Operating margin of 35.8 percent increased 240 basis points.
• Interest and other expenses decreased by $8.0 million, driven primarily by a $2.4 million favorable impact from currency revaluation in the fourth quarter of 2018, versus a $6.2 million unfavorable impact in the year-ago period. This was partially offset by higher interest expense due to an increase in interest rates.
• The effective tax rate in the quarter was 23.9 percent compared to 21.1 percent last year. The higher tax rate was driven primarily by one-time tax benefits that totaled $31.8 million in the year-ago period, partially offset by a $28.4 million benefit in the current period from the Tax Cuts and Jobs Act of 2017.
• Net income totaled $187.2 million, up 22.7 percent from a year ago. Diluted EPS of $1.34 increased 24.0 percent.

Outlook

“As we turn to 2019, we are remain focused on top-line growth and operating margin expansion and believe our continued investments in technology will help enable us to achieve these objectives,” said John Wiehoff. “We are also committed to strong cash returns to shareholders.”

John added, “A critical part of our strategy is to make investments that add value for our customers and carriers and drive growth for our business, regardless of where we are in the freight cycle. I remain as confident as ever that we have the right people, processes and technology to continue to win in the marketplace.”

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