C.H. Robinson Worldwide (NASDAQ:CHRW) is one of the largest non-asset-based third party logistics companies in the world. C.H. Robinson is a global provider of multimodal transportation services and logistics solutions, currently serving over 37,000 active customers through a network of 235 offices in North America, South America, Europe, Asia, Australia and the Middle East. C.H. Robinson maintains one of the largest networks of motor carrier capacity in North America and works with approximately 53,000 transportation providers worldwide.
In 1905, Charles Henry Robinson founded C.H. Robinson Company to help settlers in the Dakota Territory receive merchandise, vegetables and fruit. More than 100 years later, C.H. Robinson still buys, sells and markets fresh produce through its Sourcing business, which accounted for about eight percent of 2011 net revenues.
Today, C.H. Robinson Worldwide is one of the largest third party logistics companies in the world with 2011 total revenues topping the $10 billion milestone. Transportation services represented 88% of the company's 2011 net revenues with Payment Services for motor carrier companies and fuel distributors making up four percent of net revenues.
CHRW has contractual relationships with approximately 53,000 transportation companies, including motor carriers, railroads, air freight and ocean carriers. Depending on the needs of each customer and their supply chain requirements, CHRW selects and hires the appropriate transportation for each shipment to optimize service for customers.
C.H. Robinson provides efficient and cost-effective freight transportation services and logistics solutions to companies of all sizes in a wide variety of industries. Operating through a network of 235 global offices, CHRW handled 10 million shipments in 2011 and worked with more than 37,000 active customers. CHRW's proprietary global supply chain technology and economies of scale provide distinct competitive advantages, which drive efficiencies and create service and cost advantages for its customers.
Steady Track Record
C.H. Robinson has generated a track record of strong and steady performance in all types of market environments. Over the past 20 years, the company's net revenues have compounded at a 16% annual rate with operating income and EPS growing even faster at 20% and 21% annual rates, respectively. The management team's long-term compounded annual growth target is 15% for net revenues, operating income and EPS, recognizing that volatile industry conditions may curtail growth over shorter periods. While C.H. Robinson is a market leader, they only occupy a fraction of the large and fragmented global logistics market, which provides significant future growth opportunities as they capture market share, add new services and expand their global network.
Debt-Free Balance Sheet
C.H. Robinson maintains a strong, debt-free balance sheet. This is another competitive advantage as companies want to work with financially and operationally strong providers. The company has historically generated substantial cash from operations. Free cash flow has compounded at a 15% annual rate over the last decade to nearly $377 million in 2011. During the 2012 first quarter, free cash flow motored 47% higher to more than $63 million.
With relatively minimal capital expenditure needs, management redeploys growing cash into strategic acquisitions and returns significant cash to shareholders via dividends and share repurchases, totaling $1.2 billion over the last three years. The latest dividend increase was 14% to an annual rate of $1.32 per share, representing a solid 2.2% yield.
High Return On Equity
C.H. Robinson's business generates high returns on equity, which have averaged more than 30% annually over the past five years. The company's variable cost business model enables them to stay very efficient internally while maintaining industry-leading profitability.
Long-term investors should hop aboard C.H. Robinson Worldwide, a HI-quality market leader with steady growth, a debt-free balance sheet and high profitability. Buy.
Disclosure: I am long CHRW.
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