EDEN PRAIRIE, Minn.— C.H. Robinson Worldwide, Inc. has released its financial results for the quarter that ended June 30 showing fourth consecutive quarters of growth and commends its staff for embracing changes aimed at delivering high quality and consistent performance levels.
“Our second quarter results reflect a higher quality of execution and performance, as we continue to implement the new Robinson operating model, “said Dave Bozeman, C.H. Robinson’s president and Chief Executive Officer. “And although we continue to fight through an elongated freight recession, we are winning and executing better at this point in the cycle. Our truckload business grew market share for the fourth consecutive quarter, and we took share the right way, with margin improvement in mind. And our adjusted income from operations increased 32 percent year-over-year for the full enterprise.”
Second Quarter Key Metrics:
- Gross profits increased 3.0% year-over-year to $676.5 million and increased 4.5% sequentially.
- Income from operations increased 34.3% year-over-year to $178.1 million and increased 40.1% sequentially.
- Adjusted operating margin (1) increased 600 basis points to 25.9%.
- Diluted earnings per share (EPS) increased 29.6% to $1.05.
- Adjusted EPS (1) increased 25.0% to $1.15.
- Cash generated by operations decreased by $58.4 million to $166.4 million provided by operations.
“I also want to commend our people for continuing to embrace the changes that we’re making to deliver a higher and more consistent level of performance and for the high quality second quarter results that they delivered in what continues to be a challenging market,” said Bozeman. “With ongoing efforts to improve the customer experience and our cost to serve, we continue to focus on ensuring that we’ll be ready for the eventual freight market rebound, with a disciplined operating model that decouples headcount growth from volume growth and drives operating leverage.”
According to a press release, Bozeman said that all the changes the company is making are aimed at generating incremental operating income and delivering higher highs and higher lows over the course of freight market cycles.
“We will do this by focusing on two main fronts, growing market share and expanding our operating income margins,” said Bozeman. “We’ll continue to grow market share by leveraging our robust capabilities to power vertical-centric solutions, by reclaiming share in targeted segments, and by expanding our addressable market through value-added services and solutions that drive new volume to our four core modes. We’ll also be more intentional with our go-to market strategy to drive additional synergies and cross-selling across our portfolio.”
Summary of Second Quarter of 2024 Results Compared to the Second Quarter of 2023
- Total revenues increased 1.4% to $4.5 billion, primarily driven by higher pricing in our ocean services, partially offset by lower pricing in our truckload services.
- Gross profits increased 3.0% to $676.5 million. Adjusted gross profits increased 3.3% to $687.4 million, primarily driven by higher adjusted gross profit per transaction in truckload and less than truckload (“LTL”) services.
- Operating expenses decreased 4.4% to $509.3 million. Personnel expenses decreased 4.3% to $361.2 million, primarily due to cost optimization efforts. The average employee headcount declined 10.0%. Other selling, general and administrative (“SG&A”) expenses decreased 4.8% to $148.1 million, with reductions across several expense categories.
- Income from operations totaled $178.1 million, up 34.3% due to the increase in adjusted gross profits and decrease in operating expenses. Adjusted operating margin (1) of 25.9% increased 600 basis points.
- Interest and other income/expense, net totaled $21.5 million of expense, consisting primarily of $22.9 million of interest expense, which decreased $0.3 million versus last year, due to a lower average debt balance, and a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses.
- The effective tax rate in the quarter was 19.4%, compared to 14.9% in the second quarter last year. The higher rate in the second quarter of this year was driven by lower benefits from foreign tax credits, a higher foreign tax rate, and the impact of higher pretax income, partially offset by higher U.S. tax credits and incentives.
- Net income totaled $126.3 million, up 29.7% from a year ago. Diluted EPS of $1.05 increased 29.6%. Adjusted EPS (1) of $1.15 increased 25.0%.
“We’ll expand our operating income margins by embedding Lean practices, removing waste and expanding our digital capabilities,” Bozeman said. “This will enable us to strengthen our productivity and optimize our organization structure in order to be the most efficient operator, in addition to the highest value provider. We’ll optimize our gross profit by monitoring key input metrics and responding faster to error states and changing market conditions with countermeasures and innovative technology that improves our execution. As we take action on all of these fronts, I’m excited about the work that we’re doing to reinvigorate Robinson’s winning culture and to instill discipline with our new operating model. The operating model is helping us execute a solid strategy even better, and we expect further improvement as we continue to cascade the new operating model deeper into the organization and as our team continues to embrace it and build operational muscle. I know from my past experiences of implementing Lean operating models, that improvement isn’t always linear, and we still have a lot of grass to cut. I’m confident in the team’s willingness and ability to drive a higher level of discipline in our operational execution.”
North American Surface Transportation (NAST) Results
According to the release, second quarter total revenues for the NAST segment totaled $3.0 billion, a decrease of 2.9% over the prior year, primarily driven by lower truckload pricing, reflecting an oversupply of truckload capacity compared to freight demand. NAST adjusted gross profits increased 4.8% in the quarter to $419.7 million. Adjusted gross profits in truckload increased 7.9% due to a 6.5% increase in adjusted gross profit per shipment and a 1.5% increase in truckload shipments. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 2.0% in the quarter compared to the prior year, while truckload linehaul cost per mile, excluding fuel surcharges, also decreased approximately 3.5%, resulting in an 8.0% increase in truckload adjusted gross profit per mile. LTL adjusted gross profits increased 6.5% versus the year-ago period, driven by a 1.5% increase in LTL volume and a 5.0% increase in adjusted gross profit per order. NAST overall volume growth increased 1.5% for the quarter. Operating expenses decreased 1.5%, primarily due to lower technology expenses and cost optimization efforts, which were partially offset by higher variable compensation. NAST average employee headcount was down 9.7% in the quarter. Income from operations increased 19.7% to $141.1 million, and adjusted operating margin expanded 420 basis points to 33.6%.
Global Forwarding Results
Second quarter total revenues for the Global Forwarding segment increased 18.1% to $921.2 million, primarily driven by higher pricing in our ocean services. Adjusted gross profits increased 2.7% in the quarter to $184.1 million. Ocean adjusted gross profits increased 8.6%, driven by a 4.0% increase in shipments and a 4.5% increase in adjusted gross profit per shipment. Air adjusted gross profits decreased 8.9%, driven by an 18.0% decrease in adjusted gross profit per metric ton shipped, partially offset by a 11.0% increase in metric tons shipped. Customs adjusted gross profits increased 6.1%, driven by a 6.0% increase in transaction volume. Operating expenses decreased 4.3%, primarily due to lower technology expenses and due to cost optimization efforts. Second quarter average employee headcount decreased 11.0%. Income from operations increased 38.2% to $41.0 million, and adjusted operating margin expanded 580 basis points to 22.3% in the quarter.
All Other and Corporate Results
Second quarter Robinson Fresh adjusted gross profits increased 5.2% to $39.9 million due to an increase in integrated supply chain solutions for retail and foodservice customers. Managed Services adjusted gross profits decreased 0.7%. Other Surface Transportation adjusted gross profits decreased 20.3% to $15.1 million, primarily due to a 23.3% decrease in Europe truckload adjusted gross profits.
Other Income Statement Items
Interest and other income/expense, net totaled $21.5 million of expense, consisting primarily of $22.9 million of interest expense, which decreased $0.3 million versus the second quarter of 2023 due to a lower average debt balance, and a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses.
The second quarter effective tax rate was 19.4%, up from 14.9% last year. The higher rate in the second quarter of this year was driven by lower benefits from foreign tax credits, a higher foreign tax rate, and the impact of higher pretax income, partially offset by higher U.S. tax credits and incentives. For 2024, we expect our full-year effective tax rate to be 17% to 19%.
Diluted weighted average shares outstanding in the quarter were up 0.1%.
Cash Flow Generation and Capital Distribution
Cash generated from operations totaled $166.4 million in the second quarter, compared to $224.8 million of cash generated from operations in the second quarter of 2023. The $58.4 million decrease in cash flow from operations was primarily related to a $166.7 million decline in cash provided by changes in net operating working capital, due to a $23.1 million sequential increase in net operating working capital in the second quarter of 2024 compared to a $143.7 million sequential decrease in the second quarter of 2023.
In the second quarter of 2024, cash returned to shareholders totaled $76.4 million, with $72.7 million in cash dividends and $3.7 million in repurchases of common stock.
Capital expenditures totaled $19.3 million in the quarter. Capital expenditures for 2024 are expected to be toward the lower end of the previously provided range of $85 million to $95 million.
Dana Guthrie is an award-winning journalist who has been featured in multiple newspapers, books and magazines across the globe. She is currently based in the Atlanta, Georgia, area.
