EDEN PRAIRIE, Minn. — C.H. Robinson Worldwide Inc. reported positive financial results for the quarter ended September 30.
“I’m pleased with our third quarter results that reflect continued improvement in our execution, as we continue to deploy our new operating model,” said Dave Bozeman, president and CEO. “We are raising the bar, even in a historically prolonged freight recession, with strong execution and disciplined volume growth across divisions while delivering exceptional service for our customers and carriers. I want to thank our people, one of our greatest competitive advantages, for their relentless efforts to embrace our new operating model and execute in a fit, fast and focused way so we can keep pushing that bar higher.”
Third Quarter Highlights:
- Significant year-over-year increase in profitability, driven by strong execution, disciplined volume growth and improvement in gross profit, productivity and operating leverage
- Gross profits increased 15.5% to $723.8 million
- Income from operations increased 58.7% to $180.1 million
- Adjusted operating margin increased 660 basis points to 24.5%
- Adjusted operating margin, excluding restructuring and loss on divestiture, increased 1,120 basis points to 32.9%
- Diluted earnings per share (EPS) increased 17.6% to $0.80
- Adjusted EPS increased 45.5% to $1.28
- Cash generated by operations decreased by $97.2 million to $108.1 million provided by operations, due to an increase in net operating working capital related to higher ocean rates
In a company media release, Bozeman noted that due to a focus on constantly testing market conditions and optimizing yield, the company improved the quality of our volume in the third quarter and continued to expand our NAST gross profit margin. The company also continued to push its efficiency to higher levels in both NAST and Global Forwarding, and remains on track to deliver greater than 30% compound growth in productivity over the two-year period from the end of 2022 to end of 2024.
“Our new operating model has changed how we discover and inspect root cause issues and quickly implement countermeasures to improve the level of our operational execution,” Bozeman said. “The reliability of our operating reviews continues to increase, as we leverage our data rich environment to inform our decision making and enhance our competitive differentiation. At an organizational level, we continue to cascade the operating model deeper into the organization and build operational muscle at various levels of the enterprise to deliver on our strategic roadmap. As part of this effort, an evolving toolkit is being used by our employees in the form of problem resolution, balanced scorecard reviews, daily management, and value stream mapping, to name a few.”
Summary of Third Quarter of 2024 Results Compared to the Third Quarter of 2023
- Total revenues increased 7.0% to $4.6 billion, primarily driven by higher pricing and volume in our ocean services, partially offset by lower pricing and volume in truckload services.
- Gross profits increased 15.5% to $723.8 million. Adjusted gross profits increased 15.8% to $735.3 million, primarily driven by higher adjusted gross profit per transaction in our ocean and truckload services.
- Operating expenses increased 6.5% to $555.1 million. Personnel expenses increased 5.2% to $361.6 million, primarily due to higher variable compensation, partially offset by cost optimization efforts. Average employee headcount declined 9.6%. Other selling, general and administrative (“SG&A”) expensesincreased 8.9% to $193.6 million, primarily due to a $57.0 million loss on the planned divestiture of our Europe Surface Transportation business. The prior year included $21.4 million of restructuring expenses, primarily related to the divestiture of our operations in Argentina. In addition, other SG&A expenses decreased across several expense categories in the current year.
- Income from operations totaled $180.1 million, up 58.7% due to the increase in adjusted gross profits, partially offset by the increase in operating expenses.Adjusted operating margin of 24.5% increased 660 basis points.
- Interest and other income/expense, net totaled $36.3 million of expense, consisting primarily of $22.1 million of interest expense, which increased $0.2 million versus last year, and a $15.1 million net loss from foreign currency revaluation and realized foreign currency gains and losses.
- The effective tax rate in the quarter was 32.4%, compared to 11.7% in the third quarter last year. The higher rate in the third quarter of this year was driven by the impact of higher pre-tax income and non-recurring discrete items in the quarter, partially offset by increased tax benefit related to stock-based compensation and higher U.S. tax credits.
- Net income totaled $97.2 million, up 18.6% from a year ago. Diluted EPS of $0.80 increased 17.6%. Adjusted EPS of $1.28 increased 45.5%.
“Empowering our people with the Robinson operating model is creating a flywheel of performance, talent development and accountability that is evolving our culture to be driven by progress, execution and proactive problem identification and resolution,” Bozeman said. “This is showing up in improvements such as more disciplined pricing and better decisions on the volume that we’re seeking. We are still early in our journey, but the operating model is helping us execute a solid strategy even better, and we expect further improvement as our team continues to embrace this new way of operating. As I’ve said before, I know from my past experiences of implementing Lean operating models that improvement isn’t always linear. But I’m confident in the team’s willingness and ability to drive a higher and more consistent level of discipline in our operational execution.”
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.
