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C.H. Robinson posts record Q1 profits amid global volatility

Higher freight rates across all modes help 3PL smash earnings expectations

Can C.H. Robinson regain its mojo?(Photo credit: C.H. Robinson)

C.H. Robinson released its financial results for the first quarter of 2022 after the market closed on Wednesday. North America’s largest publicly traded 3PL smoked Wall Street’s profitability expectations. Robinson posted diluted earnings per share of $2.05 compared to the Street’s consensus estimate of $1.53, good for year-over-year earnings growth of 60.2%. The company’s Q1 net income totaled $270.3 million, an increase of 56% from year-ago levels.

Total revenue increased by 41.9% versus the year-ago period, rising to $6.8 billion. The company’s adjusted gross profit increased by 29% year-over-year to $906.2 million. Robinson cited higher adjusted gross profit per transaction and higher volumes across most of its business segments.

Robinson raked in record earnings by operating efficiently against a favorable backdrop, benefiting from 20.5% higher truckload pricing to customers and soaring profits in ocean freight, which now generates more total gross profit than Robinson’s less-than-truckload business. Robinson’s trucking business reached 2018’s gross profit levels, but international freight forwarding took the company to new heights.

Chaos from the COVID-19 pandemic distorted global patterns of consumption and production, spurred fiscal stimulus programs, scattered transportation assets and overloaded key infrastructure points with goods. The result has been widespread inflation in rates paid for space on trucks, trains, planes and ships, deteriorating service in those modes of transportation, and an ever-increasing reliance on transportation intermediaries like Robinson to make things run right.

The first quarter was a favorable backdrop for 3PLs: expensive, complex, confusing and unpredictable. Global Forwarding revenues nearly doubled, growing by 89.8% compared to the first quarter of 2021. Meanwhile in North America Surface Transportation (NAST), Robinson captured big rate increases without having to chase extra freight.

Average dry van truckload contract rates rose through the first quarter of 2022:
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In his outlook, CEO Bob Biesterfeld cited economic uncertainty stemming from war in Ukraine, energy prices and inflation, but said that Robinson’s technology, product-led organization and flexible, global asset-light operating model performed well through the cycle. 

While both revenue and gross profit increased, so did operating expenses, inflating by 17% y/y.

Robinson’s NAST segment accounted for more than 60% of the company’s revenue in the quarter, down by nearly 6 percentage points from a year ago. NAST revenues grew by 28.1% in the first quarter, eclipsing the $4 billion mark for the first time, reaching $4.1 billion. The revenue surge was primarily driven by higher pricing in both truckload and LTL and growth in truckload volumes. Overall NAST volumes edged up by 1% y/y in the quarter.

NAST adjusted gross profit increased by 20.2% to $506.1 million, the highest level since the fourth quarter of 2018. NAST adjusted gross profit margin declined by 100 basis points (bps) year-over-year to 12.4% but was a sequential increase of 20 bps from the fourth quarter.

Adjusted gross profit on the truckload segment of NAST increased 19.5% y/y, thanks largely to a 15% increase in adjusted gross profit per load and 4% growth in shipments. The average truckload linehaul rate per mile charged to customers increased by 20.5% year-over-year, while the average cost per mile increased by 21%.

LTL adjusted gross profit increased by 25.5% y/y as adjusted gross profit per order increased 27% y/y, offsetting the 1% y/y decline in LTL volumes.

NAST operating expenses increased by 13.9% in the quarter, with the company citing higher salaries, incentive compensation and technology expenses. The average headcount increased by 12.4% y/y to 7,348, an 8.6% increase from the fourth quarter.

Global Forwarding continued to be an area where Robinson focused efforts. The company grew revenue by 89.8% y/y, climbing to $2.2 billion, 32% of the company’s total revenue. Adjusted gross profit in the quarter increased 50.2% to $321.8 million. 

The company was able to expand adjusted gross profit on the ocean and in the air. Ocean adjusted gross profit increased 63.5% y/y, as adjusted gross profit per shipment increased by 52.5% and volumes increased by 7%. Adjusted gross profit in the air increased by a more modest 33.9% y/y, thanks to a 10% increase in metric tons shipped and a 21.5% increase in adjusted gross profit per metric ton. 

Operating expenses in the Global Forwarding segment increased by 24.7% y/y, following similar trends of higher salaries, incentive compensation and technology expenses. Headcount in the segment increased by 18.5% y/y and 10.6% sequentially to 5,610.

All other corporate results, which include Robinson Fresh, Managed Services and Other Surface Transportation, experienced year-over-year growth as well. The combined revenues increased by 16.1% y/y to $506.7 million. Adjusted gross profit for Robinson Fresh increased 22.3% to $30.5 million, Managed Services increased 9.9% to $28.1 million and Other Surface Transportation increased 19.4% to $19.7 million.

John Paul Hampstead

John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.

Tony Mulvey

Tony Mulvey joined the FreightWaves team as an analyst focused on producing equity-like multi-modal research for the transportation industry. Prior to FreightWaves, Tony received a Bachelor’s degree in Economics from the University of Tennessee.