Tax cuts, volume growth boost C.H. Robinson

The global third-party logistics provider’s net income jumped 43.3 percent year-over-year in the second quarter as revenues climbed 15.3 percent.    C.H. Robinson saw its net income climb 43.3 percent year-over-year to $159.2 million in the second quarter of 2018, boosted by a lower effective tax rate in the United States and broad-based volume growth, according to the company’s most recent financial statements.
   The Minneapolis-based global third-party logistics provider posted diluted earnings per share of $1.13 for the quarter, up from $0.78 per share in the first quarter of 2017, as revenues rose 15.3 percent to $4.3 billion, driven by growth across the firm’s various transportation segments, as well as higher base pricing and increased fuel costs.
   C.H. Robinson’s earnings also benefited from a reduction in the federal corporate tax rate resulting from the December 2017 Tax Cuts and Jobs Act. The company said its effective tax rate for the second quarter was 25.6 percent, down from 35.6 percent last year, and it expects the full-year effective tax rate to be in the range of 24 percent to 25 percent.
   Income from operations in C.H. Robinson’s North American Surface Transportation (NAST) segment grew 31.6 percent year-over-year to $184.6 million in the second quarter. NAST revenues jumped 20.9 percent to just shy of $2.9 billion, as a 4.5 percent decline in truckload volumes was more than offset by a 6 percent increase in less-than-truckload shipments and a 3.5 percent uptick in intermodal.
   The company’s global forwarding unit reported income from operations of $29.8 million on $617.6 million in total revenues, increases of 7.6 percent and 16.8 percent, respectively, compared with the second quarter of 2017. C.H. Robinson said its August 2017 acquisition of Montreal-based forwarder and customs broker Milgram & Company Ltd. for $50.1 million added roughly 4.5 percentage points to net forwarding revenue growth during the quarter.
   Robinson Fresh, the company’s international produce transportation division, on the other hand, saw its earnings drop 35.2 percent to $9.2 million as segment revenues slipped 5.5 percent to $621 million. C.H. Robinson attributed the decline primarily to lower truckload volumes, as well as a $4 million contingent auto liability claim.
   For the first half of 2018, C.H. Robinson reported a net income of $301.5 million ($2.14 per diluted share) on $8.2 billion in revenues, year-over-year increases of 29.3 percent and 15.1 percent, respectively.
   “We delivered double-digit increases in both net revenue and operating income and a 90-basis point increase in operating margin,” John Wiehoff, chairman and chief executive officer of C.H. Robinson, said of the results. “Both pricing and volume trends improved across most of our service lines in the second quarter. Combined with the benefits of U.S. tax reform, our strong performance enabled us to increase our operating cash flow by nearly 90 percent and increase our cash returns to shareholders by nearly 30 percent in the quarter.”
   Wiehoff said that despite a “slight moderation” in rate growth in the company’s North American truckload business during the quarter, both customer pricing and carrier costs increased for the fifth-consecutive quarter on a sequential basis.
   “We believe that the current freight market fundamentals will remain in place for the remainder of the year,” he said. “With a healthy economy, demand for freight will remain strong.
   “We will leverage our digital transformation to provide our people with an expanding set of insights and capabilities to increase the value of the supply chain expertise we deliver to our customers and carriers,” added Wiehoff. “We will remain focused on operating cost efficiency, driving higher levels of service execution for our employees and increasing returns to our shareholders.”