C.H. Robinson Accelerated Revenue Growth as Margins Expanded
Adjusted operating margin widened 360 basis points to 34.7% despite rising transportation costs.
C.H. Robinson Worldwide (CHRW), the global logistics provider, returned to growth in the second quarter as revenue rose 19.3% from a year earlier to $4.93 billion.
The result reversed the first quarter’s 0.8% decline and marked a roughly 23% sequential increase. Operating income rose 18.4% to $255.7 million after slipping 0.7% in the prior quarter, while adjusted operating-income growth accelerated to 19.5% from 5.6%.
Gross profit increased 6.8% to $725.9 million, trailing revenue growth as purchased transportation costs climbed 23.8%. Adjusted gross profit rose 6.5% to $738.0 million. Diluted earnings increased 23.8% to $1.56 a share, and adjusted earnings rose 24.8% to $1.61 a share, accelerating from respective first-quarter growth rates of 9.9% and 15.4%.
North American Surface Transportation revenue increased 23.1% to $3.59 billion, while adjusted gross profit rose 8.6% to $469.4 million. Volume grew about 1.5%, improving from flat growth in the first quarter and exceeding a freight market that contracted 3.3%, according to the company. That extended C.H. Robinson’s market outgrowth to 13 consecutive quarters.
The segment’s growth mix favored less-than-truckload business, where adjusted gross profit increased 21.7% as profit per order rose 19.5%. Truckload adjusted gross profit edged up 0.2%; customer linehaul rates per mile increased 25.5%, while linehaul costs rose 29.0%. NAST operating income increased 15.8% to $189.8 million, and its adjusted operating margin expanded 250 basis points to 40.4%.
Global Forwarding revenue rose 12.4% to $896.6 million, while adjusted gross profit increased 0.7%. A 6.2% reduction in operating expenses helped lift operating income 18.8% and widen adjusted operating margin 490 basis points to 32.3%. Air adjusted gross profit climbed 23.4% despite lower volume, while ocean and customs profit declined.
Average employee headcount fell 10.8%, helping limit total operating-expense growth to 1.0%. Restructuring adjustments rose to $7.5 million, largely reflecting workforce-reduction costs.
Cash conversion weakened as operating cash flow fell to $35.9 million from $227.1 million a year earlier, with a $196.4 million sequential working-capital build absorbing cash. C.H. Robinson returned $301.3 million to shareholders through $226.0 million of share repurchases and $75.3 million of dividends, leaving working capital as the main counterweight to the quarter’s faster earnings growth.