C.H. Robinson Reports 2022 First Quarter Results

C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended March 31, 2022.

First Quarter Key Metrics:

• Gross profits increased 29.1% to $900.5 million
• Adjusted gross profits⁽¹⁾ increased 29.0% to $906.2 million
• Income from operations increased 54.7% to $345.5 million
• Adjusted operating margin⁽¹⁾ increased 630 basis points to 38.1%
• Diluted earnings per share (EPS) increased 60.2% to $2.05
• Cash used by operations improved by $42.8 million to $13.9 million

⁽¹⁾ Adjusted gross profits and adjusted operating margin are Non-GAAP financial measures. The same factors described in this release that impacted these Non-GAAP measures also impacted the comparable GAAP measures. Refer to page 8 for further discussion and a GAAP to Non-GAAP reconciliation.

"In our first quarter, we delivered record quarterly profits," said Bob Biesterfeld, President and Chief Executive Officer of C.H. Robinson. "Sequential improvement was driven by significant operating margin expansion in our North American Surface Transportation business, as we improved the health of our contractual truckload business, continued to grow our truckload volume, and improved the profitability of our LTL business. Our Global Forwarding team continued delivering excellent service to our customers and collaborating with our carriers, driving more business to our platform. And finally, our Robinson Fresh, Managed Services and Europe Surface Transportation businesses all improved their top line growth and operating income on a year-over-year basis."

Summary of First Quarter Results Compared to the First Quarter of 2021

• Total revenues increased 41.9% to $6.8 billion, driven primarily by both higher pricing and higher volume across most of our services.
• Gross profits increased 29.1% to $900.5 million. Adjusted gross profits increased 29.0% to $906.2 million, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
• Operating expenses increased 17.0% to $560.7 million. Personnel expenses increased 14.6% to $413.4 million, primarily due to higher headcount, which increased 15.1%. Selling, general and administrative ("SG&A") expenses of $147.4 million increased 24.7%, primarily due to higher purchased and contracted services, a non-recurring legal expense, and increased travel expenses.
• Income from operations totaled $345.5 million, up 54.7% due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 38.1% increased 630 basis points.
• Interest and other income/expense totaled $14.2 million, consisting primarily of $14.5 million of interest expense, which increased $2.3 million versus last year due to a higher average debt balance.
• The effective tax rate in the quarter was 18.4% compared to 18.3% in the first quarter last year.
• Net income totaled $270.3 million, up 56.0% from a year ago. Diluted EPS of $2.05 increased 60.2%.

North American Surface Transportation Results

Summarized financial results of our NAST segment are as follows (dollars in thousands):

First quarter total revenues for C.H. Robinson's NAST segment totaled $4.1 billion, an increase of 28.1% over the prior year, primarily driven by higher truckload and less-than truckload ("LTL") pricing and an increase in truckload shipments. NAST adjusted gross profits increased 20.2% in the quarter to $506.1 million. Adjusted gross profits in truckload increased 19.5% due to a 15.0% increase in adjusted gross profit per load and a 4.0% increase in shipments. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 20.5% in the quarter, while truckload linehaul cost per mile, excluding fuel surcharges, increased approximately 21.0%, resulting in a 17.0% increase in truckload adjusted gross profit per mile. LTL adjusted gross profits increased 25.5% versus the year-ago period, as adjusted gross profit per order increased 27.0% and LTL volumes declined 1.0%, mainly driven by a normalization of business levels as our LTL volumes in the first quarter of 2021 continued to be bolstered by a few large customers that benefitted from the stay-at-home trend during COVID. NAST overall volume growth was up 1.0% for the quarter. Operating expenses increased 13.9% primarily due to increased salaries, incentive compensation, and technology expenses. Income from operations increased 33.3% to $182.4 million, and adjusted operating margin expanded 350 basis points to 36.0%. NAST average headcount was up 12.4% in the quarter.

Global Forwarding Results

Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):

First quarter total revenues for the Global Forwarding segment increased 89.8% to $2.2 billion, primarily driven by higher pricing and higher volume in both our ocean and air services, reflecting the strong demand environment, market share gains, and strained capacity. Adjusted gross profits increased 50.2% in the quarter to $321.8 million. Ocean adjusted gross profits increased 63.5%, driven by a 52.5% increase in adjusted gross profit per shipment and a 7.0% increase in volumes. Adjusted gross profits in air increased 33.9% driven by a 10.0% increase in metric tons shipped and a 21.5% increase in adjusted gross profit per metric ton. Customs adjusted gross profits increased 13.5%, driven by a higher mix of value-added services and a 5.0% increase in transaction volume. Operating expenses increased 24.7%, primarily driven by increased salaries, incentive compensation and technology expenses. First quarter average headcount increased 18.5%. Income from operations increased 85.1% to $167.6 million, and adjusted operating margin expanded 980 basis points to 52.1% in the quarter.

All Other and Corporate Results

Total revenues and adjusted gross profits for Robinson Fresh, Managed Services and Other Surface Transportation are summarized as follows (dollars in thousands):

First quarter Robinson Fresh adjusted gross profits increased 22.3% to $30.5 million, due to a 7.5% increase in case volume and an increase in integrated supply chain and technology services. Managed Services adjusted gross profits increased 9.9% in the quarter, due to growth in business with both new and existing customers. Other Surface Transportation adjusted gross profits increased 19.4% to $19.7 million, primarily due to a 21.7% increase in Europe truckload adjusted gross profits.

Other Income Statement Items

The first quarter effective tax rate was 18.4%, up from 18.3% last year. We expect our 2022 full-year effective tax rate to be 19 to 21 percent. The first quarter rate is typically lower than our full-year rate due to the tax benefits related to delivery of annual stock-based compensation in the quarter.

Interest and other income/expense totaled $14.2 million, consisting primarily of $14.5 million of interest expense, which increased $2.3 million versus last year due to a higher average debt balance.

Diluted weighted average shares outstanding in the quarter were down 2.6% due primarily to share repurchases over the past twelve months.

Cash Flow Generation and Capital Distribution

Cash used by operations totaled $13.9 million in the first quarter, compared to $56.7 million in the first quarter of 2021. The $42.8 million improvement was primarily due to a $97.0 million increase in net income, partially offset by a $288.5 million sequential increase in net operating working capital in the first quarter of 2022, compared to a $251.8 million sequential increase in the first quarter of 2021. The increase in net operating working capital in the first quarter of 2022 resulted primarily from a $479.0 million sequential increase in accounts receivable and contract assets, compared to a $190.4 million sequential increase in total accounts payable and accrued transportation expense.

In the first quarter of 2022, $250.6 million of cash was returned to shareholders, with $177.7 million in total repurchases of common stock and $72.9 million in cash dividends.

Capital expenditures totaled $26.2 million in the quarter. Capital expenditures for 2022 are expected to be $90 million to $100 million, primarily driven by technology investments in our digital platform.

Outlook

"As questions linger about the impact on global economic growth from the Russian invasion of Ukraine, higher energy prices and inflationary pressures, among other impacts, we believe that our global suite of multimodal services, our growing digital platform, and our resilient and flexible non-asset-based business model will continue to deliver strong financial results through the cycle," Biesterfeld stated. "We will continue to benefit from our product and technology investments while delivering on opportunities to integrate our services to help our customers solve their complex global supply chain issues. We are uniquely positioned to orchestrate end-to-end supply chain success for our customers and to help them not only navigate uncertain market conditions, but to succeed in doing so. One of the core values we live by is to evolve constantly. To advance our industry leadership in a more digital environment, we are evolving to a product-led organization by reorienting the intersection of our growth strategy and our engineering and technology teams with the needs of our customers and carriers, and we'll continue to differentiate ourselves in the market by having great people that our customers can rely on. I’m excited by the initial results from the enhancements that were rolled out in February for our Navisphere Carrier product. We’ll continue to build on our customer-centric commitment by continuing to invest in smart, customer and carrier-focused products, and we’ll launch several new products that we believe will benefit our customers and carriers as we continue to build out the most powerful supply chain platform."

About C.H. Robinson

C.H. Robinson solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With $28 billion in freight under management and 20 million shipments annually, we are one of the world’s largest logistics platforms. Our global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, we use our information advantage to deliver smarter solutions for our 100,000 customers and 85,000 contract carriers. Our technology is built by and for supply chain experts to bring faster, more meaningful improvements to our customers’ businesses. As a responsible global citizen, we are also proud to contribute millions of dollars to support causes that matter to our company, our Foundation and our employees. For more information, visit us at www.chrobinson.com (Nasdaq: CHRW).

Except for the historical information contained herein, the matters set forth in this release are forward-looking statements that represent our expectations, beliefs, intentions or strategies concerning future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to, such factors as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; risks with reliance on technology to operate our business; cyber-security related risks; risks associated with operations outside of the United States; our ability to identify or complete suitable acquisitions; our ability to successfully integrate the operations of acquired companies with our historic operations; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with the potential impact of changes in government regulations; our ability to hire and retain a sufficient number of qualified personnel; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of war on the economy; changes to our capital structure; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update such statement to reflect events or circumstances arising after such date. All remarks made during our financial results conference call will be current at the time of the call, and we undertake no obligation to update the replay.

Conference Call Information:

C.H. Robinson Worldwide First Quarter 2022 Earnings Conference Call

Wednesday, April 27, 2022; 5:00 p.m. Eastern Time

Presentation slides and a simultaneous live audio webcast of the conference call may be accessed through the Investor Relations link on C.H. Robinson’s website at www.chrobinson.com.

To participate in the conference call by telephone, please call ten minutes early by dialing: 877-269-7756

International callers dial +1-201-689-7817

CHRW-IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20220427005827/en/

@CHRobinson reports record quarterly financial results