CH Robinson released its financial results for the first quarter of 2022 after the market closed on Wednesday. North America’s largest publicly traded 3PL has smoked Wall Street’s profitability expectations. Robinson posted diluted earnings per share of $2.05 versus Street’s consensus estimate of $1.53, good for year-over-year earnings growth of 60.2% . The company’s first-quarter net profit totaled $270.3 million, a 56% increase over year-ago levels.
Total revenue increased 41.9% over the same period a year earlier, reaching $6.8 billion. The company’s adjusted gross profit rose 29% year over year to $906.2 million. Robinson cited higher adjusted gross profit per trade and higher volumes in most of its business segments.
Robinson delivered record profits by operating efficiently in a favorable environment, benefiting from a 20.5% increase in truckload prices for customers and rising profits in ocean freight, which now generates more gross profit total than Robinson’s LTL business. Robinson’s trucking business hit 2018 gross profit levels, but international freight transportation has propelled the company to new heights.
The chaos of the COVID-19 pandemic has distorted global consumption and production patterns, spurred fiscal stimulus programs, scattered transportation assets, and overloaded key infrastructure points with cargo. The result has been widespread inflation in fares paid for space on trucks, trains, planes and ships, the deterioration of service in these modes of transport and a growing reliance on transport intermediaries like Robinson to make things work properly.
The first quarter was a favorable context for 3PLs: expensive, complex, confusing and unpredictable. Global Forwarding revenue nearly doubled, growing 89.8% from the first quarter of 2021. Meanwhile, in North America Surface Transportation (NAST), Robinson saw significant rate increases without having to search for additional freight.
In his outlook, CEO Bob Biesterfeld cited economic uncertainty resulting from war in Ukraine, energy prices and inflation, but said Robinson’s technology, product-focused organization and flexible and lean global operating model performed well throughout the cycle.
While revenue and gross profit increased, operating expenses increased 17% year-over-year.
Robinson’s NAST segment accounted for more than 60% of the company’s revenue in the quarter, down nearly 6 percentage points from a year ago. NAST’s revenue grew 28.1% in the first quarter, surpassing the $4 billion mark for the first time, to $4.1 billion. The revenue increase was primarily due to higher truckload and less than truckload prices and growth in truckload volumes. NAST’s overall volumes increased slightly by 1% year-on-year in the quarter.
NAST adjusted gross margin increased 20.2% to $506.1 million, the highest level since the fourth quarter of 2018. NAST adjusted gross profit margin decreased 100 basis points (bps) d year-over-year to 12.4%, but saw a sequential increase of 20 basis points from the fourth quarter.
Adjusted gross margin in NAST’s truckload segment increased 19.5% year-over-year, largely driven by a 15% increase in adjusted gross margin per load and growth of 4% of shipments. The average full line carrier rate per mile charged to customers increased 20.5% year over year, while the average cost per mile increased 21%.
Adjusted LTL gross margin increased 25.5% YoY, with Adjusted Gross Margin per order increasing 27% YoY, offsetting the 1% YoY decline in LTL volumes.
NAST’s operating expenses rose 13.9% in the quarter, with the company citing higher salaries, incentive compensation and technology spending. Average headcount increased 12.4% year-on-year to 7,348, an increase of 8.6% from the fourth quarter.
Global Forwarding continued to be an area where Robinson focused his efforts. The company increased its revenue by 89.8% year-on-year, reaching $2.2 billion, or 32% of the company’s total revenue. Adjusted gross profit for the quarter increased 50.2% to $321.8 million.
The company was able to increase its adjusted gross profit on the ocean and in the air. Ocean adjusted gross margin increased 63.5% year-on-year, with adjusted gross margin per shipment up 52.5% and volumes up 7%. Adjusted gross margin in air increased from a more modest 33.9% year-on-year, driven by a 10% increase in metric tons shipped and a 21.5% increase in adjusted gross margin by metric ton.
Global Forwarding segment operating expenses increased 24.7% year-over-year, following similar trends of higher salaries, incentive awards and technology spending. Segment headcount increased 18.5% year-on-year and 10.6% sequentially to 5,610.
All of the company’s other results, which include Robinson Fresh, managed services and other surface transportation, also saw year-over-year growth. Combined revenue increased 16.1% year-on-year to $506.7 million. Robinson Fresh adjusted gross profit 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.
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