C.H. Robinson(CHRW) - 2024 Q2 - Quarterly Results

C.H. Robinson 2024 Second Quarter Results Financial Highlights C.H. Robinson reported strong Q2 profitability with gross profits up 3.0%, income from operations surging 34.3%, and diluted EPS increasing 29.6% to $1.05 Second Quarter Key Metrics | Metric | Q2 2024 | YoY Change | Seq. Change | | :--- | :--- | :--- | :--- | | Gross Profits | $676.5 million | +3.0% | +4.5% | | Income from Operations | $178.1 million | +34.3% | +40.1% | | Adjusted Operating Margin | 25.9% | +600 bps | - | | Diluted EPS | $1.05 | +29.6% | - | | Adjusted EPS | $1.15 | +25.0% | - | | Cash from Operations | $166.4 million | -$58.4 million | - | Management Commentary CEO Dave Bozeman emphasized improved execution and market share growth in truckload, driven by the new operating model and a strategy to expand operating margins through Lean practices and digital enhancements - The company is implementing a new Robinson operating model to improve execution and performance[4] - Grew truckload market share for the fourth consecutive quarter with a focus on margin improvement[4] - The company's long-term strategy is to generate incremental operating income by growing market share and expanding operating margins through Lean practices and digital expansion[4] Consolidated Financial Performance Consolidated results show a slight Q2 revenue increase and significant profitability improvement, with income from operations up 34.3% year-over-year due to higher adjusted gross profits and reduced operating expenses Second Quarter 2024 Results (vs. Q2 2023) Q2 2024 total revenues increased 1.4% to $4.5 billion, with adjusted gross profits up 3.3% to $687.4 million, driving a 34.3% rise in income from operations to $178.1 million | Metric | Q2 2024 | YoY Change | | :--- | :--- | :--- | | Total Revenues | $4.5 billion | +1.4% | | Adjusted Gross Profits | $687.4 million | +3.3% | | Operating Expenses | $509.3 million | -4.4% | | Income from Operations | $178.1 million | +34.3% | | Net Income | $126.3 million | +29.7% | | Diluted EPS | $1.05 | +29.6% | - Personnel expenses decreased by 4.3% due to cost optimization efforts, with average employee headcount declining by 10.0%[6] Year-to-Date 2024 Results (vs. YTD 2023) Year-to-date 2024 total revenues decreased 1.5% to $8.9 billion, while income from operations increased 3.9% to $305.2 million, driven by reduced operating expenses | Metric | YTD 2024 | YoY Change | | :--- | :--- | :--- | | Total Revenues | $8.9 billion | -1.5% | | Adjusted Gross Profits | $1.3 billion | -0.4% | | Operating Expenses | $1.0 billion | -1.7% | | Income from Operations | $305.2 million | +3.9% | | Net Income | $219.2 million | +3.3% | | Diluted EPS | $1.83 | +3.4% | - Personnel expenses decreased by 2.6% year-to-date, driven by a 10.8% decline in average employee headcount[10] Segment Performance Segment performance was driven by strong profitability gains in NAST and Global Forwarding, with NAST's income from operations up 19.7% and Global Forwarding's surging 38.2% North American Surface Transportation (NAST) NAST Q2 total revenues decreased 2.9% to $3.0 billion, but adjusted gross profits increased 4.8% to $419.7 million, leading to a 19.7% rise in income from operations to $141.1 million | NAST - Q2 2024 | Amount | YoY Change | | :--- | :--- | :--- | | Total Revenues | $3.0 billion | -2.9% | | Adjusted Gross Profits | $419.7 million | +4.8% | | Income from Operations | $141.1 million | +19.7% | | Adjusted Operating Margin | 33.6% | +420 bps | - Truckload adjusted gross profits increased 7.9% due to a 6.5% increase in adjusted gross profit per shipment and a 1.5% increase in shipments[14] - LTL adjusted gross profits increased 6.5%, driven by a 1.5% increase in volume and a 5.0% increase in adjusted gross profit per order[14] Global Forwarding Global Forwarding Q2 total revenues increased 18.1% to $921.2 million, with adjusted gross profits up 2.7% to $184.1 million, driving a 38.2% increase in income from operations to $41.0 million | Global Forwarding - Q2 2024 | Amount | YoY Change | | :--- | :--- | :--- | | Total Revenues | $921.2 million | +18.1% | | Adjusted Gross Profits | $184.1 million | +2.7% | | Income from Operations | $41.0 million | +38.2% | | Adjusted Operating Margin | 22.3% | +580 bps | - Ocean adjusted gross profits increased 8.6%, driven by a 4.0% increase in shipments and a 4.5% increase in adjusted gross profit per shipment[16] - Air adjusted gross profits decreased 8.9%, driven by an 18.0% decrease in adjusted gross profit per metric ton, despite an 11.0% increase in metric tons shipped[16] All Other and Corporate The 'All Other' group showed mixed Q2 performance, with Robinson Fresh adjusted gross profits up 5.2% to $39.9 million, while Other Surface Transportation declined 20.3% to $15.1 million | All Other - Q2 2024 Adjusted Gross Profits | Amount | YoY Change | | :--- | :--- | :--- | | Robinson Fresh | $39.9 million | +5.2% | | Managed Services | $28.8 million | -0.7% | | Other Surface Transportation | $15.1 million | -20.3% | Other Income Statement Items Q2 net interest and other expense was $21.5 million, with the effective tax rate increasing to 19.4% from 14.9% in the prior year, and a full-year projection of 17% to 19% - Interest and other income/expense, net was $21.5 million of expense in Q2 2024[19] - The Q2 effective tax rate was 19.4%, up from 14.9% in Q2 2023, with the full-year 2024 effective tax rate expected to be between 17% and 19%[19] Cash Flow and Capital Distribution Q2 cash from operations was $166.4 million, a decrease from the prior year, with $76.4 million returned to shareholders through dividends and repurchases - Cash from operations was $166.4 million in Q2 2024, down from $224.8 million in Q2 2023[21] - Returned $76.4 million to shareholders in Q2, consisting of $72.7 million in dividends and $3.7 million in stock repurchases[21] - 2024 capital expenditures are expected to be toward the lower end of the $85 million to $95 million range[21] Financial Statements and Reconciliations This section presents detailed financial data, including adjusted gross profit by service line, GAAP to non-GAAP reconciliations, and condensed consolidated statements of income, balance sheets, and cash flows Adjusted Gross Profit by Service Line Q2 2024 enterprise adjusted gross profits increased 3.2% in total transportation, with growth in Truckload, LTL, Ocean, and Customs, offset by declines in Air and Other logistics services | Service Line (Q2 2024) | Adjusted Gross Profits | YoY Change | | :--- | :--- | :--- | | Truckload | $274.2 million | +5.0% | | LTL | $145.8 million | +6.3% | | Ocean | $116.7 million | +8.5% | | Air | $30.9 million | -8.4% | | Customs | $26.7 million | +6.1% | | Other logistics services | $57.3 million | -13.9% | | Total Transportation | $651.5 million | +3.2% | GAAP to Non-GAAP Reconciliation This section reconciles Q2 2024 GAAP metrics to non-GAAP measures, showing adjustments from GAAP gross profit of $676.5 million to adjusted gross profit of $687.4 million, and diluted EPS from $1.05 to $1.15 | Q2 2024 Reconciliation | GAAP | Adjustments | Non-GAAP (Adjusted) | | :--- | :--- | :--- | :--- | | Gross Profit | $676.5 million | +$10.9 million | $687.4 million | | Income from Operations | $178.1 million | +$15.2 million | $193.3 million | | Diluted EPS | $1.05 | +$0.10 | $1.15 | Condensed Consolidated Statements of Income The Q2 2024 income statement shows a 1.4% increase in total revenues to $4.48 billion, with income from operations rising 34.3% to $178.1 million due to effective cost management | Income Statement (Q2 2024) | Amount (in thousands) | | :--- | :--- | | Total revenues | $4,483,348 | | Total costs and expenses | $4,305,258 | | Income from operations | $178,090 | | Net income | $126,251 | | Diluted EPS | $1.05 | Business Segment Information This table details Q2 and YTD segment financial performance, highlighting NAST's $141.1 million operating income and Global Forwarding's $41.0 million, alongside a 10.0% decrease in average employee headcount | Q2 2024 Segment Data | NAST | Global Forwarding | All Other & Corp. | Consolidated | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,989.9 million | $921.2 million | $572.2 million | $4,483.3 million | | Adjusted Gross Profits | $419.7 million | $184.1 million | $83.7 million | $687.4 million | | Income (loss) from Ops | $141.1 million | $41.0 million | ($4.0 million) | $178.1 million | | Avg. Employee Headcount | 5,868 | 4,652 | 3,954 | 14,474 | Condensed Consolidated Balance Sheets As of June 30, 2024, the balance sheet shows total assets of $5.51 billion, total liabilities of $4.00 billion, and total stockholders' investment of $1.51 billion | Balance Sheet Item | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $3,179.2 million | $2,880.7 million | | Total Assets | $5,512.3 million | $5,225.3 million | | Total Current Liabilities | $2,244.2 million | $2,052.0 million | | Total Liabilities | $4,001.9 million | $3,806.6 million | | Total Stockholders' Investment | $1,510.4 million | $1,418.7 million | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash provided by operating activities was $133.1 million, a significant decrease from the prior year, resulting in a net cash decrease of $32.4 million | Cash Flow (Six Months Ended June 30) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $133.1 million | $479.4 million | | Net cash used for investing activities | ($41.8 million) | ($51.3 million) | | Net cash used for financing activities | ($120.1 million) | ($432.1 million) | | Net change in cash and cash equivalents | ($32.4 million) | ($7.3 million) |