C.H. Robinson(CHRW) - 2024 Q4 - Annual Results

Financial Highlights Fourth Quarter 2024 Highlights Q4 2024 profitability surged, with gross profits up 10.4% to $672.9 million and income from operations increasing 71.1% Q4 2024 Key Financial Metrics | Metric | Q4 2024 Value | YoY Change | | :--- | :--- | :--- | | Gross Profits | $672.9 million | +10.4% | | Income from Operations | $183.8 million | +71.1% | | Adjusted Operating Margin | 26.8% | +940 bps | | Diluted EPS | $1.22 | +369.2% | | Adjusted EPS | $1.21 | +142.0% | | Cash Generated by Operations | $267.9 million | +$220.6 million | - The significant increase in profitability was attributed to disciplined execution, a focus on quality of volume, and improvements in gross profit margin, productivity improvements, and operating leverage[5] Full-Year 2024 Key Metrics Full-year 2024 gross profits increased 5.8% to $2.7 billion, income from operations rose 30.0%, but cash from operations declined Full-Year 2024 Key Financial Metrics | Metric | Full-Year 2024 Value | YoY Change | | :--- | :--- | :--- | | Gross Profits | $2.7 billion | +5.8% | | Income from Operations | $669.1 million | +30.0% | | Adjusted Operating Margin | 24.2% | +440 bps | | Diluted EPS | $3.86 | +41.9% | | Adjusted EPS | $4.51 | +36.7% | | Cash Generated by Operations | $509.1 million | -$222.9 million | - The decrease in cash from operations was attributed to an increase in net operating working capital, which was related to higher ocean rates[5] Management Commentary CEO's Perspective CEO Bozeman attributed Q4 financial improvement to the new operating model, driving disciplined execution and productivity gains across segments - The new Robinson operating model is credited with enabling disciplined execution, leading to higher quality of volume, greater productivity improvements, and expanded profit margins[6] - In the NAST segment, dynamic costing/pricing tools and revenue management practices improved gross profit margins both year-over-year and sequentially, despite rising transportation costs[6] - The Global Forwarding business achieved over 15% productivity improvement for the full year by decoupling headcount growth from volume growth, reducing average headcount by more than 10% while growing ocean and air shipments[7] - Over 2023 and 2024, the company delivered compounded productivity growth of 30% or more in both Global Forwarding and NAST, which are viewed as evergreen improvements[7] Consolidated Financial Performance Fourth Quarter 2024 Performance Summary Q4 2024 revenues decreased 0.9% to $4.2 billion, but adjusted gross profits rose 10.7%, leading to a 71.1% increase in income from operations Q4 2024 vs Q4 2023 Financial Results | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4.2 billion | $4.2 billion | -0.9% | | Adjusted Gross Profits | $684.6 million | $618.6 million | +10.7% | | Operating Expenses | $500.8 million | $511.0 million | -2.0% | | Income from Operations | $183.8 million | $107.4 million | +71.1% | | Net Income | $149.3 million | $31.0 million | +382.1% | | Diluted EPS | $1.22 | $0.26 | +369.2% | | Adjusted EPS | $1.21 | $0.50 | +142.0% | - Personnel expenses decreased by 2.1% to $354.4 million, primarily due to cost optimization and productivity improvements, with average employee headcount declining by 9.5%[10] - The effective tax rate dropped to 11.4% from 55.3% in the prior year's quarter, driven by non-recurring discrete items, higher U.S. tax credits, and increased tax benefits from stock-based compensation[10] Full-Year 2024 Performance Summary Full-year 2024 revenues increased 0.7% to $17.7 billion, adjusted gross profits grew 6.2%, and income from operations rose 30.0% Full-Year 2024 vs 2023 Financial Results | Metric | Full-Year 2024 | Full-Year 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $17.7 billion | $17.6 billion | +0.7% | | Adjusted Gross Profits | $2.8 billion | $2.6 billion | +6.2% | | Operating Expenses | $2.1 billion | $2.1 billion | +0.3% | | Income from Operations | $669.1 million | $514.6 million | +30.0% | | Net Income | $465.7 million | $325.1 million | +43.2% | | Diluted EPS | $3.86 | $2.72 | +41.9% | | Adjusted EPS | $4.51 | $3.30 | +36.7% | - Personnel expenses decreased by 0.6% due to cost optimization, with average employee headcount declining by 10.3%[12] - Other SG&A expenses increased by 2.5%, primarily due to a $44.5 million loss on the planned divestiture of the Europe Surface Transportation business[12] Segment Performance North American Surface Transportation (NAST) Q4 2024 NAST revenues decreased 6.6% to $2.8 billion, but adjusted gross profits rose 6.2%, leading to a 38.1% increase in income from operations NAST Q4 2024 Financial Results (in thousands) | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,802,700 | $3,000,650 | -6.6% | | Adjusted Gross Profits | $403,764 | $380,157 | +6.2% | | Income from Operations | $132,528 | $95,958 | +38.1% | - Truckload adjusted gross profits increased 9.5% due to a 17.0% increase in adjusted gross profit per shipment, which offset a 6.5% decrease in truckload shipments[13] - LTL adjusted gross profits increased 4.5%, driven by a 2.5% increase in volume and a 2.0% increase in adjusted gross profit per order[13] Global Forwarding Q4 2024 Global Forwarding revenues increased 24.7% to $884.0 million, adjusted gross profits grew 25.6%, leading to a 129.6% surge in income from operations Global Forwarding Q4 2024 Financial Results (in thousands) | Metric | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $883,968 | $708,814 | +24.7% | | Adjusted Gross Profits | $203,801 | $162,322 | +25.6% | | Income from Operations | $51,827 | $22,576 | +129.6% | - Ocean adjusted gross profits increased 27.7%, driven by a 23.5% increase in adjusted gross profit per shipment and a 3.5% increase in shipments[14] - Air adjusted gross profits surged 45.4%, driven by a 26.0% increase in adjusted gross profit per metric ton and a 15.5% increase in metric tons shipped[14] All Other and Corporate Q4 2024 All Other and Corporate saw mixed results, with Robinson Fresh adjusted gross profits up 15.7%, while Managed Solutions and Other Surface Transportation declined All Other and Corporate Adjusted Gross Profits Q4 2024 (in thousands) | Division | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Robinson Fresh | $35,983 | $31,093 | +15.7% | | Managed Solutions | $28,133 | $28,846 | -2.5% | | Other Surface Transportation | $12,942 | $16,205 | -20.1% | - The increase in Robinson Fresh adjusted gross profits was due to an increase in integrated supply chain solutions for retail and foodservice customers[16] - The decrease in Other Surface Transportation was primarily due to a 19.4% decrease in Europe truckload adjusted gross profits[16] Financial Position and Cash Flow Other Income Statement Items Q4 2024 net interest and other expense decreased to $15.4 million, with the effective tax rate dropping to 11.4% from 55.3% - Interest expense decreased by $2.8 million versus Q4 2023, attributed to a lower average debt balance and lower variable interest rates[17] - The Q4 effective tax rate was 11.4%, down from 55.3% in the prior year. The company expects a full-year effective tax rate of 18% to 20% for 2025[18] Cash Flow Generation and Capital Distribution Q4 2024 cash from operations increased by $220.6 million to $267.9 million, and $82.8 million was returned to shareholders - Cash from operations increased by $220.6 million in Q4 2024 compared to Q4 2023, driven by a $118.3 million increase in net income and an $81.3 million positive change in net operating working capital[19] - In Q4 2024, the company returned $82.8 million to shareholders, consisting of $74.5 million in dividends and $8.3 million in stock buybacks[20] - Capital expenditures for 2025 are projected to be in the range of $75 million to $85 million[20] Financial Statements and Reconciliations Adjusted Gross Profit by Service Line Q4 2024 total adjusted gross profits increased 10.7% to $684.6 million, driven by strong Air, Ocean, and Sourcing performance Adjusted Gross Profits by Service Line - Q4 2024 (in thousands) | Service Line | Q4 2024 | Q4 2023 | % Change | | :--- | :--- | :--- | :--- | | Truckload | $261,527 | $243,839 | +7.3% | | LTL | $141,982 | $136,602 | +3.9% | | Ocean | $127,139 | $99,191 | +28.2% | | Air | $40,856 | $28,224 | +44.8% | | Customs | $26,467 | $23,730 | +11.5% | | Sourcing | $32,269 | $27,635 | +16.8% | | Total | $684,623 | $618,623 | +10.7% | GAAP to Non-GAAP Reconciliation The company reconciles GAAP to non-GAAP measures, adjusting Q4 2024 gross profit from $672.9 million to $684.6 million for restructuring and divestiture impacts - Adjusted gross profit is calculated by excluding the amortization of internally developed software from GAAP gross profit. In Q4 2024, this amortization was $11.8 million[27] - Adjusted operating margin for Q4 2024 was 26.8%, a 940 basis points increase from 17.4% in Q4 2023. Excluding restructuring and loss on divestiture, the margin was 26.9%, a 1,020 basis points increase[27] - For Q4 2024, adjustments to net income included pre-tax restructuring costs of $13.2 million and a pre-tax gain on divestiture of $12.6 million[28] Condensed Consolidated Financial Statements Consolidated financial statements show Q4 net income up 382.1% to $149.3 million, total assets at $5.30 billion, and full-year operating cash flow at $509.1 million Statements of Income Condensed Consolidated Statements of Income (in thousands) | Metric | Q4 2024 | Q4 2023 | Full-Year 2024 | Full-Year 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $4,184,656 | $4,221,887 | $17,724,956 | $17,596,443 | | Income from Operations | $183,799 | $107,429 | $669,141 | $514,607 | | Net Income | $149,306 | $30,973 | $465,690 | $325,129 | | Diluted EPS | $1.22 | $0.26 | $3.86 | $2.72 | Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Current Assets | $2,969,603 | $2,880,694 | | Total Assets | $5,297,926 | $5,225,280 | | Total Current Liabilities | $2,324,898 | $2,051,993 | | Total Liabilities | $3,575,875 | $3,806,583 | | Total Stockholders' Investment | $1,722,051 | $1,418,697 | Statements of Cash Flow Condensed Consolidated Statements of Cash Flow (in thousands) | Metric | Twelve Months Ended Dec 31, 2024 | Twelve Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $509,084 | $731,946 | | Net Cash Used for Investing Activities | ($74,288) | ($82,787) | | Net Cash Used for Financing Activities | ($416,099) | ($717,833) | | Cash and Cash Equivalents, End of Period | $145,762 | $145,524 |