C.H. Robinson Reports 2022 First Quarter Results

Rhea-AI Summary

C.H. Robinson Worldwide (CHRW) reported strong financial results for Q1 2022, with total revenues up 41.9% to $6.8 billion and gross profits increasing 29.1% to $900.5 million. Operating income surged 54.7% to $345.5 million, while diluted EPS rose 60.2% to $2.05. The North American Surface Transportation segment saw a 28.1% revenue increase, and Global Forwarding revenues jumped 89.8%. Cash used by operations improved significantly to $13.9 million. The company anticipates continued growth despite global economic uncertainties.

Positive

• Total revenues increased 41.9% to $6.8 billion.
• Gross profits rose 29.1% to $900.5 million.
• Operating income surged 54.7% to $345.5 million.
• Diluted EPS increased 60.2% to $2.05.
• NAST revenues grew by 28.1% and Global Forwarding by 89.8%.

Negative

• Operating expenses increased by 17.0% to $560.7 million.

EDEN PRAIRIE, Minn.--(BUSINESS WIRE)-- 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):

	Three Months Ended March 31,
		2022			2021		% change
Total revenues	$	4,114,889		$	3,211,423		28.1	%
Adjusted gross profits(1)		506,100			421,108		20.2	%
Income from operations		182,354			136,784		33.3	%

____________________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.

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):

	Three Months Ended March 31,
		2022			2021		% change
Total revenues	$	2,194,397		$	1,156,039		89.8	%
Adjusted gross profits(1)		321,848			214,300		50.2	%
Income from operations		167,638			90,589		85.1	%

____________________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.

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):

	Three Months Ended March 31,
		2022			2021		% change
Total revenues	$	506,667		$	436,407		16.1	%
Adjusted gross profits(1):
Robinson Fresh	$	30,505		$	24,948		22.3	%
Managed Services		28,082			25,556		9.9	%
Other Surface Transportation		19,661			16,468		19.4	%

____________________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.

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

Adjusted Gross Profit by Service Line
(in thousands)
This table of summary results presents our service line adjusted gross profits on an enterprise basis. The service line adjusted gross profits in the table differ from the service line adjusted gross profits discussed within the segments as our segments have revenues from multiple service lines.
	Three Months Ended March 31,
		2022			2021		% change
Adjusted gross profits(1):
Transportation
Truckload	$	359,787		$	300,023		19.9	%
LTL		152,312			121,553		25.3	%
Ocean		221,463			135,510		63.4	%
Air		61,434			45,894		33.9	%
Customs		27,495			24,222		13.5	%
Other logistics services		55,636			51,740		7.5	%
Total transportation		878,127			678,942		29.3	%
Sourcing		28,069			23,438		19.8	%
Total adjusted gross profits	$	906,196		$	702,380		29.0	%

____________________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.

GAAP to Non-GAAP Reconciliation
(unaudited, in thousands)
Our adjusted gross profit is a non-GAAP financial measure. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. We believe adjusted gross profit is a useful measure of our ability to source, add value, and sell services and products that are provided by third parties, and we consider adjusted gross profit to be a primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profit. The reconciliation of gross profit to adjusted gross profit is presented below (in thousands):
	Three Months Ended March 31,
		2022			2021		% change
Revenues:
Transportation	$	6,528,351		$	4,560,227		43.2	%
Sourcing		287,602			243,642		18.0	%
Total revenues		6,815,953			4,803,869		41.9	%
Costs and expenses:
Purchased transportation and related services		5,650,224			3,881,285		45.6	%
Purchased products sourced for resale		259,533			220,204		17.9	%
Direct internally developed software amortization		5,734			4,647		23.4	%
Total direct expenses		5,915,491			4,106,136		44.1	%
Gross profit	$	900,462		$	697,733		29.1	%
Plus: Direct internally developed software amortization		5,734			4,647		23.4	%
Adjusted gross profit	$	906,196		$	702,380		29.0	%

Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit which we consider a primary performance metric as discussed above. The comparison of operating margin to adjusted operating margin is presented below:
	Three Months Ended March 31,
		2022				2021			% change
Total revenues	$	6,815,953			$	4,803,869			41.9	%
Operating income		345,474				223,329			54.7	%
Operating margin		5.1	%			4.6	%		50 bps
Adjusted gross profit	$	906,196			$	702,380			29.0	%
Operating income		345,474				223,329			54.7	%
Adjusted operating margin		38.1	%			31.8	%		630 bps

Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
	Three Months Ended March 31,
		2022				2021			% change
Revenues:
Transportation	$	6,528,351			$	4,560,227			43.2	%
Sourcing		287,602				243,642			18.0	%
Total revenues		6,815,953				4,803,869			41.9	%
Costs and expenses:
Purchased transportation and related services		5,650,224				3,881,285			45.6	%
Purchased products sourced for resale		259,533				220,204			17.9	%
Personnel expenses		413,361				360,835			14.6	%
Other selling, general, and administrative expenses		147,361				118,216			24.7	%
Total costs and expenses		6,470,479				4,580,540			41.3	%
Income from operations		345,474				223,329			54.7	%
Interest and other income/expense, net		(14,174	)			(11,260	)		25.9	%
Income before provision for income taxes		331,300				212,069			56.2	%
Provision for income taxes		60,952				38,764			57.2	%
Net income	$	270,348			$	173,305			56.0	%
Net income per share (basic)	$	2.07			$	1.29			60.5	%
Net income per share (diluted)	$	2.05			$	1.28			60.2	%
Weighted average shares outstanding (basic)		130,499				134,508			(3.0	)%
Weighted average shares outstanding (diluted)		132,155				135,745			(2.6	)%

Business Segment Information
(unaudited, in thousands, except average headcount)
		NAST			Global Forwarding			All Other and Corporate				Consolidated
Three Months Ended March 31, 2022
Total revenues		$	4,114,889		$	2,194,397		$	506,667			$	6,815,953
Adjusted gross profits(1)			506,100			321,848			78,248				906,196
Income (loss) from operations			182,354			167,638			(4,518	)			345,474
Depreciation and amortization			6,239			5,555			10,692				22,486
Total assets (2)			3,701,164			2,940,486			879,688				7,521,338
Average headcount			7,348			5,610			4,300				17,258
		NAST			Global Forwarding			All Other and Corporate				Consolidated
Three Months Ended March 31, 2021
Total revenues		$	3,211,423		$	1,156,039		$	436,407			$	4,803,869
Adjusted gross profits(1)			421,108			214,300			66,972				702,380
Income (loss) from operations			136,784			90,589			(4,044	)			223,329
Depreciation and amortization			6,625			5,649			11,004				23,278
Total assets (2)			3,218,084			1,582,967			795,572				5,596,623
Average headcount			6,537			4,735			3,725				14,997

____________________________________________ (1) Adjusted gross profits is a non-GAAP financial measure explained above. The difference between adjusted gross profits and gross profits is not material.

(2) All cash and cash equivalents are included in All Other and Corporate.

Condensed Consolidated Balance Sheets
(unaudited, in thousands)
	March 31, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	242,809		$	257,413
Receivables, net of allowance for credit loss		4,391,512			3,963,487
Contract assets, net of allowance for credit loss		504,604			453,660
Prepaid expenses and other		140,306			129,593
Total current assets		5,279,231			4,804,153
Property and equipment, net of accumulated depreciation and amortization		139,926			139,831
Right-of-use lease assets		297,425			292,559
Intangible and other assets, net of accumulated amortization		1,804,756			1,791,569
Total assets	$	7,521,338		$	7,028,112
Liabilities and stockholders’ investment
Current liabilities:
Accounts payable and outstanding checks	$	2,066,915		$	1,919,301
Accrued expenses:
Compensation		121,768			201,421
Transportation expense		385,603			342,778
Income taxes		143,656			100,265
Other accrued liabilities		182,754			171,266
Current lease liabilities		68,507			66,311
Current portion of debt		572,000			525,000
Total current liabilities		3,541,203			3,326,342
Long-term debt		1,593,756			1,393,649
Noncurrent lease liabilities		244,302			241,369
Noncurrent income taxes payable		28,617			28,390
Deferred tax liabilities		17,244			16,113
Other long-term liabilities		714			315
Total liabilities		5,425,836			5,006,178
Total stockholders’ investment		2,095,502			2,021,934
Total liabilities and stockholders’ investment	$	7,521,338		$	7,028,112

Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
	Three Months Ended March 31,
		2022				2021
Operating activities:
Net income	$	270,348			$	173,305
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		22,486				23,278
Provision for credit losses		1,672				(1,250	)
Stock-based compensation		24,606				23,989
Deferred income taxes		(2,916	)			3,869
Excess tax benefit on stock-based compensation		(4,965	)			(7,853	)
Other operating activities		42				488
Changes in operating elements, net of acquisitions:
Receivables		(424,025	)			(437,862	)
Contract assets		(51,439	)			(43,495	)
Prepaid expenses and other		(11,924	)			(26,692	)
Accounts payable and outstanding checks		143,980				206,237
Accrued compensation		(79,885	)			(27,977	)
Accrued transportation expenses		42,825				24,044
Accrued income taxes		48,502				34,087
Other accrued liabilities		8,099				(1,959	)
Other assets and liabilities		(1,334	)			1,099
Net cash used in operating activities		(13,928	)			(56,692	)
Investing activities:
Purchases of property and equipment		(10,046	)			(5,435	)
Purchases and development of software		(16,183	)			(8,071	)
Other investing activities		2,250				—
Net cash used for investing activities		(23,979	)			(13,506	)
Financing activities:
Proceeds from stock issued for employee benefit plans		25,366				17,709
Total repurchases of common stock		(177,741	)			(150,916	)
Cash dividends		(72,855	)			(70,030	)
Proceeds from long-term borrowings		200,000				—
Proceeds from short-term borrowings		1,062,000				816,000
Payments on short-term borrowings		(1,015,000	)			(566,000	)
Net cash provided by (used for) financing activities		21,770				46,763
Effect of exchange rates on cash		1,533				(2,750	)
Net change in cash and cash equivalents		(14,604	)			(26,185	)
Cash and cash equivalents, beginning of period		257,413				243,796
Cash and cash equivalents, end of period	$	242,809			$	217,611
	As of March 31,
Operational Data:		2022				2021
Employees		17,640				15,105

CHRW-IR

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

Chuck Ives, Director of Investor Relations

Email: chuck.ives@chrobinson.com

Source: C.H. Robinson

FAQ

What were the key financial results for C.H. Robinson (CHRW) in Q1 2022?

C.H. Robinson reported revenues of $6.8 billion, gross profits of $900.5 million, and diluted EPS of $2.05 in Q1 2022.

How much did C.H. Robinson (CHRW) increase its gross profits in Q1 2022?

C.H. Robinson's gross profits increased by 29.1% to $900.5 million in Q1 2022.

What was the revenue growth percentage for C.H. Robinson's Global Forwarding segment in Q1 2022?

The Global Forwarding segment's revenues increased by 89.8% in Q1 2022.

Did C.H. Robinson (CHRW) experience an increase in operating income in Q1 2022?

Yes, C.H. Robinson's operating income increased by 54.7% to $345.5 million in Q1 2022.

What were C.H. Robinson's (CHRW) operating expenses in Q1 2022?

C.H. Robinson's operating expenses rose to $560.7 million, an increase of 17.0% in Q1 2022.