North America’s largest third-party logistics provider grew volumes and revenue in the first quarter of 2020 by slashing prices to its customers, but saw margins narrow in March as trucking capacity tightened unexpectedly.
C.H. Robinson (NASDAQ: CHRW) reported its operating and financial results for the first quarter of 2020 after the close on Tuesday.
Robinson reported total revenues of $3.8 billion, up 1.4% year-over-year, and net income of $78.1 million, down 51.7% year-over-year. Diluted earnings per share were down 50.9% from a year ago, to 57 cents, lower than Wall Street’s consensus estimate of 71 cents per share.
“Since the beginning of the COVID-19 pandemic, C.H. Robinson has focused on three key pillars as guideposts for our decision making: ensuring the health and safety of our employees, providing supply chain continuity for our customers and carriers, and protecting the economic security of our people to the greatest extent possible,” CEO Bob Biesterfeld said in a statement.
Biesterfeld reassured investors that with $1.2 billion in total liquidity ($294 million of cash and cash equivalents), Robinson had a strong enough balance sheet to weather the COVID-19 pandemic; he also said Robinson remained committed to its quarterly dividend payments.
Of Robinson’s three business units, North American Surface Transportation (NAST, which includes truckload brokerage, less-than-truckload [LTL] brokerage and intermodal), Global Forwarding, and All Other and Corporate, NAST is by far the largest.
NAST grew its total revenues by 1% against the year-ago period to $2.82 billion, but total net revenues fell by 23.4% to $372 million. Income from operations was just $98.5 million, 53.4% lower than the first quarter of 2019.
NAST’s overall net revenue margin compressed to 13.19%, an 81-basis-point quarter-on-quarter deterioration. The earnings call Wednesday morning should break out margins for truckload, LTL and intermodal.
Robinson cut prices to its shippers more steeply than it could push down its costs in the form of trucking spot rates. Truckload prices per mile Robinson charged to customers were 8.5% lower than a year ago, but the rates Robinson’s brokers paid to trucks were only 2.5% lower. That strategy yielded 7.5% growth in both truckload and LTL volumes, while intermodal volumes grew 8% over the period year.
Global Forwarding total revenues were trimmed by 1.4% year-over-year to $530 million, while net revenues increased slightly by 0.8% to $128 million. Income from operations fell by 15.8% to $11.9 million. Growth in operating expenses outpaced revenue at 2.9% year-over-year; Robinson noted the rise in opex was largely due to increased selling, general and administrative expenses.
As the coronavirus took hold, airlines grounded planes and container shipping dried up, Global Forwarding saw lower air and ocean volumes. Ocean net revenues fell 2.3% on 3% lower volumes, while air net revenues increased 2.8% due to higher pricing, but were offset by an 8% decline in shipments. Robinson said customs net revenue fell by 3.1% due to a 2.5% reduction in the number of transactions.
In All Other and Corporate, total revenues grew by 8.2% to $450 million. Managed Services grew net revenues by 10.9% to $22.5 million, while Robinson Fresh net revenues fell 4.2% to $27.4 million.
Understandably, guidance provided in the release was vague — we believe the conference call Wednesday will yield more insights into April numbers and Robinson’s discussions with its customers.
“While the situation remains fluid, one thing is certain: we are committed to our vital role in the global supply chain by delivering critical and essential goods and services — especially in this time of crisis,” Biesterfeld said.
jermaine D Seals
Yeah but you leave us in a position that we can’t even operate with this 90 cent a mile freight
Neal Lucas
We are the main problem here. Owner operators are still taking freight that’s barely over operating cost. Until we put are feet down and say we arent going to take cheap freight they will find a way to take advantage of us. If no one runs the freight at current prices the rates will go up. PLEASE SAY NO TO CHEAP FREIGHT.
Richard Meintel
There are far too many brokers out there and it is too easy to be a broker with little to no skin in the game. During this pandemic, truck drivers have put their own health at risk by delivering essential goods such as medicines, PPE, Food and other critical goods. All of the while brokers are behaving like the most ugly kind of opportunists possible by slashing rates to truckers taking advantage of over supply caused by non essential business closures due to COVID. Yes fuel prices are down but the costs of auto liability insurance is increasing at an out of control pace due to our lawsuit happy country and lawyers who love to go after truckers, costs associated with ELD’s, cost of equipment, and the cost for drivers are all up. However I guess brokers do not have to consider any of those expenses because it seems like they either have no idea what it cost to run a truck or they just don’t care about truckers. Carriers/Truckers have to find a way to stick together and stop accepting these terrible rates.
Bill
I will not stop unless the O/O stop taking the cheap freight from them.
Randall Aimoe
I understand you have shareholders that you have to answer to,but how about looking after the people in the trucks that helped you get to where you are today, No one expects to get rich trucking but you’ve slashed rates so low that it is impossible to even make a profit and you expect the owner operator to take the loss. Sounds like CH Robinson is doing well enough that they could have stood out and made themselves better than the other brokers and gave their regular drivers ,a fair rate per mile threw this crises instead of bidding jobs so low and taking it out the owner operators share.
SayNO To CheapFreight
yea, that would be the day (grrr),they were never about worrying about drivers
the reason why they “worry” about their shareholders is because all the big guys in that company are the biggest shareholders of their stocks, that way they can still keep their pockets lined up and receive big bonuses for doing such an “amazing management job”
H. Clodfelter
And now they will slash their workforce in the name of shareholders.
Ken
You can say all this while we the truckers down here are bleeding like crazy loads are not paying enough to even do minimal mechanical work In our equipments , if at one point we get a tire burst we can afford another tire and all we here is you worried about the shareholders.? Shame on you and hope you all get punished by God for all the pain you bring to us down here trying to keep our small companies.
Carlos Moreno
Chrobinson is makin money from
Margin
But is makin moore money from stealing
Owner operatos money
Paying trash for loads
And stealing detention from drivers
Hope the people suit them teach em a lesson