C.H. Robinson (NASDAQ: CHRW) benefited from a collapsing trucking spot market in the first quarter of 2019 and reported earnings that beat analyst expectations on lower revenues. According to Barchart, the average analyst expectation for CHRW’s earnings per share (EPS) was $1.13; on April 30 after trading ended, Robinson reported earnings of $1.16 per share.
Total revenue for the first quarter decreased 4.4 percent year-over-year to $3.8 billion, while net revenues increased 8.4 percent to $678.8 million. C.H. Robinson breaks outs its earnings into three divisions: North American Surface Transport (NAST), its domestic freight brokerage business; Global Forwarding, its international freight forwarding business; and All Other and Corporate Results.
Robinson’s NAST division was able to widen margins enough, even during a period of contracting gross revenues, to increase net revenue by 11 percent to $486.5 million. Net revenue margins were 17.3 percent for the quarter compared to 15 percent in the first quarter of 2018.
“Excluding the impact of the change in fuel prices, average North America truckload rate per mile charged to customers decreased approximately 5.5 percent in the quarter, while truckload transportation cost per mile decreased approximately 8.5 percent,” C.H. Robinson wrote in a statement.
Truckload freight yielded the most revenue for C.H. Robinson, growing net revenues by 14.7 percent year-over-year, while less-than-truckload net revenues increased 3.6 percent and intermodal revenues fell 3.9 percent year-over-year. The NAST division also benefited from the inclusion of Robinson Fresh transportation, which was previously reported under ‘Robinson Fresh.’
Global Forwarding had a similar story – contracting gross revenues but growing net revenues. Total revenues for Global Forwarding decreased 2.9 percent year-over-year, but net revenues rose 3.4 percent to $127.2 million.
In the first quarter, CHRW returned $146.4 million to shareholders ($69.7 million in cash dividends and $76.7 million in share repurchases), 8.7 percent more than the first quarter of 2018.
“We expect to continue to expand market share in 2019 and beyond, and we will continue to automate core processes and reduce our cost to sell and cost to serve, while also providing excellent service to our customers and carriers,” Bob Biesterfeld, Chief Operating Officer, stated. “We are firmly dedicated to operating margin expansion and believe our continued investments in technology will help enable us to achieve this objective. We are also committed to strong cash returns to shareholders and expect to deliver annual double-digit growth in earnings per share over the long-term.”
Biesterfeld will take over the company as chief executive officer on May 9 at the annual meeting of shareholders.
The chart above compares the year-to-date relative stock performances of C.H. Robinson (white line) and Echo Global Logistics (orange line).
Shares of C.H. Robinson dropped approximately 8 percent in value on Monday, April 29, after Amazon’s entry into digital freight brokerage was publicized.
“We view this as a potential long-term negative for the traditional brokers, such as CHRW, ECHO, and to a lesser degree JBHT, XPO and other asset based player[s] with brokerage exposure,” wrote Cowen equity analyst Jason Seidl in an April 29 client note. “That being said, not all customers will be looking to turn over their confidential supply chain data to Amazon, particularly larger players in the retail and consumer products business.”