C.H. Robinson has been hitting on all cylinders for almost two years, but in the fourth quarter the giant 3PL started to run into the realities of a freight market that is a broker’s worst nightmare: a sudden rise in spot rates.
But even as some of the brokerage’s sequential numbers showed the impact of those conditions, and the year-on-year comparisons were mostly stronger but not to an enormous amount, C.H. Robinson’s (NASDAQ: CHRW) stock soared anew.
At approximately 5:05 pm EST, less than an hour after the earnings report was released, C.H. Robinson stock was up about 6.7% to $196. That number is a 52-week high for a stock that is up about 68% in the last 52 weeks.
Adjusted non-GAAP earnings per share for C.H. Robinson in the quarter were $1.23. According to SeekingAlpha, that beat consensus estimates by 10 cts/share.
The bottom line wasn’t a better outcome either against a year ago or in the third quarter. Diluted earnings per share in the fourth quarter was $1.12. That was down 7.1% from a year ago. In the third quarter, that number was $1.34.
On the ground, the less favorable market was most visible in the company’s fourth quarter adjusted gross profits figures compared to the third quarter.
For example, truckload brokerage adjusted gross profits fell to $248.1 million from $273.9 million in the third quarter, and was also down 5.1% from a year ago. LTL gross profits declined to $150.9 million from $158.3 million in the third quarter, though were up 6.3% from 2024’s fourth quarter. Total adjusted gross profits were $657 million in the fourth quarter, down from $706 million in the third quarter and 4% less than a year ago.
Cost savings at C.H. Robinson continued. The drop in headcount year-on-year was 12.9%, but the data showed continued decline in employment levels from the third quarter and for every quarter going on two years.
As C.H. Robinson does not disclose volume numbers, it is not possible to know how volume numbers did sequentially. But year-on-year, C.H. Robinson said volume at its North American Surface Transport (NAST) segment, which houses its core brokerage activities, saw its volume increase 1% year-on-year in total, with truckload up 3%. It noted that the Cass Freight Shipment Index was down 7.6% year-on-year.
In its commentary, the company said the small growth in revenues at NAST were “primarily driven by higher volumes in our truckload services, partially offset by a shorter average length of haul in truckload services.”
The adjusted operating margin in the fourth quarter of 27.6% was 80 basis points better than a year earlier, but it was down from 31.3% in the third quarter. In his prepared remarks released with the earnings, CEO Dave Bozeman said the average gross profit margin in NAST was up 20 basis points year-on-year, “despite the pressure on spot market costs from a decline in available capacity.”
Bozeman said “the fourth quarter certainly provided a challenging macro environment, with weak global freight demand, rising spot costs in trucking and falling ocean rates all providing headwinds to our business.”
But he also touted the company’s widespread adoption of Lean AI, which he described as “the combination of our Lean operating model, industry-leading technology and the best logisticians” as “(enabling) us to consistently outperform over the last two years, and we did it again in the fourth quarter.”
The rising spot freight rates C.H. Robinson encountered toward the end of the year–Bozeman said it was the last five weeks of the year–were “due to a seasonal decline in capacity, three winter storms and incremental pressure from the cumulative enforcement of various commercial driver regulations.”
C.H. Robinson’s earnings call with analysts was set for 5:30 p.m. EST Wednesday. FreightWaves will have coverage of the call Thursday.
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