C.H. Robinson Worldwide, Inc. today reported financial results for the quarter that ended September 30, 2022.
Third Quarter Key Metrics:
- Gross profits increased 5.0% to $880.7 million, and adjusted gross profits increased 5.1% to $887.2 million
- Income from operations decreased by 7.5% to $287.6 million
- Adjusted operating margin(1) decreased 440 basis points to 32.4%
- Diluted earnings per share (EPS) decreased by 3.8% to $1.78
- Cash generated by operations improved by $699.0 million to $625.5 million
"On our second-quarter earnings call in late July, I talked about a deceleration in demand that we expected to see in the second half of 2022 in three large verticals for freight, including weakness in the retail market and further slowing in the housing market. We're now seeing those expectations play out, with slowing freight demand and price declines in the freight forwarding and surface transportation markets," said Bob Biesterfeld, President and Chief Executive Officer of C.H. Robinson.
"Throughout the changes in the freight cycle, we have maintained our focus on continuing to improve the customer and carrier experience and scaling our digital processes and operating model to foster sustainable, profitable growth."
"Today, we believe that we are entering a time of slower economic growth where freight markets will continue to cool from their peaks and will operate more reliably and at more normalized rates, with fewer disruptions. These changes in market conditions, coupled with many successful endeavors on our digital roadmap directed at scaling our model to be more efficient, are allowing us to take actions to structurally reduce our overall cost structure," stated Biesterfeld.
"Compared to our third quarter operating expenses, the actions we're currently taking are expected to generate $175 million of gross cost savings on an annualized basis by the fourth quarter of 2023. Inflation, other headwinds such as annual pay increases, and tailwinds such as lower incentive compensation are expected to result in net cost headwinds of $25 million in 2023 that we expect will partially offset the gross savings, resulting in net annualized cost reductions of $150 million by the fourth quarter of next year."
Biesterfeld added, "We also continue to identify opportunities to accelerate our enterprise-wide digital and product strategy. To drive greater impact and speed of execution, Arun Rajan has been promoted to the role of Chief Operating Officer. Since joining C.H. Robinson in 2021, Arun has been a critical contributor to and strategic leader of our digital and product strategy. Arun is helping us think and act differently as we accelerate our pace of digital transformation and scale our operating model."
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