Analyst Note| Matthew Young, CFA |
Tailwinds from heavy retailer restocking and favorable pricing conditions (tight trucking and airfreight market capacity) continued in C.H. Robinson’s first quarter. Gross revenue (up a strong 42%) came in nicely ahead of our expectations for both truck brokerage, or NAST, and global forwarding. NAST’s gross profit margin percentage (net revenue/gross revenue) came in shy of our forecast, but that’s partly because soaring fuel surcharges artificially suppress margin. Also, gross margin improved sequentially on progress repricing contractual truckload business. We expect continued sequential gains, especially if TL-market spot rates continue to ease, providing relief from historically high capacity buy rates. Total net revenue (adjusted gross profit) surged 29%, though the increase came in below gross revenue growth because of lower global forwarding and NAST gross margin percentages. Even so, this dynamic is not unexpected in very tight markets when cost of hire spikes.