Dow Jones Transportation Average component C.H. Robinson (CHRW 64.86, -3.83) has slid 5.6% after reporting mixed results for the second quarter. With today's decline, the stock is back at levels not seen since the start of 2016.
The freight carrier delivered below-consensus second quarter earnings of $0.78 per share on a 12.4% year-over-year increase in revenue to $3.71 billion, which was ahead of estimates.
Truckload margin compression weighed on the results as purchased transportation costs increased significantly while customer pricing remained little changed due to contractually-set rates.
Volume growth across all segment helped fuel the increase in total revenue. The September 2016 acquisition of APC Logistics contributed about two percentage points to the company's revenue growth rate.
Total operating expenses rose 8.7% to $391.97 million. Personnel expenses rose 5.2% due to an 8.1% increase in average headcount. This was partially offset by lower expenses related to variable incentive plans.
Looking at the segment breakdown, North American Surface Transportation (NAST) revenue grew 10.3% year-over-year to $2.38 billion thanks to volume increases. This segment accounted for roughly 92.0% of total North America truckload net revenue. NAST net revenue declined 9.8% to $359.91 million.
NAST LTL net revenues grew 2.1% to $97.10 million with volumes increasing roughly 6.5% and net revenue margin seeing a modest decrease. NAST intermodal net revenue fell 6.3% to $7.80 million. This masked an increase in contractual volume, which was partially offset by a decrease in transactional business.
NAST operating expenses increased 1.5% to $219.60 million due to higher selling, general, and administrative expenses, which were partially offset by a small decline in personnel expenses. Average headcount increased 3.0%.
Global Forwarding revenue spiked 48.2% to $528.82 million while net revenue rose 24.5% to $121.02 million. Ocean net revenue rose 22.0% to $73.20 million while Air net revenue jumped 31.0% to $24.50 million. Customs net revenue grew 40.6% to $16.30 million. Growth in the segment was due to volume increases, including the contribution from APC Logistics.
Global Forwarding operating expenses jumped 24.8% to $93.30 million due to a 14.4% increase in average headcount and amortization related to the acquisition of APC Logistics.
Robinson Fresh total revenue dipped 0.5% year-over-year to $657.00 million. Net revenue fell 10.3% to $60.85 million due to declines in transportation and sourcing net revenue. Sourcing net revenue fell 6.8% to $35.10 million due to lower net revenue per case. Case volumes were little changed year-over-year.
Robinson Fresh operating expenses rose 15.0% to $46.60 million due to higher claims expenses, warehousing expenses related to expanding facilities, and an increase in average headcount.