Revenue rose 29.5% to $5.4 billion and adjusted earnings of $1.80 a share topped estimates. Operating cash flow fell by $151 million on working capital. The Dow Jones Transportation Average fell more than 2%.
C.H. Robinson had more revenue and more profit than analysts expected. Its shares still fell, and the cash line is one place the quarter was weaker.
The freight broker reported third-quarter revenue of $5.4 billion, up 29.5% and above the $4.97 billion analysts polled by S&P Global expected. Adjusted operating income rose 26% to $290.8 million, and adjusted earnings rose 29% to $1.80 a share, above the $1.75 estimate. Volume in its North American surface transportation business grew about 3.5%, against a 0.3% decline in the Cass Freight Shipment Index, which suggests it is gaining share.
The cash problem
Cash from operations was $124.1 million, down $151.3 million from a year earlier. The company attributed the decline to working capital, driven by higher transportation rates. When rates rise, a broker typically has more cash tied up between paying carriers and collecting from shippers.
The timing matters. C.H. Robinson agreed on Oct. 5 to buy RXO for $5.8 billion, and has paused buybacks to reduce debt, according to a summary of its earnings call. A quarter in which revenue grew strongly but cash generation fell lands just as the company is taking on an acquisition and leverage.
The reaction
The shares closed Tuesday at $143.59 and were at about $126.87 in early afternoon, down about 12%, after touching a new 52-week low of $126.14.
Transport stocks broadly were weak. The Dow Jones Transportation Average fell about 2.3% to 20,085, with Old Dominion Freight Line down about 6% and Landstar about 16%, both after their own results.
What the market may be weighing
The positive view: C.H. Robinson is growing volume in a falling freight market, profit grew faster than revenue, and the cash drag is a timing effect of higher rates that should reverse when rates ease.
The negative view: cash flow fell sharply in a strong quarter, the company has suspended buybacks to manage debt for a large acquisition, and integrating RXO adds execution risk at a point when investors want to see cash.
What to watch
Fourth-quarter operating cash flow, regulatory and shareholder progress on the RXO deal, freight-rate trends, and whether the volume gains against the market continue.