C.H. Robinson Worldwide Inc. (NASDAQ: CHRW) announced Monday afternoon following the close of the trading day that the third-party logistics provider had named Scott Hagen, Corporate Controller, to Interim Chief Financial Officer (CFO), effective immediately. This announcement comes just a day after former C.H. Robinson CFO Andrew Clarke's resignation, announced on March 21, became effective.
Hagen has led C.H. Robinson's accounting and financial reporting teams since 2008. C.H. is still conducting an internal and external search for a permanent CFO.
Three days after Clarke announced his resignation, Stifel equities analyst Bruce Chan wrote in a client note that he "lament[ed] the departure," was revising his CHRW price target down to $99 from $104 (the stock closed today at $88.30), but said that he did not expect a material change in the company's capital allocation or merger and acquisition strategy. C.H. Robinson said it would try to close one or two acquisitions a year, mainly in global forwarding, as Clarke put it in a February investor presentation.
"Together with a new CEO announced in February, the CFO transition could signal a potential change in direction for CHRW as the industry grapples with new, tech-savvy entrants," wrote Morgan Stanley equities analyst Ravi Shanker in a March 25 client note.
The company took the opportunity to announce another transition. The financial results of Robinson Fresh, the century-old legacy business supplying fresh produce and refrigerated groceries to food retailers and restaurants, will now be reported under the "All Other and Corporate" category. To date, CHRW had broken out its results by three major divisions: North American Surface Transportation (NAST), the company's core truckload brokerage division, Global Forwarding, which focused on maritime and air cargo and saw acquisitive growth under Mr. Clarke's leadership, and Robinson Fresh.
For context, in 2018, NAST represented $11.24 billion in gross revenue, growing 15.6% over 2017; Global Forwarding accounted for $2.48 billion in gross revenue, growing 16.2% over 2017; and Robinson Fresh took in $2.26 billion, a 6.1% contraction from the previous year.
It appears that CHRW is de-emphasizing Robinson's food business, which is shrinking in both absolute terms and as a proportion of the company's overall revenue, and is signaling to investors that it wants them to focus on truckload brokerage and freight forwarding.
"As we combine the best practices of the NAST and Robinson Fresh transportation networks, we believe we are well positioned to support the future growth of Robinson Fresh and also strengthen the overall effectiveness of our temperature controlled service offering," said Bob Biesterfeld, Chief Operating Officer and CEO-elect of C.H. Robinson, in a statement. "Robinson Fresh is an important part of our history and our culture. We take great pride in our Robinson Fresh team, who works every day to bring fresh food to the tables of families around the world."
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