Damon Lee
Chief Financial Officer at C.H. Robinson Worldwide
Thanks, Arun, and good afternoon, everyone. This quarter we delivered significant year-over-year improvement in operating income, driven by an increase in adjusted gross profit or AGP, while controlling cost through our productivity initiatives and thereby driving higher operating leverage. Disciplined revenue management and procurement of capacity in the face of continued soft freight market conditions improved the quality of our volume and benefited our AGP, which was up $100 million or 15.8% year-over-year. On a monthly basis compared to Q3 of last year, our total company AGP per business day was up 13% in July, up 18% in August, and up 11% in September.
Within our two largest businesses of NAST and Global Forwarding, AGP, operating income, and adjusted operating margin all improved on both a year-over-year and a sequential basis. And while elevated Ocean rates are benefiting our forwarding business, the continued discipline that our people are showing as they embrace our operating model has enabled both businesses to be more fit, fast and focused and to grow operating margins.
As we look forward, Q4 is typically a seasonally weaker quarter from a volume and gross profit perspective. Michael mentioned the typical sequential volume decline that the trucking market experiences in the fourth quarter.
From a Global Forwarding perspective, there are several indications that customers pulled forward some of their peak season ocean freight due to the ongoing concerns about geopolitical issues and capacity disruptions, including the Red Sea conflict and the potential for labor disruptions at the East Coast and Gulf Coast ports of the U.S. This could dampen ocean demand in Q4.
Additionally, ocean rates have steadily declined since early July. Given the mix of contractual and transactional volume in our ocean business, the impact of changing market rates generally takes 1 to 2 months to flow through to our average profit per shipment. Consequently, we began to see the negative impact from declining rates in our profit per shipment in September, and we expect this to continue in Q4.
From an expense standpoint, our total operating expenses, excluding a loss on the planned sale of our European Surface Transportation business and other restructuring charges were down $3.2 million year-over-year.
Q3 personnel expenses were $361.6 million including $2.9 million of restructuring charges related to workforce reductions. Excluding restructuring charges in the current and prior year, our Q3 personnel expenses were $358.6 million up $18 million or 5.3%. This was driven by an increase in incentive compensation related to improved financial results and was partially offset by our continued productivity and cost optimization efforts. Our average Q3 headcount was down 9.6% compared to Q3 last year.
We continue to expect our 2024 personnel expenses, excluding restructuring, to be below the midpoint of a $1.4 billion to $1.5 billion range. This includes an expectation that headcount will be relatively flat in Q4 compared to the end of Q3.
Moving to SG&A. Q3 expenses were $193.6 million including a $57 million loss on the planned sale of our European Surface Transportation Business, or EST, and $1.5 million of other restructuring charges. Excluding these, SG&A expenses were $135 million down $21.3 million or 13. 6% year-over-year. The expense reduction was across several expense categories as we continued to eliminate non-value added spend. We now expect SG&A expenses for the full year, excluding the planned sale of EST and restructuring charges to be toward the low end of the guidance range of $575 million to $625 million. SG&A expenses include depreciation and amortization, which we still expect to be $90 million to $100 million in 2024.
Our effective tax rate in Q3, excluding the planned sale of EST and restructuring charges, was 24.2%. This results in a year to date tax rate of 20.8% and we now expect our 2024 full year effective tax rate to be in the range of 18% to 20%.
Our capital expenditures in Q3 were $17.3 million bringing our year to date total to $59.1 million. We now expect 2024 capital expenditures to be $75 million to $85 million compared to the previously provided guidance toward the lower end of $85 million to $95 million.
From a balance sheet perspective, we ended Q3 with approximately $1 billion of liquidity, comprised of $860 million of committed funding under our credit facilities and a cash balance of $132 million. Our financial strength continues to be a key differentiator in our industry as it enables us to continue investing and improving our capabilities even through a prolonged freight recession. As a result, we expect to emerge stronger when the market tightens.
Our debt balance at the end of Q3 was $1.56 billion and our net debt to EBITDA leverage at the end of Q3 was 2.08 times, down from 2.4x at the end of Q2. This was primarily driven by the performance of the business and the resulting increase in our trailing 12 month EBITDA as well as a decrease in our net debt balance.
Overall, our Q3 financial results are a testament to our execution with a focus on margin expansion and discipline on how we run the company. I'm optimistic about where we're going and I look forward to meeting many of you at our upcoming Investor Day.
With that, I'll turn the call back to Dave for his final comments.
