Mike Zechmeister
Chief Financial Officer at C.H. Robinson Worldwide
Thanks, Arun, and good afternoon, everyone. The soft freight market outlined by Dave resulted in third quarter total revenues of $4.3 billion, down 28% compared to Q3 last year. Our third quarter adjusted gross profit or AGP was also down 28% year-over-year, or $252 million, driven by a 31.4% decline in NAST and a 31.6% decline in Global Forwarding and partially offset by a 4.6% increase in our other business units. On a monthly basis compared to Q3 of last year, our total company AGP per business day was down 34% in July, down 26% in August and down 21% in September. The third quarter contained one less business day than both the third quarter of last year and the second quarter of this year.
In our NAST truckload business, our Q3 volume declined approximately 6% year-over-year and 4.5% on a per business day basis. On a sequential basis, NAST truckload volumes increased 2% versus Q2 and 3.5% per business day. During Q3, we had an approximate mix of 70% contractual volume and 30% transactional volume in our truckload business for the third quarter in a row as the spot market remains suppressed. The sequential declines that we've seen in our truckload linehaul cost per mile since Q2 of last year continued into Q3 of this year.
On a year-over-year basis, we saw a decline of approximately 13.5% in our average truckload linehaul cost per mile paid to carriers, excluding fuel surcharges. Due to the usual time lag associated with contract pricing resetting to follow spot market costs, our average truckload linehaul rate or price billed to our customers excluding fuel surcharges declined 16.5% on a year-over-year basis. With this price decline coming off of a higher base than cost, these changes resulted in a 34% year-over-year decrease in our truckload AGP per mile and a 36.5% decrease in our AGP per load. Within Q3, our truckload AGP per load was relatively flat through the quarter.
In our LTL business. Q3 orders were down 2% on a year-over-year basis, and 1% sequentially. On a per business day basis, Our Q3 LTL orders were down a 0.5% year-over-year and up 0.5% sequentially. AGP per order declined 13.5% on a year-over-year basis, driven primarily by soft market conditions and lower fuel prices. On a sequential basis, the cost and price of purchased transportation in the LTL market increased in Q3, resulting in a 2% increase in AGP per order. This was primarily driven by capacity that has likely temporarily exited the market. By leveraging our broad access to capacity in all modes of LTL, we were able to meet our customers' LTL needs at a high service level.
In our Global Forwarding business, market conditions continued to be soft behind weak demand and plenty of capacity. In Q3, Global Forwarding generated AGP of approximately $170 million, a 32% decline year-over-year. Within these results, our ocean forwarding AGP declined by 35% year-over-year, driven by a 34.5% decline in AGP per shipment and a half a percent decrease in shipments. On a sequential basis, our ocean volume grew 2.5%. Compared to pre-pandemic levels, we have grown ocean market shares through adding new customers, diversifying trade lanes and verticals, and leveraging investments in technology and talent.
Turning to expenses. Our productivity initiatives continue to enable us to deliver on and exceed our expense reduction expectations. Q3 personnel expenses were $343.5 million, including $3 million of restructuring charges and that was down 25% compared to Q3 of last year. Excluding the restructuring charges, our Q3 personnel expenses were down 22.2% year-over-year, primarily due to our cost optimization efforts and lower variable compensation. Our ending headcount was down 14.2% year-over-year in Q3 to 15,391. Q3 ending headcount was also down 2.4% sequentially compared to Q2. As a result of the progress on our cost optimization efforts, we now expect our 2023 personnel expenses to be $1.43 billion to $1.45 billion below the $1.45 billion to $1.55 billion range that we previously provided. As a reminder, our expense guidance excludes restructuring expenses.
Moving to SG&A Q3, expenses were $177.8 million and included $21.4 million of restructuring charges primarily related to asset impairments, driven by our decision to divest our Global Forwarding operations in Argentina. Operating in Argentina has become challenging due to its strict monetary policies and rapid currency devaluation and this divestiture will help mitigate our exposure to the deteriorating economic conditions and increasing political instability in that region. As a part of divesting our operations in Argentina, we are pursuing a path for a local independent agent or agents to ensure continued service to our customers with shipments in that region. Excluding those Q3 restructuring charges, SG&A expenses of $156.4 million declined approximately 3.5% year-over-year, primarily due to reductions in contingent worker expenses and legal settlements. We expect our 2023 SG&A expenses to be near the midpoint of our previous guidance of $575 million to 625 million, including depreciation and amortization expense that is expected to be toward the high end of our previous guidance of $90 million to $100 million.
As you recall from our Q1 earnings call, we raised our cost-savings commitments, $300 million of net annualized cost savings by Q4 of this year compared to the annualized run-rate of Q3 of last year. With the progress to date on our productivity initiatives, we are on track to deliver approximately $360 million in cost savings in 2023 at the midpoint of our updated guidance with the majority of cost savings expected to be longer-term structural changes. Consistent with our strategy, these cost-savings improve our operating leverage and will help our operating margins as demand and a more balanced freight market returns. Q3, interest, and other expense totaled $20.7 million, up $4.8 million versus Q3 of last year. Q3 included $21.8 million of interest expense up $1 million versus Q3 of last year due to higher variable interest rates against a reduced debt load. The reduced debt load drove a 1.4 million decrease in Q3 interest expense on a sequential basis.
Our Q3 tax rate came in at 11.7% compared to 16.9% in Q3 of 2022. The lower tax rate was primarily driven by lower pretax income and incremental tax benefits from foreign tax credits. We now expect our 2023 full-year effective tax rate to be in the range of 14% to 15% down from our previous guidance of 16% to 18%.
Adjusted or non-GAAP earnings per share excluding $24.5 million of restructuring charges and $5.5 million of associated tax provision benefit was $0.84, down 53% compared to Q3 last year.
Turning to cash flow. Q3 cash flow generated from operations was $205 million, which demonstrates our ability to generate cash and make meaningful investments despite the continued soft freight market. Our Q3 cash flow compares to $626 million in Q3 of last year. The year-over-year decline in cash flow was primarily driven by changes in our net operating working capital.
In Q3 of last year, we had a $359 million sequential decrease in net operating working capital, driven by the sharply declining cost and price of purchased transportation. With the more moderated sequential declines in cost and price in Q3 of this year, we had a $55 million sequential decrease in net operating working capital.
In Q3, our capital expenditures were $16.7 million compared to $31.3 million in Q3 of last year. We now expect our 2023 capital expenditures to be toward the lower end of our previous guidance of $90 million to a $100 million.
We returned $76 million of cash to shareholders from Q3 through $73 million of cash dividends and $3 million of share repurchases. The cash returned to shareholders equates to 19.2% of Q3 net income, but was down 88% versus Q3 last year, driven by the $153 million of cash used to reduce debt.
Now onto the balance sheet highlights. We ended Q3 with approximately $1 billion of liquidity comprised of $837 million of committed funding under our credit facilities and a cash balance of $175 million. Our debt balance at the end of Q3 was $1.58 billion, which includes debt pay-down of $615 million versus Q3 last year. Our net-debt to EBITDA leverage at the end of Q3 was 2.1 times, up from 1.81 times at the end of Q2. Our capital allocation strategy is grounded in maintaining investment grade credit rating, which allows us to optimize our weighted average cost of capital. Our $615 million in debt pay-down helped maintain our strong liquidity position and investment-grade credit rating. Keep in mind that the cash that we use to reduce debt generally, reduces the amount of cash for share repurchases.
Over the long-term, we remain committed to growing our quarterly cash dividend in alignment with our long-term EBITDA growth. Our dividends and share repurchase program are important leverage to enhance shareholder value. Overall, I'm encouraged by the progress that we continue to make on our productivity initiatives, and look forward to our ability to build on that progress. By leveraging generative AI combined with machine learning to take the capability of our people to an even higher level we are positioned well to further reduce waste and increase operating leverage and value for Robinson shareholders.
With that, I'll turn the call back over to Dave for his final comments.
