CHRW - Earnings call transcript Q1 2018 | C.H. Robinson Worldwide, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the C.H. Robinson First Quarter 2018 Conference Call. At this time, all participants are in a listen-only mode.

Following today's presentation, Bob Houghton will facilitate a review of previously submitted questions.

As a reminder, this conference is being recorded, Wednesday, May 2, 2018. the Relations. to turn President Houghton, now Investor of will call Bob over Vice I

Robert Houghton

Donna, Relations good Chief you, Biesterfeld, be Clark, Thank and Financial Chief John today our Chief President Wiehoff, will quarter website be Operating call Officer Chairman John, that accompany slides chrobinson.com. Andy, Transportation. provide found of Surface Presentation and and Officer; the Bob will Executive our and Andy commentary remarks results. can section on America and morning, our at Officer; in Bob everyone. Investor XXXX North On of first their

follow X responses yesterday. expectations. call we I'd to will will today's that factors in contain our our the release received remind I turn to the pre-submitted may you that presentation results management's lists We questions from that cause to with differ like remarks And could earnings Slide after actual over that, statements. our with today to forward-looking John.

John P. Wiehoff

good He you Officer and the hearing promotion. talk of some morning, role that remarks, Operating formation participant Chief some Thank my announced of of be about. In thoughts as transformation digital I you, of highlight presentation. Bob on the to everyone. of Operating Officer, of these services us leaders recently role performance initial of our and our will with our Bob Bob, be for earnings businesses the first Bob opening his accelerate chaired and Chief will share globe. regular themes will optimize our the these to you'll in the new operating strategies other the presidents strategies headlining to around information lead working earnings divisional We on In his Thank today's later be will want and a Bob divisions. the call. quarter technology go-to-market joining Biesterfeld's also all commercial calls.

in pricing chain expertise drives which to freight the in supply guide both a and market. shift the Rapidly our committed shipper environment. environment, quarter, all across driver and illustrate capacity growth mandate dynamic The margin carry, continued contractual carriers single our strength quarterly this point, our environment. very a North costs of the activity spot compression customers to tightened increase service a The are largest truckload in e-commerce electronic from to balance our we a prices freight. fluid time, business device long-standing unprecedented globe. the have on publicly previous XX.X% route portfolio increases In North our in experienced typically the our our in in quarter both to of incremental significant XX% We rapid volume of performance of healthy for First, participate while rising the with economy Pricing price rising over around a most spot quarters. increasingly shortages resulting and and freight a in freight these enforcement a result willing they has history market. motivating into in be our loads to same The and demand this in We lines ability America our selective and is time shippers XX-year increase is escalate is freight we traded is of deteriorates, are including market carriers market company. delivered logging driving truckload. opportunities, this the in first rapidly America as business ability cost create arrangements. model increased results. To quarter, increase to delivering in double-digit At relationships spot

our contractual increased it not the was but rates enough declines quarter, Our to at overcome double-digit truckload the in transactional volume during volume.

is important. management model are also leveraging when continue practices build to now We business spot I'll around account become More fulfilling financial to world, committed management process those a each statements. it critically to our they carriers is with market our the and we review of core comments, but the concept topics, award component creation. environment, This of In Andy and for the of is customer part technology long-term come honoring available. while shippers value to these to commitments people, rapidly of our cost believe introductory that long-term rising turn on foundation the opportunities relationships believe that right over a with

Andrew C. Clarke

work in net to hard revenue, aggregate you, Thank make continuing all start for volatile like profits. growth of and double-digit team did John, volume environment. growth. I would recognizing entire a in freight across operating saw while everyone. increased this to transportation by this We and the increase future investments significant the services, morning, good We

Robinson to hard Managed Fresh are also and teams Global segments. NAST Both however, margin short We delivered expectations, working operating Profits best-in-class return results. in Services. in our both expansion did and of Forwarding to fall

on to and results. X Now, our financial slide

up service services, Forwarding saw truckload First and investments revenue in quarter increased million air growth XX.X% costs. total service net higher the Net XX%, to where net the $X revenues We $XX benefit company million, Total line in was higher across volume by by up and recent fuel driven million. all the in pricing services and or million $XX billion, LTL quarter. revenue increased significantly XX.X% increased revenues $XX or growth lines, quarter. led of $X.X in Global Global our by Forwarding, LTL

and by net million. $X SG&A higher quarter $XX XX.X%, expenses. First revenues ocean operating expenses up Total were increased million, personnel or driven

XX%. increased support expenses compensation Global Services Variable to opportunities growth, personnel Forwarding and Managed in in increases increased quarter. quarter businesses. volume by X.X% the led in Total the increased quarter, our count also head company average First

to We in our to expect expenses soft SG&A for variable XX.X% elevated million. given in quarter the were up compensation year, full performance the XXXX. $XXX be

settlement. $X.XX legal our As a million included first one-time results year a last reminder, quarter favorable

our first Robinson Fresh and this in X% advance occupancy a SG&A increased in up net over primarily as write-off year's was below income the points a last settlement, year. of $XXX first impact sequential first revenue X.X%, of % basis. of basis by increased depreciation SG&A income quarter, Total and percentage the supplier declined quarter. expenses XX.X%, expenses the on Operating and a XXX amortization expense. quarter operating million Excluding X.X driven was last

income area. Our so this rate equal work objective grow to net is still to do to at revenue, operating have greater a or in than we

drive for We greater expenses his through as context XXXX. will will we continue remarks. what to and margin invest improvement on provide while striving to in doing Bob efficiencies we operating were move more managing

and was $X.XX, in other up year. per increase share quarter slide from net First and income. the X diluted earnings same period $XXX net $X.XX an impacting income XX.X%, last was million, to items of On

rate it our tax from lower rate full restricted to lower is due down year. was The for the was XX.X%, than corporate tax be first primarily tax XX.X% to primarily typical the by driven rate. U.S. tax The of impact year, the quarter last tax in Also, the the effective stock in reduction quarter rate first delivery.

be operating our update have In of results. our Interest Fresh Robinson full There total to XX% do our in impact million. to $XX.X We impacted of XXXX, higher net were material approximately was expect quarter within year. variable levels continue driven however, increase our shipments this policy expect revenue. and We results. quarter, other the debt in be not results; by material our expense for the revenues quarter, in-transit to a accounting $XX negatively to financial Changes adopted first a with an was our impact tax Starting debt. revenue division, no the by will have short-term enterprise first interest for standards did on increased and now included not XX% primarily and XX% million, first the the recognition. between new we currency impact in our on rates quarter effective foreign rate on

increase flat repurchases the and Our flow the to $XXX share In We our ways outlines Slide quarter. were cash quarter period. million last as policy, by over with approximately increase in of count that working operating capital activity Through our earnings, plans. increase continue offset increased and to equity better and for just in the both cash versus in flow distribution generated stated value. the X of drive our returned $XXX share performance the year the line prior combination in was improved XX% our of million quarter, we a a we XXX% capital evaluate a in performance deploy capital shareholders compensation operating over impact quarter, the year period. and shareholder

We the investments returns will results outstanding technology for our our that generate processes, shareholders. people, and in customers for and make

$XX.X reward culture. million our companies will fit that We model we Capital expenditures the dividends. to totaled buybacks our acquire And quarter. through and shareholders will and strategies, in look business

to the We technology. to $XX majority dedicated CapEx continue year with of full million million, to expect $XX

Now, sheet X.X% on by a XXXX. the the fourth of total fourth seasonal onto receivable, reduction versus sequential quarter the given accounts balance of versus improved X. in capital decline slide quarter revenue XXXX, Working the in driven

in a capital, in-transit quarter. the accrued revenue contract remained percent versus revenue, policy. with total asset expense of activity recognition as The balance quarter flat reflect working the accordance lines newly-adopted sheet fourth transportation First relatively and the on

wrap on we the period majority both provides decision and company are on rate first April X. capital Our issued our This quarter. bond a Across received $XXX history. repay both at XX-year look of in in perspective. expected capital facility, offering was interest slide the structure successful with listed rates a comments rate morning outstanding locking of this a public to our We outcome credit the capital also placement debt issuance. in offering X.X%. to the from credit rating grade with XX-year balance notes for weighted a at securitization, and and With believe debt from million my billion. our flexibility of balance Moody's, fund On details The unsecured with will average proceeds rise AR to $X.X our a fixed was investment needs. rates in greater at of used future, us consisted interest of facility. senior the X.X% is our offering acquisitions future I and We in debt the we The quarter current S&P our end trends. private working pleased are an up current the prudent the structure X,

comparison, while consistent per day revenue prior volumes to has XXXX increased decreased practice XX%, business net where increased year. has versus the day is additional share one X% ago has business this April versus per volume business period day year global Our XX%. truckload the April and the approximately

continuing closely We achieve conditions, our are of while pricing to commitments. marketplace meet with the volume to customers reflective working our

in committed America re-price appropriate. as in declines April We see volume where North actively truckload business continued to we

customer our while additional transactional honor Our management, also account commitments, on are managers we focused award ensuring freight opportunities. securing

Our transactional includes freight. strong in double-digit April performance growth

New quarter, now carrier with Bob on April over I April segment were the mandate. from performance. seeing you the a turn of first in currently our Thank morning, provide will this to ELD enforcement so listening sign-ups we impact X all in the hard not additional consistent relatively the it to for pace and negative context are

Robert C. Biesterfeld, Jr.

and by this be open to network Thank new you I'm Robinson you, speaking It's forward in with want looking Andy, to all global good C.H. pleasure serving our XX,XXX a employees really everyone. saying the over of that morning, to role. today. across I

and a focus in at of more different business. our roadmap experiences, greater technology journey, that drive digital and introduction, divisions, us Each between streamlined in drive my ahead have exciting deployment innovation our accelerate the our will of this John customer pace and transformation a continuing improve mentioned an synergies operating the of his and carrier platform, be stage organization. leading to our our units will of business on to are across we As

revenue The One truckload fuel nature on The the of on since market of we net net blue represent per lines key mile logistics carriers, XXXX. percent to captured the of all XX. customers ways dark light transportation and line is and measure for rate change the and North gray margin graph in the is the dynamic cost slide America services. the cost

the As John per change his in North the both mile opening rate mentioned XX% remarks, mile and this exceeded truckload per quarter. in cost America

we year. of demand, pricing Given market the volatility and strong the continue for higher expect current and balance freight dynamic of tight the capacity to do

that see level high able market, extended of margins our in these freight cycles. we are despite can freight maintain You through to a volatility also the

of increased margin years period. revenue slightly Our first up ago five transportation the quarter five-year our versus net period XX.X% and over million net annual during revenue is $XXX this same time has

the navigate depth of market average, was providing the a The our experience choose In this measure shipper's in that are from routing trucking a account and we the routing many like to The capacity this to that shipment. are bring cyclicality X.X, X,XXX does which you makes on customers guide the have customers where over volatility these guide of was periods the carriers. challenges carrier the would Robinson for routing significant (XX:XX) spikes fast to a routing like quarter, indicating One customer-facing to in recognize work market representing markets. X market. help use a depth year's significance recognize routing that and to of type for marketplace. American C.H. guide past of last localized included think with great environment. The the depth quarter averaged fact in broad-based comparison, solutions great of presented second carriers the it in the the market. By volatility pricing the serve our weeks both our of X.X, first is our is chart all to Managed certain to in balanced parts metrics consistently work employees I'd innovative executing illustrating see this industry typically increases that for I'd changing customers. the carrier Services what over our job us also business. quarters working guide in average managers North three and possible guide that We our also country,

North business; environment. to truckload strong less our NAST tight increase million service In the quarter. the of cost Transportation to American $XXX to the customers and growth business, revenue by demand our Turning led Surface truckload net quarter, to XX XX.X% and reflect a the rising adjust slide worked In led increased with we in contractual pricing to sharp in our and truckload lines. freight cost in combination capacity continued market, in the than

mix and Our teams net combination by our truckload revenue offset as Despite volume truckload quarter, impact in shipments. customers market activity growing. volume were contractual the quarter. transactional XX% declines million in in the XX.X% declined within increased of Led a customer net double-digit $XXX year period Overall growth, XX%. failed. growth of the did and capacity our spot in ago also volume not transactional as secure growth was the versus quarter. for negatively pricing, by we volumes revenue active where X% routing volume in guides The in volumes where resulted volume declines transactional Re-pricing industry contractual approximate satisfied the in double-digit increased helping higher are to declines XX% contractual are with volume market shipments

This lead and NAST we've in marketplace Over that as conditions. we and market spoken benchmarks. be lag on growth about or the our industry volume of to business, mix our either long-term some continues continued a truckload line years, the the focus. We concept of with our market portfolio within focus taking periods, our share adjust though, several balanced volumes long-term over past above that will realize, overall growing

to improvement improve us moved to a X,XXX XX% continue improve the performance new At market disciplined in in volume our XX,XXX shipments increase a Volume year's growth, through These first add quarter, a pricing our quarter, As result, roughly and also ease quarter. network. expect continue on help new the carriers will first quarter approximately volume for quarter. last comparisons we the to over and carriers and in To versus we We the adjusting balance fourth time, of carriers XX% sequential added throughout do year. to we XXXX. as second same the we the remain move to changes.

As on Andy ELD took of mandate said, the our effect slowing XX new rate that carrier December is not adoption.

to largest a North motor every adoption customers. C.H. rate In the April we're of increasing. carriers as of for thousands to fleet of the us fact, Carriers bring the mandate continue capacity life of new sign in continued new rate hard The addition carrier ELD see solutions carriers at on Robinson enforcement our up expand similar our motor new quarter. to quarter continue the choice. to is X, to XPL to and America allows Despite first carriers continuing the of

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to within within the operating revenue which year. intermodal NAST improving freight launched just volume XX from to launch, us of allow This networks efficiently the technology profit over drive will road should within services, new rail intermodal have and growth the outlines coupled We rail. move the net customers' balance more our performance. with a Slide our

increased quarter included to performance Operating million We're year-ago XX.X% First settlement. and to we operating margin against good productivity at $X.XX Investor improved basis XX initiatives period efficiency Day May. progress that last strong the the $XXX XX%, profit outlined versus the making favorable legal million. our points

and and automate also drive launching consolidating maximize selectively workflows. technology We our invest interactions, our carrier in our customer scale. network to to by office well continue activities as across tools locations We're to that as internal productivity both our

exceeded expect deliver fourth The growth head a declined count count consecutive of of result full of remain for to this, were count rate growth volume head ninth total growth and As flat we that NAST the head quarter. we consecutive year. quarter NAST NAST the in able our to for rate for the

to business. each increased of lines. the Forwarding Forwarding million Global our service for XX.X% quarter net our with Turning in to slide Global XX $XXX growth in revenues

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of business. sales and extremely We customers ocean have existing an new strong in our pipeline

quarters, benefits net continues our revenues the to approximately cities. increased the XX.X%, as few we freight to increased Air contributing grow increased increased air density quarter X Air quarter, demand Milgram and investments First shipments in approximately XX% have gateway in continue as with air over points. volume percentage have outpace supply. to past costs from

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Our Global an Forwarding and business benefit offering continues service expanded from to geographic footprint.

of quarter growth. strong net top-line I'd of profit operating performance. Forwarding quarter the sixth to double-digit offer consecutive like Global Slide our outlines XXXX first XX team Forwarding to represents performance. Global of revenue another congratulations quarter on the The

leased performance people in level well clear, investments technology profit To this and across our quarter fell million. and were all in X.X%. quarter. accounting percentage points expenses operating drivers count lines declined for profit of Operating the Milgram operating points expense margin First the freight of X declined XX% the Headcount XX.X% increased the approximately growth. of Increased to increase. primary XXX with XX% warehouse for increased below Operating $X air quarter. expectations to basis the space service be head

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is we we drive continue significant but process also deployments We'll the additional us, be focused realize in to margin units. earlier than intelligent of how transformation automation. The stage top-line this through opportunities business some other an on expansion also opportunities greater and business growth at efficiency have on digital be our operate. of to We in of focused front will operating technology

over we consistent segment. Over the segment be the Transitioning our to other and margin year. the Global market operating expect and to improve our performance longer term, to balance margin of in XX the companies we slide expect operating of our this leading with Fresh Robinson Forwarding

million double-digit and our at Sourcing transactional committed customer year X.X% transportation compression ago business. Slide net by due Truckload revenues LTL. revenue net revenues were was $XX Robinson per and truckload a from in offset outlines margin business XX Fresh a an Net partially international volume the strategic million, in produce exiting year, were load performance. levels. to profit growth operating down below declines increased sourcing increase our revenue in of double-digit business and fresh last pace, our in X.X% in truckload business, $XX

XXX count increased operating increased a million. head quarter $X as basis off Operating margin XX.X% First quarter, offset to of supplier basis, a XX.X%. in on Operating a declined points, expenses personnel well in to head per as was profit the expenses a as X% declined X% reduction by write advance.

be We business. have implemented also within Much improve quarter. Robinson profile the will quarter, in in in sourcing, transportation invested to facilities stringent improve exited implemented plans office implemented the technology of was second and our certain controls. and of operating We've the expense profit this the network, the Fresh business efficiency, to first completed re-pricing

all Moving on other to businesses slide corporate our XX. and

outside in miscellaneous revenue and other chains to the revenues valuing management to all required Services the and Managed Surface transportation $X billion. supply allowing are to other without quarter. based increasingly technology. nearly our Services, their in Software-as-a-Service selection the Managed million the $XX.X manage of Transportation net Freight unallocated reminder, includes them Customers in America, a increased increased under North As X.X% expenses. process complex XX% quarter carrier system, investment management control their corporate

result customer both both increase and expand Europe X.X% margins geographic the quarter business, primarily in LTL nature automated points. Other The to service in the million. Surface operating and still net were in $XX.X highly increased XX basis growth Transportation profit lines. truckload able for revenues this the to Given volume and was of we of invest growth

these volume the trends in we of quarter. pipeline strong a have second to business expect new increase and We

minute back wrap to John I performance. final take some to unit section about turn our So, a for I'll this the comments, business up call before

As for results in challenging we quarter. mixed, Through were helped customers accelerate marketplace in the but their a our the business you've our first we quarter, environment, assisted them in navigating businesses. to seen, the overall positive commerce and

in Looking of forward, us. sit energized that I'm front by the opportunities

a strong industry experienced a ecosystem to that expertise active We've with strong, our value. global value. people leaders, each carriers. the on our digital and people driving that's and XXX that aggressive, have XX,XXX is got to customer-centric, enterprise and productivity leading got includes across industry of over globe XXX,XXX We customers and We've nearly of over and creating and services. improvement, our team We've dedicated across got organization delivering customer are a lead or XX,XXX technology continuing innovation, in focused

both we that this morning, how before some our move questions. people, and your and we this closing our point to I'll days our advanced John ahead we forward further us. our for customers this aggressively, turn are technology back transform listening for forward as us going continue Our to technology, operate and we around been evolve. and Thanks to and how as in foundation business and to to more order built to it process truly has of make believe at Look address analytics leverage is serve comments best to carriers. carry pre-submitted we continue I emerging

John P. Wiehoff

Thank Bob. you,

continue on will expectations freight fundamentals the of the quarters. do current our the that market comments to moving several XXXX. for with our the for remarks balance some Before wrap believe questions, I'll We up next prepared

for high, we aging demand to demographics freight new expect of declining to and We with expect driver shortage drivers, the truck continue. remain driver numbers

tight. to effect capacity ELDs we industry With X, April the hard of enforcement on expect remain taking

tight expect So healthy to remain economy, for given of the freight and prices the XXXX. we balance elevated environment, demand high capacity

closely the We meet ensure to the customer focused working commitments help market, them market to on pricing we are with and of customers conditions. both our reflective achieve our understand

chain we increasing operating to digital to execution, expanding transformation leverage service the levels value provide carriers, expertise and to with of capabilities our of increase deliver efficiency, to the insights to focused driving We our returns our will shareholders. on supply and of and and set an people higher we will continue remain cost customers our

thank XX,XXX in environment, our like world this our deliver for and effort investments the would personally work net Global and capabilities, Forwarding operating to In were hard I the over their make increased a expand deliver employees business, double-digit able rapidly-changing to income. Lastly, freight quarter. also digital revenue Robinson we around significant growth,

We this with questions. also quarter have and the answer operating operator I'm shareholders concludes significant in I people, in to to we and million a prepared And the returned to our the confident turn that to back delivered to cash win improvement the comments. $XXX processes, That marketplace. our continue flow. technology right pre-submitted that, will it

Operator

Mr. is for the yours Houghton, session. Q&A the floor

Robert Houghton

Donna. you, Thank

to release the like would I First, earnings investors our after yesterday. analysts time many thank and for taking the to submit questions

in XX turn to years, with nearly the picture? asked first Robinson trends most then operating Bob Chris I about Weatherbee Atkins on should about John, income response. or C.H. Q&A market from and freight increase X% in session, going What bigger Ossenbeck comes a will over year-over-year JPMorgan also frame-up only margin. with on was basis. a operating is able margin and question Citi, thinking we Andy, question to is Jack the to the the it company for in net operating be For and how a John, are drive And robust and improve operating with profitability to we do Stephens. today's and Brian

John P. Wiehoff

for do do it's operating this range kind then margins. deck we and the our the our been always when planning profitability approach our It's we long-range the picture way way bigger long format revenue and the we when has to growth of internally. we business analyze planning at The around separate call net and looking

we similar goal we at grow has of the been, already believe our revenue we've rates. that and all income remains stuff and Our That our can in operating brings that net and income discussed item. the level, that scale margin around have efficiencies price volume at the points the it lever we into and line gross gets operating and at the operating then

last did we year look the at discuss you QX, legal settlement. If

your But adjust quarter, to acknowledged our comments, in progresses. we, be what you net we as X% income pro grew improve in calculations, in that overall let adjusted long-term, XXXX forma to that do prepared to for but an as and the X% revenue not you a doing our on XX% legal settlement operating where that, If we're we range. we basis, own for want

to the understanding Over the in years segment of ago as various relevant. a things and network, Forwarding different and dynamics the of move because did invested significantly we've our are last years, was that we we believe services offer the Global that margin five couple we growth one reporting

and profitability division, around NAST were we high-level committed be truck broker carrier public, serve XX than to that the Tier to of also to we as the relationships. ago I when that went wanted our we Within is a years were common that committed those more they lot be the freight transactional a after to customers story we way going going go a

While the transactional we've a provider around truckload also our very in the and transparent a environment been is being are prices in basis capacity that growth committed sources strategy growing changing, significantly on marketplace.

over XX%, a and that business the of those recommit at revenue margin we of marketplace. source and had largest costs being look up If well we spot to our in a our source re-earn went to mid-teens daily market, active in you portfolio very half

sort in and of the at. was the and legal and effort first leverage know and I less there. shut that re-pricing line activity expense that benefits time. some some compression even them rate see that make the of continue the the adjusted where the for Robinson of item is through, from the quickly if lot pushed segment We a but more show down shedded very are within and and NAST sure challenges will but happen you some that, Fresh, where paying network GF did which in market and the to think this a we're the income and in and during operating transactional the had revenue the were at was market some can addressing we that to capitalized of of and the quarter the put we heavily comparable also In continue standpoint some we you of accordingly. segment, the operating at of investments that what Bob net in on to talked challenging, a about occurred adapt into segment, and of the can that of you expense us Despite ones prepared XXXX, operating in of we grow give there forth to is some comments, we or where period to committed are that, that challenges did are we leaned a doing settlement you're of off on revenue net active, rationalize is verticals those the talked grow, balanced market So, segments lot successful rest volume

the to not in disciplines top So with line income performance remainder on believe in of to We growing long-term more year. income right place we're the the that this value together. and have and right continues operating the with operating that for our business growth overall, be our for we're our And but strategy happy it. net creation of model the the grow we for quarter, revenue

Robert Houghton

John. shippers? discuss segment? can volume. JPMorgan is by of and with next truckload are Dave decline you the this Bob, loads is being Vernon and and of with for asked Thanks, the volume booked in Merrill from that on volume find Bank question turning is America away away, Brian Lynch Ossenbeck Bernstein. capacity comes also freight Is can't Hoexter or Ken The this drivers with you about

Robert C. Biesterfeld, Jr.

see in it our about comments shift business in largely spot driven actually was bit. market the while by a contractual We America our volume QX the grew digits. do double happen of within transactional that or talked rising the transportation in fact periods we North some this rates, to tends declines and decline for prepared where that portfolio marketplace, typically of little So

those contracts. committed before, tend of customer our we've As about talked higher total does tied Robinson to percentage have to portfolio a

worked for were to ensuring awards best we hard us given those that first in in that the our we So commitments the of customers, ability. met our to quarter manage

see cases, guide quarters. environments the in As come rates don't might guide in most market the think routing spot of anticipate or out, transactional we Typically, shippers may to period of we're of throughout year. heavy and the that volume, and we you to balance have back failure. truckload see back, in contractual, pay those about look then we do like routing the when this that forward us volume both this, we degradation and see weeks, some award in to but or And opportunities months, come subsequent

Robert Houghton

the truckload from on John, some next please you color and with within The Bob. tradeoff Morningstar. provide core question Thanks, Matt Young could NAST between volume business? pricing the is

John P. Wiehoff

There addressed a term. the bit a value to in in is about in to our over of So longer current lot in no longer and share period tradeoffs want try terms of we strategies happening go-to-market I question in Robinson. market the volumes what on that marketplace. what's Bob creation how and that drive the the think gains the increases this build volume/pricing are little

the So of or targeting regions certain many with in and fact because of year-to-year we making process basis, pricing of how sales a to our in volume It's segments, really that all during is after capacity we grow about decide customers tradeoffs, be. that don't terms expand aggressively volume market iterative of our we're that in the our core and to about we're to network business going bids. to what very and marketplace, a of On thinking margin going and exactly activities, go-to-market our aggregate share. are the practices very the tradeoff volume our get continue different source

common bid out. provider really may and a several contrasting have we we're that North price market, those and increases And shipper's be in believe the providers participants what largest approaching are view they're what hundred bid. through most America, settling processes we and truckload to large around comparing the and other bidders particular it's in the sort contract how While and

large sort and market to volume of So that each have share not even the it's tradeoff kind up and pricing to provider, we very want market, a do a committed we fragmented though end particular we're relationship. of in command in where exactly

the what increases material with that price the for of market think us the going or seeing is the remainder are believe significant in you're we stay year. that current to I

in some year Some a we're occurred applying of of by is are proven pricing last has being different freight. how the that the terms to route to approach take of repricing and accepted those they their the marketplace inadequate, in not be today that shippers trying who

how into fact accept byproduct enter and bid we the that it price there shipper each and we each just becomes arrangement and volume are do tradeoffs, of a those of So of the results interactions.

Robert Houghton

count? Thanks, continue segment question without with in you grow NAST you is see the the John. BMO. leverage opportunity on operating you benefit market Chamoun from adding next conditions. from favorable The Maybe volumes as Fadi thoughts head Bob, can to in

Robert C. Biesterfeld, Jr.

shown that volume can head that at Yeah, absolutely. a ahead rate is moving forward. and count We've we plan our in last grow the of quarters few growth,

the the mix functions. count it fact a complex is to we head business bit organized more into than Our summarized within specific at the due that little that appears at report level we're

within to and count automation, roles management. functions. carriers, account process volume without adding more still This So and our drives in more as top head head revenue we're growth allows certain sales digital we with count invest us revenue, introduce in to both line that and trading able as such grow customers

Robert Houghton

from believe accounts a it bad provision QX for first Thanks, off? debt doubtful expense XXXX R.W. Ben the write the Bob. question issue next the The will supplier with was given balance advance of Baird. Andy, quarter Hartford the elevated is year, any simply remain to reason or for

Andrew C. Clarke

thank Yeah, you.

One where quarter just was actually $XXX million the flow of strong really from over of highlights in the the cash generated performance we cash operations. flow first

compare fourth XXXX, to was last million. $XXX that $XX of the QX compare you If you quarter that was year, to it of million, that and if

performance strong The as driven really allowance flow for strong year. earnings capital X% by doubtful end accounts working performance from strong down as the was cash performance. well the So of

team to broadly in the have the we expect a the to out XXXX. And and of wonderful see order quarter continue this year, improvements that finance we job throughout done first the there cycle. would made driving of speaking So the business, cash

Robert Houghton

seeing customers Bob, Thanks, Andy. is from your still and elevated looking to to with customers rates lock quarters? risk truckload despite the today's question you are into Or more willing Robinson rate The market? on take in eager Susquehanna. Bascome third spot second are becoming committed next Majors with

Robert C. Biesterfeld, Jr.

move the if macro XX% typically normal marketplace, freight environment spot. going moving it versus And that XX% to in think and question the contractual with in of contract marketplace XX% think in this So helps of around to the about truckload freight I kind think in of to terms XX% moves we about what to is typically transactional.

where rates, working from time Today to withholding a spot really bid true freight markets. could are in originally So activities these they're don't hold rates of we in though, if rising non-awarded so the tendered many contractual when of committed lagged contractual and contract higher really planned that rising leading year back that environment, actually in either at they that their some sort. this at up a indicator rates shippers capitalize of into environment. last higher awarded open total some maximize the portion we cost or think the rates, amount of That being on spot of to more in up rates And saw shippers spot this to their freight market. could rates allocating what marketplace. as come reality, was is or market that ends contractual secondary spot The necessarily are

planned the know that that spot a of The of I outcome an that more this freight is So was level for. maybe have typically environment plan shippers execute spot the to goes in don't market. plan enter that freight didn't necessarily more at the into

Robert Houghton

repriced for Fowler with also The bid season progressing Thanks. KeyBanc. has XXXX how question How to-date? next and comes and of Bob, book from contract is your Todd much is

Robert C. Biesterfeld, Jr.

activity we some the participants of in made in stated So our We we contractual participate the comments bids and bid the in. John a earlier question repriced number an business. that portion quarter in fourth of about that

and fail months, repricing been everyone bids think results. more in more activity to quarter, original knows, is over but tended the as has bit I than the As happen highest to And the normal these has cycles. given dynamics first the a repricing much little repricing fluid plans more expected typically past fly on market derive in few

a moves are age and that due us though shows bidding, to So at average customer carrier load our eight typical even both closer changing. cycles actually versus is annual that to months annual, research six networks and the to

that So in of these in this been book contractual as we previously opportunity also the one much haven't has we provider. get to opportunity existing get bids, we of the price business a opportunity our to the business question When a reprice participate difficult how to answer. repriced is to had

lanes see past have we win and we that lanes when previously some So may lose previously in have where a had rebalancing period these some didn't we we we in a that billions as we tens contractual market typically that bids, dollars see see assign of annual bid Overall, provider. of opportunity an on freight basis prefer to this we of shippers would as the available on contractual. to the

either look at decision our and provider, and the environment a where As we contractual John our us said overall of and earlier, make market macro work market data processes leveraging to a route our the analytics is believe we going spot environment. shippers then pricing to that represent pricing where or on leverage to committed or or backup marketplace. us the more And as in in go

Robert Houghton

seen Bank Lynch environment, competitors competitive current about with of is Thanks, tech the Ken America also have marketplace Stanley. conditions? Hoexter Bob. from environment. asked in The of the and Andy, you competitive Shanker on Morgan next of the Ravi more given less comes entrants question Merrill or market

Andrew C. Clarke

answer really. not Yeah, the short is

really of, take the terms this to broaden little of been than a we'd technology, last that have in terms a day maybe that's out tech great our I every go-to-market isn't like competitors opportunity technology any of our And different our we more thousands years. money several of there on of in invest in our business. all for the guess based XXXX So technology. process, our been We out and and parts face in our lot to pure entrants, news we team. a But has people,

three with customers investors, about we to sure of when those as make just we well that, both think us talk in all we marketplace. that differentiates as so of as a our the internally really our And it's want that as combination well

Bob, much If you the as and to into we you of then at it a as into and that's don't just the into that think XXXX, fourth tech just end a advantage marketplace think market if did when purely quarter the as now dislocated came a and the the play, third quarter we it's about John, begin talking edge continuing talking or and competitive and competitive to it more our want believe to – day, every customers. technology all and that our there And to I, our we going managers, just you're when customers that business bringing they're looking are our do leaders, for account out them. But They we're technology. than technology.

answers, to able and people to that but remarks freight, them mentioned be able be your technology, with got it in cover complex chains, global John you've very to as as well with and in you your processes. do got you you've the help do supply also Bob their their and to manage As

Robert Houghton

making about this analysts number expect would for you what Forwarding. and Andy. are Thanks, A The question to point margin in next see Can describe is you of investments the at you Global Bob. in business, asked improvement? operating margin

Robert C. Biesterfeld, Jr.

Thanks, Bob.

to or excluding our are acquisition amortization. the XXXX, our leaders close expectations since to in acquisition industry So Phoenix in of operating that be we've margin XX%, International stated range of and the exceeding

about in So the our catch Global growth, couple growth our case of look area at We over the our last specifically If work expenses. several in But we've quarters, a we back and in air freight in head top we good feel forward line this drive on got past and air to quarters, as other to over of facilities the still realistic really count we freight. revenue realize Forwarding we've growth as time. our the invested do some to target well investment services. in believe is up

revenue ahead transitioning also added from (XX:XX) of to acquisition, will also that we forward. moving acquisition. Milgram related agent So some generate in business Asia Those heads the

to quarter, transactions and those. As realize we capture around made years, focused productivity Late recognizing we're processes that quarters. we managing on first to will we trailing do past still measurable employee our we've some the a through to synergies made acquisitions to in acquisitions, Global some have in changes we Forwarding few compared that these global have over anticipate some difference our the

not as expect our normal margins So XXXX more operating quarter, improve margins our to level and do to operating pleased return we're this progresses. to certainly with a but we

Robert Houghton

NAST? for about it Forwarding is lower the have makes next question what business is fundamentally The Bob. a margin Several different John. Global asked, that than analysts business Thanks,

John P. Wiehoff

for those And gross compare a diversification, There so majority to that to in assessment a public providers traded, confessed Surface that what complex more completed businesses. Over than that much and North corridors make box being that over to our Robinson XX diligence our air point scale require are scale. or years, XX-some you profitable with us weren't you single I've you due on more and of we've opportunity a acquisition unique and going contract of who successful kind Throughout X.X and a actually transactions, reached that guess in couple tipping North the have shortly sure transactionally the build it. number air we the density certain and really after know the Global have level and benchmarks of I you certain opportunity the years our had right X do Phoenix It's around Phoenix So you higher-margin couple freight. story of of same time years a of time, they of how investment. or or that scale truckload. we how America ocean go industry Both some publicly Forwarding more percentage followed business level, that than reasonably we've for truckload. goals isn't our decades, corridors. years our of the higher other the Global terms including limited and At dozen are the into we of standpoint, opportunities of started in our couple confident our contrast Forwarding weren't of They're until become margin years, ago the in have the where of XX they a margins, a ocean different to emerging how last American and before that are the NAST Transportation. than is from our investment

and five As what Forwarding the XX% can the margins, invest articulated, and last our But XXs. results, and certain income our in you an mature Global businesses we NAST restated we've operating goal, and because revenue or at standpoint, When XX% which than has of the six from growth some exclude amortization, low Bob of look operating have that we acquired operating the lower learn years. target building business, net been is but the freight we of has our Surface you than in experience can network. tell this quarter's air been and continue it North at by our be that's level, out to Trans, gross corridors American maturity higher margin actually

have a a at structures you lot different more business is border two have also Managed because double-digit, brings businesses. with in mature things, you have the emerging you costs different Services Europe Forwarding, least it. just in a cost-intensive where overhead associated clearances businesses maturing We countries, that compliance number competitive more countries with and and low we're every requirements, in single-digits businesses in transaction, local high Global are more and those have and some around double-digits statutory or where global it compliance of you more In a cost have

healthy benchmark an on growth we Surface the that's we of and us. that those aggressive feel our So, value all returns Forwarding North around, look the business and like comparable when And to combine Global you in other for Transportation capital we in are and transacting fairly opportunities America units creation feel that, confident for target that we're the when in.

Robert Houghton

analysts in contribution have the integration to Milgram Termone acquisition. a of its Andy, Bobby How agent of and UBS. long how convert much about how asked the is with take had it few expected? progressing out you Wadewitz played and as terms business? has BMO it with does it investment the Milgram. Also, Talk and Milgram John. (XX:XX) Tom about Thanks,

Andrew C. Clarke

now go-to-market customers. both and to going dovetail important with the Bob's strategy we and acquisition, when our these with are and steps Phoenix the I'm our expansion, Milgram, Yeah, APC, comments. in in our And continued with John our started all global

about at that we've all To of agent had converted really Milgram, exceedingly been end of first them. So, we dive right the the of pleased with into XX% business. quarter,

billion is Milgram across good its customers about gross starting year go of that really we last a expect we with we're really to of some are the its I think If the the terms in the start So fourth last think $X second hit entire have in we of that we And in team our of to great ended and us is that. having of progress helping globe. acquisition feel year, of got Bob XXX% is that really end the serve making. making the Global it. And Canada just quarter investments an its global Forwarding we at to the part completed and revenue, converted grow team quarter important team the stride, back, the both mentioned we've Asia over of ability of presence by there.

Robert Houghton

increased Ossenbeck quarters to Thanks, the the some to accelerating response asked Andy. productivity this on relative Brian to employee the or Is reason? transformation. KeyBanc Bob, our competition elaborate comments in about around and with marketplace or digital for transformation. with other Todd recent please Fowler digital JPMorgan improve in

Robert C. Biesterfeld, Jr.

to of and to XPLs applications the mobile the web enhancing internal of this be while transformation first carriers we really fact to we We've automated. focused if that path being the and both one been on years, more on were customers really also processes for think with the digital communicate back to leverage

would about journey, from our I think thinking of of journeys, transformation really get work and employee our an thinking in this what context, journey, current concept journey as the cycle, the customer they of and terms the well terms done. about In carrier order-to-cash about is as how digital

where and while remove can with friction we we're to as journeys the possible, carriers So, how want much meeting on us. focused as how and reduce customers interact they still from these and

really so customers all the in all of and carriers many manner workflows processes. in and at costs, how using we're personal isn't decision by for interaction analytics relied and about we enable So, building where stakeholders but manual and human And can improves a increases historically quality. on science replacing looking appreciate, that better areas that advanced this our trade reduces support we've efficiency,

more the leading-edge of work our just processes. how great reengineering about enhancing mobile our isn't the really the about next app. we done and this get So, in technology It's work people context of

Robert Houghton

Thanks. normalize The Ben first Hartford Fresh Robinson Bob. asked is Baird quarter next margins the W. do for you also quickly after and expect question R. margin how EBIT to pressure? loss customer with

Robert C. Biesterfeld, Jr.

of business in and repriced the Robinson the transportation implemented quarter. of quarter will be the was second Fresh course first throughout Much the

tend customer that's tend they and to between expect Fresh have broader We when to contractual base, transportation, NAST much margins; the more more Robinson impact this EBIT have important point that to towards transportation of to heavily and to a compared and business. I concentrated differences it's positive relationships however, NAST to think out the one lean

So, costs rate headwind and the expected to purchase transportation, given rising environment coming and continuing Fresh serve will as this Robinson increase in in a quarters. a

have we cost of QX Robinson year. in down in the on revenue variable a second that As Fresh. that of overall, QX. between net a to year during than impact stated savings the this will less specific release, loss Robinson the for pretty around also customer expenses our lapse X% facilities, will the And total cost the call, stringent the will Fresh we on controls mention exited And, we and half within some couple Related implemented drive have business. which we've

Robert Houghton

Hoexter Bob, question Lynch. Thanks. transportation? services? offering leading Are America for growth from What is Merrill One Ken you of with LTL more within Bank new

Robert C. Biesterfeld, Jr.

has the been to shipping. enough whether build of LTL we've micro of to story once to the integration, from we legacy of customers business, smallest Freightquote well that really shipping a leading we've that probably that And, really on easy our Freightquote process in that as an about. the since business the industry customers acquired the or full time, needs LTL Robinson LTL In efficient focus micro America. a LTL we technology frankly, talk customers, most shipper of great as their it for segment don't to in and order to that North Through companies. platform spectrum meets with the access the gain strengths more and combined And one customer legacy business, manage small large companies. made Robinson, that that ships for per quarter complex global global XXXX,

spans So, continuum. service service the size spans our and within our also customer the and mix LTL mix segments

ability a compelling consolidation in to that controlled as really as as temperature So own highly automated continues for that business. differentiator well highly for common our parcel, service, LTL, us and we be think and nice blend network efficient our really It's to well LTL business a as carrier Robinson.

Robert Houghton

Thanks Bob.

were drivers quarter? Andy, the expansion point the from question primary XX-basis operating Services, Schneeberger Oppenheimer. Next in margin of is in the with Managed Scott what

Andrew C. Clarke

Managed important great which are TMC go-to-market and done and of are strategy they've brands our our a business, with Yeah, our an the job part customers. Freightview, Services

$X under freight Bob it's a to mentioned, quarter. billion As nearly and the based grew they first in management their business, SaaS

contracts manner you're in in, performing in you annual bring once revenue Because to bring able and able it's their well. operate efficient because they're pretty revenue they're that place, of they business to grow put on So processes a more really with of customers efficiently. that recurring longer-term them

So, both of of those teams, bringing very TMC and job have manner. a in a customers Freightview cost-effective great done in

Robert Houghton

count our Baird. Fresh Forwarding, Thanks, from is XXXX? Global for of Andy. Hartford your W. for balance head Ben last NAST, Bob, Robinson and across And question are of expectations the what R.

Robert C. Biesterfeld, Jr.

Forwarding on that XXXX. be year. be call or Within the we count as NAST the out to compared and other balance acquisition anticipate decline will balance throughout head to Milgram count we that a anticipate of look XXXX do up flatten of year Fresh on forward it continuing to show throughout stated for count flat I Fresh, sequentially, down head head we that this year-over- to be the think basis we the for but year-end inflated look Robinson I So, Global XXXX. due will investments, to Robinson

Robert Houghton

at Bob. of Thanks, available portion of today's at Q&A section Investor the today. concludes time XX:XX approximately the of in will our replay call. a.m. call That be the Eastern earnings chrobinson.com Relations A website

again have you can in by Thank for good email. questions, I reached first day. a additional conference our you Have quarter participating If call. or XXXX be phone

Operator

for your thank participation. gentlemen, and Ladies you

C.H. Robinson Worldwide (CHRW) 2 May 182018 Q1 Earnings call transcript