CHRW - Earnings call transcript Q2 2019 | C.H. Robinson Worldwide, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Second Quarter 2019 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. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, July 31, 2019.

to of conference Investor like Houghton, to now President Vice Relations. would turn over the Bob I

Bob Houghton

website Thank section you, Officer; their that Donna, Officer. our call in Corporate today XXXX and found and remarks Bob good of morning, be Controller Investor at results. provide the Biesterfeld, can everyone. and Bob second Scott chrobinson.com. be Chief commentary Chief quarter accompany Executive Interim and our will Hagen, will Scott Relations Financial On on our slides Presentation

We to received will the pre-submitted after our that with follow responses questions earnings we release yesterday.

contain we results be to statements. a like to to today's in quarter, actual this with factors Slide to the expectations. question-and-answer marks the our remind devote you Starting could X portion call forward-looking of cause list will our may presentation differ shortening that I'd prepared that management's our session. from larger today remarks

the to I that, over Bob. call with will And turn

Bob Biesterfeld

second everyone. Thanks, call. Bob, morning, good and joining Thanks quarter earnings our for

the where net achieved For to share. period, fifth XX%. X% delivered We margin and the increased consecutive an X.X% growth our versus per expansion second increase net of revenues year-ago operating revenue earnings we quarter quarter,

in generated NAST expansion Surface the American revenue businesses. operating Robinson Our North quarter, delivered X% Fresh in net we Transportation and business and our growth margin both

increased than we cash no cash American in are $XXX Within business, of that the a and today with there's acquisition start, which combined a year we Global capital, also In the us Group returns operations make Cargo Services. softer in our expanded Transportation earnings, Forwarding, to improvements shareholders. allowed the continue a ago. integration and increased to nearly from we North strong million business working were generate Europe Space off to to And question market of with is in the our we our Surface Dema flow

levels. the air the market market by below levels exit pricing of suggest through volume to volume industry-wide capacity experiencing weakening and elevated Forwarding orders and Global declines increased marketplace. is the spot starting carrier and bankruptcies activity. from transactional ocean ahead truckload is year-ago pull-forward are Declining capacity, Driven new resulting Concurrently, tariff additional markedly that as volumes shippers inventory peaked demand work truck and has and

with in were However, backdrop, second this a there number a volume as of highlights quarter. our

Our truckload volumes and pace. per single-digit during at day sequentially increased low increased a LTL contractual volume business the quarter. Truckload

indices, growth ocean Our continue in declined truckload where such tariff in in industry region double-digit volumes amidst from and digits LTL Freight our uncertainty. Asia volumes volumes mid-single included as Southeast And this scale Cass quarter. second outpaced Index, benefit we the as the to

results, With hard work globe. like I'd these recognize the our people the of to across

commitment customers to carriers to continued deliver instrumental success ensure continued success. world-class is and Your and of our to service the our

I'll introductory those over it Scott our turn with to So to review comments, financial statements.

Scott Hagen

and quarter. Slide everyone. Bob, for our morning X shows you, good Thank results financial the

truckload service Our net our total second transportation the by by line. pricing revenues company most decreased X.X% services. Total quarter, lower margin improvements led in driven primarily revenues X.X% across increased quarter in

in in quarter per revenues up X% up May Second were monthly net X% day business and in June. X% April,

share income $X.XX last margin points from year. X% up in Operating basis versus operating up year. was X.X% quarter, the earnings XX last second Total improved Diluted was prior the per year. over $X.XX

items. statement covers X Slide some other income

last effective down from XX.X% quarter was rate year. second The tax XX.X%,

and tax expect effective continue full our XX% be year rate We between to to XX%.

revaluations. key U.S. several expense last dollar impact a million interest overall from quarter, year. our up $X.X strengthened from of second and Interest debt $X.X currencies other a million quarter, favorable currency $X.X balance. of resulting Our totaled against driven by the our in expense reduction declined this million, in quarter in The

share offset repurchases as diluted The by activities our the compensation impact of the share was were count in plans. in partially quarter down equity X.X%

totaled We cash drove Cash combination generation. X. quarter Slide operations an of performance flow increased from working million strong had cash year. versus to capital and an in of $XXX XX% improved the flow the earnings nearly A increase improvement. Turning last another second quarter,

Capital quarter. $XX.X totaled expenditures million the for

We expect the million for between capital accelerate expenditures of our the primarily to of increased spending back the in dedicated $XX year, spending capital to the continue to be million with to and we technology. full-year, rate $XX half expect and

in repurchases million the increase $XXX and in in We XX% to We on combination versus $XXX period. of also through a remain the spending year-ago dividends, share nearly returned XXXX. total track shareholders for technology quarter million a

sixth results Our growth operations. our from flow cash second in quarter double-digit represent consecutive of quarter

fund strong cash in shareholders, an Our investments in acquisition, pay the down quarter. us to technology returns increase increase our to and second cash generation debt enabled

value we Moving evaluate how our deploy capital create our for generate forward, carriers, returns ways will to customers, best for in our shareholders. and that employees

X. lower XXXX Slide by XX.X% capital driven the in versus revenues Working decrease Now resulting receivable. to and gross on accounts decreased year-end, sheet on the balance

Our comments debt quarter. with balance X.X% interest was at our look a I this was the trends. weighted morning our approximately rate wrap billion, will current average quarter-end the at in $X.XX up my

volume. Our day net America share is business of to consistent revenues practice in comparisons per truckload North

X%. has NAST XXXX, total day far truckload approximately July per So volume revenue net has approximately decreased in business decreased and the X% company

in total XX% it And morning. turn revenue XX% Bob business I on will August day additional July, to listening increased in company per XXXX, In this over to context appreciate performance. We now September. our and segment net provide you in XX%

Bob Biesterfeld

of the shows segment the second price and market. rate Slide performance of I'll truckload NAST Thank in X business highlighting current our cost in truckload our you, declines accelerated Scott. begin that on my America remarks quarter. state the North operating by

declined per carriers net per Price declined to XX.X% of paid XX.X%. mile our customers our billed to contract fuel mile cost cost while

mix during to towards shift the market continued quarter. contractual versus contractual spot of Our more business freight

improvement in in declines cycle, rapid in quarter. change net both the As in truckload in the change revenue is margin in cost the point in and this resulted typical pricing at freight customer

market with in market contractual pricing we're declines double-digit the declines in Consistent and seeing trends, spot market. lesser

routing market Managed reflection roughly representing reflect year X.X current a to that Services guide lowest Average billion is for the guides. cost pricing to top markedly near the the metrics routing shifted softening XXXX, management. we've strategies guide routing depth was measure on guide quarter, price most this both shipper's our average, the shown decade. guide depth in it's we're $X slide. of represents truckload route our under our the and of that routing and conditions tender cases. among first executing per in in And which business, was that freight from customers' use we the carrier depth the In One demand ensure a reduction This have environment and in levels the is in to the from last experienced shipment of

North XX American Slide our Surface to in Transportation business. Turning

by net driven X.X% in primarily revenues NAST quarter increased Second growth truckload.

changes Truckload Our Freight net driven increased volumes outpaced Index revenues Cass by quarter the second margin in X.X% second quarter, expansion. consecutive year-over-year the quarter. in for the

period. XX% contractual of quarter in XX-XX towards a shift Our volume the and volume in mix mix versus resulted transactional year-ago an XX% the in approximate contractual

modest repricing Our price second customers. reflect activity to including the include quarter conditions, large market of several impact awards declines with results in contractual current

contractual XX% decreased volume slightly This an loads quarter versus NAST reduction associated being includes our up with as volumes last despite truckload in was negative shipments impact X.X% Second volume in decline industry year. done. volume quarter profitable approximate the the of

result, as Our doing our a teams is excellent contractual account in volume are at which And with job carrier our awards management customers. leading pace. contractual a increased and our single-digit increased an customers, serving low to truckload

spot our double-digit volumes trends, market market at a rate. with Consistent declined

year's a reduction largest increasingly network, further fleet of freight While enable we're successful on evidence Robinson to towards new North of market the of the overall such freight in this, relying carriers seeing continue the in network increase add In as capacity, motor second last business them We owners. which America. of we the second across continue largest roughly carriers truckload in quarter. as quarter, gravitate over to X% to expansion customers carriers sector slowing new are a America. carriers and truckload added to available environment X,XXX be Robinson XPL our driving have in a is North Carriers to we

truckload increased XX.X% pricing renewed volume service declined awards drove and line, revenues businesses. truckload. growth the LTL by growth net our precision-scheduled in industry customers. in in Intermodal new revenues and and of existing decreased to XX.X% to added in led temperature-controlled as railroading accelerated a an consolidation the intermodal our net customers reductions decline a related X.X% we with to volume intermodal X.X%, from second LTL In quarter shift lane as quarter. volumes combination

operating Slide income XX performance. NAST outlines our

of XXX auto expense claim. quarter. growth net quarter included operating while variable margin Second results driven quarter operating reduced income $X by second liability combination of basis in improved points, increased contingent million a and a compensation XX.X% NAST the also X.X% revenue

Our with year-over-year operating investments quarters NAST five refinement to operating consecutive in our of margin in generate along model, expansion business. have technology, helped in the our us

digital of truckload and fully including of higher Our in increasing, order business. levels shipments tenders levels our are automated automation

benefits network employees. efficiency and efforts for process are transformation digital Our our driving customers to are providing our more of carriers and

flat expect to headcount continue for slightly NAST be full We to year. our down to the

integration is brokerage and The provider a our convert forwarding, acquisition in results network. logistics of going talented about Space the Cargo Global of highlights Forwarding, we from of team XX well on to performance remain the opportunity well, other business in the quarter as the Spain services and freight our leading includes a and both Slide customs as Robinson now which full to Group, we our Colombia. international excited brought agent

quarter. X.X% Second our were line, percentage points net X.X% quarter decreased of Cargo net points In ocean growth. Global volumes the Space down Ocean were Space contributed revenue Forwarding contributing revenue revenues of in net net up in service quarter. the percentage Cargo revenues X% three two with growth.

growth be tariff continued quarter decreased lower revenues both inventory ahead driven in by resulting net and contributed percentage to XX.X%, air negatively activity. Cargo this of elevated six quarter of impacted pull points shipments. volume revenue shippers air as decline Results in Second forward X.X% from ocean Space a to worked levels net and air. pricing through

Demand less of of much inventory the elevated the weakened remained for the for throughout demand quarter. air inherently there's as nature some in levels shipments air quarter as expedited

quarter, net in We driven second are, levels normalize seeing increased third revenue by Customs mix. to XX% the improved inventory however, quarter. into start the

chains. their impacts and We've percentage X% the with tariff plan Space point the activity quantify one of implication and remained of to declined to shippers the continue supply help them Cargo understand optimal across changing redesign help customers our them potential engaged chain. engineer in to the this actively globe growth. and Customs tariff the landscape Global to the quarter. contributed to supply for transactions

grew volumes continue ahead We well both total our and to for strong second air. Southeast in Asia, net presence quarter benefit and growth line ocean from of where our revenues service

Given we portfolio our our complexities the navigate to services, help presence, supply broad positioned global believe of we're customers of well chains. executing and global our expertise our very

XX Global Slide operating outlines performance. our income Forwarding

margin net revenues. points lower Second year, to Operating quarter Cargo growth decreased decreased Space Average operating quarter in X.X headcount of XXX the income in driven the percentage headcount. versus with last XX.X%. by contributing X.X% points basis primarily XX.X% increased

our While market, are we control. forwarding of we new winning record do operating see areas can that the headcount well we're growth expenses. short-term and We're challenges business, managing doing in our in levels freight the and teams

significant drive Forwarding business. and opportunities geographic we see forward, our reach Global continue to in scale Moving to

and that deliver global operating performance. the cost And we'll We growth that we operating that margin exceeds over combination expect volume growth long through our in margin drive headcount confident remain operating to a of efficiency. industry-leading term, investments expansion deliver technology

and Slide segment All Moving on Other Corporate XX. to our

Managed unallocated and As a reminder, other of revenues North miscellaneous and Fresh, outside expenses. America, Transportation Robinson Services Surface other all includes corporate

Robinson revenues quarter exit were XXX margin volumes due Robinson to basis to generated X% from in expansion Fresh year. points businesses. X.X% strategic last quarter. Fresh Second net the declined decisions Case of operating down unprofitable

revenues were Managed Second grew freight and quarter flat mid-single Services net under digits. management

quarter. third net Services the business we business, pipeline Managed revenue X of the revenue with expect Surface in revenues Dema to percentage net We new growth. and return of have in about quarter opportunities our Other strong growth in to increased Services points of X.X% adding acquisition Transportation the a net

value and our our significantly highly operating the environment. XX, wrap we successfully up employees what Slide for cash while environment LTL increased flow remarks prepared our We margin net These their is operations the in revenue a going to shareholders. testament on to solid in global quarter. from and truckload results cash our current our with final posted in and are service returns customers market a expanded quarter a few to our delivered and in We share gains ability create So lines comments. to and freight financial cyclical both margin freight I'm the results in

network our carriers people Our focused the for platform. on customers and remain accelerating of commerce that engage

in and and And at/or XXXX, below the believe be starting a reduction We American quarters while In fears trucking the moderating. XXXX per balance softer capacity. and truckload, environment this exit we rapid are is at concerns in to weakening persist North run-up before market, shipper revenue year. cost are are there's prices do In of environment, during our expect resetting the net pricing capacity to could few the now are of Tariff shipment lower XXXX to response costs recession levels. freight data routing demand. after meaningful and for suggests resulting the dollars following any guides it

remain focus of However, regardless our freight the areas unchanged. environment,

As market share expand expect we've to forward. market each our share this we're and before, market service taking committed Over taken of lines, said I've continue to moving in largest time, share. we to

quality us Second, that finally, expect process we'll and continue the our while to to automate to and remain our committed industry-leading help carriers our delivering this expansion. service margin And serve in objective. our our will achieve to sell to processes, we customers And us. business cost investments our and automation reducing from technology operating and cost reengineer

supply for will employees and for platform, To by achieve our on generate opportunities continue we'll and your I committed through industry-leading and to our unique career that people, over continue solutions confident that to the for success also provide chain goals. remain you companies conduct ability our continue through technology. shareholders. fueled we process business through and to help returns will strong to create XXX,XXX capabilities deliver our you confident our global value our rewarding am be our I that to our

prepared turn answer the can comments. with back submitted that, And concludes That to the I'll questions. our we so it operator,

Operator

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

Bob Houghton

Donna. you, Thank

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

today's For up then over will question for or Q&A to the session, a turn and Bob Scott I frame response. it

to comes September? question Dave July? in Are Wadewitz Atkins the second questions. UBS. factors cause from are what Vernon Jack performance and quarter similar Stephens from driving Tom significant first to for X% net fall-off What down and X.X% from primary with Our the asked factors Bernstein be than year-over-year expect that up the from could in you'd there in July meaningfully worse August revenue

Bob Biesterfeld

throughout thanks Good our below to saw a load back morning, quarter revenue the for during pretty XX look we at quarter revenue Results reached the we bit week per per week until XX-year net trailing significant we historical Tom, question. decelerated dropoff X% sequentially Jack If second an our dollars around in and from week-to-week. XX, Dave, as net a in our equilibrium XX. of truckload week average decreased

week order of what per during net pressure that we’re key seen based the like reprice By at feel experienced on volume any the win to repricing ever current contractual time. maintain take we’ve our market really metric in revenue and we’re last on we in marketplace July, of the load in where load business than do anticipate revenue continued rates, we’ve this is net on in higher but needing slight per So seeing at uptick we to our business and market. rate

bids saw that margins process that second what in So are positive coming at third coming quarter. But a than we are see in awards last and on the our as year. real these we the through lower

contractual net going per to revenue these really with when factors last. are market balance load comparing the the put seeking to year spot half to lack of this on and customers continue mid-cycle second coupled this, pressure through the So freight, relief price of of

year So it’s EPS is need path meaningful volume to the this to clear going to second driven in be that growth our by really half of truckload growth.

point or at September truckload. not I’m last QX while did results through relative predict the sequentially year for slow July, going August our to growth this in And to rate attempt

isn’t favorable So team third the to by progresses. as really alone. somewhat comps our comps success be in the quarter get do our more NAST But going in The quarter the we’re if nothing represent scrappy the X% of in very player aggressive largest and while XPL truckload overall less than also the and else, still market, is, aware marketplace. we that the driven

call that think I out it’s all designed our important to really And growth. systems incentive are around

And to the in see team half. right going so on driving focused now pretty you’re in really growth a motivated the marketplace second

Bob Houghton

Atkins declined Jack is out Stephens. of The quarters. next question asked has the similar Todd volume Thanks, Fowler Bob. six Truckload a last with question. in from with seven KeyBanc

what spot clear cost volume very to significant trends market your soft, it’s advantage? preventing given return are is growth, While the

Bob Biesterfeld

there six lying volume said if this answer question. in really I our be for that past goal isn’t right. So down seven And an the have of quarters, easy I’d to was be

If When story. up. revenue about. several you on been could our quarterly what a we years. kind look the revenue basis typically and is net revenue When leading several is net cyclical truckload in load the There’s down. that sorts a short, years, of back see between per net you largely the is for over last truckload lagging at load all past per shipment But cycle the volume per relationship volume down, it’s indicators same volume of typically really up, to talk this is is growth and

maximizing we’ve expansion volume that Robinson, that of been NAST. total focused revenue margin history and you’ve net with growth this come seen And the tradeoff between on contraction. across largely Over has or

change NAST our structure data pricing to this in strategy our reengineer and forums lot to where our share to talked work in technology different goal the our need we’re is we’re to at a our further growing get to And centralize taking our support of like out of about in and we processes, cost in take further trajectory. science model, to evolving of volume and and to and things point really regardless As I’ve along a get where our ways, leveraging cycle.

So that we’ve the all we’re really isn’t that the story proud delivered and really of negative. results

year great these we same the many companies. We’re in not for that freights had for outpacing companies But are guides contractual were in awards are these last winning of huge routing freight last from the we making loss awards some up cases, that contractual in spot year. that when far failing space the executed awards our

So we’re down. trending customers of volumes those seeing largest for some

be results in we act consistent in do to think order So patterns. through need and differently network us order to in we our break know forcing more to that differently within this, to some these of cyclical our

Bob Houghton

is generally? Bob. The on What capacity? capacity next analysts. several question a industry truckload carriers you in see Thanks, or your comes from take reduction Do

Bob Biesterfeld

carriers obviously we’ve So carrier to there’s the lot of marketplace announced same that everyone the bankruptcies from And closings seen seen. there kind marketplace around and in we and sentiment exits compared publicly year. work else last talking the to that of the has certainly a with, a negative

with we’d of they the the see on entered. a the carriers can capacity capacity. these years at of increase the the smaller and around focus entered cancellations we and of exit Class couple market pace as start orders, saw and in dynamics, in leaves to to general declines you You that last tea rate orders similar Based of X rapidly to of on that expect fairly many changing probably just couple contraction sentiment profitability, carrier are that going that

they business, look that by, last small much those to But year. sign-ups you new entering the perhaps think, moving. alternatives Robinson were look equipment but at not increase to seeing X% increase towards that their bit to compared surprised if the contribute we I carriers to keep gravitating quarter for other little carriers and our so market really a candidly, So this we new in as carriers see

obviously in we pretty markets on in when pressure cases, many indicate contraction rates up, good see this future. the capacity. past So spot dry see start would a the these cycles And downward of this predictor past and we’ll is to the that

Bob Houghton

competition, this Thanks, especially heard Bob. true it normal Chan the with given To from for Stifel. you? Bruce are what we of is in on The increasing contractual question abnormal, extent business. And or is price freight is where reports next cycle? We’ve

Bob Biesterfeld

In routing from you’re the really a as part this a the first in of I’d marketplace, you’re guide, cycle. normal contractual not freight this last. standpoint, if qualify

I’d now. is truckload this freight so market, terms moving that XX% And right under all in estimate around contractual somewhere of

As prepared you’re of our in depth a the only with we’ve which we or fall to tenders contractual market carriers actually to in remarks X%, decade, see said going to secondary guide about XX% lowest in is spot. routing of seen the X.X, last maybe the the probably

balance, spot guide, that the first given isn’t guide which opportunity just to lead market, the that in a much pressure lot around So the routing the towards of continues in fuels really lead to competition price. which routing obviously leading heavy being

Bob Houghton

Thanks, from conventional Bob. several in the next analysts. from C.H. question is seeing players broader tech-focused the coming brokers competitive and impact a Is pressures the Robinson The greater are Or from market? market?

Bob Biesterfeld

spans from U.S., as many think we others. landscape on some carriers, the IMCs and face the I amongst cases, that the the freight brokers registered in forwarders, the asset-based call, XX,XXX knows in the other competitive of everyone

to industry. one because this focused today, Our our not And to how just on the our really competition we the impacted And frankly, constant create how we in value. focused we’re always it’s by past, customers not on any a market keep the us prefer of been serve competitor. and carriers fragmented as Competition has is like any and we type attention in much time disproportionately competitive.

on amongst ignoring the So trends focus saying we’re we’re our we keeping or that things technology, it’s can really great not but of control. utilization competition the just the emerging

Bob Houghton

contract shippers your your reducing or on downward the comes sell Bob. Bernstein. Vernon Thanks, putting next market? otherwise The due allocations your Dave with spot to question rates from pressure Are weak

Bob Biesterfeld

we lot have of of competition that or Robinson, term questions us concessions back such some in for rates to our is greater and come confirm these add that think volumes. I that’s kind pressure downward either carriers, tone on concessions shippers unique So the rate maintain broad incumbent incumbent seen but outside there bidding to of a a for would rates. asking statement. through as don’t marketplace more normal cycles for order I

in thing far following One process, spot and – interesting routing that shippers rates below instead commitments see does of spot normal to carrier that last little if shippers some get spot to decline guide it’s were a rejects the where guide, last freight that the that have going versus more we’ve doesn’t to routing in which counter so it that we spot contractual to started year. tender a market secondary is the impact of being first that fulfilled. volumes. we’re what rates to really go in second a more markets lanes, of that’s compare to seeing with seen falling the level there’s over we’ve think to quarter might so But the market directly market position, carrier again, tender, the many One

Bob Houghton

any in far Ossenbeck shown so Will Have Brian for next this brokers from both guide? and to preference JPMorgan. XXXX? shippers with is routing carriers up asset-based move Thanks, brokers as in the Bob. question The or attempt carriers change

Bob Biesterfeld

Brian. morning, Good

contract seen quarter of haven’t to quarters. few back last I’d past the go year, the go We for renewals. indication any And fourth in our back even

providers way upon based their metrics that of in any than smart or the their experience, favor are brokerage decisions shippers so towards past a We meaningful contract any our their cycles. haven’t seen indication of of experience favoring acceptance commitment, In to service, asset on individual assets based rate, any more provider shippers quality, upon and with either the evaluate key compared position. section performance customer make providers or whatever capacity ownership tender disfavoring showing

Bob Houghton

and to Bank this better ask, X% than Fadi meaningfully Tom We’ll performance Thanks, Wadewitz Scott. or revenue NAST of decline in Montreal give the July? with is net question with Bob. Chamoun UBS next overall worse

Scott Hagen

is have driven NAST net while the year net revenue declining seen by change per slightly July, prior show Global day in the the a also of very comparisons July. in minus strong overall margins we but to driver to in Forwarding by growth revenue primary X% up

Bob Houghton

Goldman Jordan an currently? impact Thanks, next similar renewals expectations margin Sachs Fowler contract a truckload provide going question. what contract question Where And pricing. Scott. is have Todd The on with forward? KeyBanc. from on from update renewals Alliger gross Please recent will are asked

Bob Biesterfeld

I’ve quarter in seeing in kind we’re the truckload pricing we’re as inflecting to, contract alluded second year into last third market. quarter the negative and contract compared So of that bidding the to

are were where times at, where a terms of winning at quarter win opportunities quarter in In in twice contractual percentage we in positive in note, bids of that terms X.X fourth of the on and our rates second the on were first that where at renewals we’re of were we quarter.

So winning we to. are of visibility we that a get larger freight the share

bid frankly of side the other as that being freight first during not that as in The second coin though quarter. just is there’s much quarter we see fourth and quarter

the to And drive in our is for really to first customers. that routing going contractual business. guide lower revenue net targeting per we’re in a that our be said in prepared we as remarks, So load typically

Bob Houghton

areas with inflection question. Brian Robinson gradual efficiencies? Thanks, from expectation Or over point is Todd Ossenbeck is comes Bob. main that more an How also there similar The leverage? an are JPMorgan operating hit an period? Robinson will will for Fowler. C.H. next And of improve at targeting a the a question some What extended implementation point? asked is efficiencies it

Bob Biesterfeld

All right.

we’re can to question have But around the just I’ll a touch a want drive at to the course, there’s efficiency flip the increasing to the areas. which the ultimately key go chain. to And question focus for value supply for focus how really friction on, and improving reducing of creating operating little try on more improved and same across focus leverage. So time, time this. Todd, improving and But all this that the going probably doing internal few efficiency internally, the we efficiencies on rest I that, parties and we what’s take around bit, on by and lot us a of is is off

lot to I’ll but of few areas them. of that a we’ve got a focus, speak there’s So

around is first pricing. The

really greater to to cetera. more automate And and guides, our pricing et so faster years response accurate time, we’ve for spent bidding, the for which routing last carriers, allows compliance working customers our few

And quality efficiency is investment around so that’s pricing. a and real area around and of improvement focus of

that the of networks small of than have know carriers. press digital is We freight gets right a freight our around small and executed these The second by area less larger idea carriers the carriers. About miles XX% efficient majority some carriers our of and do lot are around tend freight to now that is empty higher And matching. carriers. of matching the

order efficient and provide in for in helping well. eliminates and a to for them data hopefully better more takes deadhead platform moving and businesses. work By it them run as reducing negotiations investing science to – need matches an matching, makes So easier company lot also their towards us with and better digital the more we’re to a miles yields

we’ve automated And book the fully quite gravitating now. tours are seeking more option. towards carriers And benefit online our had that some and booking time and for to of more that ability out and

and both inventory in is area I’d at motion around visibility, rest. third talk inventory the The in-transit about

our with So widely of the mobile mobile feel great feel a We apps. carriers. used about stickiness we our apps we most and of the factor really with strong uptake one have

the real-time integration people, on focus other ELD which so a we’re do really We revenue-generating activities. become then takes allows that them visibility of our able And interactions third customers, has also off with and feel our work without of bunch time more that providers provide that desks to to today. human their our stakes allow of to parties us good to about table which

of businesses have to may small The and other not is they given access markets their to providing that would our large scale. serving to shippers I on area infrequent their that small around own, base these access speak or

in a last quarters, we testing in for So been product new to of beta second brought we’ve couple quarter, the product. And full. this the life

of credit based LTL rate and their guaranteed an needs. we their any launch So to time, go any of truckload move their a based C.H. shipment online, Robinson capacity a product product excited literally carrier, pick this our swipe really and on get customers or enables to learnings card to acquisition Freightquote built which our the quarter, from by this on Freightquote our formally at be

the have that experience important these we've The is today, a and us small customers, businesses user so interact those customers. it's about serving been we largely And positive. infrequent-type shippers. rough feedback really is that that we've has as XX,XXX that's simple superfast, why economy And got feedback is with gotten the

moving that experience, serve we so And help experience. by see to cost real a to them reduce us and great quality digital our a provide opportunity a to

partners, drive has that among to change roll to partners, digital onboard we innovate processes. directly, tools question and to continue those an new incremental and continue So answer all and launch will and compliance amend the more be our this business together continue as to legacy concurrently

expense So expense. is driver as Todd, main personnel of our operating you know,

And these carriers, customers targeted also relative revenue. and and that all value net focused to are creating of so at for lowering any while investments, on expense personnel

Bob Houghton

freight softer progress? automation Thanks, Is efforts? environment update Citi. Bob. Chris with similar Can provide from The further your conducive an next less automation to Wetherbee asked a the or on Ossenbeck Brian question comes more question. you

Bob Biesterfeld

next of to map expect quarters implemented we're I road at cycle. a long-term years. of that will be as in We've the touched we regardless the of efforts. But submitted months, we be in this see to on automation got And from don't driving of in the think I market and terms the a Todd. in clear general, where factor continue around much question our previously where

Bob Houghton

asked remainder environment the Thanks, make similar you asked believe operating anticipate Where XXXX? for that do Bob. of the Stephens net the does the you Or you year? revenue headcount Jack difficult? Fowler that second in with growth. And Atkins half about of expand going Todd current per question. headcount employee a can do

Bob Biesterfeld

change lagged on our has the across Our been of really in headcount change in specifically NAST over enterprise. And out time. having focus our volume

As that growth growth you total exceed headcount volume our saw the through of slightly. half of this year, first did

flat see decrease year to Looking forward throughout of finish XXXX compared to our as this we expect to balance based of year-end would on current XXXX. trajectory, what down and sequentially we headcount to the

I growing to taking focus said, continues as be So and share volume. our on

being year, lands. of the it be lesser growth than not rate up positively are headcount by where volumes that end up at volume or if is So significantly a could the possible

per in that I per relative second load increase be net half, per the – year's employee, revenue headwinds Given the net given half. of question part the second truckload to it challenging the revenue employee revenue headwinds to will around think net around last second the do

Bob Houghton

you headcount asked take the Is why by Thanks, second on in provide area. don’t from increase Corporate a driven one? quarter Can technology-related that All sequentially this from XXXX the what hires? total Bloomberg Bob. Lee about X% color Klaskow went any and is? Scott, this up by X% was quarter first Other you and

Scott Hagen

by increase large was IT the A expansion of X% our driven organization. Sure. of portion the

in our to We have of accelerate digital is to we team future and critical X,XXX talented engineers people for the hire transformation success. software a and data IT, scientists that continue

spent technology technology to five $XXX employees. the our we over annually decade, our that to data and so billion on carriers current have at to over our better in least our to rate spending million our to and $X leverage on the insights We years increase next we expect can customers, drive of

Bob Houghton

as Thanks, SG&A Ossenbeck asked current Scott. is this don’t one this the Brian why well? the elevated and quarter, this about SG&A. Jack sequentially? employee take year-over-year higher driving Scott, Atkins IT per you with remain What Will investments? and

Scott Hagen

the with increase portion the is Sure. by integration related rest software. technology the This purchased elevated But of SG&A of expect do through the of investments year. the we of sort the was particularly of last remain technology, our consistent expense driven to in expenses answer. much And SG&A to

Bob Houghton

opportunities space. share from Robinson’s market? fragmented as brokerage but with U.S. is Matt is forwarding question much the to as offer industry Morningstar. next some highway quite The Young not The fairly and grab thoughts forwarding the Could in Scott. on global Thanks, air C.H. you ocean

Bob Biesterfeld

Matt. Sure. Good morning,

from the such for we So under small largest a we’re of we to and management largest of global market Asia one have a America the total that North But to runway growth. ton the fraction of NVOs U.S. the see China still from

be air several of dominate ocean lot see us. in a growth. we think our see Global and across we growth for area results, portfolio the we’ve our for And geographies of to Forwarding. business runway you’ve billion Since Phoenix And invested about and XXXX, going we’ve up Global our similar terms Milgram this $X seen our into and what and really Cargo. in We service Space As point. to air Forwarding in got continued as a really is acquisition of the APC approach

between So that continue blend we’re to run growth. play, is to which nonorganic organic and going a

you Robinson founder-led been in of teams solid, with fill So We needs strong doing, our about on that or we’ve agent geographies of cultural us. kind focused the convert fit service businesses the network. acquiring for it’s play business acquisitions if run think with to what then those to

and frankly, surface – And Global services heck new then of the we all trans of all with to Forwarding surface sell capabilities Forwarding Global new our out we trans our customers. customers crossed our we existing

see lot synergies kind the a our we room in for a for lot of Forwarding So in of and approach of of pearls business. string approach the growth Global

Bob Houghton

Thanks from Bob. Jordan Sachs. Goldman The next question with Alliger is

if more you're peak underlying truckload ascertain is of demand? demand truck that essentially getting noted weakness current brokerage conditions or are especially to what excess expected season from market competitive But to feedback market respect outlook, balance You is capacity, tied continue to the the customers, expected pressures XXXX. in through with trying to

Bob Biesterfeld

Yes. Thanks, Jordan.

of evolve past said, attribute months the in has compressed and manageable. some we how we weeks, measure continued which that's capacity in over peak is marketplace several do less excess I've makes not the much changed to it lot e-commerce across of retailing than been frankly in has to tend I are this peak general. and past. But And as a it today. So think that season there much the today truck the But think we do to peak that And years. the definition more today,

is that XXXX. season in less a capacity, to of robust lead likely XXXX will the with coupled trend, peak half Our this excess and back the belief

short-term And see that trigger change won't spot to general, or capacity and say would some in demand don't tightness regional market large-scale that not we that's in fundamentals. be of there market pricing. in the increases anything a But

Bob Houghton

business Scott about you prior foresee this trending LTL the Bob. discuss current cycle than asked of years from Schneeberger in less versus how Oppenheimer prior term. truckload. intermediate conditions business Thanks, or in and Please cycles this

Bob Biesterfeld

Okay.

on general So and temperature-controlled for fresh-cut common lot freight, from flowers the such which just retail a as that. business, our where as as we everything to way to our industries business, include network as carriers. we consolidation the LTL in LTL all frozen goods. consolidation that and there's include report kinds, includes providing well automotive focuses well which produce as service freight the line, We we're common carrier And our consolidation, of

anticipate been customers. bundled moving will our traded fueling growth The this the publicly not to cycle that several forward report times over past being with provide some and services unique under that might our results. how the is drive LTL diversity said, mix what's of with really their you carriers service So to growth years. at our we results other continuing exactly that we our we kind And LTL of see of report LTL as

spans that – that that I largest talked virtually about to mom-and-pop the access from of need really LTL industries global within base customer I shippers that efficient Our companies to all and digital customer segments solution some and all size really earlier. market

we for financial freight consistent the business. within for to what to of of LTLs, that's line to alike publicly hitting Much for the similar quarter seen general, was And consolidation volume LTL the during in terms shipment LTL other flattish be purchase was truckload the that’s saw costs side in lower the us improvements attributed quarter. transportation reported you've most in that there decrease spillover quarter weight business of networks. haul the can releases. our in traded in results the So pretty as other less And

Bob Houghton

Bob. Thanks,

Our markets in you affected if lanes global global slow Cowen focus next Bruce you. asked relative in domestically the grow you type Company market Seidl Jason Have target developments where this prefer list with comes Stifel. the there a question from question. Are with similar Chan freight and U.S. to one’s your of for And would any for M&A? this environment? to Scott,

Scott Hagen

Thanks, Bob.

that fit businesses on been been are over a fit. freight strong good And sit of good and we years. always to M&A a are a at presented and global model geographic number This itself. sidelines financially opportunity the a if us business slow, if marketing are good cultural typically They even forward wouldn’t for have expand the our We looking past theme options presence. has

will continue scale. acquisitions that strengthen to that space us at for We look fill our geographic and

add look that at new or services would to also companies platform. technology will our We

Bob Houghton

contract leverage Scott The Scott. Services from is wins. Schneeberger. question Thanks the C.H. to garner opportunity next this and discuss business with other Please and Managed portfolio businesses ability in to in Robinson’s progress company’s the address

Bob Biesterfeld

question. the address I’ll

the add revenues wanted off, First And to I touch were Managed for to the color flat more our on is really some maybe the our quarter really, QX that a results. and solid Services a to fact function Managed of business already bit and Services in a coming are really close been timing. We’ve the deals for have more pipeline got quarters. of that that closed several results

years. So feel in business that pace should we last our growth be seen a over on trajectory couple of similar like what to you’ve the

that supply for global we’re with talent of on due new engineers business revenue being to complexities they’re and us, back Managed on and to more TMC largest Services, chains, recognized bringing global, high-growth to lead prior time Managed the really actually which focused chain supply of multimodal these complex a been complex have integrations. Typically length is business. the would peel this integrations. what associated we if with So really shippers And the multinational, Services part complex, in

in this a business. good really we’re So with place

We management of and the accelerate in the under half freight to back expect the revenue that the year.

with In that to platform. other TMC TMC of Robinson, this Managed business the a things terms of commitment differentiates one or a is divisions in the marketplace the neutral being intersection at Services the of

TMC is Forwarding. the Surface or of sold Global NAST either Transportation or typically see existing to are customers Services we that what Managed But European or

the supply guides, see grow divisions neutral chain a bidding, decision a maintain the they're given neutral provide given platform And favorable when have typically to the with. Robinson mark with with. And those customers customers, their support so solid well their share TMC these that platform and begin platform that and we typically or the opinion with top of implement other and customer making to to manage be management tend very Robinson their we routing do fact a to or over

Bob Houghton

is also Schneeberger. question Bob. from Scott Thanks The next

Please growth particularly C.H. strategy in recently. Europe, acquisitive brokerage? in and been freight Robinson in discuss has Europe opportunity your

Bob Biesterfeld

don't enough in say I for we've around see probably opportunity XX of Robinson we would the Europe And there. the Europe in been in brokerage. doing model about terms talk now years We be with C.H. freight the brokered have most and to is model more one or that's companies not as of carriers tend assets that marketplace tend in to contractors European transportation surface common the blended independent more integrators. between what

look build help about time and we variety expertise across and gained XXXX. some got countries Transportation at being in growth Dema Surface If of Dema with a back we will have. of for of a Logistics in executing which with people offices didn't continue previously blend Europe. density customers total, we XX Today, over acquired in growth been organic Transportation Our we've XX out And to scale Europe independently, in us XXX Surface company market. the to people, wide and there Apreo in acquisition the acquired our great some Italian Europe latest has prior Services, which in we the added to marketplace, the

really within that that maybe expats. that a the in much of overflow strengthened is driving there's terms marketplace. we worth enterprise more talent things years growth manner truckload strong we in few the we've of were there I'd over team also first past couple with of say on in based positive a for And that we've carrier are really focused Europe. built an leadership versus evolved become the sharing. really leaders the more have And the a have our We clients, – whereas past, local leadership

European lot about learning’s that of we're the one between great trans. forth of So share trans of surface business surface business a to and Europe things a and lot our back able NAST our is and technology

allow take a So there we back accelerate in businesses, between intricacies forth, can Europe. the there's our that two learnings are differences and which us to of lot development certainly while and

the growing greater in we're truckload marketplace, European committed or to that, marketplace than continuing and is to space. invest Given equal that in really U.S. to size that to

Bob Houghton

Bob. Thanks,

Morgan Global a similar comes business? with the will impact of from Stanley. on Forwarding question Chan Bruce Ravi What XXXX next Our IMO Shanker the asked be question.

Bob Biesterfeld

We really costs increased a Should further face at the pass-through. view Forwarding see or being or interfere to the in Global the certainly its to cost of pass-through reduction as impacts lines global of steamship value, of for IMO that the consolidation impacts we our the way to of adverse us. impacts forecast a the XXXX business. trade, lead capacity with largely IMO and to have of impacts any be could But capacity

Bob Houghton

another about Suisse for Allison working Credit you. Thanks, capital. Bob. Landry Scott, question asked with

Can far progress optimizing good much accounts working made might as You've how on have further you and as payable? receivable capital discuss efficiency. you accounts

Scott Hagen

Sure.

on working progress capital We are pleased the efficiency. with

feel also capital continue optimize We room to working have we to performance. our

service a while have cash of continuing improve provide to conversion underway customers of to carriers We a number level our our and initiatives vendors. to support high network of and and

Bob Houghton

The Hoexter contract spot Lynch net question second next Stanley. and Can is similar Scott. Morgan of closing? Thanks, asked with Shanker the a Merrill question. gap the year-over-year rate Ken revenue increase with truckload Bank Ravi America with XXXX in of half from margins

Bob Biesterfeld

margin. XXXX, per current as to net versus and we market because for given know, shipment market dollars margin to revenue And just for revenue the net conditions revenue forecast think around the the I net all our on year you of second per manage load our business tend noise year decrease this basis a moving though, basis on above of our a we would we to the experience half load per net balance where XX dollars dollars average. the revenue well net anticipate of to revenue compared

Bob Houghton

our on Forwarding Global objective term question Scott perspective And margin the long-term Bob. provide is for business. final intermediate your from Thanks, Schneeberger. Please and

Bob Biesterfeld

Global been system, the we portfolio. companies we towards margin look in with Forwarding that in in think over investment for price an more We've course few purchase high-XXs. to the So the been Forwarding investment single there's impact a technology our as there's that these of goal that over years. business. Global all onto Global amortization. several for ultimate doubled business, to years the Also target the of for to integrating GF last operating bringing have Forwarding past But And low-XXs Global term intermediate acquisition, Forwarding, about than our moving the that and in we've outsized the fair global if amount for companies a technology for the is

Bob Houghton

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

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

Operator

your for time, may you lines you and thank at This gentlemen, participation. and a this have your day. today's disconnect conference. wonderful concludes And Ladies

C.H. Robinson Worldwide (CHRW) 31 Jul 192019 Q2 Earnings call transcript