CHRW - Earnings call transcript Q3 2019 | C.H. Robinson Worldwide, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Third 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, October 30, 2019.

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

Robert Houghton

he Thank you, Executive Natural the joining Prior Donna, at joined three of most call Zechmeister, today he decades recently where and Chief us a Robinson, good morning, Treasurer. be our company brings Biesterfeld, everyone. in General He Bob years of for spent XX Finance VP CFO finance United September our served of and with Finance Officer. also Foods. of VP public to Mills, Retail Chief Financial Officer; leadership and Pillsbury Mike will and held variety Mike On him including our Sales U.S. experience. of as finance roles, division, for

on our will in be at can our third Mike the that of quarter found slides and provide section results. website accompany Relations XXXX Presentation Bob remarks chrobinson.com. the Investor commentary

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

I’d that like X list management’s remarks presentation today in actual today’s remind statements. factors our contain expectations. forward-looking may cause to differ Slide our results from you could to that

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

Robert Biesterfeld

and Thanks, everyone. good Bob, morning,

in challenges third quarter American Forwarding segment Surface Transportation well our The provided as segment. both North as operating Global our

our Our below our net incomes operating and revenues, long-term our finished EPS expectations. results

last environment the comparisons and second half double-digit second difficult year. of pricing into revenue strong of driven coming we industry And demand. in softening capacity net aggressive we by our the year, an excess anticipated knew half We versus growth faced the that

in costs fell the margin first impacted in for rate X faster compression than Our of in North by of negatively America, truckload results quarters. time the that as pricing change were

did contractual truckload level generate that the not contractual we in at our quarter, we volume rates anticipated. volume growth of While the low-single-digit increase did

resulting in shippers believe volume for elevated In declines market truckload in in a significant worked environment, volume in in Forwarding, largely was through to X% enough the growth that volume we our the have the spot their contractual decline current And levels. not quarter. offset the inventory Global

global softening However, and tariff are air market ocean demand. recession concerns continues volume as fears and experience of the declines forwarding to

our customers customer is cyclicality of through and our the freight A in the volatility industry. committed as of part relationships proposition, helping value a particularly manage of pricing that occurs our result our cycles

and a quarter in bids what can contractual customers did people control, includes largest to with great Our which and job, the controlling increasing awards innovation. our excellent service continuing we provide in

we in order are that are As to third continuing adjust our to delivered our results. strategies our the of a this market, in quarter results pricing result to shareholders optimize we The of over below is creation will carriers; our growth what results that and we I’m term. the ultimately targets. long-term customers which our long the our But for value shareholder drive delivered proud

the we and the hard, the worked increased. our Our by as of as such, teams across globe year. during customers were awards recognized quarter provider several their contractual And

to continue as products small freight carriers XPL choice securing We as of our also their for Robinson Freightquote optimizing C.H. businesses. C.H. choose new for such by And networks. Robinson launched the and

of allows new life quarter motor bring every capacity While the to our solutions of addition thousands us for carriers to customer. new

our improvements are of on transformation our dues. process around investments paying and plans long-term in and Our technology business are track

margins. to million During third industry-leading and quarter, we our also operating shareholders delivered returned $XXX

operating and us these immune alignment continued this drive the down-cycles demonstrate investments results will term. not expansion financial margin this and believe over net our our costs through through better in to long We we’re cyclical Our to that revenue that cycle will swings environment. quarter between freight enable growth large generate the our and

financial our over comments, now turn introductory statements. I’ll to Mike review to those it With

to Robinson drives comes and As CFO. intro, Bob through a business growth Houghton leader brings seasoned effective is finance strong as mentioned and and proven strategic He partnership. that experience public-company a Mike leadership tremendous his in

Mike them on With turn Mike. team been I’ll Robinson. two that, has with the us have to proud we’re to for it over at and months almost now very

Mike Zechmeister

words Thanks, Bob. great and the be and record couldn’t more of with terrific the team. life, I of in be appreciate most in to Robinson Robinson part as of a my success track strong a the company a culture industry. kind excited Living known Minneapolis a I’ve

strategy, expectations, engagement ahead. I’m opportunities our long-term of QX and finished While energized our the team the below our by

Slide Now, X financial on to our and quarter. the for results

lower across revenues XX.X%, that to primarily due decreased mentioned the services transportation Bob and Our driven softening demand capacity earlier. pricing third gross most total by quarter excess

our net September compared revenues to company the in revenues led by down XX% compression business net XX% QX July, line. in down truckload down margin quarter, monthly decreased X% periods August Total in X.X% per in year. day service and the last were in same

and declined personnel the Total as declines QX last net over points not last spending XXX decline, operating year, to basis income with technology. versus in due did keep down partially up margin increased was year. in SG&A Operating the XX.X% revenue

from per share net QX diluted earnings highlights year. $X.XX in per was in Diluted last share income. Slide other X impacting $X.XX QX, down XX.X% covers fully

last resulted approximately a QX points primarily taxes rate rate and tax effective XX.X% in XXX The quarter approximately a tax was income in tax to QX. derived related $X.X prior effective in an Third to from million rate an basis in adjustment XX.X%, year. intangible to lower foreign year due provision of favorable reduction was improvement the

previous point down our tax effective from X now range to our We XXXX expect to be the rate in full-year of guidance. percentage XX% XX%,

During sale Central gain Building in Chicago recognized of on Office million the Chicago, occupied we the previously Illinois. $X.X our third quarter,

as income to the statement SG&A on under and All Corporate up the benefit the Other a shows line This segment.

balances other those each Third the reside. the cash million to currency in where and quarter and in Interest $XX.X interest includes totaled primarily $X.X the last of million, other to of expense conversion and working from investments capital related up QX currency functional impact year. revaluation, expense country

million QX from compared gain to impact revaluation. included million revaluation, currency this year $X.X unfavorable QX included that last $X.X from currency year

Average debt shares repurchases down $XX driven QX. reduction. QX due declined by in share primarily was to diluted interest expense in million primarily $X.X outstanding overall million, X.X%

to cash from XX.X% Turning million last the operations versus quarter, decreased totaled earnings working due QX in flow a to partially primarily by year, Slide decline capital. $XXX third improved X, and offset

million between date XXXX last expenditures now brings and increased We to capital totaled to on XXXX. QX million year, capital $XX.X million, in to with million. $XX.X $XXX total $XX expenditures spending technology invest full spending million, our remain technology. to track year We which expenditures versus capital be dedicated $XX expect primarily to in year approximately

returned shareholders share a X.X% to decrease we million last $XXX combination represents dividends, QX, In which approximately year. QX of through repurchases and versus

best how evaluate value our forward, optimize will shareholders. Moving to deploy for capital we long-term continue to to

Now, on balance highlights Slide to some sheet on X.

revenue versus the year, in Third generally the gross costs quarter prior in capital with working X.X% purchased quarter. the consistent declines and transportation decreased

Our debt X.X% versus end down interest year. QX million the weighted rate quarter of year. in at balance our quarter was was And average approximately QX X.X% end $X.XX last compared to billion, last the $XX in

out comments with up wrap current trends. our look my will a I

excess versus trends levels, October approximately capacity the October, NAST net volume truckload XX% and QX revenues have and year. of over business modestly demand total levels. soft combination is October truckload year-ago well volume flat improved last down per company is below day is our keeping, pricing approximately While

day revenues total October, and in For in November, December. company reference, XX% net increased in XX% in XXXX, per increased XX% increased

segment I’ll Thanks the performance. for turn to business listening over this our on and additional context to and back Bob morning, it provide some

Robert Biesterfeld

decade. truckload remarks my begin paid percentage million change I’ll to North the our over American segment and by on per state light Mike. the our Thanks, current highlighting X, rate billed performance customers our in truckload cost blue and represent On dark market. cost fuel Slide the net of contract of NAST lines carriers mile to the operating per the current

in continue double-digit to all-time market, pricing including see market versus spot of pricing competitive We industry year-ago the activity where both highs. experienced the in and levels pricing, contractual declines the

per mile declined rate revenue XX%. versus declined modest our while in contract the fuel customers cost XX.X%, the The carriers billed of of costs third margin that compression Price paid in to resulting quarter to per truckload our net declined quarter. second cost of mile moderated net

shift third period. that a to us cost in contractual resulting and declining environment, an in reflect XX-XX a versus XX% transactional volume volume in is price approximate quarter quarter the the contractual XX% typical year-ago for a and in results Our of mix mix

depth from we As use routing management. market freight before, business, Average metrics which Services of to billion guide we Managed conditions said was in remains a executing our that the in one experienced was X.X measure on represents depth average, $X this most the is This depth route roughly the guide cases. under routing of truckload the for guide routing quarter, third levels first shipper’s lowest representing shipment decade. the guide we’ve the near carrier in tender

operating in tender range. first contractual And acceptance are largely routing with rates the guides high-XX%

strategies to the pricing NAST to with routing we’re conditions of Our and the near work top current that reflect guide. ensure continue the

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

XX.X% Third the truckload. NAST decreased net revenues in quarter by primarily driven decline

combined net the lower outpaced year-over-year XX.X% and Index truckload in quarter revenues changes for third Our LTL decreased and quarter. the volumes volumes. quarter, consecutive compression by in margin Truckload driven third the Cass Freight

Third quarter last NAST truckload versus X% volume decreased year.

quarter low-single-digit volume pace. truckload a third contractual at increased Our

double-digit rate volume market at overall Consistent our a trends, with spot market volumes declined driving decline. the

was This when new XX% down new we roughly a carriers, over the quarter added third it’s and added last quarter, sequentially year. our this truckload network. decrease record to quarter compared to we second truckload During of the a year’s of X,XXX X,XXX carriers X%

the our margin Improved net pricing the drove new X% in LTL service volume quarter. from intermodal as in led the in XX% net of LTL in temperature revenues declined volume expansion third to intermodal XX.X% management net an truckload quarter led by revenue In business. volumes in industry increased back shift the truckload. for Intermodal growth by quarter. the our line, intermodal in-transit decreased increased decline growth controlled customers. revenues drove X.X%, growth cost in

our Slide operating income outlines performance. XX NAST

margin offset was decreased headcount revenue in points X% flat the Third by the expense declined of average versus driven in and XX.X%, the quarter by variable partially reduced of net XXX XXXX. NAST operating operating income quarter compensation decreased second basis headcount XX.X% quarter quarter. while the decline sequentially

will the in the transformation invest to freight business. our cycle, of we NAST continue digital Regardless of

carriers. be in and full for customers new insights our shipments this headcount including and business. The automated Due down investments our Our business our to across bringing level the for to automation automation, fully digital slightly expect truckload to are continues order capabilities of to NAST higher of levels new year. in part and tenders our increase life we

Slide performance highlights in Forwarding. our XX Global

well. going X.X%, growth points of The acquisition network, converted third percentage of Group X.X business Forwarding and of our customers. net Space Cargo revenue key Third quarter is of quarter. revenues net contributed the we’ve and our Global We’ve increased Cargo to Space the in most agent employees retained the integration

In growth service the as points X percentage our by volumes net margin in in the addition as line, quarter net flat of quarter. from up ocean Space well were Ocean were revenues Cargo expansion. of driven the revenue X.X%

primarily shipments. decreased X% percentage net revenues points net contributed air Cargo decline quarter X.X% growth. Third X Space driven by revenue in an of

primarily to in point net X revenues transactions. air in quarter increased volumes net and soft negatively by shipments due growth third demand impacted air the Air X.X% tariff percentage the customs uncertainty. also ocean X.X% of expensive quarter in were increase Customs Third impacted to nature expedited revenue contributed and in were driven inherently less the market. Cargo a for quarter. in the Space freight more by results reduced by demand

benefitted results Within changing to ocean positioned to strong the of continue remain in our volumes customers our and presence we our with customers continue net in from tariff Asia, and landscape. changing them help service to We Global line engaged the the quantify Forwarding, to where We believe broad for environment. portfolio actively win understand total our and air. again an be once service ever impacts revenues outperform we offerings, that Southeast both trade global help well

operating income Forwarding Global our outlines XX performance. Slide

net the year, with global quarter the operating driven XX X.X margin Cargo new to headcount. XX.X% win last increased we business. percentage growth Even levels by quarter points the higher during continue of increased in operating Average revenues Space X.X% to income compensation. primarily this headcount time and increased in basis contributing landscape, lower record points variable Third X.X%, of in versus uncertain

excluding our the managing both are basis Space expenses headcount Cargo. our year, versus year-over-year also operating a on of We’re last down and impact

headcount of Moving margin drive growth cost exceeds the scale and leading industry in to forward, volume time remain we geographic reach operating business. we’ll and long-term, operating to that deliver that our growth confident And Global And a margin we technology see combination the our significant opportunities through drive we Forwarding investments expansion to performance. over deliver over efficiency. expect in

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

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

Fresh Robinson flat to decisions versus year. Fresh headcount. to expansion driven revenues operating due on quarter points businesses. Third net approximately quarter Robinson X.X% by last generated XXX Case basis were exit declined volumes reduction the of in XX% unprofitable margin

system Managed in complex Third value the combination of process net supply Customers continue wins increased driven to services allows and which carrier technology. our revenue chains Services X.X% people offering, or their them selling to by a fixed transportation customers. new additional and quarter management customer to investment manage required existing selection without

adding quarter Other acquisition growth in of Service quarter. Services the net operating XX expanded percentage with revenue XXX XX.X% Surface revenues the Transportation the Managed margin increased Dema points in about points quarter. of net in the basis

I’m On XX, prepared to our remarks few going with up comments. Slide final wrap a

opening mentioned for results long-term of our As goals. I overall quarter in my fell our the remarks, financial short

delivered Services, X.X% our and earlier despite However, in we impact European there increased and And Surface Cargo were our Services of We reduced Dema in acquisitions operating positive operating several technology the expansion Fresh, investments our Global Robinson the in margin year. the expenses of Forwarding, and Managed Transportation. Space highlights.

opportunities. North ahead, per revenue environment reset first our levels prices half Looking market that response cost expect to of routing at shipment the expect following will business, net we decline truckload the continue to in year-ago remain we to spot below XXXX. dollars in freight and lower American through guides In

flat and pricing As relatively remain we in in to season bid expect through the QX QX.

suite results, the promise environment challenges smarter for industry weakening truckload shipper drives solutions of providing Tariff we and technology are that capacity of concerns for customer having few we built of the rely And global a remain data demand. believe delivering our leveraging our on trading can our by next advantage experts, short-term available and and chain while committed shipments freight exceed fears recession to will to quarters. that’s executing our and services, on. Regardless of capacity supply continues market, people exit great suggests partners information to the the

We owners. and global by technology our our also our successful plus be continue I truly to needs freight local believe knowledge that plus them in secure that best our success meets plus expertise, be future technology help technology business and allows carriers enabled outstanding will their technology service to innovation. plus: industry-leading

our remain investors, unchanged. our focus areas For

We’re our taken forward. committed expand share to to share. time, we’ve each to expect taking market lines market market share service in largest we continue Over of moving and

over automate to both margin to we’ll And both industry-leading investments and to remain reducing carriers. to processes, our our leverage re-engineer operating business to and committed continuing in time. Second, while technology cost finally, customers to expansion our and to continue our serve, sell to service we cost our quality deliver our

outstanding of to want company choose I success and team XXX,XXX our day every thank continued the with our commerce success efforts Robinson. of to conduct demonstrate over ensure of that companies them proud the they to I’m and for C.H. the

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

Operator

Houghton, is Mr. for the question-and-answer floor session. the yours

Robert Houghton

Thank you, Donna.

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

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

X market in the from year-over-year last Our X share spot do to of America first quarters. gains? quarter grown North question several What for volume was can Bob hasn’t fell, company accelerate volume volumes but the truckload comes analysts. the as down in

Robert Biesterfeld

XXXX, in supply, this. strong and But, going combination was in both everyone. right, again, increases so demand to the cost the I’ll good anticipated of of due to to that lead of tight start partly to All we answer transportation. purchased morning implementation the ELDs significant

rates first in that rising tender was We environment reduction going in acceptance lead the that to also expected due cost to that XXXX. to

same strategy less such. in and routing drove environment as we an lower higher So guides time, truckload. in for resulted contractual committed receiving at our us pricing moving our in the net XX% reflected XXXX revenue dollars freight XXXX But freight cost and increase this

our our accelerating outpacing freight rate. XXXX, awarded XXXX In is an at awards

current environment, actual freight freight than to lower However, we from we’re seeing this awarded usually see. in also a conversion

of as year. negatively during awards Additionally, impacted into a it’s at period of X the end and year, quarters beginning market year, entered this this season experienced the we bidding the that this first of expected And we’ve we this last peak year. bidding the slightly forward through different carried our frankly, than

the not our spot of are XXXX market just many in making failing. is we when increased of contractual awarded executed that for up guides customers, freight loss the freight routing With our

So volumes year strategy believe value that resonating the are our as marketplace. is we ago you’ve proposition is seen levels. in our said, below being that and sound our XXXX, With in

We the obviously to and and aligned But are really service. got excellent to get pricing table market right stakes. conditions just these deliver

differentiated over carriers volume – mentioned. customers promise in going just customer I services to Our that our the is delivered time to delivering with be our growth and by line

in Our us all, to on. tell that value us they from with above continue ability customers they the And that to our industry-leading having they they local that continue rely tell all benefit they modes. technology. to continue across global appreciate expertise our supply us deliver tell that to They chain people, services experts can

shippers give the going to the market on lead tell us moving are things us that in these focus us our are market, to gains that These differentiate share things continue the The and that advantage. ultimately, competitive the forward. we’ll us that and things help to

Robert Houghton

with in revenue net decline Brian rate to with question. rebuild Ossenbeck leverage your KeyBanc, Bob, of from ability the of discuss costs asked from next in How the more line The is business going Chris cycle? with JPMorgan, forward. Wetherbee similar can the please reduce independent operating question a Fowler Citi Todd and

Robert Biesterfeld

time Our on rate revenue in didn’t we of remains of the net earnings core but that than to are demonstrate per long-term shareholders the centered our been growth faster and believe and we fact has a our over still targets pillar share that this And we’ve that we focus. to grow expect growth. a at communicated commitment quarter, that that that it

tech making in wouldn’t increasing investments bit against in long-term, little challenging commitment deliver over But technology these our investments Our these our in accelerate more to makes investment be felt the we this the ability short-term. that this to would in a we unless time.

our at on that quarter, is the margins and the will were over are maintain few cycles, these our per challenging For XX.X%, pointed enterprise both through historical average net the which past operating that But investments we where beneficial both margins right load ebb making that improve can around and low-end the operating we’re confident revenue up the of we’re years. upon areas ensure or historical freight down. that

of technology ultimately, as relationship staff, we As between you the largest all productivity of personnel headcount, linear so previously at expense know decouple largely stated, and And volume can our surrounds revenue. expense investments increasing lever personnel. that of that and we’ve our are our targeted and

Robert Houghton

question cycle? The comes advantage. is in new you Can this cost well entrants next talk is Weakness analysts. landscape, about your competitive competitive from traditional players particularly several intensity given greater as whether for somewhat, volumes from surprising Bob the as

Robert Biesterfeld

relative much this we hasn’t to the different think been and freight peaks if in cycle first, cycle about cycles. So valleys previous really

what’s opportunities with drop season three sense quarters really played And really this and of in a peak some spot the good I that’s out before, off market. of that first of combination the driving out on how year, last we our the in mentioned significant terms year As bidding along through the during results of missing got being volume.

a again are time at certainly a the budgets the play of tender intensity, acceptance very market range years where In down regardless near the our of about there an new average tender competitive aggressively the can is of perfection to shippers X, XXXX, that percent that ago. and rapid out pursuing coming the that rates competitors, of industry weren’t market, on market many total in some market close terms increases small and you shippers on represent in any operating many XX% But guides of exceeded this they competitive marketplace. competitors going share far Thinking depth with in of are are to in routing assume few collectively, high costs. based environment the the their be especially in that in price very

recouping now, If those and the smaller it’s have And the year. year they’re year. our But as the rates we against this see of on highest we costs typically think freight, improved right actively been throughout looking quarters. available QX bids, ways bidding about win QX of base this bids a at as volume

our or And this if Contracts you you We results and And into bids nature one-year bids the win ways, on year reflect is the in tend to the know that feel nature, cycles. you well. our just bid, forward this as those into year. on be out about And as really risk looking of can good XXXX. those cyclical business. plan if you on of some for going those in at QX in work year next freight miss a hit a typically

generate just not increase. chase taking really freight financial that pricing. losses remained short-term we’ve contract to in a cycle, could for this We’ve our So benefit of during disciplined chosen volume the

Robert Houghton

minus to is is from to in quarter in for from drivers December, The talk in remaining next trend XXXX? November Montreal. the in net about of QX deceleration Fadi the Can X% and and with the rest minus expect With continue October revenue growth through of Chamoun comps you XX% should question Bank October? the Mike fourth we of tough

Mike Zechmeister

Bob. Thanks,

total we looks year, XX% XX%. this at in per and in company revenue As business down saw to in down similar September. August X% September reminder, down a July, October XX% day net QX in down

was day December. in up December the pricing truckload near right November comps and revenues contractual market XX% at Last environment or up challenging and combined as of You’re net in a shipment spot opportunities benefit by cost in in and locking per about falling in driven year, we freight our the business highs in XX% tight per environment. saw November net all-time revenue

QX our environment. pricing and truckload quarter, the the in In this year, to throughout competitive response pricing committed declined transactional

same moderated quarter through shipment as sequentially. this moved per was continued the carrier truckload October. the at result time, costs we While and reduction revenue a trend The in into net

While while truckload company showing it enough improve to did To was our volume capacity not drive up, to QX improvement revenue total sequentially is from early sum an in lead it net the first October, signs very will some of of horizon environment that freight significantly tightening, through we XXXX. that don’t on growth. the be see anything different believe half to would us the

Robert Houghton

to about customers’ your leverage next that to your Jack on share the reality Bob, guys Atkins model the of them? with more you business as from gains efficiently Stephens. build relative timing of technology market into timing you needs, do make leveraging execute to investment the C.H. think to this how out one execute Robinson you’re The to question transform where capability to is a strategy

Asked another market way, gains expenses kick could of before next we couple for revenue see share really a the of years, the in? elevated over period

Robert Biesterfeld

for Good morning, Jack. Thanks question. the

I America transportation. talk let’s of But gains. this an So there And surface are market two in really freight types think oversimplification. North about market, first be will share the as of

complex some commodity say and that that challenges. freight oversimplify and it, largely Let’s and to shippers call don’t complex that’s have ship commodity meant not freight freight,

increase each execution. both terms solution, freight and different gains, share type of requires in a in to technology order of But market

seasonal high the guides routing velocity that moves commodity space, freight via or about in route So think regular volumes. consistent freight, with fairly largely freight

both to yield parties. we’re this technology and both In in space, customer carrier efficiency investing order and for the here in from maximize remove the to friction

accurate be, out pricing, capacity customer visibility, based also to committed freight So movements, rating manual process, align real-time digital moving taking towards engines, customer-specific more algorithmic committed would examples multi-leg on relationships, right. of this of the focused which and more and matching steps

these and examples operational So technology the all are investments of space. in

operational our excellence investments going market what’s on data with drive technology along is that to market – ability space. to Our in and share capitalize in gain sharing these

supply executing everything less some to of tech-plus our technology about involves movement is to frankly, from complex on-demand supply comes this can’t really and mantra problems. inventory as innovation mile Within And really PO where the This global that more solve alone to really complex last. from, are driving technology management types from efficiency first around freight, solve chains investments in challenges. more driving chain to these

So also beyond investing types commercial off-the-shelf moving, – that well freight our to know, the as our technology, both developed we’re teams efficient as as business we’re and you of in effective. make more internally more overall internally software

come the cases, expense to we before make moving on-prem of is going data that of our expenses that science, examples a better the many from parts of effective, more So even the implementing on infrastructure force recognized. our to value the to CRM all where advancement these cloud, so can we capitalize sales new help incremental are technology, in

delay on will investment between So be that there return likely investment. and some

Robert Houghton

you demand? EBIT comes Credit do next question. per align expect Suisse. a mitigate better lowering similar Baird dramatically headcount The in with Hartford Bob, productivity Given ahead? looking question softer from considered asked resources How decreased with have Ben to net market, and Allison with Robert QX? Landry W. to fell the employee you revenue

Robert Biesterfeld

All right.

quarter more fourth quarter pronounced. XX peel We NAST the mindful really quarter. end down and of actual quarter, the continue of headcount between would being our was the was our as about variance of back right we’re So we to beginning across our so the through headcount basis include But points. that our layers, the the headcount expect headcount If to decline functions. as onion well this speak, NAST the to corporate now, divisions average business enterprise, to all

headcount Managed up, for incremental headcount. XX% down Cargo wins was they less process excluding large headcount headcount the Fresh and Robinson scale, implementing, were customer of we’ve quarter investment required and in the quarter. got Space and that businesses size our Services, the and Surface and Trans have across and was European Forwarding down onboarding Global for as these that was frankly

in the effect couple XX% in to increased And past quarters. we to this Parallel headcount out, a technology to play there technology expect next is investment our run level the over rate of headcount will by couple but we’ve out that, of years. our in team that

processes business expect business our across with a become on of of and efficiency aligned automation basis. all per As head areas increase, more We a continued lift and services. functions through do further continues consolidation task-oriented to our shared coupled

it uplift. it and occasions as is talked targeted change that said productivity volume, linear that that at we’ve about demonstrates And goal. of goal technology between our that headcount to that I’ve investment Now our on decouple in a relationship multiple and is lot

given again, impacts positive really expense, accomplished operating to personnel, margins. see significant largest So once our that our as we

Robert Houghton

next The of Wetherbee to revenue, with to Bob operating net type and your revenue longer What to see is do return net from targets? you income for question Citi. environment, need Chris term demand

Robert Biesterfeld

release Good take made press I about reiterate the I comment feel really to are the Chris. that controlling how and And we’re that and earlier opportunity Thanks. morning, our want In our control. here. things good our this team, to in call, an that I within

customers to a just we’re that is focus to long-term on plan, we out say less make where then we impact. focused Our external focused control factors, and to our not on staying teams working are strategic that those it’s interest on ignorant best plan. feel the in our That’s of our say, our our on factors that can driving environmental we of are direct

heavily diversifying Global into the several our portfolio and network. you’ve expanding we’ve So years, our as Forwarding seen invested in

balance thing continue and acquisition do both thing it’s portfolio. think, to of and right that for organically we via do as to to customers going the for our the right our the We’re

of reach. the in truly decentralized that been platform increased to our our We’ve technology and in the scale, carriers automation business value evolve that leverages journey scaled customers our offices from this our drive investments in our independent and a technology to business. few national drive model one, obviously to our to as new years ways our network operates and and NAST We’ve past in efficiency in for

business and Services now complex most the Managed our last world. doubled almost the years, some supply and on the global managing We’ve chains in of X

to talent, to and sales our and best approach opportunities, continue align our best market to go-to-market to We our drive our growth. share evolve

market the we’ve when got X% that more any we that about market I So in in. than no participate share think fact

about as next across drives our Chris, I going it’s our environment years. to several as the several ability executing going successfully quarters our think, the to to plan, over it’s have don’t underway initiatives think our going the result demand success business. our I that to that much and define we to really that’s be

Robert Houghton

this most number in next Chris on you of next the X, automated be in is Bob. quarters? and talk, How reflected volume in you The or the Wetherbee it opportunity automation? And outline was where NAST your would how also few from from technology go also where power? Can QX? see in Can question can the investments much for you next earnings

Robert Biesterfeld

become Chris. broadly has Thanks, ways we’re our in many a right. across more clearly chain. different multiple Automation used and being parties All the by defined term supply seeing more that industry, and in is

how of answer an absolute to our automated is give it’s question difficult the So to business.

just on our our touch attempt to of for where customers and and carriers. focused a areas digitalization automation both we’re different I’ll few So

rates. digitalization focus and area accuracy win speed, first greater enhancing delivering terms and And so of automation around pricing, so greater in is with with around pricing of the pricing

So examples across Robinson we modes small which work launch of would that Freightquote infrequent customers the is of that delivering our long-tail by that C.H. of products, multiple with. pricing be to

driving pricing or for and digitalization. transactional more with automation customers to accurate Our I ways that specific pricing engine our TMSs specific faster different or implemented bots would that we’ve be customers, we’re friction and consider pricing which customer are across reducing

second as our quality automation yield side as friction matching, digital customers. improved so movements, improvement, reduced leading to the well on distribution, freight area carrier all is multi-leg for around The freight around

around of important opportunity. that automation for on order really connected connectivity, overarching us we have this right to optimization the next that lead and connected on digital automation it’s focus to The and is with is of our or people around really right, generation area in the digitalization most Navisphere in there. XXX,XXX investment the Kind we’ve platform over sales force got the capitalize companies platform, to leads right right ensuring most

on that bunch as office and AR. a manage back an AP, cash. how can from steps, making to up we and friction can we sign automated reduce that visibility process automation manual more from carriers can and that so So standpoint focused stuff a how And also of we improve quote from we’re that we so we our eliminate everything to

to got moving So specific publicly for are that We the area. we share basis. areas goals we’ve just really distilled ongoing forward, metrics and each in of on an these we’re making progress haven’t ready each

that reporting of part investment. technology second the about in of, think question we’re you the terms If

innovation X are Our towards going largely investments creation, technology and maintenance. areas,

technology systems towards extensions. about XX% towards new and our platform customers is XX% products which that the technologies, are ensuring our And going our of around we’ve XX% our platform. technology expanding dollars of the infrastructure, and So capabilities that towards availability dollars of the got are of really demand. innovation, going of and are integrity maintenance Navisphere dollars going creation, new tech our

Robert Houghton

Shanker the next Scott Our a What Ravi contract similar are for here? question from in asked headed And mix Stanley. Schneeberger you which is spot question. with Mike Morgan was from way QX? with Oppenheimer

Mike Zechmeister

the Thanks Scott. for Ravi question and

due spot truckload spot Our XX% going into this to many freight that was don’t moves at contractual, the arrangements, around XX-XX cycle. contractual tend contractual versus mix so we XX% while at of precise But the in mix the in cap that in part general The infrequent don’t contractual optics we our have utilize we shippers out contractual. market the to of forward. during generally around quarter market versus fact serve contractual favor

honoring and extended few will have way believe will maximize to customers spot carriers, our also that the We towards over volume of market freight, network quarters. we securing continue cycle, we likely freight next and to to weighted our capacity while best the Over our serve an – contractual business our value. is contractual remain shareholder commitments grow

Robert Houghton

question We’ve market Has number pressure share? it forward expected bids on with to this an rates? shippers C.H. negative per and has net Jack revenue put rebidding more Robinson with been The carriers gain pulling from and provided similar Atkins comes and talk lower Stephens. your as of a a Brian JPMorgan greater than advantage about has market of Bob is take a net heard of for question. Ossenbeck opportunity asked next existing this load? freight to Or

Robert Biesterfeld

seen many haven’t actually bids pulling we shippers interestingly, forward. So

for shippers bid is say given less rebid savings. I’d contractual what likely incumbent recently lock-in, next of most keep shippers period almost with routing are to trend more fact offering at that bids think, to to coupled flat the or we freight mid-cycle. volumes of call actually opportunity here the upcoming guides in either shippers and working incumbent I’d already we’ve I year-over-year the that rates seeing perfectly volumes. are declining order One that to cost they’re maintain seeing seen out

the on likelihood remaining having of dynamics the marketplace impact the quarters. next relatively do So year-over-year in these truckload given to see as this flat pricing relative potential load a and the per We revenue in coming for of our net negative comparisons couple quarter.

Robert Houghton

the headcount, technology? with of Our from margins, that any investments share targets in should Dave your watch key Bernstein. market? what timelines growth? can to there next metrics it you question for from success for Is on are investors Bob, And is the judge Vernon

Robert Biesterfeld

right, quick investments. either we’re several looking my answer growth. of have My yes, longer proof the yield on answer points metrics is, make or they we’re that to margin to investments, going measure to at these headcount is value to that So the

external to carriers, our our impact either owners our employees, at of And customers, course, to these our or investments need or these ultimately, stakeholders. look investors. lenders to and our So the we tend of internal

internally, our the investments looking headcount employee. impact and between at So interplay we’re and effectiveness that these and and efficiency volume, of they how

factor really, that’s headcount yes, the there. So answer, is us a for

positive our normally customers value insights a reduced impact carriers. unique as realized is have for investments cost, yields them, to create better manner customers than that for value for improved increase either better a these that or service Externally or or our carriers experience in

to growth. factors those So are fueling really tied

manage of which in the expenses we benefits shareholders yield lower relative that what’s turn be So those combination improved growth are margins more and with to our to personnel is drives growth, expecting. to going that

that moving do that evaluate share forward. to financial non-financial continuing the right we we’re and broadly So here and will we measures can

Robert Houghton

strategic Bob, asked, Oppenheimer with balancing Schneeberger is your view what versus Scott price for volume?

Robert Biesterfeld

price drive directly our based is entire party the general In being divisions correlated my the industry, long-term. for created. about that’s regardless ultimately belief NAST, the markets large operating to industry pricing Global of of So talking going no really, and value our we’re to on Forwarding set or is is over price that enough one value any the

over the commoditized drive price that believe simply developed over market it’s movements broader volume the that But that they are only not be that growth. So drives by but be also volume of to time. the freight mentioned providing time has Not freight going I price. that just demand, sustained biggest by earlier, to ultimately short-term. and lowest creating maintained in drivers in long-term the are price a that supplying value factors of I

going through are cycles. sustained create that So those companies come to to value volumes

X number make. the the continue decisions is technology customers factor and us customers notably of drives and the purchasing impacting over with is on-time that full, Our XX% service that tell to that decisions purchasing

that our of the past I over proud reflect up customers, So make been as XXX% have rate which about half showed revenues, of a XX% these on I base, our over am our partners for the And fact decade. retention of customer year. XXX our customers over top

to that beneficial speaks to driven upon versus seek price volume. our teams that I’m out to mutually And guiding short-term our always to I our coaching it and value. value comes guide longer-term going ability that we build time can think and teams, create when over relationship to

Robert Houghton

in peers an C.H. Citi with greater Chris Wetherbee tuck-in their assets more the Barclays acquisition forward? the showing from platform attractive? well the potential reduced of or asked technology also likely become variety at M&A of Robinson’s price Oglenski is even several is either that growth brokerage could customers? and Robinson, more margins M&A. public about fit Brandon operations, with strategic Mike, developed more single would And source and for a role that make moving a take driving Are to there C.H. you’ve platform with

Mike Zechmeister

Chris. and Brandon question, good Yeah,

improve technology add/or geographic preferred not will based we near-term the the overall in long-term related compelling presence non-asset a help continue services, on scale this benefits, models. us freight have see our margins our or I strategic sure proven good business prospects. to to with significant expand platform. and fit, that cycle. build on a cultural question your and As history, has lever to am enhanced point We M&A been businesses Specific valuations to as impact strong our

generation a me cost pursuits add our believe lower we can that as building with Let build be with the technology returns strong on to adjusted to risk well a flow in other related, than liquidity, and strongest capitalize are scale we With our of balance on benefit at scale, will they or whether M&A basis are significantly decisions the also positioned investments. selective generally investment respect sheet, we it. that buying we cash

Robert Houghton

comes capacity next helpful? for Does be Todd or falling during discuss asked Please rates. of XXXX expected firming buy outpaced competition? Bob, color that is would quarter on sell rates the first customer greater the Chris for since reflect the Fowler additional XXXX than time, and sell QX quarter? first The expectations have Any the a rates costs question. from in this price This rates with is capacity KeyBanc. similar question buy change faster Wetherbee than

Robert Biesterfeld

Okay.

flat know, truckload So volumes QX. and for the margin down being But within our far in through forward October, compression go in based and fact it’s specific as carrying that information revenues we won’t we so the into deep the October in being XX% enterprise general, truckload that about trends upon quarter. a in you that shared business about

rapid sequential of nature, want of rate and the year. in question last as think the aperture I questions. to couple most QX change addressed bit I’ve effectively, that address QX that market. the a of do comparison the fall a it’s past and the In the to this of happened rise earlier terms the like other competitive over feel cost of relative on widening look But results at really in And worth to what couple and of we’ve to got I years I

we as it last time XXXX of the was saw Todd, QX this out, that And was pointed inflection. you

customer in a QX in down by X.X% by peaking So go then saw of of in we followed where QX XX% a year-over-year at and a increase before pricing then in QX. X.X% that saw XXXX, accelerated increase to QX basis in we QX a in of a followed XX% things we QX back down on XX.X% if down increase year-over-year XX.X% QX pricing XXXX, XXXX, increase XXXX, negative of to reflect XX.X%

on So either we’ve of fall and price bookended really seeing this lagged kind cost. where rise side rapid

X.X% we sequentially, if but we actually X.X% recently, More around customer saw sequentially. QX from of increased look at QX XXXX XXXX, about to costs of sequentially pricing of drop carrier fuel net

what and QX. difference caused So QX the between that’s

I’d With around as full change that change we’ve quarter. bit, this inflection this rate sell the bounce to is tend in say, of before little if a cost hard in a say recovery. being bottom, it’s less a in cycles to than seen past things

were show they data at like back point that are we sell our normally in buy we’ve and about XXXX, this to where reached of would be. where it to kind feels would back But rates so both

Robert Houghton

to lower under operating next additional XQ going Bob from Would cause the require into your trend Atkins to invest to revenue that expect to from in you expenses question XXXX Jack if need Our personnel even Stephens. SG&A pressure. net is for and levels? from investments will technology Or growth remains expenses is rise,

Robert Biesterfeld

and expense. decreased rate in by that QX declining by will relatively personnel line anticipate run as of variable a offset decline the in I’d be increase driven of be will technology headcount So the with expense QX compensation

Robert Houghton

question Lynch a Brian reduction to? discuss Also, provide please The question. XXXX. JPMorgan Mike is with for What Ossenbeck on asked initial CapEx XXXX modest thoughts is Fowler of Merrill KeyBanc, if this in Please similar from any and America with the with Bank Ken possible. Todd CapEx, for in relation next Hoexter

Mike Zechmeister

Sure.

capital had to guidance previously $XX million track The spend reminder, total of technology CapEx opposed is approximately XXXX full-year a a being our of we reduction as expense in million that reduced to function communicated. simply million As the XXXX spending. to to on million $XX to operating invest as in remain our $XXX more technology We expense. we $XX $XX from million classified

XXXX guidance provide CapEx our We expect of call. to part a QX earnings also as

Robert Houghton

asked Bob strategy question Wetherbee truckload of adjusting shippers’ next with we similar Last reside. much quarter, Young expect in ahead? the with freight where reinvigorate Should to of from Matt volume a trends Citi talked guides, comes quarters you this The pricing opportunities route question. the to for Chris Morningstar. reach top the

Robert Biesterfeld

of smaller quarters. but in our year So through win base as past bids, freight couple available I the we’ve said the against of in rates increase contractual seen our earlier that

environment with performance guide we likely believe the our in within customers to freight the we our the pricing for have the insights that NAST, this from routing in both the means contractual that we that guide still the awarded top most routing business, coupled towards get is be Managed Services freight. of feedback Given in

terms our we’re contractual we of marketplace that, the with they of balance price of are on side will a at us. commitments level than volume to meeting believe But of QX, If we’re contract QX continuing on were in bit NAST look that And lower that to these in comparisons growth of QX. expect they regardless where out we the going the our through annual focus our volume commitments. the customers

customers’ put in the what need ourselves ourselves to to these position to over and going would and during the I honor are paper chase files call commitments rates unsustainable nature not in to order significant to season, expose of discipline going bid negative We loads to or pricing expectations maintain take not we peak just a we’re annual volume. loser to because

Robert Houghton

markets next Our talk forwarding expectations Atkins your both season peak Stephens. from in your your operations? Can you is for about and Bob around Jack with question domestic

Robert Biesterfeld

around Yeah, kind sharing view describe In seems the uncertainty mixed. general, us still they’re I of to with customers reign. that is our of peak

We season. continuity are status capacity in others peak are And seeing a customers for place playing it supply programs to order some quo. ensure chain somewhat just in put the out

own is one that truckload that points tend a data we business absolute to that our of of of look received. really at the at is our which we aggregate measure data, Looking in tenders demand,

differentiated for versus season. of a same that bit drop in a QX an time overall this market year, saw at Looking of is or year-over-year peak the we basis. different I’m last over period of increase a a reflective trajectory demand a really that’s trend precursor anyway so the sequentially a if to aggregate from us year, on But QX, unsure

year. have a later We this do Thanksgiving

got So the last had and about less year. than we’ve a December we between Thanksgiving holidays week

So that interruption. domestic supply could cause some the peak could some movements compress chain that brief of

Robert Houghton

next with Bob is Scott for The Schneeberger from question Oppenheimer.

Given uncertain supply in customer to changes with regard address behavior conditions, global trade chains. please

Robert Biesterfeld

network. The We really manage mentioned we our simple answer earlier is the increased But clear forward. Asia. unknowns. in some out. lot I still in our that in supply There just chains customers have about call that shifted equipped and our cases general, and well And to given feel figure in think is customers help trying are Southeast are results to of increased there a volumes no path still global it

Robert Houghton

large entrant’s headquarter Chicago? Morgan opening new there question for competitive any in the is next in Stanley. Shanker The Ravi change dynamics Bob Has from hiring with a following been

Robert Biesterfeld

No. Chicago our talent. North logistics. for our hub a and American is infrastructure

been we’ve for years. So there over XXX

what And best the I units. Chicago be but Chicago And retain continue over we we think the home. in and our got know, X,XXX best the to our been area. has people we’ve different hire people to of business believe across attract, land

If Services Chicago the our out NAST our in headquarters you headquarters flagship Central think Yards. other Chicago. us, headquarters in intermodal to got really We’ve Chicago Chicago. our got importance Managed in about got in TMC in We’ve suburbs. We’ve NAST the our of as we’ve as got and high-performing well Chicago Forwarding Global Lincoln office two offices there

grow there is continue important hold invest great talent super Chicago talent We’ve continue So, and for we got and that in that to geography. us. on to to and

Robert Houghton

preparing trucking Morgan. we scale? for comes small from impact adopted the Our with Ossenbeck on Bob Are the autonomous for only if of next it’s Brian on JP question even business, a

Robert Biesterfeld

Services is that and look acronym Freight is at FUM And lot we be will measure million future. management for think under billion a in traditional something our we’ve business, under even FUM business. important that under important really we got the Today, over our for around brokerage freight management management think freight and talk a between $XX that shipments. and business XX And the us. Managed in our it’s we about more or or

more to get of we might whenever more concept once be, we environment FUM this So think important. will autonomous even that this be

to model want need to that the carriers our optimizing that within of their that carriers our bias perfect within They’re is bit little biases that upon a and is more our motor a greater built there provides. obvious And reduce to largely get toward choose and for reason We’ve is have to difficult. they assets. And with go. their And today typically, optimization underlying can get based in got Surface carrier there’s Customer to that make effect business want the yield the freight. us flywheel miles part empty want on business But Our today, more load, returns they today might driver. able experience that drivers’ which Transportation. home. biases their of that model

positioned of else these that the in we’ve think do yield assets we state great truckload than got autonomous of yields positioned reason best to biases got the are to autonomous some for drivers more optimize industry. to we’re in if people got freight and experience so, that management best really the the we’ve and assets the with removed, our And truck we’re and technology And anyone the drive more same we under and this those process. more freight the optimize We’ve get that of the to cabs.

Robert Houghton

materially is question Brian from contributed smaller initiatives in Routes Ossenbeck. also new final Robinson and portal Our the have XXXX? Freightquote Bob, such shipper from as

Robert Biesterfeld

emerged but yet, as These with programs quite development materiality are two hasn’t in excited both on of they’re and one either that early about, the deployment. really them we’re

to more movements for which a them day offering. phase. ability beta both core think really We’re of cases learning carriers, Robinson expect we become our on our and we part is every in about a service create it’s to of If multi-leg Routes, still of both

largely corridors. using and with it in We’re specific dedicated fleets

into great. to soft launch the seeing done just in our Freightquote Robinson our in by product quote that product, we’ve the results product even close customer the with the the to micro/small that great already With of in we’ve users XXX,XXX unique is getting feedback C.H. ability of quarter, the to ratios, book last that segment. terms business And and grow we’re we’re brought

that opportunity having be product of absolute into we an – infrequent think about that see we increased that is how just us. Freightquote long to most tail the or serve we for As we really homerun effectively future, shippers the have

Robert Houghton

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

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

Operator

conference. Ladies today’s and gentlemen, this concludes

this disconnect day. lines and at time, have wonderful may a your You

C.H. Robinson Worldwide (CHRW) 30 Oct 192019 Q3 Earnings call transcript