CHRW - Earnings call transcript Q3 2020 | C.H. Robinson Worldwide, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Third Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode.

Following today's presentation, Chuck Ives will facilitate a review of previously submitted questions. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, October 28, 2020. to Investor conference Relations. like Ives, to now of Director would turn over the Chuck I

Chuck Ives

Thank Donna, you, and good morning, everyone.

with and Chief results. call Chief summary of Mike the me third Bob a is On quarter XXXX Biesterfeld, will Executive provide Officer; Officer. Mike Financial our our Zechmeister, Bob and today our

after you their yesterday. statements. I'd release follow to that will contain earnings remarks with We may the pre-submitted to remind our responses comments questions our today we received like forward-looking

to supplemental and factors are X call the earnings with release in slides Investor results comments presentation Bob. earnings presentation to of that over Slide our and today's our And actual that, at to can the I'll lists Our cause in today's chrobinson.com. found differ turn be could expectations. our from Relations section website management's

Bob Biesterfeld

good Thank everyone. you, Chuck, and morning,

demand against late in transition picture to around rates that Our the continuing progress second time C.H. tender to quarter are This play in first guide increased quarter I Managed than from the and and XX%. to months. range In and Robinson, X.X the in the with by quarter depth routing company continued acceptance rose degradation this third proxy haven't performance deliver over see Services call since marketplace. growth what's Consequently, a sharp in May returned a seven is of good spot American purchase to transportation. recovered carrier and tender from July, position proud depth end. in faster solid pricing that a outstripped in US X.X XX% moved the the a increase our of of supply that Sequential results helped At quarter sequential happening a in earnings in demand painted the and that stronger in freight business contractual deliver included key third a current We the trends dynamic team up of as to market. of Managed growth mid-XXXX. to seen North quarter X.X conditions we drove the our July, believe late high which market we've and decline these spot a for market of routing experienced their the out that guide at to increases our caused last quarter, a truckload we loads the more was our volatility efforts emerge broader initiatives. I'm level capacity cost around Services of within of from markets to our the market, to the

results percentage of while excluding the customers, carriers, third cost continue we'll our backdrop, delivered per response year, paid the above the record-high our to sequentially and with contracts we on a we progressed per capacity balance with a regular dislocated our business business to to annual the of as in fuel margins, have industry diversified into the to across initiated able our mile some market with quarter excluding base, market also the improve and the as renew loads book many while expire XXXX. deliver cadence During selective due customers' constrained through XXXX our were of of portfolio truckload mid-contract solid and our price Despite on fuel of market. to performance company net inflected day net opportunities year-over-year in around in revenue quarter, to trough last commitments contract both rates increased reprice positive far in day customers. efforts average, to and and efforts improved business needs also and were company volatility in XX.X% July, that cycle August members the our reaching After the per spot world. quarter with has XX.X%. of negative team to And acceptance total we in billed freight mile the per repricing In collaboration our a September, total serving our C.H. our increased compared our in basis. this contractual a business so Against Robinson October, revenue

gains, make and improvement, long-term profitable our We strategic to around continue on advancements. productivity progress initiatives technology market share

increases Our in quarter to Freight Index. X% in share volumes gains industry LTL with compared and XX.X% of results consecutive market in a an year-over-year truckload the measured seventh included decline NAST X.X% Cass and as by volume

of by a XXXX change the the and This headcount point in in NAST productivity favorable equivalents basis improve the upon volume our spread point basis metrics Excluding that acquisition in our year-over-year continue and NAST we to change X,XXX quarter builds the Services, Distribution spread Prime indicated from full-time as business. delivered second favorable our in the volume of the XXXX. X,XXX between

an investments focus is technology a metric our in key our important As said transformation and we've and of past, this efforts. the

to need. and systems capacity the an around assurance last offer and ERP with few XX Robinson, reinforced initiatives on transform unique Procure teams in our multimodal logistics connected system an allows the digitally ways we in management as months, and position which discover bidding geared new to transportation to Our capabilities during than businesses more backed based world. unrivaled solely of And Intel In announced In purchase most systems annual connectivity transportation the in C.H. of technological that will process. small characteristics which management the buying to truck also rather the transportation opportunities of number to provide we've chains. in simultaneous innovative network launched IQ, this help their to by September, by with time shippers Freightquote shippers our technology engage customers to has ways. bulk we Microsoft a their platform the supply delivered We that unprecedented effective and alliances Navisphere, our help continue efficient new more

solutions supply chain customers delivering for and carriers. our built for for are billion our our experts All of of $X these advancements and investment by part technology that's innovative

this our investments bookings A few of continue quarter third platform. to to automation examples also XX% and compared truckload the users tech last of in the improvements include automated of on year. increase Our a fully in drive number

digital we've transactions and a users average XX% to carrier-facing already exceeded up Our a for ago, monthly daily to year our digital over and year. customer were increase. the and transactions billion applications continue compared the And of

by low the air cargo augmented we amidst by well capacity, forwarding global pandemic. third levels reduced freight customers to again inventory In both in demand. revenue gross new to which market pricing to market, customers. in Our support XX% our worked existing higher ocean uncertainty and impacted across the continued from ocean replenish from capacity performed and with several was The the charter flights as increased was quarter due market industry, our increases demand business the driven widespread

optimize our the to balanced contractual and growth our business goods margins moved year-over-year enabled Our net XX% revenue. continue to that ensure while are us net possible. of forwarding as global expertise, in Robinson's as revenue and spot as and and a in scale to chain This shippers resulted rely on quarter, data critical in advantages both portfolio inexpensively global supply quickly

health taken structure new managed since as in As to as customers lot how through our a both our and agile, sell flex effectively, We've and of of how ways, steps our serve differently, demonstrate we in reduce to pandemic cycles our teams. ability employees be and our cost costs. to learned to controls how we've and to this the organization carriers communicate we've and discussed business this the to across pandemic, safety work more on the change. virtual how The more we've onset work to ensure collaborate our and while

our investment of the our we're going expect our the customers network by to in annual continue to time the This create evaluate I'll to Mike now to our review As our to we We're our the transformation, unmatched managing business to back stop the manner. of and we our operations some $XXX of we're business a cost technology million for specifics that the experience, to XXXX. of to reduction result services, of unlock and combination ability our communicated, previously call our of and our to of information middle of ensure this technology turn continue carriers achieve suite to but performance. utilizing not advantage. in half both invest our we'll better and our outcomes scale, and target growth continuing long-term harness there. efficient benefits global is most and efficiency, now third We'll financial by global quarter

Mike Zechmeister

and Bob morning, good everyone. Thanks,

revenues decreased increased third majority NAST a service higher in gross QX Our in in purchased compared load in by revenue QX volume cost In the our revenues last both increase truckload, X.X% revenue truckload the driven third company the gross compared decrease The lines. Total the net year. last per increase of of to higher XX% due and primarily in pricing resulted was to across to cost quarter, increase X% net transportation. year. in a XX.X% quarter

net and July both day business August sequentially low revenue our mentioned, and Bob improved per a As in hit point September. in

in last year. Our in July, down monthly same down net and to in periods X% August, revenues per X% were September QX business day down in compared XX% the

X.X% decreased personnel growth versus QX per driven percentage year-over-year our equivalent headcount with adding year. points. month company in by primarily in X.X%, full-time Average for expenses accounts despite were savings cost acquisition year seeing the approximately As efforts on from reductions $X.X of which revenue day, work The Overall, and sale employees expenses to Bob due approximately decreased year, $XX of travel. hours year, SG&A total mentioned, October, quarter. of $XXX.X gain a was QX last Prime acquisition two is from QX or QX which Chicago. building business million, third Prime Average initiatives. an in year. totaled net the million primarily are reduction cost reduced the QX compared the despite down of X.X% QX we growth increase $X.X to first up over the X.X% ongoing our last compared short-term office a last expenses significant to million again reduction overall $XXX.X generated in in million million in last benefiting headcount,

the previously, savings temporary suspension and we of personnel, company the to in and project travel entertainment, plans retirement Canada. put we cost communicated As and in spending, initiatives non-critical place match US the impacting

in income personnel third by expenses. last to estimate from we in initiatives, communicated of As we now QX the short-term run rate, these $XX was will earnings XXX the year, dollars due which is last and points the compared operating $XX offset to primarily revenue quarter in compared our down a million QX approximately cost approximately decline reductions on operating XXXX Total by basis the year margin and declined versus net be result million call. to XX.X% QX savings up partially

Third other debt QX and due quarter down $X.X to to QX interest $XX.X last lower a year compared average million QX million last $X.X balance. million, declined expenses compared million year. to interest expense to totaled by $X.X in million $XX.X

Our rate QX X.X% weighted average to last interest in X.X% year. QX compared was

a a $X.X to Our other expenses from currency million loss year. of QX in gain last compared included $X.X also QX revaluation million in

XX.X%, Our rate to third rate tax XX.X% effective improvement last XXX was in point compared the a QX quarter basis year.

per benefits quarter. the XX% X.X% earnings utilization totaled rate from share activity to million We foreign last $XXX.X Our down discrete communicated year. tax Net in be additional that the option now down range QX and the in rate income deduction effective XX%, an our QX expect XX% previously. employee from included versus tax XXXX we $X, increased was third full-year credit and effective stock to quarter, tax XX% diluted to from

Year-to-date flow QX revenue. This the that our million QX by year. and as The due from QX volatility in Turning $XXX in operations business, now cash points compared in similar driven our usage QX. used in in were in in approximately to XX.X% QX. increase primarily million cash sequential $XXX receivables XX.X% experienced with to compared a QX, basis has increase receivable accounts percent QX, improved cash as generation by year. gross cash Despite increase, generation receivable compared $XXX contract to coincided volatility the assets past million a sequential million of last QX cash accounts sequential was in receivable of decrease XX $XXX the with in low improved increase high cash cash of accounts in overall was flow. quality operations to generation by this

communication million, expenditures million are totaled delivered expectations be own landing of to capital a expectations, indicative our of the none expect $XX capital $XX.X end more our QX million our July on bringing at more to million. their While these year indicative our year-to-date down ongoing million quarters capital I $XX.X in spending point $XX going forward. operating to our $XXX XXXX, of cash normalized from like where We of low to million $XX as range, flow full-year million to of would $XX now expenditures the XXXX a range. of we

prioritize risk-adjusted a million to to in committed investment to the continue basis, highest $XX.X consisted of We technology and cash from our to our billion XXXX returned approximately shareholders remain technology quarterly We in on we almost dividend. entirely of returning initiatives QX, which $X XXXX.

As previously pandemic. in hold March the an on of of communicated, uncertainties a program by the abundance given we our repurchase placed out posed caution share

quarter. resume our repurchase plan to Our is share the in here fourth opportunistic program

important to enhance levers we the committed remain and program long-term, our share opportunistic dividend as value. shareholder to quarterly Over repurchase

We cash $XXX sheet cash equivalents. with finished on QX and the Now highlights. in balance million to

we and to investment fund grade needed a ratio to deliver Over helps the the only operations debt-to-EBITDA us long-term, to credit carry maintain that intend cash an rating.

at was million balance billion, down debt quarter $XXX versus end $X.XX last Our year. QX

comprised accounts Our our We available ended credit under leverage of and cash receivable with facility, of billion gross balance, is our end of $X.XX which October in committed liquidity times. matures $XXX of from this securitization, XXXX, undrawn our X.XX which at of a funding and December. QX matures credit was debt-to-EBITDA solid million billion $X quarter

segments. out process pandemic. has and drive will and The the look opportunities into automation continue We business like driven efficiency around long-term normal our our and in pandemic seek post to on new what NAST deliver model to primarily at other in insights Robinson business through new redesign savings

expect Going become to estate prominent. of work we forward, we our footprint network optimization are evaluating arrangements the real more flexible as across the

$XXX We that we of enhance by and meant lower savings was the expect only long-term post in of that expense we that deliver converted now there savings permanent as short-term our that million per year of also two-thirds to XXXX. or Of of savings level virtual committed business expect our savings the we reconceptualized approximately to travel communication XXXX see efforts. needs as $XX we pandemic. have the sustained end permanent note began of XXXX, to as is later Please for million to

As a million our $XX short-term long-term in that for is and both included result, totals savings XXXX.

our we permanent middle complete of to expect be communicated. full better which the expect as million time The cost cost the long-term that sizable are will initiatives savings headwind important XXXX, our results. three-year to coincides originally now year-over-year savings we XXXX by mentioned, $XXX half results, of we of a the Bob incentive As of with a financial be compensation which expectation to horizon

market is final morning. a define call Thanks as We profitable to continue the and turn emerge efficient stronger new his efforts on Bob focused more to our and capable back now for our post I'll pandemic enterprise that normal this comments. listening over share more for gains. And

Bob Biesterfeld

that Chick-fil-A, these the carriers hard business the that so remaining interest our we will our believe make continuing of and Robinson, creating are for as true decisions continue offices the our We'll while around both to best that demand in continue organization. and so that quarter and tighten are our transformation to our in back markets technology comments carrier company, our to we of carriers, uncertainty pre-submitted decisions. And the higher we company, investments and our cycle our that open proud to season carriers' to and caused enter into or BJ's that effectively of incredibly be from maintaining even day to for time driving growth such service needs forward profitable the challenging health the I world. company them during customers we customers' our around holiday thoughtful uncertainty. to a to precautions despite our this growth Bayer, NextEra are support. of I'll that shareholders them. pillars can that share for this our to the our been freight members the in questions. during economic unlock every work Whirlpool, while Wholesale bestowed Robinson we've and the also capacity. can many customers and are we've continue We disruptions driving Mills, trying our environment anticipate because that and concludes customers, that and our lower a on ours, focusing and for our our times. taken stronger investing have of to market communities C.H. measured strengthening are time the midst Through XXXX. employees, recognition the and COVID-XX excellence, A is of resulting our and by team for our home our have of from It's able technology excellence Energy, testament continuing managing quarter and customers has safely we General our At flexible as and efficiency, name in the our that still a service to world our I of availability of we're prepared meet as to work address displayed fourth several emerge our employees we a in committed exceed and employees it the an Mike. values enables Robinson and to better and work your Thanks, in to long-term That thank C.H. guide this Freight leadership, unprecedented been and offices, due our in Target, what our our deliver carriers, the shippers, outcomes dedication just alone team's Donna, with strong Lowe's, customer few from turn that, and upon our of morning.

Operator

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

Chuck Ives

you, Thank Donna.

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

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

your Citi Matt did perspective from for your Atkins question Young similar first Stephens. your model with with and Our quarter how and did Morningstar from Jack is How Chris Wetherbee unfold the Bob now as the with you have questions. us, is revenue Robinson forward? return the worst position With move of to compression growth relative do perform behind own feel to C.H. like a margin we in net to expectations?

Bob Biesterfeld

morning, question, you thank good gentlemen. again for Well, the and

some to in comments, a try prepared will provided deeper we our this add here to context bit additional While I go little and clarity. some

improve important we start terms is truckload, I I we quarter. to that's of believe the were was And a think it's in NAST as the that quarter, said the the markets. that quarter this transition results our with driver largest quarter bottom. results do for the the I sequentially July in really as clearly in that saw the we like progressed. Relative

As Xth take But experiencing dislocation to faced as month we we we're the relative we caused of July bit just to a the in progressed, July marketplace, moved in the holiday candidly, are saw all to action tightness on. the a due came and uncertainty we hesitant longevity costs that mid-cycle and into July. as increase of July, that repricing there of disruption continue capacity to sorts of the

During load we on saw our revenue within truckload. lowest record July, NAST net per

we year-over-year up per to was revenue in resulted net XXXX. July XX% to and that compare were files negative close margin load when it of XXX% Our a our down

customers reprice to freight we about As business, work costs XX% revenue Improved remained a in that we load revenue year to increase September net net work load resulted steady of quarter spot September. the we Volume July back August growth the coupled saw continue in the throughout volume a each of improved to continue relatively quarter. comparison per Within against a sequential the quarter. load with in month trough businesses our moved. and and quarter percentage ocean to both with revenue in with percentages contracts margin consistent from the as got net revenue well increasing we the XX% in July September, business margin come one mid-cycle. per teams to total opportunities to the to the last revenue our meaningful more of to off negative quarter. market July work quarter. the and and in reduction lead the forwarding did really growth net The of loads strategically net actually one gains throughout as loads LTL and online by some performed pretty to revenue into began by from and progressed per strong did share This dollars saw for throughout as And net air accelerate

we While offset air our in ocean that the from rebound did deceleration business nice peak, subsided QX freight a that growth air. see freight in

accounts capture truckload and a in and about couple talked revenues, next of much long-term the model the billion $X.X to holding much that feel at in about the represents ability savings team how earlier, about air we our in Given me, around and company I we side, quarters through pretty as ongoing and and revenue continue to forwarding has in forwarding Net-net, excuse XXXX up. normal XXX the really good both work about with total customer XXX done kind moving a given I these said cycles see total do - of we're given the top results ocean going percentage our as positive feel positive point growth marketplace, quarter, the capacity of the October. that to-date that what seeing about, month fourth the coupled in net is our larger revenues be constraints in net gross and to the we know as repricing what pipeline, And are in to well deliver forward. we in of Mike this current strong

Chuck Ives

find this capacity or XXXX today? reciprocating in As compare? cycle when loosened honored into is then, late Bob, different lessons XXXX did you from with you the customers and Stifel. to Bruce Chan learn too last is did that freight The you are next commitments that question applicable what upcycle

Bob Biesterfeld

compare, question, I'd I'm you retention the those too that it's different have I it's customers customers. past decade our the and think I XXX% and to rate glad that fact think a nearly top don't we to over XXX first got of Bruce, really point and of great rate retention asked the it.

our win-win conversations believe contracts with some into how freight take our that last this the point, shipper opportunity we're not actions product, sometimes through is me, steps freight can and them rising last the are that said, it work equation. Albeit necessarily continuing for I but clients or we're the view which and demand us a interesting today. approach life to that lot to nice We these freight of that and taking a us think freight how excuse that the approach our perfect of alternate our come cycle, managed. for cycles. results do we're annual in that the we've to both being this to the think but some all do really more effectively in of the that long-term to the learn carrier, don't all is the decisions in making those really the we believe environment. side sense. seeing of learnings that you the in from inform lot we process through did Procure tell enhance for helped and short-term, cycle change makes procured, from the of So, that cycle terms pushed of the to IQ and us are that And provide that Part this to Up could that our freight I look, of the big our about do and really relationships the already, a from $X procurement With we market introduce science is we're really an we taking that have launch painful practice really supply billion learnings can will of common have dominate going shippers. does the we're tied parties returns to the either the results still both

in consultative So, a we're to our though, taking more them freight we've those approach the learnings 'XX and managed the ELD and 'XX customers through, where of ways. did to Snowmageddon that Specific take help one those learnings and of phases, shaping the honored was environment and were cases we appears our to great which with be more in let's it catalyst see cycle, up innovative to away commitments the to really relationships. cycle of that of and in returns for new the that your to continue to from we be which navigate, call our difficult the kind them be implementation customers become really, question, strong

commitments short-term market or We back little quickly in those either trust customers. On to to relationships. the bit those regain dynamics of haven't learn flip side a overreacted XXXX. some to in And been in many of the that though, we did did able damage cycles of we that some where some volume cause we perhaps cases, too the

even through intentionally So, cycle the and relationships long-term importance cycle the with being manage more working putting those and value of this our patient we to on together. are through more customers

Chuck Ives

Our analysts. next expect for quarters? costs should to next back some tied the the question that the much and think is quarter, temporary temporary that million more how about is point reduction When those layering Mike was the over impacted how several several costs, how from in we that cost of much you about third actions $XX to think you come at permanent? On back

Mike Zechmeister

Thanks for the question.

savings savings savings in QX. short-term To we me million in recap, that or the to provide generated approximately additional clarity we $XX QX. Let in cost some temporary delivered cost

US expenses, and spending, furloughs, Given of some due match the project Canada, of travel and return Think of about in on plans vast majority the retirement non-critical in the reductions the the the those XXXX. company the nature suspension will some to pandemic.

permanent As both savings. $X converted approximately expense was greater long-term I savings counted long-term would In approximately of savings and savings. short-term savings and included short-term of is we savings is we over than savings for expect began annual savings temporary referred our million one-third of XXXX, $XX had or or travel million for and put, in of savings Simply to as to approximately later QX approximately example, towards $XX $XX QX, million there and short-term By $XX about that all that long-term. of was QX, what total. million way earlier, the of million long-term each

to our than that a As historical be across globe, expect back run business the to much we the travel, at of the folks our level will get impact pandemic rate. subsides essential but lower

and the we QX all as savings annual will that at eventually spend. a delivered So, short-term temporary in lower or we land permanent become long-term savings some or were travel much expense

Chuck Ives

from durability you to question Bob be? to pricing with JP next with asked Public In limitations? have potential months. to but the similar into Morgan Ben for W. what last Brian cycle the a the accelerate your about Ossenbeck broader perspective fourth inning growth the question. over spot any describe current Please supply three Hartford restocking continuing to would data truckload on Robert cycle cycle growth Our drivers shows Baird. comes rates this resulting freight the quarter, inventory provide pronounced of quite investor including rates concerns context growth the peaking and strength and become of

Bob Biesterfeld

World So baseball the on analogy a great after day the Ben. Series,

relative So, I the in innings in this North freight early truckload I America. to we're of cycle think guess

about the shows reference think point in graph and deck the is that important change that a think we when in price have this. cost really I our we

is basis to 'XX and XXXX, increase clearly is positive year-over-year year-over-year look a inflected in price last of in on quarters. past at of first graph, which year is that the - the the quarter that first since largest XX.X%, where decade, The quarter If the second increase in since cost see and in XX% goes cost eight what XXXX. QX you you the year-over-year the the pretty the third back both of year-over-year cost quarter largest this

in declining think virtually that costs guess contract about I is quarter other out those truckload in the that priced where were I there So, exists considering an every environment it than that third were priced year-over-year. way that

got the with in surge in assumption election, stimulus of a upward funding quarter pricing next the in forward and as being quarter this the that fourth is safe and uncertainty abounds. and political reprice US contracts of might the around also into year. on year intersect Europe, with will said, COVID additional demand. US that With seeing a that it's how consumer I that of policy of trajectory be confidence all landscape we think amount we've and around We're tremendous some move cases the upcoming first in majority there as uncertainty uncertainty and got we've the

need seems So, equation, experts our we that of there you industry, on the to be well it retaining who side if long-lasting. both any peers asset are the headwinds are and as my into some like that drivers somewhat with to listen of attracting deal on really there the real could

say macro the some you're factors win turned if we've a a see I of health going that terms we've economic and in inning in, COVID, our kind third expect interesting and to we end. tied with I'd of we here got of crisis uncontrollable So, ball great pretty on things to back field for inning. game asking corner we're the for team the the just where in absent associated the are at And the to the in question of what Robinson, projection in a

Chuck Ives

Can investments from of over the an navigate question examples helped of is The Chan with Bruce have concrete market past volatile couple for you Bob how your quarters? some you us next to give technology unbelievably Stifel.

Bob Biesterfeld

year Yeah, to platform, of such as with are few great things. the of companies Robinson us I'd regular development today aligns through and recent Labs, point already of by this Procure terms launch of in provided announced processes, a as really of C.H. but the a Freightquote well Robinson Microsoft of our including absolutely. technology business our of the our that digitalization we've IQ been we've the the launch life further channels, come advancements that There number updates that on Intel, have have some examples, as tangible to to

been safe customer First can from we that since people really throughout C.H. went Robinson, we supply and this how enact that done keep keep running. able it our flawlessly and our been critical be can foremost, it this can't we so culture in we've pandemic a remote has chains anywhere understated We've to at work March.

the scale, job Our in the maintain order ensuring the we've environment. place speed, us has that security this and tech infrastructure, to done the an got in stability, team the amazing for

call in we business, we headcount the remarks Within between this as improve. point quarter. structural examples NAST as in NAST continues we NAST, driven saw and Index, some evolution. of In to that basis X,XXX are managed. we steps change the difference progress or well that it this really good I and the the technology, in the ongoing volume opening by shared saw Productivity taken change here NPI Huge my the

in at for shipments that's per XX% and quarter. the person up look per we NAST metric key Another day, is

So, historically, tremendous a negotiation a supply pipes some transportation evaluating time and pricing, anyone science, matching our intelligence, you this really external of connectivity the productivity opening data we industry. and internal between percentage the place across and out market Navisphere there of be takes program unlocks around management of of the to as enterprise generating we're has offers, our and internal using pretty customer up pretty spot business been used the all well and and platform systems automated artificial and know of lot taken using We've hell in leading know big that business. shipments. our and providers the seeing demand, of frankly, resource consuming that as process external on Bruce, a what overall you

improved significant better steps delivering way carriers and quality to in in right drove our higher only and more loads for not automated fully also quarter helped their us the XX%. pricing cost north up we've significantly. our XX% also science made around investments in and have These the just that pricing up the was Consider yields. were that on market the timely productivity these of carriers customers, for in spot customers matching costs the but our that side So, information operational improvements pretty a the our improvement our outperform quarter, to

is meaningful a our in just huge the our pretty I a we overall and against the supply and think network value that speaks spread create story value chain. That's there the of that that to there market. scale

routing increasing the in regularity with We failed customer that also guides quarter. know

we're made market delivering the Given assurance somewhere day spot some per manage around the capacity in with changes of them and quotes market. science, through in for the automating real-time help XX,XXX into we've the our spot investments market pricing customers to

and a work So, in and done full the not quarter. really of and our far playing certainly or today few do, hope so There's made next implementation and we're in to in terms going the some we lot that I roll-out real we're some technology of excited of what's progress quarters. this out gives where to have what's flavor what's year coming roadmap, still context about but -

Chuck Ives

issues? next is from Fadi from with of or Hoexter with revenue Capital have Mike Ken in than changes with asked timing Working seems America maybe Chamoun Bank for draw questions. capital The would question policy similar Any Susquehanna alone. and Bascome we larger more BMO growth Markets. what expected Majors

Mike Zechmeister

the large draw in working QX, policy right. not but result You're capital was any The changes. of

Receivables the increase that driven sequential the the gross capital QX sequentially we offset terms payables The in One in pass was impact percent the points compared of note net compared other in XX.X% QX $XXX million which coincided our grew to receivables in the primary on with earlier, working quality in by and mentioned of did is receivable absorption XX.X% I to accounts our due that was talked not as by basis improved working receivables sequential increase the quarter. increase As the of pricing in to volume revenue, driver capital. about. our gains to point also QX. XX improved

contributed flow outstanding high to payables saw operations. payable cash were and days in As from you QX, the balance our atypically high, which

to it payable to runs and our offset are increase revenues a a our to generally sales not addition in increasing, less XX than XX result, are gross about when days In outstanding, the receivables. outstanding, days days payables full as

Chuck Ives

Several to discuss on the truckload America question. your asked pricing contract following please revenue in adjust the ability Bob, short-term. analysts North

XXXX sharp in first able half of or you it in XXXX? of contract rates XQ rates adjust to Given wait in the will to late reset be the spot XQ necessary and be year, contracts this move for in will to in XQ or any

Bob Biesterfeld

Well, say, we are in time long-term that. We're what's of with customer of at our customers and putting terms closely the navigate them approach reinforce, by really the really a forefront working the help market. pricing relationship taking just in customer volatile freight a to

truckload first get would guide the on needs that quarter to will to and off-cycle us necessity changes represents some those of about top I in about to freight billion reprice customers, quarter, our customers. pricing, revenue will fourth with estimate of about pace to our XX% continue which quarter on adjustments truckload cycle on we that based there customer experience by based current of spend. just that XXX moved customers know the be between driven said, natural has routing reprice We existing XXX in performance. fourth contractual our I and the $X.X As really

Chuck Ives

Jordan discuss looking question. environment Shanker from Stanley a Ravi will Alliger and W. Please Bob for with Goldman is question next and similar the The Morgan it spot ahead, with Robert Hartford volume the of be margin Baird Sachs. could that Ben with strong pressure And revenue enough this year still year? margin to revenue start to net pressure truckload still mitigate for possible until of next balance rates part exist net fade? could exist asked

Bob Biesterfeld

look can in I on well over right. four forward are below just contractual business, if comparisons our so is our quarters quarters our four our terms historical - start of with our great our I I averages, say if contractual And business past that what truckload certainty contract with the with margins

quarters. the year four or comparisons So that up sets some for for next next interesting for

earnings a share do pursue We're drive going should our growth continuing tailwind to spot which profitable growth in market, in growth. for nice in return growth we continue And relative to some the market we that come to given through right. volume. reprice, So business contractual of additional I given margins the occur additionally, to to normalized volume a next couple book fact, spot of more on repricing anticipate to more to our market through as participate expect going all we also that expect that's growth, to be the quarters,

Chuck Ives

within and what from coming Chan on headwind are Mike, T&E available? visits, Stifel. should next medical of a kind cetera. front, offsets there What back moving kind et SG&A are in, with The of be comes lot question parts Bruce expecting we of the

Mike Zechmeister

XXXX. Thanks SG&A in in for the We question, some do and tailwinds Bruce. headwinds expect

virtually, while As land to do we increase we rate I our earlier, XXXX. our engage travel run expect historical than to lower with mentioned significantly and expense customers, to in enhancements teammates expect ability an carriers, in due

rising than in In XX% also categories industry. as total costs additional historically spend. the We of SG&A our insurance less anticipate expense are expense represent aggregate, those

as occupancy Real more tailwind in real In network spend. the across in offsets, to of footprint SG&A work represents our expect a be flexible to estate XXXX, XX% our of would estate XX% optimize look we anticipation terms we of arrangements. to

medical also are visits. P&L. expense mentioned Those You our personnel on expenses within included

X% elective to medical personnel and families be see a it Medical becomes to for doctor of easier has to safer costs. have expect historically procedures. X% their We XXXX, as been and in our and headwind their employees

financial referenced As improved with the increase largest be incentive alignment the will is I earlier, XXXX headwind which compensation, results. in expected in to

Chuck Ives

do Citi Bascome Susquehanna. why and Morningstar cyclical Wetherbee this you with Matt Majors questions. you much of similar components extremely elevated with Young with would to Chris ease? question attribute and asked both buy How and pressure in ocean? next for The rates expect to from Bob the When is air

Bob Biesterfeld

the It's capacity is there flights, the a but decreases air been well of lot transcontinental market that's passenger the freight domestic, out come documented of to market, in and right. due in

driven lot activity we've to significant market, of also that. increase that's offset out charter a but So, has of the in seen a that capacity helped

are back more for in. don't come in to net-net know I but seeing back neutral certainly capacity charters a market, So,

bit the the we if in in tightness think ultimately, the strain chain the to significant still overall global add we're the to next the demand have a increases and pricing, the months markets over quarters, several or to capacity about And forward just likely are of there see fewer whether over down, and in scale. while it's distribution last several carriers that we to driving air, and to today, the really course come. a meaningful disruption that supply this, see looking the size potential continue has we some the vaccine some capacity flat market. Relative So, And seeing air at ocean, of are years. ocean these months. displaced we in If with past could quite consolidation COVID the we for remain that what it time recovered is is to point, believe space

discipline that continue as as near So, again is and well. that's ocean to we year-over-year network And lanes. see have XXX% this ongoing that at things driven being of pricing have capacity happened in constraint somewhat pressure the better this of consolidation mode these pricing our trade utilization some given of core going to existing capacity, in an put on

Chuck Ives

with from is forwarding you asked for with How Oppenheimer. Scott do margins high-XXs? sustainable view the question. operating question Stephens similar next Jack Atkins a Schneeberger in Bob The the

Bob Biesterfeld

that we with over has to we're global have coupled and XXXX parts and while forwarding capabilities organic that a believe both making we the of I'm but in are have margins further this of by - a business. year. savings strong at risk-adjusted the and for serve driving investments our great forwarding time we And in which this improvement industry-leading subsequent XX% our driven to Since same well are implemented drawing other XXXX growth, some their business. - great look acquired our opportunities way in in deliver and back, growth, transformation that blend short a of XXXX. years, a Robinson, technology, have both then of XX% their long-term business in many Like evolution really profitability been through significant past this reinforcing drag as is statements if the down gains acquisitions and the as results, and see and we forwarding decisions in So, the operating revenue between basis, enhances and we've gains, seen between those the for margins to been phase on International going return short-term the seeing ranged that Phoenix that can division we year net about that few sorry, future metrics obviously investments to our cost in to accelerate share the

Mike think time that expanding up But in of that to market to the near-term we next continue anticipate achievable. margin favorably cost integrate are that returns some given over So the we are just business, some developed. being that headwinds range talked variable - in about, we our for of we think the in work we really them And really model. fully that coming we mid-XX% the capabilities the forwarding macro year, back as technology think sets the expecting be towards

Chuck Ives

down The secular is Do in count X% Mike with see next for decline you as you Employees question continuing more were Bank technology? employee a Ken year-over-year. adopt from of Hoexter America.

Mike Zechmeister

Yeah.

know, the growth we've delivering productivity marked our been you As a fourth quarter between in efforts. significant and that in NAST. volume growth QX our spread consecutive transformation we headcount delivered favorable

forward, than and volume Moving We redesign committed technology as carriers, expect and delivering have risk-adjusted investment process industry-leading growing margins. to employees continue headcount, with in to our our strong and returns. remain industry-leading for operating continue we to faster customers, automation

Chuck Ives

add you capacity with to Ken rates Hoexter deeper than similar that Bob peak in rally question. next or Jordan from expectations? Do Goldman this subscribe keeping see question be you asked Bank slower do for past, general XXXX is than of Alliger nearing America. The Sachs will with into the a

Bob Biesterfeld

Right.

it's fact to which the where earlier, is I is cycles seen procurement inflect what the course of rates really past quarter difficult. annual the hard part of over So, this the that years. peak positive makes is said be, of we've I'll start going as predict the to couple that really with And first truckload

that I'm back go tracks beginning the that the back guess to of the a to the I to going I deck basis quarterly referenced on going XXXX. change cost in in earlier graph and So, rate

that past volatility rates years and for consecutive was pretty those customer XXXX way see quarters covers more there since and cycles there's up XX two XX rate and - So, then, customer XX them volatile from in and both through experienced play out only five downs. let's basically year-over-year for have went of context course one that lot quarters, data. been inflation ups since quarters, shown of cycle of slide Interestingly, we a deflation. the of the XX chart, the within rate - in terms distinct that XXXX over the and On XX

that a up rates referenced 'XX Following mile was of basis I on QX that consecutive running of 'XX, from per quarters quarters XX of through then dropped year-over-year, QX eight of consecutive five our inflect two rates and into for which one rates followed a by XX 'XX showing quarters negative - now quarter six recovery. got increases We through under saw first XXXX, of first and XXXX. XXXX the belt our we've quarters through then for quarters

purchased about on at our per fuel. again X% I than more not the quarters. One in So, were and future, few fuel, of absolute predictor data reflected what's basis the look some while adjusted peak that third XXXX, this of when the below higher it were recovery about that of chart, point for to is the happen peak customers XXXX, data, on our mile X% other in is to legs rates history our truckload to expect on terms not for do likely that's a I our to but a adjusted that of realistic cost likely quarter a but going contract it's there perfect will run I'd think that transportation share

over way where fact the average we could X% that see capitalize a based to the unlikely a in a market with contractual and of heads, it's in the with cost we still spot in always coming leading consider we time the inflation trend if our pricing really customers. fact not X% So, to And be on like almost a to indicator pretty to along the we've truckload feel well while quarters. benefiting of done up is pricing on contract positioned that, year pricing our that that relationships, that we're meaningful that work

Chuck Ives

question. like from does Brian much is with is question Convoy's and service? differ the Guaranteed on you shippers a IQ Procure J.B. Ossenbeck from to JPMorgan. can Fowler this XXX KeyBanc accomplish Todd and believe three five How The Primary what marketplaces asked over platform? the freight years Bob, how currently similar Hunt next from do with next

Bob Biesterfeld

Thanks, Brian and Todd.

really be just what terms isn't. of want I in what to in terms it So, is of it product positioning, and clear

IQ operating on price executes in Procure think Navisphere delivers science it you I models our platform the outputs focused reliability as and about the is an know really this. is IQ of service. data analytics Procure like improving that platform and process. that

over of customers, and So pilot opportunities time, September, that our freight to-date we've in annual exposure during product execute large engagement $X we billion we've expect an to of executed IQ the with launch phase. our in pace all and to in on of Procure represents Since the in about escalated truckload basis. in the freight opportunities bid about $XX billion platform truckload

other do we transportation over evolve and product beyond. into in and modes this time, also geographies expect So that XXXX will

in isn't. of it terms that and hopefully, clarity is adds some it what So what

framework analytics win contractual expect impact ultimately, is of this of In opportunities. our that business, and improve to to allocations and the I leveraging and data rate our terms science going

Chuck Ives

effective a from XXXX, changes to no Brian current what JPMorgan. Chris Wetherbee Ossenbeck expect to similar the to with you is the range do assuming Citi law? Mike, tax with asked rate question next in The tax normalize question.

Mike Zechmeister

the for thanks question. Yeah,

our the rate. clarity we election of has a tax to long-term will may rates more normalized we if a of you but XXXX law XXXX planning are by or US XX% rate. rate our no of continue question, your represent get tax expectations. tax to tax strategies doesn't our bit Once of As federal, we team to XX.X% of our improve to come this updated results, results XX% changes, where rate have state, evaluate I'd communicated, effective aided and point our headed, tax tax variety one-time effective election On as benefits long-term more the year in, assume been regardless our international indicative on

Chuck Ives

of LTL Schneeberger is was the volume Oppenheimer The of the for you discuss growth Could Scott year-over-year from of Bob. next please drivers question market. XX.X% gains? share excess with an the

Bob Biesterfeld

bring LTL industry. and a got to most put of we We've in to value we about growth new Robinson. happy I'm product one To story think LTL comprehensive lot market it don't it because incredibly the talk I and propositions it's most good retention such a great compelling talked of our and about we're simply, business. enough, within the always winning client

and C.H. regional consolidation industry. And in the made of to our growth LTL has of LTL in working with Robinson we've temperature and portfolio managing an temperatures On all their growth proposition with well. the quarter. control again, new the for quarter our delivered national strong and LTL alone business across within this within within Full OTIF or a of mile less And In while consolidation are product the on part comprehensive acquisition asset-based retail We've platform across delivery control of Prime's LTL volume large in services than our retail as providers. in coupled by and to and today this it's networks. incredible produce hands-down a We most final that the we to compelling existing overall the our channel. to consolidation our on got the companies in LTL, more meaningfully more got all that quarter optimize the freight retail continues frozen we're really invested driven the network reverse continuing a this landscape. logistics contributed in to customers we Also had the partnerships common unrivaled provider truckload marketplace. to our with Time that's we fresh growth grew us our and overall the quarter level. quarter. manage in a with meteoric Prime foods the both have That in growth really implemented We partner as business. being smaller virtually in business Volumes our e-commerce shippers of had acquisition navigate us really them story, temp volume look groups the bring requirements carrier great national year and strategic finally, value Freightquote as earlier by evolving We've legacy the consolidation growth made And Prime in to largest network are win strong in

Chuck Ives

do also are well well? signs seeing structural business business? truckload that now a Stephens we the Wells think as from to Fargo will principal able cyclical believe you pressures Atkins basis are of is question potentially Allison by do quarter profitability on on cycle investments dollars you course automation challenges, impacting next What your the or this third XXXX and behind the of losses, of The the of with the over XX question. be similar Bob. in the Jack Poliniak productivity with the it Is your for last As factors primarily brokerage are last in point? a to share follow-up, underway, with through X%. achieve cycle asked next deterioration this Truckload some cycle, point you employee months market profitability levels revenue below cycle net prior

Bob Biesterfeld

that for lot a you there. thank Jack, and is to There question. Allison unpack

lot know in as to structural in play So, are best based here some do I'm there I things there do my that to as some what think that things going cyclical. are on play. are that I as do of a well here

so look part and Over less it's to the the centers candidly, freight. back truckload localized than distribution an time around short-haul past. moving short-haul going the shorter, truckload I simplest can pretty in today. dollars whether So that identify since than a change supply basis of of length per years. network getting we on the single sense, make change about necessity our period, our the e-commerce, in And right haul enough just Why simply revenue receivers, load big on of is is is as several in likely variable dropped over years is supply long-haul today closer the has total every probably business has in to is to more about important for freight our that that I average right, that ever clearly If the of it's the US that the one XXX inventory structural freight we in few load look past shippers a portfolio XX% do more rise on chain structural not it in dropped been we really this talked net the miles or chain year. XXXX, that's haven't past average we've on the seen

per So the back. come that that there some doesn't we probably lives know and dollars that in into impact of future there on net revenue terms shipment, is

our the discussed in some pricing in would to to but pretty quarters, gains attempted over relatively going time, our unsustainable truckload on some as with but over customers, profitability. select has customers. other anticipate short-term share Additionally, protect impact the firm new pursue margins nature I entrants and categorize downward normalize we've marketplace, have pressure we've been to few calls a some house had it there over is stance protect this has as as past in to an our as taken and some likely with share I on

July, this high at an our the - throughout in to specifically, per all-time it improve net we at low rather was and quarter. all-time took an steps revenue load Looking quarter truckload

about improvements that that back I to up the our and are with well forward NAST. you these and moving to Mike do coupled your margins more some historical focused in the saving more I've believe we're to question we're some get and with to productivity for us today, where power set something margins discrete off low Given in think in we moving over pricing time. going really of cycle, I This I sustainable think on described, that mentioned talked historically have has we're initiatives customers operating coupled that cost the

Chuck Ives

The question similar Company Jason a Credit Cowen asked Suisse Allison from Landry Seidl Bob. with is next and for with question.

main M&A What current market on volatility, M&A color can the looks? your give us considerations potential right how market current for targets now? the any you Given are

Mike Zechmeister

I'll take one. that

business. Our be in top the continues capital transformation growth for to priority fuel investments core allocation that our and efficiency closing

extent M&A is market, The favorable uncertainties pipeline standpoint the outcomes continue pandemic flow deal level environment the to the we of to related to platform. borrowing strategic financing related the the impact be can current up and that a hesitation. is we needed, some with fit, and rates see quarter. the certainly tax enhance prefer cultural presence, as of businesses expand from front, geographic or benefits, lever but and We and scale to compelling good the models. a business a continue over help past improve strong maintain picking our strong build us opportunities technology seems On election Longer-term, M&A of on services, proven our add creates non-asset-based the

we discipline deals, value creation to and all maintain our around fit. For will continue strategic

Chuck Ives

Ossenbeck The for within of brokerage systems JPMorgan Bob. next question from current with cycle? How the is transportation the transparency margins independent rate management proliferation of impact Brian

Bob Biesterfeld

years idea load necessarily back own was So, the put relationships emailed they rates whatever get past. think carrier online that Brian, available experiences then I any can and ago that my to every don't carrier managing the every desk in to subscribe know a XX was tender. they to XX, there the on that was their put a customer rush transparency in that to than hope to when TMS the on I with broadcast were they spot customer to system would I a process today have they using, greater out in is a to book load time would I log in and and and a a rate

paper spot that while. to that and the will with science to generating do distribution the believe been the so shop, to accelerated which in solutions providers economic that that them they're of of that. though ability rate appropriate customers compare So their is the have Shippers have transparency to in for to we speak, has market. just a the that C.H. continue through market that velocity exponentially, in execution a this for end, rate also And goes rate saying around that to that's meet Time be to from committing an for the needs. our rate, that's of equal and confidence them digital I deliver expected our where it is and to case rates time every quite almost move rate or commitment at the to benefit and to On is that rate commitments freight spot a time against the across associated our in market has provider though use is huge ability benefit a terms whether Full. savings rate outcome, determine Robinson without really to a In differentiate with met think And which I giving for going a the

Chuck Ives

increases repurchases? in in The diluted quarter. expect count something X.X% final average temporary fourth or Citi. expect going with Should driving question Mike we share is from in increased this? we should Wetherbee for quarter sequentially of further there the the share What forward was Weighted Chris terms

Mike Zechmeister

We stock was employee diluted in impact - forces QX. Chris. our driven shares increase see weighted two There work stock did Thanks, increase stock outstanding the price share diluted in as The a by million outstanding our our were in at QX. million average X.X options approximately increased. on in shares average of or X.X

our more money the count. Our and stock a from and went of exercised moved out up were options to creating into options dilutive price share the more more money impact on

repurchase that our was suspended share program. we The second influence

dilution stock offsetting As the a option with result, we're not repurchases.

program the our expect to prepared we reduce in remarks, the share resume level As outstanding. time, over our fourth mentioned repurchase repurchases quarter opportunistic of to I do expect the we shares in overall share and diluted

Chuck Ives

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

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

Operator

concludes Ladies and This gentlemen, thank you participation. conference. today's for your

a log You may day. webcast this your disconnect or time, and wonderful at off lines the have

Chuck Ives	Director, Investor Relations
Bob Biesterfeld	Chief Executive Officer
Mike Zechmeister	Chief Financial Officer
Jack Atkins	Stephens
Chris Wetherbee	Citi
Matt Young	Morningstar
Bruce Chan	Stifel
Ben Hartford	Robert W. Baird
Brian Ossenbeck	JP Morgan
Fadi Chamoun	BMO Capital Markets
Ken Hoexter	Bank of America
Bascome Majors	Susquehanna
Jordan Alliger	Goldman Sachs
Ravi Shanker	Morgan Stanley
Scott Schneeberger	Oppenheimer
Todd Fowler	KeyBanc
Allison Poliniak	Wells Fargo
Allison Landry	Credit Suisse
Jason Seidl	Cowen and Company

C.H. Robinson Worldwide (CHRW) 28 Oct 202020 Q3 Earnings call transcript