CHRW - Earnings call transcript Q4 2020 | C.H. Robinson Worldwide, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Fourth 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, January 27, 2021. 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 fourth Bob a is On quarter XXXX Biesterfeld, will Executive provide Officer; Officer. Mike Financial our our Zechmeister, Bob and today our

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

that profit of this included the reconciliation have given we gross want sourced of Before renamed. of and I our to better We for I of earnings the the to financial of netting is turn cost statement gross a on A term have is revenue non-GAAP the Bob, our non-GAAP our items it expenses with includes what change transportation adjusted update included couple GAAP been believe that is results, such Beginning with as earnings purchased XXXX products presentation. term over you release in quarter resale. significant the no both cost in adjusted descriptor profit, composition metric the a and the to to fourth net to renamed metric.

adjusted renamed from operations change by margin. the also is calculated dividing income margin metric. is by to term the Adjusted operating adjusted with this We profit. no composition in Again, operating to included what of operating margin gross

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

Bob Biesterfeld

Thank everyone. and you, good morning Chuck,

to and solid on to further repricing the changing our portfolio, our performance conditions was Our broad that market reflect technology transformation are business our by across and service business meaningful results. truckload fourth efforts quarter our improvements advancements marked in continued progress providing

QX strong quarter. global the size shippers scale of fourth sustainable global to business Robinson forwarder, value other our and a to providers impacted augmented to market and strategy by with and with again air carriers support to charters their business, needs do flights cargo sustained our we in procurement Our reputation Air contracting forwarding our to The are increasingly ocean execution from capacity. number a charter working with so. be freight both meaningful customers. continue the demand in as their piece to fail and reduced with In meet coming have evolved capacity continues existing of capacity ocean our into new

our a of scale to ensure to globe should There recent a profit. critical getting despite our regionally enabled up number business Robinson's to moved and in by and competitive around teams per bolstered to our that We've forwarding and talent to hiring and procurement advantages contractual adjusted gross as continue us as of increased to inexpensively volatile market. our data our air our on possible. several our growth. with continue pricing profit in in quickly balanced to portfolio As the on adjusted tonnage in are resulting combined year-over-year the gross is Forwarding the capacity XX% and and This forwarding shipments as global needed spot a contribute Global optimize QX focus result, Shippers growth global supply goods long-term growth our very transaction year-over-year, of global rely drivers decreasing. sizes our shipment have air expertise chain are

and areas such policy regional South historical economies also Asia. in added Latin we geographical America trade is across new This our lanes, Trans-Pacific Europe, and uncertainty. While in in Trans-Atlantic and diversification volatility continue grow customers times we've Oceania, important to of as

building years, out leadership ensuring five development for the our necessary place we've commercial that and past strengthen the relationships our we Over training new teams, global have customer and and been talent that in bringing to talent. on

allows to to right continue and framework combined across unique will easily sustained use value also more for of more these global build format more analytics our commercial enabling in revenue We value consumed sales win advantages high offer solutions the and a we've out emerging us and support to the customers. strategic customers consistent strategies that's created for and that pricing vertical our industry. sustain our a end-to-end increased by that business more and us logistics data strategies believe and an competitive market with deploy centralized to is that the regions will is We've us strategies enterprise to share teams our to create customers, creating pricing achieved. portfolio our enable streams. lastly, gains And We

that to pleased solely this pandemic during count was a carriers carriers market the business. our we X,XXX in global impact fourth reflecting backdrop, had during to the our has than X% exclusively quarter, our to network this small which XXXX the year-over-year. by an marketplace. our partners XX% in very count add now The on customer almost we were new customers. Nearly carrier our active greater outsized XXXX business small in decline in Turning XX.X% carrier NAST Likewise, decline driven small increase XXXX. is an emerging category Against and represented occurred in and exiting believe

routing below X.X that by quarter, in tightness percentage This quarter, evidenced tightness. average As which a guide reduced was truckload with business we entered By routing substantial Transportation we North that acceptance truckload X.X quarter the by well end of seen the routing month contractual operate with negative well, rose as were contractual our remaining volumes normal. depth haven't market quarter fourth that tender This quarter, of continued American our with continuing we and Managed throughout level Surface was in reevaluating to margins. mid-XXXX. fourth fourth throughout Services the at to guide capacity the portfolio our first a depth each of third since levels guide experiencing was capacity

compared Our and cost to strategic targeted how quarter, a environment, rising relationships spot as growth business we in that the market spot and by This contractual of continued Cass of continues mix in last grew a market QX Distribution's elevated. and excluding cost not of of clear price opportunities more business path is at XX%, the honoring impact profitability environment market X.X% transactional shipments this term in our volume customers. volume did to and remain acceptable quarter some tackle exiting other represented indicating spot eight the our approximate as repricing included not XX% our double-digit year-over-year that in volume year. reflect fourth commitment up and approach spot consecutive well. a quarter We strong growth and in volume of volume. overall outpaced very overall year mix a positive capacity, a Freight in With Index, NAST our automate long Prime share captured business, market opportunities the resulting has the benchmarks QX measured show our growth to In efforts to to strengthening gains period. third to fourth costs the XX% This the were cost party market industry rising versus approximately X% ago contractual observed and LTL approximately market, NAST. the in had typical tightness transportation purchased in XX% XX% shift we Due in to while

to XX% contract increased And sequentially Our surcharges average XX.X% QX. fourth paid truckload last quarter carriers increased mile mile of our per excluding per to in line-haul the compared cost cost fuel year.

that the contract repricing increased our fourth to or call, in in compared sequentially of per short-term rate month for our bridge implemented gross in environment. fourth instances sequentially. shippers bids manage Consequently, $X.X rising where the we our to to XX% delaying shorter annual the fourth billed surcharge fourth average line-haul mini revenues customers was quarter. made cases top or said of excluding we've truckload in average and the further the that Having bids. extending quarter re-priced fuel the mile delayed, be implementing of tendered quarter XX% made each approximately that last sequentially, contractual line-haul scheduled truckload surcharges some of XXX truckload bids billed and minimal saw either In of in been volume. customers decisions we business fourth fourth pricing quarter about last represent to rate cost how XX% progress year. excluding their to reflect And we exchange per Our XXX our improved shippers quarter adjusted We annual parties also increased on also this, to fuel a improved load profit accounts On quarter. commented bids truckload I billion have were on quarter's both acceptance our

in that of to the the until around service of of representing $X.X estimate reprice However, gross first deliver businesses. were revenues This C.H adjusted top billion of quarter third Fresh Surface the performance portfolio, about XXX quarter. including those events our year-over-year Robinson in approximately approximately and of fourth RFPs around Transportation now over repricing XXX profit that we represents Because our delayed members $XXX billion truckload We pricing efforts million during broad have first quarter. team will revenues planned we the $X the our in us our that Services, able their a in our XXXX. our our across shippers of of solid resulted accounts business Robinson Managed world, European in growth

the improved each versus profit quarter. company total year-over-year per gross month of QX adjusted day QX in and grew sequentially business in Our

on in Continued in improvements progress meaningful earnings key metrics couple X have productivity efforts resulted our strategic initiatives of technology are A our Slide business. and displayed within on presentation. these our transformation

between Prime NAST in favorable headcount significant Excluding our NAST volume XXXX continue point the a our volume full X,XXX Services, from acquisition metrics equivalents year-over-year in and productivity our of as the basis Distribution change business. the time year-over-year show by indicated spread in improvement to change and

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

the improved is by to second XXXX. over looking person way productivity, per half metric the day. shipments half by second view in Another per of we at And XX% of XXXX, this our

bookings also the this example fourth continue Our fully automated is truckload investments increase year. and platforms. our quarter to XX% number in improvements the a in last on drive of tech users to One of compared of automation

lane carriers the these book search. were carriers During our presented quarter we carrier their over had portal. These and automatically to during XX,XXX XX the an searches carriers with million Navisphere quarter, time load executed the utilize load unique of fourth web related XX% a to option

human engage to automatically percent in temperature our to add continue technology access than our to be procure evolving and with that have end, our procurement launch through since our the commercial for increase controlled to and access truckload and to connectivity our by intervention. tool With to The advantage with we less ERP TMS American booked US HAZMAT quarter nearly truckload active strategies. carriers in positive volume over continue single-stop services. needs, recommendations customers to meets them platform. the intermodal optimal first provide onto platform, automated to to We're freight our growth without XX,XXX build available been digital to We their booking of [ph] taken truckload, to been we and for of with we've with modes engagement drive lastly, of carriers ability connectivity direct during any we're able procure that XXX and that self-service the freight XX% the And experiencing IQ able have sub continue customers to and as freight we've other will North of efforts, capacity yielding of and our customers early September, tailored more returns. end IQs connections

managing customers of the information technology our of better most transformation, to unmatched global growth to of move As now middle long-term track call suite the we're the financial and our we of cost we combination services our our in creating I'll efficient million manner, experience, our our quarter And removing and a business to XXXX. to result our into our harness for and performance. achieve network turn as on benefits to business specifics and target by investing by in the to Mike carriers ensure ability investments global operations we're of our review continue to of our of XXXX, that our and technology $XXX and scale of evaluate our utilizing efficiency fourth outcomes unlock the advantage.

Mike Zechmeister

Thanks, Bob, everyone. and morning, good

gross revenues across majority business XXXX to of XX.X% pricing increase QX total Global of primarily in XX.X% higher by to service due increased delivering volume million adjusted a our quarter to lines. adjusted QX XX.X% increased and primarily driven transportation XXXX. compared quarter, higher fourth the compared our Total profit fourth by gross Our the company up profit, in Forwarding $XX

profit to term up expenses gross was and that volume. renamed QX, in and included As profit profit, Chuck December. to stated the the adjusted up QX XX% Forwarding XXXX, up QX added the for at compared points. XXXX, of million, included the $XXX.X November or totaled aligned X largest per composition to call, QX net day XXXX, change of incentive no up softer of versus in the gross last in including compensation reduction million QX year our higher driven had XXXX. that gross a Recall higher pricing XX% Average adjusted the a company percentage with of business in total increase adjusted ocean we acquisition X% beginning to business $XX by basis, X.X% decreased up personnel Within which compared QX have that in versus X.X% October, X% metric. in monthly Global in in with revenue QX On what Prime is headcount our results. the

the and includes long-term expectation the based expenses improved cost compensation ongoing profit we of approximately XXXX aligned also were primarily gross expense XXXX to personnel in results. impact million XXXX, as of compared reductions and forward, personnel our be on short-term XX% continued incentive travel X. expect savings Looking in of the our due those $X.X XXXX in higher our adjusted to efforts of company billion $XX.X US including the million the down with on $XXX.X of contributions and reinstatement January Canada SG&A expenses match QX retirement expenses. QX or to of

expect expenses our of $XX XXXX back million $XX pandemic XXXX half XXXX travel the SG&A long-term due savings. million will to to is billion expenses be million total is amortization of we permanent down cost from primarily expected completing per with We year of amortization in XXXX, SG&A prior the depreciation impact the a approximately In building of which $X.X million related the $XXX delivered subsides. and in include a $XXX XXXX, to acquisition. to two-thirds of or as approximately

we call, long-term on our earnings to remainder that As we mid-XXXX. expect indicated by the savings of QX in deliver $XXX million

deliver and quarter redesign QX increase For expenses XXX real to pandemic. other XX.X% continued efforts. up adjusted cost of in XXXX fourth XXXX. the the arrangements we million long-term primarily will and more was and to QX increased estate basis through footprint example One margin we network income adjusted of become operating million, savings work up across cost across interest reduction optimization compared profit post flexible beyond, due Fourth the automation $X.X Total primarily and enterprise. as to is our $XX and quarter expect prominent versus continue XXXX by operating process to our gross points, the totaled

weighted average X.X%, interest of Our the rate compared was QX XXXX. flat was to which QX

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

The related quarter provision XXXX. in XX.X% was quarter the fourth of to in QX was of one-time and QX was in XXXX in fourth compared effective Mexico, XX.X% rate the Our of quarter primarily to tax due unfavorable XXXX. which to items tax fourth increase rate favorable the

effective tax state XX% XXXX or international the rate in laws. no to tax to our expect assuming We federal, XX% be changes

rate lower our the our tax the effective quarter was XX.X% benefits of to versus tax of to stock per fourth Net in due delivery earnings diluted related As million has typically in share a QX. up annual compensation $XXX.X first XXXX. based and income reminder, a QX totaled $X.XX, quarter

assets to million million by accounts cash cash flow. approximately flow compared was $XXX.X a sequential in sequential to in in capital partially to XXXX. $XXX.X was of in Turning QX. accounts decrease in The X.X% operational which QX coincided expenditures contract contract $XX million $XXX compared X.X% cash operations receivable from to This totaled increase increase million driven sequential revenue, QX offset total decrease million, increase X.X% our bringing was capital receivable million. $XX.X sequential assets spending a in days $XX full-year sales in a with by outstanding. in QX XXXX

We expect our million. be XXXX, $XX to capital $XX million to expenditures

and opportunistic returned We to QX, returning almost repurchases. adjusted pausing cash the X the our rather paid our committed quarterly prioritize deferred QX XXXX that of highest in risk quarter which continue to share of in basis resumed of million entirely the QX in XXXX. to on tax remain $X.XX January a after share $X XXXX. technology in of was approximately on We investment for repurchase to XXXX, initiatives billion program We December, shareholders declared in our fourth $XXX The shareholders. we QX in consisted from we technology and dividend than obligation which

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

XXXX. on and to down $XXX to balance million Now cash QX $XXX of cash highlights. million compared QX in the sheet with finished We equivalents,

we the operations. to the to carry needed Over only cash fund long-term, intend

$X.XX October of of funding also cash comprised and with under our liquidity, of committed ended $X QX matures facility, balance XXXX. which billion our billion We credit of in

matured chose Given our our receivable not to December. that $XXX liquidity million in accounts we renew position, agreement securitization

billion, $XXX debt and no last on balance borrowing credit was at facility. versus million rate QX debt no our $X.XX Our included down variable end quarter and year

credit intention our I'll to turn listening back gross now times, the Thank his aligns maintain QX final comments. call at an end to Bob leverage to EBITDA the of for X.X morning, for grade over with you investment debt rating. which Our this was

Bob Biesterfeld

accounts By and we are but was Mike. stronger. emerging most a you, all Thank challenging unusual XXXX year,

growth expect competitive we our business fully We manner. of of to pricing believe be We're we will and within the The sustainable the Global that our are continue and in NAST more and continue. automated with improving advantage. Forwarding our and trends a have volume a more business pleased in to transacted enabling we digitization

our carriers much factors these anticipate for benefits expect Due and helping customers increase will drive that, to committed creating compassion technology being back we emerge the company continue our while Robinson, them and services customers the capacity, continued We're our and that comments. also the frictionless number of as capabilities, profitable can to industry-leading that's firmly to answer carrier in markets deliver to growth, built delivering portfolio well for it's we adoption the turn company and the combination for share disruptions as with both growth that That it by tight environment. forward, investing both that new meet times our and their shippers market continue outcomes and during margins the world of experts carriers and and and unmatched shareholder Donna, in platform caused C.H thank can this that enhance investors, we to I'm of questions. to members I to unprecedented pre-submitted prefer around and interest advantage continue team and to despite information corporate drivers of by better our shortages of available transformation value. concludes key the with in several stronger. productivity by see for to of freight efficiency, have We're experience, needs. and our a As Robinson citizen prepared and COVID-XX incredibly so supply our truly I'll ever-changing to operate these And resiliency, including chain XXXX. remain the continuing and industry-leading global and the to proud leveraging technology responsible of committed by scale unlock dedication including our for their carriers growth so our of we the the driving to displayed

Operator

floor Ives, the session. is for Mr. yours Instructions] question-and-answer the [Operator

Chuck Ives

Thank you, Donna.

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

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

questions. Our Atkins from Bob about Wetherbee KeyBanc, for Citi, first from is asked UBS from Stephens, question Todd Wadewitz from Chris Jack similar Barclays, and think How Robinson environment American driving profitability? should a Oglenski from Brandon Tom volumes we or Fowler North productivity increase more for segment American growth? the offset volume truckload Is improvements right this What can volumes? truckload is for North increased Robinson focus to with

Bob Biesterfeld

question. and Chuck, you the thank for Thanks, gentlemen

combined the both So of for Cass I truckload volumes in and were LTL our the Index past growth outpaced the the NAST rate truckload year and earlier, each quarters. but said as volumes, basically eight between our flat, of in Freight

all that we our our goals value several spectrum growth be our our on of I've in times, said NAST, initiatives has a Growing customers thousands confident truckload of proposition across We're and can our going through we the to operating improving and primary certainly odds. these volume North margins for growing largest how volume ever sometimes key truckload most the also Street two business. and remains inclusive shippers margin world complex team thoughtful share that publicly Main to our share improving focused feel strength operating As in about two market of the businesses. the and be of at around profitable services are from of serve taking the across across American focus

XX% out with the some fourth the of XXXX increasing priced that against and in make year in over last contracts towards increasing tail some had XX% the a So different we critical where in to throughout at needed third honor some on cost then quarter the at intentional very decision and quarter those in marketplace, versus business we clear move exit also in to mind expecting some where if would forward, to to a $XXX mutually agreed wasn't profitability. we that path were to reach we there keep had needed in that were say and end during plans are And quarter business that actually environment about first going million customers, to I volume evaluate marketplace some the those identify seek to spot our fourth manner to pricing in to these we the put calculate customers quarter which to couldn't as based cases where the we're reprice spot quarter. for we some commitments short-term we how where through committed the agreed subsequently with relief, in manage pushed the year. we we potentially this in shipments and of contract to that risk. where quarter to pricing And versus cases was going

experienced in it So strong contract the declines offset market spot we in to enough wasn't growth quarter, this of some portfolio. but our the

about the unlock of to terms In conversation a continue productivity, profitability we see large there.

back the a to transactions on said XX% day shipment that continue we and arena cost were and to drive execute our a down half and up expand of per the basis. is automated per shipments in capabilities As year-over-year our in frictionless year the to person significantly

person be on per where continues per to So focus our and cycle in our are in still transaction basis day share. and improving the improvements shipments while automation, seeking process of our regardless gain to per cost through our we lowering

Chuck Ives

are and Todd The digital from from from next perspective, what some and Landry do expect Jack are of Suisse your the Atkins you with bigger Stephens, in major of to picture asked projects what terms you Bob a with similar Credit transformation think you XXXX? question undertake is Fowler in questions. KeyBanc, inning Allison

Bob Biesterfeld

use cycle. I quarter the analogies, when So talking analogy innings last I to an sports in about fairness freight guess

the quarter we I'll given time talked analogy. of is around Super the as initially tech, So XXXX that right billion corner, use Bowl XXXX. a When boxed to in $X we our that investment this maybe football

just if couple think about we're five-year into plan. a that, years So of you

second them quite not halftime end the the quarter but towards through push maybe zone. at midway and So

really the new like to Labs. also pricing TMS several our of capabilities initiatives Intel companies for partnerships connectivity by ecosystem. past commercial automated well our and SAS, in it ERP and our new delivered an incubator, LTL connect adoption call reach systems. and of our our as products enabling C.H. platform for partnerships these automated our most strategic booking with that the load into Freight life established of launched Robinson and truckload platform with increase. and capabilities continues each industry-leading Over we've to we've And several We've customers R&D announced IQ like and we Navisphere quote delivered through capabilities bringing customer and as Robinson which procure across carriers recently extended quarters, Microsoft customers and number We've and

Navisphere product vision and grow and at add capabilities industry-leading Our to product motion users to as modes visibility continues that add to all global in inventory all and provides geographies additional that across we rest.

that's carrier platforms this the opportunities stability for for clearly we is believe of also In Navisphere the ability meeting the products the want of innovations, our carrier improve of we're through in systems carriers investment provide scale we're customer We're to invest terms mobile a each best and and In all carrier personal this we do continued and platform, more transition and fully providing our operators backside platform. scalability, to and and how as solutions the owner of We carriers the these possible a the us. life form priority business developing to for offerings is facing in and optimize do to increasingly where on and our our business. its Azure based they to Cloud. for outcomes on quality that executed security being web our the

all reveal want be a really This clear So on we're we're big but in background. more excited isn't to that continuing to those also necessarily for not for we greatest We're an our the the to value several and coming on approach agile going return to think customers and we taking highest I and building quarters about, carriers. shareholders be roadmap bang that to bullet projects coming announcements the a prioritizing are the that look have the in our big or we're approach. at strategy have of going a our this silver

of to that launching We people. for focus are changes technology most and by our that operating areas we're accompanied too of these also changes realize of are model many have

are of of talked is and a strong time across digital across public So ahead transformation but much around work underway board proof points of for and couple load XXXX we in returning over is each it from had stock know the for we point and the Index, really NAST portfolio question in about moving alone what improvement as to is the our of X today million in our to innovation. per that know at forum roadmap $X fact truckload no opportunities shipments is that box that quarter person this NAST, last the in Productivity the our the relates the investment we and carrier And per prepared business deck, shared units. billion opportunity points around of that day the we an we comments our is while all data that results. to searches a delivering we tough book XXXX, Part that what a to makes there automatically answer also

that getting going we'll we're prepared soon continue four for continue to of of so, we finish going years be on as evolve, part evolving we're to to values innovate as And next to these investment as in to next constantly, horizon. our that and out

Chuck Ives

Susquehanna and coming to a in current results? what net from will provide enhancements, where or you Schneeberger question operating up headcount these as you level in margin financial update view view with you inflected to reported Scott Our basis besides margin normalized XX.X% mix Majors was business an operating question. sustainable similar how can with as NAST? the asked From Todd XXXX. Oppenheimer XXX productivity margins for KeyBanc, With of Fowler standpoint, surfaces points of QX quarters? expandable or with and Bascome and a is Do next positive year-over-year Adjusted in

Mike Zechmeister

for questions. Thanks the

that targets think margin now long-term our note I we're to adjusted targets them important changed. it's operating not margin operating as or have calling

a from the For some long-term to will some about headwinds in better, return margin continues XX% expected compensation adjusted be productivity talked of enterprise we've the of like the target to or our and cost XXXX, operating for the XXXX. tailwind incentive be short-term us offset savings help of that improvements continued

to expectation continues the than grow target be XX% long-term ongoing with our For to margin NAST, volume headcount. adjusted faster operating

to person is a coming you per way in our productivity shipments initiatives day good results. our through for per see So

our think XX%, is a which delivered long-term our while that way would margin the over near-term. QX, as target, about to in be Forwarding, long-term the it Global better suggest we For target normalizes exceeds to continues mid-XXs XX.X% we

Chuck Ives

next from given congestions Chris demand ocean through The and season? the question peak Wetherbee more overall speak for Bob can comes the this Citi. last robust in of to strength than Please

Bob Biesterfeld

ocean space. sit slowing demand So nothing today, for in from Robinson necessarily us Services we where the there's showing are down that

and seeing that us I itself carriers not in is known instituting typically the just to double-digit percentages things that that and demand down. think year, order well capacity more winter tells blank removing adjust aren't manifest which months demand slowing lower it's we're sailings in to and are there historically this of really

are and are coming bookings as several next for for to out that space clients, are is customers than we forecasts to longer new with frankly list customers Our today weeks as comment it's really new strong and been. the strong of daily their ever us engage our we look

just want provide to to scale not, I where global are again our especially just and I of the customers think the continues us solutions in the is the strong in business lanes growth amount new space with and really, capacity others trade ocean enable ocean in really our to sales forwarding in been space. commercial reinforce and the our of activity existing core strength

Chuck Ives

with gains from next questions. Chris Global a similar Oglenski Atkins Citi; Brandon Oppenheimer; After XX Brian in in air Forwarding Bob asked past XXXX, Barclays load per with Ossenbeck Schneeberger think your The result months in seen the such Wetherbee for adjusted JPMorgan; Scott onto is strong Jack gross have Stephens; over how your and freight freight of to you profit question should the ocean with in hold with about ability we operations? and

Bob Biesterfeld

will that air balance ocean. cadences supply of more into eventually So demand back normal come in and both and

at come anticipate some some experienced adjusted those of historical that market regardless this we we global addition down forwarding reinforce highs in of normalization historical to is that strategy, played to that more believe air charters more becoming procurement the we've Again of And our are advanced of part when and the of going and which we so, more so conditions year. back pricing balance second as from air in it's look more shipment our and in that continue including analytics freight revenue important We've XXXX. to both could the in past our happens, ocean. that quarters, in our per and quarters business, evidenced that how out improve gross the different in pricing our of already that of through peaks steps to we've mix in structural over air critical strategies we quarter there, several do offering the taken that's our a profit our freight the setting results believe of use

great I and story activity in margin isn't story TEUs on of expansion. just air had our a air forwarding that by really terms and driven volume commercial just the ocean in in We've water of both tonnage that So gains mentioned.

Chuck Ives

Wetherbee Schneeberger Mike Scott Suisse The Chris with from questions. Credit Atkins and Jack next with Allison question from for Oppenheimer; similar is Citi; with asked Landry Stephens;

in strong Given the robust consolidated hold should here? we in are XXXX it versus approximately business, flat Can the gains level about XX,XXX? you QX freight the a making productivity how headcount in you of think

Mike Zechmeister

Yes.

our With the the charts solid Index the saw Productivity in the on and per the productivity per delivered we momentum person improvements NAST shipments that QX presentation. in on you day initiatives,

covering per we and one, good demands is this to of progress for also our question productivity to expected the into freight XXXX ending our on at expect your point, on headcount in continued QX because said, is than Taking productivity XXXX. we slightly closer a driving account robust expect the XX,XXX. or be of So person. would higher business, initiatives headcount focus That average

our opportunistically appropriately down capture staff flexing additional will for to deliver manage we the or So, enterprise and growth opportunities by to value efficiencies. overall drive up for

Chuck Ives

for a higher up throughout offset expect at elevated you similar headwind? through in managing we help analysts phenomenon questions. asked thinking to Allison remain we than increase level, are are XX.X% this question should pricing note this the current If asked Poliniak cost other about XXXX? your with that is Fargo the slide Wells this Bob. can next quarter's How Several cost Or environment, where this you XX.X%. push

Bob Biesterfeld

by Allison. what Thanks, putting to we've answer over into quarter context past I'm this going seen try decade. of the broadly the this to

seen so we highest QX excluding average if of about decade. So record think per mile, actual rate mile customer but per fuel, rate rates actual cost carrier that past the carrier represented not over customer change, rate the actual rate and per on we've mile, and

decade year-over-year and the change were over Additionally, change past the change in in in of the rate that cost metrics the seen as well. highest we've rate both

wasn't in back cost look a change back peak of we terms previous if the the of and and around first XX% in XXXX of quarter in So occurred rate price bit, XX% the respectively. peak per until had that and basis. we where price a two of actual cost the quarters And it rate experienced -- mile at after in on terms mile Robinson actual per

customer in an over pricing we compare of period truckload of of QX time in in increased peak-to-peak. X% if to peak customer So, fourth absolute XXXX price previous has XXXX, by quarter pricing value average that the only the

XX%, cost up comparison again costs So peak-to-peak making when are mile, per that on about comparison. that same we make

horizon expect reprice, we pricing at soften out a in or largely fourth going will such contracts of because change, spot terms as and costs in rate we will the of it of in quarter the to cycle play high of price of higher increase really of we are continue that and see So continue per normally that increase a I course so side a know throughout cost experienced the years, customer don't intensely does. outside to the of the certainly rate terms likely to side, demand ordinary, the market and to kind as actual gravitating X% an year. customer mile, the the isn't than customer actual in of But over couple maintaining the greater time on pricing

cost In market to of of what freight in terms out mile, to see we in in contracts, cost expect moves fourth relative we spot the saw per as the some and quarter. moderation would more

start into now carrying within out January. look quarter, did we the fourth to if we and So this that is trend see play

rate deeper, cost little a customer to purchased given basis that equilibrium. largely On cost. in carrier rate in go in market, by customer for more contracts with came in worth And to spot per such season, in around are basis to was being moderating faster on they're sequential XXX mile change tied when year January rate about mile some of pricing of the the the transportation out basically length. October, rate XXX moving but we've in and points. at it character per is pricing than noting fourth quarter customer above a our compared while at the same change this that in and the than in isn't of basis rate the probably November and year-over-year our December, change January, out price to peak that of of still the with both and in same costs that points environment, in basis, half cost basis. up December exceeded in In that So XXX a seen price down at in change change points inflect that a cost robust the It's increase also necessarily we about extend typically the

Chuck Ives

your QX how of XXXX? thoughts comparisons the for similar as to tougher Alliger The question Chan from Suisse is into Matt Sachs; air of Bob specifically Jordan from with Bruce on and Goldman air freight What Landry are with Stifel; the question. and with situation we markets in Morningstar; next asked the it move Credit capacity forwarding relates Allison cargo rates Young the

Bob Biesterfeld

the well. vaccine that us. the and with in been different charters the hasn't peak PPE, demand indication that and of add So with inventory air becoming more some see is we're and as staff cargo pricing continued countries, products the freight adding there in rollout tight for more outside In will much occurring all lockdowns though, these strong hearing additional will low remain meaningful is terms macro expecting the no and could a which along quarter in of We're the difficult supporting space remain levels. and will of that flights with etcetera, constrain future represent to as second comparable of XXXX really foreseeable tough doubt there a was definitely we capacity of environment,

capacity back more is start really to coming that available to passenger levels air international likely until a on travel. be continue such normal So to an flights issue point

Chuck Ives

compensation temporary the The with Atkins and we XXXX in in XXXX the should return expenses and how puts inflation a from Todd next comes costs XXXX, and employee could versus incentive with some of similar us Wetherbee similar point and freight given questions. Jack from from cycle last Fowler XXXX? in asked personnel in all into Mike, think Citi; about cost KeyBanc question you per takes the Stephens; around Chris provide in insight

Mike Zechmeister

Good question.

expectation I As line to XXXX is prepared improved expenses our with those XXXX profit our mentioned gross on incentive billion, be personnel expect in we of based approximately compensation $X.X adjusted in which and the remarks, results. higher

be X. XXXX, January the from significant company of expense most Regarding employees US the within on and match of return the contributions which savings the back would on the cost came retirement Canada, temporary in personnel return for

expense a of for personnel in meaningful point You XXXX. comparison do expectations think I XXXX. mentioned provides XXXX

you year of As including Robinson, for to bonuses, costs performance which higher led a incentive and commissions. was strong equity XXXX recall

about freight So XXXX we given it XXXX. comparison where in are to think reasonable cycle, be in the to would

XXXX, you look employee. over personnel we were at a cost if per per in $XX,XXX little employee total Specifically,

it X% expectations for to that expectations $X.X our I outlook you XXXX. expectations to the you gets of get XXXX, for add XXXX inflation year billion That relative talked with our personnel to from outlook you decent per combined expense If XXXX. overall staffing gives earlier, about a to

Chuck Ives

that when tightness mix record term The in Brian cycle Stanley near of higher with decline exposure? Shanker a Barclays; Morgan expecting be is of contractual XX% management continuation the JPMorgan; with Was contractual rates. of mix capitalizing the asked Ravi of similar year, seek Bob for in next or or a in and from Understanding good truckload spot strategic to the questions. the time to would Oglenski the for is result decision with much Ossenbeck Brandon more question market a

Bob Biesterfeld

more I'd yield as questions market-driven our of couple with is routing seen occurs in start as as tends a frequency, really that there's fall mix mix market blend simply just fail our spot managing in you've the through is portfolio within that there. factors to to a more XX%-XX% the higher intentional industry guides So, well of – some the choices well and with shift repricing the direction is saying as time. freight that in

Our through contract. that really maybe of peak call it XX%-XX% from cycle more over quarters spot to where and our quarter third mix of 'XX couple contract ranged of past of heavily to third mix mirrors closely being the the past the 'XX, quarter XX%-XX%

past happened back contract around you balanced the in the as of contractual market years, out, was lowest really if Looking saw several and will through max of of in what such of and fourth percentage we more XX%-XX% that half kind the And XX% freight XXXX. we quarter 'XX. then

next As we I the we to well as of that heavier fourth first the that anticipate in starts intend the range to closer contract reprice couple shift would the changes quarter pricing that that towards during quarter, back business quarters. the start meaning as XX% occurred to to in implement mix

kind it best about would that's the way think now. think I of I that right

Chuck Ives

Could competition? more industry geographies? concerns next with over is deliver Brian secular improve Ossenbeck new to service leading The build and multi-modal question other What business from is for lines margins out from and in Bob become the JPMorgan. and strategy time a cyclical regarding Robinson

Bob Biesterfeld

Thanks, Brian.

low past past two we've profit the our quarterly load our per load over record record quarterly just per that seen gross adjusted experienced profit the high years, decade. we've adjusted in both and gross So

to to serve, our some our for definitely and your in our the is and truckload, some digitization cyclicality service point, control through volatility to this lower we efforts there and we're doing line So automation largest need to that through the of cost effectiveness to on of appropriately by our and between contractual share growth. business to that order in commercial spot the reorganize that portfolio business to top working network and our both continuing and line drive about, we've and take redesign balancing maximize talked

expenses are fuel in going focus at way our growth confidently, business, opportunities planned our reduce in cost have I line of today operating we're move cost the to say the we the see I feel in that that originally we top within I have technology, to going we suite point on million we and I of -- that diversified management half deliver past of on is organization. as global time Our on broad to and to innovative combat additional better finding forward. can cyclicality. than one about any as to development new the continue capabilities $XXX our our remain focused we'll services that investments better which to feel And reduction

terms strategy has over years. of several clearly diversification, past our of part been this In the

growth the is leading. part a growth taken You of look returns the that at that LTL in overall is our on, mix business and industry of our business and have frankly critical been

technology proposition Group and freight capabilities grow diversifying Across it's continues the in the Managed supply expanding in and our balance the combined continues fourth and clear commercial the under and really of the to it the most providing of results was unique strong over And client Forwarding business rate network, and a of resonating helped more chain overall blending to with the creates rest and Services share provides outperformance world have portfolio, Europe. Robinson Robinson of market. both provide that's customers business a to to our quarter complex largest portfolio and a it investments solution management Global really in in connectivity never continues Our also well returns. sticky our of relationship expertise value to in us into the maybe enhancing than adding stabilized and time. a our ahead over they're the the talent Forwarding Fresh of the our of unit with and some years has and between couple And of creates and in Surface business course place Europe take revenue a lot to our high that the Trans market recurring improve continued the and last been

of Brian out and diversification like sense returns standpoint, revenues it our unique makes balance us a to the both be a in it value kind to of to while, really sell of a proposition and portfolio we've helps from at So, market helping shareholders. done path this to in the for feel it's terms commercial us we

Chuck Ives

question with buybacks Citi. direct How M&A, fit the areas to XXXX? for Mike in next interest? free you Wetherbee The do How going about flow any Where hierarchy? from is in are cash Chris of

Mike Zechmeister

Thanks for the Chris. question,

top be of capital to the priority continues our business. process related closing efficiency redesign in allocation, to terms In fuel and investments our primarily core that growth and technology

continuing dividend to without our We are also committed decline.

Next the return to to we we an maintaining credit of extent an excellent repurchase investment M&A, opportunities capital share have would strong our lever grade maintain to rating, pipeline available be a program that while continue to value shareholders. where offers

fit businesses well geographic scale lever that enhance platform. M&A technology continue see as We'll continue potentially a our or can run We also in us add expand the services, to look for presence, to that improve our or Robinson nicely build help culture.

Chuck Ives

next of digital new connect for progressed question from the further to expectations? Brian it As TMS is business Robinson's net ERP efforts adoption with with What The Bob platforms generated Ossenbeck multiple recent to future? activity? have with customers increase in leverage how does JPMorgan. mean and operating interfaces an in relative

Bob Biesterfeld

questions them to Brian. Multiple tackle at I'll time. there and try a Thanks, one

and our TMS pace has through ERPs been connecting We've engines pricing connections with expectations. successful modern connecting and these got our APIs progress Our been has real-time long-standing relationships and in with fast-paced. companies really on with in

question connections are connections growth smoother others experiencing it services and digital through To pricing has the these tendered and are of to operational volume these visibility faster quoting much our to opportunities obvious connections analytical as XX/X, our and We increased able activity? these other to than forums on faster than of activity Some in-transit in XXX. relying significant expect. you might manual business insights. of benefit We're quoting other committing and in processes. older these and the functionality The and more is like availability for also respond

margins, share business transactional It To in automated expect and we with those adjusted on but parts which this active win seen capturing to that positive gross our profit the quite question adjusted impacts. automated these cost grow, continue on of transactional our shipment including to serve. per pricing we've and will per-unit business competitive productivity traditional our are final in So space I'd gross around yield do of is a dollars productivity the we're business, uplift landscape. percentage all your our profit and par APIs our say lower with our transactional significant

Chuck Ives

for becoming for Bob visibility take with is question the of The ingrained Robinson from more next just in customers? many JPMorgan. advantage SAS? How and shippers a to announced program one can Ossenbeck supply with Brian How similar chains you is driving

Bob Biesterfeld

years XX our always our with problems ambition customers' solve our central my Brian, has approach. to Robinson, been to toughest

As the get arenas a well beyond drop-off pickup transportation to within involved result, we've extend in chain the supply that the in of freight. the challenging exciting and really got opportunity just and

this and to to it's shared stages value new supply our are collective now of inventory leader taken to receivers. our a way Our to value work our our visibility that many company's settlement across order our in and is a to base. deeper into unique facilitate has bring real we characteristics to another services, in in collaboration and that geographies and modes of the obviously potential and bear lifecycle the the early cash SAS with can ideate values expertise deep and many of of that extend is technology opportunity companies engagements exciting each expertise, customer industries SAS planning together and entire in new We're to the and together an customers. to of work ways our great no in example attributes to our us partner relationship in can with initial industry with other shippers unlock business best going and chain investments customers. and going bring these innovate do underway. developed unique require to through years the vertical have for together our The segments the believe from We areas expertise This to

Chuck Ives

appears outstanding Brian Have changes The Ossenbeck revenue your to question from have days been bad growth. debt with capital moved of there is with any in or sales next for JPMorgan. customers? from Mike any Working

Mike Zechmeister

Brian. Thanks,

has receivable a X.X higher The days result contract total X.X% days year the of higher sequentially quarters, two by plus accounts That a DSO increased running QX ending QX and over In we've over minute. AR improvement pricing by in past the X.X% said, when to been compared correct. a QX been revenues and You're I'll in outstanding QX that about of using last days while than ways in increased couple balances. driven volume. assets sales talk was sequential addressing

compared by certain pandemic debt expense bad the notably Our driven was and increased primarily of on customers. XXXX categories the XXXX, higher monitor reserves impact to we as in

higher to While our debt compared expense our of debt than approximately average, reduction in million of in we a XXXX. QX prior bad XXXX in three-year expense did was $X bad see approximately QX $XXX,XXX

and data across to and external We greater customer, and maintained of electronic collections utilize metrics. our which We risk QX variety to additional a categories monitor focus with internal improvement and invoicing on all tightened our by higher lead enhanced closely in risk category and limits, key credit receivables continue credit of credit safeguards, by to we've results. results sequential the enhance

Chuck Ives

JPMorgan. question for from next Ossenbeck from The Bob is Brian

You has across driven it mark the or Prime at point? to expectations? other the opportunity or logistics this that verticals has capabilities one-year synergies at attractive are any customers? are with portfolio industrial the compared What And almost developed for Robinson acquisition. How

Bob Biesterfeld

mean their acquisition Prime a happy year. team that this we're labor, hurdles of within that that protocols of really year frontline are expectations really the costs and by And workers great undertaken exceeded profitability team proud the with team leadership. truly throughout driven We some Prime, year, with work increased against rising associated great The transportation. I for full did costs purchased we've the our really safety challenging cost and the of

In with their opportunity attracted Robinson distribution. consolidation time the expertise terms acquisition part in Prime of expertise what the synergies, of and to of in at and was transportation retail to really the bring together warehousing us

two shared value for that and the our of for the and stronger we've serve. several So proposition companies these combination got even capabilities customers industries customers we made an for the

driven tightened especially lot demand from last and the have of some new really Robinson capabilities requirements and on retailers evolved year of these these over As the serve supply Robinson that you're new and shippers in bring their are Prime, in this shipping a some course many achieving full metrics, not has retailers, between life without chain performance time to interest fall or a that difficult has supply like quantities. to chain truckload the reliability typically partner if of

efficiency redundancy both in a maintained and network. perspective, programs some in piloting and order a cross-sell now today we're common national Prime to and opportunities some From those and So, together with to capture with move was to large where rollouts Robinson as markets opportunities synergies us, several we to process of seeing and bringing services under other of warehouse Prime's for in transportation several costs many customers. facilities seeing forwarding the inland cost great we're shared retailers there legacy facilities we're

services. forward moving delivery leverage to network network large providing opportunities as home see also other We as well retail that augment format to our

Chuck Ives

JPMorgan is announcement? incur? produce your offering? viewed start-up question customers there any What rationale and is retail strategic Are costs you Robinson How next Ossenbeck from have from Fresh launching foodservice Brian the behind for the Bob. will the The

Bob Biesterfeld

supply last have integrated As really complex and into the longer the over chain penetrated have with product really it's solutions expanded with providing it. that itself, partners our the go about a solutions that's retail in Fresh chain decade, no evolved right role just about product our selling our actual supply

of supply our our brand like the the take and fresh the right quality really high history us consolidate our really in story this advantage produce. time growing XXX-year services, connect and chain between and was and healthy So produce our we demand the felt products to allow to for dots consumer

of to out label maximize the we're the In under primary of align rolling the use Robinson first the of etcetera. the that terms to existing packaging XXXX growing brand disruption, half we'll order of with start-up Fresh costs, seasons the over market in products

any our has feedback of change. supportive they're the brand, the strategic for and quality packaging, customers terms the brand be of rationale also of from been Initial the really product retail the in positive, of costs won't really the and the overall there and making to both feel due material So food the but launch. look

Chuck Ives

Baird. Holland gaining drivers LTL clearly your expectations continue The Garrett volume was strong market ability Talk last with about very demand question R.W. freight in of for is QX of in the the XXXX. to share? from LTL

Bob Biesterfeld

Yes. Thanks, Garrett.

results we've our really Our carrier in the well spectrum programs, as we think that LTL of services our and that in offering you consolidation quarter frozen deliver I as in the and strong from other scale, industry service We for talked most programs the cover retail control that marketplace. probably fourth our temperature through of at proud that have comprehensive LTL programs continues industries including got offering we're unique service just common really again fresh goods. the to as the saw about products

many gains share XXXX in been some but they've really the Our have e-commerce that including market companies delivery, across felt tailwinds and been by home fueled board.

As be formula I of to and the in winning Robinson retail the has mentioned marketplace. a Prime and consol earlier, combination proved

to in growth all solutions our Robinson Main LTL Navisphere capacity, and large their that that to consolidate businesses are C.H. as our service. by and across order continue to our expect enterprise out industry realize cost demands sizes solutions to quote shippers with for planning engaged we've to those platform Street We leverage customer verticals customized to built value optimize network and Freight avoid ability improve and from capabilities of

Chuck Ives

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

phone can questions, by XXXX a great reached quarter be have I fourth And have in any you day. our conference additional Thank you again If call. participating or email. for

Operator

you participation. your and thank Ladies for gentleman,

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

C.H. Robinson Worldwide (CHRW) 27 Jan 212020 Q4 Earnings call transcript