CHRW - Earnings call transcript Q2 2021 | C.H. Robinson Worldwide, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to the C.H. Robinson Second Quarter 2021 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, July 27, 2021. I would now like to turn the conference over to Chuck Ives, Director of Investor Relations.

Charles Ives

Thank you, Stacy, and good afternoon, everyone.

me Officer; Bob Chief and with and our Financial call Executive Chief Mike the today Biesterfeld, is President Officer. On Zechmeister, our XXXX then Mike quarter questions. the and will a live of Bob provide call for results, will we our and open up summary second

be website presentation earnings at can investor.chrobinson.com. supplemental the Investor earnings release to Our in our section are and slides found of our

of slides. the prepared expectations. remind would However, in we we’re with information the turn not If the over today today's remarks we cause that, may are to follow specific slide X factors call do comments let our Bob. on also first lists to any statements. slides, management's will which that could you Slide to to you refer intended And that presentation results like know our to I'll contain our actual I referencing. forward-looking from differ

Robert Biesterfeld

us Thank you, afternoon, thank everyone, and Chuck. for Good today. joining you

quarter, During moving in results our our chains supply we the by global customers capacity and the constrained of serving on delivered a environment. needs second focused keeping staying financial record

pleased truckload believe are with and less delivered in record and that than experts and combines logistics growth. great the to plus we strategy. volume volume is We truckload we strategy tech right that We technology our air, that ocean return industry-leading processes great

services, larger in volumes, and delivered Robinson services resulted income. our of total for both sequential suite AGP, global adjusted and revenues revenue total in our gross growth highs AGP and of in part profit operating As quarterly volumes, which year-over-year or

transactional in through a how we volume adjusted increase year-over-year. and a came included grew I our service XX% increase comments spot and achieved X% This driven through increase earnings pricing business, sold our we in results. engine. profit pricing load. volume nearly will NAST million in our these engine in priced via real-time $XX per part results volume XX% our delivering talk integrations of in proprietary assurance or market largest our largest when gross prepared This quarter, XX% business network per pricing about increase America. adjusted X% our dynamic due XXXX was T-Chek profit that we or the increase XXX% of a quarter I fourth an by of share second in In truckload, spot capacity of my also through was was high. the our record gross with on of to walk dynamic second truckload from with as an in quotes real-time the North Excluding quarter in XX% capacity year-over-year our

portfolio business While significantly, approximately our declined included pursue our growth. the we in This our continue during as and market to business in reshape quarter volume two the the profitable balance a XX% of increased volume spot contractual things.

first closed a versus for this transactional in XX% year-ago First, adjusted consistent of period. commitments XX-XX honoring is to to max the cost and volume percentage the to contractual the of profitability. And manage And our quarter in our still managing XX% this an second, and resulting of We with business of profit mix volume in with with mix with gross increases rates customers, loads in approximate ongoing limit quarter was year. normal strategic the transportation. margins order due higher a negative purchase loads our acceptance than which contractual in negative

the increased year. linehaul Our carriers of cost second compared fuel last average quarter excluding to to XX.X% paid truckhaul mile per surcharges

average and with cost average haul, a mile adjusted profit NAST billed length X% in in Our combined truckload decrease mile. resulted gross customers on fuel increase resulted excluding our year-over-year. year-over-year highest gross per per adjusted profit in and record, per increase truckload. in This rates surcharges XX% to our linehaul XX% in of This increased price a a the X.X%

quarter, business XX% a to X of still were between contracts the was in continued terms be our of Having contractual awarded in than months. underperforming and to volume quarter XX-month continues The our reprice second this, second awarded some including us contractual positions. quarter one, process on two-thirds greater second dynamic X our for bid contracts. We bid and said to in

routing in business the managed X.X declined saw tender quarter, we depth our X.X services in March slightly June. of During from in guide to

added which quarter increase However, network, of from the in quarter. the carriers and is that just in this constrained carriers welcomed ways first an network of to additional X.X quarter, scale X,XXX was second that the the In XX% one second size over carrier advantage information from market an we quarter of the unchanged average second the navigate the represented capacity customers in our help last comes of our conditions marketplace. we year. the Leveraging

XX% reopening the we expansion as of shipment. increase the quarters said this persist the do second coupled largest a per XX% remaining economy with to year. grow market and to gross outpace continued I line current disruptions shipments continues in million, demand supply, we around in expect continuing factors, with market other ocean and other well and our XXXX. Strong Given XX% of adjusted current truckload year-over-year. of conditions a profit supply, constrain will constraints grew gross the quarter, structural This adjusted came our capacity. equipment shortages last during as through a profit our In we to expect by as increase container of service forwarding, or the And truckload $XX volume through

a great that the customers. team customers add that our with multinational our they team while forwarding done new to need commercial relationships procuring leading needs. serve are also sizes increased Our have strategic The better and to meet to continues existing ensuring job incremental relationships capacity capacity to carrier access that to award our of customers strengthening has their

sustain in more that the we've new next well made and digitization, we to existing we've of expertise. is We continues and our into value as vertical demand and from as towards we ocean pipeline will the benefiting achieved. create early believe peak be holiday that supporting year, advantages from and new There customers. competitive and that for business investments expanded data robust And the geographical network a Our business season turn, our customers in do into win move and market in gains both analytics share and these enable strategies customers remain global our results strong are us that more expect and XXXX. shipping to as

strong service We're a truckload has and retail a home growth volume a through million, and $X services provider growth, organic logistics. LTL largest warehousing Distribution, NAST in market, we've strategic profit seeing built full part increase billion Freightquote and our gross XX% which services as on a and modes expansion retail LTL most and segments. by As technology of reverse portfolio strategy, balanced or in consolidation, our common This continued which investments and adjusted business, decline growth $XX LTL e-commerce delivery is gross such across momentum a XX% of growing industry. digital profit our across including carrier, year-over-year. growth Through its Prime combined than LTL and This comprehensive our less through blend or on customer is consolidation per control, by the acquisitions, capitalized made LTL third of largest in order. temperature and of adjusted strategic business the suite slight focus parcel, and of the came

businesses freight a resonate strategic as volume that scaled to high XX% we not NAST over-year volume In with Freight LTL shippers index second quarter Robinson manage overall last networks. measured their as Our to related large year are in sizes did us partner Cass in that industry volume utilize growth that a same the all grew quote which quarter includes Index. XX% platform, continues includes pandemic industry optimize look Due by freight large easily of enterprise that proposition to small value level. by experience for a well highly increase as year second the compared the and as our across automated to total, decline shippers This systems of to C.H at approximately in verticals. and

not the did While exceed X-year our over time benchmark industry frame. for a the growth quarter

the X-year timeframes. X, the index for and outperformed X, have X We

results and ocean and strong, we continued by was been a adjusted up profit recovery fourth Europe. our of capacity conversions existing airfreight position a partially behind in last service, strained quarter to delivered X% air both support tons gross and gross largest demand of demand Air has capacity charter flight from be continue to to freight to freight international has strong new customers. XX% XXX% year, driven delivered some again over of growth. we increase Finally Demand incredibly Adjusted second in shipped. metric when profit

continue benefits efforts day XX% the sequentially our of air, relying Our offices services quarter company second global can pre-pandemic full world project new our with value second advanced suite adjusted to quarter, Because of around in improved of global productivity solutions. the in deliver exciting and deliver in that investments, on profit and our X% to per in and experts continue which customers returns XXXX. working solid the for ways. ahead. that continued customs Bolstering and We benefits our business globe, by unlock build global members and for our sustainable customers and and years over digital technology, a forwarding shareholders customer advantages ocean business X% and of team the Robinson gross logistics Robinson's our with the our utilize local of logistics to gains results quarter our value competitive the our customized services total that will of forwarding in in across quarters and year-over-year, deliver continue

digitization both for in turn top value results. carriers, and Our drives three improvements teams, are of our productivity and our creating areas to on customers, driving for line improvement bottom primary for focused which investment value in

facing impacts just the carrier lens and year-over-year as example. daily growth our the at customer to with of and grow customer average of customer of in platforms. XX% continues adoption, across carrier the number monthly one users daily our digitization of and the users through platforms average Looking

improves improves rates. amount mentioned for improves our delivered quotes grown our dynamic of digital response customers, and real-time customer our has time connections volume being I that Enabling earlier, for efficiency requests pricing significantly. through win and our As quote the these is tools

with the connections accelerated digital to We XXXX. the second customers TMS and add over during ERP connections our quarter customers new connected also XXX via at with pace quarter continue of an in

our have to of pricing via connection. C.H. we've customer now ERP by XX,XXX or Freightquote these points dynamic well for integrations Robinson. customers through total, via Our customers as web access In portal, capabilities over direct enabled real-time Navisphere pricing these TMS as across their

Navisphere of Carrier carrier carriers side, Navisphere through new the continue web deliver Driver. mobile we On and our to to benefits our versions and and capabilities

we During earnings metrics had on bookings as Page fully quarter, the of NAST of X truckload productivity, our relates our automated again presentation. business. highlighted And finally, a we've NAST it in key over XXX,XXX to couple for

We in productivity by year-over-year our continue to show the year-over-year the change represents in productivity favorable NAST and the X,XXX time spread between indicated point equivalents index, full in NAST. in volume, which our change difference NAST improvement in as

customers strengthened and powerful was are supply We've the We key competitive technology customers' of has impacts impact carriers investments to a the innovation industry our with our experience to is succeed. and timing customers We show results. a compared listen between the and We're metrics. voice per to giving evolve that Robinson, to the of that key these very and Another investments we our person increased and on our company, of top the continue priority customer for experience. encouraged strategic in as impacts bold quarter of we're technology with data got chain with these digital and last for increased the investments our to and shipments making constantly the carriers carrier ambitions second the relationship digital our XX% information up needed progress same our capabilities the the our most year. technology focus the day. charts enhancing and part products metric and Both needs been and our platform overall to customers, of per and metric and advantage review the for these quarter employees, mind. the Leading platform our on in our And and our in clearly of this marketplace. journey, delivering our continually operational

an work be to information suite to create us on rely able a customers team, our Our leading of services market global and smarter their of advantage. solutions solutions extension drive through provide and that

his I'm product Robinson, to for our value the create global lead customers to join excited specifics customers, of our now Chief drive and and for strategy our differentiated quarter three provide digital products and directly Product leader the carriers of for at turn on deep enrich and seasoned next-generation we our as our product across to will and decades Travelocity. call Team industry-leading sustainable and second Mike companies invaluable to value carriers to X experience intersection nearly customer industry, Foods, the consistent innovation to Officer who as creating reporting technology Whole a the continue to brings strategy me. Arun experience deploying value and sit business inspiring long-term financial nearly a that we products. the our organization global XXX,XXX performance. create our I'll experience drive of September Executive have shareholders. of the As be technology of and will while leadership Arun's our Rajan our platforms review suite of at our Arun and and industry-leading will such Zappos, capabilities product Arun as and customer experience is developing

Michael Zechmeister

and Bob, good everyone. Thanks, afternoon,

financial QX, total adjusted driven plus QX, market company bottom solid metrics to leverage and line income. and quarterly a by across In strong variety profit top we line revenue, and performance technology our established As we a results favorable total continue volume, Bob gross quarterly mentioned, in a we delivered in operating records strategy. as of

and from a QX. up XXXX, Our basis, in air. sequential truckload, to business segments XX% to was XX% monthly of of performance XX% company up On each total June. total compared strong compared company XXXX, our On our May, a compared in by LTL up delivered growth per day AGP business ocean, April, basis AGP to was AGP up and XX% QX driven in

a facts per our about all percentage. mile in me simply our function the let With in in a our highs and that, percentage price time reaching To mile cost mile equation. margin margin of business some per is versus illustrate QX denominator truckload the margin AGP This AGP per our AGP QX, AGP declined. share larger

X% AGP XX-year was Our than average. our QX per truckload mile higher approximately

average. than was AGP margin our below XXX more While points percentage basis XX-year our

compressed pricing truckload by dollars percentage. load an predominantly high margin As all-time determined per in markup, to percentage opposed having as is results a price

across sustainable, growing we on AGP and and continue solid optimizing focus AGP With to investments to to We our our overall growth. into growth offerings. and service dollars drive focused continuing have digital customer by be our generate volume efficiency per long-term shipment growth model, our strategies

to personnel Turning short-term and of impact QX higher pandemic reductions to QX last due were $XXX.X million, year. to in compensation now QX of year, the cost costs compared expenses. expenses up incentive last XX.X% related

to Headcount deliver our our QX time expectations, year, Global business. average and QX to equivalents up particularly Our on increased headcount long-term compared in X.X%. of our were X.X% added average primarily growth last Forwarding full was

Combinex of business Surface new XXX Transportation B.V. employees approximately added to acquisition June in the X addition, Robinson. Holdings European In our

in XXXX. incentive our billion, to profit compensation personnel to with higher is XXXX billion. SG&A headcount to of prior QX up guidance up of $X.XX expenses compared now and XXXX we of million X.X% our expectations, expect our from increase which our $X.X $X.XX be associated QX Given were expenses $XXX.X billion

of million, to the million primarily acquisition. depreciation XXXX, to but amortization travel XXXX to the This due includes completion $XX expenses the a million We which SG&A up expenses $XXX SG&A to the billion, million down prior $X.X is include to related from continue approximately $XX guidance approximately of amortization. expect million to total back prior be XXXX of half $XX of year. expected in building to from our is and $XX in

results we've pleased expense Second we quarter million half $XXX long-term report delivers cost completed totaled up savings per a committed $X.X year to of approximately to million year. compared I'm last million impact QX in year gain a of $XX.X included currency on that interest QX work and $X.X that currency a a to due to the the million, QX loss year ago. due unfavorable million and FX to $X.X other that the versus valuation last revaluation.

savings Our in of this annualized rate $XXX surpassed million QX run year.

efficiency continue across and efforts drive Going our to our business enterprise. forward, through automation the redesign we model process into will primarily

and at XX.X% to was from year-over-year. Our up an adjusted $XXX.X diluted year $X.XX, was was points and QX which compared million, operating XX.X% up compared all-time income QX finished last net income operations quarterly at our was $XXX.X QX to last million, margin earnings high QX of share per XXX basis up year. XX.X%

to flow. Turning cash

$XXX approximately last the $XX.X million, sequential X.X% AGP. year. QX flow Our capital of by improvement in of to decrease capital primarily compared QX, was versus working a outsized operating or QX QX Sequentially, $XXX cash increased million, in X.X% QX operations working to a by driven compared million year, last from increase in

million shareholders million. QX represents not through shareholders return million were That of repurchases an of $XXX due caution of level to year, of of versus a We share million returned to shares $XX to million to to expect grow $XX.X year, we long-term, to $XX.X and to investments up last from continue XXXX hardware the the through our were million in million $XX software. Over QX, expenditures Year-to-date primarily QX, at slower in rate increased expect XXX% cash and cash in repurchasing in Capital working than pandemic. last of AGP. capital expenditures $XX a out range we approximately and we million when our a finish $XX by of our to abundance capital in dividends. continue the capital QX were $XXX expenditures increase driven QX of combination

X approximately price end repurchase $XX.XX our on XX May QX, shares During at of an of approximately capacity of share. share year, shares per And authorization from of million this the average we QX remaining had million XXXX. million X.X at we repurchased

$XXX foreign million We only October funding balance cash of committed to QX and comprised QX cash under of cash QX million XXXX. of the carry end We $XXX QX with which to XXXX from excess balance. compared $XXX our credit Our cash at liquidity intend fund ended in of down of to the and $XXX to entities. million, facility, operations our matures was of efficiently million repatriate needed

increased balance working debt $XXX by versus million year quarter was $X.XX billion, repurchases Our up primarily at QX last driven capital. and end share

the end sequentially Our at standpoint, robust X.Xx, we an deal end market net through leverage more QX the remains QX. in and From M&A of the X.Xx industry debt-to-EBITDA at the of from down see was expect flow XXXX. consolidation end of to the

While specific companies for potential see the we on role. Robinson do don't transactions, a to play or comment we

We be our continue disciplined on focused capital remain to and with regard. value that allocation creation in

our investment we deliver us efficiency disciplined We continue to build said, you to geographic sustainable turn Overall, rating an scale add important that to initiatives for small still call for growth digitization tremendous our and Bob efficiency of our enhance That cross Global be in listening and From afternoon. of compelling standpoint, or quality overall prioritize credit grade expand back opportunities his continue shareholders. to a fit to committed to is to leverage this capital into flywheel have strategic in us, now long-term And or service strong growth global allocation we offer growth Thank A efforts. presence, excellent just I'll efforts our maintaining stewardship, landscape. ahead represent companies can opportunities, logistics comments. and to the growth, the we're service to in M&A drive also final our over against capital percentage generating help our we our with selling a particularly market offerings, for progress or Robinson making Forwarding, efficiencies. culture addressable as of our model. improve

Robert Biesterfeld

Thanks, Mike.

non-asset revenues, volumes, adjusted our a quarterly services. that model demonstrated operating based of diverse income profits record and Our gross strength the business portfolio includes of

experts work to that, delivering incredibly And across innovation, by of This and prepared in members the we health to is more to more growth to to to also nearly customers outcomes for platform guided our help drive Q&A better our team And technology by environment, collaborate a bold thrilled health join team turn as open rapidly the creating people and that's team I'll I'm new combination Robinson of I back return I'm safety suite the gains chains, pursuing our continuing in with We excited around chain earlier, back of value as advantage. customers expectations, Arun a to ways, have this world flexible globally of it chain supply the with the to supply office navigate and the and to strategy to emerge for differentiated for said strong us to experts our improved the local I'm stay supply invest concludes return our for team team work inclusive our of And profitability like for global our XXX,XXX people unmatched at carriers to the employees committed of our that and scale, for has results that Stacy continue creating industry-leading with and business guidelines. back experience, capabilities, innovation. we And I'd by more I of capable digital carriers continue drive carriers and by seeing to ambitions customers built our and believe model services. world to service the customers evolve portion in disrupted to proud look leveraging into that forward ensuring for how continue as by Robinson our the technology the thank learning drive order and and Rajan company to U.S we're and our for information course to around delivering will of align across for and of our and advancing modern stronger. began As Coming a market the most share of of and the month. shareholders. call. office our helped hybrid globe, our comments. while world. thousands and the Robinson live next-generation our we create the Robinson, appropriate, with while

Operator

Goldman question Our Jordan from Alliger [Operator Sachs. Instructions] Please first go comes with ahead.

Jordan Alliger

Hi. big selling thoughts about I on truckload little aspects further on but markets. net revenue. seeing your bit on versus picture the a more talk Yes. some Thanks. we your the Obviously, was do know Hello. or could trends transport you dollars, two thoughts price if you I some focus revenue and maybe of of purchase wondering that tightening net start the thoughts anyway just those your on of

Robert Biesterfeld

Can you Jordan? hear me,

Jordan Alliger

Yes, you. I hear you. I hear

Robert Biesterfeld

Okay.

I it have mute, I you're technical difficulty [indiscernible] feel we there. on Sorry, sounds like guess.

margins. contracts, optimizing balance to expect that and about basis. now, to per hard 'XX, continue mean, truckload And second because the pulling that volume the that had pressure of balance think To on AGP the was bid growth markets we the see spot to revenue obviously, number market We're freight more clearly through is I between Sequentially, of in think, We've the pricing to overall by in continue market acceptable to of for now, we point, AGP focused loads really in we avoid are cycle the been continuing the right call, do below last per do it there. and well us. we're working or but we the really the depression growing up I basis, contractual facing on that manage business really right in Jordan, sustained we As of our a range on truckload a last shipment. with outsize your as per and profitability said, see net the we XXXX continued we the these to late revenue entered see as quarter staying early But year. net negative year. increasing see I in range truckload. can into contribute XX% AGP market the year-on-year quarter's dollars, dollars

contracts that on we around so, in focusing risk -- spot avoiding between a a balance take couple negative of and both contractual. addressing to of And propose then and those negatives lot really had files, instituted steps that that

So truckload view that to shorter this this we contract spot thought are had a accurate, going move. we was coming And back opportunities where was and cause year at market fairly did belief the term we the in point, But appear really early early about are in miss now market. to contractual through either agreements some year. us us more to those that

Jordan Alliger

Thank you.

Operator

Your Atkins Jack question, next go Please with ahead. Stephens.

Jack Atkins

and Okay, great. questions. Good afternoon for taking you my thank

investments. drive growth can get incremental big a guess, we're if and to back So kind that all you that tipping we're the that. point, the market about when really about think goes talk those of maybe on that I the that tipping of share makes level acceleration gains come to for sort gains to sense. drive of when I'm further curious, and back really Bob, all question the know it clear and productivity and several feel we line top to of seeing from just step a I take productivity can the market we're at we're trying been point your start going a I investments that share to business here. And you years guess, view it get just, you and specifically of accelerate, the if over in see But have these hit sort could than through just over making think a last last technology several that's to years, gauge profitability certainly market going feels going like course the

Robert Biesterfeld

think has some results today. we're and seeing We're for and And I I things Obviously, this technology investment. financial Jack. at sense, new years spend that as creating makes of increased been -- it a the certainly those carriers. and value I'm in believe us. in ongoing operational I we're couple Yes, the for customers results, looking into digitization investment ways both

would over portal, your access it's that customer matching digital customers. bookings, single the they I almost to And occurring. that's pricing a mean, but well different every ERP, it's that attract for big really we're be our NPI, automated adoption us free we spent that. productivity really NAST certainly of I digital that shipments our that's quarters the building to per the productivity that we've capabilities around within by it per prepared bookings, of or can also a side, -- the fully last for us, the carrier uplift now driven that's and Robinson's speaks way that of and to Index. the way day, engine automated quote and of models fully provide TMS freight algorithms several or the digital different different method deck a whether ability productivity engage pushing the in NAST Productivity broad I truckload to or person booking. gotten believe today proprietary products engines only information on capabilities comments we and in lift the whether carriers with through prefer I Some the against for automotive in web direct talked that today XXX,XXX in new virtually leverage that pricing my mean, not either may NAST,

wild, getting into really the the at we're do line new some capabilities, impacts see So, results back starting those we're think finish not into but again, stage of or I I go introducing to either business. to and early the out

digital quarter, driven we that spot had pricing with alone XX% and those in market roughly volume through of this engines lot growth the a Just was that connections.

we're think in good place, a Jack. I So

to at accelerate with again, remarks, at Arun and said the even for move companies. really strong look that really a us -- a digital platform in I've prepared us strategic a adding lot Rajan, be I as there. through As native to of help help experience product better as leader I looked --

Jack Atkins

Okay. Thank you.

Operator

Fowler Todd question, go KeyBanc ahead. Capital Please Markets. next with Your

Todd Fowler

evening. Hey, great. Thanks and good

So think I impact quarter? spread at bit in appreciate, the the the widen that gap the point maybe kind again, rates the quarter. should per I on Mike, sell to this to between starts think little we cycle. the buy see saw that during unusual a the of and higher it's rate widening has gross that percentage here the reported in about commentary how of But the profit mile on we

Thanks. gross back of based So the year about how think trend half we on do dynamic? that profit should into how the

Michael Zechmeister

for thanks, This our in follows and Yes, cost contract great that's always business. price exaggerated a Todd. And question. Robinson, particularly

AGP is down. margins, transportation of so, And when respect cost to at margins are best our the purchase the coming with Robinson,

widening at so may going quite going but up. be our going it's of the It's to point, the and up market think for that year potentially, all-time high. the at been now, end it's there's sustain in this some still through when that here if We you look And business time, the tightness XX-year averages, some reaching costs start start the that's for to -- when or cost X-year down, to coming you us when started those or comparing QX coming margin. widening when that's of And that's 'XX, back 'XX of averages, the pricing happened margins of when Robinson. start started back QX in what the

Todd Fowler

Got ton it. a That makes sense. of

So if we're to down looking coming about line we think that versus at up? need Slide going X,

Michael Zechmeister

Yes, that's right.

Todd Fowler

Great. the time, Thanks for guys.

Robert Biesterfeld

Todd. Thanks,

Operator

ahead. Please Ravi go question, next Morgan Stanley. Shankar with Your

Ravi Shankar

Thanks. everyone. Good afternoon,

trying legacy with talking that you level a your about the how about gross guys of to about up of are time kind X% future. scale over in talking do being the peers broker margins foreseeable some do to detect for new bit? normal not digitalized XX% cycle XX%, the kind see think the And So, And maybe Bob, level, XX% even legacy the way? little current it same of you

Robert Biesterfeld

gross dollars and load AGP just in our midpoint per adjusted quarter, X load. at average per for or to right revenue net I actual the tell don't trailing second the is XX-year and adjusted I of averages, revenue Yes, right. margins you will profit our basically And Ravi I to back going net What over I'm flip time. subscribe again, would tell to X% gross you,

margins back 'XX, of relationships margins Now, of front are highly at cost clearly, end customers with today. on saw drop against and digitized, when the half 'XX carrier. the we business. they're outsized half contract back end And of X% bunch they're because whole the We've XX% to front those got a the profitable us, highly with for highly to automated our customer started connected, highly both that

a labor But my business profitably lot issues all in lot with into single-digit if a got can work carrier So that's API the you you backside, range day receiving, talk high on X% can highly because imagination. if efficient X% lot long margin I relationship a go mix, dependent to customer that integrated the of or XX% I side to really about, you've integrated not at mid in XX% carriers of of that that's via upon single-digit, margins. so that procurement, customer run have needs think shipping right, a and business and that with is to

so I that, go variables think that not be. going there's into to it's many

we've greater that. on steps the bunch Now with the operating its what of serve, XX%? XX%, that up if cost of us about drive control that at to end and about it of ensure with outside But to this rapid run end. -- we're witnessed our carrier and operating our by end our X%, model the differently what taking to the and survive regardless as Front we and what ultimately, we it's clearly scenarios got sales. if But thrive end and we stays both in lot we're is if think cost to if just here what that want that the expenses of a quarter what can running back sitting back whole as customer, of happens what digitize front the allow because a think efficiency right

Ravi Shankar

you. Thank Great.

Operator

Wadewitz Your Please go next ahead. question, with Thomas UBS.

Thomas Wadewitz

the a to market it framework, this get guess Yes. seems but bit look Good I thoughts at different. XXXX the your I afternoon. maybe -- little to I changing, on seems cycle be meaningfully wanted with

has of business last in manage seems to been just and I'm that NAST wondering a differently in years. the target want the like do mix the business, the if you struggle you the future? So couple It contract way

offer instead I seems XX% markets allow quarter. So it contract? Does you'll changed. mix? to sense that guess, XX-XX trying question then a to XX%, a it target more of the given sense the be a does if potentially to Or than just that me you to it of make make of two believe it's consider as for in And -- to the I less wanted results second one were going know people the terms in I for because credit get forwarding, don't forwarding you think one, lot don't one in of strong but a I think I persist. to strong don't Thank that, just Do sustainability the or know quarters. in out couple you XXXX maybe you. of look of any you in if have thoughts on results forwarding

Robert Biesterfeld

too, good both we'll questions. dock but Sure. but was quarter, technically we'll just -- them next because you That take they're Tom, on we'll

Thomas Wadewitz

you. Thank

Robert Biesterfeld

that we're the working today, contract we respond how shape that and pricing goods. we On on the portfolio we piece, portfolio how side, to to that right, truckload based on shape go-to-market, those

doing months prepared our think As of I the those awards X said XX% kind term, per spot of slightly space for but I quarter. in a or us, we're things comments, the We're well. where beneficial the se, shorter that lot in where that keeping it customers customer as between for to derisk contract today it of customer, with things X We're for out it's of in us during agreements. my and spot. Its things we're a not in derisk

to moving XX% typical really disadvantages is truckload the pretty certainly. around 'XX getting is is creative of true because unprecedented, a terms. in But volatility XX-XX, contract we're point, existed in under to because I the to So from a market market think us that today moving pricing, freight your

not We that operators wouldn't umbrella the serving like that bring most at and access on look a to contractual of we a technology asset to customers customers and independent aggregate can in all good owner own. so their access And life single we're under really to they're capacity want really that. there and -- large built that arrangement. feel We think

to but So versus of level, know we to makeup that kind I of shape sustained that shape the contract get on don't -- spot. we'll a ever the the work XX-XX do consistently

side, it On did. must transitory. kind there's growth the saying we think everyone was the XXX% I And that air this year going was no in Robinson future, last at in way of is this point forwarding comp that be just to freight

a just couple increased and Mike team We've the we course revenue But And headcount in Year really the beliefs years, volume see Short that work that markets significantly. we've fundamentally of certainly in returns modest of what between what so, over forwarding air much don't now reinforces the and our changing in Chinese his own the And I I so last of scale there's of and increased would leadership can last increases we modest the couple internal that ocean minimum. years. has business. anything at business the the in -- with significantly, would how done business can of be of challenged over course call and New the

mix years lot So bringing there's continue scale into We've that we've been based created. the on better to logos shippers And of that. occurred. I a just lot be that's are that a ago that working of added were weren't that manage with that We're to the were does that through now dislocated, market so NBOs NBOs activity to BCOs today, business. forwarder believe typically commercial a than new we X

So, now, of delivering there, of months but from we're months that cycle, from believe there's I'm on not really a a prognosticator or sustainability done that technology the that are and I XX and work of exactly a and also that's XX the the is forwarding what the the lot of basis. because now, size business investments investments -- global on talent been in results both and on of

Thomas Wadewitz

the Thanks Okay. for time.

Operator

next question, go Your Please Morgan. with Brian Ossenbeck JP ahead.

Brian Ossenbeck

kind with to roll just what's because it's just of adapt is evening. more have of look contracts, going more shorter in you're you. maybe the mix think kind notice of to offer taking Or for changed Rob, things your good answer to on that's that of on one the the behavioral the term sign you future? Thanks out to this like to and kind of this keep and something market hybrid question. bit. given market, Hey, something of contract, the Do you the previous enough expand a another you

you're be Just Thanks. want your that? so what any indication more mean addressing that that might moving are they'd how if for see mix giving customers in going And forward? that direction, to

Robert Biesterfeld

many of just up putting like between XXXX And a are days into a with and the we're of options where shippers low, rates mix, been ton that bid we're market end happened Brian, shipper, in that, paying of work the lot and you're terms pricing acceptance you also disadvantaged of XX associated that guides implementation, instances well too 'XX inverse routing annual to or market. and after that. a an today, and different 'XX, realization front goes and customers, No, I a are going and over a by of in think there's cost in how failing, that as there levels it's

for derisking that do going be that the because a with an risk. they XX-month transfer contract take of likewise, you've it's volatility when that as going they're the a it's at a think to and there's a price to sides, hand to And this not markets and are. risk on is are that's been unrealistic over shipper amount volatility to when that think going got carrier moving quickly there, And a both continue I on adjustment so to simply as much

of finding freight pretty winning ship helping market that large that for the I to are to the So helping to solutions in think creative that and volatility. -- shippers do are with deal different pricing ways we're to get find the to approach blocks

Brian Ossenbeck

you. Okay, great. Thank

Operator

Your next Wetherbee Please ahead. go Citi. with question, Chris

Christian Wetherbee

about level that hi. to of of absolute of the of on out. impact Yes, an percentages sort the rate obviously, now. sort dollars wanted I of you before made to the kind the and shake we're margins at come those back direction And that has of where comment kind

at direction the of year. gross sense. certainly to ability the change half makes profit want for sort of the looking the So understand back though, guess, load, I per and to I

some back margins. factors in half year-over-year mix, want so. to thought that the back see improvement level start the that sort made to rates see would make don't you'd seem in year? of So we've you thoughts potential on is expect there to of see shorter other the I off you the of understanding able you XX%, pricing, saying Were in the for down that But into it between half XX% rates some play a as the year, your and you stuck that net of sort basis? comments purchase understandably the Or sequential to contract around before. sure been be see the necessarily margins I'm of until versus better term, you potentially kind

Michael Zechmeister

let of mentioned and in know you not, pivot. Chris, me this question, tell we I repricing, process Yes, comments that out. this can on, so hits if we made focused been we've I are on around level a negative loads basis, negative if of million negative today, still I files contract we about normally XXXX to average, quarterly an elevated know, basis. $XX don't in On on We're in look our been will business. $XX quarterly you a million this I quarter. roughly earlier if your at we've taking loads

year and of normal there's business. $XX contractual delta like in what million second quarter our So just between this looks a

the And is so, we that pursue. to continue opportunity that

pretty course the that start of over the year, You and get taking quickly. start numbers big some to you

on way So the opportunity business, difference. would to biggest the to work probably you the we profitability, that that pursue in continue to contractual tell I improve that is

those of lower just probably same. that that's can far 'XX margins end they negative the you and margins down market right contractual operating the margin, -- down the you net existence the is revenue of difference of the but because now between If are are existence can spot But to just roughly then that than biggest you today the were loads. of the margin, take to take front

at chipping to So away we that. keep got

Christian Wetherbee

of helpful. direction, take the very you spike help me that's I assuming step up. progression further with don't right in rates move a would does type the That quarter-by-quarter should that a of answer, sort that guess, right. That's presumably

for talking we're here. about understand duration I the So

Michael Zechmeister

Yes, you're absolutely right.

market if the take gets of rising steps really chasing Wadewitz's out. mine, of equilibrium the a out. point taking you constantly to can higher some if assume of taking of absolutely those the also but through higher, You're some the Tom at the that you're along questions reached start to the negative harder we're course when point, price in cost fact that's to is instead right at you're way. those two one, But Certainly, that loads sort you a contract, going it

some whatever, reach XX% that's and year-over-year, then you increases if take really plan out or you to status profitability. If start even or improve a, can equilibrium, to that

Christian Wetherbee

Thank Understood. you.

Operator

you. Thank

ahead. Bascome comes Your from next Susquehanna. question with Please Majors go

Bascome Majors

my and thanks for evening, Good questions. taking

go of talked for quarters talk business, and boarding. about it's Can in in five here. some the that I for long-term? if or thoughts long-term continuing. on a trying little you. going. the double early momentum it's about trend sequentially You done short-term don't revenue in bit at Thank specifically, to like is a quarter you the just can it to how where improvement, that's month of digits sense that But what if it the can you've But give you net some where headed about straight us ocean looking stickiness by looks get in think third the risen know

Robert Biesterfeld

see, ocean of front AGP are in look the volume is well. and You and on ocean an the me each right sorry, increased, last of to as five just quarters trying like and here

feed would -- to I kind overused, it's I continues it's that but believe So, say business, the right. flywheel

continuing new so to to shippers. continuing And logos, are logos on new larger build that bring we're

ago. were And like what sizes award they so, years times X our X.X are today

over as that to see consolidations, exponentially continue density we trade continues build just continue we And to more to more so, to able we lane do as be really time. grow

Bascome Majors

on continuing still trim after month? that sequential any be momentum short-term quarter month helpful? And the thoughts is in would the is, the So within

Robert Biesterfeld

I July, say a each is the lot and for adjusted they of forward right, what June June, carry gross the profit terms July. Yes, like into cleanly mean, performance from underlying July pretty in of really looks services I about us day, Bascome, that really would general, in per of really

Bascome Majors

you. Thank

Operator

Your ahead. next question Landry Suisse. Please Allison go Credit with

Allison Landry

and Thanks. taking my afternoon, question. appreciate you Good

should be them -- at maybe or than offerings as pretty this whether read also that organically about just a the the aspect other would or what more detail entering there's Thank initiatives And little somewhat we your talk But current I a looking more that like it. asset I may signal tech focus you if you're through to are markets, to should in that It say, a we Rajan is, M&A? might imagine seems business? was impressive strategic So so, include on? Arun Officer. resume. an potentially I Product I'd that Chief as could hoping hiring key expect intensive But hire, product a you. something

Robert Biesterfeld

Sure.

I that Robinson leadership transformational and our at for experience I'm value global right. quite our The long in So, of to fairly the and next-generation I've for Those of has bring The that I products they carriers facing throughout of critical Chief Officer talent one commitment Arun going of and But as that step developing over time, process, customer the for and experts how products, found really platform He's his extremely getting transformational looking talking here be Navisphere really is a right drive me this it companies. been to this deploying really industry. and him, deep be this been carrier platform us knowledge Arun really extension is person, Product innovation and customer and some with our our invaluable leader. our know technology, team. experience about got the and of customers when I by intersects quite about they we product about enrich create got products carriers. right the to of have because really the best organization, customers on. really things long-term context as hiring Arun digital supported is to and right, part network to and that matter. and considering at that found their businesses, I've for a position our tell the And to industry-leading us that see was add are our rely and of talk history really course for people can the first the

our So platform innovation in carriers. the customers and all global -- and at that and Navisphere Robinson, will product here how he of across our lead again, intersects development with entire his role

it in at being In looking in certainly wouldn't adjacencies it read a areas, to through I M&A other terms of respect. signal that or

about products were really around as and effectively product we the organizing it's creating market. So those the organization in ourselves

Operator

Your Research. go next question, ahead. Scott Please Group with Wolfe

Scott Group

Hey, thanks. Afternoon.

net NAST the hired on thoughts time? operating third for do term any down. up, margins and in quarter, go low longer sometimes sequential end these revenue think of the the maybe on it's it's And sometimes been NAST forwarding margins you the Where never just thoughts So net then towards over some range. can

Michael Zechmeister

like Yes, I I a July would revenue net looks pretty again, of business lot the as on as as mean, growth far in go. revenue, bit June probably per and a -- were day the rates are higher similar, than a in so kind comparisons. given are QX July net little June, as numbers I the just deep they that's

let's So operating the about talk margin.

get trying think As this how of about the get might times question, the does to we it question thinking cycle. to I previous in often I compare was was we

is and time of back go of if this NAST a was that we're 'XX like second you at at comparison, Forwarding time, XX.X%. quarter Today, XX.X%, of as at XX.X%. NAST and for at Forwarding quarter second in And just at so, And overall I XX.X%, at are XXXX and picked XX.X% point second quarter year. XX%, was we

is So kind similar today our consider today time cycle. in an what it would of than a enterprise as in the actually operating I margin was better

a upper biggest things time to I that. NAST. said per goal do able we've biggest the a that mover business in close that moves. is truckload, we ourselves cost of our to right. of revenue long to still the get to now the margins certainly doing what there margins. And there. cost XX% to structure all to to an That's go, terms net move a operating is We're opportunity be XX and shown the believe we're to And right, can where In operating for in is that's structure sudden, But that going NAST. engineering XX%, what We XXs we XX% get Forwarding for of try to lot of certainly factor can is our back be dollars

for current still Forwarding guide And sustainability reserve to of enterprise the business. But revisit Forwarding, at towards the mid consistent the could very we'll and continue but past quarters keep kind can range of certainly margins, that the so, XXs we'll our that right that's will, feasible I'd we say, the think look that and XX% guidance, in if to us. we range, that you for if with for

Scott Group

it. Appreciate guys. you Thank

Michael Zechmeister

Yes.

Operator

go ahead. Barclays. David with question, next Please Zazula Your

David Zazula

had it down haul for you Hey, the truckload, I linked mentioned taking thanks was I noticed believe truckload question. X.X%. to

was I that? change kind or to is trend or how wondering base of whether mix So sort comps, the that business think just freight in describing trending within just is due really do current your there's What sequentially. mix some customer of of you either pandemic

Robert Biesterfeld

trend trend an [technical over been the macro the over down continued course the difficulty]. ongoing past We've of really that to several That's years. see

David Zazula

Thanks.

Operator

Next Please question, ahead. go Bruce Chan with Stifel.

Bruce Chan

business guess, about I cycle. what you Great. just that could with really Thanks just Arun. I seem that. under the I you collaboratively business been your have a much is we for if be And cycle, that's the But, for others contractual manage and it don't the of to congrats long-term I it, previous blunt we've and run you, your contracts. a I over the why question good thing look doesn't customers if to. understand market I your and little so to running for like get very getting mean, have But question a This brokers volatility over theoretically back underwater. seen still some maybe is probably the similar still

market one. a that's tight, than got normal really probably the we've longer cycle is a So

faster move that Things of customer. can are that's right or that your there something going on? ton a providing You're to competitive you value now else just here, is

Robert Biesterfeld

record very delivered a line we on brokerage a services. grew in spot spot XX%, suite And with the our seen have record volumes similar our volume Bruce, the across market is just that really which companies revenues, lot focused the more over results. delivered quarter other of Well, I've entire of with market by truckload are what

business, of is contracts market that XX% Why moves is to that a I in in we the as contractual participate negative the Look, was we that of want increase earlier, a second I the the is on that focus freight in, XX% are having degree cycles. expect Our it that think said to be to want that increase, forecasted but business. this we we loads high year in thought still we're didn't a and going XX% where in we carrier costs go, higher quarter. through

got what our shareholders, And for create But for so, are shareholders. value the our multiple certainly. customers our to stakeholders, deliver we've results ultimately

given XXX%, we as the When retention we to the And testament to view. see so to with those of it any believer revenue, to customers why relationships in try because the customers have I we XX% to I a firm those rates our do positions need that's to cycles, take with and top best think customers, long-term our we with look year, take our long-term. that XXX because we that those I'm up make XX% close do dividends pays a commitments our through at to manage that

Bruce Chan

Okay. fair and the point That's That's a color. great. appreciate

Robert Biesterfeld

Bruce. Thanks, Okay.

Operator

with Next America. Bank ahead. go Please [indiscernible] question, of

Unidentified Analyst

has me announced squeezing on wanted [indiscernible] their to for Thanks your offerings of digital get thoughts guys. requiring afternoon, kind good competitors, I Bob, one enhancing of LTL. they're and in. your in that large competitors startup Hey,

thoughts time kind the your in and but to said thinking of to I that a long your is about Robinson your your has in solutions freight really C.H. competitive kind wanted wanted get moat to I for ability advantage, have markets. there, provide of it that comprehensive tight So kind you scale contextualize of

the you of talk been the last and kind couple of on kind over and competitive capacity seen about kind to C.H. also of we've of maybe landscape given months. real tightness could Robinson able has thoughts itself, how differentiate that the maybe So

Robert Biesterfeld

the those on comment strategies our moves. I absolutely. advantages won't be Yes, their to to believe cited, competitive But certainly or competitors things I speak right. will and I case, that you still

that us America, We freight to help digitizing can which allow carriers all X,XXX relationships navigating last largest more to successful, have are new highly often digit focused of new bring now quarter, challenging our in the Those quarter. on ensuring we customers. to more move signed our are in serve continue carriers are -- carriers North We we to markets, network customers faster. and the those up carriers with which life those we're

I to question that to the As our commitment matters. customers matters last go our to back our our asked, word customers, was

promise. differentiate We continue on to that customer

plus of business. based I product, So the I carrier ability the largest The or leading a is trucker a global services, non-asset our go would believe to -- equivalent offer the or suite them to a transportation we don't blend having surface into customer global be billion multiples between business closest a a a provider product. a asset forwarding next and what our LTL technology based warehouse. of competitor. fifth and LTL the $X mean, LTL largest that's own sixth by We're leading

that'll things those to true continuing resonate believe with that win be service to And of I the of future. investment, believe are those technology the of scale, to so marketplace. to commitment, continuing be today. And us in excellence, customers and of And and I help in true

Unidentified Analyst

of itself or manifest of the in better rates that kind does growth over better time? But margins form of kind

Robert Biesterfeld

XX% Yes, I that talk operating the believe about XX% investing forwarding, of mid and if have operating something we margins. in excess to that are path believe in operating XX% want XXs business that I margins, it a in operating business. does. that's margins believe the we for And -- I back And again, you to

our investing our will love. building in the across great people capabilities. services investing technology great really these life. will that experience are We use customers hiring better to building that love. to globe and We're And we're building and in bring use We're with technology carriers

Unidentified Analyst

Okay, great. Thanks time. the for

Operator

Chuck to would floor Thank the turn you. I closing over to remarks. for like

Charles Ives

earnings again. today's Have talking you to today and look you we a joining to concludes everyone That us for call. Thank forward evening. good

C.H. Robinson Worldwide (CHRW) 28 Jul 212021 Q2 Earnings call transcript