Earnings call transcript Q4 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the C.H. Robinson Fourth Quarter 2022 Conference Call. At this time all participants are in a listen-only mode.

Following the company’s prepared remarks we will open the line for live question and answer session. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, February 1, 2023.

to Investor conference Relations. like Ives, to now of Director would turn over the Chuck I

Chuck Ives

Thank Donna, you, and good afternoon, everyone.

with Officer; Chief a summary call Interim Officer. Scott Zechmeister, the me our will Scott Financial is On provide Mike Anderson, our Chief Chief Executive Officer; XXXX Arun Operating our of and the Rajan, and Mike experience. a today our XXXX. update on quarter then an scalable model open results up provide operating and the carrier Arun for our will customer to we will questions. improve outlook And path to and for call our fourth

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

refer let Our slides, on are prepared to know you follow comments intended specific do we to the not will we slide the we're which referencing. information If slides.

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

with over I'll to Scott. turn And the call that,

Scott Anderson

supply for including Robinson the all company, chain positioning ongoing Robinson We the disruptions. his an navigated Bob Robinson he role guidance, and Good to years afternoon, like for made the us success. Under for you joining in everyone, Bob's pandemic And as Board's my contributions CEO. thank wish C.H. the XX and and I'd gratitude the the that best. three C.H. years Chuck. by to by the challenges today's today. appreciation presented over call long-term start his you, expressing Biesterfeld important with Bob Thank played

into qualified CEO. search Board, and Jodee's Board lead background I leading of Search leadership new a With the the strategic process. Committee felt expertise, the Chair Jodee Robinson's the was that newly to company is can't a accelerate In initiatives chapter, anyone to find and in think C.H. the Board take of Kozlak, appointed needed. more to change next order its the the and

Robinson you last as give Chairman years Companies, XXXX my XXXX. team first and Patterson I've Chairman of closely most of at spent as well the XX Robinson and the career forward my months. the a I've over Board Board. years background, to at three spent the years and weeks XX look I with also recently little as To here Director a as working XXXX the to Jodee to coming from XXXX in from and CEO as the of whole

with I'm role and relationships my customers experience the to bring excited continue I'm leadership capabilities growth and team delivering focus Robinson to that ensure our of on leveraging I great and the knowledge have my continuing to our to execute sustainable global with Interim to senior CEO. strategy. the of while services superior carriers we

been employees few I'm transition our confident meeting I've this customers. Interim first are deliver to engaged for my motivated and CEO, who in our and ability our navigate as and customers weeks highly During with win. And to

global balance through of the due profitable managing At operating is for the and growth same Throughout The the services. time, economic costs, inventories for point demand delivering declining growth, transportation transportation ground the our changing shippers our causing long-term and to unseasonably amidst increasing soft customer model elevated and prices forwarding one slowing supply freight demand. improve are and scalable to experience, through focus in a transition, we're on the of cycle foster carrier lower cycles. current

unexpected, two quarters certainly While correction was in forwarding the levels. correction with of was market on speed in the to the some trade only pre-pandemic already rates ocean magnitude and lanes freight back the expected,

misaligned. were As a result, our operating costs

as expect, of our to than out economic adjust are expected savings the opportunities annualized we QX $XXX actions call, have cost annualized net play growth to taken earnings rate. XXXX If The XXXX or on differently announced plans reduce structurally run our generate actions we'll was QX to overall As we conditions our compared million cost quarter by structure. third accordingly.

carriers I our marketplace our uniquely and suite through digital shareholders shippers, believe deliver positioned our to of of solutions, a we're logistics for combination of our global in network services the and experts. global

of let me Mike turn a for over Now to it fourth review results. quarter our

Mike Zechmeister

Thanks, good afternoon, Scott, and everyone.

Our freight surface markets that price QX the referenced financial earlier. transportation and demand results slowing declines Scott the reflect in and forwarding

including compared gross down on Forwarding and basis, in in to XX% basis, company in Global Forwarding by NAST. total XXXX, sequential XX% profit down monthly XXXX offset a in per down prominent quarter driven of X.X% business was or was million market NAST. softness XX%, day partially fourth or compared growth The company AGP and a also a in adjusted QX November decline in to On QX Our an was in total company $XX decline a XX% of October, total decline XX.X% by down with and XX% Global AGP down our a XX% X% December. AGP

X%. our NAST our business, with the basis seven In first volume shipments on a quarters declined down in year-over-year time for truckload

declined Within weakened. December from monthly volume through the sequentially October fourth quarter, demand as freight

our however, truckload Our versus shipment to came year our X.X% QX truckload an AGP but increased last due AGP average. contractual shipment. a our increase X.X% XX-year remained On per sequential down AGP per truckload above in shipment basis, per

since level our quarter second the from the overall we've which which is XX% of third to in of Services seen depth for transactional Managed we proxy compared mix tender in and quarter X.X XXXX. mix volume the impacted in XX-XX Routing of market, approximate same QX, to pandemic a X.X had contractual XX% guide is business, year a our period a an quarter, in the ago. volume declined lowest During the fourth

cost linehaul led through capacity, The to conditions. cost sequential in slowing resulted XX% price truckload average truckload This decline approximate carriers, combined in per in carrier excluding our linehaul market that QX we surcharges. in the declines QX with in paid continued our softening demand, mile to year-over-year as an excess experienced QX fuel

decreased our XX%. surcharges, fuel to approximately linehaul customers, year-over-year excluding rate by Our average billed

down basis. mile year-over-year the increase saw truckload down XX% price With cost XX%, a NAST AGP X% on our a and we in per

inventory Forwarding levels, Global to generated representing of combined import which and our prices the up decrease $XXX.X customer reduced for business, softening XXXX, XX%. quarter demand, a AGP ocean Forwarding year-over-year Global significantly of versus XX% In QX, record was contributed million, airfreight. in In with fourth higher high

growth With shipments. $XX XX.X% by were and our QX compared declined shipment results decrease to XXXX. forwarding these a in QX an year-over-year AGP results, AGP or driven decrease ocean in million The in of XX% per X.X% a XX.X%

by driven decline by XX.X% This a growth shipped. decrease XX.X% per in metric of was a XXXX. business or ton QX in AGP declined year-over-year AGP a XX% airfreight XX% in $XX million our tons compared in and metric to

continues business new from than customers lanes team trade verticals our from was lane. to lanes. Despite trade the market, soft AGP and and In other QX, the approximately generated industry our the new add diversify XX% forwarding trans-Pacific of

Now restructuring-related and a QX $XXX.X lower previously reversed The costs some partially we restructuring than year, charges results we turning last million, due related of driven in including came to million were by compensation financial expense to equity personnel previously as expenses. in decrease November. in accrued expected. the offset compared severance that to by were expenses $XX.X up X.X% QX that initiated

$XX.X basis, QX On declined personnel a expenses sequential million.

benefits due the lower to QX, associated lower million charges headcount. expenses and reduced incentive in Excluding salaries compensation with restructuring personnel $XX.X sequentially and declined

average. our declined QX X% Our versus headcount average QX

The approximately workforce reduction November initiated in affected employees. XXX

XXX XXX had of prior nearly over the January. as those employees December to early left of company While exited XX, had

throughout model, decline expect XXXX as As scalable we our headcount improves. a continue to operating to make we progress on delivering productivity

down XXXX, X% to approximately compared we our billion, total to at due of be headcount. reduced expenses $X.XX $X.XX to midpoint the For expect billion to our billion, XXXX primarily personnel $X.XX

guidance personnel year-over-year. in of expenses is our the the XXXX QX Excluding for X% down XXXX, charges restructuring midpoint of approximately

$XX.X to QX expenses offset will credit to million our to on developed SG&A in XXXX compared The reprioritization software Arun a year-over-year Moving charges internally investments charges driven decrease QX the million partially included that a by $XX.X and primarily of increase speak related $XXX.X impairment of in to were in technology settlements, restructuring to losses. of of SG&A. shortly. an legal up million primarily restructuring by

approach the us model expected. delivering scalable data-driven of not delivering Our improving delivering value are the prioritization investment a and more investments more quickly investments as in we to is operating more pivot allowing and which to is benefits and than are past, the focused on if

legal million For expect million million Those $XXX.X SG&A be we that $XXX in XXXX. the $XX to compared onetime center. are from in at XXXX the million items QX charge occurred the $XX of in the and the XXXX, expected in amortization $XX.X total and QX million XXXX. absence decrease to settlements expense City depreciation our compared sale our million an $XXX expenses in decrease include million Kansas to expected to slight midpoint $XX.X expenses includes SG&A regional include gain two to million XXXX. of and The approximately $XXX leaseback of to restructuring

interest of $XX.X QX QX QX $XX.X million loss compared primarily interest included year, QX million average interest of last expense, million, results versus the QX short-term year by higher up U.S. last currency weakness the $XX.X of also expense revaluation, to $XX.X versus dollar. due foreign driven relative other up $XX.X of million prior rates. million the totaled on and up of $XX.X include a XXXX year. to million

not on which FX gains is the intercompany hedged. losses they reminder, a As non-cash impacts why are predominantly are and balances,

rate in XX.X%, tax at came to XX.X%. rate tax QX year full our bringing

We XX% to international XX%, federal, tax meaningful assuming state tax to year no expect be full our or XXXX to rate effective policy. changes

non-GAAP the share, of $X.XX, excluding compared diluted was to versus or million income XX% million, which prior up earnings was 'XX, charges, $X.XX. was net and restructuring per $XX.X QX the earnings year. down XX% per QX Adjusted $XX.X share was of

flow. in flow million record a of cash $XX.X compared to QX by generated Turning to $XXX.X million cash operations QX XXXX. was

improvement due model. purchase in about declining came expecting prior truckload included and we decrease improvement million sequential as The QX a $XXX in year-over-year $XXX ocean, were air and operating price costs As year cost in when a and working $XXX Conversely, of by an QX net prices in working our have cost the were calls, and to increase price talked million last of of capital capital capital earnings was transportation down. working rising. operating driven in net sequential million we the in

That we and price of on has from of purchased cost QX DSO our down, flow. lag come cost the transportation to realized of transportation QX, approximately billion of $X the rising If and working purchased you $X.X our cash end by XXXX Between capital look and capital over working based QX come increased of when XXXX, benefit basis DPO. net and to has operating and have billion. at a on as was operating benefit back price period the

to year cash of of was cash Driven by free significantly cash by QX, $XX cash and The of exceeded we flow net repurchases returned million through million versus increased driven income $XXX dividends. QX cash shareholders in last shareholders flow. record million the XXX% the and to by generation $XXX QX up returned share

allocation investments and Consistent after committed capital we that with have share excess holding strategy, returning we credit to the managing commitments, shareholders our repurchases. to rating, extent are cash our through cash investment-grade to through to that an

capital Capital year to to The $XX.X to full an was primarily expenditures were million XXXX. compared $XX million, internally million in increase our increase developed $XXX.X up software. bringing due in QX, spending

XXXX million of our range $XX $XXX expenditures in million. to We capital the be expect to

facilities committed Now funding $X.XX million. billion liquidity comprised We approximately with a under highlights. on sheet balance of credit of $X.XX ended of the of cash our balance $XXX QX billion and to

QX Our borrow the given the year, our $X.XX $XX billion, was end by of debt strong capacity last expanded versus EBITDA up driven QX balance to million at primarily performance.

end QX the the from down times, X.XX year. net Our of at of leverage at end X.XX was last times debt-to-EBITDA QX

capital. capital As our I which investment-grade optimize our allows rating, based is maintaining of us on allocation mentioned, credit to our strategy cost

of lower cash we targets. As reduced half our results deliver reduce extent reduce levels, in To may for the debt in earnings the XXXX share the of our given used are repurchases. of that planning the strong we for leverage XXXX, we level first anticipate this a amount to debt

increase quarterly regular our it December, declared authorized In beginning $X.XX a taking the dividend our that XX.X% to paid with was in in Board and dividend January.

decline without for years. We distributed dividends have XX uninterrupted than more now

levers alignment to the term, our and remain we value. shareholder EBITDA program in long repurchase our growth important long-term quarterly as using dividend Over committed cash enhancing share with to growing

strategy our With over to that, carrier strengthen call through a customer operating model to turn our scalable Arun and experience. I'll to the walk and deliver

Arun Rajan

Thanks, and everyone. Mike, afternoon, good

our model a we scalable During our experience improves the at carriers and efforts information scalable customer working efforts price around while These and by our from to serve. fourth to quarter, coverage carriers advantage service operating features build A and continued that customers customers include providing and needs simultaneously improves insights operating cash to scale and model. giving and backwards on focus improve flow. utilization operationalizing reducing cost their to levels carrier

Increased a by billion a demonstrate in that the as are evidenced loads XX% element There XXX% year-over-year. operating across model. which data digitally carriers, and booked carriers increase is board scalable by and XXXX, a digitization points with key of number the in digitization X.X including increase our increased of customers represented digital transactions progress

and road, financial meaningful In carrier in execution processes. XXXX, management, and all touch by order to we tracking, of of documentation life customer, improvements to accelerating points including employee deliver the in-transit our will and continue appointments, cycle advances the the experience cash digital

QX appointment-related the as QX. increasing points XX% with front and in-transit XXX We well tasks, increasing basis in made by versus year-over-year on tracking of progress automation this automation

on to and customer We are experience which enable expect operating or increased self-serve model, improving service productivity are us drive simultaneously and automate that make will while and volume we focused to processes opportunities those headcount levels. to growth the our decouple core

shipments provide the we'll progress productivity to XXXX, we're is which a per metric on person per day, making key on improvements. Throughout measure updates our

are recent model, and assessment ongoing scalable described the our software some of of our better serve. determined and to to projects. more we to we we're reduce improve to evaluation projects, of And prioritization earlier. projects remaining charges continued cost restructuring allocating During the and that customer projects. investments experience tech Mike longer the no acceleration and relevant we aligned the were of Through incurred operating restructuring our that those The carrier and our the therefore, those our efforts,

steps to low-cost unlock priority a compensation long-term We've of the incentives operator, growth and taken us is and accelerate the creating market long-term which ultimately foundational support being our targets. align our while delivering operating to model, flexibility which also to margin to scalable share strategic gives operating pricing

Scott comments. turn I'll over to that, for With his the back call final

Scott Anderson

Arun. Thanks,

highest keeping while As inflationary organization cost to markets continue pressures our need challenges, economic bring needs by and freight to our focus carriers at we of of continue our driving we growth long-term great lowering the to to weigh customers cyclical on overall strategic structure evolving including global the and do our center present what priorities, scale.

the scalable to that a operating strategy team model. the in on believe I is executing deliver

continue all We amplify as drive to which our expertise costs productivity, lead improve for will to expect expect initiative will which in efforts reduce improvements growth. shareholders. also carrier we our and customer gains Arun our our and and of drive this experience the and of will operating returns And said, people, share improved our these will

for market the our like employees and to continuing market saying to I'd you our followed by industry-leading to to carriers. customers during extended close persevering and provide for period disruption the thank and that of service is correction

with And for to of portion Donna the the Q&A I'll call. remarks. turn our prepared concludes that, back This it

Operator

coming first of from [Operator go is Jack Please ahead. Atkins question Stephens. Instructions] Today's

Jack Atkins

taking Good afternoon. thank you my for And question.

months I ago the to address a conference indicate Scott, message listen level you. today, The change similar could So Board the three in change it's from in CEO believes strategic at direction necessary. this message that would the company. the to very on is that call But the the if to I if leadership

those? is Thank what changing as that I my over about here does to question long this Board for looking the So take And where the in what are Robinson term? qualities today? guess actually the CEO, fundamental think is, permanent company the you. you And you're C.H. want at

Scott Anderson

Appreciate question. Jack. few A things. the Thanks, Yes.

our in around to opportunity unanimous leadership it new at company, in an was that point decision. this that of an was for And Board making being component really a the all, be of of performance inflection First the terms happen. and of

over to his I as the unanimous my we Bob's in contribution company appreciation remarks were in As prepared said well, of also career. our

tremendous people field. excited be I've couldn't the five at I spent more is and our think after a the weeks opportunity this in and Robinson with here

Obviously, I model to is chains strategically, global as complex eyes in to be will are perspective becoming partner forward, Our out the in But go-to new with core CEO give solid. that think, going of of we terms some a absolutely in a supply operating building our a strategy spot new more well. future.

faster this So in strategy is a pace. company. is not This really accelerating in shift at moving for a a shift the of and performance sort

Jack Atkins

you And the CEO, talk then next for can about in for terms that qualities of a the moment? maybe

Scott Anderson

Yes.

the Committee. As Search Chair I the mentioned, our of Jodee Board is now Kozlak, Head

at Just Officer for Target. Jodee HR former the Chief background, was

search this. And helping inclusive. looking of We're CEO. like broad executive going for So to going We're qualities time. in to type processes the going and she's using terms We're thorough Board. leading be in take the that's be the our we're familiar of a firm we're to at next

this We're someone before, said to opportunity take Robinson for I with and the who Like can thinking looking experienced next an really strategic a operator sharp for is somebody. tremendous level.

for XX forward. the the be think company I years next the for are exciting most going going Robinson to

the here leader. fantastic for opportunity the is So next

Jack Atkins

Okay. Thank time. you for the

Operator

The Chan go from of next Stifel. is question coming Please Bruce ahead.

Bruce Chan

Global then way Robinson, you. an about same Forwarding statement many are feel And before when both of Global how the a question good you Maybe And on think for pointed the service? of many when afternoon your a strategic and about division part maybe How of that a operator. way. little intrinsic Thank that just use But about Thanks, Forwarding kind think was you you more and bit forward? everyone. customers? in NAST of end-to-end going customer follow-up Bob's them you base, do

Scott Anderson

Yes.

over that, then for First, perspective. and specifics get I I'll my don't on why Mike to some turn it

Mike Zechmeister

Yes.

some at we've from comes AGP months, revenue NAST in And you opportunities our the use between a last we've from Forwarding, As two. as over combination XX half we Global cross-selling and at both, if Surface seen the of who and standpoint out, pointed look Global Forwarding, great services. Transportation the look we of had customers

advantage the at had I'll the could this. one do deeper did relationships but looked or better who looked use use we where we other. And who of and taking a of We've points pretty the with five-year share the that years you both results. probably we into rate last have job at one compelling some the basis We studies on sides, versus customers for And who and growth use Global at customers looked customers than one the other. both was XXX both five better Forwarding NAST compound annual or we use who those

able bring and So been to relationships, can to China us what complement what customers leverage get a that customers NAST vice they believe Global of in stuff center from really customer from do think we that center and We and a need that Forwarding way about their customers they center want to versa. full we bring business they need as services we've supply it they U.S. value-added is chain. Asia, can where with and to

leverage So to of we plans our businesses, going ability that's and both in those the believe forward.

Scott Anderson

business. can multiple Yes. problems to value when supply weeks sat solve a think And that, Robinson. cross-selling before, the really have I've Phoenix over said I'm on did was I meetings of was are modern and the partners I as tremendous and create I've Forwarding which that players, Global substantial believer XXXX that chains in and I in in already five just our begun the for I'll seen including in a can those of more we add getting sort last the Forwarding see business built global that. complex, customer benefits. have baseline we on to Global And acquisition, board

as ways challenge always test being as customers That portfolio best and Board, we stress a drive the to to said, for and shareholders. value the ourselves

important tremendous I world supply much in Forwarding I say, Global chains we would last where in we after just years, so are post two So would have say Robinson a opportunity -- a great business, franchise pandemic. the a particularly, and have our

Bruce Chan

And just a follow-up there. quick

didn't the the is you of talked hear platform Forwarding. store making. this technology right the comments side all about changes Global of that and whole Forwarding some feel in some just guess, there? lot quick that. about side I that on global tech Navisphere platform lot And do the a you're ultimately, You about for a Maybe Arun, new, what's I

Arun Rajan

Yes.

cross operating of as relates think opportunity, divisionally operating NAST Global Forwarding. model, The just NAST. terms a Global In scalable model, and scalable we to across much as creating that Forwarding it exists of in as

focus increased be in there an the the the will tech that focused Forwarding Global but in opportunities starting of already terms product context, this path, organizations that on and are believe we back down acceleration of half year. In is

doing Navisphere, we a probably terms as relates As to back of the and There that's of is -- they record. present out to carriers our system a consume I around it Navisphere that of much whatever it, how think data choose the of of it of and harvest run form lot work in Navisphere in we're algorithms it. customers to

Mike Zechmeister

opportunity for is And truckload I business, Global to further for business and LTL. the the would behind Forwarding in that, probably greater. is The U.S., that enhancements add probably tech sure, the in on

said, great. have culture, for enhancements features services. a But the automation. And so being XXXX. get more been standpoint. environment when that tech Global a tech that Forwarding nice They've complexity got have currencies, about languages, that tech more the on challenging customs in enhancement excited it Global side Forwarding from some makes done backhouse They've they're the And some there's improved you customer-facing really

Global our Certainly they've year about. respect customers some X.X Forwarding. mean, since fact, internally is been And been excited the is. that upcoming the has customers. In it's excited tech to while, team tech a to something shown with and Nav about are I

Scott Anderson

earlier the we who add up technology that last to a the volume heads on years, can that stress is is echo moved open to areas you management just perspective Forwarding and I some when said, week very change the for the get think two investment Global what drive back And they excited what's with had he excited way about Mike the just they've of Mike we'll And and Global and from improve. basically the Forwarding, Scott. but just amount team. where tech were I'll they over the test they're it investment this the about coming this return. on also them Yes, help have did internally

Bruce Chan

for the color. Thanks Great.

Operator

next Thank question Kauffman from Partners. you. is coming The Vertical ahead. Jeff of Research go Please

Jeff Kauffman

Thank do you And the for change? Forwarding question where and on terms think both had by and are when digital you I we're are how of about where what's digital the digital percent very much. of you the do Arun. you define with today? platform, a in separately, -- to Arun, you transactions the consider you where transactions digitalization finished versus that digital? -- thinking NAST what's not this businesses of time want And be

Arun Rajan

the non-digital, if Yes. it's generally we versus a I digital manual way there's not mean touch, about think digital.

couple might So than decades. tracking think that has be broker company way the a different of might digital-first And a you approached approach take as it the past in-transit I an example. for

think And have is it several better the it less I service productivity been to as there less historically, you the for of it a we load better obviously. both customers, is have because more and them. of it in variability our of for outcome as our to And relates in it's it's in-transit relates standardized people, in-transit internal terms tracking, a equally outcomes, And touch the the way touches -- tracking. about lots experience

multiple the life So it load. we of in that's think cycle about across the how processes kind of

payments, So track on. think appointments trace, document about and about and management, so think

about of ahead. of productivity go of So customer systematically experience a down those time, driving the think it's manual That's and how better touches and processes drives carriers. for over matter Scott, greater kind each we it. which

Scott Anderson

just to as of in background. add how using through sort come to would business incumbent the space a business from the is distribution I I of of the modernize employees is sort some talk it examples, that about sort of technology Yes. an I sort leader

really leveraged drive look then expertise but and technology they've the company how tasks you have employees Grainger unleash So customers. to for like a their their at

technology the we really easier and and track. very business to make just of employees make much think, think then product making is that customer sticky That's on have opportunity I similar experts absolutely appreciate to, logistics in the us or Arun's our that are really more do with. team terms productive to they that here I is And tools

Arun Rajan

give color some along to described, Scott were for And the insights to be How approach sales. taken sort do maybe An we what behavioral abilities take just Reducing lines do The targeted past? of equally said. might of sales have the you ability the be data in might someone efforts. what sure, to of touches, the targeted in people. that add their I versus amplifying example and them our to more in

Jeff Kauffman

percentage of that Where second to that part I the term? thinking then in And that transactions to choose long take where where you however think of are want take want or two do digital. please, three it. in question, of Arun, was you to do And are that you today you terms of years? --

Arun Rajan

is that we productivity performance better better it is in per I the output our customer and measured or person of and In think the per on of full inputs, looking effectively customer are better as people time lens to -- outcome shipments satisfaction. and look customers, all greater day we're it's carrier by outcome. a for the at these case

metrics we output at. the are look those So

a And quarterly. have so XX% expectation productivity that these from a improvement we track goal as for we investments of XXXX,

that And vary in-transit for we see productivity metrics might the at better look tracking I a think might input it in to for because it's opportunity us greater way. versus appointments.

calls on productivity investments. and just so from these customer and on there we'd focus the not go outcomes expectations And these rather as

Jeff Kauffman

much. very you Thank Okay.

Operator

of question next The is go Please from coming Wetherbee Citi. ahead. Chris

Chris Wetherbee

Scott, here question a maybe Forwarding. Thanks. Good Global about afternoon.

is like portfolio going So you it to this is the something forward. sounds key think

levels maybe I back think and a the we in some rates are you the think kind to in noted as of pre-pandemic normalization be the of markets. you release, sort in So bit give elevated where end these of perspective were down to levels, boosted Obviously, would extraordinarily of of helpful to it a cycle. pandemic

XXXX, I this words, cross-selling other go been you was for obviously, opportunity? that we of north that. could some perspective out, in if start context I prior of revenues the there? much of peaked forward? guess What Forwarding Just sort So It how the how it as great. What's us share multiple would million. Global of to generating captured a net give to to be normalization, think has about the right number of $XXX business maybe in is think

Scott Anderson

much over Yes. into Great, granular is a turn Global than a to I of Robinson Forwarding would part a stronger is at detail. you pre-pandemic. this think run a rate Chris. it business more what And dive I'll to we was what Mike make my little normalized today and question is owe that it of is few then to on more rate. say I is comments the exactly statement business

marketplace, encouraged can in I'm year. that and that Short maybe give of and a doing numbers with knowing specifics Mike But super this help his what we're some some Mike marketplace you team tougher the by in of we're terms a against to up backdrop question.

Mike Zechmeister

that to you. do Yes. Chris, happy for

correction. some of and call that Forwarding and obviously, income over to wasn't us QX in speed operating surprised The a terms of has margins back market a QX, and in level, running at the we would normalization, you after the Global the in magnitude bit come us sustainable So knew that, XX% of if it point.

didn't I And the cost think ourselves in process, found match business. that so that structure with we

of process we in that so structure. kind the are rightsizing of And cost

to place. greater a come when of like and in better service. demonstrates, in Mike investing those some cost pandemic in was pandemic feel go done a all technology. But we We're business. income we've team And customer were We During our improving in the still our There the getting were that. of have got and to the ability ways customers intent And operating out after attention get as in we been was to rightsizing margin, the a of the look we've investing intentionally periods, structure, QX at the extent. to along the you that.

go-forward Year. New for help success we number. be go. business, that basis, is to We and of are I will right that the in can a I'll continuing do how the still think And is encouraged as and for Headcount Global mentioned things enter that think margin down operating other mention long the further term a a that Forwarding technology on few is share the operating key down XX% team but in into improve we I income as too, things gain the market and the to the technology terms margin

and there I'd done are activities But a uniformity. another start That's standardizing that are work lot generates there a mention there. operational a still is good that that, the of on but bit have efficiency. really They one quite more

come news wants Team here, customer better, them solid. scores the that in out good shape that pandemic make to the of as but they they're the is good And from pretty are excellence perspective. pretty

Continuing to build scale.

help around ocean expenses to I on scale intentions solid. they've back be will a us So And looking here and little the verticals. has new managing actions good quite ensure to at as customers That in putting really that business pipeline that that been air a of out investments headcount. rates They're bit in about and and get half we're got at did trade building the back came the important dramatically. talked line new return. that in their for looking new lanes. leverage They're

thing the talent last would acquisition. then be mention And I'd

us a So folks there's lanes help new new marketplace. verticals lot and in pretty the into can a has extend talent out trade of in bringing The job good geographies. of team into done that and extend

also of grow can to success and to term. getting margin that the that us so gives key will continue that share to going be And long to forward. XX% they market key that the And continuation confidence

Chris Wetherbee

Okay.

to pre kind is next pandemic downside the guess So the normalization I relative business. way idea that be ability triangulate there's the of the so about double course of the here Margins some they over the net era. you of year to to and or absorb profitability maybe this shock could on were, to year that's think the way revenue line. what

Mike Zechmeister

fair. that's think I

Operator

is go Sachs. question from of Goldman coming Please Alliger next The Jordan ahead.

Jordan Alliger

if spot for you bit pricing. wondering we you truckload was from where to talk market are a I could little a perspective think

this bottoming to where in of are you based that your point? occurs, terms we maybe think And non-renegotiated timing how contracts on contract on of sort Thanks.

Mike Zechmeister

that. me Yes. Jordan, let take

So a pretty of result, first of There's And all, spot here. there. clear. the up. has back the ton demand a has as dried That's market really not really pulled opportunity

about at are were deliver demand. of that the pressured because of comments, we to sitting contract commitments from In the overall those that being the inside we're agreements the talked prepared the a contract business to volumes able customers be

right the extent. spot. XX-XX now, So were spot a not to opportunities there great we contract are The business

as through And go out eventually so that, we here that expect we year. the would flattens

sure not but of around follows most follow in is market contract the basis. where in truckload the the if per early that XX% then generally in And coming projections a in decline cost XXXX. spot have lag spot year-over-year we're we you I'm that mile anticipating XXXX, on marketplace the pricing a pricing,

the business, the take I'll to beginning you back inside contract And so of maybe XXXX.

in contract that we and as looking did. they new entering at would with holiday the New coming more the available, were than prices shutdowns, half so we season, Year potential COVID of business hold were up And contracts into the that bidding Chinese 'XX back were on

came played soft. a season. The down. key As really wasn't demand was things The out, prices there

we And known so percentage been we as as contracts the would QX have had on that QX, better And in drop-off liked probably weren't would successful as on win coming. we certainly, we have and been. have bidding we was a to were

pretty and isn't into We're demand from just good But to you then there there kind in bidding and out rates. the market here, QX time QX. we're real feeling strong. get these us the So about the win the of customer volume the We're competitively, contracts. and on

a are higher the that even So our materializing rate with bid still are challenged. win standpoint, volumes from

on to soft of QX, a seen delivered negative was volume. but X% numbers we've as truckload in news, performance Year, And side good seen, we into not to about the expect market. minus a grow, is truckload a the it kind We into certainly better talked I that volume obviously We our we is It quarter. January the in think, the had New here. come have us the for truckload our in decline and on intention volume

few the that things largely years I talk think about contracts observed and what the were that that of XX-month was you months, past themselves we that what's coming, When we was what of were to less one you were half over the transitioned XX a during And bid contracts can pandemic had of that the bid that. continued half something other lesser in QX is the -- and that, half duration. the about that that contracts on tell in roughly than I contract

the mix So down, that contracts less than remained market has even as in duration. are come the XX-month that has

of So Anything I your parts a question. missed? I few the that covered of

Jordan Alliger

appreciate you. I Thank No. the answer.

Operator

next question Please Chappell of Jon is Evercore coming The ahead. ISI. from go

Jon Chappell

in change of question, Thank earlier maybe you. Good however, timing. answer afternoon. direction, sense greater no an the of to urgency you'd mentioned Scott, in and strategic kind and

see load some still alignment headwinds headwinds getting kind the front-end year You end when in or ways to of half therefore, the have So talked that or some conceivably the the volume new about in of things you new back and role, this been opportunities have as the of annualized macro you're year? better? timing that planned of savings more with either are the you may But the for be by of cutting 'XX. you've kind found the you cost of

Scott Anderson

the empowering the the palpable was short to There's being a think of tough no year. term, I'm Jon. I here. thanks, excitement the And said, No, about things the I And a But field. in simplifying aligning expertise about it the the one in talked with future management of on do half his But trying Yes. we're people's do amplification doubt, the that back to see team, of also about and very them, team benefit. Arun and talked on we message, and I focus expense. was customers our leveraging focused show customer

the We're tightly said that team, through the as this We're managing of the wind the business our on XXXX. assumptions headcount. making be focused first also, focused at to year. no on back But will leadership I've throughout really half senior

I'm in easy the the but the the want is efficiencies throughout for opportunity additional of company. faster, in get the of go of there's to to to here stronger happened at get to and us spirit do how Robinson. think ability November, find better, precise proud to and never market sort team. absolutely back folks really what I It's we more in the field

Mike Zechmeister

And just add I a cost little the to can color on front. savings

side. in target that progress some back expense personnel make So And the as particularly reduction we to the did a just reminder, against here commitment. QX, on

that and million of rate $XXX a net we of of we run QX get to it, taking at So was XXXX. QX annualizing commitment reduction were least and the the would cost by

where about we you if at, to you at And get look you restructuring take in and out what that's QX, delivered expense a annualize the $X.XX we're billion. number

-- and that So we billion. were rate QX the that if was that, annualized the run of rate $X.X you about run the take

that implies we've $XXX commitment. about that original are that already -- versus already million So at savings

because have progress. decent equity is expect in QX, reduced that QX, can't But net compensation to you some the wouldn't I overall did our that in we made into have we expense we the XXXX. benefit a much continue read too that Now to to that as had of spoke and earlier, into

our think, I roll be key that's And are, on focused will forward XXXX. that we going structure We much a headcount. since through as such big cost of better a part

Jon Chappell

Thanks, Understood. Mike, thanks, Scott.

Operator

Brian question go Please next from is of The coming JPMorgan. Ossenbeck ahead.

Brian Ossenbeck

in than question. initially thanks maybe little things but like in ago for follow-ups afternoon. worse Maybe still then got reduction. thought you Forwarding. a And Good taking the on bit implemented obviously quarter, just seems and quick announced while just fourth it expense little two It's the faster the a

implementing if the horizon clarify So of sticking with if or and that. $XXX you you're can are additional the for there being opportunities time just the on million sort

in you of stabilized. I think just, little Mike, And terms bit then on January things mentioned a

start wondered or put terms market, AGP that helpful if truckload first would some could in quarter? this Thank third of of I per day first the So as you. anything the you volume like be that you behind numbers

Scott Anderson

Obviously, through XX over off expenses the a I'll Global Global well unique. to Forwarding was toss Forwarding to history cycles. last of The really managing very XX kick months on Yes, team Mike. and has it

sense, confident that. some And I'm So reduction color makes they absolutely And then to maybe can point. they're give that it. can do to expense find they're Mike where on going that

Mike Zechmeister

Yes.

get part sure to make your of question. I So try each to

that all, So first on net years. commitment reduction the annualized. And it's is in rate as $XXX to by savings obvious of maybe inflationary high part, on XX with we're we as the basis that cost in there been point out environment run million the the cost the just continue a QX I'll

is reduction we will But cost net offsetting that. our the the So savings delivering too. stick with inflation and there,

for the add I on we you that the get run of billion $X.X the And to provided, off also we're math guidance you will going year. again, of billion. rate $X.X expense the the midpoint that just did if that is

of is $X.X to savings. So we're worth billion, a $XXX which guiding million midpoint of

So a second. address let that me for

the to structural net to committed we in what is permanent cost consider are be more would That reduction, We cost reduction. more nature.

we is that. more just second say I the the will in And likely part as cost there, talked are with transitory deliver seeing some that adjusting We comes market. that. But history of the our there than structure is market. the softness savings related would some with savings along got to And we've we've more savings the a because of additional what softness about,

the do in XX% We part December. we trends. give did -- as an I the you AGP continued down in going into down QX volume day and I QX, Year. think improvements of have November has New on where XX% about in give were per down delivered AGP October, enterprise that your business truckload another seen question X% was we in we you basis That on mentioned, into softness January. that we But in

Brian Ossenbeck

that, all for Thanks Mike.

million call difference basically you market-based the $XXX be guess impact. Is and you, the transitory you of million between would the $XXX that the I what guided the out So there? that to

Mike Zechmeister

Absolutely. Yes.

Operator

for Jefferies. question. one for from coming is Moore today Stephanie final We are ahead. final showing question The time Please go of

Stephanie Moore

in want is Good being how direction, this thank to strategic plans. change on know your to with I capital I afternoon. want reflected touch change allocation in you. And this

kind how of it out company. allocation certain strategic but deliver look just maybe to capital wanting of targets, as called the plan to change could speak adjust maybe could Thanks. leverage on or You to the direction your you you sense to make

Scott Anderson

as Yes. and bit Stephanie. I'll wrap about talk well. start, our up I'll a Thanks, allocation maybe then little and committee capital Mike have

Mike Zechmeister

Yes.

all-time in think from capital I had of has capital earlier in of pointing dollars working the price capital the back that billion we and we capital of capital from ocean, back to amount and highs absorbed And transportation air us. standpoint, alignment end one coming that cost really record of start billion deploy had down been XXXX strategy. the 'XX that QX, us, our the with in resulting course, from we in cash flow major began been back. when of $X $X.X the would experienced idea a differences come late to of to over up the free of that, of we've tied working would of QX purchased back coming here that So to allocation working and saw to And allocation the off that truckload is therefore, that come and

after to our to, goes And leverage course, our are we dividend. of commitments, rating, that's that our share repurchase. to left investments, policy our after is any as so we that money And managing our covered our maintain investment-grade over credit

on we experienced And then is to investment-grade which view QX. to saw across and, air leverage maintain a the ratio you quite our rating. coming forward-looking So therefore, we truckload, that EBITDA maintaining and observing appropriate our in was down our that need bit and share pick need after of credit forward-looking prices up debt on those view informs ocean, the informs we level repurchase QX what

of a share leverage. And sure a that's repurchase on long targeted so to maintain that we that way make describing pullback

deploy forward. free strategy, philosophy while are as all of terms in record activities changed to differences going there our we But on allocation the planning flow in haven't overall capital of how a capital result some at cash our the were

Scott Anderson

permanent And be to we're we I also a value think Capital Stephanie, as adding for can terms just a a to areas would to at of to this drive customers Yes. Committee our from the Allocation management team And going that Board perspective, I is shareholders. organization across the making great partner both that. serve soon additional add really in and committee, we're members and going looking

Stephanie Moore

Great. the time. you. Well, appreciate Thank

Operator

At this I'd closing over Thank to the for back you. turn floor like to time, Mr. Ives comments.

Chuck Ives

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

Operator

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

at rest your disconnect your enjoy this may the of lines time. day. And You

C.H. Robinson Worldwide (CHRW) 1 Feb 232022 Q4 Earnings call transcript