CH Robinson Worldwide Inc at Bank of America Corp Industrials, Transportation & Airlines Key Leaders Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Ken Hoexter - BofA Securities - Analyst : So Damon, let me turn it over to you to start if you want to provide your thoughts on the market today, which shifted certainly from yesterday and the day before, but what key three themes do you want us to walk away with today?

Question: Ken Hoexter - BofA Securities - Analyst : That's great wrap up. Sounds like technology, a lot of weight. I think you mentioned it twice in the last two buttons, so a lot of weight on your shoulders. Let me just follow up there on the rules of the game changed on Sunday with those lower tariffs on ocean. I know we're going to jump away from brokerage for a second to start. So just to understand what has been the impact on the tariffs. So initially we did we see a lot of free shipping come in, and so we're okay. And so this mother of all restockings. Now that you know we'll have this three week air pocket might not happen because we have enough stuff or do we have to catch up maybe just set the stage there?

Question: Ken Hoexter - BofA Securities - Analyst : Just to beat that 90 days. (multiple speakers)

Question: Ken Hoexter - BofA Securities - Analyst : I hear you. It just seems like in those 90 days if we start getting some deals like the UK, like whatever China is getting, it seems like they're more likely to be at least. If you get a bunch of them signed, it seems like that 90 days becomes much extended for another 30, 60, 90 days to keep going. But I guess you're right there you're sure you need surety to plan. So yeah, that was an ocean discussion, I guess. I just want to ask you a quick one on air because we talked a lot yesterday and the night before about the end of de minimis. So just to understand kind of on the air side, have you seen how is that movement of -- because we had a huge drop off of e-commerce good. So what are you seeing on the air side?

Question: Ken Hoexter - BofA Securities - Analyst : Okay, right. So Arun, in December you hosted your first analyst Day in seven years. Dave set out a goal to benefit from AI automation and grow no matter the market as Damon just talked about, I think in bullet point number one, right, was to grow. You executed the plan. So Arun, talk about the path to automate the process, I guess maybe more on the brokerage side. What enables you to scale the business without growing people and and how well are you adapting that?

Question: Ken Hoexter - BofA Securities - Analyst : It answers so many questions that I was ready to ask you, right? I mean like how do you keep taking market share? How do you get better margins, right? So it's all interesting. So let me dig into the margin one just for a second, right? Let's go. Last 10 years you've averaged a 350 basis point sequential improvement in net operating margin from 1Q to 2Q, right? So you had 27.5% in the first quarter. Consensus is somewhat looking for flattish overall. Just wondering, so is that just pressure from global forwarding and everything we just talked about to open? Is there any other thoughts? So I guess help me understand the need of that dynamic.

Question: Ken Hoexter - BofA Securities - Analyst : Yeah, that was different in my discussions with Chuck is the consistency of that message that we're going to grow no matter the market, which I think is a change from CH where it was more of the market's down -- will be down and now it's -- we're going to outpace the market. I think Arun's commentary on the ability of the technology to get you there.

Question: Ken Hoexter - BofA Securities - Analyst : I think that's IR. That's the operating ratio. Now, you're bringing us to railroad.

Question: Ken Hoexter - BofA Securities - Analyst : The message definitely coming across and echoing. So let's talk about the truck brokerage sector for a second, right? So clearly, I understand you want to take sure a few years ago digital entrants were the rage, right? We heard -- everywhere we turn, we have a panel called Broker Wars because a few years ago it was digital versus the incumbents, right? And so now, we've had Coyote sold Convoy shut down. Coyote was sold to RXO. Uber Freight now seems to be focused on making money as opposed to just growing. I don't know. Amazon is still out there. You're winning relative share despite all this noise. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 14, 2025 / 12:00PM, CHRW.OQ - CH Robinson Worldwide Inc at Bank of America Corp Industrials, Transportation & Airlines Key Leaders Conference What do you think is the state of the market? And what are -- is there something going on behind the scenes? So we had a shipper up yesterday talking about some of the smaller guys are now disappearing from the market and so they're hurrying to cover that. What what are you seeing in the marketplace?

Question: Ken Hoexter - BofA Securities - Analyst : Automated or is that something you're changing manually?

Question: Ken Hoexter - BofA Securities - Analyst : So you're able to co-opt the digitization into your network and given your scale benefit from it.

Question: Ken Hoexter - BofA Securities - Analyst : Not lose to just the new entrant because they're just digital. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 14, 2025 / 12:00PM, CHRW.OQ - CH Robinson Worldwide Inc at Bank of America Corp Industrials, Transportation & Airlines Key Leaders Conference

Question: Ken Hoexter - BofA Securities - Analyst : I think that's where people lost it is you can digitize everything and have nobody involved, but then the customer still wants an expert when something goes wrong.

Question: Ken Hoexter - BofA Securities - Analyst : So Damon, let me bring it again back to near term. If I think about on the NAST side, right, so we talked about the forwarding to open. NAST truck pricing was above cost for five consecutive quarters. Now enables the expansion of gross margins, right? So we're talking about the systems enabling even better gross margins while you grow that. Talk about one we've seen spot rates stabilize kind of at this cost per mile level of $1 50. What is -- one, what does share look like in that environment? What do margins look like in terms of that balanced out market? And maybe talk about it as we went through midseason how how things are shaping up.

Question: Ken Hoexter - BofA Securities - Analyst : From analyst, we have to get more. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 14, 2025 / 12:00PM, CHRW.OQ - CH Robinson Worldwide Inc at Bank of America Corp Industrials, Transportation & Airlines Key Leaders Conference

Question: Ken Hoexter - BofA Securities - Analyst : And then bid season, is there any comment on how pricing is going now in terms of --?

Question: Ken Hoexter - BofA Securities - Analyst : So gross profit fell from a 14% growth in January to negative 2% in March. I know you're not forecasting, and you don't provide April updates anymore, right? You used to give like that one month out. But anything you can talk to us just given the backdrop, maybe setting the stage given that disruption of the tariffs and the rebound. The time it would take to float through or kind of maybe set the stage of directional. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 14, 2025 / 12:00PM, CHRW.OQ - CH Robinson Worldwide Inc at Bank of America Corp Industrials, Transportation & Airlines Key Leaders Conference

Question: Ken Hoexter - BofA Securities - Analyst : All right. NAST head count, Arun has declined for 11 consecutive quarters. Your thoughts on kind of scalability of that. Is there a floor given the productivity you can achieve?

Question: Ken Hoexter - BofA Securities - Analyst : And not because of the market gyrations more on productivity.

Question: Ken Hoexter - BofA Securities - Analyst : All right. So we hit on a lot in terms of kind of NAST. You talked about global forwarding meaning scale, talked about margins without getting forecasts. If I think about global forwarding, let's talk about just margins there as we wrap up, it did mid 23% gross margin in the first quarter. I just want to understand not the forecast for the second quarter, but given the rate pullback, how do we think about that margin swing? Does it go back to the 20% range just given that's what historical was? Is that just given the spike up in global rates and shipping pricing? Maybe just explain the gross margin on global.

Question: Ken Hoexter - BofA Securities - Analyst : Alright, so let me wrap up. I think we've just run out of time. So the ad strategy, not the or on margin and volumes go to expand gross margins. I think you throw out $90 million. You're going to grow regardless of the market, grow with margins, increase productivity, take the digital and apply it to your scale. Still have humans in the loop. But keep winning on both margins and volume.

Question: Ken Hoexter - BofA Securities - Analyst : Anything else you want to throw in?