C. H. ROBINSON WORLDWIDE, INC. Q4 FY2024 earnings call

• The new Robinson operating model has enabled significant year-over-year improvement in financial results, with expanded gross profit and operating profit margins. - In NAST, the dynamic costing and pricing tools, along with revenue management practices, helped provide greater value to customers and improve NAST gross margin. The LTL business saw a 2.5% year-over-year increase in Q4 shipments due to strength across several services. - In Global Forwarding, process standardization, automation, and adherence to the operating model led to decoupling headcount growth from volume growth, reduced headcount, and achieved high productivity. - Utilizing Gen AI and other innovative technologies, the company has automated transactions, reduced response times, and created business model scalability, driving operating leverage.

NAST Segment: In Q4, adjusted operating income increased significantly year-over-year. NAST gross margin improved by 170 basis points year-over-year. Total NAST volume declined approximately 1% year-over-year, with LTL volume up 2.5% and truckload volume down 6.5%. Despite the rising cost of purchase transportation, the team achieved sequential improvement in NAST gross margin and truckload AGP dollars per shipment. Global Forwarding Segment: Ocean and air shipments grew each quarter year-over-year and more than 5% for the full year. The forwarding team reduced average headcount by more than 10% for the year and achieved productivity improvement of greater than 15% for the full year. Over the two-year period of '23 and '24, compounded productivity growth of 30% or more was delivered in both Global Forwarding and NAST.

• 2025 personnel expenses are expected to be $1.375 billion to $1.475 billion. - 2025 SG&A expenses are expected to be $575 million to $625 million, including depreciation and amortization of $95 million to $105 million. - 2025 capital expenditures are expected to be $75 million to $85 million. - Expect to further advance productivity as businesses grow, including NAST and Global Forwarding, and continue to grow market share by reclaiming share in targeted segments and leveraging capabilities for value-added services.

• Freight markets are subject to fluctuations due to seasonal, cyclical, and geopolitical factors. - The situation in the Red Sea/Suez Canal route is ongoing, and it remains uncertain when ocean liners will return to normal operations through the route, which may impact the forwarding segment.

Q: Chris Wetherbee from Wells Fargo asked about balancing gross profit margins and operating margins in the market.

A: Dave Bozeman and Michael Castagnetto responded that the team is prioritizing the quality of volume, maintaining discipline in pricing and hauling the right freight, and being prepared to adapt if the market inflects.

Q: Bascome Majors from Susquehanna International Group asked about cyclical puts and takes on the path to '26.

A: Damon Lee stated that there has been no pivot from the position laid out in December at Investor Day, and they feel good about the targets and the path to delivering them.

Q: Ben Mohr from Citigroup asked about revenue growth in enterprise vs SMB markets and cross-selling opportunities.

A: Michael Castagnetto responded that they are in early innings in all aspects of growth, with much runway in SMB and cross-selling opportunities to maximize the value of one Robinson.

Q: Brian Ossenbeck from JPMorgan asked about demand across verticals and the bid season.

A: Michael Castagnetto said Q4 was competitive with high adherence to route guides, contractual business was healthy, and Q1 is a heavy RFP space but no uptick in overall demand yet.

Q: Tom Wadewitz from UBS asked about truckload volume growth in '25.

A: Michael Castagnetto said they have optionality in truckload volume, are disciplined in what volume is right, and are prepared for different market inflection scenarios.

Q: Ken Hoexter from Bank of America asked about the forwarding side and headcount.

A: Damon Lee mentioned rate normalization considerations for forwarding and that the Global Forwarding team decoupled headcount from volume growth in 2024.

Q: Jon Chappell from Evercore ISI asked about balancing winning share and maintaining profitability thresholds.

A: Dave Bozeman and Michael Castagnetto responded that the operating model discipline, people, and technology give them optionality to handle different market scenarios.

Q: David Hicks from Raymond James asked about the Middle East and ocean liner return to the Red Sea/Suez Canal route.

A: Dave Bozeman and Damon Lee said the situation is ongoing, ship lines are evaluating, and it will take time for normal operations to resume.