CH Robinson (CHRW) Q1 2026 Earnings Transcript

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DATE

April 29, 2026, 5:30 p.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — David P. Bozeman
• President, North American Surface Transportation — Michael D. Castagnetto
• Chief Operating Officer — Arun D. Rajan
• Chief Financial Officer — Damon J. Lee
• General Counsel and Secretary — Charles S. Ives

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RISKS

• CEO Bozeman stated, "if it is not in our favor, that certainly brings some headwinds to the industry" due to regulatory complexity and potential insurance cost increases.

TAKEAWAYS

• Adjusted earnings per share -- Increased 15% year over year, achieved despite a significant rise in truckload spot market costs.
• North American Surface Transportation gross margin percentage (NAST) -- Maintained at 14.6% as the business absorbed significant cost increases and optimized margin through targeted repricing and volume management.
• Contractual truckload volume mix -- Grew to approximately 70% (up from 65%), attributed to improved tender acceptance and targeted verticals in retail and automotive.
• Total NAST volume -- Flat versus prior year, outperforming the 6.2% decline in the CAS Freight Shipment Index; LTL volume up approximately 2%, truckload volume down approximately 3.5% year over year.
• Global Forwarding gross margin expansion -- Gross margins rose by 60 basis points year over year in the face of global freight market disruptions and ocean rate declines.
• Adjusted gross profit (AGP) -- Declined about 12% year over year, primarily due to a 12% drop in Global Forwarding AGP from lower per-transaction profit and volume in ocean services.
• Personnel expenses (excluding restructuring) -- Decreased by $13.4 million (3.9%) year over year to $334 million, as average headcount fell 12.3% and productivity increased.
• Operating margin (excluding restructuring) -- Expanded by 210 basis points company-wide and 310 basis points in NAST, highlighting the impact of Lean AI-driven productivity and revenue management initiatives.
• Cash generation and liquidity -- Generated $68.6 million in operating cash and ended the quarter with approximately $1.24 billion in liquidity.
• Capital return to shareholders -- Returned approximately $360 million, including $280.7 million in share repurchases and $79 million in dividends, more than doubling the total from the previous year.
• Lean AI and technology scale -- "Lean AI" strategy, proprietary data, and in-house AI agents cited as sources of sustainable operating efficiency, margin expansion, and competitive moat.

SUMMARY

C.H. Robinson Worldwide (NASDAQ:CHRW) delivered a 15% increase in adjusted earnings per share while maintaining NAST gross margin and expanding operating margins, despite spot market cost pressures and a 12% adjusted gross profit decline. Management attributed sustained performance to disciplined revenue management, a focus on higher-margin transactional volumes, and a Lean AI strategy driving improved productivity and cost-to-serve metrics across both NAST and Global Forwarding segments. The company returned $360 million to shareholders and reaffirmed its ability to drive operating leverage independent of market demand recovery, supported by ongoing technology innovation and a scalable operating model.

• Management reaffirmed its $6 earnings per share target for 2026 with "no market growth assumed," citing confidence that double-digit productivity gains—primarily in the second half—will support delivery of operating income targets.
• Share repurchases accelerated, leading to a net debt to EBITDA ratio increase from 1.03 times to 1.32 times; leadership continues prioritizing balance sheet strength and investment-grade credit rating.
• Process automation advancements resulted in over 50% improvement in shipments per person per day since 2022, with significant additional automation planned.
• LTL business achieved year-over-year volume growth for the ninth straight quarter, reflecting consistent outperformance versus the broader market and deeper relationships with LTL carriers.
• Global Forwarding segment managed global shipping disruptions with minimal impact, while AGP softness was primarily linked to ocean segment declines rather than crisis exposures.
• Management noted seasonal trends may support future volume growth, but operational discipline and margin optimization continue to outweigh pursuit of volume gains for their own sake.

INDUSTRY GLOSSARY

• NAST (North American Surface Transportation): Business segment focused on North American truckload, less-than-truckload, and intermodal freight brokerage services.
• AGP (Adjusted Gross Profit): Gross profit metric adjusted for specific items, providing a measure of profit after accounting for direct costs of services.
• Lean AI: C.H. Robinson's proprietary approach combining lean operating principles with embedded, custom AI agents for workflow automation and productivity gain.
• Tender rejection rate: Industry metric representing freight loads declined by contracted carriers, often indicating market tightness.
• CAS Freight Shipment Index: Industry benchmark reflecting freight shipment and volume changes across North America.
• Agentic AI: Autonomous AI agents designed to execute tasks within operational workflows, requiring ongoing human oversight as adopted at C.H. Robinson.
• Drop trailer: Logistics solution where freight trailers are 'dropped' at customer locations for flexible, efficient loading/unloading.
• RFP (Request for Proposal) season: Industry period when large shippers solicit freight service bids, heavily influencing contract volumes and pricing.

Full Conference Call Transcript

David P. Bozeman: Thank you, Charles. Good afternoon, everyone, and thank you for joining us today. As has been widely discussed in recent months, the North American trucking market has entered a period of supply-driven tightening. If that has occurred, we have heard old tapes being replaced regarding which transportation providers benefit most during certain parts of the truckload cycle. But those storylines do not fully appreciate the secular earnings growth that has consistently been generated at the new C.H. Robinson Worldwide, Inc., regardless of market conditions. 2026 was another example of this. Our adjusted earnings per share increased 15% year over year despite a significant increase in truckload spot market costs.

We continue to outperform by opportunistically capturing transactional volumes at higher margins as the industry's tender rejection rates increase, by continuing to exercise our disciplined revenue management practices, by repricing some of our contractual business in a very targeted fashion, and by continuing to widen our cost-of-hire advantage, all of which have improved as we implemented our new lean operating model. This enabled us to optimize our adjusted gross profit per truckload shipment and maintain our NAST gross margin percentage despite having to absorb the elevated cost of capacity. Additionally, we gained market share in our NAS business for the twelfth consecutive quarter, and we continue to deliver evergreen productivity improvements across our business.

Over the past year, we have consistently said we are not immune to macroeconomic conditions or an inflection in spot cost, but that we are managing those conditions better than we have in the past and better than our competitors. Our first quarter performance puts another check mark on our say-do scorecard. Our ability to consistently outperform over the last two-plus years is a result of focusing on controlling what we can control and the strength of our Lean AI strategy. Lean AI is our unique, disciplined approach to AI innovation that is transforming supply chains.

It combines the principles of our Robinson operating model rooted in lean methodology, the power of custom-built AI, and the expertise of our people to maximize value, minimize waste, and drive better outcomes for customers and carriers. As we continue to purposely engineer our work to drive higher automation and industry-leading cost to serve and improve customer outcomes, all of this is aimed at building the best model for demonstrable outgrowth while continuing to have industry-leading operating margins. I am proud of our employees for navigating ever-changing market conditions with discipline and ingenuity and for embracing the culture shift that has fundamentally changed this company.

Our Global Forwarding team continues to help our customers navigate disruptions such as conflict-driven rerouting and reduced flexibility across global shipping networks. The international freight market has been tumultuous and impacted by global trade policies, geopolitical conflicts, and route restrictions. Similar to 2025, excess vessel capacity has caused ocean rates to decline versus the elevated rates from a year ago. As the team helped customers comply with changing customs regulations and continued to implement the same revenue management disciplines that have been deployed in NAST, the team expanded gross margins in Q1 by 60 basis points year over year. We also continue to evolve our Global Forwarding business to a more cohesive centralized model with standardized and Lean AI-enabled processes.

We will continue to focus on providing differentiated service and solutions to our customers and carriers, executing with discipline, and improving our business model and our cost to serve. We are highly confident in our ability to continue executing on all of our strategic initiatives, and the strategies that our team is executing are built to be effective in any market condition. We are excited about the prospects for a possible return to a healthier demand environment, but with our strong balance sheet and cash flow generation, we are also comfortable if the freight market ends up being lower for longer.

In either scenario, we are ready to serve our two-sided marketplace and to deliver higher highs and higher lows across the market cycle. Our model, with an industry-leading cost to serve, is highly scalable, and we expect it will continue to improve further as we continue to harness the evolving power of AI to drive automation across the quote-to-cash life cycle of a load. As the pacesetter for innovation in our industry, we will continue to fail fast and use our domain expertise to build technology that delivers on our customer promise and drives higher value for all of our stakeholders. We are the trusted provider customers look to for cutting-edge innovation, differentiated solutions, and best-in-class service.

And while we are pleased with the results we have delivered in the last two years, we are still in the early stages of our transformation. Significant runway exists as we continue to deepen the lean mindset and scale custom-built AI agents across the enterprise. I will turn it over to Michael now to provide more details on our NAST results.

Michael D. Castagnetto: Thank you, David, and good afternoon, everyone. I am extremely proud of the team's disciplined execution in Q1 that showcased the secular earnings growth underway in NAST and our improved ability to offset pressure on our contractual truckload margin as the cost of capacity increased significantly. As a result of standing by our customers in Q1 with an industry-leading tender acceptance rate, our contractual truckload volume grew year over year. It also increased due to a win rate that has improved over the past year with a particular focus on growth in certain verticals that we have targeted with improved horizontal capabilities and solutions.

As a result, our mix of contractual truckload volume increased from approximately 65% in Q1 last year to approximately 70% this year. At the same time, Q1 truckload spot market costs, excluding fuel, increased approximately 19% year over year according to DAT. This was a result of several supply-driven constraints, including CDL and other enforcement actions and multiple winter storms that disrupted the typical seasonal rate softening across several impacted regions and prevented spot rates from following their normal downward trajectory in Q1. As a result, tender rejection rates rose across the industry. Contractual route guides began to fail and route guide depth increased throughout Q1.

This created opportunities for transactional volumes at higher margins, and armed with better disciplines and tools than in the past, our team of freight experts did a great job of capturing the right transactional volume. Combined with targeted repricing of some of our contractual business, widening our cost-of-hire advantage, and strong performance within our LTL business, we were able to offset the pressure of our contractual margins and maintain our NASS gross margin at 14.6% in Q1. This also included absorbing the higher cost of fuel. While it has very minimal impact on our gross profit dollars due to being a pass-through cost in our brokerage model, a rising fuel surcharge reduces our gross margin percentage.

For example, the increase in fuel surcharges from February to March reduced our truckload gross margin in March by over 50 basis points sequentially. Again, there is no impact on gross profit dollars, but it does impact the margin percentage, and this could continue into Q2 given the still elevated fuel costs. The team also outgrew the CAS Freight Shipment Index while maintaining our overall NASS gross margin in Q1 for the twelfth consecutive quarter. Our Q1 total NASS volume was flat year over year, compared to a 6.2% decline in the index. Our LTL volume increased approximately 2% year over year while our truckload volume declined approximately 3.5% year over year, reflecting market share gains in both modes.

It is important to understand that we could have grown our truckload volume by considerably more, but our focus on optimizing our gross profit and earnings outweighed further market share gains in Q1. As a result, our year-over-year and sequential growth in adjusted gross profit outperformed the market again in Q1. We will continue to appropriately exercise our optionality on a monthly, weekly, and daily basis to pivot toward volume or margins as market dynamics evolve, making disciplined, data-driven adjustments to optimize for the most effective combination that drives earnings growth and long-term value creation. One of the keys to our consistent market share gains has been volume growth in some key verticals that we have specifically targeted.

During Q1, we continued to deliver year-over-year truckload volume growth in both the retail and automotive verticals. These results reflect the execution of our strategic focus and our expanded capabilities that directly support these segments and evolving customer needs, such as our leading drop trailer, cross-border, and short-haul capabilities. In our greater-than-$3 billion LTL business, where we move more LTL freight than any other 3PL in North America, we delivered year-over-year volume growth for the ninth consecutive quarter, reflecting consistent outperformance versus the broader LTL market. Our deep, long-standing relationships with LTL carriers and our proven ability to manage service variability across the carriers enable us to consistently deliver a high level of service to our customers.

They continue to turn to us to simplify the complexities of LTL freight and to reduce their costs. Across our NAST business, we are also making smarter use of our proprietary digital capabilities and getting actionable data and AI-powered tools into the hands of our freight experts faster, enabling them to make better decisions and to capture the optimal freight for us. These digital capabilities also enabled us to continue delivering double-digit productivity increases in NASS in Q1. Since 2022, we have delivered a more than 50% increase in shipments per person per day, and this is measured across the entirety of our NAST organization.

This enhanced efficiency is not only lowering our industry-leading cost to serve, but it is also elevating the customer experience by enabling faster, more reliable service. Beginning with produce season and continuing with stronger food and beverage demand, looking ahead to Q2, it is typically a seasonally stronger quarter compared to Q1 as the weather gets warmer across the country. Due to these seasonal trends, the ten-year average of the CAS Freight Shipment Index, excluding the pandemic-impacted year of 2020, reflects a 4.5% sequential volume increase in Q2.

Truckload spot rates are expected to remain elevated, and we are now expecting a 17% year-over-year increase in dry van spot rates for the full year, up from 8% only three months ago. There is less elasticity in the supply of capacity and carriers' operating costs continue to rise, and this is leading to higher spot and contract rates. None of this changes our expectation to continue outperforming in any market condition, and we are excited about our strong results from ongoing contractual bids and further opportunities to win in the spot or transactional market.

As David said in his opening comments, we remain focused on what we can control regardless of market conditions, and we will continue to deliver industry-leading solutions and flexibility that only a scaled broker can provide to customers and carriers. Our people and their unmatched expertise enable us to deliver exceptional service and greater value, and they are relentlessly driving improved results. With much more runway for improvement in front of us, we are still in the early innings of our transformation journey. With that, I will turn it over to Arun to provide an update on the durable advantages of our technology scale and expertise.

Arun D. Rajan: Thanks, Michael, and good afternoon, everyone. As David and Michael described, we continue to execute our disciplined strategy, delivering for our customers and carriers while scaling several innovations that better serve our customers and widen our competitive moat. At the center of these efforts is our Lean AI strategy, which combines our lean operating model with deep industry expertise and our proprietary custom-built AI agents embedded directly into the workflows within our quote-to-cash life cycle. This strategy enables us to automate, scale, and execute in a sustainable and repeatable way without letting external narratives blur the difference between perception and reality. We take a highly focused and disciplined approach to AI deployment, and there is no hobby AI at C.H.

Robinson Worldwide, Inc. We deploy AI where it delivers real-world results and measurable outcomes that show up in our P&L. We prioritize our efforts based on ROI, leveraging extensive instrumentation to identify the most manual and high-friction work and then scale our AI capabilities with our existing technology spend. Access to AI itself is not a differentiator. Anyone can say they are using AI. But what matters is how AI is engineered, operationalized, and scaled. And AI is only as effective as the data and context that powers it. Part of our competitive advantage comes from the scale, scope, depth, and proprietary nature of our data and context, which I will explain shortly.

We combine that with a disciplined operating model that allows our tech to be continuously operationalized and improved. Before going deeper, it is worth grounding in how AI works at a high level. In the AI ecosystem, there are broadly three layers. At the foundation is infrastructure, which provides compute and storage. Above that are AI models, which are increasingly accessible to everyone. Neither of these layers provide the durable competitive moat. The real differentiation and advantage exists at the third layer, which is the application layer. At C.H. Robinson Worldwide, Inc., we own our application layer.

It is where the benefits of AI come to life when deployed correctly, and how we deploy AI agents is another source of our competitive advantage. C.H. Robinson Worldwide, Inc.'s builder culture produced our proprietary transportation management system and an extensive application stack, including advanced AI and machine learning capabilities that sit on top of that. That same culture now enables us to design, build, and deploy fit-for-purpose AI agents that drive value for the customer, carrier, and C.H. Robinson Worldwide, Inc.

With more than 450 in-house engineers and data scientists who have domain expertise and deeply understand our business, we are able to deploy agents faster and with greater control than a buy-and-integrate model that relies on stitching together third-party solutions that are generic and lack the dataset and context that represent the scale, complexity, and nuance of our business and the industry. Our unmatched scale, proprietary systems, and deep logistics expertise provide the data, context, and human-in-the-loop oversight that makes our AI agents more effective, more reliable, and more difficult to replicate. Our data and context advantage spans multiple modes such as dry van, flatbed, temp control, ocean, and air.

They also span multiple services such as short haul, drop trailer, cross-border, expedited, and customs as well as multiple geographies, customers, and lanes. This level of granular, disaggregated data cannot be purchased. And this depth of data, such as data on individual warehouses, enables us to understand price and cost dynamics better than anyone in the industry. Scale, scope, and depth of the context that we provide to our custom-built AI agents is also part of our moat and competitive advantage. Through our human review process and extensive instrumentation, we collect institutional knowledge from workflows and tribal knowledge from our freight experts into a context layer that enables our AI agents to execute and continuously improve alongside our expert logisticians.

In effect, our people teach our AI agents in the same way they would train a new operations employee. Routine work can then be executed autonomously, allowing our teams to handle non-routine surges in volume and higher-value, more strategic activities for our customers. For example, think about appointment automation—the breadth of customers, freight dimensions, and dock management systems we deal with. Every one of these customers' dimensions and locations has policies and nuances that are known to the appointment agent by way of an engineered context layer. Economically, this model scales efficiently. After the initial build and implementation, our marginal costs are very low.

The ongoing costs are primarily tied to AI token usage, rather than having to pay by transaction to a software-as-a-service provider. So owning the technology and engineering it in such a way that we have a scalable model is a critical component to widening our competitive moat. Our build model is also important for speed of implementation. If a company is using multiple third-party providers to create and implement AI agents, they are beholden to that external provider who does not know the business as well. With our builder culture, we are leveraging the vast domain expertise of our in-house team.

Since we are building our own AI agents, we have more control over the implementation process and the speed of integrating those AI agents. That faster speed to ideate, build, operationalize, and scale our AI agents is a differentiator, and it is showing up in our outperformance. Our fleet of AI agents is growing quickly as we continue to pioneer new ways to automate manual tasks and supercharge our industry-leading freight experts to solve for complexity and deliver high-quality service and outcomes to our customers and carriers. We continue to leverage and scale the use of generative AI-powered new capabilities that are backed by our unmatched data, scale, and context, and we are continuing to disrupt from within.

Agentic AI operates with a degree of autonomy and unpredictability, making its progress nonlinear and requiring ongoing human-in-the-loop oversight as it advances through cycles of progress and retrenchment. Our Lean AI process of discovering, learning, and building—where missteps and resulting learnings are milestones—is not only necessary, it is the best path to uncover what truly works. Continued improvements of our service-to-cost-efficient AI task agents that listen, learn, and act all day every day enable us to deliver fast, accurate, and personalized service at scale and in any market. We have a clear view of both what has been built and what remains ahead, and we are still in the early innings of our transformation.

There is significant runway across our business to continue scaling AI agents, and we have automated only a fraction of the hundreds of processes and subprocesses that exist across the quote-to-cash life cycle of an order. As David said, our strategy is focused on building the best model for demonstrable outgrowth while continuing to have industry-leading operating margins. Our technology is unmatched, and we will continue to disrupt ourselves to stay at the forefront of the AI revolution and to further widen our competitive moats. With that, I will turn the call over to Damon for a review of our first quarter results.

Damon J. Lee: Thanks, Arun, and good afternoon, everyone. Through another quarter of disciplined execution, we delivered secular earnings growth and continued to advance our strategic priorities aimed at market share growth, gross profit optimization, and increasing our operating leverage, all supported by our Lean AI strategy. With the CAS Index down 6.2% year over year, the macro environment continued to provide pressure in Q1 against easier comps. While we outperformed the index, our Q1 total revenue and AGP declined approximately 12% year over year, respectively. The AGP decline was primarily driven by a 12% year-over-year decline in Global Forwarding due to lower adjusted gross profit per transaction and lower volume in our ocean services.

For the total company on a monthly basis, our AGP per business day compared to the prior year was down 4% in January, down 2% in February, and flat in March. Turning to expenses, Q1 personnel expenses were $352.7 million, including $18.8 million of restructuring charges related to workforce reductions. Excluding restructuring charges, our Q1 personnel expenses were $334 million, down $13.4 million, or 3.9%, primarily due to our continued productivity improvements and cost optimization efforts. Our average headcount was down 12.3% year over year in Q1 and was down 3.1% sequentially, illustrating how we continue to decouple headcount growth from volume growth and optimize our organizational structure.

We continue to expect that our 2026 personnel expenses will be in the range of $1.25 billion to $1.35 billion. This includes an expectation that we will generate double-digit productivity improvements in both NAST and Global Forwarding in 2026 as we continue to implement agentic AI solutions across the quote-to-cash life cycle of an order. As we have stated previously, we expect these productivity improvements to be over-indexed to 2026, and the same can be said of the sequential declines that are expected in our personnel expenses. Our Q1 SG&A expenses totaled $132.1 million. Excluding $1.5 million of restructuring charges, SG&A expenses were down $9.6 million, or 6.9%, year over year due to cost optimization efforts.

We still expect our 2026 SG&A expenses to be in the range of $540 million to $590 million, including depreciation and amortization of $95 million to $105 million for the year. Although most of our SG&A expenses are subject to inflation, we expect continued cost improvements to partially offset the inflationary impact. As a result of our efforts to grow market share, improve gross margins, and increase our productivity and operating leverage, we expanded our operating margin, excluding restructuring costs, by 210 basis points year over year, and despite the significant increase to spot market cost in the truckload market, NAST expanded its operating margin, excluding restructuring costs, by 310 basis points year over year.

This is the Lean AI strategy at work, and we reaffirm our 2026 operating income target that we raised in October. Shifting to below operating income, our effective tax rate for the quarter was 11.7%. Historically, our tax rate has been lower in the first quarter of the year due to incremental tax benefits from stock-based compensation deliveries that occur in Q1. For the year, we continue to expect the full-year tax rate to be in the range of 18% to 20%. Our capital expenditures were $15 million for the quarter, and we still expect our 2026 capital expenditures to be $75 million to $85 million.

Turning to cash and our balance sheet, we generated $68.6 million in cash from operations in Q1, and we ended Q1 with approximately $1.24 billion of liquidity. Our financial strength continues to be a key differentiator in our industry, giving us the ability to invest throughout the freight cycle to further enhance our capabilities and to return capital to our shareholders. Our net debt to EBITDA ratio at the end of Q1 was 1.32 times, up from 1.03 times at the end of Q4, as we opportunistically deployed capital for a higher amount of share repurchases.

While our capital allocation strategy remains grounded in maintaining an investment-grade credit rating, our balance sheet strength enabled us to return approximately $360 million of cash to shareholders in Q1. This represents a more than twofold increase compared to Q1 of last year and includes $280.7 million of share repurchases and $79 million of dividends. We have strong conviction in the strategy we are executing and in the intrinsic value of the business. Our share repurchase activity reflects that conviction and our confidence in the long-term fundamentals of the company. There is tremendous runway for improvement ahead, and our operating model, our technology, and our people continue to differentiate C.H. Robinson Worldwide, Inc. and widen our competitive moats.

With that, I will turn the call back to David for his final comments.

David P. Bozeman: Thanks, Damon. As you have heard in our prepared remarks today, we have continued to deliver secular earnings growth from the disciplined execution of our strategy. I am proud of the progress we have made collectively to transform C.H. Robinson Worldwide, Inc. into the global leader in Lean AI supply chains. With our lean operating model, our commitment to continuous improvement, and our AI innovations at the core of our transformation, I continue to be even more excited about what we believe we can deliver in the coming years.

Our differentiating Lean AI gives us a unique opportunity to create new ways to solve complex challenges at scale, helping our customers build supply chains that are smarter, faster, and more resilient in a world where disruption is constant and agility is essential. We will never stop with our push to discover, learn, innovate, and solve problems with speed, and that is where the lean operating model is so important to our success. As lean disciplines continue to be deployed more broadly across our organization, our teams are becoming increasingly equipped to identify root causes of problems, implement countermeasures, and drive meaningful improvements.

That is how we deliver and how we have consistently delivered outperformance and further earnings growth in Q1 for the last two-plus years. It is also why we are positioned to continue doing so regardless of market conditions or cycle. The strength of our strategies, our technology, our people, and our operating model disciplines are differentiating and sustainable in any market environment, including an inflecting spot rate environment like we have seen recently or eventually an inflecting demand environment.

And as we lead our industry and stay on offense with our Lean AI strategy, I want to thank our people for their relentless efforts to provide exceptional service to our customers and carriers, for embracing the Robinson operating model, and continuing to execute with discipline. We have been a leader in this industry for more than a century, and we will continue to be. Our scale, our technology, our people, and the Robinson Way enable the operational excellence that has defined us for decades. The Robinson Way means being authentic, persistent, accountable, curious, and united, and those values along with our long-standing commitment to safety guide how we operate every day. Anything suggesting otherwise is misinformed.

We will continue to lead with purpose and move with urgency to disrupt ourselves and the industry, and we expect to drive sustainable outperformance, profitable growth, and long-term value for all our stakeholders. That concludes our prepared remarks. I will turn it back to the operator now for the Q&A portion of the call.

Operator: Thank you. We will now open the call for questions. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 to remove yourself from the queue. One moment while we poll for questions. Our first question comes from the line of Thomas Richard Wadewitz with UBS. Please proceed with your question.

Thomas Richard Wadewitz: Yes, great. Thank you, and it is good to see the strong results against a kind of evolving freight backdrop. I wanted to ask you how you would think about the impact to your business from the cycle improvement. I generally think stronger contract rates are good. The brokers can get squeezed for a bit—obviously you have managed that well—but is that potentially, if contract rates are up quite a bit—we are hearing kind of 10% to 15% contract increases for brokers and truckload—potentially a driver of upside to your $6 number for the year? Maybe that helps you in the second half. And then the other question is along the lines of the Montgomery case.

I think that we are expecting a decision May or June. It seems like probably some, you know, over 50% chance, let us say, that you win. But how would you respond if you end up losing in the Montgomery case, just in terms of other things you can do on the safety side to do more? Or would you say you are fine because it hurts others more than it hurts you because you have scale and financial strength? Thank you.

David P. Bozeman: Hey, Tom. This is David. Thanks for the question. I will start with the back half of your question on Montgomery and then Michael will address the first part. Let me be really clear about this. The Montgomery case is a case that we expect to win. We have argued a really good case going to the Supreme Court. It is important that you know the context here. This case is really not about immunity for brokers. This is about safety, and this is why we support this case.

Not having 50 different state rules—and when it comes down to the ruling of it, which we are anxiously awaiting—if it comes in our favor or not, we obviously have a playbook for either. But this is really about driving safety for the industry. We think that if it is not in our favor, that certainly brings some headwinds to the industry because you will have to start dealing with various brokers, and this should be the FMCSA really being the ones driving safety of carriers. But we are expecting—because we won in the Seventh Circuit and we won in the Southern District of Illinois—we expect that we will win this in the Supreme Court as well. Either way, C.H.

Robinson Worldwide, Inc. will be prepared to go, and we have a playbook for either.

Michael D. Castagnetto: Yes, Tom. This is Michael. I will tackle the first part of your question around the overall rate environment and how that will move forward. First of all, I would say I am really proud of the team and how they managed what was a difficult Q1, which was really an extension of the back half of Q4 through the holiday and then into the multiple storm periods, as well as the impact of regulatory on the overall supply of capacity in the marketplace. The team did an incredible job of being very active in terms of our repricing efforts in the quarter—very rifled in our approach.

We have talked about that, that we expected ourselves to be faster than we have in the past, but to do it with more accuracy, more specificity, and to really work with our customers to reprice the places where the market requires it to keep supply chains healthy—but to do it with them—and I think they have appreciated that through Q1. We saw that in our results and really have had some success with repricing. From our prepared comments, we are really pleased with our recent bid activity. Q4 and Q1 are large RFP periods for the industry as a whole.

We feel really good about how we came out of those periods and feel good that we are going to be in a position to manage the ongoing higher-cost marketplace that we are in right now, but also feel good that our process to manage repricing with our customers that we did well in Q1 would continue into Q2 if needed.

Operator: Our next question comes from the line of Ken Hoexter with Bank of America. Please proceed with your question.

Ken Hoexter: Hey, great. Good afternoon. David, congrats on really impressive moves on the technology adoption. In dropping the 12% of employees, or a little bit less year over year, maybe walk through that process and where we are seeing that change—where it is coming out of. Is it adjusting sales at all? Maybe talk about that and how you can continue to accelerate that from this point forward. And then, Michael, is it normal for contract as a percent of the total book to go up this soon in the turn? Do you not want to play the spot and take advantage of that fluctuating rate to offset the negative impact of the contract?

Or do you feel like you are catching up on the book of business fast enough? Thanks.

David P. Bozeman: Yes, Ken. Thanks a lot. Let me start with a little bit of context. The way we look at this, and we have said this pretty consistently, is we look at workflows at C.H. Robinson Worldwide, Inc., and for us, it has been the order-to-cash process, which has been a very manual process, and it has worked. That is where we have really gone at it with our technology. Also in this industry, and with us, you have low double-digit turnover that happens, and that has really allowed us to drive efficiencies while not, in some cases, backfilling some of those roles that we have had in that entry-level order-to-cash process.

We have also shifted—as we have said consistently—our focus on being more customer-focused, and that is where we have actually invested in some roles in our small and medium business, as well as customer-facing roles for solution solving with customers. But there was just a lot to go after when we started looking at that order-to-cash process. That is the context that we really have when it came to headcount. And as Damon and I have always said, we really do not have a KPI at C.H. Robinson Worldwide, Inc. when it comes to headcount because we have shifted to an input focus versus output focus. We really reengineer the work, and the output is the output.

That is how we look at it here.

Damon J. Lee: And, Ken, I will put a bow on what David said. This year, we have committed to double-digit productivity across the enterprise—both NAST and our Global Forwarding businesses. We have also commented that will be over-indexed to the second half of the year. The way we think about productivity going forward, just to remind the audience, is we have committed to single-digit productivity every year regardless of circumstances. Our operating model will generate productivity in the single digits—mid-single digits—every single year. Then in years like 2025 and 2026, where we have waves of innovation—whether that be GenAI adoption, agentic AI adoption—then we are committing to double-digit productivity when you compound those waves of innovation with baseline continuous improvement.

We are in the early innings of our productivity journey—early innings of lean adoption and early innings of our technology adoption—so there is a long runway to go as it relates to productivity at C.H. Robinson Worldwide, Inc.

Michael D. Castagnetto: And, Ken, on your second question about the mix of business, I think you are right that in a longer time frame our goal, as the market shifts, would be to move that percentage to more equalization. But really in Q1, most of the activity in the marketplace was supply-event-driven—either storms or regulatory impacts on capacity. While we are optimistic that there is some life in the market, it was still dominated by supply-driven events.

It was really important for us, as we come out of our RFP business, to make sure that we take care of our customers, that we select the right transactional business to win—which I think we did based on the combination of mix of business and our margin performance. Early in the quarter, a lot of the transactional pricing was not matching where the market was—or maybe I would say the transactional market did not match where the pricing and capacity market was—and we saw that improve throughout the quarter. I feel really good about how the team balanced that.

It is important that we also make sure that we take care of the customers who have awarded us business through what was a successful RFP season. But we do look for that to equalize over time, especially if demand improves throughout the rest of the year.

Damon J. Lee: And, Ken, just to put a bow on what Michael said, this has been a strong bid season. We expect to gain share through this bid season and price. As Michael said, just to summarize that, really strong bid season for C.H. Robinson Worldwide, Inc.

Ken Hoexter: Damon, just a quick follow-up for Arun. How is Global Forwarding in terms of the AI deployment? Or is it still all brokerage? Is that balanced and catching up, or still mainly brokerage?

Arun D. Rajan: Yes. We are actively deploying the same playbook that we use in NAST over in Global Forwarding. You will start to see more of that kick in the second half of this year. And just like NAST, as you have seen the journey the past few years, we have a lot of runway to move forward. Thanks for the time.

Operator: Our next question comes from the line of Christian F. Wetherbee with Wells Fargo. Please proceed with your question.

Christian F. Wetherbee: Hey. Thanks. Good afternoon, guys. I want to ask about your view on spot activity and demand as we went through the quarter. Obviously, AGP improved as we went month to month, but can you talk about spot activity and maybe in the context of the contract comments that you are talking about? What level of contract rate increases are we seeing so far through the bid season?

Michael D. Castagnetto: Thank you for the question. Early in January there was still a bit of a decision process of whether the storm impact of early January flowing into early February were events or whether they were indicative of a continuous and ongoing cost-increasing market. What you saw from a lot of customers was pushing or rolling the loads beyond the storm without necessarily pushing the loads into the transactional marketplace. As it became clear throughout the rest of the quarter that the cost side of the marketplace was going to hold, the transactional marketplace started to pick up some steam.

But in many cases, the overall demand ecosystem was loads being moved from the contract side of the business to the transactional side without a total increase in loads available. We are really pleased with how the team mixed the service to our customers and also took advantage of the transactional freight that delivered the margins that we required in that marketplace. To your second part, we look at repricing as an ongoing event in terms of how the market is performing, and so we do not have a preset goal of percentages. We know we are going to have to continue to manage the health of our customers’ supply chains.

For some customers, that might mean little to no repricing; for others, it might be significant. It depends on the mix. Geography is a large component right now. There are areas that are impacted more than others by the regulatory changes. We feel really good about our process, about our revenue management process, and the tools we are putting into our people's hands, and we are very confident that we can continue to take share from an RFP perspective and then manage that business appropriately.

Christian F. Wetherbee: Great. That is helpful. A quick follow-up for David. If there is an adverse outcome on Montgomery, how do you think about market share? It strikes us that a whole bunch of this industry is making essentially no money right now, and theoretically there should be some cost pressures from insurance coverage or other factors. What is the opportunity for C.H. Robinson Worldwide, Inc. in that scenario from a share standpoint?

David P. Bozeman: Thanks, Chris. Let me address it this way. It is really important that we put on a strong argument and that we win this case. The Supreme Court has an opportunity to resolve the disagreement of the lower courts. We have to ensure consistency in the application of preemption on these claims, and it will reduce uncertainty for brokers, shippers, and carriers alike. The opposite is 50 different state rules, and we support one national safety standard. That is super important. When it comes to the impact to C.H. Robinson Worldwide, Inc., we do not look at it that way. This is a long-tail issue for a lot of brokers. We have to plan for both sides of it.

You are right to call out that there are going to be some insurance implications if you are going to be in this business, and that is going to impact different people in different ways depending on their health and their size. We are prepared either way, but we really put up a strong case. It is important for the industry that we bring clarity to this, not just the positive or negative impact to C.H. Robinson Worldwide, Inc.

Operator: Our next question comes from the line of Jonathan B. Chappell with Evercore ISI. Please proceed with your question.

Jonathan B. Chappell: Thank you. Good evening. You gave a good example of the very active and rifled repricing approach to the spot rate backdrop. I think what people really want to understand more is the sustainability of what you have managed to do in the first two quarters of the upturn. In addition to the repricing approach and collaboration with your customers, can you give more tangible evidence of how you have managed these first two quarters differently than prior upcycles and how that translates into 2Q or 3Q if rates stabilize from here and stop the parabolic move higher?

Michael D. Castagnetto: Thanks, Jonathan. I would start with our revenue management capabilities and getting tools into our people's hands faster. If you compare to the past, it would have taken us most of Q1 to figure out where our problems were and most of the quarter to understand what level of repricing we needed, where, and how. With our Lean AI disciplines now, our tech being in our people's hands faster, they are able to see where our customers’ supply chains are having breaking points—where the health of that supply chain is impacted.

Then we are able to have conversations with customers where we can make disciplined decisions together, either in a one-time event if needed based on the change or as an ongoing event based on the volatility of that part of their supply chain. We have talked in the past about whether we would have noticed it weeks or months after; now we are noticing it that day. We are recognizing the trend, and we are able to talk to our people about how we are going to fix this and what time frames we think this adjusts to. I see our process continuing.

Whether the market goes up or down, we are going to continue to have those conversations with our people and our customers. I feel really good that we have the tools available to handle a continued upswing in the manner it has for the last four months, the market stabilizing, or it potentially going back down depending on the overall conditions of the marketplace. I feel really confident that we are getting the team what they need to service customers regardless of market conditions.

Damon J. Lee: And, Jonathan, I would add that with the frequency in which we are interrogating the market from a price and a volume perspective, we do not have to set a strategy and hope that strategy materializes within the quarter. We are changing strategies multiple times a day—hundreds of times a month. To Michael's point, we are working within the conditions the market has given us, we are outgrowing that market, and we are taking price at the same time, with our operating margin expansion. Whatever the market conditions bear, the frequency and the surgical nature of our revenue management gives us capability that we think few have in this marketplace.

Operator: Our next question comes from the line of Jizong Chan with Stifel. Please proceed with your question.

Jizong Chan: Thanks, and good afternoon, everyone. I wanted to get your thoughts on forwarding in terms of volume development and margin shaping. There is a lot going on with the Middle East and capacity and the fact that we are lapping the trade disruption this quarter. Any color there would be really helpful for our models.

Michael D. Castagnetto: Thanks for the question, Bruce. What I would say is this: another solid quarter in a very difficult macro environment for our Global Forwarding team. There has been tremendous disruption in the Middle East. Our direct exposure to the Middle East is quite immaterial to our book, but the knock-on effect to global rates and global capacity has been the challenge that our team has helped our customers work through in the quarter. They did an exceptional job with that challenge. You can imagine capacity being staged in one area that is being relocated to another area for demand patterns and repositioning. The team has done a really good job there.

In a quarter where disruption could have been impactful to our business due to the knock-on effect of the global impact of capacity and rates, the team managed that impact to a very immaterial number for C.H. Robinson Worldwide, Inc. Global Forwarding in the quarter. Your opening comment is right—there is a lot of disruption and global displacement because of the conflict in the Middle East—but as far as the impact to our business, we have been able to manage it quite well. The impact has been relatively immaterial to our results, and we continue to help our customers solve ongoing global conflicts and challenges in the forwarding space.

Operator: Our next question comes from an Analyst with Barclays. Please proceed with your question.

Analyst: Hi. Good evening, and thanks for taking the question. I think implied in your 2026 earnings outlook, you embedded quite a bit of expected efficiency gains, especially in the back half of the year. Given commentary around fundamentals mid-season maybe going a little bit better, how should we think about earnings progression into the back half of 2026? Thank you.

Damon J. Lee: Thanks for the question. We feel very good about our Investor Day update—the $6 EPS with no market growth. As usual, the year starts out differently than you planned. There have been market headwinds in terms of spot rates being substantially higher than we—or anybody—forecasted for 2026, but the team has managed that exceptionally well. We continue to perform exceptionally well on our self-help initiatives around outgrowing the markets, revenue management capability, and productivity. We have a very high degree of confidence in our $6 EPS target. I would not say we are in a position to change that target or the profile of that target at this point in time.

As we mentioned, the productivity improvements that we referenced in those commitments are over-indexed to the second half of the year. We think that profile still aligns to our deliverables. We feel very confident in delivering our $6 with no market growth assumed in 2026.

Operator: Our next question comes from the line of Richa Harnane with Deutsche Bank. Please proceed with your question.

Richa Harnane: Hey. Thanks. Good evening, gentlemen. Obviously very solid results in NAST. I want to better understand the flat volumes and down 3.5% TL volumes. Michael, I know you discussed this about a deliberate decision you were making about being disciplined around growth opportunities, but maybe dive deeper into that and what you are seeing in the market that prohibited you from profitably participating in more volume opportunities. Maybe it was just PT, but I want to better understand and see if volume growth could start to be more significant as we go through the year.

Michael D. Castagnetto: Hey, Richa. Thanks for the question. I will speak to what we saw in the quarter. The impact on volume was, first of all, that we made very deliberate choices about the volume we wanted to win in the transactional space at the margins we thought the market required, as well as making sure we serviced our customers in the contractual space. It is also important to realize there were major storm events that impacted very large shipping areas and volumes. While much of that volume does end up getting shipped, you do not get all of it back, so there was a volume impact due to the events that we went through in the quarter.

Looking at the balance of what freight was available to us and how our customers were impacted, we feel really good about the volume we produced in the quarter. As Damon mentioned, the market did not grow in the quarter—as you saw with CAS down 6.2%—so we saw market outgrowth in both modes, year-over-year growth in LTL. We continue to believe we are taking the right share at the right time. We expect ourselves to continue to do that whether the market starts to improve or not. We will continue to hold ourselves to that high bar, but we are going to continue to do it based on the right return for customers, carriers, employees, and shareholders.

David P. Bozeman: And, Richa, I would just add that we have been pretty adamant about this for almost two years now. We take the volume we want in a given quarter. In Q1, we took the volume that we felt met our criteria. Make no mistake, Michael and team could have outgrown the market substantially more than what we did, but based on our own financial expectations and quality of earnings, we focused on the volume that mattered most to us. The bookends are important here. We had one competitor that had pretty high growth in the quarter—double-digit growth—but negative gross profit dollars and a significant contraction in rate. Another competitor had a significant volume reduction—almost 20% in the quarter—but maintained rates.

We believe our model is superior. We had strong outgrowth in the quarter while maintaining our AGP margins in a quarter where spot rates were up 18% to 20%. As Michael said, we feel like we have the strategy that works. We take the share we want and deliver the margin we need. We believe we have the best cost-to-serve model in the industry, and Q1 was a perfect example of that.

Operator: Thank you. This does conclude our question and answer session. I would now like to turn the floor back to Charles S. Ives for closing comments.

Charles S. Ives: Thank you, everyone, for joining us today, and thank you for your questions. We look forward to talking to you throughout the quarter. Have a good evening.

Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful rest of your day.

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