The operator welcomes participants to the C.H. Robinson First Quarter 2024 Conference Call and introduces the company's executives. The executives remind listeners that their remarks may contain forward-looking statements and refer to the earnings presentation slides for more information. The CEO discusses the company's first quarter results, which reflect a change in their operating model and improved execution despite a challenging market.

The company's CEO identified an opportunity to improve operational execution and implemented a new operating model based on Lean methodology. This has led to greater discipline, transparency, and urgency in decision-making, resulting in improved performance in Q1. The company's truckload business saw improved optimization and market share growth, thanks to the resilient and dedicated efforts of the team.

In the first quarter, the company's NAST and Global Forwarding businesses saw improvements in operational execution and pricing discipline. In the truckload business, volume declined but AGP yield improved due to the new operating model and better pricing discipline. The LTL business saw an increase in shipments and improved AGP per order. The Global Forwarding business has been working closely with customers to navigate conflicts in the Red Sea, which have led to transit disruptions and reduced ocean capacity.

In the first quarter of the year, ocean rates have increased significantly due to disruptions in the Red Sea. However, rates have started to come down and capacity has been repositioned. As a global logistics provider, the company has been able to increase its ocean market share by providing differentiated solutions and leveraging technology and talent. In the first quarter, the company's Ocean Forwarding AGP increased by 2.5%, driven by an increase in shipments. The company remains focused on productivity improvements and optimizing structural costs. They have exceeded their productivity targets in 2023 and have carried that momentum into 2024.

C.H. Robinson is on track to meet their 2024 targets of improved productivity and has high net promoter scores, leading to market share gains. Customers value their quality, innovation, and reliability, as well as their financial strength and ability to consistently invest in the customer experience. C.H. Robinson offers a combination of people, technology, and scale to provide an exceptional customer experience and meet all logistics needs, including cross-border freight and retail consolidation. They are also helping customers navigate disruptions and support growth in cross-border trade.

In the sixth paragraph, the speaker discusses their focus on improving the customer experience and cost efficiency in preparation for a potential rebound in the freight market. They highlight their commitment to continuously improving processes and eliminating inefficiencies to become a faster, more flexible, and more effective company. The next speaker then discusses their efforts to increase AGP yield, improve operating leverage, and strengthen the customer and carrier experience through investments in pricing science, technology, and customer relationships. They also mention progress in eliminating productivity bottlenecks.

The company is using generative AI to automatically respond to transactional truckload quote emails, which has resulted in faster response times for customers and increased productivity for the company. They plan to continue scaling this technology and using it to optimize their processes and improve the customer experience, which will lead to cost structure benefits and increased productivity. In the first quarter, the company saw positive results from their efforts.

In the first quarter, total revenues for the company were $4.4 billion and adjusted gross profit was $658 million, a 4% decrease from the previous year. This was due to a 7% decline in NAST and a 1% increase in Global Forwarding. The company's new operating model has helped improve execution and decision-making, resulting in a 16% decrease in AGP per business day in January, a 3% decrease in February, and a 7% increase in March. Personnel expenses were $379.1 million, down 2.2% from last year due to cost optimization efforts and lower headcount. The company expects personnel expenses to be between $1.4 billion to $1.5 billion in 2024. Non-value-added tasks continue to be eliminated to increase productivity, with a projected 15% increase in shipments per person per day in NAST and a 10% increase in Global Forwarding.

In the first quarter, Q1 expenses were $151.5 million, including $5 million in restructuring charges. Excluding these charges, SG&A expenses were $146.5 million, up 3.6% year-over-year. The company expects SG&A expenses for the full year to be between $575 million and $625 million. Interest and other expenses were down $11.5 million, driven by a reduction in debt. The effective tax rate for the quarter was 15.8%, and the company expects it to be between 17% and 19% for the full year.

In the first quarter, our adjusted earnings per share were $0.86, excluding restructuring charges and tax provision benefits. Cash flow used by operations was $33 million, compared to $255 million generated in the same period last year. This was due to changes in net operating working capital, with a cash inflow of $235 million in the previous year and a cash outflow of $135 million this year. Our capital expenditures were $22.5 million, and we expect them to be between $85 million to $95 million for the year. We returned $91 million to shareholders through dividends. Our liquidity at the end of the quarter was $842 million, with a debt balance of $1.7 billion and a net debt to EBITDA leverage of 2.73 times. Our capital allocation strategy prioritizes maintaining an investment-grade credit rating.

The speaker is encouraged by the company's improved execution, deployment of a new operating model, and opportunities for market share gains. They expect continued growth and cost savings from process simplification, technology, and waste elimination initiatives. The company is leveraging AI to reduce waste and drive structural cost changes. The speaker commends the team for their performance and is excited about reinvigorating the company's culture and instilling discipline with the new operating model. They are focused on being fit, fast, and focused to win and prepare for a future freight market rebound by implementing Lean practices and expanding digital capabilities.

The company is implementing a new operating model to increase productivity and efficiency, provide value-added solutions to customers, and focus on profitable growth in their core modes. This will involve leveraging their capabilities, using innovative technology, and taking action to improve their value proposition, market share, and profitability. The CEO is confident that this new model will help the company reach its full potential and create value for all stakeholders. The details of the new operating model were not provided in the statement.

Dave Bozeman, the speaker, is confident in the new operating model that he has implemented in the company. He believes that it will drive better discipline, accountability, and responsibility. The model is based on Lean principles and focuses on inputs rather than just outputs. This allows the company to quickly address any issues and solve problems. Bozeman is determined to embed discipline into the company and is confident that it will lead to success.

The company has seen an improvement in their first quarter results due to their implementation of a new operating model. This has led to an increase in enterprise AGP per day and they are confident about the momentum and progress they have made. The second quarter is expected to show further improvement due to seasonal factors.

The company is focusing on what they can control and is pleased with their move into the second quarter. They have invested in pricing and costing technology to respond quickly to market changes. The company's behaviors and conversations have improved, leading to better problem-solving and a connected company. The working capital has also improved, and the company is on a sustainable journey.

Christopher Kuhn asks about any changes to the compensation structure and if they will impact veteran agents as part of the new model.

Dave Bozeman, a company executive, is discussing the changes he has implemented in the company and how people are reacting to them. He mentions the importance of balance in the company's operating model, with a focus on both productivity and growth. He also talks about how the company's compensation structure reflects this balance and incentivizes employees to achieve both. Bozeman also mentions that the company regularly reviews its portfolio and makes changes as needed to improve its performance.

In the first 10 months of his tenure, the CEO has implemented changes to drive focus within the company's core areas of truckload, LTL, Ocean, and Air. He plans to continue examining the company across these areas and making necessary decisions to improve results for customers, employees, and shareholders. The CEO has also taken steps to diagnose the company's issues and understand its operations, such as going to the work and implementing new systems.

The speaker talks about how they took time to understand the company and its operations. They were pleased with the people and their dedication to the company. The speaker also brought in outside talent to help with simplification and reducing complexity. They started implementing a new operating model that focuses on key inputs such as headcount, shipments, cost, customer service, and AGP dollars. This is different for the company and requires addressing these areas.

The new President of North American Surface Trans, Michael Castagnetto, has successfully implemented a focus on execution and discipline within the company. This has led to faster problem-solving and a more efficient use of resources. The company has also combined marketing and communication to drive synergies. These changes support the company's strategy for profitable growth and better returns for shareholders, as well as creating a better environment for employees and providing better value for customers. This new approach will continue to be implemented throughout the year.

The speaker, Mike Zechmeister, responds to a question about the improvement in AGP per day in March despite a weak freight environment. He explains that the company's operating model, execution, and focus on yield management and pricing have contributed to this improvement. He also mentions that the company has made strides in balancing technology and the expertise of their employees. This has resulted in increased productivity, as seen in their shipments per person per day metric.

The company has implemented technology to reduce manual tasks and allow their employees to focus on customer relationships and problem-solving. Generative AI has also been beneficial in handling the high variation in the freight industry. The company has seen improvements in productivity and has set targets for this year. The company actively manages volume in AGP through a combination of science and people. The question is about ocean capacity.

The speaker discusses the recent disruptions in the ocean market, including issues in the Red Sea and Panama Canal. These disruptions caused spot rates to increase, but as the capacity has been repositioned, prices have come back down. However, there is still more capacity coming into the market than going out, and the demand for shipping has not yet shown significant growth. The company's contract business makes up 30-40% of their business, leaving room for them to do business in the remaining 60-70% of the spot market.

The speaker discusses the progress in the Panama Canal and the company's focus on tracking the business closely. They mention that there has been some improvement in water levels, but the number of crossings per day is still lower than normal. The speaker also mentions that they are closely monitoring the market and adapting their productivity delivery based on demand. They aim to maintain their productivity numbers even in a soft market.

The team has been successful in implementing technology and large language models to remove menial tasks and increase productivity. They are focused on executing their operating model and remaining disciplined in a soft market. They are confident in their ability to handle both lows and highs in the market. April performance is not specifically discussed, but the team is confident in their strategies to drive volume and gross margin.

The company has made progress in Q1 and is confident about Q2. The produce and beverage businesses are expected to do well in the second half of Q2. The company has been winning market share and maintaining price discipline. The competitive landscape has been challenging, with smaller brokers exiting the market, but the company's success is mainly due to its operating model and disciplined execution.

During the earnings call, Dave Bozeman states that the broker business is not at the same levels as 2019, despite the influx of capacity and carrying capacity coming down. He also mentions that the truckload market from an asset-heavy perspective is not at the same level as 2019. The call concludes with Chuck Ives thanking everyone for participating.

This summary was generated with AI and may contain some inaccuracies.