C.H. Robinson Worldwide, Inc.

Good morning, ladies and gentlemen, and welcome to the CH Robinson third quarter 2019 conference call. At this time, all participants are on a listen-only mode. Following today's presentation, Bob Houghton will facilitate a review of previously submitted questions. If anyone needs assistance at any time during the conference, please press the star followed by the zero on your telephone keypad. As a reminder, this conference is being recorded Wednesday, October 30, 2019. I would now like to turn the conference over to Bob Houghton, Vice President of Investor Relations.

Thank you, Donna, and good morning, everyone. On our call today will be Bob Biesterfeld, our Chief Executive Officer, and Mike Zechmeister, our Chief Financial Officer. Mike joined us in September and brings with him three decades of public company finance experience. Prior to joining Robinson, he most recently served as CFO of United Natural Foods. He also spent 25 years at General Mills, where he held a variety of finance leadership roles, including VP of Finance for the Pillsbury Division, V.P. of Finance for U.S. Retail Sales, and Treasurer. Bob and Mike will provide commentary on our 2019 third quarter results. Presentation slides that accompany their remarks can be found in the investor relations section of our website at chrobinson.com. We will follow that with responses to the pre-submitted questions we received after our earnings release yesterday. I'd like to remind you that our remarks today may contain forward-looking statements. Slide two in today's presentation list factors that could cause our actual results to differ from management's expectations. And with that, I will turn the call over to Bob.

Thanks, Bob, and good morning, everyone. The third quarter provided challenges in both our North American surface transportation segment as well as our global forwarding operating segment. Our net revenues, our operating incomes, and our EPS results finished below our long-term expectations. We anticipated an aggressive industry pricing environment coming into the second half of the year, driven by excess capacity and softening demand, and we knew that we faced difficult comparisons versus our strong double-digit net revenue growth in the second half of last year. Our results were negatively impacted by truckload margin compression in North America as the rate of change in pricing fell faster than that of costs for the first time in six quarters. While our contractual truckload volume did increase at low single-digit rates in the quarter, we did not generate the level of contractual volume growth that we anticipated. And our growth in contractual volume was not enough to offset the significant declines in the spot market volume in the current environment, resulting in a 4% decline in truckload volume for the quarter. In global forwarding, we believe that shippers have largely worked through their elevated inventory levels. However, the global forwarding market continues to experience air and ocean volume declines as tariff concerns and fears of recession are softening demand. A part of our customer value proposition, particularly in our committed relationships, is helping our customers manage through freight cycles and the pricing volatility that occurs as a result of the cyclicality of our industry. Our people did a great job controlling what we can control, which includes increasing awards and contractual bids with our largest customers in the quarter. and continuing to provide excellent service and innovation. As a result of this market, we're continuing to adjust our pricing strategies in order to optimize our results. The results that we delivered to our shareholders in the third quarter are below our long-term growth targets, but I'm proud of the results that we delivered for our customers and our carriers, which is ultimately what will drive shareholder value creation over the long term. Our teams across the globe worked hard, and as such, our contractual awards increased, and we were recognized by several customers during the quarter as their provider of the year. We also launched new products, such as our freight quote by C.H. Robinson for small businesses. And carriers continue to choose C.H. Robinson as the 3PL of choice for securing freight and optimizing their networks. While the addition of thousands of new motor carriers every quarter allows us to bring new capacity solutions to life for our customers. Our long-term plans around transformation of our business are on track, and our investments in technology and process improvements are paying dues. During third quarter, we also returned $136 million to our shareholders and delivered industry-leading operating margins. Our financial results this quarter demonstrate that we're not immune to large cyclical swings in the freight environment. We believe that our continued investments through these down cycles will drive better alignment between our net revenue growth and our costs, and will enable us to generate operating margin expansion through the cycle and over the long term. With those introductory comments, I'll turn it over to Mike now to review our financial statements. As Bob Houghton mentioned in his intro, Mike Comster Robinson is a seasoned and strategic public company CFO. He brings tremendous finance experience and is a proven leader that drives growth through strong leadership and effective business partnership. Mike's been with us for almost two months now, and we're very proud to have him on the team at Robinson. With that, I'll turn it over to Mike.