C.H. Robinson Worldwide, Inc.

Good morning, ladies and gentlemen, and welcome to the CH Robinson fourth 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, January 29, 2020. 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 Sekmeister, our Chief Financial Officer. Bob and Mike will provide commentary on our 2019 fourth 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 their comments 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 2 in today's presentation lists 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. I'll get right to the point this morning. Our net revenues, our operating margins, and our earnings per share all finished well below our long-term targets. We've been facing some rather extreme, if not unprecedented, cyclical changes in our North American trucking market. One year ago, we were experiencing near record net revenue dollars per shipment and double digit total company net revenue growth. This was followed by a period of rapid price declines driven by excess capacity and weak demand. The resulting net revenue reported for fourth quarter of 2019 stands in rather stark contrast to the results of a year ago. Higher operating expenses for the quarter, including increased investments in information technology, magnified this effect. Mike will provide more context on our operating expenses in the prepared remarks. To be clear, our fourth quarter results do not reflect our performance expectations going forward. We are committed to our investments in technology even during more challenging periods in the freight cycle. Our investments this quarter led to operating margins below the low end of our historical fourth quarter averages. We're not immune to large swings in the freight market, but we believe our continued advancements through cycles will align the net revenue growth and the operating costs needed to drive operating margin expansion over the long term. We will continue our focus on cost controls with our target of eliminating $100 million in operating costs over the next three years. So as we move through mid-2020, we expect that our operating margins will begin to improve. Despite results below our long-term expectations, I do believe that we took some really important steps in the fourth quarter. We continued to adjust our pricing in order to optimize our results. Our fourth quarter decline in truckload net revenue per shipment was largely as anticipated as the fourth quarter of 2018 benefited from contractual pricing in a rapidly falling cost environment, resulting in the highest quarterly truckload net revenue per shipment in the last decade. On an absolute basis, our fourth-quarter truckload net revenue per shipment was very much in line with levels experienced during the balanced freight markets in both 2016 and 2017. Pricing adjustments to reflect the current market helped enable us to deliver flat volume in NAS truckload, including a mid-single-digit increase in contractual volume and 4.5% volume growth in LTL. These are healthy market share gains in a quarter, where volumes as measured by the CAASPP rate index declined approximately 6%. Our truckload volume trends improved further in January, increasing approximately 6%. We're starting to see our increased investments in technology drive operating efficiency in our business, including a 330 basis point favorable spread between truckload volume growth and headcount growth in our NASC business. We continued to deliver industry-leading operating margins in the quarter and returned $137 million to our shareholders through a combination of share buybacks and dividends. We generated $212 million in operating cash flow in the fourth quarter, and for the full year, we generated operating cash flow of $835 million, an all-time high. During the quarter, our teams continued to excel in the areas that we can control. including another quarter of increased win rates on contractual bids in our truckload and LTL service lines and increased awards with our largest customers while we continue to provide the excellent customer service and innovation that our customers have come to expect from C.H. Robinson. I'm particularly proud of the results we delivered to our customers and carriers and the efforts of our employees to continue to provide supply chain expertise that brings capacity solutions to life for our customers and secure freight and optimize routing for our carriers. Yesterday, we announced the acquisition of Prime Distribution Services, a leading provider of retail consolidation services in North America. We're excited about the scale and the value-added warehouse capabilities that Prime will bring to our existing retail consolidation platform. Prime is a strong leadership team that's experienced in retail consolidation and warehouse operations. and we're thrilled to bring the employees, the customers and the carriers of Prime to C.H. Robinson. With those introductory remarks, I'll now turn the call over to Mike to review our financial performance.