Greetings, ladies and gentlemen, and welcome to the CH Robinson third quarter 2026 conference call. At this time, all participants are on a listen-only mode. Following the company's prepared remarks, we will open the line for a live question and answer session. To ask a question, please press star 1 on your telephone keypad. If anyone needs assistance at any time during the conference, please press star 0. As a reminder, this conference is being recorded Wednesday, October 28, 2026. I would now like to turn the conference over to Chuck Ives, Senior Director of Investor Relations.

Thank you Donna, and good morning everyone. On the call with me today are Dave Bozeman, our President and Chief Executive Officer, Michael Castagnetto, our President of North American Surface Transportation, Arun Rajan, our Chief Strategy and Innovation Officer, and Damon Lee, our Chief Financial Officer. I'd like to remind you that our remarks today contain forward-looking statements. Slide 2 in today's presentation lists factors that could cause our actual results to differ from management's expectations. Our earnings presentation slides are supplemental to our earnings release and can be found in the events and presentation section of our website at investor.chrobinson.com. Today's remarks also contain certain non-GAAP measures and reconciliations of those measures to GAAP measures are included in the presentation. With that, I'll turn the call over to Dave. Thank you, Chuck.

Good morning, everyone, and thank you for joining us today. Before we talk about another quarter of strong results delivered by the Robinson team, I want to take a moment to review what the team has accomplished over the past three years to revolutionize our business and why we can replicate that transformation with the acquisition of RxL. Three years ago, many doubted that a lean operating model was applicable. or could be adequately implemented to drive significant benefit in a logistics business. Some said it would be impossible to outgrow the market and expand margins at the same time. As it turns out, we've consistently outgrown the market. We've expanded our gross margins and optimized our portfolio, and we've significantly increased the productivity and operating leverage of our business. We've achieved all of the things we said we would do. building a strong say-do ratio. Let's talk about how we delivered all of this and how this put us in a position to have a business model that can now be applied to inorganic solutions. As always, it starts with the customer. We've strengthened our value proposition by improving the horizontal capabilities that support the verticals our customers operate in. We've invested in our customer-facing roles, and we've improved our go-to-market approach in order to emphasize the full breadth of our domestic and global services. As a result of providing better service and solutions to our customers, our NAS business has outgrown the market every quarter over the past three years, and we expect this consistent organic market share growth to continue for many years to come. We've implemented disciplined revenue management practices that dictate the responsible nature in which we obtain market share at an appropriate gross margin. These practices have enabled us to be more selective in the volume that we seek and accept, and they've improved the speed and success of repricing our contractual portfolio when the marketing conditions require it. At the same time, we've improved our ability to capture spot market volume with enhanced price and cost discovery and with an AI agent that responds significantly faster to transactional quotes received via email. All of these initiatives have enabled us to expand our gross margins. Last, but certainly not least, we've lowered our cost to serve and improved our operating leverage by removing waste and automating manual processes through lean disciplines and custom-built AI agents. This has enabled us to decouple headcount growth from volume growth. As a result, since the end of 2023, we've expanded our NAS operating margin and many more. We've expanded the operating margin in our global forwarding business by over 2,500 basis points and exceeded our mid cycle target of a 30% operating margin by applying the same lean AI strategy. Three weeks ago, We announced our agreement to acquire RxO, and we continue to be very excited about the benefits of the plan acquisition for our customers and carriers, our employees, and our shareholders. The same lean operating model and AI technology that have been vitally important in the transformations of our NAS and global forwarding businesses are what will enable us to successfully integrate and transform the RxO business. These disciplines don't disappear As we integrate a strong team and book a business with additional capabilities. Rather, we believe these disciplines are what will enable us to deliver different results than this industry's past acquisitions. Those disciplines will be emphasized by our skilled integration team that has proven integration experience and a transformation pedigree. That team is being led by our vice president of the Robinson operating model, Jim Rutlinger, who was instrumental in several successful integrations at Danaher and in helping me stand up the lean operating model at Robinson in January of 2024. There are also a few other things that I want to reemphasize related to our plan acquisition of RxO. It is not a substitute for organic growth or an indicator that our organic growth is slowing. As I said earlier, we expect our organic outgrowth to continue, supported by the same initiatives that we've been executing on. We believe the inorganic growth from the RSO acquisition will accelerate our growth and profitability. For example, in addition to our own knowledge of where we do and don't compete with RSO, our team of external advisors did a thorough analysis of potential customer overlap. focusing on the top 100 truckload brokerage customers of RxO. Even though this seems hard for some to believe, the data shows that the overlap is limited. We are a data-driven company and we rely on data to drive our decisions. And finally, a thorough analysis of RxO's legal docket was an important piece of the diligence that was completed. That analysis revealed that RxO's legal docket is a neutral factor when compared to our own docket. And like us, RxO has a significant insurance tower for contingent auto liability claims. Our insurance tower is a differentiator versus many other brokers. And it's one reason that we believe an inflation in our 2027 auto liability premium will be less than what other brokers will have to absorb and much less than the extreme scenarios that some have suggested. We continue to manage our legal docket as we have for years, with most cases being either dismissed or settled for amounts below our deductible. We're also progressing nicely through our 2027 insurance renewal process, and we believe this renewal will result in insurance inflation that is reasonable and manageable. As a reference, we've been absorbing approximately $30 million of annual wage inflation, and we still deliver double digit earnings growth in 2024 through 2026. Our insurance renewal process will be finalized by the end of December and we will share an update on our 2027 insurance costs as soon as we can. Lastly, we continue to see examples of our customers deciding to alter their sourcing strategy to shift volume to larger brokers with significant insurance coverage and strong carrier vetting processes. Everything that I just discussed is why we strongly believe that we can deliver the $300 million of net synergies from the acquisition of RxO while continuing to drive organic outgrowth that will be able to manage the expected insurance inflation and that will continue to deliver significant value for our shareholders. Now, turning briefly to our third quarter results that Michael and Damon will discuss in more detail. I want to thank our people for continuing to provide exceptional service to our customers and carriers, embracing the Robinson operating model and executing with discipline, resulting in another quarter of double-digit year-over-year earnings growth. Q3 was the 14th consecutive quarter in which the NASS team delivered year-over-year volume growth that outpaced the cash freight shipment index. They also continued to deploy our disciplined revenue management practices while the North American trucking market continued to reflect a period of significant supply-driven tightening. By successfully repricing a large portion of our contractual truckload portfolio and by capturing spot volumes at higher margins, the team achieved a 17% year-over-year increase in truckload AGP per load. In NAS and Global Forwarding, the team continues to turn manual processes into agentic workflows that are increasingly automated. More connected and easier to manage at scale. As a result, both businesses delivered a higher level of year-over-year productivity improvements than they achieved in the first half of 2026, and both businesses achieved their mid-cycle operating margin targets again. Our ability to consistently deliver secular earnings growth over the last three years is a result of the disciplined execution of our lean AI strategy. Lean AI is our unique approach that combines the principles of our Robinson operating model rooted in lean methodology with 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. We're highly confident in our ability to continue to execute on all of our strategic initiatives in any market environment. Our industry-leading cost-to-serve model is highly scalable, and we expect it to strengthen further as we harness AI's capabilities to automate more of the quote-to-cash lifecycle of a load. As the industry pacesetter for cutting-edge innovation and differentiated solutions, we will continue to use our domain expertise and lean mindset to build technology that delivers on our customers' promise and drives higher value and all of our stakeholders. I'll turn it over to Michael now to provide more details on our NAS results.

Thanks, Dave, and good morning, everyone. In Q3, the NAS team continued to demonstrate our ability to consistently gain market share, to optimize our profit per load despite significantly higher spot rates, and to deliver higher levels of productivity as we incorporate agentic AI into our workflows. As Dave mentioned, Our total mass volume outgrew the cast freight shipment index for the 14th consecutive quarter. Our total mass volume grew 3.5% year over year compared to a 0.3% decline in the index. Our growth was balanced with both truckload and LTL volume growing 3.5%, reflecting market share gains in both modes. Having industry-leading solutions in both truckload and LTL is a competitive advantage for Robinson. For our $1 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 11th consecutive quarter, underscoring our sustained outperformance versus the broader LTL market. We'll continue to drive the best solutions for our customers and move their freight in the most optimal way that fits their supply chain. One of the keys to our consistent market share gains has been volume growth in key verticals that we've specifically targeted. During Q3, we continued to deliver truckload volume growth in the retail, healthcare, and technology verticals, supported by our horizontal solutions such as drop trailer, cross-border, and short haul capabilities. We continue to win volume in both the contractual and transactional markets. As a result, the mix of our truckload volume remained at 70% contractual and 30% transactional, which was unchanged year over year and sequentially. At the same time, stricter driver requirements, federal enforcement actions, and other carrier challenges continue to remove capacity from the market, creating an environment that is increasingly sensitive to disruptions and sudden changes in freight demand. It has also caused truckload spot market costs to increase significantly in 2026. Excluding fuel, VAT spot rates in the U.S. increased approximately 37% year over year in Q3. As a result, load to truck ratios and tender rejection rates remained elevated, which continued to create opportunities for transactional volumes at higher margins. In Q3, our team continued to effectively capture the right transactional volume at a substantially higher AGP per shipment compared to last year. Combined with ongoing repricing of our contractual business to reflect the new market realities, we were able to achieve a 17% year-over-year increase and our truckload AGP per shipment. Our revenue management disciplines, our improved price and cost discovery, and our strong customer relationships have enabled us to reprice our contractual portfolio much faster than we have historically. Our customers know they can trust the market and rate information we're bringing to them, which has resulted in historically high level of acceptance in our repricing campaigns. Across NAST, we also continue to integrate agentic AI into our workflows, lowering our industry leading cost to serve and elevating the customer experience by enabling faster, more reliable service. The increased automation of our workflows enabled us to continue delivering double digit increases in NAST shipments per person per day with a greater than 15% year over year increase in Q3 and a greater than 65% increase since the end of 2022. measured across the entirety of our NAS organization. Looking ahead to Q4, market volumes are typically softer compared to seasonal peak in Q3, with the 10-year average of the cash rate shipment index excluding the pandemic-impacted year of 2020 reflecting a 3.4% sequential volume decline in Q4. On a year-over-year basis, we expect our consistent outperformance versus the market index to continue. Truckload spot rates are expected to inflect higher during Q4 as capacity seasonally tightens during the holiday timeframe between Thanksgiving and New Year's Day. As we look forward, we will continue to deliver industry-leading solutions and flexibility to our customers and carriers. We'll also 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 in order to optimize for the most effective combination that drives earnings growth and long-term value creation. Our people and their unmatched expertise, combined with our operating model, enable us to deliver exceptional service and drive sustained improvement. With that, I'll turn it over to Arun to provide an update on the advancement of our Lean AI strategy.

Thanks, Michael, and good morning, everyone. Today at CH Robinson, we are faster and more disciplined in how we design, build, and scale technology across the company. We adapt faster to changing market conditions, put actionable data into the hands of our people faster, and respond faster to our customers and carriers, all while solving increasingly complex logistics challenges at scale. Speed alone is not the only objective. What matters is creating sustainable value by reengineering how work gets done. That includes raising the level of service we provide to customers, improving the quality of work and experience for our employees, and delivering measurable and scalable outcomes in any market cycle. Our approach of pairing AI with our proven lean operating model continues to differentiate us. A key part of that differentiation is our builder culture, and more than 450 in-house engineers and data scientists. They enable us to design fit for purpose technology and better agents directly into our proprietary systems and workflows. They understand logistics, our business and how work gets done at Robinson, enabling us to build for real world complexity rather than rely on generic solutions. That same expertise also enables us to engineer workflows for efficiency, optimizing token usage, and selecting the right large language model for each task based on effectiveness and cost. We don't need the newest or most expensive model for every use case, and we are not dependent on any single provider. Our focus is on achieving the best business outcome at the best economics. As a result, while our token usage has increased over 40x versus two years ago, Our annual token costs on a one-way basis is still less than $2 million. As we continue to integrate our custom-built AI agents into more workflows within the quote-to-cash lifecycle, the value of our Lean AI is showing up across the enterprise. This includes improved service and responsiveness to the customer and productivity gains of more than 65% in both mass and global forwarding since the end of 2022. These outcomes reflect the combination of our custom-built technology and our proprietary data and context. More than ever before, we're now putting these advantages to work in our global forwarding business and leveraging the learnings from the same journey in NAST. One example is ocean floating, where we are enabling faster responses for customers and less manual work for our teams. Our lean operating model turns those advantages into repeatable execution, We simplify and standardize workflows, identify high friction work, and prioritize opportunities based on measurable outcomes. Our people are central to that continuous improvement. Their understanding of the work helps us identify where processes need to change and where technology can make a meaningful difference. We are not simply automating existing processes. We are applying logistics expertise and lean problem solving to improve the processes themselves. That discipline also provides a structure AI needs. Our agents have specific responsibilities, defined guardrails, and human oversight. We measure what works, learn from what does not work, and continuously improve. This is not technology operating separately from the business. It is embedded in how we run the business. As we said before, we remain in the early innings of our Lean AI transformation. We have automated only a fraction of the hundreds of processes across the quote-to-cash lifecycle, with substantial runway remaining across NAST and global forwarding. Our logistics expertise, proprietary data and context, custom-built technology, and lean operating model work together to deliver measurable outcomes and create advantages that are difficult to replicate. With that, I'll turn the call over to Damon for a review of our third quarter results. Thanks, Arun.

And good morning, everyone. Our Q3 results provide further evidence that our lean AI strategy and our discipline execution are driving secular earnings growth. We continue to make meaningful progress against our strategic priorities, including market share gains, gross profit optimization, and improved operating leverage. Our Q3 total revenues and adjusted gross profit, or AGP, grew year over year by 29.5% and 14.5% respectively. This was due to NAST's continued outperformance versus the CAS index, higher pricing in NAST and global forwarding, and further progress on optimizing our truckload gross profit. On a monthly basis, our total company AGP per business day compared to the prior year was up 6% in July, up 14% in August, and up 24% in September. On a sequential basis, AGP per business day declined in July before increasing in August and September, reflecting improving truckload profitability and stronger ocean rates. Turning to expenses, Q3 personnel expenses were $360.3 million, including $3.6 million of restructuring charges related to workforce reductions. Excluding restructuring charges, our Q3 personnel expenses were $356.7 million, up $17 million, or 5%, primarily due to higher incentive compensation that is aligned with our strong financial performance. This increase was partially offset by our cost optimization efforts and productivity improvements. Our average headcount was down 10.4% year-over-year in Q3 and was down 2% sequentially, illustrating how we continue to decouple headcount growth from volume growth while growing volume. Due to our continued volume outgrowth in NAST, our strong 2026 earnings growth, and our pay for performance compensation plan, we now expect personnel expenses to be in the range of $1.36 to $1.37 billion. Sequentially, we continue to expect incentive compensation to be lower in Q4 than in Q3. in line with our sequential earnings profile. Our Q3 SG&A expenses totaled $176.3 million, including $15.4 million of other charges that consisted primarily of $12.5 million of impairment charges associated with continuing to optimize our real estate footprint. Excluding these charges, SG&A expenses of $161 million increased $25.1 million year over year primarily due to higher claims expenses. While our claims expenses are typically linear throughout our year, periodically some quarters are higher than others as demonstrated in Q3. However, even with the higher than usual claims expenses in Q3, our year to date insurance and claims expense remains at less than 50 basis points of our total revenues. Based on our expenses to date, and our expectations for Q4, we now expect our total SG&A expenses to be in the range of $585 to $590 million compared to our prior range of $540 to $580 million. This includes an expectation that depreciation and amortization expense will still be toward the lower end of our previously stated range of $95 to $105 million for the year. As Dave mentioned, we hit our mid-cycle operating margin targets again in Q3. By segment, NASS delivered an operating margin excluding restructuring costs of 40.3%, an increase of 110 basis points year-over-year. Global Forwarding delivered an operating margin of 36.6%, an increase of 660 basis points year-over-year. This reflects the continued impact of our Robinson operating model and Lean AI strategy which creates greater operating leverage across the enterprise. Based on our performance through the first nine months of the year, we remain confident in our ability to deliver full-year operating income within our target range that is shown on slide 17 of our earnings presentation. The bottom end of our target range remains equivalent to at least $6 of diluted EPS. but we are not guiding towards any part of the target range. The range itself is unchanged from the target we raised in October of 2025 despite year-to-date market volume growth that has been negative on a year-over-year basis. We have been able to offset that headwind and absorb other cost increases by consistently over-delivering on our strategic initiatives aimed at growing market share, optimizing gross profit, improving productivity and expanding operating leverage. Moving below operating income, our effective tax rate for the quarter was 20.6%, and we are maintaining our tax rate guidance of 18 to 20% for the full year. Turning to cash flow on our balance sheet, we generated $124.1 million of cash from operations in Q3. However, Net operating working capital remains elevated as higher freight rates continued to drive an increase in receivables and negatively impacted cash flow. Our capital expenditures were $17.5 million in Q3 and we continue to expect four-year capital expenditures to be in the range of $65 million to $75 million. We ended Q3 with approximately $747 million of liquidity. While our capital allocation strategy remains grounded and maintaining an investment-grade credit profile, our balance sheet enabled us to return $289.1 million of cash to shareholders in Q3, including $214.3 million of share repurchases and $74.8 million of dividends. This represents an increase of approximately 52% compared to the third quarter of last year. Our net debt to EBITDA ratio at the end of Q3 was 1.71 times up slightly from 1.64 times at the end of Q2. As a reminder, following the announcement of the RxO acquisition, we expect our leverage ratio to increase upon closing. Consistent with our commitment to maintain investment-grade credit ratings, we have now paused share repurchases and remain committed to deleveraging and returning to our target leverage range by the end of 2028. Our strong conviction in the strategic and financial merits of the RxO acquisition have not wavered. RxO's portfolio of customers and capabilities will add to our growth strategy and we remain confident in our ability to execute the integration and achieve our synergy targets. We have strong conviction in the strategy we are executing and in the intrinsic value of the business. Significant transformational runway remains across the enterprise, and we believe our lean operating model, our technology, and our expertise position us well to create value through both organic initiatives and future inorganic additions. With that, I'll turn the call back to Dave for his final comments.

Thanks, Damon. As you've heard in our prepared remarks today, We've continued to deliver higher highs and higher lows from the disciplined execution of our strategy. And we continue to strengthen our say-do ratio. I'm proud of the progress we've made to transform CH Robinson into the global leader in lean AI supply chains. And I want to thank our people for embracing the culture shift that has fundamentally changed this company. 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 have the opportunity to deliver in the coming years through both our organic growth and through the addition of RXL. When I joined this company a little over three years ago, I told the CH Robinson employees that we needed to provide such exceptional service and value to our customers and carriers that they would view us as the trusted partner that they choose to do business with. We've made significant strides in delivering on that mantra, and we believe the addition of RxO will only magnify our value proposition. The strength of our strategies, our technology, our people, and our operating model disciplines are differentiating and sustainable. We will continue to lead with purpose and move with urgency to disrupt ourselves and the industry and to deliver customer success through our unmatched expertise, our unrivaled scale, and our tailored solutions. And we expect to drive sustainable outperformance, profitable growth, and long-term value for all of our stakeholders. That concludes our prepared remarks. I'll turn it back to the operator now for the Q&A portion of the call.

Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. In order to allow as many questions as possible, we are asking you to please limit yourself to one question. Again, that's star 1 to register a question at this time. Today's first question is coming from Jeff Kaufman of Citizens Bank. Please go ahead.

Thank you very much, and congratulations for maintaining momentum in such a tough market. I just want to dig down a little bit into other SG&A. Obviously, expenses can be lumpy, and that's what happened with claims, and you also had the real estate impairment that came through the quarter. So I guess my question is, I know you've raised the SG&A range, and your view is let's just run these through operations, but in theory, was this kind of an odd lumpiness of expenses this quarter, and do we go back to more of a run rate like we were seeing in the quarters prior, or is there a quarter where you probably have lower than expected versus the run rate because claims should average this, and we were very, very lumpy in 3Q?

Thanks, Jeff, for the question. Good morning. Look, first of all, before I get into SG&A expenses, let me just say I'm very proud about the performance the team delivered in Q3. As you mentioned, 14 consecutive quarters of outperformance versus the market for our NAS business. Three years ago, I don't think anybody would have thought that was possible for the team. Another quarter of exceeding expectations. and another quarter of exceeding mid-cycle margin targets for both businesses. So we felt really good about the performance of the team in the quarter. Specific to SG&A, I think you're on some right themes there, Jeff, which is SG&A by quarter is nonlinear, right? I mean, I think we certainly focus on the full year. And to your point, there's quarters that are below run rate and there's quarters that are above run rate. And we certainly view Q3 is a quarter that was above run rate. But if you look at our revised SG&A guidance, you will see that we've got Q4 SG&A coming down versus Q3 levels, right? So we certainly don't view Q3 as a new run rate for SG&A expenses. And I'd also say I don't view anything unusual. I think as all of you know, we have multiple types of claims that go into claim expenses. You have Cargill claims, you have various types of customer settlements, you have auto liability claims, you have auto liability settlements, and all those things just by their nature are nonlinear, and you just saw a higher accumulation of those in Q3. But as I said before, we certainly have the expense level for SG&A coming down in Q4, and we don't see Q3 setting any type of new run rate for the company.

Hey, Jeff, I want to put a period on what day... I want to put a period on what Damon said, and I like the way you framed the question. Again, I couldn't be more proud of this team. In a really, really tough kind of macro backdrop, they continue to be consistent and deliver. And that is our say-do ratio. That is the system and model that we built. and we continue to drive through at Robinson. So I like that framing. Love Damon's answer, but appreciate the question.

Yeah, Jeff, I'll just put a final bow on my answer as it relates to SG&A. And we speak about this a lot. We typically refer to total insurance and total claims expenses being targeted at 50 bps of total gross revenue. And certainly year to date, we are below Thank you. The next question is coming from Tom Wadowitz of UBS. Please go ahead.

Yeah, good morning. And, you know, nice to see the good results. And I think in, you know, truckload volume picking up a bit, that's a good thing, too. You know, the three and a half percent growth. So I guess, Dave, I wanted to ask you about, I don't know if this is like for you or for Jim Rutlinger or Michael Castagnetto, but if you could appreciate your comments on RxO and kind of the 100 customer overlap analysis. I just wonder if you could give a little more thoughts on how you plan the integration with RxO to avoid maybe not an overlap issue, but what if your approach, you know, what if you reject more loads because they're not as profitable than RxO and the customer doesn't like that or they really like the customer rep or just things like that that, you know, could be friction points that could cause some attrition, not necessarily because of overlap. So what would your approach be on the integration side? Really to avoid some of the more negative experiences that have happened with prior brokerage deals.

Yeah, Tom, thanks for the question. First of all, couldn't be more excited about this deal. I think you know that. We've assembled a team that is experienced and ready for this deal. We have playbooks that are detailed, ready to execute. and all of what you're talking about are things that you have to execute on integration. And we feel really good about setting up for execution. This is a really good company, incredible top line that's going to come into a company that has built the best, lowest cost to serve model in the industry. and we have the details to do that. But Michael can go in further on the customer overlap that you talk about because this is front and center for us.

Yeah, Tom, first of all, thanks for the question. And we did cover in some of our previous remarks, you know, how we feel strong about the overlap number being very manageable for us in terms of the process. In terms of some of the more direct engagement post-close First of all, I'd say we're going to operate from a work backwards from the customer mentality and make sure that they get the best experience possible of the two companies coming together. And that means we'll be incredibly no ego about this and make sure that the right people are talking to the customer to maximize growth for the customer, maximize the service we bring to them. Your second part is actually something I'm really excited about in terms of profitability, maybe something they have. that's different that we have at different levels of profitability. They've really covered it, which is we've got this incredible top-line growth company that we are acquiring. We feel really good about that. But combining them with our industry-leading cost to serve, our industry-leading pricing and costing engines, our ability to put our data combined with their data in front of our people, our combined teams, really makes me excited about what that profitability can be. And I think a lot of businesses that others would struggle to execute, we're going to be really in prime position to go grow and execute at a highly profitable level.

I would only add one last thing, which is when you mentioned would we be inclined to decline volume because it's at less profitability than currently Robinson's levels. Remember, one of the things we're excited about about this acquisition is RxO's book of business is very healthy. Their gross margins are actually what we consider very healthy. and so therefore from a quoting perspective, I don't think you have much of a fall-off between RXO and C.H. Robinson in the marketplace, right? Where they're challenged on profitability is cost to serve, where certainly we have industry-leading capabilities. So to your point, I don't see a possibility of us walking away from new business because of profitability because as I just mentioned, their AGP margins are quite healthy.

And keep in mind, Tom, and great question. You can see we're pretty passionate about it. You have two of the companies, are the strongest when it comes to customer interaction, customer retention, customer execution. These two are the strongest in the industry, and now they're going to be coming together. So couldn't be more excited about that, and I hope you will be as well. Thanks.

Yeah, that's a great answer. I appreciate it. I just wondered if there's room for a clarification on one comment you made, Dave. You said that and many more.

Just so you guys can get your head around the headwinds that we absorb every day and never talk about, right? And so we talk about the $30 million on labor inflation, right? We've never referenced that number before. That's a number we absorb year in and year out. It compounds year in and year out, and we still deliver demonstrable earnings growth, even with that inflation. So we've given that example just to show the community, the external community here, how we're built, right? How we're built to offset headwinds, Thanks for the time. I appreciate it. Thank you.

Thank you. The next question is coming from Stephanie Moore of Jefferies. Please go ahead.

Great. Thank you. Actually, I think I'll jump off of Tom's last question here and maybe try to dig in for a little bit of a finer point here. So two-part question, but same topic. So first, maybe just remind us when we should expect to hear any update on incremental insurance and insurance costs for 2027. So when we should kind of see that come through, you'll be able to speak to the headwinds there. And then second part of the question, you know, I think maybe just talk a little bit about how you think you could manage these inflationary pressures. So I appreciate that you just gave that $30 million example. You're very confident that you've been able to, but you've already done a lot of work behind the scenes and you've made a lot of headway to obviously reduce your costs to serve. So what's the next leg to the story here that gives you the confidence that in probably an accelerating inflationary environment, you can still be that successful at offending those costs? Thank you.

Thank you for the question, Stephanie. So on the timing of insurance updated information or clarity, certainly the definitive date is sometime in mid to late December. I mean, that is typically when We get finality on what insurance policies will look like. Now, as you know, we are trying very hard this year to finalize those negotiations sooner. And we won't wait to provide guidance once we have it. And so once we have insight onto insurance inflation going into 27, we will not wait for the next earnings call to provide that information.

That's information that we'd more likely file a K and provide that information as soon as it's available.

But as we said last call and is the reality of what we're going through today is those negotiations are still pending. They're still in progress. And what I would say, though, is we still feel very good about those proceedings. Right. We've said multiple times that we feel like the outcome of our insurance negotiations will be close to industry leading, if not industry leading. And we certainly don't feel like the inflation rate. on those costs will be anything that will derail earnings going forward. Again, just to remind everybody, automobile liability insurance is only 25 bps of total gross revenue for us. And so, therefore, it's at a minimus cost today. With inflation tomorrow, it'll be at a minimus cost tomorrow. So that's what I'd say. Now, how do we offset inflation? It's a great question. This is at core of our lean operating model and our lean AI strategy. Certainly, Our whole organization is working on a pipeline of initiatives every single day. And that pipeline of initiatives far exceeds what we need to deliver any given month, any given quarter, any given year. And so we have the ability to pull initiatives to the left when we need to or when we're capable of doing so. And so therefore, I think that's what differentiates us versus so many companies is our ability to react to the conditions that we're seeing today. and be able to improve our performance based on those funnels of initiatives that we're working on. And so I would just say that is really our funnel management and just the forward thinking, the forward planning that we do as a company allows us to plan past things like inflation on labor and inflation on insurance.

And Stephanie, I'll just add that our roadmap of opportunities, to Damon's point with Lean AI, and sort of what the tools deliver or the new tools as they roll out and the way we're able to leverage it. Both on global forwarding, you've seen us make some announcements. We still have a lot of room to scale up opportunities that we've already got. We've started to roll out. And then, you know, we've rolled out, we've talked about this before, there's still plenty of opportunity to put cash lifecycle across all of our businesses as we go deeper. We deployed a lot of agents to automate various tasks. but the ability to stitch together those agents and automate entire workflows, there's still plenty of opportunity and grass to cut.

Yep, and I would just end that, Stephanie was saying, look, it wouldn't be a Robinson call if we didn't talk about the early innings of our transformation. Very early innings of the lean transformation, I think we've gone at length on what that means and why we feel that way. And then as Arun just walked through, I mean, certainly early innings on our tech deployment as well. And I think, you know, Thank you for the question. Thank you, David.

Thank you. The next question is coming from Jonathan Chappelle of Evercore ISI. Please go ahead.

Thank you. Good morning. I kind of want to reframe the opportunity for global forwarding now that you've run out some of your initiatives there. Let's go back to the investor day and the anticipation for global forwarding that underwrote your 26 estimates. You weren't expecting much at all. You're saying go back to kind of late 23 and clearly That business has done well on its own without you implementing a lot of the lean AI principles that you've done at NASA. Now that you're kicking that off, but understanding you're coming from a much higher starting point on global forwarding than what you were underwriting to begin with, what's the potential there? Whether that's mid-cycle margins, whether it's outsized market growth, how do we measure the medium term for global forwarding today versus two years ago and yesterday?

Yeah, thanks a lot, John. A couple things I want to clarify on global forwarding. When we started our journey and our transformation, I would say this. As we kicked off our operating model, we put that business under that operating model here for the last two and a half, three years. and we like the progression that we've seen on the self-help of that business and the health of that business. And I agree with you on the acknowledgement of how it's kind of gone up and to the right But as Damon said, we're just getting started on that. And as we signaled earlier or later last year in the beginning of this year is that we will continue to now roll out in a purposeful manner our technology stack into global forwarding similar as we did to NAS. So kind of a two-part approach. And we're starting to see the benefits of that as well. But make no mistake. The lean operating model really has begun, has transformed that business, and there's more to come on that that Arun just alluded to, but we can go a little bit further and deeper on that.

Yeah, John, I'll just add to what Dave said. I mean, certainly we're in a different position in global forwarding than we are in our NAS business, right? I mean, certainly the NAS business is starting at the top. And, of course, we've improved that gap between us and everyone else. Global Forwarding is a much smaller competitor in the forwarding space. Therefore, there's tremendous opportunity on all levels, on margin enhancement, on revenue growth. I would say the same playbook we've run on MAST is the exact same playbook we're running on Global Forwarding. Specific to your question, we believe there's demonstrable revenue growth opportunities in Global Forwarding. We think there's demonstrable revenue management opportunities. Thank you very much. Thank you for joining us.

all the NAS productivity that you've seen us deliver and all of our machine learning models that power our price discovery and cost discovery, basically our algorithmic pricing and costing in NAS. We're deploying all of that into global forwarding, right? And to Damon's point around our confidence in building and deploying the best technology stack in the industry, We feel very confident about that. We've got the playbook. We've deployed it in NASC. You see the results. And we're in the early innings of deploying the same capabilities, both on productivity and gross margin, i.e., revenue management in global forwarding.

Yeah. And one final comment, John, on mid-cycle margin targets. We don't envision changing that target, freedom NASC or global forwarding. We believe Those targets are solid targets. We believe they're anchored in our strategy, and we want to use that optionality around those targets to drive even more demonstrable benefits for the enterprise. So I don't necessarily see a future where we give revised mid-cycle targets. We believe those are appropriate targets for both businesses, as they said. But what we have committed to is making sure that the optionality above those targets drives optimal earnings for the company. Thanks for the questions.

Thank you. The next question is coming from Chris Weatherby of Wells Fargo. Please go ahead.

Hey, thanks. Good morning, guys. Maybe I wanted to come back to the RxO acquisition. I think the market is looking at this and is expressing some concern about revenue attrition as you put these two companies together. And, Dave, I thought it was helpful, some of the comments early in the call about the 100 customer analysis that you guys have done. Thank you for joining us. and we've said even in our external statements post the announcement, right, there's a couple places where we are really strong in the industry. LTL is an example, a couple places they're super strong in the industry, Last Mile, Expedite, where we don't cross over really at all. And so there's a lot of opportunities, we think, from a Synergy perspective there. When you take some areas that there's large parts of the, you know, the for hire market where we don't, we have zero crossover. In places where we do have some crossover, We've heard from customers that they're excited about this because there's opportunities that even within customers, we don't do the same thing. We feel really good that while we're not naive that there will be some attrition, but we've built that into the synergies number that we've shared externally. We feel really good about the future growth opportunities of the two entities coming together. When you start to combine our capabilities, that's the part where we feel really good about our opportunities. When we think about how we go to market, one of the maybe unknowns is that when we go to market and compete for business, we're not competing just with other brokers. We are competing with assets. We're competing in supply chain solution modeling. We're really going after how do we provide the best solutions to customers. In that case, when you combine our Two capabilities of what we offer, I think it's going to be a very, very strong value proposition for customers. And so from that aspect, I'd say we feel really good about the net endgame of where this plays out.

Chris, listen, I felt really good when customers have reached out, as Michael said, and felt good about doing business with us going forward. I mean, again, remember, last mile, expedite. These are not, you know, things that, you know, Robinson was exactly strong in or even did. And so that's why we feel really good. We always said, now you have two companies that, you know, you take the steamship and go to the front door. And so it's a lot of different customers for us. And that's why we're so excited about this. and you'll see that and we just can't wait to really get started on doing this. Okay, great.

Appreciate the perspective. Thank you.

Yeah, thank you.

Thank you. The next question is coming from Brandon Ogulinski of Barclays. Please go ahead.

Hey, good morning and thanks for taking the question. So maybe I'll continue with the third question on the RxO here. But, you know, if we look at their recent acquisition of Coyote, it was kind of hard to see the synergies, you know, drop into the bottom line for them. And I know Damon talked about, you know, maybe the cost headwinds at RXO today or excess cost in the business. So, you know, when we think about key relationships with key employees and customers, how do you, you know, really address the potential for attrition in the employee side of RXO, especially the key folks there? Thank you.

Well, I think a couple of us will jump on this question, Brandon. I want to start and be really, really clear to everyone in hearing this. And hopefully, guys, a number of you have been with us here in this transformation in the last three and a half years. The operating model that Robinson has developed and has executed, we have basically transformed this company through a disciplined, measured approach. It's a say-do ratio that we always put up with our receipts on being consistent. Super, super important. But it's something that we operate this company with discipline. That will be no different than we go in and do the integration within our Excel, which is why it's so exciting. Damon hinted to it. Really good, healthy book of business on the gross profit line. Where our strength is, is operating. And I don't know that there's a debate with that. and our operating model will allow us to bring this company in with confidence and drive that. That's a bit different. We can't speak to every deal out there in the industry. What we can speak to is how we execute and I think we execute pretty consistently and that's what we will do with this deal as well. But Michael, why don't you double in on some of the attrition?

Well, I think What I'd start with is looking back on what we accomplished inside our NAS business and our ability to get our costs to serve where it's been has been driven through process improvement, our lean AI capability combined with our operating model. It has also been focused on how do we get the best information and data into our relationship and revenue driving job families so that we can go grow our business. And so When I think of potential attrition, what I would say to the folks on that team is I would be super excited about the opportunity to have the combined data stack, the information and capabilities that we have, and put those into the revenue and relationship management job families that RxO has. We have not prioritized cost cuts in those job families here at Robinson. We have improved our operating processes. and I think we said this and it showed in our Q3 results in terms of our repricing. We were able to put better information into our people's hands and we were able to reprice our contractual book faster than any time in our history. And that comes from the operating model and putting our capabilities into our revenue and relationship managing job families as fast as possible. And so if I was in those job families At RxO, I would be super excited about the combined capabilities of our entities and how quickly we're going to get information and opportunities for growth into their hands in the future.

Yeah, Brendan, I would only add is just remember on our productivity journey here, where we've generated over 65% productivity since the end of 22, that has been significantly over-indexed operational roles, right? Not customer-facing roles. We have retained, we've promoted, we've enhanced our customer-facing talent in many areas. We've added, not reduced, resourcing and headcount in those areas. And as Michael said, we've used our technology to enhance those relationships between our customer-facing teams and their relative customer. And so, as we said over and over again, you guys will get tired of hearing this, we are going to run the same playbook with ARCSO. So if you run the same playbook on RxO, you're going to keep a lot of those relationships. You're going to keep a lot of that talent. You're going to keep those customer relationships. And the productivity is going to be driven in the back office and the operations. And so, again, anytime I think you guys think about what's going to be different versus what's not, just look at the playbook we've run on Robinson. We're going to run the same playbook on RxO.

And just to kind of underscore that, you know, All the technology we've invested in, to Michael and Damon's point, this ability to send targeted signals to the desk such that they can action changes in the market, we've invested in this for many years, and the platform's there to be applied to RxO as well.

Thanks for the detailed response.

Yeah, thank you, Brian.

Thank you. We're showing time for one final question. Today's final question is coming from Bruce Chan of Stiefel. Please go ahead.

Hey, good morning, gents. Appreciate all the great callers so far. Maybe, you know, one on freight forwarding. You gave a lot of good detail on the internal opportunities. You know, it's obviously been a big beneficiary on the rate side from global disruption. But as you think about demand, maybe you can give us a sense for What you're seeing in terms of strength by end market, and then maybe as part of that, how much of a benefit are you seeing from a data center build out to air freight right now, and how are you thinking about that as an opportunity?

Thanks for the question. Certainly, part of our vertical strategy is focused on those areas of the market that are outgrowing the overall market. You mentioned certain areas of technology and data centers. certainly that is a focused area of growth for us. In aggregate, what I would say about forwarding is very similar to what we've said about the overall freight market, which is certainly we are seeing signs of life. There are pockets of life in the freight market, so certainly in technology, certain areas of manufacturing, you are seeing growth. I think you're starting to see that show up in the CAS index as an overall representation of the NASC market, and I'd say there's a There's a correlation to the global forwarding as well. But what I would say is consistent to what we've said, which is we're optimistic that there's signs of growth. But the contributors to the overall freight market growth are still somewhat tepid, right? I mean, housing is certainly a tepid market. I'd say overall manufacturing is still a tepid market. And there's certainly large areas of retail that is still tepid. And so until you see significant participation from those It's going to be hard to have meaningful, absolute growth in the overall freight market. So we're cautiously optimistic. And now finally, Cass, at least on a month-to-month sequential basis, is showing some of that optimism, even though the quarter was still slightly negative. You saw some of that exit rate on August and September. I would say that that theme does hold for global freight markets as well. So cautiously optimistic. but we have not seen what I would consider demonstrable catalysts yet to say that we're going to see sustained absolute growth in the overall freight markets.

Thank you. Thanks for the question. I would like to turn the floor back over to Mr. Chuck Ives for closing comments.

Yeah, thank you everyone for joining us this morning for the call. We look forward to talking to many of you throughout the quarter. and have a great day.