All right. Good afternoon, everybody. Welcome. For those of you who do not know me at this point, my name is Stephanie Moore. I am Jefferies' Transportation and Business Services analyst. Thank you for coming to Jefferies' 2026 Industrial Conference. We are very pleased to have the team from C.H. Robinson with us today. We have CEO, Dave Bozeman, CFO, Damon Lee. Welcome. Thank you. Thank you. Format, fireside chat. I will kick it off with probably what has been the most topical area of question that you have received over the last couple of months or so. That would be post the Supreme Court ruling on the Montgomery case. There has been a lot of, I think, just uncertainty that investors feel about just what this can mean for the overall brokerage space and C.H. Robinson as a whole. So maybe just to start things off, since the SCOTUS ruling, what processes have changed at C.H. Robinson? Why don't you start off, Damon? Yeah. I'd say post-Montgomery, first of all, I'll just start with, look, we're a lean company. We have a lean operating model. All of our major processes are always going through some level of continuous improvement. Carrier vetting is no different. I would say post-Montgomery, we did not have material changes to our carrier vetting process. So, roughly about, I'd say less than 3% of our active carriers were expelled from our network post-Montgomery. What does that tell you? That tells you is that we had an industry-leading carrier vetting process pre-Montgomery, and we still have an industry-leading carrier vetting process post-Montgomery. I would even add, the Lipe case, which has got the most recent attention. Post-Lipe, we've made no material changes to our carrier vetting process. We've always felt really good that our carrier vetting process was of the utmost integrity and quality, was industry-leading. We felt that way after Montgomery. We feel that way after Lipe. We're going to continue to do what we do. Just to add on to what Damon said, and we've been talking to investors, analysts about this and just putting some framing on this. We're a data company. We like to talk in facts and data, not in emotion, in a sense. So, if you think about it, we've been public for 28 years or so. We've had a docket. Everyone has a docket that's in this industry in doing that. We manage our docket pretty well. Our current docket, it consists of, say, tens of cases. That's on the lower end of tens of cases. You got to put that over an overlay of what's our annual shipments? 37 million annual shipments. Over a time, we manage hundreds of millions of shipments over a current docket of, say, tens of cases. Our point there is that we are very good at managing a docket, defending ourselves about those things. Also, if you are going to have a lawsuit or thing, you got to have an accident. We do not have many in doing that. We do very good. We feel good about our carrier network. We feel good about our vetting processes. Again, we talk about numerator, denominator, the actual math of what is happening, and that is the scale. Tens of cases, hundreds of millions of shipments, and you just have to keep that in perspective when you are going through this. Just to round out what Dave said. Look, 98% of our docket, right? So of our current docket, 98% historically and current of those cases get dismissed or settled. The settlement amount of that 98% is somewhere between the range of $1 million - $3 million, right? So historically speaking, legal liability has not been a material issue for C.H. Robinson. We do not believe it is going to be a material issue going forward. We believe the Lipe case is an anomaly. Certainly, the industry standard is to settle cases, not to let them go to jury trial. Right. That ultimately, we believe, will be turned down on appeal. So we feel that the historical precedent that we have set with having a very successful path of managing our legal docket successfully, that is going to continue going forward. I will just add one element because it is probably on top of mind is related to insurance. Right. Just to provide some baseline insurance stats and then talk about what we think the future holds. So automobile liability insurance today is only 25 bps of gross revenue for C.H. Robinson. So it is a relatively immaterial number to our cost structure. Even if you have inflation on that number going forward, we do not see that number being a material impact to our earnings potential going forward. So we certainly do not believe the earnings trajectory that we have been on, the outperformance that we have been on, in any way is going to be derailed by insurance. We are in early discussions with our insurance carriers. I would call those discussions reasonable and fair. I do not believe some of the more bear case scenarios that you have heard of insurance going up hundreds of percent is going to apply to C.H. Robinson. I think we'll ultimately end up in a situation that everybody gets a sense of calm once we're able to share some of those details. Stephanie, as you know, we always say who's the best proxy for our current docket? It's our insurance carriers, right? They have an intimate knowledge of our current legal docket. They could be on the hook for that. So at the end of the day, how we progress with any type of increase of our insurance or the rate of that, it's our insurance carriers who will be a good proxy for people listening to this on how you judge Robinson on going forward, and we feel pretty good about ourselves. Yeah. One last comment, Stephanie, if you allow me. We're in a bit of fog of war right now with the legal environment. We believe once we get on the other side of providing clarity around the legal docket, clarity around the insurance, we actually think this is quite bullish for C. H. Robinson. Very much. We believe the average small and medium-sized broker is going to have a very difficult time surviving in the post-Montgomery, post-Lipe world. Certainly that market share will accrete to companies like C. H. Robinson in a consolidation event. Once we get through some of the unknowns and the clarity that is needed on the current legal environment and the insurance environment, we believe this is actually a bullish economic position for Robinson going forward. Thank you. I do want to touch on maybe the longer-term implications for the industry and the potential for further consolidation. Before we get to that, though, Dave, I think we talked about this earlier today, you and I did, but do you think that there needs to be, as the leader of the industry yourself, to go into Washington or create some maybe oversight or some changes from a federal standpoint post these rulings that will also ultimately help the industry? I do. Actually, I will be in Washington all week next week. I am sure you guys have a lot of sympathy for me in doing that. It is on two vectors here. Let me just explain. Our team, along with some of my industry colleagues as well who agree with us on this, I will be talking to FMCSA, Administrative Bar, really driving the conversations around a standard. We have to really get back to what is that duty of care standard that needs to be established from the federal government. We certainly, as Robinson and others, are talking to the FMCSA to establish that standard. I think we are going to do that. Because we have to get that going, but that will not solve all of this. Having the standard, you have to have a second vector, and that is the legislative part. I am going to talk to a number of different senators, congressmen and women, in which we are now talking about what is the legislative solution on this. That has to be a bipartisan approach to this. We think that this is bipartisan, when you look at both sides of it, and we will be having that healthy dialogue all next week, to make sure we are applying what is reasonable liability when it comes to the legislative part of this. It is a two-vector approach because what SCOTUS did on Montgomery was essentially, it was not really an indictment on Robinson. It is essentially saying, hey, the federal government really is not capable of driving this right now. They put it out to the various states and the various jurisdictions. Obviously, that creates ambiguity. We just want to help Congress act and drive some clarity in this space. Ultimately, I think everyone in the industry should welcome some of that. We will be having some of those conversations next week. Thank you. Maybe moving to some of the longer-term implications for the industry. Are you already seeing some of your enterprise shippers actively consolidate their broker lists post this ruling? We certainly are. That behavior, Stephanie, has started. Part of it, you have to just do the framing on here. You have shippers who are looking at their own liability when they see what is happening. Part of it is they are looking and saying, "Hey, yesterday we may have had 12 different dispersion of our freight going out." They say, "Hey, maybe we do not need that. We will roll that up into two." We are seeing those calls come to us. We are seeing some of that call equality. So the behaviors of shippers, we are seeing that that has changed. We think that is going to continue to happen. As Damon said, we will have continued roll-up within the industry. You know what? Listen, at the end of the day, over the last couple of years, just on the economics, 20% of brokers had really shut their doors anyway over the last couple of years. Now add Montgomery and Lipe to it. We think that that obviously can increase to almost 30%-40% per say, if you are a small to medium broker, and there will just ultimately be some consolidation within the industry. Yeah, Stephanie, we believe that consolidation happens a couple of different ways. One is certainly shipper selection. Shippers wanting a higher quality broker, one that can provide some liability stability between them and the freight movement. Then I think there's also just going to be the lack of insurability with small and medium-sized brokers. I believe the insurance industry will also dictate who wins and loses in the go-forward environment as well. I think shippers will have an impact, I think the insurance companies on who they'll actually insure going forward. Then I think you're back to the economics again. You're in an industry where many of the small and medium-sized brokers still do not turn a consistent profit. For them, a higher insurance cost is going to be a lot more demonstrable to profitability than it would be to a company like C. H. Robinson. We just think you've got multiple angles of influence on why we believe the small and medium-sized brokers will consolidate, then ultimately we'll be a beneficiary of that market share. I guess maybe just given this quite briefly could be maybe the biggest change to this industry that we've seen since deregulation or certainly in many, many years. How is C.H. positioned to capitalize on this change in this environment? The consolidation, the potential pricing mechanisms that come from this, what's the strategy going forward? Well, our strategy is, you've seen us, Stephanie, over the last three years in starting this transformation. What we said is that we were going to build the best model in the industry, and I think we're on our way to doing that. We don't just say that in jest. We invite everyone to just look at our results and what we have built. We've introduced Lean AI into an industry that's countercyclical in this industry to bring in lean manufacturing within an industry. We've done that along with technology. We feel that that has generated the best model within the industry on a couple different fronts. Our strategy was simple. It was, one, outgrow our end markets, and two, expand our operating margins. In which, you're really told in this industry you can't do both. You have to do one or the other, and we just don't believe that at C.H. Robinson. I think, looking back, it's been a little bit over three years, believe it or not, being in the chair here. We've had 13 quarters in a row of truckload outgrowth. We've had 10 quarters in a row of beating EPS consensus. That's not going to stop. I mean, we're going to continue. Why? Because our model of our Lean operating model, is one that has unleashed our technology, it's unleashed our people, it allows this company to be a disruptor, move at a pace that the industry is not used to, and really go to from an output-based company to an input-based company. We in a sense act like a technology company in an industry that's been around a long time, and that's where you're seeing some of that disruption. We are well-positioned, in pole position, to not only have when the market takes off, I think we will have an exponential curve, not a linear curve, and you'll see more of a demonstrable spread between ourselves and the industry. I think we feel really good about the results we've had, but it's a lot more coming, because we're in early innings on a lot of that transformation. Yeah. I would just add that we've had the question, yesterday and today of, okay, if you're going to take the demonstrable share, you're going to have to add more cost in to support that demonstrable share, and the answer is no. Right? I mean, we've built processes, we've built sustainable processes at C. H. Robinson that can absorb substantial amounts of volume without adding incremental cost. Right? We have decoupled headcount growth from volume growth at C. H. Robinson, right? This share that we're talking about accumulating to C.H. Robinson, as the industry consolidates, right, we will be able to absorb that volume with very little incremental cost to the business, therefore, the operating leverage will be great. Right? As Dave mentioned, I don't know that we could be in a better position, to take advantage of what's getting ready to occur with the industry. Let me two-part follow up. What is the level of incremental volume you can take on within NAST before adding incremental cost or headcount? Yeah. It's substantial, right? Just to give you one example, one of our agents out of the hundreds that we have in operations, we have one agent today that we've said this publicly, that today if it's doing 600,000 requests for transactional freight quote, and tomorrow the market inflects and that goes to 6 million requests for transactional freight quotes, we don't have to add any incremental personnel to support a tenfold increase in volume. That's one example. We have numerous examples of mature agents that are operating many, if not most, of our back-office operations at C. H. Robinson that can absorb multiples of volume increase without adding incremental headcount. So we're very confident, right? We get a question a lot, how does your model work when the market rebounds, when more volume comes into the system? We answer that with, look, nobody's more excited than us to prove what this model can do when you get substantial volume into the system. We've said this publicly many times. We think our operating margins and our operating leverage were surpassed out of the assets when volume returns to the system. Just Q2 alone, in a very tepid quarter where the market was down 4.5%, our operating leverage as a broker was 96%, right? I don't think anybody two years ago would've thought a broker would've had operating leverage at 96% in a market that was down 4.5%. So we're very compelled about what our capability is on absorbing tremendous levels of volume without incremental cost. I think it's important for me and the team at Robinson is that, this audience listening to this, that this is not a temporary change, this is a structural change. This is very sticky. I mean, we've been purposeful about where we apply these changes. For us, we looked at that order-to-cash process. We have attacked that order-to-cash process. We've augmented our people and upskilled our people as we've gone after the small-medium business segment. We've been very successful at that. Enhancing our people on the verticals that we participate in. But that particular order-to-cash process, as Damon said, that's a structural change. It doesn't matter if the market stays where it is for longer, we win in that scenario. If the market does an inflection, we certainly win, in that environment because it's a structural change. That's the important thing to know about Robinson today versus Robinson yesterday. This is just a different model. Maybe on the incremental volumes and consolidation piece, you've also been public in talking about taking on incremental volumes via M&A. That might be a change in tone from what we heard a year or so ago. Maybe that's wrong, but how would you view your return or as you look to evaluate going after that share organically and via M&A? Yeah. So it won't be an either/or strategy, right? I mean, we'll continue down our path of organic growth, organic margin expansion, organic outgrowth and earnings growth. None of that would change if we introduced inorganic to the mix, right? I think certainly, we had to earn our right to do M&A. I think certainly two years ago, we didn't have an organization that was mature enough from an operating model perspective to successfully integrate a company. Our technology hadn't matured to the point where we felt comfortable putting another company on that platform. Certainly, I'd say the last six months, we've gotten very comfortable that now we're stable, both from a technology and an operating model perspective. Therefore, we think there's some very attractive opportunities that can drive real value for ourselves and investors from an inorganic perspective. I think it'll show up in two different forms. One we've already demonstrated. So in Q2, we acquired a company called DeSpir Logistics, roughly a $75 million acquisition. DeSpir is an industry leader in high-value, high-risk goods. So think advanced safety, advanced track and trace, advanced security protocols. That's an area that Robinson, I would say, is underrepresented in today. DeSpir brings that industry-leading capability. We put the Robinson scale behind it. We think the ROI is going to be fantastic on that acquisition. So the strategic tuck-ins that gives us capability that we can immediately scale is an attractive area of M&A for us going forward. We've also said we're not going to rule out scaled acquisitions either. Certainly, if you think about what we've done with the Lean operating model, the Lean AI approach, we have the best cost to serve model in the industry. We do feel that at the right price, with the right mix of business, there's competitors that are at scale that have relatively healthy books of business. Think relatively healthy gross margin. It's just their cost to serve model is sub-optimized. We believe we can take that book of business, put that on the new Robinson operating model, and ultimately, in a couple of years' time, bring that book of business up to 40% operating margins like our NAST business is today. We believe that type of acquisition can drive tremendous value for investors as well. We won't make a mistake. We're going to be very disciplined. As Dave said before, we're not going to be a statistic as it relates to M&A. When we do an M&A deal, you will know why we did it. It will be compelling. But I believe you'll see us demonstrate our muscles in both of those vectors over time. Stephanie, you may recall, we first started this journey. None of this is haphazard. I talked about a diagnosis, you've been in some of those meetings. Then coming out and doing that under the 4 Ps. It was people, product, process, and portfolio. We've systematically built out this strategy and this transformation around that people, product, process, and portfolio. Assembling a leadership team that is really made for this moment, that was part of the plan. Damon coming over from GE Aerospace with his pedigree, having a CFO that understands Lean, understands transformation at scale, that was really purposeful. Just having Jim Reutlinger come in from Danaher Corporation, helping me to scale out our Lean operating model, put together our playbooks, for potential M&A. All of that was putting together the team that we have today that I think is exceptional, that puts the company in a position of optionality on something that we purposely built over the last three years. I do want to maybe transition to talking a little bit about your operating model and maybe some of your more specific results as it relates to 2Q. For the second quarter, look at my figures here, but it was a 30% year-over-year increase in truckload line haul costs, but AGP per load was flat. Yeah. Clearly, your ability to dynamically manage costs and pricing was very much evident there. What does this mean as the cycle continues to turn? Yeah. I'd say, our Lean AI approach, what gets most of the headlines is the productivity, which rightfully so. We've generated 60% productivity since the end of 2022, and that's a real productivity number. No footnotes, no asterisks. You can find it in our earnings. You can find it in our operating margins. I'd say what hasn't got as much attention is what Lean AI has unlocked from a revenue growth perspective, and from a revenue management perspective. Specifically to your question, Stephanie, on how did we break the norm and break the physics of a broker in Q2, it is through that revenue management capability. Historically, and we would argue most of the industry still operates like this today, when you had a rise in spot rate cost, typically the approach was to give everybody, every lane, the same cost increase. Spot rates are up 30%, you give a shotgun approach, everybody gets a 30% increase. Chaos ensues across the industry. About 50% of the pricing accepted, 50% rejected, and it takes you months, if not quarters, to reprice your book of business. With our approach, what we call New Robinson under Lean AI, we can actually utilize our 100 trillion dataset model that we have that has almost unlimited characteristics for loads and lanes and carriers and customers and pricing dynamics. We can be very surgical in how we reprice our book. We are surgical by customer, by lane, by region, by different freight dynamics. Therefore, if a customer has 20 different lanes, we may only have to reprice four of those lanes versus all 20. Therefore, the ability for us to get the customer over the line and get them to accept our price increase happens at a much faster timeline than would have happened three or four years ago. I mentioned the roughly 50%- 60% acceptance in that shotgun approach. Right now, our acceptance rate on our repricing of our book is 93%. Our average time to reprice our book through this, call it four-quarter cycle of repricing, has been three weeks. We have gone from a cycle time of repricing our contractual books from months, if not quarters in some cases, to an average time of three weeks. That cycle time is what allowed us, with that revenue management capability, to essentially reprice that book almost in real time to mitigate the rising spot costs. That shows the strength of our people, too. In this industry, we always talk about this is a people industry. We agree. We think we have some of the best logisticians in the world. Our customers, to have that, have to have trust. The people who do the work at Robinson, they have built that trust over many years. To show them that data, trust has to ensue when you have that much of a stickiness when it comes to repricing of the books. We feel really good about the team and where we are. Yeah, just the data behind that trust that Dave talked about was that 93% acceptance rate. How do you get to 93%? You give a price increase to a customer, they go shopping around pretty quick, realize they are not going to get a better price with the same coverage. They come back to Robinson, accept the pricing. Now, we were right 93% of the time because the customers came back and accepted our pricing. That is the trust that Dave is talking about. You can only develop that trust if you also have the tools and the discipline and the capability to price that increase right the first time. You have to have the right level of sophistication to be able to stand in front of that customer and say, "This is the best price you are going to get, and if you want to cover your loads, I would recommend you accept that price." That resulted in 93% acceptance, which we think is a phenomenal result. Damon, you mentioned your contractual exposure, which I think, as of the second quarter, stood at about 70% of your mix. Yeah. How would you characterize your contractual and mix exposure for where we are in the cycle? Yeah, we like the mix we have. Certainly, I know there's been some headlines on kind of chasing spot because that's where the margins are, and that's not the case for Robinson. We can make very healthy margins in the contractual side of our book, and we can make very healthy margins in the spot side of our book. We believe that result of having a 70/30 mix, which has lasted through this last inflection of cost, is what's allowed us to optimize market share at the same time of optimizing earnings. Just a reminder to the crowd, 75%-80% of all freight is contractual. So you cannot live in the spot world forever. You can get a temporary sugar high from the spot market, but it is fleeting. It will go away, and if you haven't put your efforts into building a contractual book and reprice that contractual book like Robinson has, ultimately, you're going to give back a lot of market share on the other side of this cost curve. We feel really good about what we've done. To us, that 70/30 mix is just math. We've won aggressively in spot, but we've also won aggressively in contractual. So you haven't seen us really alter our mix because we've been winning aggressively in both sides of that equation. We've actually set our own internal records, even including COVID, on the file averages we've generated on the spot side of the business. So I'd say we're eating well on the spot side, we're eating incredibly well on the contractual side. And I think the competitive advantage we have contractually is we can take business and make good margins on it that most brokers can't break even. That's why we've been able Right to win substantial share in this inflection. We've had good conversations today on that, where some investors have said, "Well, Dave, why don't you guys just go change that mix and go really, really heavy spot?" And our response to that is exactly what Damon just laid out. It's like, you really don't want me to do that. That would not be the best move for investors. You want a balanced mix on how we're doing it. And ultimately, that pays off in the longer run. So we've been measured, we've been disciplined in how we've approached. And again, I think that shows up on the bottom line. So maybe as we think about some of your long-term targets as you balance volume and margin, how should we think about the medium-term margin opportunity for C.H. Robinson as you kind of balance, as you said Yeah having profitable contractual growth, but also taking advantage of the spot market too? Yeah, I would start with Q2. Yeah. As you led with, Q2 was, I think, a unique quarter where spot rates were up 30%. Our AGP per load was flat. But our operating margins actually exceeded our mid-cycle margins in a market that was down 4.5%. We think an outstanding result that the team demonstrated, and the capabilities that's just so different from Robinson versus everybody else in the quarter. It's important that we've achieved those mid-cycle margins now. Those are self-imposed quality-of-earnings targets that we set out there for ourselves to show our revenue management capability and how we were going to keep a floor on quality of earnings. Now that we've achieved those targets, now we can take some of that incremental margin, that incremental price, invest that back into even more demonstrable outgrowth. Right versus what we've demonstrated for the last 13 consecutive quarters. We view getting to those mid-cycle margins in Q2, now we have another tool in our toolkit that can even supercharge our outgrowth even more. With that said, we've committed to, on an annualized basis, we're going to continue to expand operating margins because we've committed to evergreen productivity that will facilitate that operating margin expansion. But on a month-to-month basis, quarter-to-quarter basis, I think you can see some oscillation between margin and market share gains as we optimize the best mix for earnings growth. That negotiation happens every day. We built our way up. This was, again, something we said we would do. We would have to build our way up to hitting mid-cycle margins, and having that optionality, and we happen to reach that point in Q2. But arguably, I do not know if we would say 2Q is necessarily in a mid-cycle environment. Absolutely. No, absolutely not. No, market was down 4.5%. Yeah. We've certainly exceeded our own expectations. I think the hint to the question might be, what do you have, Dave and Damon, is that going to go higher? I think the answer to that is yes, it could go higher. But as Damon said, we have that optionality. That's why we haven't put out new targets or anything like that, because this is what we said we would do. Get to that optionality, allow us to get that more growth at our option to do that. Because as Damon properly says, freight changes on a Monday to a Thursday. It could be all different dynamics within freight, and you have to have that negotiation every day. But we are at a point where I think we're in pole position, because we built the system to be able to give us that optionality, and the team can execute to that. Yeah. Stephanie, to that point, we don't see a scenario where operating margins- No don't continue to expand. It's just really, do they go to 45 or do they go to 43 and we invest that 200 basis points back into demonstrable growth? I think it's really that optionality that we've kind of reserved to optimize earnings growth is really what we've been focused on. But there's certainly going to be quarters where margin will expand more than the average, and then there'll be quarters where the market share gains are more than the average, and it's exactly what Dave said. Is the freight that shows up every day is not the same freight that showed up the previous day, and we're very disciplined and selective on what freight we take at C. H. Robinson. So when there's good freight to be had, we'll increase market share. When there's not good freight to be had, we'll expand our operating margins even more. Really, that's the math going forward. Stephanie, can I just put a point on one thing, though? We're saying all of this. We love our results, where we're going. This is not easy, right? Changing this over, changing the culture over. You go in Eden Prairie in Minnesota or any of our hubs around, that's an awesome team. Everyone loves showing up at Robinson. They love winning. They love improving. But make no mistake, driving a lean operating model every day takes dedication, and you have to do Gemba walks. You have to have operating reviews. I take that very serious in leading that, along with Damon, some of the senior team. This is not something that you can just replicate. This is really difficult. Then add our technology in there. It's just, we think, several moats of advantage that we've built over the last three years, and we're going to continue to build, but it's not something that's easy. It's easy to sit here and talk with you. You make it easy to do that. But the execution of it is something that the teams do every day, and they do it well. Just one final question from me. We didn't touch on it, but I do think it's important, especially as you talk about investing for growth. Can you maybe give us an update on some of your Lean AI opportunities that you have on the global forwarding side? Yeah. The simplicity about talking about global forwarding is it is a broker business just like NAST, right? The playbook between NAST and global forwarding has a very high correlation, right? So we are optimizing that quote-to-cash cycle. Albeit the processes in global forwarding tend to be more complicated and a higher level of complexity, but we have the playbook to execute that play. I would say very similar set of process capabilities that we have generated in NAST is what is applicable to global forwarding. Yeah. I would say we may even be more excited about the opportunity in global forwarding because the cycle times are more elongated, the complexity is higher, so therefore, the opportunity to drive efficiency and opportunity is higher. But for us, it is really running the same playbook that we ran in our NAST business. Using that agentic technology has me really excited. If you ask me, "Dave, what are you excited about?" Excited about what we will do with our agentic technology, applying it first in global forwarding and then bringing it actually back into NAST. There are certain things that were below the line that we can bring above the line now with that enhanced technology. Generative AI was very, very important to us and gave us results. Agentic is going to give us even more. We think we are going to do some special things in the industry. Great. Well, thank you both for your time. Thank you. Yeah. Thank you. Thank you. All right.