C.H. Robinson Worldwide, Inc. Q2 FY2026 earnings call

Strategic Transformation & Lean AI Strategy

• The company's differentiated Lean AI strategy combines lean operating methodology, custom-built proprietary AI, in-house engineering (over 450 engineers and data scientists), and domain expertise, embedded directly into end-to-end quote-to-cash workflows rather than treated as an experimental side tool. AI agents are trained for specific, bounded tasks with human oversight for judgment and exception management, reducing implementation risk.
• Productivity has improved over 60% since the end of 2022 across NAST and Global Forwarding, creating significant operating leverage: 96% of Q2's year-over-year adjusted gross profit (AGP) increase fell to adjusted operating income.
• The new closed-loop agentic AI system deployed in 4PL Managed Solutions can complete full supply chain assessments in 25-30 minutes (compared to 4 weeks for traditional retrospective assessments), with continuous improvement cycles driving better real-time performance. In Global Forwarding, AI automation is reducing fragmented manual work, enabling teams to focus on higher-value customer engagement.

Operational & Market Performance

• The company delivered 20% year-over-year growth in adjusted operating income in a trough freight demand environment, with the Cass Freight Shipments Index declining for the 15th consecutive quarter.
• NAST continued disciplined revenue management through a sharp 34% year-over-year increase in ex-fuel truckload spot rates: despite 29% higher year-over-year line haul costs, AGP per truckload shipment remained flat year-over-year, an improvement over historical performance during spot rate inflections.
• NAST's multi-modal scale provides competitive advantage: bubble shipments (marginal between LTL and truckload) that shifted to truckload during low rates have moved back to LTL in the current high rate environment, enabling optimized customer solutions.
• Capital allocation returned $301.3 million to shareholders in Q2 (88% year-over-year increase), including $226 million in share repurchases and $75.3 million in dividends. The company closed the acquisition of Desper Logistics (note: transcript reference to Spirit Logistics/Desperate Logistics reflects original wording) in Q2, a niche tuck-in acquisition adding premium high-value freight expertise.

1. North American Surface Transportation (NAST): NAST achieved its mid-cycle operating margin target in Q2 2026, with an adjusted operating margin excluding restructuring costs of 40.9%, expanding 280 basis points year-over-year. Total NAST volume grew 1.5% year-over-year, outperforming the Cass Freight Shipments Index which declined 3.3% year-over-year, marking the 13th consecutive quarter of market outperformance. LTL volume grew 2% year-over-year (the 10th consecutive quarter of growth), while truckload volume grew 0.5% year-over-year. Contractual truckload volume grew year-over-year, holding its mix sequentially at ~70%, up from 65% in Q2 2025. NAST delivered a 15% year-over-year increase in shipments per person per day in Q2, with a >60% increase since the end of 2022.

2. Global Forwarding: Global Forwarding also hit its mid-cycle operating margin target in Q2 2026, with an adjusted operating margin excluding restructuring of 33.4%, expanding 470 basis points year-over-year. The segment delivered over 15% year-over-year productivity improvement in Q2, driven by ongoing deployment of automated AI-powered workflows that reduce manual effort.

• Full-year 2026 operating income: Maintains the prior target range of $964 million to $1.04 billion, originally set in October 2025. The company now expects to achieve the lower end of this range with a 3% market volume contraction, down from the original assumption of flat market volume, supported by $40 million in incremental productivity self-help.
• Personnel expenses: 2026 personnel expenses are now expected to land at the higher end of the prior 1.25 billion to 1.35 billion yen range, driven by higher incentive compensation aligned with strong 2026 performance, while double-digit annual productivity improvements for NAST and Global Forwarding remain on track.
• SG&A expenses: Narrows the 2026 SG&A range to $540 million to $580 million, down from the prior range of $540 million to $590 million. Depreciation and amortization is now expected to land at the lower end of the prior 95 million to 105 million range.
• Capital expenditures: Lowers the 2026 capex guidance range to $65 million to $75 million, down from the prior $75 million to $85 million range.
• Effective tax rate: Maintains the full-year 2026 guidance range of 18% to 20%. Q3 2026 effective tax rate is expected to be similar to or slightly above Q2's 21.5%, with Q4 expected to be lower due to recurring stock-based compensation tax benefits.
• Full-year 2026 truckload spot rates: Ups the full-year forecast to a 34% year-over-year increase, up from the prior 17% forecast three months prior.

• A Texas jury issued an adverse advisory jury verdict in a highway accident liability case, which management strongly disagrees with. The case will be appealed if entered as final, with the appeals process expected to take multiple years. No final outcome or ultimate payout (if any) is certain at this stage.
• Sustained increase in large "nuclear verdicts" for transportation liability would increase industry-wide insurance costs, negatively impact freight movement costs and service levels across the industry. The company is already covered by insurance through the end of 2026, and preliminary discussions for 2027 coverage have just begun.
• Persistently depressed freight demand (down 4.7% year-over-year in the first half of 2026) could limit near-term volume growth opportunities.
• Elevated truckload spot rates driven by carrier supply constraints are putting near-term pressure on contractual gross margins during the ongoing repricing cycle.

Q: The Texas advisory verdict creates uncertainty for investors. Can you provide more context on the legal process, what the outcome means for C.H. Robinson, and whether this is an industry-wide issue?

A: Management states the verdict was based on emotion rather than law and facts. The driver and carrier are independent third parties, not C.H. Robinson employees, and the carrier met all FMCSA safety standards. The company and its insurance providers expect to win on appeal, and the advisory verdict is only one step in a multi-stage legal process, with no final payout determined. Management notes nuclear verdicts are a broader industry issue affecting all transportation providers and shippers, and the company's scale and financial strength position it well to manage this risk.

Q: Does the adverse liability verdict change your M&A strategy and capital allocation plans?

A: Management confirms the verdict does not change the company's capital allocation or M&A strategy. The company continues to target niche tuck-in acquisitions (like the Desper Logistics deal closed in Q2) that add specialized capabilities, and larger strategic acquisitions remain part of the plan. Standard legal diligence of acquisition targets' legal dockets is already part of the process, and management is confident in the strength of its legal position in the Texas case.

Q: You hit mid-cycle margin targets in both segments. Can you shift to prioritizing volume growth now, and how should this strategy be measured?

A: Management confirms the optionality to prioritize volume growth above the sustainable mid-cycle margin threshold is now available. The company will selectively pursue accretive volume growth as market conditions allow, maintaining dynamic, daily revenue management rather than chasing arbitrary volume targets. The core track record of 13 consecutive quarters of market outgrowth paired with expanding margins and earnings growth will remain the key measure of success for this strategy.

Q: Global Forwarding's margins are much stronger than expected. Is this improvement sticky, or just driven by favorable market conditions?

A: Management states the margin improvement is driven by the same lean AI and continuous improvement principles that delivered NAST's performance, not just cyclical market tailwinds. The segment is now rolling out the same AI tech stack that NAST has used to drive productivity and revenue management improvements. Management believes the 30% mid-cycle margin target for Global Forwarding is sustainable through market cycles.