Conference Transcript - CHRW 2026-05-21

Scott Anderson, CEO

All right. We're going to get going with our next session with C.H. Robinson. Really happy to have you guys back at the conference. We've got Dave Bozeman, President CEO, Damon Lee, CFO. There is so much to talk about, both industry-wise, C.H. Robinson-wise. So rather than do anything, we're going to jump right into questions, if that's okay. I want to just knock out some of the quick industry things right away. Obviously, the big news over the last week was the Montgomery ruling. I guess your initial view of this, what does it mean to your business? What does it mean to your insurance costs? What does it mean to how you change carrier vetting? What does it mean for the industry, large broker, small broker, industry capacity? You know, very open-ended question, but I think it's obviously, like, topical right now. We've got to address it. Let's get right into it.

Dave Bozeman, CEO

Let's just – hey, happy to be here. So thanks for having us. So let's just jump right in, set the record straight where we are. Montgomery case, we expected to win that case, and we went in to argue to win that case. It didn't go in our favor, but we had a playbook for both sides. We've said that, be it favor or not favor, we had a playbook and we executed that playbook because it didn't go in our favor. So that being said, what does that mean? Number one, we have one of the safest networks in the industry, just period. For every one severe incident we have, that could be an incident, we broker 500 million miles. That's just a fact. Super safe. Our vetting process, one of the strongest, if not the strongest in the industry when it comes to our carrier vetting. We're going to continue to do that. We have a strong balance sheet. We have auto liability insurance that is some of the strongest in rivals, even assets, 137 million in auto liability, 86 in general liability coverage, strong when it comes to that. What does this ruling mean? Listen, at the end of the day, we're proud about who we are. We're super safe. We're going to continue to go. We were trying to lead the industry on bringing clarity in the industry. So one way or the other, we have clarity, and now you move on. We do think that this will be somewhat of a headwind to smaller, non-scaled brokers from an insurance perspective, from a scale perspective, maybe some small carriers as well. That will be an impact. If you think about the ruling, you have shippers that could be impacted as well, and you need a trusted, skilled broker to stand up and really drive this. We are that trusted scale broker, so we are squared away in doing this. I don't know if you had anything.

Damon J. Lee, CFO

I just had one follow-up to what Dave said, which is, look, we do believe this will lead to a consolidation in the industry for all the reasons that Dave mentioned, right? The economics of small and medium brokers, higher insurance costs, just the confidence in shippers to use small and medium-sized brokers because of all the liability connectivity there. So we believe this will lead to a consolidation of the industry, and we believe Robinson will be that consolidator.

Scott Anderson, CEO

So just a couple of quick follow-ups. Like, maybe, Damien, like, practically speaking, like, when and by how much do you think insurance costs for you change?

Damon J. Lee, CFO

Yeah, so when would be our next renewal cycle? So for 2026, I mean, we're locked in for insurance covers. You know, we'll start those negotiations the second half of 26, and certainly that'll be – that impact, that'll be felt. in 2027. But look, insurance costs today are less than one half of 1% of gross revenue for C.H. Robbins. And so it's not going to be a material impact, even if we see a demonstrable increase in insurance rates. And certainly, look, our job is to manage challenges. We do it every day, right? And so higher insurance costs would be just another challenge. I would say, though, I view insurance costs as a transitory impact on brokers, meaning it'll be an impact on brokers initially, it'll ultimately get passed on to shippers and then ultimately get passed on to the consumer, right? So I don't view higher insurance costs as being a structural deficit for brokers forever. I view that as a transitory cost that'll ultimately end up being borne by the consumer.

Dave Bozeman, CEO

And Scott, to finish on that, you know, keep in mind the scale here. At the end of the day, we're going to ship over 100,000 shipments today. We do 37 million annually. This is not our first rodeo here. We've been doing it. will continue to do it we set the bar this is a scale play we've adjudicated things for years and and this doesn't change that we were just trying to drive clarity and safety within the industry okay and then just maybe last thing on

Scott Anderson, CEO

this for me at least you know what changes to like from a carrier procurement same point like we just had a panel with Schneider and they said they were using 70,000 carriers at the peak during the in 22 and now they're down to 14,000 carriers and you know part of that is like being more regular rigorous with who they're using related to cargo theft and all this sort of stuff like do you have to make changes to your carrier you know who you're using you know obviously there was a 60 minutes piece about superego chameleon carriers non domicile like do you have to do you have to make changes in terms

Dave Bozeman, CEO

of who you're using we're trying to stay on point on some of that you go all over the place on a lot of that but the the facts are this we have a vetting process that we think is industry-leading we do partner with highway and gin logs we also have our proprietary technology as well we're a data company as you know and if you look at it we look at the results I mean our our process has prevented several people from accessing our network we've stopped chameleon carriers, hundreds of them. Our fraud has down to a, we have a 99.9% fraud-free type of network. And what we're doing, these are things that people don't know, but that we're driving and that we're leading the industry. We lead a consortium of companies, including my old farm and Amazon and others, when it comes to fraud. And I think our technology and And our processes that we're doing are helping to lead the way that we'll continue to do that. So strong, strong vetting process. Fact, if you start getting into driver level heuristics, some of that is legal, right? That happens through the FMCSA. But our vetting on carriers is strong. It'll continue to be strong. It'll continue to get better with the data set that we have.

Damon J. Lee, CFO

And, Scott, just put a bow on what Dave said. Like, we feel like we've had an industry-leading carrier vetting process for a very, very long time, right? So are we going to make wholesale changes to that process? Are we going to continue with our continuous improvement mindset like we do on everything else in our business to make it better?

Scott Anderson, CEO

So it sounds like not a whole lot has to change for you. And then it's a question of, like, to what extent does this catalyze consolidation within the brokerage industry where large brokers…

Damon J. Lee, CFO

Yeah. I think that same comment applies to small and medium-sized carriers. So I think that's the way we think about, will there be a consolidation of carriers in the industry? Absolutely, there will be.

Scott Anderson, CEO

And does that change the gross margin profile for a broker if you're procuring capacity from larger carriers instead of smaller carriers?

Damon J. Lee, CFO

We believe our cost-to-hire model is industry-leading. We believe we have the best revenue management capabilities in the industry. We'll continue to procure transportation at industry-leading cost regardless.

Scott Anderson, CEO

I want to now turn to the market. One thing that was interesting, just listening to Q1 reports, listening to some of the other brokers at our conference, someone said, our spot volume's up two and our contract volume's down 18 or 19. And then talked to another private broker said, our spot volume is, our contract volume's up two, but our spot volume's up 20. So meaning, other brokers seeing sort of a big sort of shift more towards spot volume and you guys were the opposite right at least in q1 right where your contract for spot mix actually increased five percent right um why do you think you're sort of seeing something different right why do you think you know i would have thought spot lines would be growing given the tightness of the market so So it just seems a little interesting, notable to me. Some thoughts there.

Dave Bozeman, CEO

Well, I think it's different because you want it to be different, this room, because we're winning at both. And you have to break this down. If you go into this industry and you just start talking about spot without talking about contract, I don't think you're talking about the wrong things. So we're winning in both spot and we're winning in contract. But make no mistake, when it comes to how freight moves, 75%, 80% of that freight is going to move on contract. And you have to have a relationship with that. We're strong about where we are in that relationship. And we're strong about where we are with our processes when it comes to spot. It is a balanced if you want sustainable growth. That's super important that you've got to have in this industry. sustainable growth spot alone is fleeting as you know and you can't just balance just one aspect you got to have both we've been consistent in our strategy operated both and we went at both I'll only add a few things so we've

Damon J. Lee, CFO

outgrown the market in our North American surface transportation business for 12 consecutive quarters you don't take that type of market share by just a singular focus on spot right and so as Dave mentioned we're focused on healthy freight regardless. If it's contractual, if it's spot, Robinson's going to win. With our cost to serve model, we make very attractive margins in contractual. I can assure you in the spot market, we've set C.H. Robinson records on our file averages in spot. So I'd say we take a little bit different look at it. We're winning in both, very profitable in both. We've said before we think this will be a tremendous bid season for C.H. Robinson, both in volume, so more share gain and in price. We feel good about what we're doing, right? And certainly physics would say you can also perform better in spot if you're losing share in contractual. So that's another

Scott Anderson, CEO

way to look at it. Right. And so in terms of the market, you've said, hey, we're not immune from a squeeze, but we think we'll do better than the market on squeeze, better than maybe what we've done in the past on a squeeze um i think last cycle you guys weren't there so you know but you know at the time i think at the peak 15 of our volumes were loss making like how is that doing now right you know we didn't hear you guys talk about lost loads but like is that something that we're dealing with right now and you know do you do you think we're at the point now where, hey, there was a squeeze in Q4, Q1. Are we starting to get unsqueezed because we're repricing business and all that sort of stuff?

Damon J. Lee, CFO

I'll start. Dave, I'll jump in here. Look, Robinson is a fundamentally different company than it would have been in the last up cycle, right? I mean, the company is different. The mindset is different. The culture is different. Our processes are different. We're a much more efficient company, much more focused company. Our strategy is to outgrow the end markets and expand our operating margins. We've demonstrated that now for well over two years. I would say the squeeze dynamic that we have gone through on the cost side is a great test for the squeeze dynamic you're going to go through on the demand side. And I think our team has performed exceptionally well. If you think about the very small increases in Q3 that we saw that we managed without any impact to the business. You had a more material impact in Q4 of last year. We managed that extremely well. And then you take Q1, where spot costs are up close to 20% year over year, and we had flat margins from an AGP perspective. So we believe we're doing things at C.H. Robinson from a market share game perspective, a revenue management perspective, that the industries just can't match. And we know those capabilities will transfer to an up cycle in the market as well. So I made this statement before I make it again today. We believe our operating leverage for C.H. Robinson will rival the asset players when volume returns to this market, right? Our incremental margins are phenomenal right now. And because of the systemic way we've changed the company, that cost structure is not going to change when volume comes back to the market. So, look, we always get questions. Are you guys a little – you have a little anxiety about the market turning around? the answer is no we're extremely excited about the market turning around because we believe you'll see an even more set of phenomenal results from ch robinson than you've seen the last two plus years

Scott Anderson, CEO

and you made a comment where we think we'll have a really successful business i forgot the exact time but what what are you seeing from a pricing standpoint is bid seasons yeah so and and we've

Damon J. Lee, CFO

mentioned this before dave's talked about it a lot right like you know we believe the industry practice we call it hatchet versus surgical right where you just kind of put out these massive price increases and it takes, you know, months, if not quarters for things to settle down in the marketplace, right? We are very surgical in how we're negotiating with our shippers. And it's a continuous process, right? It goes on every day, every month, every week. With our revenue management capability, we can get very precise on what lanes need to be repriced at what percentage versus other lanes versus just everything gets a, you know, five, 10% increase, right? And so we believe that approach will allow us to continue to gain market share while expanding margins in an up

Dave Bozeman, CEO

cycle it's disciplined it's measured it's part of our lean operating model our customers appreciate it um and i think we've demonstrated that we're not this is not aspirational we just point to the results on here and when you talk about squeezes scott you can argue that you've had squeezes along the way be it road checks storms i mean there are a lot of a lot of things that are pressing companies out here on the squeeze over the last uh year that's a prediction of how someone's going to operate and we feel like we've shown up pretty well on that

Scott Anderson, CEO

damien just a numbers question on the guide right so you've said six dollars of earnings this year and, you know, in an assumption, it's like sort of zero market growth, right? I know market feels a lot tighter, but we're hearing from everyone, like, it's supply-driven, it's supply-driven, right? CAS, at least to date, is still negative, right? You said, like, we can – I can't wait for volume growth. The operating leverage is going to be great, but it doesn't feel like we're getting a lot of, like, market volume growth yet. If market stays negative on volume at least, can we still do six this year?

Damon J. Lee, CFO

Yeah, so look, I'll just reaffirm. We feel really good about our $6 target that we've committed to. And I will call it a target, not a guide. We don't guide. But feel good about the $6 target. Now, to your point about negative market versus zero growth, the $6 is predicated on a zero growth market. Now, at the end of the day, you know, Robinson does everything we can to deliver the best result every single day. Right? So even if the market is a headwind, it doesn't mean we give up on our $6 target, right? I mean, we will absolutely fight in the trenches every single day to make up any market headwind we have. But our commitment, and I'll just reiterate that commitment, is $6, no market growth. But you'll get the best result that Robinson can deliver regardless of market.

Scott Anderson, CEO

And then similar, you've got a 40% sort of mid-cycle margin target for NAST, right? We just did 37% in what, you know, a quarter where, you know, maybe there was some degree of a squeeze, right? And still no volume growth, right?

Dave Bozeman, CEO

We thought that was pretty good.

Scott Anderson, CEO

So I guess is there, you know, shouldn't there then logically be upside to 40%?

Dave Bozeman, CEO

Logically, yes. And perhaps that will happen. But you need to break that down on the dynamics of that. And so, you know, you start talking about mid-market, we feel really good that we could exceed that. What we have told you consistently is that we're building a strategy of operating leverage. And that operating leverage is once you have that built in, what do we do at that gross profit level? Do we take some of that, move it into growth and continue to do outgrowth? That is what we look at every day, and that's what we negotiate every day. We think we make the right calls with that, and we'll continue to make the right calls on that. But we feel super strong about where our margins are, industry leading, and they'll continue to be.

Damon J. Lee, CFO

Nope, just put a bow on that. So, look, 40% is pretty good, industry leading. we've talked about once we get north of 40 percent we want the optionality to go after market share that will demonstrably improve our earnings what we don't want to do is put ourselves in a box commit to a higher margin target when we don't see any reason to commit to a higher margin target right I mean at some point Robinson has not a lot left to prove on quality of earnings right and so your answer is, can we do more than 40%? Absolutely, we can. Is the likelihood that we will? Probably. Are we going to commit to it and put ourselves in a margin percentage target box

Scott Anderson, CEO

above 40%? No. Okay. And so this is actually a good, if there are questions, raise your hand, we'll get you involved, we'll come to you in a second. There's sort of two things I want to sort of discuss in that sort of context, right, as we maybe dive into, like, the company-specific things happening inside of CH. So, you guys have done 30%, maybe even more.

Damon J. Lee, CFO

Correction. 45% enterprise-wide.

Scott Anderson, CEO

45% enterprise. Okay.

Dave Bozeman, CEO

50% NAS, 45% global 40. 50% into 22.

Scott Anderson, CEO

Okay. 50% labor productivity, right, in NAS, right? You know, we hear about AI, we hear about lean what is help us understand like what's AI what seemed like what's like an actual example of here's what lean did here's what here's what AI did right and then can we how much sort of if we've already done 50 at what point

Dave Bozeman, CEO

does that sort of tap out let's let's frame it up yeah for you right because we get that question I'll start with the short answer Dave you're asking me a series question lean versus AI we don't think of it that way we would say we don't know because there's a symbiotic relationship between lean and AI it's our system it's our culture and what we're what we're driving so that 50% productivity improvement for NAS since the end of 22 45% for global forwarding that's not a period right for us it's a comma because it's part of our our system and what we do we have publicly said we are going to commit to single digit productivity no matter the market condition C.H. Robinson will do that could be a hot market we're gonna do single digit productivity there are times where we will go to double-digit productivity like we are doing this year when we have a technology advanced or a process advanced we'll continue to do that but it's a continuous improvement culture that is going to continue to advance what we're doing so we we don't break them up and look at it that way it is symbiotic in what it's doing and a good example would be we talked about quoting transactional quoting that was on a gimbal walk gimbal walkers go to the work we're looking and we found out that we were only addressing that 60% of our transactional quotes our technology our agent at scale our quoting agent launched that quoting agent now hits 100% of those quotes it gets it back in now we cut off a second was 32 seconds and now 31 seconds back to the customer in a conversational manner with the details that a human just didn't provide as well so that has allowed us to get more winning percentage allow us to get more revenue and it's really allowed our people to move to the right and do a lot more customer facing so that's one example of many that we have in our orchestrating agent but that comes out of that symbiotic relationship of operating reviews gimbal walks really kind of driving the and stressing the system of what's broken what do we have to fix that's why we're

Damon J. Lee, CFO

we have to put the context to it I'll only add look there is no cap on our productivity as we've mentioned before we're in the early innings of our journey uh if you look at the catalog of our processes uh i mean it's it's thousands of processes tens of thousands of sub processes we've only automated a fraction of those of those processes right so we're early in our journey both lean and ai and so i would say look there's no cap on that productivity number and it is

Dave Bozeman, CEO

important to say i mean look we've both been doing i've been doing lean over 30 years uh it is just super early I mean we're we're driving you know when it comes to problem solving all the way down to the desk Scott I mean we've just got a lot to do and a lot more to go so when people say early innings why do you guys say early innings you're doing all these things it is early innings it's like like second inning when it comes to this stuff we know what great looks like it's a lot more to do and we have a lot more a lot more grass cut when it comes to you so

Scott Anderson, CEO

there's I think there's one for at least for me one important thing I just I want understand better yeah so you guys said we're gonna effectively I think we're gonna do three things right we're gonna get a lot of labor product we're gonna get a lot of productivity right we're gonna our model we're gonna have higher gross profit per load we're gonna have demonstrable growth right check check and check okay so well that's my question right so the labor product we just said 50% undeniable yep that is a you know double check I'll give you two checks for that one. Thank you. The gross profit per load is up meaningfully from the middle of 2023, right? The rest of the industry is not. One check for that one. I'll give you a check and a half for that one. All right, good. All right, but here's the real question though, right? You've said you've gone from responding to 60% of quotes to now you respond to 100% of quotes. Transactional quotes, yes. Quotes, like I, your volume is, I get the industry's down, right? But you're kind of flat on volume. If we're responding to 40% more quotes, I don't conceptually understand why volume's not, maybe it doesn't have to be up 40. Why isn't volume up 10, 20, 30% if we are responding to 40% more quotes? Well, let me do this. And the math's probably even more, 60 to 100, you know, more than 40%. Yeah, it's transactional quotes that

Dave Bozeman, CEO

we're doing that. Now, don't take that as a 100% in-series view. Everything we've always told you from when we met is building a system that's optionality, right? So when we have that ability to quote 100% of quotes in there, we also take the view of negotiating what volume are we going to take, right? It still has to be the right economics for us. Since we've been sitting here, we've probably denied a load at 30% margin, right? Because it doesn't fit our economics in doing that but we have the choice to be able to do that and we control that and before if you have things sitting in a box you don't get back to it for four hours that freights gone that attempt to win that freight is gone we've eliminated that we've inserted our technology in the order the cash process and remove that friction that's what a lot of that productivity comes from but to your point when it comes to that volume we make that choice on what we're going to take. And I would also say, put that relative to the market, we're still taking share within that market, right? That's how you got to look at. Cass being down, we're still outgrowing the market. So you could argue that we are taking share and getting more volume on it.

Damon J. Lee, CFO

I'll just add a little bit. So four-year freight recession, Cass hasn't had a positive reading since I think the second half of 22. And we've outgrown that Cass index 12 consecutive quarters. So as Dave said, We take the freight we want. Any given quarter, any given month, we could take demonstrably more volume at margins that probably the industry would say, I take that, right? That's not the standard at C.H. Robinson, right? Now, going back to the 45% margin question, right? That's why we don't want a constraint on margin. So once we've established that baseline on profitability at 40%, to your question on why can't you take more demonstrable volume, the answer is we will, right? Because then the economics will fit the model we have going forward. Once we've demonstrated and sustained that quality of earnings that we've committed to, but make no mistake, any given month, any given quarter, we could take a demonstrable amount more share than we do. We choose not to do it.

Scott Anderson, CEO

And so is it fair that in a world where market is down from volume and price, like even it's harder to just the margin profile of that incremental is harder to justify. But in a market where if the market starts growing and certainly in a market where price starts going up 10 percent, whatever, we should increasingly see the demonstrable share growth. Is that fair?

Damon J. Lee, CFO

Yeah, and I think when we've talked about optionality, you can equate optionality with demonstrable outgrowth, right? And that's, again, why we've been very, very pointed about saying, like, look, we won't commit to a higher margin target beyond 40 percent because of that exact statement. But I think it is just important for this room to hear again, any given month, any given quarter, we could have a much different volume number, a much different share number if we if we chose to.

Dave Bozeman, CEO

The instrumentation is pretty instantaneous. I mean, we know, Damon's point, we can turn a knob, and it's an instantaneous reaction. I mean, that is not a problem. But it's about being disciplined, measured, controlled, we own, and we know the freight that we want. It has to match our economics. And the model we've built continues to mature. We're in a really, really good position to do that.

Scott Anderson, CEO

And so back to where we're starting, Montgomery could help catalyze some of this. Oh, for sure.

Damon J. Lee, CFO

Right. I think certainly the opportunity, you know, make no mistake, if the industry consolidates, Robinson will be a winner in that in that consolidation. And that's the organic side. You know, we haven't got to an M&A question, but we certainly expect to be very active inorganically and be a consolidator on that side as well. So when you think about the industry going forward, Robinson will be the consolidator of this industry.

Scott Anderson, CEO

We're going to come back to that in one second. I think there was a question in the back. Sorry.

Operator

hey guys what do you think is your best estimate of capacity exiting the industry due to the Montgomery rolling it's the first question second question

Dave Bozeman, CEO

you guys have said can I clarify that just so you so we're clear it's two two things of capacity are you talking about broker capacity to tell my carry

Operator

capacity or both both you know all right you can go in your term paying medium term whatever and the same question is you guys have said you're gonna have the same operating leverage as asset base character carriers when volume turns up but what if what if there's no volume and it's just price driving a cycle so kind of look what we're seeing now would you guys still have the similar

Dave Bozeman, CEO

operating leverage yeah so so let's let's answer that well first of all higher highs and higher lows and for us it doesn't matter we lower for longer or or inflection we we love an inflection because we're gonna we're in pole position, we're going to win. And if it's lower for longer, I think we've proven we'll be higher highs and higher lows as well. When it comes to the capacity going out, you know, listen, I could sit up here. I know just as much as you do. I'll give you an anticipation. We anticipate maybe 20 to 30 percent of broker capacity that could come out. But we don't know, right, for sure. The reason we would say that is because of the facts. The facts are you're going to have more insurance liability that is going to be on these brokers. Shippers are now going to have to start looking because this particular ruling now changes the dynamic and the space of where shippers can be liable on some things. So their vetting process of brokers is going to go up, and they're going to want a broker that has the strong economics and the strong service schedule to be able to have trust in where they move their goods. And that means a lot of those kind of smaller, less scaled brokers will probably be hampered and come out of the system. That could be 20%, 30% of that. And I think you'll see some small carriers as well. Until there's a roll-up, you'll see some impact on carrier capacity as well. That's what I would see with that. I'll give you the other part of the question.

Damon J. Lee, CFO

Yeah, the other question, look, I would say we're highly confident in the scenario you gave. Actually, we're highly confident regardless. But in the scenario you gave on the operating leverage, as we've said before, we have fundamentally changed the processes of the company, right? And so that quote example that Dave was going through and the transactional, If we're doing 600,000 transactional requests for quotes today, and that goes to 6 million, the technology can absorb that without any material increase in headcount, right? So that's just one example, tenfold increase, no increase in material cost of headcount. The second question is, remember, we don't believe we just have industry-leading productivity. We also believe we have industry-leading revenue management, which means in your scenario around price, we believe we'll optimize price better than anyone else in the industry. We believe we are the gold standard on cost of higher discipline within the industry. So in that other example, we believe revenue management capability will allow us to exceed expectations in that environment as well.

Scott Anderson, CEO

Just a quick thought. So would you think, like, you're already seeing gross profit per load improve, like, before, like, the cycle really has kicked in at all? Like, do you think that means we should hit a, to use your term of higher highs, like, should we exceed prior peak, like, gross profit per load this cycle?

Damon J. Lee, CFO

Relative to the market, for sure. And relative to C.H. Robinson, historically, yes. Certainly, take Q1, for example. Maintaining flat margins versus expanding in Q1 was, I think, quite a feat. When you consider some of the other competitors out there that demonstrated, I think one competitor demonstrated 10% year-over-year volume growth, but margins contracted 300 basis points, gross profit dollars were actually down. Yeah, another competitor where they maintained a relatively consistent margin, but volume was down 20%. So I think in that scenario, I picked what Robinson did, which was we outgrew the market, we maintained flat margins, we expanded gross profit dollars.

Scott Anderson, CEO

And I want to follow up on something you said, because at least listening to it, it felt like a little bit of a change. I think the last time we heard you guys talk about M&A, you said there's a really high bar for M&A. And I think you just said, we think we're going to be very active in M&A. So maybe that's, I don't know, that felt like a bit of a change, but, you know.

Damon J. Lee, CFO

Yeah, I would say it's a different time, right? Because if you've listened to us the last two years, what we've said, Dave has said many times, is we had to earn the right to do M&A, right? We have a very high bar for M&A. We're not going to make a mistake on M&A. But we had to get the company ready for an acquisition. And I would argue, you know, six months ago, 12 months ago, we weren't ready, right? We didn't have an industry-leading cost-to-serve model yet. We didn't have processes to a level of maturity yet. We didn't have a progression on the operating model and our technology to a level that we wanted to have. But now we know we have the industry-leading best cost-to-serve model. We know we're ready to do M&A, and we're going to do M&A. Now, the bar is high. It doesn't mean we're going to do, you know, 10, 20 deals, right? But if you think about what kind of M&A will we do, it could run the gamut, right? Like specialized, small, medium-sized player that gives us capability that we don't have today. You put the Robinson scale behind it. The ROI is incredible. Or it could be the acquisition of a scaled broker, right? So a traditional broker that has, you know, an attractive book of business, maybe a challenge cost-to-serve model. We can take that book of business, put it on the Robinson cost-to-serve model, ultimately have a combined company that has Robinson-like margins, right? So, yes, we will be active in M&A. And, look, we've certainly made the statement. We'll make it again today. We're going to be the consolidator of this industry.

Dave Bozeman, CEO

And, again, it's not new, Scott. I mean, it's part of what we've always said. We said we're going to be disciplined and measured. You know, Robinson's been around 120 years, have always done M&A. It's just one of those things, as Damon said. We are, you know, the powder's good, ratios are good, and we feel like we've got the mousetrap that's built. And we think that that that will serve as well.

Scott Anderson, CEO

And so, Dave, can you sort of like rank for us priority between buyback, niche acquisition, sort of transformational, large scale capital allocation?

Damon J. Lee, CFO

All ROI based right now. We think we have the capital to do all of the above right now, certainly, you know, based on the magnitude of M&A. Right. I mean, that can always influence pace of buyback for a period of time. But look, we believe we have the capital. We have the balance sheet. We have a fortress balance sheet. We have leverage ratios that are some of the best we've ever had. You know, we think we can allocate capital to to all those priorities in the future.

Scott Anderson, CEO

We have I've got time for one last question because we're already over. You want a forwarding question, an Amazon question?

Dave Bozeman, CEO

40. Yeah.

Scott Anderson, CEO

Okay, we haven't touched forward. Okay. There's certainly volatility right now in markets. I think, you know, listening to others at our conference, I think like air freight market feels a little bit structurally tighter. Maybe ocean market, you know, notwithstanding some volatility, maybe structurally looser. Just how you think about, you know, you know, we've had tremendous success at NAS. Like, what's the opportunity set going forward at forwarding?

Dave Bozeman, CEO

Look, we said consistently that we started with NAS. That was purposeful. We're now moving and being very purposeful in moving our technology stack into 40. That business alone we already felt good on. It's improved off the back of just the operating model. And now we're going to continue to improve it by driving our technology stack. So kind of the core things we did with NAS, the order-to-cash process, removing that friction, increasing productivity, driving agility, driving speed, allowing that business to continue to punch above its weight. That's what we're in the process of doing. That's what we will continue to do. The forces that are out there when it comes to ocean, we're not immune to that. Everyone has to deal with that, and we will compete and deal with that. You're right about air. We're doing that, and that's a little bit different tack time on doing that, and we're competing really well in that business. So we're pretty excited. He and I have always said, next two years at Robinson, I'm telling you, man, they are much more exciting than the last two, and the last two have been pretty damn exciting. So we feel really good about it.

Scott Anderson, CEO

All right, that's a good place to wrap. Dave, Damon, thanks so much.