Financial Data and Key Metrics Changes - In Q3 2025, total revenue and adjusted gross profit (AGP) declined approximately 11% and 4% year-over-year, respectively, primarily due to significant declines in ocean rates and the divestiture of the Europe surface transportation business [27][30] - The effective tax rate for Q3 was 20.6%, with expectations for the full year 2025 tax rate to be in the range of 18%-20% [30] - Cash generated from operations in Q3 was $275.4 million, with capital expenditures of $18.6 million [30] Business Line Data and Key Metrics Changes - In North American Surface Transportation (NAST), combined truckload and less-than-truckload (LTL) volume grew approximately 3% year-over-year, outperforming the Cass Freight Shipment Index, which declined 7.2% [7][13] - Gross margins in NAST expanded for the eighth consecutive quarter, achieving a 39% adjusted operating margin [8][27] - Global Forwarding's AGP was lower year-over-year due to lower ocean rates, but gross margins expanded year-over-year and sequentially due to disciplined pricing and revenue management [27] Market Data and Key Metrics Changes - The Cass Freight Shipment Index recorded its lowest Q3 reading since the financial crisis of 2009, marking the 12th consecutive quarter of decline [5][13] - Ocean rates declined substantially during Q3, leading to a 27% year-over-year decline in adjusted gross profit per ocean shipment [5][27] Company Strategy and Development Direction - The company is undergoing a transformation towards a lean AI supply chain model, focusing on innovation and operational efficiency [10][38] - Strategic initiatives are aimed at growing market share, expanding gross margins, and increasing operating leverage, with a new 2026 operating income target range of $965 million-$1.04 billion announced [32][36] - The company emphasizes a culture of problem-solving with speed and a lean operating model to enhance productivity and customer value [6][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a soft freight environment and regulatory changes but expressed confidence in the company's ability to navigate these issues [4][9] - The company is not waiting for a market recovery to improve financial results, focusing instead on executing strategies that are effective in any market environment [9][10] - Management remains optimistic about the future, expecting the next two years to be more exciting than the last two, driven by ongoing lean AI initiatives [12][37] Other Important Information - The company has authorized a $2 billion share repurchase program, indicating confidence in its financial strength and commitment to returning value to shareholders [36] - The company continues to invest in technology and innovation, with a focus on leveraging AI to enhance operational capabilities and customer service [23][80] Q&A Session Summary Question: Impact of Low-End Capacity Exiting the Market - Management noted that while low-end capacity is exiting the market, the company has managed to maintain strong gross margin expansion despite these challenges [43][44] Question: Volume Growth and Truckload Performance - Management highlighted positive volume growth across key verticals, attributing this to a combination of effective pricing strategies and strong execution by the team [53][56] Question: SG&A Expenses and September Revenue Trends - Management clarified that SG&A expenses are expected to be above the midpoint of the range, with September revenue impacted by normalizing ocean rates and a challenging market environment [63][66] Question: Staying Ahead of Competitors in AI Innovation - Management emphasized the unique combination of skilled personnel, proprietary technology, and a robust operating model as key differentiators that help the company stay ahead of competitors [71][80]

Financial Data and Key Metrics Changes - In Q3 2025, total revenue and adjusted gross profit (AGP) declined approximately 11% and 4% year-over-year, respectively [24][25]. - Global Forwarding's AGP decreased by 18% year-over-year, primarily due to lower ocean rates, while NAST AGP increased by 6% [24][25]. - Personnel expenses for Q3 were $349.3 million, including $9.7 million related to workforce reductions, with an average headcount down 10.8% year-over-year [25][26]. - The company ended Q3 with approximately $1.37 billion in liquidity and a net debt to EBITDA leverage of 1.17 times, down from 1.40 times at the end of Q2 [27][28]. Business Line Data and Key Metrics Changes - In North American Surface Transportation (NAST), combined truckload and less-than-truckload (LTL) volume grew approximately 3% year-over-year, outperforming the Cass Freight Shipment Index, which declined by 7.2% [6][12]. - Gross margins in NAST expanded for the eighth consecutive quarter, achieving a 39% adjusted operating margin [7][12]. - Global Forwarding improved gross margins by 380 basis points year-over-year, achieving a 30% mid-cycle adjusted operating margin despite challenging market conditions [7][24]. Market Data and Key Metrics Changes - The Cass Freight Shipment Index recorded its lowest Q3 reading since the financial crisis of 2009, marking the 12th consecutive quarter of decline [4][6]. - Ocean rates declined significantly, with AGP per ocean shipment down 27.5% year-over-year [25][26]. - The company noted a continued soft freight environment, with international freight impacted by global trade policies and excess vessel capacity [4][5]. Company Strategy and Development Direction - The company is focused on a Lean AI transformation, aiming to enhance operational efficiency and customer service through AI-driven innovations [9][10]. - Strategic initiatives include expanding market share in key verticals such as retail, energy, automotive, and healthcare, with positive volume growth reported in these areas [13][14]. - The company has increased its 2026 operating income target by approximately $50 million, reflecting confidence in its strategic initiatives despite challenging market dynamics [29][30]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by a soft freight environment but emphasized the company's ability to navigate these conditions through disciplined execution and innovation [3][8]. - The company remains confident in its ability to deliver exceptional value and continue executing strategic initiatives, even in a lower-for-longer market environment [8][9]. - Management highlighted the importance of a strong balance sheet and cash flow generation, allowing the company to invest during market downturns [27][28]. Other Important Information - The company has authorized a $2 billion share repurchase program, indicating a commitment to returning value to shareholders [32]. - The Lean AI strategy is expected to drive further productivity improvements and operating leverage, with double-digit productivity increases anticipated in both NAST and Global Forwarding [31][34]. Q&A Session Summary Question: Impact of Low-End Capacity Exiting the Market - Management noted that while low-end capacity is exiting the market, the company has demonstrated strong gross margin expansion despite these challenges, leveraging AI-driven pricing engines to manage costs effectively [43][44][46]. Question: Volume Growth in Truckload - Management highlighted positive volume growth across key verticals, attributing this to a combination of effective team execution and advancements in AI-driven pricing models [56][58][60]. Question: SG&A Expenses and September Performance - Management clarified that SG&A expenses are expected to be above the midpoint of the guidance range, with September's performance impacted by normalizing ocean rates and a challenging global forwarding market [66][70][72]. Question: Staying Ahead of Competitors - Management emphasized the unique combination of skilled logisticians, proprietary technology, and a robust operating model as key differentiators that help the company stay ahead of potential copycat strategies from competitors [76][78][80].