Good morning, ladies and gentlemen, and welcome to the C.H. Robinson First Quarter 2014 Conference Call. At this time, all participants are in a listen-only mode. Following today's presentation, Tim Gagnon will facilitate a review of previously submitted questions. (Operator Instructions) As a reminder, this conference is being recorded, Wednesday, April 30, 2014. I would now like to turn the conference over to Tim Gagnon, the Director of Investor Relations. Please go ahead, sir.

Thank you and good morning everyone. On our call this morning will be John Wiehoff, Chief Executive Officer; and Chad Lindbloom, Chief Financial Officer. John and Chad will provide some prepared comments on the highlights of our first quarter and will follow that with a response to pre-submitted questions we have received after our earnings release yesterday. Please note that there are presentation slides that accompany our call to facilitate the discussion. The slides can be accessed in the Investor Relations section of our website, which is located at chrobinson.com. John and Chad will be referring to these slides in their prepared comments. I'd like to remind you that comments made by John, Chad or others representing C.H. Robinson may contain forward-looking statements, which are subject to risks and uncertainties. Our SEC filings contain additional information about factors that could cause actual results to differ from management's expectations. With that, I'll turn the call over to John to begin his prepared comments on Slide 3, with a review of our first quarter 2014 results.

Thank you, Tim, and thanks to everybody who is taking the time to listen to our first quarter call. A special thanks to all of those who pre-submitted questions. We over a hundred good questions and it really does help us prepare and modify our prepared comments to address many of them as possible, and as Tim said, we will have some specific Q&A follow-up to really make certain that our messages are clear. On that Side 3, with our overall Q1 results for 2014, I guess the introductory comments that I would like to make is for those of you who have been following our story, I think the first thing you probably recognize compared to last year is that our financial statements are much cleaner and we do not have necessary a pro forma financial information for this period. As you probably know, last year with the sale of T-Chek and the acquisition of Phoenix and Apreo, for the year we presented the pro forma information to try to be very transparent and show what we felt is the right standard to hold ourselves accountable to around the pro forma or comparable growth for the combined businesses that made explaining and understanding things a lot more complex last year and we don't have to deal with that this time around, so it's hopefully going to be a cleaner, simpler set of explanations in our numbers quarter-over-quarter should be comparable. Second topic I would like to address as I know that the word for the quarter is whether, and if you see the word whether our first bullet point as well too. Culturally in the past, we have tried to avoid talking about the weather and using that as the explanation for a lot of the variances and looking…

Thanks, John. I am going to cover some information on our cash flow and our balance sheet and then we will turn it back to John for the look ahead slide. During the first quarter of 2014, our cash provided by operations was $14.4 million. You can see that last year, there was actually cash used by operations of $58 million. John mentioned that most of the comparability issues of the transactions of selling T-Check and acquiring Phoenix are behind us. There was one lingering impact in the first quarter 2013, which is actually the payment of the income taxes related to the gain on sale of the divestiture in 2012, so that had approximately a negative impact to the first quarter of 2013's cash flow of about $100 million. You can see if you adjust for that $100 million of cash flow from operations was actually down in the first quarter of 2014 compared to 2013. The driver of that decrease in cash flow compared to last year's quarter, was primarily investments in working capital as we had accelerating revenue during the quarter which increases both, our receivables and our accounts payable, but as those of you have been following us know our accounts payable is always lower than accounts receivable, so we did invest significant amounts in working capital. This incremental investment in working capital impacted the amount of cash we had available to repurchase shares. While remain committed to our strategy of returning approximately 90% of our annual earnings to shareholders through dividends and share repurchases, the first quarters tend to be lower. The reason is in addition to the growing working capital, we also have our bonus payments which happen at the end of January. Moving onto share repurchase activity, in February our ASR was terminated by the remaining bank and we were delivered approximately 1.2 million additional shares. In addition, we used only about $8.2 million net for share repurchases during the quarter. The bulk of that was shares withheld on delivery of restricted stock to recipients. Our capital expenditures during the quarter including software were $12.3 million and are in line with the expectations that we laid out last call for $40 million to $45 million of capital expenditures during 2013. We ended the quarter with $142 million in cash and $910 million in debt. We are comfortable with our current liquidity position. With that, I will turn it back to John for our look ahead slide.

Okay. Thanks Chad, the last, Slide 13, around a look ahead just to share some thoughts and comments on what we are seeing in the marketplace and how we are managing. I think, the first bullet point is an important one around truckload market conditions remain difficult to predict. When we have talked about our business in the past, we've talked about the fact that it is very difficult to forecast. It's very difficult, almost impossible to give accurate guidance. The core of that is the fact that we are sourcing that truckload capacity on a daily basis and are exposed to market movements that can move very aggressively and we predicted Q1 in the middle of Q1, we probably would not have predicted it accurately and I think it's very difficult to know exactly how markets are going to move in the future. Over the last three or four years, when we have talked about the balanced market conditions and what was happening in the North American in truckload sector, we and others talked often about the possibility that at some point in time you could see significant price increases based upon a reduction of capacity and a balanced market that really probably wasn't well positioned to accommodate significant demand increases if and when they occurred. Not a lot of people or maybe nobody anticipated a weather-driven tipping point in January and February that created some of the most significant price increases and market changes that we've seen in a while. There's uncertainty as to where we go from here around that. I would say the most popular question internally in interacting with customers during Q1 was, how much of this was whether and how much of it was the change in market conditions and it's clear that nobody really knows that. It's impossible to determine I think from an overall standpoint in terms of what exactly it's doing to the pricing and the market conditions, but it does feel like, the way the market has evolved over the last three or four years with the tightening of supply chains and information by shippers and the limited capacity additions by carriers that we do have a very tight market that maybe is as difficult to predict or a volatile as it's been in a long time.

That's the first thing that we are understanding and trying to manage to internally and with all of our customer relationships. I commented earlier that North America truckload net revenue margins in March, and thus in April are flat with last year, so what that means for the month of April, when we have talked about in the past about sharing what we do know. What we do know is thus far in April, our net revenue growth on a daily basis has been around 10% in North America Truckload. It can bounce around quite a bit day-by-day and month ends and quarter ends can have a significant impact. It's also important to remember that we are talking about North American Truckload here that we do have headwinds in other parts of our business and most other services are not growing at that sort of place so we do see the recovery in the Truckload margins for the last couple of months, which we haven't seen in a while, but in a very unpredictable environment. Talking a little bit about our team, I commented earlier about our pride in and how we manage through and serve our customers during the quarter. I talked at the beginning of the year about the investments we've made in the past and how we are thinking about as a leadership team and how were making these decisions collectively. They really are bottom-up made, very similar to talk I about with account management and pricing. There is more and more collaboration in top-down input around the productivity metrics and the hiring processes within our company, but it still is a very collaborative process to make sure that we are adjusting to each part of the business in each market opportunity in the best way. If…

Thanks John. As John stated, I personally thank all the analysts and investors that have submitted questions, a lot of great questions. John has [read] as many responses to some of those questions into his prepared comments that's including Chad as well, but there were over 100 questions as mentioned, so we have a lot of unique topics to get to and I'll jump right into it here and I'll ask the question and then I'll turn it to John or Chad to respond. The first question is for Chad, and I will read it verbatim here. The $220 million in personnel expense in the first quarter was fairly meaningful step up versus the second quarter '13 to fourth quarter '13 run rate. Was this increase primarily headcount-related and is it a good quarterly run rate to use for 2014?

Okay. My comments will really compare first quarter to the fourth quarter of 2013, because that's where most of the people asked the question was Q4 to Q1. Although, our headcount was only up slightly compared to year end, at the end of the first quarter our average headcount, when you compare quarter four to quarter one was actually up slightly over 100 heads, so during the fourth quarter we were adding heads to get to that ending number. During the first quarter of this year, we kept headcounts roughly flat, so therefore in effect there were more heads than that. It's definitely part of the increase. Every year we have phenomenon in quarter one, where our payroll taxes go up significantly compared to quarter four. By the end of the year, many of our people are over their social security limits therefore there is no expense for the FICA expenses of those employees. During the first quarter, many of our employees actually maxed out because of the payment of their bonuses, so payroll taxes were up. I think it was an increase of over $7 million compared to Q4 in Q1. Restricted stock expense, we talked about this is during our fourth quarter call. We actually had a credit in restricted stock expense in Q4, because we ended up having 0% vesting one by the end of the third quarter of last year look like we would have some performance days in vesting, so we had to reverse the accumulated expense from the first three quarters and we did have some vesting expense on unrestricted stock and options during Q1. Those two are by far the biggest variances between Q4 and Q1. In addition to the headcount increase, I think, our average salaries grew less than 2% on a quarter-over-quarter basis.

Okay. Thanks. Chad. Then the next question is again for Chad, and it's related to personnel again. You talked talk about wanting to leverage the investment you made in personnel and operating expenses in 2014, but we didn't see that in the first quarter year-over-year results. Should that be more evident in the second quarter results or is it something you expect later in the year?

My response to the previous question as well as something John said in prepared remarks kind of address, but just to be abundantly clear, our stated goal was to leverage our year-end headcount. Our headcount grew significantly during 2013. We're still online what the target. Our headcount is roughly flat. I think it's up 27 heads compared to the end of the year, so comparing to our goal was not have flat headcount with the first quarter, but to leverage the heads that we had at the end of the year. Actually, even if we don't add significant headcount, our expenses might grow as the year continues, if growth continues, because we will have increases in cash incentive pay as well as restricted stock vesting.

Okay. Next question related to bad debt and for Chad again. Can you give us some more color on the increase in bad debt expense? Has there been any change in your strategy to pursue a different customer segments or was this just an isolated event?

Unfortunately this is the second or third quarter in a row where we talked about isolated events, but basically they were. Rather than just looking at the increase, I will talk about what made up the $6.3 million provision. In quarter one, as we mentioned earlier, our receivable portfolio grew significantly. We do some calculated risk analysis to establish a reserve. The increase in our gross receivable portfolio made up about $2.4 million of the $6.3 million total provision. In addition, we had two different significant specific reserves booked during the quarter, which totaled approximately $4 million, so it is not a change in going after different market segments. The variance was really driven by those two significant customers, one of which is a customer who was a moderate credit risk, who suddenly had a deterioration in their business and another customer was one were closely monitoring and also had some changes in their business that made it prudent for us to reserve the receivable.

Okay. Next question, again for Chad, before I turn it back over to John, is the number of offices held by three in the quarter to 282 from 285 at year end. Will there be further closings and what are the savings?

That particular reduction was based to one move we made a Minneapolis. We had four operating branches that were already shared and already consolidated in more sharing office space and we consolidated the management of that to be led by one general manager to try to leverage and scale some of the efficiencies within there. There might be late changes from that combination, but really there were no significant headcount reductions or no significant changes in the staff, so hopefully we are going to be able to grow that business faster and leverage some expenses going forward, but nothing significant in immediate term.

Okay. Thanks, Chad. The next question is a Truckload question for John about capacity. As freight flows normalized post the weather, any sense that carriers are actually not that busy or has capacity remained tight in van reefer flat bed.

I started to touch on this in the prepared comments, but we have seen in the month of April some softening of what we would characterize as supply and demand relationship in April relative to the first quarter, so for that, what that would mean from us is that we are not seeing a lot of the extreme spot market activity or extreme difficulties in truck deficits and sourcing capacity. It has not however softened to the earlier market conditions of a balanced market with adequate supply and demand in all markets like we have been talking about for a number of years, so I think it's really sort of fits the pattern of what I talked about earlier that while there were some whether-provoked extremes during the first quarter, that probably precipitated a bit of a tipping point attitude around pricing and tightness in the marketplace and while a lot of that whether impact has subsided, there does remain a different market conditions today that we see versus the past couple of years.

Okay. Thanks John. The next one again for John in the area of truckload, Organic truckload volume growth of 4% seems a bit low given the market dislocation. Can you expand on why CHRW was unable to take advantage of this to drive better volume growth.

We don't have great metrics yet on what the market probably did for Q1, but we do acknowledge that that 4% growth was probably more in line with market or that we didn't take a lot of market share during the first quarter. If you connect some of the previous comments that I have made around how we honor our customer contracts and how over the last three or four years, our business has move towards a much greater mix of committed and contracted freight, we knew coming into the year that in the fourth quarter and early first quarter as the pricing started to change aggressively and we started to think about our customer relationships and how best to serve them in a very capacity-constrained market that going after a lot of volume growth in Q1 didn't feel like it would be the right answer for us to balance the combination of honoring those existing customer commitments with trying to grow our business and pursue the additional opportunities in the market. While we did that, and do that every quarter in terms of selling and looking for new business opportunities, we did not have as higher volume growth as we have had in quarters or would hope to have in some of the future. Other comment that I would make is, there have been periods of time in the past where markets have tightened and we have had greater volume growth, we have talked in the past about the uniqueness around these tight market conditions maybe being more driven by supply constraints rather than an increase in the demand from shippers. If you think through the dynamics on that, when there is incremental freight in the marketplace that just hasn't been bid or planned, but there is ample capacity to rerouting and go extra miles. It does create a more favorable environment for going after volume, when capacity constrained environment like this with a lot of existing customer commitments it doesn't bode well to both, serve your customers and go after a lot of volume increases.

Okay. Thanks, John. Next question, again, for John. It's more related to some of the look ahead comments. What's more important for 2014? Volume growth and sustaining market share or price to improve margins?

Based on the last quarter and on this question there were a number of follow-ups around, you know, has our strategy changed to focus more on price or what's more important around price and volume. I think that the thing that's important about that is, in our long range plan, we talk about the foundation of making Robinson a bigger, better company to create value and to serve our customers. It's about gaining market share and expanding our footprint and expanding our services, so market share gains are the long-term objective and we will never stop pursuing those. We have a lot of different go-to-market and sales initiatives that we are pursuing. When the market is moving as aggressively as it did towards the end of the fourth quarter of '13 in the first quarter of '14, simultaneously aggressively pursuing market share and adding a lot to the team like I said a couple times is not the best way to manage the business for our customers or for our long-term profitability, so it's always a blend of the two of those. It's not a change in strategy. It's an adaptation to the current environment and the market conditions. We will continue to focus on serving our customers, honoring our contracts and adjusting to the pricing changes in the marketplace in the short-term future with some foundation of pursuing continued market share gains and will adapt to a different mix of those initiatives when the market tells us it's time to do that.

Thanks, John. Moving on to the next question related to net revenue margin. You indicated in March and April that transportation net revenue margins have been flat year-over-year. Do you think we passed through the trough for net revenue margin?

Last fall, when we talked about our long-term growth targets and managing our business we said that we manage the company and those long-term guidance goals were based upon margin stabilization. We understand that because of our business model and because of the industry that margins are going to fluctuate. We expect them to fluctuate just based on supply and demand and how things work in the marketplace, but our long-term business planning and those long-range goals that we set out do assume margin stabilization, so we have had margin stabilization in our largest service for the months of March and so far the April, that feels positive. Have we passed the trough? I think, there's too much uncertainty and too much volatility in the market today to state definitively that we passed the trough for that things couldn't go one way or the other for the remainder of the year. It's is possible I think that margins could go up or down based on what we see in the market and how we are managing our business today, so we pride ourselves on how we adapt to the changes and being prepared for either scenario and hopefully we will continue to see some sustained margin stabilization for the remainder of the year, but we are not predicting that. We are managing our business based on the certainty of that happening.

Thanks. John. The next question relates to spot market versus contract business. What was your mix of contractual versus spot business in the quarter? How did this compare with the year ago?

It's a common question and tried to set the stage for that in the prepared comments around the truckload services that without a standard definition and an enterprise framework for applying that, it's not that we know those percentages and are being cute by not wanting to share them, because we simply don't have a standard definition of that, but when you slice and dice that database of our activity for the quarter, what we do know as we have shared many times over the past couple of years is that a higher and higher percentage, much more than half was tending towards awarded freight and more committed freight, particularly with larger customers who do the bids and look for those longer-term commitments. When the market starts to move like it has, a lot less freight will move under those awards and there will be less freight that is rebid, so it will naturally sort of shift to a little bit greater mix of spot market or transactional freight just based upon the pricing in the supply and demand dynamics in the marketplace. Where it goes from here, we will see. I think, a lot of the business changes that we made around integrated services and automated processes, it is our goal to keep that contracted or committed freight percentage fairly high, because we like the long-term growth and the stability of the relationships that come with it, but we also hope that there are opportunities in the future with hopefully more supply coming into the marketplace that greater growth on the demand side that we could pursue a greater spot market opportunities as well.

Thanks, John. The next question goes back to Chad related to earnings. Given the rapid rise in spot rates and increased volatility are you more or less confident in your net revenue and earnings per share guidance for the next couple of years?

Thanks. As you know, we haven't given short-term specific guidance. We have set our long-term EPS growth rate at 7%, 12%. We agree that the market is extremely volatile. As we have mentioned earlier, we also believe it's still very difficult to predict. That said, volatile markets are better than prolonged weak freight environments like we have been experienced for the last multiple quarters. Based on what we saw in March and so far in April, we believe the market is better for us to achieve greater earnings growth than it has been in quite some time. However, that market could change at any time.

Okay. Thanks, Chad. The next question back to John here and it relates to less-than-truckload. Could you provide more detail of the decline in LTL volume? What caused the decline and is it expected to rebound in the second quarter?

I commented earlier that similar to the truckload, there were volume declines in January and February that, we believe, correlated with some of the severe whether days and disrupted some of the networks, the fact that our volumes didn't recover to the same degree in the LTL area is probably a combination of less success on our part in terms of selling and that baseline of market share gains. It is a very competitive market. There is always a constant churn of some other customer activity, particularly the more transactional stuff, so a combination of less success on our part and some weather-driven volatility of gaining market share. It is absolutely our goal to grow volume and to gain share in future periods. Again, it's a competitive market and who knows what the future will bring us, but that it is our hope to continue to grow the volumes in that area.

Thanks, John. The next question is again for John, and on the topic of intermodal. Intermodal growth expectations are still pretty strong and we have seen some announcement of container adds by larger intermodal company, so I am wondering if there has been a change in your strategy, any plans to become more asset-intensive to better compete in this business, especially as it looks like demand and pricing power is improving as the truck market tightened and not having your own assets was a hindrance this past quarter.

We have said and I would repeat again that intermodal is a very important part of our service offerings and we are committed to doing whatever it takes in order to make sure that we are relevant to our customers and a part of that marketplace going forward. As many of you probably know, in the past we have had greater asset ownership in that intermodal area phased out of it and now we have some containers and are constantly exploring what are the right types of investments to increase that capital commitment that the density of our network to better serve the customers. It's a complex circle of talking with customers, talking with our rail partners and looking at the opportunities in the marketplace to figure out when and how to do that most appropriately, but we are definitely open-minded to it and looking at how to successfully grow our intermodal business in the future.

Okay. Thanks, John. The next question, again, to you and related to the Europe, and [question] here. Are you eyeing growth in Europe?

We talked in our Investor Day and I have mentioned it, I think, since then several times that Europe is one of our key growth initiatives from two points. One is, our European surface transportation that one of our executive leaders (Inaudible) for the last couple of years has really been driving an expansion of our European surface transportation truckload and less-than-truckload with some office openings and driving some sales investments around expanding that network, so Europe is a strategic commitments for us and we are investing in having higher growth expectations for the future on the European continent. The other part of our European business is, our global forwarding business, where we are underrepresented relative to our presence in Asia and North America, but are also looking at investing in additional human capital and locations in the future to try to strengthen that part of the network. When you put together the regional shared services will support the global forwarding and surface transportation opportunities as well as some additional management services and outsourcing-type things that we can build off of that. Europe is an important strategic commitment for us that we are investing disproportionately into the last couple of years.

Thanks, John. Just the basis of time here, this will be our last question and the question is for Chad. It's related to share count. Could you provide the end of the quarter basic share count? Just trying to get the starting point for 2Q.

Sure. The ending basic share count was approximately 148.1 million shares. The ending diluted count was approximately 148.6 million shares.

Okay. Thanks, Chad. Unfortunately, we are out of time. We got too many questions, but certainly not all. We apologize that we could not get all the questions today. Thank you for participating in our first quarter 2014 conference call. The call will be available for replay in the Investor Relations section of our website at www.chrobinson.com. It will be available by dialing 800-406-7325, and entering the passcode 4676571 pound. The replay will be available at approximately 7 O'clock Eastern Time. That's evening, actually sooner. If you have any additional questions, please feel free to call me or email me. My direct line is 952-683-5007. Thank you and have a great day.