Good morning, ladies and gentlemen, and welcome to the C.H. Robinson First Quarter 2016 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 27, 2016. I would now like to turn the conference over to Tim Gagnon, the Director of Investor Relations.

Thank you, Rachelle, and good morning, everybody. On our call this morning will be John Wiehoff, the Chief Executive Officer; and Andy Clarke, our Chief Financial Officer. John and Andy will provide some prepared comments on the highlights of our first quarter and we'll follow that with a response to the pre-submitted questions we received after our earnings release yesterday. Please note that there are presentation slides that accompany our call to facilitate the discussions. The slides can be accessed in the Investor Relations section of our website, which is located at chrobinson.com. John and Andy will be referring to these slides in their prepared comments. I'd like to remind you that comments made by John, Andy 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 managements' expectations. With that, I'll turn it over to John to begin his prepared comments on slide three with a review of our first quarter results.

Okay. Thank you, Tim. Good morning, everybody, and thanks for taking the time to listen to our Q1 call. I want to start my prepared comments by talking a little bit about Freightquote. As you may recall, that acquisition was completed on January 1 of 2015, so last year during our quarterly earnings calls we were continuously highlighting the impact of Freightquote and making certain that the impact of that material acquisition was understood. As of January 1 of 2016, we've lapped a full year comparison of Freightquote so the results and the schedules that we'll be walking through today represent purely organic growth and comparisons year-over-year that include Freightquote. Again, as you may recall, our plan is that we're managing Freightquote as a separate brand within the C.H. Robinson LTL business so that we will continue to reference Freightquote and Freightquote results, but they are included in our overall LTL performance. When Andy gets to that, you'll also see that our overall LTL performance has been good and that one of the things that we do pride ourselves in and try to stay focused on is when we complete acquisitions like that that both our legacy business as well as the new business improves and continues to grow at an acceptable rate. So we continue to feel very positive about the Freightquote acquisition. It'll get a little less visibility just because the lapping of the year, but we feel very positive about that investment and now incorporating it into our LTL business. So with that, back to slide three and looking at our overall results for Q1 of 2016, our total revenues declined to 6.9% to just a little over $3 billion. The headlines and the total revenues are the decline in fuel prices as well as the decline…

Thank you, John, and thank you all for listening in. Before I get into the detailed results, I would like to follow-up on John's comments and commend the Robinson team. Our network continues to perform at a high level serving both customers and suppliers. The great results are what happens when talented people work together. In 2016, we've had many customer awards recognizing our performance as a top logistics provider to prominent companies like Wal-Mart, Coke, Dollar General, Ocean Spray, Home Shopping Network and Brose North America. These awards are a great example of how our team is adding value with the customers. The macro environment remains sluggish. Despite that, we were able to grow our volumes in nearly all services in the first quarter. We will maintain our focus on profitably taking market share in this softer environment. The market conditions in the second quarter remained pretty consistent with what we saw in the first quarter. And now on to slide four and our transportation results. Transportation net revenue increased 7.9% to $534 million in the quarter. The drivers for this increase were truckload, less-than-truckload, global forwarding and managed services. First quarter transportation net revenue margin increased 290 basis points to 19.7%. The breakout of the various factors for this change in margin were fuel, which represented an approximate 90 basis point impact; lower purchased transportation cost in truckload represented approximately 130 basis points; and the impact of higher-margin businesses in global forwarding and managed services represented the remaining increase. The first quarter is continued evidence of the cyclicality of our industry. The market has had some swings in purchased transportation costs and customer pricing over the past couple of years and, while it is always difficult to predict what lies ahead, we know that the comparisons from last…

Okay. With regards to wrap-up comments on slide 14, you can see our bullet points there and kind of sticking to form on past calls, what we want to do is just really share what we're seeing currently in the marketplace as well as where we're investing and what's on our minds with regards to our company and how we're approaching the marketplace. The first bullet point, our April-to-date total company net revenue growth rate per day is approximately 6% when compared to April last year. Andy commented that the end of March or in April we continued to see some softening in demand in the marketplace, and you see that in our overall net revenue growth in April that the demand in the marketplace remains fairly soft. The North American truckload volume growth thus far in April is around 2% compared to the 4% in the first quarter of 2016. With regards to the second bullet point, again, I've already mentioned the contractual bid activity. It's normal activity for us that in the fourth quarter and first quarter of any typical year that we would see some elevated level of activity. As Andy mentioned, that activity was more robust than normal. It would be very expected in a softening market the price declines that we referenced that you would see increased bid activity by shippers. That's normal behavior in a softening market. We do believe the lion's share of that has passed and that bid activity is at more normal seasonal levels when we come into the second quarter of 2016. Kind of tying into that bullet point three, the North American truck market continues to have a high level of available capacity. We have – currently continue to see a soft market with a lot of available truckload…

Thanks, John. And before we get started, I'd just like to thank the many analysts and investors for taking the time to submit great questions. We'll do our best to get to as many of the topics as we can. I'll frame up the questions as they were submitted and turn it over to John and Andy for their response. With that, I'll get right into it here.

And the first question is for Andy. Could you explain the comment in your presentation, contractual bid activity has normalized in the early part of the second quarter?

Yeah, certainly in the fourth quarter of 2015 as well as the first quarter of this year, we experienced an increase in the number of bids in which we participated. In Q1, for example, that bid rate was nearly double what we had seen in the previous year's first quarter. In the second quarter, it's returned to normalcy. So we're obviously participating in more bids on a year-over-year basis as our people out or selling and taking market share. So it's not that the bids – we're continuing to grow the amount, it's just the rate in which they had increased in the – versus the fourth quarter of last year and the first quarter of this year is more normalized to a normal rate of increase.

Thank you, Andy. Next question for John. Given your visibility across both domestic and international freight brokerage markets, would you describe one channel's bid activity to be more aggressive or intense than the other?

As we commented earlier with declining prices, it's a normal response that shippers would be a little more aggressive in their bid activity, and so we do see elevated levels from our standpoint across virtually all of our services. I would say that the elevated activity in the North America truckload space is slightly more significant or intense than what we see in some of the other services, with LTL and global forwarding being, again, elevated because of price declines and market opportunities that it would make sense for shippers to elevate those activities. But North American truckload, given our market position and significance, is where we saw the biggest increase.

Thank you, John. Next question for Andy. What is your expected tax rate for the full year?

We expect our tax rate to be between 37.5% and 38% for the year. In the past, that rate has fluctuated for various reasons and to a certain degree that will continue, although it will be at a lower level going forward than in the past. During the first quarter of this year, the company made an APB 23 assertion and, as a result, any earnings outside the U.S. incur local country taxes, but unless and until the earnings are repatriated to the U.S., we won't pay the U.S. tax rate on that. The good news is our operations outside the United States have and continue to perform well, and we want to thank our more than 2,800 international employees for their hard work and efforts.

Thanks, Andy. Next question for John. Your business seems to be more contractual than it was five or 10 years ago, back when you had more transactional business. It seems you could do well in all types of market cycles. Can you talk about how the North America business reacts to different types of markets now that you have a much higher share of contract business?

I think this is a really important question in terms of understanding how our business has evolved over time and how it may likely perform in future marketplaces or cycles. As most of you who are familiar with us know, that if you go back a decade or more into the past that we were very focused on transactional brokerage services and approaching the market with very fluid activity around changing prices and changing volume activity in the marketplace. Over the last decade-plus, it's been longer than that, but for sure in the last decade, one of the longer-term trends in our business is a much greater concentration of committed or contractual freight commitments with our customers. We've talked in the past about each customer's contracting process and the definition of committed freight, contracted freight, awarded freight, a lot of the terminology that you would use to display the success of results in those bids. The challenge in it is that there's variances and nuances to all of them. I think it is useful to aggregate the concept and talk about our universe of contracted freight, and it clearly has increased over the last decade, where going from being a small percentage of our business more than a decade ago to today, the best that we can quantify it is somewhere north of 50%, probably closer to 60% or 65% of our activity that we're moving in Q1 of 2016 was under some sort of a contracted price arrangement or bid result that we've worked with our large shippers. It is true that in the past, along the lines of the question, that we worried a little bit less about what was happening in the freight cycles and the expansion and contraction of the pricing because in a more transactional…

Thank you, John. Next question for Andy. Head count was plus 5.5% year-over-year in the first quarter, how are you expecting this metric to trend as you move throughout 2016? Do you continue to expect net revenue growth to outpace operating expense growth in 2016?

Yeah, as John mentioned in his remarks, we have and will continue to invest in talent at Robinson. It's core to who we are and what we do. I would expect the head count rate of growth to somewhat moderate as we go through the remainder of the year. But we talk a lot about people, process, technology, and I'll cite a very specific example of why we've invested – have and continue to invest in talented people. So we mentioned Microsoft and our ability to manage their global supply chain. So it requires a state-of-the-art global technology platform, which we've made a lot of great investments in, and we continue to hire IT people to not only program that but enhance that. And then you take and marry that up with really talented logistics professionals, not just based here in North America but based throughout the world that are managing one of the largest technology's global supply chain. And so like maybe also to answer another question around the urbanization, all the technology that goes into that, you have a technology company that is very clearly saying that we value your technology, but we also value the talent and the people that you have in the processes that you run to help us manage our global supply chain across all modes, across all regions. As to – as I mentioned earlier, for seven quarters in a row we've been able to grow net revenue in excess of our operating expenses. And clearly a portion of that is driven by the fact that our compensation, personnel expenses, there's a good portion of that that's variable. So we're rewarded on a variable basis for the performance of the business. So I would excite it doesn't always work out that way, but all of us are focused, every person in this company is focused on growing net revenues in excess of operating expenses.

Thank you, Andy. Next question for John. We appreciate the commentary around April net revenue growth year-over-year on a daily basis. Can you remind us what your monthly net revenue growth per day was organically in 2015?

So as you look back at last year's information, remember that Freightquote activity was included in that. So I believe we talked about total company net revenue growth of 7% and then followed on with kind of mid-double digits, more 15% growth for May and June as the quarter wore on. Taking out the estimated impacts of Freightquote, it was something more like flattish in the early part of April and then kind of the 7% to 8% range for the rest of the quarter. So you can look at that two ways, I guess, in terms of last April on an organic basis being an easier comparison or you can look at it as last year, April started out weak and May and June improved quite a bit as well, too. It gets challenging. We think – we want to share what we know and we want to share what's in our mind, but in a mid-month like this when you have Easter variables and a lot of normalization and a lot of different market things in there, it's tough to read too much into that, but for now at least we do know that the market is soft and April started off slow.

Thank you, John. Next question for Andy. The ocean forwarding business seemed to have a strong quarter, especially given the difficult year-over-year comparisons from the West Coast port congestion and the challenging global ocean freight market dynamics. Can you talk about what you're seeing in the market from a rate and volume standpoint? And have you experienced any customer pushback on rates, given the depressed underlying market rate?

Yeah, absolutely. The Global Forwarding team is doing a great job. We talk a lot about the success of the Phoenix acquisition and how deliberate and thoughtful we've been over the last three years on working on the integration. We're on one platform, one system. We're able to give the customers that visibility throughout the entire supply chain. So we're really happy, and we think the results support what we've been doing. We continue to aggressively grow volume and margin, particularly with new customer wins, and that's flat-out taking market share because our business with our existing customers is flat. Some of that new customer wins are the result of cross-selling. We talk a lot about that, talk a lot about the success of global forwarding to surface transportation and service transportation to global forwarding. So we're really pleased with the work that we're doing there, but part of it is also just the Global Forwarding team going out and sourcing new business across the globe. So yeah, it has been a very challenging pricing environment in the ocean side, quite frankly as well as the air. But the team is highly motivated, highly energized and being very successful in going out there and growing the business. And to the question around: are we needing to – yeah, the fact of the matter is rates are down so – and they're volatile. So we're quoting rates to remain competitive in that marketplace.

Thanks, Andy. Next question for John. The other logistics segment continues to expand. Do you see shippers' desire for help in managing more complex supply chains sustainable? How does this revenue stream help your other areas of the business?

As Andy commented earlier, we definitely see a sustainable opportunity to continue to grow those services and expand our presence with them in the marketplace. It's one of the areas of the business that we're very excited about. The pipeline looks very good and we think we have a lot of upside there. The customer contracts and relationships are also longer term than in the freight business, so that gives us kind of greater assurance, too, that it's sustainable from that standpoint. It's a good add-on to ask how this revenue stream helps the other areas of the business because to some degree a lot of those services are premised around independence, that we are creating firewalls and separating information and providing a lot of those other logistic services with complete independence from any provider, including the Robinson freight networks. However, when you think about Robinson expanding its relationships and services around more complex supply chain perspectives, it's important from a number of reasons. One, our technology solution really encompasses the capabilities to do a lot of things. So it just, it really helps broaden our minds and our cultural – our capabilities around execution. Beyond that, there's a very important cultural thing, too, that when you strengthen your relationships and your trust level with customers and you understand their supply chain challenges and are able to look at their business more holistically, it absolutely helps you be a more intelligent provider and helps you to bid more intelligently on independent opportunities. An example being if a customer has significant inventory management initiatives and we're working with them from a supply chain standpoint to really better understand their movements and their inventory levels, we also know that on the freight side there probably are opportunities around consolidation and deconsolidation that while separately priced and executed are an important part of achieving some of those strategies. So it's part of a cultural thing of expanding our mindset, expanding our account manager's capabilities, expanding our technology platform and from a go-to market standpoint, very often the services are very independent in terms of how they're priced and achieved.

Thanks, John. Next question for Andy. The LTL segment continues to do well. What is behind the strength? Is it sustainable? Does this play into areas of consolidation/deconsolidation that would benefit from e-commerce?

Yeah, here's another part of our business that continues to just do a wonderful job. We're the number one LTL 3PL and have been so for quite some time. So the short answer is yeah. It has been and will continue to be – we believe it's sustainable. We've talked often that our non-asset-based strategy benefits both the carriers and the customers and, much like my previous comments on global forwarding, we believe that our results validate our strategy. John had talked about the addition of the freight quote team of – it's been great. They have tremendous talent down there and while their primary focus is a small and micro shipper, that team has the ability to scale and serve any customer of any size. So we think being the number one 3PL, being on asset base validates the strategy because it benefits both carriers and it benefits the shippers. We – that e-commerce phase is growing obviously at a very rapid pace and we're participating in it and we're helping our customers consolidate their freight. We're helping them move it in and out of LTL networks, so we think that we can help them and we're going to benefit from it.

Thank you, Andy. Next question for John. From 2002 through last year, your transportation net margin has shrunk on average 127 basis points from Q1 to Q2, although it rose in Q2 2014 and 2015. Would you expect the transport gross margin to contract 90 to 125 basis points or some range of contraction?

It's very useful to look at the historic margins and trends and try to learn from them. It gets more and more dangerous to try to describe what's normal or typical or expect to happen. From a long-term perspective, a typical pattern in our transportation business was that years would begin in January and February with a lot less demand and greater margins in the marketplace and then as the spring season would come, particularly with our concentration in produce and a lot of activity ramping up, that we often talked in the past about how it would be normal that margins would compress a little bit moving into the spring and comparing to kind of softer January/February seasons. Over the past several years, there's been a lot of change in the marketplace that we've talked about. A lot of change in the mix of our business around the length of haul, changes in fuel prices, some of the things that Andy highlighted that can have a pretty important impact on those margins. And then add to that some of the weather impacts that we've seen over the last couple of years where there's been a pretty material movement on the market. So it's all that that kind of makes us nervous to kind of forecast or guide to where we think margins are going to go. But there is an element of the freight that does have some kind of normal downward pressure on it from Q1 to Q2 just around seasonality.

Thank you, John. Next question for Andy about M&A. How would you characterize the M&A environment recently? Has the valuation volatility among public companies slowed the market down at all? Can you share with us which geographic or modal market is providing the most attractive opportunities currently?

Yeah, let me start off by just reiterating what we've stated and, quite frankly, what we've executed on in the past which is we look to deploy capital in ways that create long-term and sustainable shareholder value. The filters we use to evaluate deals are pretty rigorous and, as a result, we end up passing on a pretty high percentage of them. The areas that we look to continue to invest in are ones where we think combining companies and cultures makes sense: global forwarding, Europe, managed services, all present interesting opportunities. But let's not forget about the opportunities that are available in North American service transportation. So yeah, we're looking at all those areas. We have a particular focus. But really, our filters that we deploy are pretty rigorous. And I guess I would follow-up and use John's words to describe the M&A environment, which is it's selective. And we think that it actually mirrors kind of our philosophy that there are still good buyers, there are still quality buyers and sellers out there, but both are being more selective. And maybe that's a result of recent market discipline among companies that have been making acquisitions and making sure. I think the market is saying let's make sure you have the right strategy and are able to effectively integrate those deals. And clearly, if you look at what we've done since 2012 with both Phoenix, with Freightquote and the like, we've had a pretty successful track record of doing that.

Thank you, Andy. The next question for John on the intermodal business. What are your growth expectations relative to the market overall on the intermodal side? Is there anything company-specific that you are doing to help drive growth and/or net margin in that segment after a few challenging quarters?

To understand our growth expectations and our view on our intermodal business, it's important to go back to what Andy talked about that we have historically and still today in intermodal are largely a transactional provider, much like we were a while back on the truckload side of it. Our focus, as we've often talked about, is with the multi-modal shipper where freight moves between truck and rail opportunities. And our primary go-to-market strategy has been to make sure that those customers that want to and are able to take advantage of intermodal savings and service offerings that we're exposing that to them and making sure that our customers are getting the benefit of a multi-modal approach. We feel like we're very good at that and we've executed on it well over the years and have become a very significant transactional intermodal provider in the network. We work with our rail partners to adjust to the market conditions and help them go after market share when they want to do that. And we sacrifice market share when pricing and market conditions dictate that it should go back the other way. So we feel good about kind of that core offering that we've been doing for several decades. The limitation with that obviously is that a high percentage of the intermodal freight that moves on the rails is more committed or more contractual freight, and we've acknowledged in the past that we are sub-scale on some of that and without our own dedicated asset commitments and contractual pricing for some of the line haul services, there are situations where we're not competitive on some of the more committed or contractual activities. We have been for several years and we will continue going forward to try to strengthen our presence in committed or contracted relationships by investing in limited amounts of assets where that's appropriate, by partnering with our rails to make sure that they understand and want the types of opportunities that we're bringing to them, and by continuing to enhance our Navisphere system to make sure that it provides value to shippers and that we can continue very high service levels regardless of what type of intermodal freight we're working on. So we do have plans to continue to diversify our presence in intermodal. We are open to investments or acquisitions, as we've said many times in the past. But it sort of comes down from the standpoint of if we're going to experience these ups and downs in our growth rate as long as we're primarily a transactional provider, and we do need to continue to focus on a broader presence with more committed relationships. We had a little bit of success with that the last few years. You don't see it over the last couple of quarters because of the significant changes in the transactional marketplace, but we do have some optimism about what we think we can achieve in the future there.

Thank you, John. Next question for Andy. In order to drive the long-term growth profile of the company, it seems other service offerings would have to grow faster at a sustainable rate. What is the opportunity to sustain some of the recent wins in international freight forwarding or expand the service to Europe? Are there other service areas that might be underappreciated today, regarding their potential growth profile over the next five years?

Yeah, first let me just say that we're really pleased with the long-term growth profile of all of our businesses. We think we're playing in the right spaces to take advantage of trade, both global and local and outsourcing. But second, let me say that the leadership teams that we have in each of these areas are exceptional. They and their people do a great job of serving existing customers and winning new business. Yeah, I mean, the short answer is we can sustain this. I mean, the Global Forwarding team has continued to show growth. We're pleased with the work that – and I'll get into it a little bit, the managed services, so these wins, we believe, are sustainable. As far as areas that are underappreciated, I would have to say one, our growing international presence. I mentioned that over 2,800 people that we have based outside of the United States, with particular note towards the teams in Europe, Asia, Mexico are just doing a great job. And finally, as I alluded to with the Microsoft example, our managed services business. TMC has been growing at double digits for some time and their new customer wins and committed pipeline is actually quite impressive. You talk about the world’s largest – one of the world's largest technology companies selects your people, your process, your technology to manage the global supply chain. I think it's a statement of the power of that business. And we think you look out over the next five years, we're pleased with all of the businesses. We're pleased with our North American service Trans. We think obviously it's a big and expanding market. The work that we're doing in Europe is going to show a lot more. Asia, Mexico, Central America, South America as well as our managed services business are all going to be a little more highlighted as well as global forwarding.

Thank you, Andy. Next question for John on ELDs. You mentioned on the last call that shippers realize that regulations such as ELDs that'll drive up the transportation costs later in the year. Do you still think that's the case, or has the loose capacity, tepid demand environment pushed the expected rate increases into 2017, at least as it relates to ELDs?

So what we've talked about in the past is the fact that over the last six or seven years there's been a variety of regulatory changes around safety requirements, hours of service and ELDs sort of being the latest regulation coming through that either limits the productivity or the available capacity or in this case, particularly, drives some cost increase in terms of the cost to serve or cost to execution on the supply side. It has been our view and remains our view that over time all those costs pass through and will normalize and that it's not something that we necessarily fear or think is going to create any sort of permanent material shifts in the landscape of who's competitive or what happens. It does, however, add some pressure around how and when those costs get added, who adds them when, and exactly how and when they get put into the rates. So when you combine the sort of normal capitalistic churn of supply and demand and the fact that carriers are always kind of coming and going in a very fragmented marketplace, yeah, probably the soft market probably adds some pressure to how and when people recover the incremental costs that ELDs will drive over time. And the fact that some carriers have had them for a while and others need to add them, it certainly can – there's some dynamic there that's probably real. But from our standpoint, with each of these cost drivers and regulatory type changes, they're sort of hard to understand and try to quantify the impact when they come, but they all seem to work their way into the marketplace without any major reorganization of what's happening.

Thank you, John. Next question for Andy. CHRW's leverage ratio remains at lower end of its one to one-and-a-half times debt-to-EBITDA target. How is management thinking about the company's current leverage ratio in light of an uncertain demand outlook and the potential uses of debt capital buybacks and M&A?

Yeah, we're comfortable with our current debt ratio and are comfortable just given the uncertain demand environment of being at the low end of that. We're also comfortable with our stated strategy of returning 90% of our net income in the form of buybacks and dividends. And in fact, the first quarter, between buybacks, dividends and the shares withheld that was 99%, almost 100% of our net income was distributed to our shareholders in the first quarter.

Thanks, Andy. Next question for John. Outside of the anticipated convergence of costs to your customer and costs paid to carriers, what do you see as the biggest challenge to achieving 5% to 10% growth in your truckload and LTL segments?

When we think about the market cycles and the margin contraction and expansion, obviously it's a pretty important topic on these calls because it can add some headwind or tailwind to our earnings growth based upon where we're at in the cycle. I think we've shared in the past that when we analyze that over time, we actually feel very comfortable with our committed relationships on both the shipper side and the carrier side that those increases have been very similar over a longer period of time. They just move at differing rates, which can have an impact. So if you strip that out and just say: hey, what's the longer-term secular challenges around growing market share and expanding the 3PL presence in both truckload and LTL? That comes back to some of our core value-added things that I talked about in my prepared comments. We think when we have better people and better account managers that bring insight into those relationships, when we have a better business process for consolidating and deconsolidating, when we have better analytics, when we have better information and a better system that helps customers manage their freight better and understand their costs and go to market more effectively, those are all things that drive the long-term value. So staying competitive and evolving our competitive advantages in all of those kind of core competency areas are what gives us the confidence and gives us the focus of how we'll continue to take share across both the TL and LTL segment. And at the same time we – like I've mentioned many times on this call, we've got to work through those contraction and expansion cycles on pricing and margins to make sure that we're adapting to market conditions and helping our partners do the same.

Thank you, John. The next question for Andy. Is the $2.6 million expense rate to the restricted equity delivery expected to recur during the balance of 2016?

No. As I mentioned in my prepared remarks, that was a one-time event in the first quarter for 2016. So it won't continue to occur. And just as a refresher, these are from equity awards that were granted years ago that were vesting seven years ago, that were vesting and finally coming due.

Thank you, Andy. Next question for John. Are you concerned that the truckload pricing currently available to smaller carriers will accelerate the shakeout of the industry even before they have to install ELDs?

I think I pretty much addressed this one in one of the previous questions that certainly the timing of these cost increases could impact any carrier's decision around whether they want to stay in the business or exit. I wouldn't say concern is the right level. It's certainly a metric that we monitor and it's relevant to what's happening in the marketplace, but we would kind of throw it into the bucket of normal ebb and flow activity around the economics of adding capacity and how things churn in the marketplace.

Thanks, John. Next question for Andy on interest expense. The interest expense of $8.8 million was higher than the $6.5 million we were modeling. Were there other issues like in Q4 2015 when you had an indemnification issue? In Q2 2015 you suggested about $7 million a quarter. Please provide updated thoughts.

Yeah, we expect our quarterly interest expense to be between $6.5 million and $7 million. In the first quarter of this year, what we had was a currency revaluation expense of approximately $1.5 million. And as currencies change, so will this number, although we think it'll be a lot less on a go-forward basis.

Thank you, Andy. Next question for John. Can you discuss competitive trends? Also, have you seen any impact from new app-based brokerage services?

We've commented often about the fact that there are literally thousands of competitors and it remains a very competitive market and the tools and approaches are changing. I don't think there's anything that we're aware of that has meaningfully changed or moved in the last quarter or two, specifically with regards to new competitors that are touting app-based brokerage services. We can't identify anything specific that's going on with that. We do have our own carrier mobile app that we're coming out this year with an enhanced release of, and we think that particularly on status events and updates and maybe more and more on freight offerings, that there are some tools there that will stick in the marketplace and be useful. Obviously, you need to have freight relationships and meaningful customers in order to really utilize those tools and take it to the market, and we think that can be part of our technology evolution that will help us keep our market-leading position. But to-date, we haven't seen any specific competitive impacts that we would credit to that.

Thanks, John. And our last question will be for Andy. How sustainable is the benefit from lower bad debt expense? It seems from the slides that that was a big driver of lower total costs during the quarter.

Yeah, well, we think it is sustainable. We've got a really good credit and collections processes in place and, obviously, having high-quality customers, global customers that have a high credit quality has helped us really manage our allowance for doubtful accounts and, quite frankly, our bad debt expense. We think this is a key competitive advantage for us. So it is sustainable.

Thanks, Andy. And unfortunately, we're out of time. Thank you to everyone for participating in our first quarter of 2016 call. The call will be available for replay in the Investor Relations section of the C.H. Robinson website at www.chrobinson.com. It will be available by dialing 888-203-1112 and entering the passcode 4928630 pound. And that replay will be available at approximately noon Eastern Time today. If you have any additional questions, please feel free to call me, Tim Gagnon, at 952-683-5007 or contact me via e-mail as well. Thank you again, everybody. Have a great day.

And that will conclude today's call. We thank you for your participation