Good morning, ladies and gentlemen, and welcome to the C.H. Robinson Fourth Quarter 2021 Conference Call. At this time all participants are in a listen-only mode. Following the company's prepared remarks, we will open the line for a live question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, February 2, 2022. I would now like to turn the conference over to Chuck Ives, Director of Investor Relations.

Thank you, Donna, and good morning everyone. On the call with me today is Bob Biesterfeld, our President and Chief Executive Officer; Arun Rajan, our Chief Product Officer; and Mike Zechmeister, our Chief Financial Officer. Bob and Mike will provide a summary of our 2021 fourth quarter results and outlook for 2022, and Arun will outline the innovation and development occurring across our platform, and then we will open the call up for live questions. Our earnings presentation slides are supplemental to our earnings release and can be found in the Investors section of our website at investor.chrobinson.com. Our prepared comments are not intended to follow the slides. If we do refer to specific information on the slides, we will let you know which slide we're referencing. I'd also like to remind you that our remarks today may contain forward-looking statements. Slide 2 in today's presentation list factors that could cause our actual results to differ from management's expectations. And with that, I'll turn the call over to Bob.

Thank you, Chuck, and good morning everyone and thank you for joining us today. Within our industry, 2021 will be remembered as a year with some of the greatest disruption and tightest capacity ever seen. For me, it will be remembered as a year in which the global supply chain is at the forefront of conversations and where our organization effectively helped our customers and carriers navigate the unprecedented level of supply chain disruption, allowing us to provide the superior level of service that global customers have come to expect from C.H. Robinson. The strength and the resilience of our model was evident in the fourth quarter and the full year as we generated record annual financial results in 2021. The positive momentum of our business remains strong as demand for our global suite of services and for our digital freight platform continues to grow. Now let me turn to a high-level overview of the results. In our NAST truckload business, we saw a strong demand for our services with a 6% year-over-year volume growth in the fourth quarter. Our adjusted gross profit, or AGP, per load continued to improve in both truckload and LTL as we repriced more of our contractual portfolio and focused on profitable market share. This repricing enabled us to reduce the amount of truckloads with negative margins in Q4 to their lowest level since Q2 of 2020. Yet that level does remain above our historical averages and we remain focused on reducing them further. For the quarter, NAST truckload grew AGP by $57 million or 22% year-over-year. This was driven by a 6% increase in volume and a 15% increase in AGP per load. This was the third consecutive quarter that we delivered year-over-year growth in both NAST truckload volume and NAST truckload AGP, demonstrating…

Thanks Bob. And good morning, everyone. It's nice to have the opportunity to address all of you today. I was really excited to join Robinson five months ago as I believe in the mission and see a clear opportunity to help digital transformation at scale within an industry-leading company. My professional background is almost exclusively been in leading product, data and engineering teams in digitally native companies such as Travelocity and Zappos. I have also spent time in product and engineering roles at companies and industries that were going through a transformation, such as Whole Foods more recently and Sabre earlier in my career. This is in addition to serving the CTO and COO role at Zappos and my 10 years across the Amazon Enterprise. I understand the importance of amazing customer experience and service and putting the customer at the center of everything we do, something that is core to Robinson. Here, the role of product is to relentlessly trust customer needs and carrier needs and to go deep with data and research to inform technology investments in service of our customers and our carriers. Robinson exists at the center of a broad two-sided marketplace in which we need to provide value to both carriers and customers. Both sides of the marketplace are demanding more real-time transparency, information and innovation. In response, we will be more intentionally connecting our business, data science, digital marketing and technology teams to bring meaningful products, features and insights to both sides of the marketplace and to our employees. We will also be taking a lean approach to delivering products and digital features, testing our hypothesis and iterating our way to deliver the outcomes we seek. As one example of this, we will soon launch enhancements to our Navisphere Carrier product that are focused…

Thanks, Arun, and good morning, everyone. As Bob mentioned, Q4 was another solid quarter of year-over-year growth and record annual financial results as we continue to execute on our tech plus strategy. Our total company revenue increased 43% over Q4 last year. And our adjusted gross profit or AGP was up 34%, reaching another record high at $856 million. AGP increased across each of our segments on a year-over-year basis and compared to the pre-pandemic quarter of Q4 2019. Note that Q4 of 2021 had one less business day than Q4 of 2020 and 2019. On a per day basis, Q4 total company AGP improved by 3% sequentially, 36% year-over-year and 50% over the pre-pandemic quarter of Q4 2019. The AGP increases year-over-year were driven by both higher volumes and higher AGP per shipment in ocean, truckload and air as we pursued profitable market share gains. On a monthly basis compared to 2020, our total company AGP per business day was up 44% in October, up 32% in November and up 31% in December. For the sixth consecutive quarter, prices and costs rose across our North American truckload business. And for the fifth consecutive quarter, they reached all-time highs. In October and November, cost per mile and price per mile were relatively flat sequentially before rising in December due to increases in load-to-truck ratios and average route guide depth. Our NAST team navigated through this environment in Q4 by growing spot truckload volume approximately 12% year-over-year, which marked the sixth quarter in a row of double-digit spot market volume growth. We also grew our Q4 contractual truckload volume by approximately 2% year-over-year despite the rising cost environment. We continue to manage our load acceptance rates to optimize contractual volume returns. As we do each quarter, we also repriced a portion…

Thank you, Mike. So while global commerce continues to face supply chain disruption, at C.H. Robinson, our integrated non-asset based business model has demonstrated resilience, growth and profitability through the cycle. We will continue to benefit from our investments while delivering on opportunities to integrate our services to help our customers solve their complex supply chain issues. And our Robinson team, their responsiveness and their ability to provide true value, continues to be a key differentiator in our ability to win in the market. I’m energized by the positive momentum that we’re carrying into 2022. Our company is differentiated by our ability to deliver diversified growth across our intentional combination of modes, services and geographies. As I said before, customers are looking for solutions that span the globe and across all modes. And ocean freight solution alone doesn’t solve the problems that our customers are facing nor is a stand-alone truckload or LTL solution. And one relevant data point that illustrates this is that over half of our 2021 total revenues and approximately half of our 2021 transportation adjusted gross profits came from customers where we provide both surface transportation and global forwarding services. And these top customers keep coming back to us as evidenced by a 99.6% retention rate in our top 500 customers. We are uniquely positioned to orchestrate an end-to-end supply chain success for these customers and help them not only navigate these markets but to succeed in these markets. We’re continuing to invest in smart customer and carrier focused products. And we’re excited about the talent that we’ve added to the team and the runway that we have to launch several new products that we believe will benefit both our customers and carriers as we continue to build out the most connected supply chain platform. So that concludes our prepared comments this morning. And with that, I’ll turn it back to Donna for the live Q&A portion of the call.

Thank you. Ladies and gentlemen, the floor is now open for questions. [Operator Instructions] Our first question today is coming from Todd Fowler of KeyBanc Capital Markets. Please go ahead.

Great. Thanks and good morning. So I appreciate the comments on thinking about the difference between looking at adjusted gross profit as a percent and then looking at it on a dollar basis. But Bob, can you share with us any thoughts on how you’re expecting adjusted gross profit margins to trend as we move into 2022, given kind of the spread that we’re seeing with buy rates and sell rates and then also your expectations for contract renewals as we move into this year? Thanks.

Yes. Thanks, Todd, and good morning. Our overall adjusted gross profit dollars, either if you look at a per load or per mile, are now kind of above our trailing 10-year and five-year averages. If you peel that back, though, our contractual portfolio is still underperforming our expectations, weighed down by the continued increases in cost of purchase transportation over the course of the past several quarters. And while we’ve continuously been repricing week-over-week, month-over-month, quarter-over-quarter, with the rapid ramp-up in costs over the course of the past few quarters, we simply just haven’t been able to catch up to that in the contractual portfolio. So as we entered the year this year, the markets remained tight in North American Surface Transportation. In January, the first couple of weeks were a lot of things out of alignment, all-time high load-to-truck ratios in the first couple of weeks, moderating a bit in the past two weeks but still at high levels. Our anticipation is that this market, if it doesn’t cool, it should at least level off. As we think about pricing in the contract market in 2022, we think it’s kind of a low single-digit inflationary environment but still remaining tight. So we see that as a positive for us. We will be aggressively repricing through the cycle here in the first quarter and beyond. And once we start to get some moderation and the increases of cost of purchased transportation that should really help the profitability of our overall contract portfolio while also continuing to allow us to participate and win in the spot market and a continued tightening environment. So we see very favorable conditions moving forward.

Great. Thanks for the color.

Thank you. Our next question is coming from Chris Wetherbee of Citi. Please go ahead.

Hey, great. Thanks, good morning. Wanted to touch on operating costs, probably in both segments, NAST and Global Forwarding. But maybe zeroing in on NAST here. Just wanted to get a sense of maybe how we see this trending out? I know there’s a goal to grow volume more than heads. It looks like at least on the NAST side that maybe that wasn’t accomplished in the fourth quarter. Can you talk a little bit about kind of what happened from a cost perspective in the quarter and then maybe how we see that progressing? I know you’ve given full year guidance, but maybe if you can kind of think about the first half that would be helpful.

Yes, let me take that. So obviously, operating expense personnel is the primary driver. When you look at NAST, as 2021 unfolded, we saw opportunity for growth probably starting in Q2 that was greater than our expectations going into the year and began to staff up to help support that growth, primarily operations-related roles. And that was really to aid the business, and you should expect to see us continue to do that. Where we see opportunities for growth, we’ll commit resources and headcount to deliver on that growth. And conversely, if the growth opportunities don’t pan out, we’ll adjust accordingly. When you look at NAST personnel expense in Q4, we grew about 300 basis points more than the enterprise grew in NAST. And the drivers are really three. So incentive costs were high for 2021. In NAST, equity, for example, was about 3 times the expense in 2021 for the year than it was in 2020. That represents about 10% to 15% of the total comp. But it’s averaged quite a bit lower, and that was really driven by enterprise results, which were driven by GF. So as you can imagine, when the enterprise is performing on an EPS growth basis, the costs that come in equity are also allocated back to our NAST business. Bonus expenses in NAST were up about 75% to 80%. And those are driven by the performance in pretax operating income on the business for the year and also for the enterprise to some extent. And then commissions were up about 20% or a little more than 20%. And that goes along with the AGP growth that you saw on the business. The second primary driver is headcount. I talked about that a little bit. For Q4 at NAST, the average headcount was up about 7.5% to a little over 7,000 employees. And for the year – or let’s say, for the quarter, I’ll remind you that we did have one less operating day. So, volume growth in truckload for NAST in the quarter was higher than our average headcount growth in the quarter slightly. The third area was the fact that if you remember back to a year ago, we had done some short-term cost savings initiatives related to the pandemic. The primary impact on Q4 last year was the suspension of the match to our retirement savings plans in the United States and Canada. And so this year, with those restored, we had a year-over-year increase in expense for NAST as well. Those are the primary drivers on NAST.

Mike, I want to just pile on a little bit if I can, too. And the year-over-year increase in personnel expense in NAST too, I think that we realized as we were going through the pandemic and the onset of pandemic in 2020, we cut pretty deep in terms of headcount in NAST in third quarter through furloughs and things of that nature. And in retrospect, we likely cycled some growth through those actions that we took to reduce headcount to the levels that we did. So some of this is adding back, getting back to those levels and a little bit ahead in order to ensure that we’ve got the appropriate number of capacity reps and operations reps to deliver the service our customers expect and to ensure that we’re not cycling growth artificially by – really artificially constraining headcount against the opportunity.

Okay. That’s super helpful. And just in terms of how quickly maybe some of that unwinds, particularly some of the incentive comp stuff in 2022.

Yes. From an incentive comp standpoint, we expect to go right back to a target level, and that will adjust as the year unfolds based on results. And we would expect our – the ability to adjust headcount would be aligned with the way incentive performance will go as well.

And Chris, I’ll just add one more – I’ll add more point, Chris. While we don’t, as you all know, provide guidance around revenue or EPS, based on what Mike just shared around kind of the go forward on personnel, specific to NAST, we do expect to see operating margins improve next year in a meaningful way off of from where they finished in 2021 even with that incremental potential expense.

Great. Thank you very much. Appreciated.

Thank you. Our next question is coming from Ken Hoexter of Bank of America. Please go ahead.

Great. Yes, I appreciate that digging into the cost there. I think that’s really key. But maybe just flipping over to the top line. Your, I guess, net margins, your pricing gap shrunk to about 50 basis points to 18.5 versus your 18 costs versus 100 basis points last quarter when the market kind of stayed strong. Can you maybe talk about what you saw accelerating? Or did your ability to price relative to those costs decelerate? Just want to understand kind of the market outlook there.

Yes. I mean, without going too deep week by week through the quarter, Ken, we definitely did see markets tighten on the back half of December around the holidays. It felt like a lot of drivers – this is anecdotal, but it feels like a lot of drivers took the last couple of weeks off, if you will. And so there are some really tight market conditions around the holiday. They really influenced the upward swing in cost of purchase transportation there. But yes, to your point, the spread did moderate a bit from Q3 to Q4, but still favorable in terms of positive spread for us. Our net revenue per mile and looking at that continued to improve throughout the quarter every quarter in 2021. And it’s a metric that we’ll continue to look at. And through getting back a little bit more healthy in that contractual portfolio, we see the opportunity to continue to drive expansion there.

So is that something you see accelerate? I just want to understand, I mean, because given this market, it seemed to stay strong. I get that it tightened at the end, but wouldn’t your pricing have adjusted for that, given the strength of the market on the pricing side?

I’m looking at a chart here of the last six quarters and year-over-year cost change of 16.5, 32.5, 33.5, 47.5, 26 and 18, it's pretty tough to say ahead of those things when they’re moving that quickly when you’ve got over half of your portfolio tied into contractual longer-term commitments. And so if you think about our spot market business, we certainly stayed ahead of those, and we were agile, moved with the moving market. But when you’re kind of selling long and buying short, if you will, in the contractual business, it’s hard to catch up there. And so given the fact that we think pricing will moderate on a year-over-year basis in 2022, we would expect to be able to get ahead of that and stay ahead of that.

All right. Thanks a lot.

Thank you. Our next question is coming from Scott Group of Wolfe Research. Please go ahead.

Hey thanks. Good morning. So you guys gave us some pretty specific cost guidance. There must be some underlying net revenue assumption within that. So maybe directionally, can you talk about what that is? If net – if costs are up 7% or so based on the guidance, is net revenue up more or less than that? And then, Bob, just big picture, when I look at NAST net operating margins, when you guys first started reporting them, they were at 45%. They're now at 33%. I think they've only gone up once in the last six years. How should we think about these net operating margins going forward?

Yes. Appreciate the question. I'll start with the net operating margins. And you're right. I mean, if you look at the past seven years, the average is still 40.1%, but they have declined from the first year we reported to you today. Yeah, 2019 was the last year that we achieved in excess of 40% in our net operating margin. I think 40.2% was the year-end in 2019. Mike talked about some of the specific drags in the short term. But we still have a very firm belief that we can deliver 40% net operating margins in that NAST business. Mike stayed very focused on the cost side of it; I can build a bit more on that or add some more color. But the drag on our contractual portfolio of our customers on the truckload side has been equal to or greater for us. If we get – "get that contractual portfolio right," it does more than offset the majority of the cost increases that Mike referenced there. So as we think about next year and how do we get at or closer to that 40% operating margin, it's about getting the health and the profitability back in the contractual marketplace, the contractual book of business. Mike talked about the increase in equity expense. If I compare 2019 to 2021, just using kind of that as a baseline, the last time we were at 40%, net-net, 80% of the increased personnel expense amassed over that two-year period is really tied to that performance, the increase in performance-based equity. And we see that coming back in next year to an extent. If you go back into SG&A, one of the areas that will stay with us is incremental investments that we've made into warehousing. It's not material per se. But…

So just to follow-up, so if it was 33% last year, I mean directionally, does it get better? Does it get worse? Any target? And then the first part of my question was just about you must have some net revenue assumption based on your cost guidance. So if you have some directional thoughts there.

We expect that – Scott, we expect that operating margins in the NAST business are going to improve next year. Whether we get back to the 40% next year is TBD, but we're certainly pushing hard in that direction. We're not going to give a full guidance on revenues. But just know that we expect operating margins to improve. We've given you some forecast on costs. You can draw your own conclusions on our assumptions on revenues there.

Okay. Thank, you guys.

Yes. Thanks Scott.

Thank you. Our next question is coming from Jordan Alliger of Goldman Sachs. Please go ahead.

I was wondering if you could give a little more color or detail around where you are on your tech spending/rollout. And specifically, I know in the near-term, there's been a lot of hiring needs. But specifically, I know in the medium to long term, there is sort of all the talk about leveraging the technology, need less headcount that need less people going forward to – that was sort of the positive of doing more of the digital strategy. So maybe give some high-level thoughts on the tech side and when you think that you could really start to see the leverage from that relative to how you could drive EBIT in North America Surface Transport. Thanks.

Yes. I'll try to answer at a high level, and then I'll ask Arun to chip in a little bit here. In Slide 12 of our deck, I think we outlined some key things that we drove in terms of change of behavior, capabilities and different ways of working this year, inclusive of driving $875 million in truckload revenue through our algorithmic digital pricing engine, right? That's a big transformation for us in terms of our ability to connect to customers electronically give them real-time pricing. It allows us to generate tens of thousands of quotes so that we can increase our win rates, drive profitability that the utilization and integration through TMS and ERP was up over 200% last year, close to 200% last year. The automated bookings, obviously, a big conversation about the ability to automatically for carriers to engage with us, book freight on our platform. Over 1 million, 1.2 million automated bookings last year, up 65% year-over-year. And then to your question too, Jordan, on kind of the shipments per person per day or the decoupling of headcount from volume growth, even though that shipment per person per day metric that we include on Slide 8 of our deck has come down in the past couple of quarters, we're still ahead of where we were in the 2018-2019 period of time. Still demonstrated a positive 620 basis point spread there this year for NAST. And as we move towards more of a product-led organization, we do expect to deliver faster in a more lean manner and eventually take costs out of that process. I don't know, Arun, if you would add?

Yes. I would just say that we're – the level of rigor we're applying in terms of the data and research we're using to inform our investments as it relates to any of the above that Bob talked about, as an example, automated bookings to drive up productivity of our employees. The idea is like we have a toolkit for our employees. They have their current ways of booking loads, but we also want to create a much more robust self-serve capability for our carriers. So if you can drive more automation through that channel, which we will as we sort of take a more rigorous approach, anchoring on sort of science, engineering and digital marketing all coming together to drive that, we should see some improvements.

And Jordan, obviously, not lost on us that as we've been making these investments for the past couple of years that ultimately, we expect to have positive impacts to operating margins. And we haven't realized those in the past couple of years. But we do anticipate that we're on the right path and that ultimately, this is going to drive greater efficiency, greater productivity, greater market share growth and ultimately greater returns than NAST, which leads to greater shareholder value.

Thank you.

Thank you. Our next question is coming from Jack Atkins of Stephens. Please go ahead.

Great. Good morning. Thanks for taking my question. So Bob, I guess going back to the productivity comments earlier on Slide 8. I guess when you think about that chart and how it's trended, a lot of moving pieces there. But do you feel like what we're seeing today is more representative of sort of the – more of a steady-state run rate of the improvements that you've been making from a productivity perspective? Or really, is it more like what we're seeing in the first half of 2021? And I guess as sort of a tag on to that, you talked about the rollout of these enhancements to your carrier booking platform. I know there was some news in the press yesterday about that getting delayed a bit. Do you think that can provide a step-function change to overall system productivity, would be curious to sort of learn more about that? Thank you.

Yes. So we – the chart on Slide 8 is, obviously, a backwards-looking chart. Our goal with that is, obviously, to make that continue to go up into the right and to continue to drive that spread between NAST productivity between headcount and volume growth. But we can't have that be the only metric, right? Ultimately, we've got to drive top line volume growth, top line AGP growth and bottom line returns for our shareholders. The piece that came out yesterday, unfortunately, that piece lacked completeness of information and context, but we feel really good about the product that we'll bring to market this week, the personalization that will come and allow our carriers to interact with us even more effectively. Arun, I don't know if you'd add color?

Yes. I think it's back to our – the one thing I would say is that it's not meant to be a big bang step function type of approach, right? I mean, we're wiring together our science and engineering in a more meaningful way to drive personalization and recommendations for our carriers, and we will see improvement. We'll have to study the data and use that to iterate, and Bob talked about a lean approach that we'll be taking. So we'll see improvements, but it's a – but it will be – it's not a step-function improvement. You shouldn't expect that. And so I think it was mischaracterized in some of the press.

And I would add too to that, Jack that what was maybe characterized in that piece around us one, to eliminate the other using tech to eliminate people. I think Arun said earlier, our goal is to provide the most comprehensive suite of truckload matching solutions, whether it be via our people, via technology, integrating with our customers, integrating with our carriers and just create greater liquidity in the marketplace. So everybody wins. And that's really the goal. But it's going to be through and with our people for sure.

Thank you. Our next question is coming from Tom Wadewitz of UBS. Please go ahead.

Yes, good morning. Bob, I wanted to get a bit more of your sense of how you expect C.H. to perform in the market. I think – and how that ties to your headcount additions. I think it seems pretty fair to say 2021 was a pretty strong market for brokerage. And I think on your volume growth in truckload, you probably underperformed the market. It sounds like when you're adding headcount, you're probably looking at maybe outperforming the brokerage market in 2022. Is that the right way to view it? And just how do we tie that, I guess, the headcount additions in NAST to how optimistic we should be on volume?

Yes. So if we think back to the first quarter of 2021, we had a belief in how the year was going to shape out. And I certainly don't say that we called the dramatic increase in pricing, but we certainly thought that the market was going to continue to tighten, and that pricing was going to increase throughout the course of the year. And that position at the time in first quarter of last year was a little bit different than how many shippers were thinking about it, how many of our competitors were thinking about it. So we started out kind of digging out of a pretty big hole in the first quarter, where our volumes are down mid- to high single digits. And since then, we've recovered and kind of be on that in that mid-single digits volume growth range through the balance of the year. Looking forward, we feel like we've got some wind in our sales right now with three consecutive quarters of both AGP improvement in our truckload business, volume improvement in our truckload business, and doing that in a market where I'll use the DAT load-to-truck ratio is just kind of a market indicator. Growing volume and AGP improvement in an environment of a tight truck market like we've seen, honestly, you kind of have to go back in time a little bit within our model to see that happen on a consistent basis. Typically, over the course of the past five years or so, Robinson has grown their volume at the highest levels in times where markets were loose, not necessarily where they were tight. So one of the things that I've talked about in the past few years is getting us to a point where we can grow volume through cycles, right? Grow volume not only in the loose markets, but also in the tight markets by having that balanced focus on both our contractual portfolio and our transactional portfolio. So three quarters doesn't necessarily make a trend. Obviously, we've got some easier comparisons last year into this. But looking into 2022, we expect to continue to build on the momentum that we have in growing volume on a year-over-year basis. We believe that the health of the contractual portfolio will continue to get better as we reprice in a more moderate inflationary price environment. And we think the market will be tight and still allow us to benefit in the spot market. So we see a pretty favorable construct for 2022 for our NAST truckload business.

Okay. But just to make sure I understand, you think it's actually a better environment for you to grow volume when the market stabilizes a bit. So you might have better volume growth or better opportunity for volume growth in 2022 than in 2021?

I believe that given the balance of our portfolio between both spot and contract, kind of the 55/45 that we've leveled out at, periods of extended tightness in the market we do very well at in terms of volume growth and revenue growth.

Okay. Thank you.

Thank you. Our next question is coming from Jeff Kauffman of Vertical Research. Please go ahead.

Thank you very much. I just want to go back to the cash flow and return on capital deployment question. Clearly, you're levered to a level that you're comfortable with. Given your view of improvement in the market and returns, what are your thoughts on capital priorities? I know you've raised CapEx a little bit; you're going to be spending a little bit more on tech. But – and you mentioned the 20 million share reauthorization. But in terms of the free cash deployment, how are you thinking about that split?

Yes. Thanks, Jeff. So on free cash flow, clearly when we're operating in an environment where we have rising costs and, therefore, rising prices in our business model where we get paid slower than we pay, we're absorbing working capital and that's impacting free cash flow. As I pointed out, we've seen record highs here now for five straight quarters. So that's a lot of absorption of working capital. As the market pricing stabilizes or comes down, that is going to be an inflection point for our free cash flow. And we'll start to see that working capital come back to us proportionate to how the market changes. So that's a little bit about free cash flow as it relates to working capital. Now capital priorities; we do have a strong balance sheet. We have maintained leverage down. We're about 1.4 times on a net debt-to-EBITDA ratio here this past quarter. We've got a little bit of room for additional leverage. [Indiscernible] And that took our leverage down a little bit lower than we normally would have operated. But our goal is to maintain investment-grade credit rating and in doing so, we do have a little bit of room on leverage to take that up. As far as priorities, the top priority for us is investment in projects on our business with great returns on a risk-adjusted basis. We've got a lot of good ideas that we can execute on, those close-in opportunities that you're hearing about on tech in other areas of the business in NAST and Global Forwarding, we'll continue to operate on. The M&A market is also – quite a bit of activity there. While borrowing costs are going up, they're still low relative to historic averages. Where we see an opportunity there, we'd certainly participate. We've talked about that. And we're committed to our dividend. We're committed to growing our dividend with long-term EBITDA. And of course, we return share – value to shareholders through our opportunistic share repurchase program as well. So hopefully, that gets to all the elements of your question.

Yes. Just to follow-up, to your point, about an $860 million use of cash this year for working capital. I mean, that's extraordinary. So normally, when a business grows, you're a net user of working capital. You would say that it is not impossible that as you manage this and customers pay and this balance comes back down, working capital could actually be a source of cash in 2022? Or is that more of a wait and see?

Yes. I mean, it's certainly a possibility. And when you break out the growth of the business – excuse me, of course, the growth related to volume will be an absorbing part of working capital. But the thing that has been most dramatic on our business over the past year is the impact of the pricing increases on accounts receivable driven by the growth in the Global Forwarding business. And so when or if that pricing stabilizes or declines, it will absolutely create a source of cash for us for working capital.

Thank you very much.

Thank you. We're showing time for one last question today. Our final question will be coming from Bascome Majors of Susquehanna. Please go ahead.

Yes, thanks for taking my questions. Sequentially, NAST profits were flattish quarter-over-quarter despite net revenue being up, and forwarding was down quarter-on-quarter on flat net revenue. I know you don't guide it internally, but I'm curious if these were below or in line with your internal expectations?

Yes, we – you're right, Bascome. We don't guide, but your assessment on the business is fairly accurate. I mean, the Forwarding business, if I think about their overall adjusted gross profits, they grew from Q1 to Q2 and Q2 to Q3. And like I said, relatively stable three to four and – or I'm sorry, Forwarding was relatively stable really through the back half of the year. We feel like we're in a solid place right now in both of those divisions in terms of where the revenue stands. We take the first – at least the first half of this year in Forwarding, the market conditions look pretty similar. And beyond that, it's a little bit probably too early to call. And we think the market is set up really favorably in 2022 for our NAST business.

Yes. And Bob, if I could just squeeze one final one in. From the Board perspective, you recently announced a bit of a refresh with two members stepping down, and a bylaw's changed to move any contested election to a plurality vote from a majority vote. Can you give us some perspective on that and perhaps a little bit of the short list on the skills or experience you're looking for in the new Board members? Thank you.

Yes. The announcement in the 8-K earlier last week was really all about continuing – continued focus on good corporate governance. The bylaw change was something that we have been considering for quite some time. It's a bit more of a shareholder-friendly bylaw. So we did want to announce that change with the departure of both Wayne and Brian, who have been long-standing members of our Board. Both Wayne and Brian have been with us for about 19, 20 years on the Board. They've been great directors; have helped guide this company through a lot of change. But through best practices and corporate governance and with our own kind of Board refresh standards, it was time to make those announcements and open it up for a couple of new directors to join Robinson. And so without going deep into our skills matrix and kind of how we think about that from a Board governance standpoint, we have been actively engaged with the firm. We've got a really nice list of candidates on the slate right now that we're talking to actively that we think could be great additions as directors that are going to be closely aligned with shareholder value creation and bring skills to the Board that can help us to be even more successful in the future.

Thank you.

Thank you. Appreciated Bascome.

Thank you. At this time, I'd like to turn it back over to you, gentlemen, for any closing comments.

That concludes today's earnings call. Thank you everyone for joining us today, and we look forward to talking to you again. Have a good day.

Ladies and gentlemen, thank you for your participation and interest in C.H. Robinson. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.