C.H. Robinson Worldwide, Inc. M&A announcement

Hello, and thank you for joining today's conference following our announced agreement to acquire RXO. Before we begin, please note that certain information presented on this call contain forward-looking statements, including statements regarding the timing, consummation, and anticipated benefits of the proposed transaction. These statements are subject to future risks and uncertainties, such as those factors described in the slide presentation available on our website, as well as those described in C. H. Robinson's and RXO's filings with the SEC, including each company's most recently filed annual report on Form 10-K. Please note that the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. With me on today's call are Dave Bozeman, our President and Chief Executive Officer, and Damon Lee, our Chief Financial Officer.

Presentation materials, along with our recent press release, can be found in the investor section of our website. Our discussion today will be strictly limited to the transaction that we announced this morning. Any comments related to our quarterly financial results will occur as part of our Q3 earnings conference call later this month. With that, I'll turn the call over to Dave.

Thanks, Chuck, and good morning, everyone. We're excited to be here to discuss this significant milestone for C. H. Robinson. As described in our press release, we have entered into a definitive agreement to acquire RXO in a stock and cash transaction. This transaction will bring together two complementary businesses to define the future of third-party logistics while driving significant value for shareholders. This is a natural step in the transformation we began just over three years ago. Together, we expect to create a more resilient business, and we expect to apply our proven Lean AI operating model to unlock significant synergies and improve financial performance of the combined company through freight market cycles. Additionally, this acquisition is expected to expand our capabilities to better support customers as they navigate a dynamic supply chain environment, increase penetration across verticals, and win new business.

We are confident that this will allow us to enter a new chapter of profitable growth that will translate to significant value creation for C. H. Robinson and RXO shareholders. This morning, I will walk through the transaction and provide some context about why this is such a compelling opportunity for both businesses. Then I will pass the call to Damon to discuss some of the financial benefits. Before we begin, I want to thank the C. H. Robinson employees for their hard work and dedication to our transformation that made this transaction possible. I also want to welcome RXO employees to C. H. Robinson. Our people are our greatest asset, and they have been key to the success of our company and our customers. I am confident this transaction will create new and exciting opportunities for our team as we bring C. H. Robinson and RXO together and unlock incredible potential of our combined platform.

With that, let's get going. I will start with a summary of the transaction terms. We are acquiring RXO for $17.25 in cash and 0.0856 C. H. Robinson shares per RXO share, implying a value of approximately $30.25 per share. The transaction represents a premium of 27% to RXO's 90-day volume-weighted average price and 29% to RXO's closing price on Friday, October 2nd, 2026. This also translates to a $5.8 billion enterprise value for RXO. This transaction is an opportunity to take a massive step forward in accelerating our growth and strengthening our financial foundation and earnings profile. We are creating a combined business with pro forma revenue of $25 billion for 2026 and significant opportunities to expand operating margins and accelerate profitability through improved offerings and operating efficiencies.

This transaction is expected to be accretive to adjusted EPS within nine months of close, which we expect to occur in the first half of 2027. By the end of fiscal 2028, we expect the transaction to be mid-teens accretive to adjusted EPS. This accretion is driven by the significant synergies we expect to unlock. By applying our proven Lean AI operating model to RXO's business, we expect to realize $300 million in net annual run rate cost synergies within two years post-close. These synergies and cash generation are expected to provide us with a clear path to rapidly de-lever to our target leverage range of 1.75-2.25 by the end of 2028. We have a proven track record of driving productivity and cost savings and expect to realize these synergies by using the same playbook.

This transaction will allow us to advance our strategy and drive significant profitability and support meaningful long-term shareholder value creation. Turning to slide 4 and an overview of the value drivers of the transaction. At its root, this transaction is an opportunity to accelerate our proven strategy with a combined platform to enhance our resilience and better compete. Our transformation has centered on the implementation of our Lean operating model and Lean AI capabilities that have allowed us to move faster, operate more efficiently, and deliver industry-leading service to our customers and carriers. This transaction will enable us to implement our unique Lean AI operating model across our combined business to accelerate the productivity improvements we've realized in recent years, driving the $300 million in net annual cost synergies I just mentioned. Achieving these synergies will enhance our operating leverage, expand our combined margin, and drive considerable cash flow generation.

This is also an opportunity to accelerate our growth strategy with expanded capabilities and improved network density. RXO's complementary capabilities will further diversify our business, expand our reach, and strengthen the value proposition of our platform. It also broadens our solution set across multimodal truck brokerage, managed transportation, last mile, and Expedite services, creating a broader and more comprehensive offering to deepen customer relationships and cross-sell our solutions to meet our customers' end-to-end needs. With expanded capabilities, increased network density, and a broader customer base, we will have an enhanced ability to drive growth through market cycles. This will allow us to build on our strong financial foundation. Given our expected productivity improvements, cash flow generation, and anticipated rapid de-levering, we expect to maintain our solid investment-grade ratings. On slide 5, you can see the scale and diversity of offerings that we will provide together.

This combination materially increases our network density, bringing together approximately 93,000 shippers and 600,000 carriers. We will also have an expanded business mix with the combined company offering more solutions across the supply chain. This network density and diversity will allow us to enhance freight matching, improve service levels, and better compete across transportation markets. Our wider network of partners and expanded capabilities will allow us to support customers with more precision and speed than ever before. Offering a stronger, more diversified service product will help us further penetrate across modes and segments, win new business, and deepen relationships with customers. Taking a step back, slide 6 provides a snapshot of RXO's business. The RXO team has built a fantastic business with a technology-enabled platform, a talented team with deep industry expertise, strong customer relationships, a high-quality carrier network, and a proven track record of growth.

Like Robinson, their success has been driven by customer-obsessed culture and a commitment to empowering their team to compete and win in the market. RXO's core business is truck brokerage, but where they truly excel is their differentiated and complementary last mile and transportation solutions. Their business is well-diversified across end markets, and there is limited customer overlap between our businesses. Adding RXO's capabilities and complementary customer base to Robinson will diversify our revenue mix, enhancing our resilience, and better positioning us to drive more consistent growth across market cycles. On slide 7, you can see the expansive suite of capabilities we're creating through this transaction. Together, we'll be able to offer a comprehensive set of solutions across multimodal brokerage, managed transportation, Expedite, last mile, and drop trailer services, creating a more comprehensive offering to meet their evolving needs.

We expect that our broader set of offerings will make us a partner of choice for customers who are increasingly looking for a comprehensive provider that can support them across the increasingly complex supply chain environment. Our Lean AI capabilities will be the thread that ties all of these offerings together. We expect our AI to supercharge our capabilities, allowing us to offer more tailored solutions to help our customers become more agile and efficient. Slide 8 provides a snapshot of how these capabilities come together to create a more seamless experience for customers and carriers. C. H. Robinson is the industry pacesetter for cutting-edge innovation and differentiated solutions. With that leadership comes a responsibility to continue delivering differentiated solutions that create better outcomes for our customers and carriers. With the addition of RXO, that's exactly what we'll continue to do.

For customers, the combination will provide broader solutions, greater capacity and choice, smarter execution, and access to a larger, denser network spanning truckload, expedite, last mile, and global forwarding services. For carriers, it will create more freight opportunities, better lane matching, enhanced network visibility, and a simpler day-to-day experience through our technology and Lean AI-enabled operating model. With our complementary networks, technology capabilities, and operating expertise, we believe we can further strengthen our value proposition and increase volumes. This will allow us to accelerate compelling growth opportunities faster than we could on our own. While this transaction is expected to open up new growth opportunities, the value proposition of this combination is the productivity we can unlock with RXO. We have a clear and achievable path to realize the $300 million of expected net run rate cost synergies.

This plan is rooted in the same principles and playbook that has allowed us to drive productivity across our organization in recent years. As we discussed, applying our Lean operating model to RXO will be a primary driver of our expected productivity improvements. Our leading AI capabilities will add fuel to these improvements. Leveraging AI has become part of our DNA at Robinson, and we see significant opportunities to improve RXO's operations by implementing our AI agents across a wide variety of workflows. The cost to serve efficiencies from implementing our operating model and shared services savings from centralizing processes and functions will make up the bulk of our expected cost synergies. We expect to unlock additional synergies from the elimination of duplicative third-party services and other integration benefits such as insurance procurement efficiencies.