Washington, D.C. 20549
C.H. ROBINSON WORLDWIDE, INC.
C.H. ROBINSON WORLDWIDE, INC.
ITEM 1. FINANCIAL STATEMENTS
C.H. ROBINSON WORLDWIDE, INC.
See accompanying notes to the condensed consolidated financial statements.
C.H. ROBINSON WORLDWIDE, INC.
See accompanying notes to the condensed consolidated financial statements.
C.H. ROBINSON WORLDWIDE, INC.
See accompanying notes to the condensed consolidated financial statements.
C.H. ROBINSON WORLDWIDE, INC.
NOTE 1. GENERALBASIS OF PRESENTATION
The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.
NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS
NOTE 3. FAIR VALUE MEASUREMENT
Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.
NOTE 4. FINANCING ARRANGEMENTS
The Credit Agreement also contains customary events of default. If
On August 23, 2013, we entered into a Note Purchase Agreement with certain institutional investors (the “Purchasers”) named therein (the “Note Purchase Agreement”). Pursuant to the Note Purchase Agreement,On August 27, 2013, the Purchasers purchased on August 27, 2013, (i) $175,000,000an aggregate principal amount of the company’s 3.97 percent$500 million of our Senior Notes Series A, due August 27, 2023 (the “Series A Notes”), (ii) $150,000,000 aggregate principal amount of the company’s 4.26 percent Senior Notes Series B, due August 27, 2028 (the “Series B Notes”), and (iii) $175,000,000 aggregate principal amount of the company’s 4.60 percent Senior Notes Series C due August 27, 2033 (the “Series C Notes” and, together with the Series A Notes and the Series B Notes,(collectively, the “Notes”). Interest on the Notes is payable semi-annually in arrears. We applied the proceeds of the saleThe fair value of the Notes approximated $472.4 million on June 30, 2023. We estimate the fair value of the Notes primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for share repurchases.similar terms and remaining maturities and considering our own risk. If the Notes were recorded at fair value, they would be classified as Level 2. Series A matures in August 2023 and is classified as current portion of debt in our Condensed Consolidated Balance Sheets as of June 30, 2023.
Under the terms of the Note Purchase Agreement, the Notes are redeemable, in whole or in part, at 100 percent of the principal amount being redeemed together with a “make-whole amount” (as defined in the Note Purchase Agreement), and accrued and unpaid interest with respect to each Note. The obligations of the company under the Note Purchase Agreement and the Notes
are guaranteed by C.H. Robinson Company, a Delaware corporation and a wholly-owned subsidiary of the company, and by C.H. Robinson Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company.
U.S. Trade Accounts Receivable SecuritizationTRADE ACCOUNTS RECEIVABLE SECURITIZATION
The Receivables Securitization Facility contains various customary affirmative and negative covenants, and it also contains customary default and termination provisions, which provide for acceleration of amounts owed under the Receivables Securitization Facility upon the occurrence of certain specified events including, but not limited to, the failure to pay yield, fees, and other amounts due, defaults on certain other indebtedness, failure to discharge certain judgments, insolvency events, change in control, and exceeding certain financial ratios designed to capture events negatively affecting the overall credit quality of the receivables.events.
NOTE 5. INCOME TAXES
NOTE 6. STOCK AWARD PLANS
NOTE 7. LITIGATION
We are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations, including 17certain contingent auto liability cases. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our condensed consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are often unable to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.
The Milgram goodwill is a resultOn September 30, 2016, we acquired all of the outstanding stock of APC Logistics ("APC"). Total purchase consideration was $229.4 million, which was paid in cash. We used advances under the Credit Agreement to fund part of the cash consideration. The following is a summary of the allocation of purchase price consideration to the estimated fair value of net assets for the acquisition of APC (in thousands):Contents
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| | | |
Cash | $ | 10,181 |
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Receivables | 37,190 |
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Inventory and other current assets | 2,609 |
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Property and equipment | 1,696 |
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Identifiable intangible assets | 78,842 |
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Goodwill | 132,797 |
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Other noncurrent assets | 70 |
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Long term deferred tax asset | 814 |
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Total assets | 264,199 |
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| |
Accounts payable | (22,147 | ) |
Accrued expenses | (12,700 | ) |
Estimated net assets acquired | $ | 229,352 |
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Identifiable intangible assets and estimated useful lives are as follows (dollars in thousands): |
| | | | | |
| Estimated Life (years) | | |
Customer relationships | 7 | | $ | 78,842 |
|
The APC goodwill is a result of acquiring and retaining the APC existing workforce and expected synergies from integrating their business into ours. The goodwill is not deductible for tax purposes. The results of operations of APC have been included in our consolidated financial statements since October 1, 2016. Pro forma financial information for prior periods is not presented because we believe the acquisition to be not material to our consolidated results. During the first quarter of 2017, we paid $1.8 million resulting from a working capital adjustment due to the sellers per the terms of the agreement.
NOTE 9.8. SEGMENT REPORTING
Our reportable segments are based on our method of internal reporting, which generally segregates the segments by service line and the primary services they provide to our customers. Beginning with the fourth quarter of 2016, based on certain internal reporting changes, we identified threeWe identify two reportable segments in addition to All Other and Corporate as follows:summarized below:
•North American Surface Transportation-NASTTransportation—NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST include truckload LTL, and intermodal.
less than truckload (“LTL”) transportation services.•Global Forwarding-GlobalForwarding—Global Forwarding provides global logistics services through an international network of offices in North America, Europe, Asia, Europe, Australia, New Zealand, andOceania, South America, and the Middle East and also contracts with independent agents worldwide. The primary services provided by Global Forwarding include ocean freight services, airfreightair freight services, and customs brokerage.
•All Other and Corporate—All Other and Corporate includes our Robinson Fresh-Robinson and Managed Services segments, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Robinson Fresh provides sourcing services under the trade name of Robinson Fresh. Our sourcing services primarily includeincluding the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Robinson Fresh sources products from around the worldManaged Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation segment. Europe Surface Transportation provides transportation and has a physical presence in North America, Europe, Asia,logistics services including truckload and South America. This segment often provides the logistics and transportation of the products they sell, in addition to temperature controlled transportationgroupage services for its customers.across Europe.
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• | All Other and Corporate-All Other and Corporate includes our Managed Services segment, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Managed Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by Europe Surface Transportation. Europe Surface Transportation provides services similar to NAST across Europe.
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The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker (“CODM”), our Chief Executive Officer. The accounting policies of our reportingreportable segments are the same as those described in the summary of significant accounting policies located in Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2016. Segment2022. We do not report our intersegment revenues by reportable segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments. Reportable segment information for prior years has been retroactively recast to align with current year presentation. Segment information as of, and for the three and nine months ended September 30, 2017 and 2016, is as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Three Months Ended June 30, 2023 | | | | | | | |
Total revenues | $ | 3,079,268 | | | $ | 779,867 | | | $ | 562,721 | | | $ | 4,421,856 | |
Income (loss) from operations | 117,859 | | | 29,647 | | | (14,883) | | | 132,623 | |
Depreciation and amortization | 5,856 | | | 5,484 | | | 14,635 | | | 25,975 | |
Total assets(1) | 3,106,092 | | | 1,149,091 | | | 1,150,078 | | | 5,405,261 | |
Average employee headcount | 6,497 | | | 5,225 | | | 4,363 | | | 16,085 | |
| | | | | | | |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Three Months Ended June 30, 2022 | | | | | | | |
Total revenues | $ | 4,147,046 | | | $ | 2,093,190 | | | $ | 558,239 | | | $ | 6,798,475 | |
Income from operations | 276,499 | | | 167,557 | | | 25,609 | | | 469,665 | |
Depreciation and amortization | 6,123 | | | 5,471 | | | 11,668 | | | 23,262 | |
Total assets(1) | 3,688,215 | | | 2,851,114 | | | 918,110 | | | 7,457,439 | |
Average employee headcount | 7,552 | | | 5,759 | | | 4,582 | | | 17,893 | |
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| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Three Months Ended September 30, 2017 | | | | | | | | | | | |
Revenues | $ | 2,469,420 |
| | $ | 552,134 |
| | $ | 613,646 |
| | $ | 149,251 |
| | $ | — |
| | $ | 3,784,451 |
|
Intersegment revenues(1) | 115,796 |
| | 7,873 |
| | 43,272 |
| | 3,228 |
| | (170,169 | ) | | — |
|
Total Revenues | $ | 2,585,216 |
| | $ | 560,007 |
| | $ | 656,918 |
| | $ | 152,479 |
| | $ | (170,169 | ) | | $ | 3,784,451 |
|
Net Revenues | $ | 377,403 |
| | $ | 129,842 |
| | $ | 54,253 |
| | $ | 32,348 |
| | $ | — |
| | $ | 593,846 |
|
Income from Operations | 151,392 |
| | 31,125 |
| | 11,586 |
| | 362 |
| | — |
| | 194,465 |
|
Depreciation and amortization | 5,808 |
| | 8,455 |
| | 1,190 |
| | 8,510 |
| | — |
| | 23,963 |
|
Total assets(2) | 2,297,980 |
| | 840,762 |
| | 413,520 |
| | 623,326 |
| | — |
| | 4,175,588 |
|
Average headcount | 6,998 |
| | 4,301 |
| | 970 |
| | 2,634 |
| | — |
| | 14,903 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Three Months Ended September 30, 2016 | | | | | | | | | | | |
Revenues | $ | 2,252,187 |
| | $ | 390,830 |
| | $ | 590,385 |
| | $ | 122,352 |
| | $ | — |
| | $ | 3,355,754 |
|
Intersegment revenues(1) | 79,728 |
| | 8,742 |
| | 32,255 |
| | 100 |
| | (120,825 | ) | | — |
|
Total Revenues | $ | 2,331,915 |
| | $ | 399,572 |
| | $ | 622,640 |
| | $ | 122,452 |
| | $ | (120,825 | ) | | $ | 3,355,754 |
|
Net Revenues | $ | 378,073 |
| | $ | 93,368 |
| | $ | 57,036 |
| | $ | 29,985 |
| | $ | — |
| | $ | 558,462 |
|
Income from Operations | 171,733 |
| | 17,047 |
| | 17,733 |
| | 4,754 |
| | — |
| | 211,267 |
|
Depreciation and amortization | 5,547 |
| | 5,073 |
| | 983 |
| | 6,054 |
| | — |
| | 17,657 |
|
Total assets(2) | 2,115,467 |
| | 625,267 |
| | 405,832 |
| | 517,496 |
| | — |
| | 3,664,062 |
|
Average headcount (3) | 6,869 |
| | 3,559 |
| | 956 |
| | 2,322 |
| | — |
| | 13,706 |
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| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Six Months Ended June 30, 2023 | | | | | | | |
Total revenues | $ | 6,383,455 | | | $ | 1,569,845 | | | $ | 1,080,226 | | | $ | 9,033,526 | |
Income (loss) from operations | 251,881 | | | 59,763 | | | (17,988) | | | 293,656 | |
Depreciation and amortization | 11,507 | | | 10,964 | | | 27,884 | | | 50,355 | |
Total assets(1) | 3,106,092 | | | 1,149,091 | | | 1,150,078 | | | 5,405,261 | |
Average employee headcount | 6,713 | | | 5,356 | | | 4,454 | | | 16,523 | |
| | | | | | | |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Six Months Ended June 30, 2022 | | | | | | | |
Total revenues | $ | 8,261,935 | | | $ | 4,287,587 | | | $ | 1,064,906 | | | $ | 13,614,428 | |
Income from operations | 458,853 | | | 335,195 | | | 21,091 | | | 815,139 | |
Depreciation and amortization | 12,362 | | | 11,026 | | | 22,360 | | | 45,748 | |
Total assets(1) | 3,688,215 | | | 2,851,114 | | | 918,110 | | | 7,457,439 | |
Average employee headcount | 7,442 | | | 5,690 | | | 4,422 | | | 17,554 | |
(1) Intersegment revenues represent the sales between our segments and are eliminated to reconcile to our consolidated results.
(2) All cash and cash equivalents are included in All Other and Corporate.
(3) Average headcount does not include employees from APC added on September 30, 2016.
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| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Nine Months Ended September 30, 2017 | | | | | | | | | | | |
Revenues | $ | 7,110,223 |
| | $ | 1,549,742 |
| | $ | 1,821,094 |
| | $ | 428,535 |
| | $ | — |
| | $ | 10,909,594 |
|
Intersegment revenues(1) | 329,193 |
| | 23,456 |
| | 116,281 |
| | 13,776 |
| | (482,706 | ) | | — |
|
Total Revenues | $ | 7,439,416 |
| | $ | 1,573,198 |
| | $ | 1,937,375 |
| | $ | 442,311 |
| | $ | (482,706 | ) | | $ | 10,909,594 |
|
Net Revenues | $ | 1,109,749 |
| | $ | 357,411 |
| | $ | 171,936 |
| | $ | 97,105 |
| | $ | — |
| | $ | 1,736,201 |
|
Income from Operations | 447,553 |
| | 75,006 |
| | 40,487 |
| | 1,197 |
| | — |
| | 564,243 |
|
Depreciation and amortization | 17,104 |
| | 24,574 |
| | 3,534 |
| | 24,128 |
| | — |
| | 69,340 |
|
Total assets(2) | 2,297,980 |
| | 840,762 |
| | 413,520 |
| | 623,326 |
| | — |
| | 4,175,588 |
|
Average headcount | 6,921 |
| | 4,113 |
| | 966 |
| | 2,590 |
| | — |
| | 14,590 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Nine Months Ended September 30, 2016 | | | | | | | | | | | |
Revenues | $ | 6,456,281 |
| | $ | 1,098,715 |
| | $ | 1,814,682 |
| | $ | 359,760 |
| | $ | — |
| | $ | 9,729,438 |
|
Intersegment revenues(1) | 211,540 |
| | 23,585 |
| | 83,200 |
| | 642 |
| | (318,967 | ) | | — |
|
Total Revenues | $ | 6,667,821 |
| | $ | 1,122,300 |
| | $ | 1,897,882 |
| | $ | 360,402 |
| | $ | (318,967 | ) | | $ | 9,729,438 |
|
Net Revenues | $ | 1,161,074 |
| | $ | 283,458 |
| | $ | 183,041 |
| | $ | 88,439 |
| | $ | — |
| | $ | 1,716,012 |
|
Income from Operations | 516,805 |
| | 56,300 |
| | 62,777 |
| | 8,084 |
| | — |
| | 643,966 |
|
Depreciation and amortization | 16,551 |
| | 15,231 |
| | 2,590 |
| | 18,344 |
| | — |
| | 52,716 |
|
Total assets(2) | 2,115,467 |
| | 625,267 |
| | 405,832 |
| | 517,496 |
| | — |
| | 3,664,062 |
|
Average headcount (3) | 6,767 |
| | 3,523 |
| | 939 |
| | 2,249 |
| | — |
| | 13,478 |
|
NOTE 9. REVENUE FROM CONTRACTS WITH CUSTOMERS
A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2023 |
| NAST | | Global Forwarding | | All Other and Corporate | | Total |
Major Service Lines | | | | | | | |
Transportation and logistics services(1) | $ | 3,079,268 | | | $ | 779,867 | | | $ | 225,692 | | | $ | 4,084,827 | |
Sourcing(2) | — | | | — | | | 337,029 | | | 337,029 | |
Total | $ | 3,079,268 | | | $ | 779,867 | | | $ | 562,721 | | | $ | 4,421,856 | |
| | | | | | | |
| Three Months Ended June 30, 2022 |
| NAST | | Global Forwarding | | All Other and Corporate | | Total |
Major Service Lines | | | | | | | |
Transportation and logistics services(1) | $ | 4,147,046 | | | $ | 2,093,190 | | | $ | 225,406 | | | $ | 6,465,642 | |
Sourcing(2) | — | | | — | | | 332,833 | | | 332,833 | |
Total | $ | 4,147,046 | | | $ | 2,093,190 | | | $ | 558,239 | | | $ | 6,798,475 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2023 |
| NAST | | Global Forwarding | | All Other and Corporate | | Total |
Major Service Lines | | | | | | | |
Transportation and logistics services(1) | $ | 6,383,455 | | | $ | 1,569,845 | | | $ | 459,492 | | | $ | 8,412,792 | |
Sourcing(2) | — | | | — | | | 620,734 | | | 620,734 | |
Total | $ | 6,383,455 | | | $ | 1,569,845 | | | $ | 1,080,226 | | | $ | 9,033,526 | |
| | | | | | | |
| Six Months Ended June 30, 2022 |
| NAST | | Global Forwarding | | All Other and Corporate | | Total |
Major Service Lines | | | | | | | |
Transportation and logistics services(1) | $ | 8,261,935 | | | $ | 4,287,587 | | | $ | 444,471 | | | $ | 12,993,993 | |
Sourcing(2) | — | | | — | | | 620,435 | | | 620,435 | |
Total | $ | 8,261,935 | | | $ | 4,287,587 | | | $ | 1,064,906 | | | $ | 13,614,428 | |
(1) Transportation and logistics services performance obligations are completed over time.
(2) Sourcing performance obligations are completed at a point in time.
We typically do not receive consideration and amounts are not due from our customers prior to the completion of our performance obligation and as such contract liabilities, as of June 30, 2023, and revenue recognized in the three and six months ended June 30, 2023 and 2022 resulting from contract liabilities, were not significant. Contract assets and accrued expenses-transportation expense fluctuate from period to period primarily based upon changes in transportation pricing and costs and shipments in-transit at period end and the timing of customer invoicing.
(1) Intersegment revenues representNOTE 10. LEASES
We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the sales betweenright to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment, trailers, and a small number of intermodal containers. We do not have material financing leases. Frequently, we enter into contractual relationships with a wide variety of transportation companies for freight capacity and utilize those relationships to efficiently and cost-effectively arrange the transport of our segmentscustomers’ freight. These contracts typically have a term of 12 months or less and do not allow us to direct the use or obtain substantially all of the economic benefits of a specifically identified asset. Accordingly, these agreements are eliminated to reconcile to our consolidated results.not considered leases.
(2) All cash and cash equivalents
Our operating leases are included on the consolidated balance sheets as right-of-use lease assets and lease liabilities. A right-of-use lease asset represents our right to use an underlying asset over the term of a lease, while a lease liability represents our obligation to make lease payments arising from the lease. Current and noncurrent lease liabilities are recognized on commencement date at the present value of lease payments, including non-lease components, which consist primarily of common area maintenance and parking charges. Right-of-use lease assets are also recognized on the commencement date as the total lease liability plus prepaid rents. As our leases typically do not provide an implicit rate, we use our fully collateralized incremental borrowing rate based on the information available at commencement date in All Otherdetermining the present value of lease payments. The incremental borrowing rate is influenced by market interest rates, our credit rating, and Corporate.lease term and as such, may differ for individual leases.
(3) Average headcount doesOur lease agreements typically do not contain variable lease payments, residual value guarantees, purchase options, or restrictive covenants. Many of our leases include employees from APC addedthe option to renew for a period of months to several years. The term of our leases may include the option to renew when it is reasonably certain that we will exercise that option although these occurrences are seldom. We have lease agreements with lease components (e.g., payments for rent) and non-lease components (e.g., payments for common area maintenance and parking), which are all accounted for as a single lease component.
We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of June 30, 2023.
Information regarding lease expense, remaining lease term, discount rate, and other select lease information are presented below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
Lease Costs | 2023 | | 2022 | | 2023 | | 2022 |
Operating lease expense | $ | 24,773 | | | $ | 23,082 | | | $ | 49,426 | | | $ | 44,727 | |
Short-term lease expense | 1,486 | | | 1,137 | | | 2,900 | | | 3,597 | |
Total lease expense | $ | 26,259 | | | $ | 24,219 | | | $ | 52,326 | | | $ | 48,324 | |
| | | | | | | | | | | |
| Six Months Ended June 30, |
Other Lease Information | 2023 | | 2022 |
Operating cash flows from operating leases | $ | 47,360 | | | $ | 43,937 | |
Right-of-use lease assets obtained in exchange for new lease liabilities | 14,204 | | | 87,554 | |
| | | | | | | | | | | |
Lease Term and Discount Rate | As of June 30, 2023 | | As of December 31, 2022 |
Weighted average remaining lease term (in years) | 6.2 | | 6.4 |
Weighted average discount rate | 3.6 | % | | 3.5 | % |
The maturities of lease liabilities as of June 30, 2023, were as follows (in thousands): | | | | | | | | |
Maturity of Lease Liabilities | | Operating Leases |
Remaining 2023 | | $ | 39,817 | |
2024 | | 82,873 | |
2025 | | 67,812 | |
2026 | | 55,842 | |
2027 | | 44,317 | |
Thereafter | | 116,071 | |
Total lease payments | | 406,732 | |
Less: Interest | | (45,549) | |
Present value of lease liabilities | | $ | 361,183 | |
NOTE 11. ALLOWANCE FOR CREDIT LOSSES
Our allowance for credit losses is computed using a number of factors including our past credit loss experience and our customers' credit ratings, in addition to other customer-specific factors. We have also considered recent trends and developments related to the current macroeconomic environment in determining our ending allowance for credit losses for both accounts receivable and contract assets. The allowance for credit losses on Septembercontract assets was not significant as of June 30, 2016.2023.
A rollforward of our allowance for credit losses on our accounts receivable balance is presented below (in thousands): | | | | | |
Balance, December 31, 2022 | $ | 28,749 | |
Provision | (8,124) | |
Write-offs | (6,164) | |
Balance, June 30, 2023 | $ | 14,461 | |
Recoveries of amounts previously written off were not significant for the three and six months ended June 30, 2023.
NOTE 10.12. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss is included in Stockholders' investmentInvestment on our condensed consolidated balance sheets. The recorded balance at Septemberon June 30, 2017,2023 and December 31, 2016,2022, was $22.9$92.9 million and $61.4$88.9 million, respectively. Accumulated other comprehensive lossThe recorded balance on June 30, 2023 and December 31, 2022, is comprised solely of foreign currency translation adjustments, at Septemberincluding foreign currency translation.
Other comprehensive loss was $6.5 million for the three months ended June 30, 20172023, primarily driven by fluctuations in the Yuan and Singapore Dollar. Other comprehensive loss was $33.6 million for the three months ended June 30, 2022, primarily driven by fluctuations in the Singapore Dollar, Australian Dollar and the Yuan.
Other comprehensive loss was $4.1 million for the six months ended June 30, 2023, primarily driven by fluctuations in the Singapore Dollar, Yuan, and Australian Dollar partially offset by the Euro. Other comprehensive loss was $26.7 million for the six months ended June 30, 2022, primarily driven by fluctuations in the Singapore Dollar, Yuan, and Australian Dollar.
NOTE 13: RESTRUCTURING
In 2022, we announced organizational changes to support our enterprise strategy of accelerating our digital transformation and productivity initiatives. We continued to execute upon these digital transformation and productivity initiatives in 2023, which resulted in further restructuring charges to better align our workforce as a result of these initiatives and in consideration of the changing freight transportation market. We recognized additional restructuring charges of $14.1 million in the second quarter of 2023 primarily related to workforce reductions. We expect to complete our restructuring actions by the end of 2023.
For severance and other operating expenses related to restructuring activities, we paid $12.0 million in cash in the second quarter of 2023 with the majority of the remaining $8.7 million accrued as of June 30, 2023 expected to be paid by the end of 2023.
A summary of the restructuring charges recognized is presented below (in thousands):
| | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, | |
| 2023 | | 2023 | |
Severance(1) | $ | 11,681 | | | $ | 14,819 | | |
Other personnel expenses(1) | 1,446 | | | 1,906 | | |
Other selling, general, and administrative expenses(2) | 1,005 | | | 1,129 | | |
Total | $ | 14,132 | | | $ | 17,854 | | |
________________________________ (1) Amounts are included within personnel expenses in our condensed consolidated statements of operations and comprehensive income.
(2) Amounts are included within other selling, general, and administrative expenses in our condensed consolidated statements of operations and comprehensive income.
The following table summarizes restructuring charges by reportable segment (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2023 |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Personnel expenses | $ | 327 | | | $ | 691 | | | $ | 12,109 | | | $ | 13,127 | |
Other selling, general, and administrative expenses | 4 | | | 39 | | | 962 | | | 1,005 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2023 |
| NAST | | Global Forwarding | | All Other and Corporate | | Consolidated |
Personnel expenses | $ | 1,156 | | | $ | 2,229 | | | $ | 13,340 | | | $ | 16,725 | |
Other selling, general, and administrative expenses | 4 | | | 163 | | | 962 | | | 1,129 | |
| | | | | | | |
| | | | | | | |
The following table summarizes activity related to our restructuring initiatives and reserves included in our consolidated balance sheets as of December 31, 2016.2022 and June 30, 2023:
| | | | | | | | | | | | | | | | | | |
| Accrued Severance and Other Personnel Expenses | | Accrued Other Selling, General, and Administrative Expenses | | | Total |
Balance, December 31, 2022 | $ | 18,976 | | | $ | — | | | | $ | 18,976 | |
Restructuring charges | 16,725 | | | 1,129 | | | | 17,854 | |
Cash payments | (26,906) | | | (310) | | | | (27,216) | |
Settled non-cash | — | | | (819) | | | | (819) | |
Accrual adjustments(1) | (122) | | | — | | | | (122) | |
Balance, June 30, 2023 | $ | 8,673 | | | $ | — | | | | $ | 8,673 | |
________________________________
(1) Accrual adjustments primarily relate to changes in estimates for certain employee termination costs, including those settling for an amount different than originally estimated and foreign currency adjustments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read theThe following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes.
FORWARD-LOOKING INFORMATION
Our quarterly reportQuarterly Report on Form 10-Q, including this discussion and analysis of our financial condition and results of operations and our disclosures about market risk, contains certain “forward-looking statements.” These statements represent our expectations, beliefs, intentions, or strategies concerning future events that, by their nature, involve risks and uncertainties. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions or dispositions, the expected impact of recently issued accounting pronouncements, and the outcome or effects of litigation. Risks that could cause actual results to differ materially from our current expectations include, but are not limited to, changes in economic conditions;conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the third partyglobal logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers,customers; risks with reliance on technology to operate our business; cyber-security related risks; risks associated with operations outside of the United States; our ability to identify or for other reasons; complete suitable acquisitions;our ability to successfully integrate the operations of acquired companies with our historic operations; climate change related risks; risks associated with our indebtedness; interest rate related risks; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with operations outsidethe potential impact of the U.S.; changes in government regulations;risks associated with the potential impacts of changes in governmentto income tax regulations; risks associated with the produce industry, including food safety and contamination issues; fuel price increases or decreases, or fuel shortages; cyber-security related risks; the impact of war on the economy; changes to our capital structure; riskchanges due to catastrophic events including pandemics such as COVID-19; risks associated with the use of unanticipated events or opportunities that might require additional capital expenditures or alter the timing of such expenditures;machine learning and artificial intelligence; and other risks and uncertainties detailed in our Annual and Quarterly Reports. Therefore, actual results may differ materially from our expectations based on these and other risks and uncertainties, including those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2016,2022, filed with the Securities and Exchange Commission on March 1, 2017.February 17, 2023, as well as the updates to these risk factors included in Part II—“Item 1A, Risk Factors,” herein.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update such statement to reflect events or circumstances arising after such date.
OVERVIEW
Our company.C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the world's largest logistics platforms. We bring together customers, carriers, and suppliers to connect and grow supply chains. We are agrounded in our customer promise to use our technology, which is built by and for supply chain experts and powered by our information advantage, to deliver smarter solutions. These global provider of transportation services and logistics solutions, operating through a network of offices in North America, Europe, Asia, Australia, New Zealand, and South America. As a third party logistics provider, we enter into contractual relationshipscombined with a wide variety of transportation companies, and utilize those relationships to efficiently and cost effectively transport our customers’ freight. We have contractual relationships with approximately 107,000 transportation companies, including motor carriers, railroads (primarily intermodal service providers), air freight, and ocean carriers. Depending on the needsexpertise of our customerpeople, deliver value–from improved cost reductions and their supply chain requirements, we selectreliability to sustainability and hire the appropriate transportation for each shipment. Our model enables us to be flexible, provide solutions visibility–that optimize service for our customers and minimize our asset utilization risk.carriers can rely on.
In addition to transportation and logistics services, we also provide sourcing services. Our sourcing business consists
Our reportable segmentsadjusted gross profits and adjusted gross profit margin are North American Surface Transportation (“NAST”), Global Forwarding, Robinson Fresh,non-GAAP financial measures. Adjusted gross profits is calculated as gross profits excluding amortization of internally developed software utilized to directly serve our customers and All Othercontracted carriers. Adjusted gross profit margin is calculated as adjusted gross profits divided by total revenues. We believe adjusted gross profits and Corporate. The All Other and Corporate segment includes Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. We group offices primarily by services they provide. For financial information concerning our reportable segments and geographic regions, refer to Note 9 of our consolidated financial statements.
On August 31, 2017, we acquired Milgram & Company Ltd. ("Milgram"), a provider of freight forwarding, customs brokerage, and surface transportation primarily in Canada. The acquisition strengthens our global forwarding and customs brokerage offerings in Canada.
Our business model. Weadjusted gross profit margin are primarily a service company. We add value and expertise in the procurement and execution of transportation and logistics, including sourcing of produce products for our customers. Our total revenues represent the total dollar value of services and goods we sell to our customers. Our net revenues are our total revenues less purchased transportation and related services, including contracted motor carrier, rail, ocean, air, and other costs, and the purchase price and services related to the products we source. Our net revenues are the primary indicatoruseful measures of our ability to source, add value, and sell services and products that are provided by third parties, and we consider themadjusted gross profits to be oura primary performance measurement. Accordingly, the discussion of our results of operations belowoften focuses on the changes in our net revenues.adjusted gross profits and adjusted gross profit margin. The reconciliation of gross profits to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
Revenues: | | | | | | | | | | | |
Transportation | $ | 4,084,827 | | | | $ | 6,465,642 | | | | $ | 8,412,792 | | | | $ | 12,993,993 | | |
Sourcing | 337,029 | | | | 332,833 | | | | 620,734 | | | | 620,435 | | |
Total revenues | 4,421,856 | | | | 6,798,475 | | | | 9,033,526 | | | | 13,614,428 | | |
Costs and expenses: | | | | | | | | | | | |
Purchased transportation and related services | 3,453,560 | | | | 5,466,874 | | | | 7,124,591 | | | | 11,117,098 | | |
Purchased products sourced for resale | 302,800 | | | | 299,988 | | | | 557,799 | | | | 559,521 | | |
Direct internally developed software amortization | 8,749 | | | | 6,640 | | | | 16,066 | | | | 12,374 | | |
Total direct costs | 3,765,109 | | | | 5,773,502 | | | | 7,698,456 | | | | 11,688,993 | | |
Gross profits / Gross profit margin | 656,747 | | 14.9% | | 1,024,973 | | 15.1% | | 1,335,070 | | 14.8% | | 1,925,435 | | 14.1% |
Plus: Direct internally developed software amortization | 8,749 | | | | 6,640 | | | | 16,066 | | | | 12,374 | | |
Adjusted gross profits / Adjusted gross profit margin | $ | 665,496 | | 15.1% | | $ | 1,031,613 | | 15.2% | | $ | 1,351,136 | | 15.0% | | $ | 1,937,809 | | 14.2% |
Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profits. We keepbelieve adjusted operating margin is a useful measure of our business model as variable as possible to allow us to be flexible and adapt to changing economic and industry conditions. We sell transportation services and produceprofitability in comparison to our customers with varied pricing arrangements. Some prices are committedadjusted gross profits, which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | |
Total revenues | $ | 4,421,856 | | | $ | 6,798,475 | | | $ | 9,033,526 | | | $ | 13,614,428 | |
Income from operations | 132,623 | | | 469,665 | | | 293,656 | | | 815,139 | |
Operating margin | 3.0% | | 6.9% | | 3.3% | | 6.0% |
| | | | | | | |
Adjusted gross profits | $ | 665,496 | | | $ | 1,031,613 | | | $ | 1,351,136 | | | $ | 1,937,809 | |
Income from operations | 132,623 | | | 469,665 | | | 293,656 | | | 815,139 | |
Adjusted operating margin | 19.9% | | 45.5% | | 21.7% | | 42.1% |
MARKET TRENDS
Carrier capacity in the North America surface transportation market has remained plentiful relative to demand which has resulted in suppressed transportation rates for much of the second quarter of 2023. As surface transportation spot rates continued to approximate the breakeven cost per mile to operate a truck, it is likely that the market is at, or near, the bottom of the industry cycle which typically results in capacity exiting the market. Conversely, the second quarter of 2022 exhibited elevated transportation rates, moderating consumer demand, and capacity entering the market. Industry freight volumes decreased in the second quarter of 2023 compared to the second quarter of 2022. One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business. Routing guide depth represents the average number of carriers contacted prior to acceptance when procuring a transportation provider. The average routing guide depth of tender in the second quarter of 2023 declined to 1.1, which is the lowest level we have seen since the pandemic impacted the second quarter of 2020, compared to a 1.4 average routing guide depth in the second quarter of 2022. The average routing guide depth in the second quarter of 2023 represents that on average, the first carrier in a shipper's routing guide is accepting the shipment most of the time.
Ocean vessel and air freight capacity continues to trend higher than demand in the global forwarding market, which has kept ocean and air freight rates low during this period of time, subject to certain terms and conditions, and some prices are set on a spot market basis. We buy most of our truckload transportation capacity and produce on a spot market basis. Consequently, our net revenue per transaction tends to increase in times when there is excess supply and decrease in times when demand is strong relative to supply.
We design our personnel and other operating expenses to be variable. Compensation is tied to productivity and performance. Each office is responsible for its hiring and headcount decisions, based on the needs of their office and to balance personnel resources with business requirements.
Our office network. Our office network is a competitive advantage. Building local customer and contract carrier relationships has been an important part of our success, and our worldwide network of offices supports our core strategy of serving customers locally, nationally, and globally. Our network offices help us penetrate local markets, provide face-to-face service when needed, and recruit contract carriers. Our network also gives us knowledge of local market conditions, which is importantsignificant decline that started in the second half of 2022 and into 2023. Several consecutive quarters of weak consumer demand have nearly eliminated the challenges from port congestion and transportation industry because it isequipment shortages that were impacting the global forwarding market driven and very dynamic.
Our people. Because we are a service company, our continued success is dependent on our ability toin recent years. Despite the weak demand, new vessel deliveries continue to hireadd capacity to the market, which suggests excess capacity may persist for several periods despite steamship lines continuing to rationalize services by reducing capacity where possible with blank sailings and retain talented, productive people,slow steaming. The air freight market has also seen an increase of capacity resulting from increased commercial flight activity to support elevated consumer travel. Although consumer demand showed a modest sign of improvement sequentially, the low price of ocean freight continues to result in less ocean freight converting to air freight and to properly align our headcount and personnel expense with our business. more than sufficient air freight capacity which has kept air freight rates suppressed.
BUSINESS TRENDS
Our headcount increased by 191 employees during the thirdsecond quarter of 2017, primarily related2023 surface transportation results were largely consistent with the trends discussed in the market trends section. The excess carrier capacity in the market led to significant declines in transportation rates versus the acquisition of Milgram. Most network management compensation is dependent onelevated levels experienced in the profitability of their particular office. We believe this makes our employees more service-oriented and focused on driving growth and maximizing office productivity. All of our managers and certain other employees who have significant responsibilities are eligible to receive equity awards because we believe these awards are an effective tool for creating long-term ownership and alignment between employees and our shareholders.
Our customers. In 2016, we worked with more than 113,000 active customers. We work with a wide variety of companies, rangingprior year. This resulted in size from Fortune 100 companies to small family businesses,declines in many different industries. Our customer base is very diverse and unconcentrated. In 2016, our top 100 customers represented approximately 30 percent ofboth our total revenues and adjusted gross profits in the second quarter of 2023 compared to the strong results achieved in the second quarter of 2022. The softening market conditions in the second quarter of 2022 resulted in an elevated adjusted gross profit per shipment as the cost of transportation decreased relative to our contractual rates. Conversely, the suppressed transportation rates in the second quarter of 2023 have resulted in a decline in adjusted gross profit per shipment and a higher percentage of contractual shipments as efficient routing guide performance has resulted in fewer loads moving on the transactional market. Industry freight volumes decreased in the second quarter of 2023 compared to the second quarter of 2022. Our combined NAST truckload and less than truckload (“LTL”) volume decreased 2.5 percent during the second quarter of 2023. Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 2619.0 percent during the second quarter of 2023. Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 23.0 percent during the second quarter of 2023.
Our second quarter of 2023 global forwarding results were largely consistent with the trends discussed in the market trends section. We experienced a significant decline in both total revenues and adjusted gross profits in our ocean and air freight businesses compared to the strong results achieved in the second quarter of 2022. Our ocean volumes decreased 7.0 percent while our air freight tonnage decreased 2.0 percent.
SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS
The following summarizes select second quarter 2023 year-over-year operating comparisons to the second quarter 2022:
•Total revenues decreased 35.0 percent to $4.4 billion, driven primarily by lower ocean and truckload pricing.
•Gross profits decreased 35.9 percent to $656.7 million. Adjusted gross profits decreased 35.5 percent to $665.5 million, primarily driven by lower adjusted gross profit per transaction in truckload and ocean.
•Personnel expenses decreased 15.2 percent to $377.3 million, primarily due to cost optimization efforts and lower variable compensation, including lower average employee headcount, which decreased 10.1 percent.
•Other selling, general, and administrative (“SG&A”) expenses increased 32.8 percent to $155.6 million, primarily due to the $23.5 million gain on the sale-leaseback of our Kansas City regional center recorded in the prior year and increased claims and higher warehouse expenses in the current year.
•Income from operations decreased 71.8 percent to $132.6 million, driven by decreased adjusted gross profits, partially offset by the decline in operating expenses.
•Adjusted operating margin of 19.9 percent declined 2,560 basis points.
•Interest and other income/expenses, net revenues. Our largest customertotaled $18.3 million, consisting primarily of $23.2 million of interest expense, which increased $6.3 million versus last year due primarily to higher variable interest rates. This was approximately twopartially offset by a $3.5 million gain of foreign currency revaluation and realized foreign currency gains and losses, compared to a $10.3 million loss last year, both driven by foreign currency impacts on intercompany assets and liabilities.
•The effective tax rate in the quarter was 14.9 percent of our total revenues.compared to 21.3 percent in the second quarter last year.
Our contracted carriers. Our contracted carrier base includes motor carriers, railroads (primarily intermodal service providers), air freight, and ocean carriers. In 2016, we worked with approximately 71,000 transportation providers worldwide, up•Net income totaled $97.3 million, down 72.1 percent from approximately 68,000a year ago.
•Diluted earnings per share (EPS) decreased 69.7 percent to $0.81.
•Cash flow from operations improved $228.0 million in 2015. Motor carriers that had fewer than 100 tractors transported approximately 81 percent of our truckload shipmentsthe six months ended June 30, 2023, driven by changes in 2016. In our transportation business, no single contracted carrier represents more than approximately 1.6 percent of our contracted carrier capacity.net operating working capital, offset in part by a decrease in net income.
CONSOLIDATED RESULTS OF OPERATIONS
The following table summarizes our total revenues by services and products (in thousands): |
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | % change | | 2017 | | 2016 | | % change |
Transportation | $ | 3,433,701 |
| | $ | 2,998,583 |
| | 14.5 | % | | $ | 9,855,739 |
| | $ | 8,593,767 |
| | 14.7 | % |
Sourcing | 350,750 |
| | 357,171 |
| | -1.8 | % | | 1,053,855 |
| | 1,135,671 |
| | -7.2 | % |
Total | $ | 3,784,451 |
| | $ | 3,355,754 |
| | 12.8 | % | | $ | 10,909,594 |
| | $ | 9,729,438 |
| | 12.1 | % |
The following table illustrates our net revenue margins by services and products: |
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Transportation | 16.4 | % | | 17.6 | % | | 16.6 | % | | 18.8 | % |
Sourcing | 8.5 | % | | 8.3 | % | | 9.0 | % | | 8.5 | % |
Total | 15.7 | % | | 16.6 | % | | 15.9 | % | | 17.6 | % |
The following table summarizes our net revenues by service line. The service line net revenues in the table differ from the segment service line revenues discussed below as our segments have revenues from multiple service lines (in thousands): |
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | % change | | 2017 | | 2016 | | % change |
Transportation | | | | | | | | | | | |
Truckload | $ | 301,025 |
| | $ | 309,027 |
| | -2.6 | % | | $ | 887,865 |
| | $ | 960,451 |
| | -7.6 | % |
LTL(1) | 101,870 |
| | 96,447 |
| | 5.6 | % | | 301,706 |
| | 287,518 |
| | 4.9 | % |
Intermodal | 7,478 |
| | 7,676 |
| | -2.6 | % | | 23,278 |
| | 25,961 |
| | -10.3 | % |
Ocean | 81,182 |
| | 56,506 |
| | 43.7 | % | | 217,495 |
| | 175,243 |
| | 24.1 | % |
Air | 25,529 |
| | 19,897 |
| | 28.3 | % | | 73,166 |
| | 58,424 |
| | 25.2 | % |
Customs | 17,421 |
| | 12,320 |
| | 41.4 | % | | 49,810 |
| | 34,649 |
| | 43.8 | % |
Other Logistics Services | 29,580 |
| | 26,771 |
| | 10.5 | % | | 87,563 |
| | 76,965 |
| | 13.8 | % |
Total Transportation | 564,085 |
| | 528,644 |
| | 6.7 | % | | 1,640,883 |
| | 1,619,211 |
| | 1.3 | % |
Sourcing | 29,761 |
| | 29,818 |
| | -0.2 | % | | 95,318 |
| | 96,801 |
| | -1.5 | % |
Total | $ | 593,846 |
| | $ | 558,462 |
| | 6.3 | % | | $ | 1,736,201 |
| | $ | 1,716,012 |
| | 1.2 | % |
(1) Less than truckload ("LTL").
The following table represents certain statements of operations data, shown as percentages of our net revenues:
|
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2017 | | 2016 | | 2017 | | 2016 |
Net revenues | 100.0 | % | | 100.0 | % | | 100.0 | % | | 100.0 | % |
Operating expenses: | | | | | | | |
Personnel expenses | 49.4 | % | | 46.0 | % | | 50.0 | % | | 46.9 | % |
Other selling, general, and administrative expenses | 17.9 | % | | 16.2 | % | | 17.5 | % | | 15.6 | % |
Total operating expenses | 67.3 | % | | 62.2 | % | | 67.5 | % | | 62.5 | % |
Income from operations | 32.7 | % | | 37.8 | % | | 32.5 | % | | 37.5 | % |
Interest and other expense | (1.8 | )% | | (1.3 | )% | | (1.7 | )% | | (1.3 | )% |
Income before provision for income taxes | 31.0 | % | | 36.5 | % | | 30.8 | % | | 36.2 | % |
Provision for income taxes | 10.9 | % | | 13.4 | % | | 10.5 | % | | 13.4 | % |
Net income | 20.1 | % | | 23.1 | % | | 20.3 | % | | 22.8 | % |
The following table summarizes our results by reportable segmentof operations (dollars in thousands)thousands, except per share data): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Revenues: | | | | | | | | | | | |
Transportation | $ | 4,084,827 | | $ | 6,465,642 | | (36.8) | % | | $ | 8,412,792 | | $ | 12,993,993 | | (35.3) | % |
Sourcing | 337,029 | | 332,833 | | 1.3 | % | | 620,734 | | 620,435 | | — | % |
Total revenues | 4,421,856 | | 6,798,475 | | (35.0) | % | | 9,033,526 | | 13,614,428 | | (33.6) | % |
Costs and expenses: | | | | | | | | | | | |
Purchased transportation and related services | 3,453,560 | | 5,466,874 | | (36.8) | % | | 7,124,591 | | 11,117,098 | | (35.9) | % |
Purchased products sourced for resale | 302,800 | | 299,988 | | 0.9 | % | | 557,799 | | 559,521 | | (0.3) | % |
Personnel expenses | 377,277 | | 444,764 | | (15.2) | % | | 760,383 | | 858,125 | | (11.4) | % |
Other selling, general, and administrative expenses | 155,596 | | 117,184 | | 32.8 | % | | 297,097 | | 264,545 | | 12.3 | % |
Total costs and expenses | 4,289,233 | | 6,328,810 | | (32.2) | % | | 8,739,870 | | 12,799,289 | | (31.7) | % |
Income from operations | 132,623 | | 469,665 | | (71.8) | % | | 293,656 | | 815,139 | | (64.0) | % |
Interest and other income/expense, net | (18,259) | | (27,395) | | (33.3) | % | | (46,524) | | (41,569) | | 11.9 | % |
Income before provision for income taxes | 114,364 | | 442,270 | | (74.1) | % | | 247,132 | | 773,570 | | (68.1) | % |
Provision for income taxes | 17,048 | | 94,085 | | (81.9) | % | | 34,925 | | 155,037 | | (77.5) | % |
Net income | $ | 97,316 | | $ | 348,185 | | (72.1) | % | | $ | 212,207 | | $ | 618,533 | | (65.7) | % |
| | | | | | | | | | | |
Diluted net income per share | $ | 0.81 | | | $ | 2.67 | | | (69.7) | % | | $ | 1.77 | | $ | 4.71 | | (62.4) | % |
| | | | | | | | | | | |
Average employee headcount | 16,085 | | | 17,893 | | | (10.1) | % | | 16,523 | | 17,554 | | (5.9) | % |
| | | | | | | | | | | |
Adjusted gross profit margin percentage(1) | | | | | | | | | | | |
Transportation | 15.5 | % | | 15.4 | % | | 10 bps | | 15.3 | % | | 14.4 | % | | 90 bps |
Sourcing | 10.2 | % | | 9.9 | % | | 30 bps | | 10.1 | % | | 9.8 | % | | 30 bps |
Total adjusted gross profit margin | 15.1 | % | | 15.2 | % | | (10 bps) | | 15.0 | % | | 14.2 | % | | 80 bps |
________________________________
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Three Months Ended September 30, 2017 | | | | | | | | | | | |
Revenues | $ | 2,469,420 |
| | $ | 552,134 |
| | $ | 613,646 |
| | $ | 149,251 |
| | $ | — |
| | $ | 3,784,451 |
|
Intersegment revenues | 115,796 |
| | 7,873 |
| | 43,272 |
| | 3,228 |
| | (170,169 | ) | | — |
|
Total Revenues | $ | 2,585,216 |
| | $ | 560,007 |
| | $ | 656,918 |
| | $ | 152,479 |
| | $ | (170,169 | ) | | $ | 3,784,451 |
|
Net Revenues | $ | 377,403 |
| | $ | 129,842 |
| | $ | 54,253 |
| | $ | 32,348 |
| | $ | — |
| | $ | 593,846 |
|
Income from Operations | 151,392 |
| | 31,125 |
| | 11,586 |
| | 362 |
| | — |
| | 194,465 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Three Months Ended September 30, 2016 | | | | | | | | | | | |
Revenues | $ | 2,252,187 |
| | $ | 390,830 |
| | $ | 590,385 |
| | $ | 122,352 |
| | $ | — |
| | $ | 3,355,754 |
|
Intersegment revenues | 79,728 |
| | 8,742 |
| | 32,255 |
| | 100 |
| | (120,825 | ) | | — |
|
Total Revenues | $ | 2,331,915 |
| | $ | 399,572 |
| | $ | 622,640 |
| | $ | 122,452 |
| | $ | (120,825 | ) | | $ | 3,355,754 |
|
Net Revenues | $ | 378,073 |
| | $ | 93,368 |
| | $ | 57,036 |
| | $ | 29,985 |
| | $ | — |
| | $ | 558,462 |
|
Income from Operations | 171,733 |
| | 17,047 |
| | 17,733 |
| | 4,754 |
| | — |
| | 211,267 |
|
A reconciliation of our reportable segments to our consolidated results can be found in Note 8, Segment Reporting, in Part I, Financial Information of this Quarterly Report on Form 10-Q.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Nine Months Ended September 30, 2017 | | | | | | | | | | | |
Revenues | $ | 7,110,223 |
| | $ | 1,549,742 |
| | $ | 1,821,094 |
| | $ | 428,535 |
| | $ | — |
| | $ | 10,909,594 |
|
Intersegment revenues | 329,193 |
| | 23,456 |
| | 116,281 |
| | 13,776 |
| | (482,706 | ) | | — |
|
Total Revenues | $ | 7,439,416 |
| | $ | 1,573,198 |
| | $ | 1,937,375 |
| | $ | 442,311 |
| | $ | (482,706 | ) | | $ | 10,909,594 |
|
Net Revenues | $ | 1,109,749 |
| | $ | 357,411 |
| | $ | 171,936 |
| | $ | 97,105 |
| | $ | — |
| | $ | 1,736,201 |
|
Income from Operations | 447,553 |
| | 75,006 |
| | 40,487 |
| | 1,197 |
| | — |
| | 564,243 |
|
| | | | | | | | | | | |
| | | | | | | | | | | |
| NAST | | Global Forwarding | | Robinson Fresh | | All Other and Corporate | | Eliminations | | Consolidated |
Nine Months Ended September 30, 2016 | | | | | | | | | | | |
Revenues | $ | 6,456,281 |
| | $ | 1,098,715 |
| | $ | 1,814,682 |
| | $ | 359,760 |
| | $ | — |
| | $ | 9,729,438 |
|
Intersegment revenues | 211,540 |
| | 23,585 |
| | 83,200 |
| | 642 |
| | (318,967 | ) | | — |
|
Total Revenues | $ | 6,667,821 |
| | $ | 1,122,300 |
| | $ | 1,897,882 |
| | $ | 360,402 |
| | $ | (318,967 | ) | | $ | 9,729,438 |
|
Net Revenues | $ | 1,161,074 |
| | $ | 283,458 |
| | $ | 183,041 |
| | $ | 88,439 |
| | $ | — |
| | $ | 1,716,012 |
|
Income from Operations | 516,805 |
| | 56,300 |
| | 62,777 |
| | 8,084 |
| | — |
| | 643,966 |
|
Consolidated Results of Operations—Three Months Ended SeptemberJune 30, 20172023 Compared to the Three Months Ended SeptemberJune 30, 20162022
Total revenues and direct costs. Our consolidated total Total transportation revenues increased 12.8 percentand direct costs decreased significantly primarily due to lower pricing and purchased transportation costs in the third quarter of 2017ocean and truckload services, in addition to volume declines in nearly all service lines compared to the third quarter of 2016. Total transportation revenues increased 14.5 percentstrong results in the third quarter of 2017prior year. The declines in pricing and purchased transportation costs were driven by the excess carrier capacity and continued weak consumer demand discussed in the market trends and business trends sections above. This compared to the third quarter of 2016. The increase waselevated pricing and tight carrier capacity caused by driver availability challenges and the supply chain disruptions, including port congestion and equipment shortages, facing the industry in the prior year. Our sourcing total revenue and direct costs increased driven by increased case volume with foodservice customers, partially offset by lower average pricing per case with retail customers.
Gross profits and volume growth in nearly all of our transportation services. Total purchased transportation and related services increased 16.2 percent in the third quarter of 2017 compared to the third quarter of 2016. The increase was due to increased cost of transportation, including fuel, and volume growth in nearly all of our transportation services. Our sourcing revenue decreased 1.8 percent to $350.8 million in the third quarter of 2017 from $357.2 million in the third quarter of 2016. Purchased products sourced for resale decreased 1.9 percent in the third quarter of 2017 to $321.0 million from $327.4 million in the third quarter of 2016. These decreases were due to decreased case volumes and lower pricing resulting from lower commodity costs. The hurricanes that impacted the southern United States had an impact on volumes and pricing during the third quarter of 2017. We estimate the impact on volumes was positive on our NAST division and negative on Robinson Fresh. The storms also impacted pricing in the North American truckload market due to the storm disruption.
Net revenues. Total transportation net revenues increased 6.7 percent to $564.1 million in the third quarter of 2017 from $528.6 million in the third quarter of 2016.adjusted gross profits. Our transportation net revenue marginadjusted gross profits decreased driven by lower truckload and ocean adjusted gross profits per transaction in addition to 16.4 percent in the third quarter of 2017 from 17.6 percent in the third quarter of 2016 primarily due to the cost of transportation increasing more than customer pricing, including fuel,volume declines in nearly all transportation services. Sourcing net revenues were flat at $29.8 million in the third quarter of 2017 compared to the third quarter of 2016. Our sourcing net revenue margin was 8.5 percent in the third quarter of 2017 and 8.3 percent in the third quarter of 2016.
Operating expenses. Operating expenses increased 15.0 percent to $399.4 million in the third quarter of 2017 from $347.2 million in the third quarter of 2016. Operating expenses as a percentage of net revenues increased to 67.3 percent in the third quarter of 2017 from 62.2 percent in the third quarter of 2016.
For the third quarter, personnel expenses increased 14.1 percent to $293.2 million in 2017 from $256.9 million in 2016.service lines. The increase in personnel expense was due to an increase of 8.7 percent in average headcount and an increase in variable compensation in the third quarter of 2017 compared to the third quarter of 2016.
For the third quarter of 2017, other selling, general, and administrative expenses increased 17.6 percent to $106.2 million in 2017 from $90.3 million in the third quarter of 2016. This increaselower adjusted gross profit per transaction was driven by costs relatedthe excess capacity and weak demand in the surface transportation and global forwarding markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the second quarter of 2023. The prior year period benefited from softening market conditions as the cost of purchased transportation decreased relative to our contractual rates resulting in elevated adjusted gross profits per transaction in the second quarter of 2022. Sourcing adjusted gross profits increased driven by integrated supply chain solutions for foodservice and wholesale customers.
Operating expenses. Personnel expenses decreased primarily due to lower variable compensation reflecting the decline in results relative to the additionprior year and lower average employee headcount. Other SG&A expenses increased due to a $23.5 million gain on the sale-leaseback of the APC and Milgram businesses, and increasesour Kansas City regional center recorded in the provision for bad debt,prior year and increased claims, higher warehouse expenses, and warehouse costs.
Income from operations. Income from operations decreased 8.0 percent to $194.5 millionhigher depreciation and amortization in the third quarter of 2017 from $211.3 million in the third quarter of 2016. This decreasecurrent year, which was primarily driven by declines in income from operations in NAST and Robinson Fresh, partially offset by an increase in income from operations in Global Forwarding. Income from operations as a percentage of net revenues decreased to 32.7 percent in the third quarter of 2017 from 37.8 percent in the third quarter of 2016.lower contracted services, including temporary labor.
Interest and other expense.income/expense, net. Interest and other income/expense, was $10.5net primarily consisted of interest expense of $23.2 million inand a $3.5 million favorable impact of foreign currency revaluation and realized foreign currency gains and losses primarily related to foreign currency impacts on intercompany assets and liabilities. Interest expense increased $6.3 million during the thirdsecond quarter of 2017 compared to $7.4 million in the third2023, driven by higher variable interest rates. The second quarter of 2016. The increase was due primarily to2022 included a higher average debt balance$10.3 million unfavorable impact of foreign currency revaluation and higher interest rates during the quarter ended September 30, 2017, compared to the same period ended September 30, 2016. Increased borrowings were related to the acquisition of Milgramrealized foreign currency gains and increased working capital needs.losses.
Provision for income taxes. Our effective income tax rate was 35.214.9 percent for the thirdsecond quarter of 2017 and 36.72023 compared to 21.3 percent for the thirdsecond quarter of 2016. During2022. The effective income tax rate for the thirdsecond quarter of 2017,2023 was lower than the provisionstatutory federal income tax rate primarily due to the tax impact of foreign tax credits and U.S. tax credits and incentives, which reduced the effective tax rate by 6.2 percentage points and 3.9 percentage points, respectively. These impacts were partially offset by a higher tax rate on state income taxes, net of federal benefit, which increased the effective income tax rate by 2.4 percentage points during the second quarter of 2023. The effective income tax rate for the second quarter of 2022 was slightly higher than the statutory federal income tax rate primarily due to state income taxes, net of federal benefit, which increased the effective income tax rate by 2.0 percentage points. This impact was partially offset by the tax impact of foreign tax credits, which reduced the effective tax rate by 1.4 percentage points.
Consolidated Results of Operations—Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
Total revenues and direct costs. Total transportation revenues and direct costs decreased driven by lower pricing and purchased transportation costs in nearly all of our service lines, most notably in ocean and truckload services. In addition, volumes declined in nearly all transportation services compared to the strong results in the prior year. Our sourcing total revenue and direct costs increased driven by increased case volume with foodservice customers partially offset by lower average pricing per case with retail customers.
Gross profits and adjusted gross profits. Our transportation adjusted gross profits decreased due to lower adjusted gross profit per transaction in truckload and ocean services, and to a lesser extent air and LTL services, in addition to decreased volumes in nearly all service lines. The lower adjusted gross profit per transaction was driven by the excess capacity and weak demand in the surface transportation and global forwarding markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the six months ended June 30, 2023. The prior year period benefited from the softening market conditions as the cost of purchased transportation decreased relative to our contractual rates resulting in elevated adjusted gross profits per transaction in the six months ended June 30, 2022. Sourcing adjusted gross profits increased driven by integrated supply chain solutions for foodservice and wholesale customers.
Operating expenses. Personnel expenses decreased primarily due to cost optimization efforts including lower average employee headcount in addition to lower variable compensation reflecting the decline in results relative to the prior year. Other SG&A expenses increased due to a $23.5 million gain from a sale-leaseback of a facility in Kansas City in the prior year and increased depreciation and amortization, travel and warehouse expenses in the current year, which was partially offset by decreased contracted services, including temporary labor.
Interest and other income/expense, net. Interest and other income/expense, net primarily consisted of interest expense of $46.8 million and a $6.0 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses in the six months ended June 30, 2023, primarily due to foreign currency impacts on intercompany assets and liabilities. Interest expense increased $15.3 million driven by a higher variable interest rates compared to the prior year. The prior year included an $11.8 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses due to the strengthening of the U.S. Dollar versus the Euro and Yuan.
Provision for income taxes decreased by $2.7 milliontaxes. Our effective income tax rate was 14.1 percent for the six months ended June 30, 2023 and 20.0 percent for the six months ended June 30, 2022. The effective income tax rate for the six months ended June 30, 2023 was lower than the statutory federal income tax rate primarily due to U.S. tax credits associated withand incentives, foreign earnings deemed to be subject to U.S. taxation. Duringtax credits, and the first quartertax impact of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards, in our consolidatedwhich reduced the effective tax rate by 3.9 percentage points, 3.3 percentage points, and 3.1 percentage points, respectively. These impacts were partially offset by state income tax expense, net of federal benefit, which increased the effective income tax rate by 2.3 percentage points. The effective income tax rate for the six months ended June 30, 2022 was lower than the statutory federal income tax rate primarily due to foreign tax credits, U.S. tax credits and incentives and the tax impact of share-based payment awards, which reduced the effective tax rate by 1.1 percentage points, 1.0 percentage points, and 0.9 percentage points, respectively. These impacts were partially offset by state income tax expense, net of federal benefit, which increased the effective income tax rate by 1.7 percentage points.
NAST Segment Results of Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(dollars in thousands) | 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Total revenues | $ | 3,079,268 | | | $ | 4,147,046 | | | (25.7) | % | | $ | 6,383,455 | | | $ | 8,261,935 | | | (22.7) | % |
Costs and expenses: | | | | | | | | | | | |
Purchased transportation and related services | 2,678,736 | | | 3,522,495 | | | (24.0) | % | | 5,556,268 | | | 7,131,284 | | | (22.1) | % |
Personnel expenses | 163,289 | | | 225,210 | | | (27.5) | % | | 339,301 | | | 426,012 | | | (20.4) | % |
Other selling, general, and administrative expenses | 119,384 | | | 122,842 | | | (2.8) | % | | 236,005 | | | 245,786 | | | (4.0) | % |
Total costs and expenses | 2,961,409 | | | 3,870,547 | | | (23.5) | % | | 6,131,574 | | | 7,803,082 | | | (21.4) | % |
Income from operations | $ | 117,859 | | | $ | 276,499 | | | (57.4) | % | | $ | 251,881 | | | $ | 458,853 | | | (45.1) | % |
| | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Average employee headcount | 6,497 | | | 7,552 | | | (14.0) | % | | 6,713 | | | 7,442 | | | (9.8) | % |
Service line volume statistics | | | | | | | | | | | |
Truckload | | | | | (6.5) | % | | | | | | (5.0) | % |
LTL | | | | | — | % | | | | | | (2.5) | % |
| | | | | | | | | | | |
Adjusted gross profits(1) | | | | | | | | | | | |
Truckload | $ | 236,094 | | | $ | 432,048 | | | (45.4) | % | | $ | 497,613 | | | $ | 766,958 | | | (35.1) | % |
LTL | 135,427 | | | 166,868 | | | (18.8) | % | | 272,505 | | | 317,610 | | | (14.2) | % |
Other | 29,011 | | | 25,635 | | | 13.2 | % | | 57,069 | | | 46,083 | | | 23.8 | % |
Total adjusted gross profits | $ | 400,532 | | | $ | 624,551 | | | (35.9) | % | | $ | 827,187 | | | $ | 1,130,651 | | | (26.8) | % |
________________________________
(1) Adjusted gross profit margin is a non-GAAP financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flow. This adoption resulted in a decrease in our provision for income taxes of $1.3 million the third quarter of 2017.
Net income. Net income decreased 7.6 percent to $119.2 million in the third quarter of 2017 from $129.0 million in the third quarter of 2016. Basic and diluted net income per share decreased 5.6 percent to $0.85 from $0.90 in the third quarter of 2017 compared to the third quarter of 2016.
SEGMENT RESULTS OF OPERATIONSmeasure explained above.
Three Months Ended SeptemberJune 30, 2017,2023 Compared to the Three Months Ended SeptemberJune 30, 20162022
North American Surface Transportation. Total revenues and direct costs.NAST total revenues including intersegment revenues, increased 10.9 percentand direct costs decreased primarily due to $2.6 billionsignificantly lower pricing and purchased transportation costs in truckload services, reflecting the excess carrier capacity and slowing economic growth discussed above in the thirdmarket trends section. Our combined NAST truckload and LTL volume decreased 2.5 percent. These conditions resulted in significant declines in surface transportation rates versus the historically elevated levels of truckload pricing in the second quarter of 2017 from $2.3 billion2022. The elevated pricing and purchased transportation cost environment in the thirdprior year was due to the tight carrier capacity caused by driver availability challenges and the supply chain disruptions, including port congestion and equipment shortages, facing the industry in the second quarter of 2016. This increase was driven by2022.
Gross profits and adjusted gross profits. NAST adjusted gross profits decreased due to lower pricing andin truckload services, resulting in lower adjusted gross profits per shipment most notably on transactional volume, increases in most services. NAST cost of transportation and related services increased 13.0 percentaddition to $2.2 billion in the third quarter of 2017 from $2.0 billion in the third quarter of 2016. This increase was driven by an increase in costs of transportation and a volume increase in most services. NAST net revenues decreased 0.2 percent to $377.4 million in the third quarter of 2017 from $378.1 million in the third quarter of 2016. This decrease was driven by a decline in truckload net revenues, discussed below.
NAST truckload net revenues decreased 2.1 percent to $266.6 millionvolumes. The lower adjusted gross profit per transaction was driven by the excess capacity and weak demand in the thirdsurface transportation market discussed in the market and business trends sections above which has suppressed freight rates in the second quarter of 20172023. The prior year period benefited from $272.4 millionsoftening market conditions as the cost of purchased transportation decreased relative to our contractual rates resulting in elevated adjusted gross profits per transaction in the thirdsecond quarter of 2016. NAST2022. Our average truckload volumes were flat in the third quarter of 2017 compared to the third quarter of 2016. NAST truckload net revenue margin decreased in the third quarter of 2017 compared to the third quarter of 2016, due primarily to higher transportation costs, including fuel costs.
NAST truckload net revenues accounted for approximately 93 percent of our total North American truckload net revenues in the third quarter of 2017 and approximately 92 percent in the third quarter of 2016. The majority of the remaining North American truckload net revenues are included in Robinson Fresh. Excluding the estimated impacts of the increase in fuel costs, our average truckloadlinehaul rate per mile charged to our customers, increased 6.5which excludes fuel surcharges, decreased approximately 23.0 percent in the thirdsecond quarter of 20172023 compared to the thirdsecond quarter of 2016.2022. Our truckload transportation costs increasedlinehaul cost per mile, excluding fuel surcharges, decreased approximately 8.5 percent, excluding the estimated increase in fuel costs. While rapidly rising prices does often create incremental spot market activity, it can also create more margin compression on committed pricing arrangements. We experienced both of these impacts in our third quarter results. The pricing trends and required adjustments to market conditions that we discussed at length last quarter continued and were accelerated by the hurricane impacts.
19.0 percent. NAST LTL net revenues increased 4.8 percentadjusted gross profits decreased due to $97.6 millionlower adjusted gross profits per transaction. NAST LTL volumes were flat in the thirdsecond quarter of 2017 from $93.1 million in2023 compared to the thirdsecond quarter of 2016. This increase was2022. NAST other adjusted gross profits increased primarily driven by increased warehousing services.
Operating expenses. NAST personnel expenses decreased primarily due to a volume increase of 6.5 percent in the third quarter of 2017 comparedlower variable compensation and lower average employee headcount. NAST other SG&A expenses decreased primarily due to the third quarter of 2016,lower allocated corporate expenses, partially offset by a decrease in net revenue margin resulting from increased purchased transportation costs.
NAST intermodal net revenues decreased 1.4 percent to $7.1 million in the third quarter of 2017 from $7.2 million in the third quarter of 2016. NAST intermodal net revenues and net revenue margin decreased while volume increased in the third quarter of 2017 compared to the third quarter of 2016 due to lower-margin contractual volume growth, partially offset by a decrease in transactional business.
NAST operating expenses increased 9.5 percent in the third quarter of 2017 to $226.0 million compared to $206.3 million in the third quarter of 2016. This increase was due to increases in selling, general, and administrative expenses and an increase in personnel expenses. The increase in selling, general, and administrative expenses is primarily due to an increase in the provision for bad debt andhigher claims expense. The increase in personnel expense is related to an increase in average headcount of 1.9 percent. The operating expenses of NAST and all other segments include allocated corporate expenses. Allocated personnel expenses consist primarily of stock-based compensation allocated based upon segment participation levels in our equity plans. Remaining corporate allocations, including corporate functions and technology related expenses, are primarily included within each segment’s other SG&A expenses, and are allocated based upon relevant segment operating metrics.
Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
Total revenues and direct costs.NAST income from operationstotal revenues and direct costs decreased 11.8 percentdue to $151.4 millionlower pricing and purchased transportation costs in truckload and LTL services compared to the prior year. Truckload pricing reached historic levels in the third quarterfirst half of 2017 from $171.7 million in2022 due to tight carrier capacity caused by driver availability challenges and the third quarter of 2016. This wassupply chain disruptions that were facing the industry. In addition, truckload volume decreased during the six months ended June 30, 2023, compared to the six months ended June 30, 2022.
Gross profits and adjusted gross profits. NAST adjusted gross profits decreased primarily due to lower adjusted gross profit per transaction in both truckload and LTL services in addition to a declinedecrease in net revenues causedvolume for both. The lower adjusted gross profit per transaction was driven by the excess capacity and weak demand in the surface transportation market discussed in the market trends and business trends sections above which has suppressed freight rates in the six months ended June 30, 2023. The prior year period benefited from the softening market conditions as the cost of purchased transportation decreased relative to our contractual rates resulting in elevated adjusted gross profits per transaction in the six months ended June 30, 2022. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 25.5 percent. Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 23.5 percent. NAST other adjusted gross profits increased driven by an increase in transportation costs.
Global Forwarding. Global Forwarding total revenues, including intersegment revenues, increased 40.2 percent to $560.0 million in the third quarter of 2017 compared to $399.6 million in the third quarter of 2016. Global Forwarding costs of transportation and relatedwarehousing services increased 40.5 percent to $430.2 million in the third quarter of 2017 from $306.2 million in the third quarter of 2016. Global Forwarding net revenues increased 39.1 percent to $129.8 million in the third quarter of 2017 compared to $93.4 million in the third quarter of 2016. The acquisitions of APC and Milgram accounted for approximately 18 percentage points of the net revenue growth in Global Forwarding.
Global Forwarding ocean transportation net revenues increased 44.0 percent to $81.1 million in the third quarter of 2017 from $56.3 million in the third quarter of 2016. This was primarily related to volume increases, including those from acquisitions. Ocean transportation volumes increased approximately 22 percent and customer rates also increased in the third quarter of 2017 compared to the same period of 2016.
Global Forwarding air transportation net revenues increased 32.7 percent to $24.0 million in the third quarter of 2017 from $18.1 million in the third quarter of 2016. This was primarily related to volume increases, including those from acquisitions. Air transportation volumes increased approximately 28 percent and customer rates also increased in the third quarter of 2017 compared to the same period of 2016.
Global Forwarding customs net revenues increased 41.4 percent to $17.4 million in the third quarter of 2017 from $12.3 million in 2016. The increase was primarily due to increased transaction volumes, primarily related to acquisitions. Customs transaction volumes increased approximately 52 percent in the third quarter of 2017 compared to the same period of 2016.
Global Forwarding operating expenses increased 29.3 percent in the third quarter of 2017 to $98.7 million from $76.3 million in the third quarter of 2016. This increase was due to increases in both personnel and selling, general, and administrative expenses. The personnel expense increase was driven by an average headcount increase of 20.8 percent. The acquisitions of APC and Milgram added approximately 18 percent to the Global Forwarding average headcount. The selling, general, and administrative expense increase was primarily driven by the acquisition amortization related to APC and Milgram.
Global Forwarding income from operations increased 82.6 percent to $31.1 million in the third quarter of 2017 from $17.0 million in the third quarter of 2016. This was primarily due to an increase in net revenues.
Robinson Fresh. Robinson Fresh total revenues, including intersegment revenues, increased 5.5 percent to $656.9 million in the third quarter of 2017 from $622.6 million in the third quarter of 2016. Robinson Fresh costs of transportation and related services and purchased products sourced for resale increased 6.6 percent to $602.7 million in the third quarter of 2017 from $565.6 million in the third quarter of 2016. Robinson Fresh net revenues decreased 4.9 percent to $54.3 million in the third quarter of 2017 from $57.0 million in the third quarter of 2016, primarily as a result of declines in transportation net revenues. The hurricanes in both Texas and Florida had a negative impact on Robinson Fresh cases volumes and net revenue in the third quarter. We have service center facilities in both of these locations that were shut down for seven to ten days as a result of the storms.
Robinson Fresh net revenues from sourcing services were flat at $29.8 million in the third quarter of 2017 compared to the third quarter of 2016. A slight increase in net revenue margin was offset by a case volume decrease of one percent compared to the third quarter of 2016.
Robinson Fresh net revenues from transportation services decreased 10.0 percent to $24.5 million in the third quarter of 2017 compared to $27.2 million in the third quarter of 2016, primarily due to a decrease in truckload net revenue. Robinson Freshtransportation net revenue margin decreased in the third quarter of 2017 compared to the third quarter of 2016. Robinson Fresh transportation volumes increased 13 percent in the third quarter of 2017 compared to the third quarter of 2016.
Robinson Fresh operating expenses increased 8.6 percent in the third quarter of 2017 to $42.7 million from $39.3 million in the third quarter of 2016. This was primarily due to an increase in warehousing expenses related to expanding facilities and an increase in average headcount of 1.5 percent.intermodal adjusted gross profits.
Robinson Fresh income from operationsOperating expenses. NAST personnel expense decreased 34.7 percent to $11.6 million in the third quarter of 2017 from $17.7 million in the third quarter of 2016. This was primarily due to an increasedecreased variable compensation and a decrease in operatingaverage employee headcount. NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses and a decrease in credit losses and lower contracted services, including temporary labor.
Global Forwarding Segment Results of Operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(dollars in thousands) | 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Total revenues | $ | 779,867 | | | $ | 2,093,190 | | | (62.7) | % | | $ | 1,569,845 | | | $ | 4,287,587 | | | (63.4) | % |
Costs and expenses: | | | | | | | | | | | |
Purchased transportation and related services | 600,636 | | | 1,768,747 | | | (66.0) | % | | 1,212,695 | | | 3,641,296 | | | (66.7) | % |
Personnel expenses | 92,937 | | | 106,096 | | | (12.4) | % | | 185,200 | | | 207,372 | | | (10.7) | % |
Other selling, general, and administrative expenses | 56,647 | | | 50,790 | | | 11.5 | % | | 112,187 | | | 103,724 | | | 8.2 | % |
Total costs and expenses | 750,220 | | | 1,925,633 | | | (61.0) | % | | 1,510,082 | | | 3,952,392 | | | (61.8) | % |
Income from operations | $ | 29,647 | | | $ | 167,557 | | | (82.3) | % | | $ | 59,763 | | | $ | 335,195 | | | (82.2) | % |
| | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Average employee headcount | 5,225 | | 5,759 | | (9.3) | % | | 5,356 | | 5,690 | | (5.9) | % |
Service line volume statistics | | | | | | | | | | | |
Ocean | | | | | (7.0) | % | | | | | | (11.0) | % |
Air | | | | | (2.0) | % | | | | | | (10.0) | % |
Customs | | | | | (14.5) | % | | | | | | (14.5) | % |
| | | | | | | | | | | |
Adjusted gross profits(1) | | | | | | | | | | | |
Ocean | $ | 107,423 | | | $ | 228,093 | | | (52.9) | % | | $ | 217,544 | | | $ | 449,494 | | | (51.6) | % |
Air | 33,479 | | | 56,112 | | | (40.3) | % | | 64,381 | | | 116,679 | | | (44.8) | % |
Customs | 25,128 | | | 27,820 | | | (9.7) | % | | 48,462 | | | 55,315 | | | (12.4) | % |
Other | 13,201 | | | 12,418 | | | 6.3 | % | | 26,763 | | | 24,803 | | | 7.9 | % |
Total adjusted gross profits | $ | 179,231 | | | $ | 324,443 | | | (44.8) | % | | $ | 357,150 | | | $ | 646,291 | | | (44.7) | % |
________________________________
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
Three Months Ended June 30, 2023 Compared to the Three Months Ended June 30, 2022
Total revenues and direct costs. Global Forwarding total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in ocean and air freight services, net revenues.in addition to volume declines in both service lines compared to the strong results in the prior year. The declines in pricing and purchased transportation costs were driven by the excess carrier capacity and continued weak consumer demand discussed in the market trends and business trends sections above. The prior year was impacted by elevated pricing and cost of purchased transportation driven by the supply chain disruptions that impacted the global forwarding market in the second quarter of 2022.
Gross profits and adjusted gross profits. Global Forwarding adjusted gross profits decreased due to lower ocean and air freight adjusted gross profits per transaction, in addition to volume decline in both service lines compared to the strong results in the prior year. The lower adjusted gross profit per transaction was driven by the excess capacity and weak demand in the global forwarding markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the second quarter of 2023. Customs adjusted gross profits decreased driven by a decrease in transaction volume.
Operating expenses. Personnel expenses decreased primarily due to lower variable compensation and a decrease in average employee headcount. Other SG&A expenses increased driven by higher credit losses.
Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
Total revenues and direct costs. Global Forwarding total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in both ocean and air freight and, to a lesser extent, decreased volumes in both service lines. The cost of purchased transportation and pricing began to moderate within the second quarter of 2022 and continued to decline into 2023 driven by the excess carrier capacity and continued weak demand discussed in the market and business trends sections above. Purchased transportation costs and pricing have remained suppressed in 2023 due to the continued weak demand and excess carrier capacity in the market.
Gross profits and adjusted gross profits. Global Forwarding adjusted gross profits decreased due to lower adjusted gross profits per transaction, and to a lesser extent, decreased volumes in ocean and air freight compared to the strong results in the prior year. The lower adjusted gross profit per transaction was driven by the excess capacity and weak demand in the global forwarding markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the six months ended June 30, 2023. Customs adjusted gross profits decreased driven by a decrease in transaction volume.
Operating expenses. Personnel expenses decreased primarily due to lower variable compensation and a decrease in average employee headcount. Other SG&A expenses increased due to increased investments in technology and other miscellaneous expenses. These increases were partially offset by a decrease in contracted services, including temporary labor and lower credit losses.
All Other and Corporate. Corporate Segment Results of Operations
All Other and Corporate includes our Robinson Fresh and Managed Services segment, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Managed Services provides Transportation Management Services, or Managed TMS. Europe Surface Transportation provides services similar to NAST across Europe.
Managed Services net revenues increased 10.8 percent in the third quarter of 2017 to $18.5 million compared to $16.7 million in the third quarter of 2016. This increase was | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
(dollars in thousands) | 2023 | | 2022 | | % change | | 2023 | | 2022 | | % change |
Total revenues | $ | 562,721 | | | $ | 558,239 | | | 0.8 | % | | $ | 1,080,226 | | | $ | 1,064,906 | | | 1.4 | % |
Income (loss) from operations | (14,883) | | | 25,609 | | | N/M | | (17,988) | | | 21,091 | | | N/M |
| | | | | | | | | | | |
Adjusted gross profits(1) | | | | | | | | | | | |
Robinson Fresh | 37,895 | | | 34,981 | | | 8.3 | % | | 69,040 | | | 65,486 | | | 5.4 | % |
Managed Services | 28,953 | | | 27,618 | | | 4.8 | % | | 57,923 | | | 55,700 | | | 4.0 | % |
Other Surface Transportation | 18,885 | | | 20,020 | | | (5.7) | % | | 39,836 | | | 39,681 | | | 0.4 | % |
Total adjusted gross profits | $ | 85,733 | | | $ | 82,619 | | | 3.8 | % | | $ | 166,799 | | | $ | 160,867 | | | 3.7 | % |
________________________________
(1) Adjusted gross profit margin is a result of new business with new and existing customers. Other Surface Transportation net revenues increased 4.2 percent in the third quarter of 2017 to $13.9 million compared to $13.3 million in the third quarter of 2016. This increase is primarily the result of increased volumes, partially offset by margin compression in the surface transportation business in Europe.non-GAAP financial measure explained above.
NineThree Months Ended SeptemberJune 30, 20172023 Compared to Ninethe Three Months Ended SeptemberJune 30, 20162022
Total revenues and direct costs. Our consolidated totalTotal revenues and direct costs increased 12.1 percent in the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. Total transportation revenues increased 14.7 percent to $9.9 billion in the nine months ended September 30, 2017, from $8.6 billion in the nine months ended September 30, 2016. The increase in total transportation revenues was driven by increased pricing and volumes in nearly all of our transportation services. Total purchased transportation and related services increased 17.8 percent in the nine months ended September 30, 2017, to $8.2 billion from $7.0 billion in the nine months ended September 30, 2016. The increase was due to increased volumes in all of our transportation services, and by increased costs of transportation, including fuel. Sourcing revenue decreased 7.2 percent in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Purchased products sourced for resale decreased 7.7 percent in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. These decreases were primarily due to lower pricing and commodity costs.
Net revenues. Total transportation net revenues increased 1.3 percent to $1.64 billion in the nine months ended September 30, 2017 from $1.62 billion in the nine months ended September 30, 2016. Our transportation net revenue margin decreased to 16.6 percent in the nine months ended September 30, 2017 from 18.8 percent in the nine months ended September 30, 2016, primarily due to the cost of transportation increasing more than customer pricing, including fuel, in nearly all transportation services. Sourcing net revenues decreased 1.5 percent to $95.3 million in the nine months ended September 30, 2017 from $96.8 million in the nine months ended September 30, 2016. This decrease was primarily the result of lower net revenue per case as volumes were flat. Our sourcing net revenue margin increased in the nine months ended September 30, 2017 to 9.0 percent from 8.5 percent in the nine months ended September 30, 2016.
Operating expenses. Operating expenses increased 9.3 percent in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Operating expenses as a percentage of net revenues increased to 67.5 percent in the nine months ended September 30, 2017, from 62.5 percent in the nine months ended September 30, 2016.
Personnel expenses increased 7.9 percent to $867.9 million in the nine months ended September 30, 2017, from $804.6 million in the nine months ended September 30, 2016. For the nine months ended September 30, 2017, our average headcount increased 8.3 percent compared to the same period ended September 30, 2016, including 650 employees added through acquisitions. The increase in personnel expense was less than the increase in average headcount due to decreased expenses related to variable incentive plans.
Other selling, general, and administrative expenses increased 13.7 percent to $304.0 million in the nine months ended September 30, 2017 from $267.4 million in the nine months ended September 30, 2016. This increase was primarily driven by costs related to the addition of the APC and Milgram businesses, the provision for bad debt, and warehouse costs.
Income from operations. Income from operations decreased 12.4 percent to $564.2 million in the nine months ended September 30, 2017, from $644.0 million in the nine months ended September 30, 2016. Income from operations as a percentage of net revenues decreased to 32.5 percent in the nine months ended September 30, 2017, from 37.5 percent in the nine months ended September 30, 2016.
Interest and other expense. Interest and other expense increased to $29.2 million in the nine months ended September 30, 2017, from $22.5 million in the nine months ended September 30, 2016. The change was due primarily to a higher average debt balance and higher interest rates on our short-term debt during the nine months ended September 30, 2017, compared to the same period ended September 30, 2016.
Provision for income taxes. Our effective income tax rate was 34.2 percent for the nine months ended September 30, 2017, and 37.1 percent for the nine months ended September 30, 2016. During the first quarter of 2017, we adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718). The adoption of ASU 2016-09 prospectively impacts the recording of income taxes related to share-based payment awards in our consolidated statement of financial position and results of operations, as well as the operating and financing cash flows on the consolidated statements of cash flow. This adoption resulted in a decrease in our provision for income taxes of $11.9 million the nine months ended September 30, 2017. The effective income tax rate for the nine months ended September 30, 2017 was lower than the statutory federal income tax rate due to the adoption of ASU 2016-09.
Net income. Net income decreased 9.9 percent to $352.3 million in the nine months ended September 30, 2017, from $391.1 million in the nine months ended September 30, 2016. Basic net income per share decreased 8.4 percent to $2.50 in the nine months ended September 30, 2017 from $2.73 in the nine months ended September 30, 2016. Diluted net income per share decreased 8.8 percent to $2.49 in the nine months ended September 30, 2017 from $2.73 in the nine months ended September 30, 2016.
SEGMENT RESULTS OF OPERATIONS
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
North American Surface Transportation. NAST total revenues, including intersegment revenues, increased 11.6 percent to $7.4 billion during the nine months ended September 30, 2017 from $6.7 billion during the nine months ended September 30, 2016. This increase was driven by volume and pricing increases in all services. NAST cost of transportation and related services increased 14.9 percent to $6.3 billion in the nine months ended September 30, 2017 from $5.5 billion in the nine months ended September 30, 2016. This was driven by increases in volumes and costs of transportation in all services. NAST net revenues decreased 4.4 percent to $1.1 billion in the nine months ended September 30, 2017 from $1.2 billion in the nine months ended September 30, 2016. This decrease was driven primarily by a decline in truckload net revenues.
NAST truckload net revenues decreased 7.4 percent to $784.3 million during the nine months ended September 30, 2017 from $847.2 million in the nine months ended September 30, 2016. NAST truckload volumes increased approximately six percent during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. NAST truckload net revenue margin decreased in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due to increased transportation costs, excluding the change in fuel costs.
NAST truckload net revenues accounted for approximately 93 percent of our total North American truckload net revenues in the nine months ended September 30, 2017 and 92 percent in the nine months ended September 30, 2016. The majority of the remaining North American truckload net revenues are included in Robinson Fresh. Excluding the estimated impacts of the increase in fuel costs, our average truckload rate per mile charged to ourwith foodservice customers, increased approximately one percent in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. Our truckload transportation costs increased 3.5 percent, excluding the estimated increase in fuel costs.
NAST LTL net revenues increased 4.6 percent to $288.3 million in the nine months ended September 30, 2017 from $275.5 million in the nine months ended September 30, 2016. This increase was primarily due to a volume increase of approximately seven percent during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, partially offset by a decrease in net revenue margin.
NAST intermodal net revenues decreased 8.8 percent to $22.1 million in the nine months ended September 30, 2017 from $24.2 million in the nine months ended September 30, 2016. Net revenues decreased while volume increased in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due to lower-margin contractual volume growth, partially offset by a decrease in transactional business.
NAST operating expenses increased 2.8 percent during the nine months ended September 30, 2017 to $662.2 million compared to $644.3 million during the nine months ended September 30, 2016. This increase was driven by increases in other selling, general, and administrative expenses and personnel expenses. The increase in selling, general, and administrative expenses were driven by investments in technology. The increase in personnel expense is related an increase in average headcount of 2.3 percent and an increase in expenses related to variable incentive plans. The operating expenses of NAST and all other segments include allocated corporate expenses.
NAST income from operations decreased 13.4 percent to $447.6 million during the nine months ended September 30, 2017 from $516.8 million in the nine months ended September 30, 2016. This was primarily due to a decline in net revenues caused by the increased cost of transportation services.
Global Forwarding. Global Forwarding total revenues, including intersegment revenues, increased 40.2 percent to $1.6 billion in the nine months ended September 30, 2017 compared to $1.1 billion in the nine months ended September 30, 2016. Global Forwarding costs of transportation and related services increased 44.9 percent to $1.2 billion in the nine months ended September 30, 2017 from $838.8 million in the nine months ended September 30, 2016. Global Forwarding net revenues increased 26.1 percent to $357.4 million in the nine months ended September 30, 2017 compared to $283.5 million in the nine months ended September 30, 2016. These increases were primarily driven by our acquisition of APC, and volume growthlower pricing with retail customers in our organic operations.Robinson Fresh business.
Global Forwarding ocean transportation net revenuesGross profits and adjusted gross profits. Robinson Fresh adjusted gross profits increased 24.5 percent to $217.8 million in the nine months ended September 30, 2017 from $174.9 million in the nine months ended September 30, 2016. The increase in net revenues was primarily a result of our acquisition of APC, partially offset by margin compression.
Our air transportation net revenues increased 27.2 percent to $68.9 million in the nine months ended September 30, 2017 from $54.1 million in the nine months ended September 30, 2016. The increase was primarily the result of our acquisition of APC, partially offset by margin compression.
Our customs net revenues increased 43.8 percent to $49.8 million in the nine months ended September 30, 2017 from $34.6 million in 2016. The increase was due to increased transaction volumes, primarily related to the acquisition of APC.
Global Forwarding operating expenses increased 24.3 percent in the nine months ended September 30, 2017 to $282.4 million from $227.2 million in the nine months ended September 30, 2016. This increase was driven by an increase in average headcount of 16.7 percentcase volume and the acquisition amortization expense related to the acquisitions of APC.
Global Forwarding income from operationsintegrated supply chain solutions for foodservice and wholesale customers. Managed Services adjusted gross profits increased 33.2 percent to $75.0 million in the nine months ended September 30, 2017 from $56.3 million in the nine months ended September 30, 2016. This was primarily due to an increase in net revenues,growth with existing and new customers. Other Surface Transportation adjusted gross profits decreased driven by lower Europe truckload adjusted gross profits per transaction, partially offset by an increase in operating expenses.volumes.
Robinson Fresh.
Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
Total revenues and direct costs. Total revenues and direct costs increased driven by higher European truckload volume in our Other Surface Transportation business.
Gross profits and adjusted gross profits.Robinson Fresh total revenues, including intersegment revenues,adjusted gross profits increased 2.1 percent to $1.94 billion in the nine months ended September 30, 2017 compared to $1.90 billion in the nine months ended September 30, 2016. Robinson Fresh costs of transportationdriven by integrated supply chain solutions for foodservice and related services and purchased products sourced for resalewholesale customers. Managed Services adjusted gross profits increased 3.0 percent to $1.8 billion in the nine months ended September 30, 2017 from $1.7 billion in the nine months ended September 30, 2016. Robinson Fresh net revenues decreased 6.1 percent to $171.9 million in the nine months ended September 30, 2017 from $183.0 million in the nine months ended September 30, 2016. This decrease was the result of declines in transportation and sourcing net revenues.
Robinson Fresh net revenues from sourcing services decreased 1.5 percent to $95.3 million in the nine months ended September 30, 2017 compared to $96.8 million in the nine months ended September 30, 2016. This was primarily the result of lower net revenue per case as case volumes were flat.
Robinson Fresh net revenues from transportation services decreased 11.2 percent to $76.6 million in the nine months ended September 30, 2017 compared to $86.2 million in the nine months ended September 30, 2016, primarily due to decreases in truckload net revenue. Robinson Fresh transportation net revenue margin decreased in the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, due primarily togrowth with existing and new customers. Other Surface Transportation adjusted gross profits increased transportation costs, including fuel.
Robinson Fresh operating expenses increased 9.3 percent in the nine months ended September 30, 2017 to $131.4 million from $120.3 million in the nine months ended September 30, 2016. This was primarily due to an increase in warehousing expenses related to expanding facilities, claims, and an increase in average headcount,European truckload volumes, partially offset by a decrease in expenses related to variable incentive compensation plans.lower adjusted gross profits per transaction.
Robinson Fresh income from operations decreased 35.5 percent to $40.5 million in the nine months ended September 30, 2017 from $62.8 million in the nine months ended September 30, 2016. This was primarily due to decreases in transportation and sourcing net revenues, and an increase in operating expenses.All Other and Corporate. All Other and Corporate includes our Managed Services segment, as well as Other Surface Transportation outside
Managed Services net revenues increased 14.5 percent in the nine months ended September 30, 2017 to $53.8 million compared to $47.0 million in the nine months ended September 30, 2016. This increase was a result of volume growth from both new and existing customers. Other Surface Transportation increased 4.5 percent in the nine months ended September 30, 2017 to $43.3 million compared to $41.4 million in the nine months ended September 30, 2016, primarily the result of growth in Europe Surface Transportation.
LIQUIDITY AND CAPITAL RESOURCES
We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock. In 2012,addition, we entered into a senior unsecured revolving credit facility to partially fund an acquisition. In December 2014, we amendedmaintain the revolving credit facility to increase the amount available from $500 million to $900 millionfollowing debt facilities as described in Note 4, Financing Arrangements (in thousands):
| | | | | | | | | | | | | | | | | | | | |
Description | | Carrying Value as of June 30, 2023 | | Borrowing Capacity | | Maturity |
Revolving credit facility | | $ | 141,000 | | | $ | 1,000,000 | | | November 2027 |
Senior Notes, Series A | | 175,000 | | | 175,000 | | | August 2023 |
Senior Notes, Series B | | 150,000 | | | 150,000 | | | August 2028 |
Senior Notes, Series C | | 175,000 | | | 175,000 | | | August 2033 |
Receivables Securitization Facility (1) | | 499,863 | | | 500,000 | | | November 2023 |
Senior Notes (1) | | 595,495 | | | 600,000 | | | April 2028 |
Total debt | | $ | 1,736,358 | | | $ | 2,600,000 | | | |
(1) Net of unamortized discounts and to extend the expiration date from October 2017 to December 2019, primarily to fund an acquisition. In 2013, we entered into a Note Purchase Agreement to fund the repurchase of $500 million worth of our common stock. The Note Purchase Agreement was amended in February 2015 to conform its financial covenants to be consistent with the amended revolving credit facility. In April 2017, we entered into an U.S. Trade Accounts Receivable Securitization facility to reduce the amount outstanding on our revolving credit facility. issuance costs.
We also expect to use the revolving credit facility, the receivables securitization facility,our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, and share repurchases.
Cash and cash equivalents totaled $297.3$210.2 million as of SeptemberJune 30, 2017,2023 and $247.7$217.5 million as of December 31, 2016.2022. Cash and cash equivalents held outside the United States totaled $233.3$203.3 million as of SeptemberJune 30, 2017,2023 and $172.2$204.7 million as of December 31, 2016. If we repatriated all foreign earnings, the estimated effect on income taxes payable would be an increase of approximately $29.0 million as of September 30, 2017. Working capital at September 30, 2017, was $468.5 million and at December 31, 2016, was $162.4 million.2022.
We prioritize our investments to grow the business, as we require some working capital and a relatively small amount of capital expenditures to grow. We are continually looking for acquisitions, but those acquisitions must fit our culture and enhance our growth opportunities.
The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands): | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| 2023 | | 2022 | | % change |
Sources (uses) of cash: | | | | | |
Cash provided by operating activities | $ | 479,376 | | | $ | 251,329 | | | 90.7 | % |
| | | | | |
Capital expenditures | (51,301) | | | (69,403) | | | |
| | | | | |
Sale of property and equipment | — | | | 63,208 | | | |
Cash used for investing activities | (51,301) | | | (6,195) | | | N/M |
| | | | | |
Repurchase of common stock | (62,754) | | | (490,699) | | | |
Cash dividends | (146,195) | | | (145,268) | | | |
Net (payments) borrowings on debt | (238,000) | | | 349,000 | | | |
Other financing activities | 14,831 | | | 29,790 | | | |
Cash used for financing activities | (432,118) | | | (257,177) | | | 68.0 | % |
Effect of exchange rates on cash and cash equivalents | (3,284) | | | (6,445) | | | |
Net change in cash and cash equivalents | $ | (7,327) | | | $ | (18,488) | | | |
Cash flow from operating activities. We generated $218.3 million and $376.8 million of cash flow from operations during Cash provided by operating activities increased in the ninesix months ended SeptemberJune 30, 2017 and September 30, 2016, respectively, a decrease of $158.5 million2023 compared to the ninesix months ended SeptemberJune 30, 2016. The increase2022 due to a decrease in net operating working capital driven by declining freight rates, most notably in our ocean and truckload services in addition to lower volumes customer rates, and costs of transportation, including fuel prices,in nearly all service lines as discussed in the first ninemarket and business trends sections. This impact was partially offset by a decline in net income in the six months ended June 30, 2023. We continue to closely monitor credit and collections activities and the quality of 2017 comparedour accounts receivable balance to minimize risk as well as work with our customers to facilitate the first nine monthsmovement of 2016 resulted in increased growth in working capital and led to decreased operating cash flow.goods across their supply chains while also ensuring timely payment.
Cash used for investing activities. We used $94.7 million and $292.0 million of cash during the nine months ended September 30, 2017 and September 30, 2016 for investing activities.
We used $46.4 million and $71.1 million for capital expenditures during the nine months ended September 30, 2017 and September 30, 2016. During the nine months ended September 30, 2017, our capital Capital expenditures consisted primarily of investments in facilities, office equipment, and information technology,software, which are intended to develop and deliver scalable solutions by transforming our processes, accelerate the pace of development and prioritizing data integrity, improve efficienciesour customer and carrier experience, and increase efficiency to help expand our adjusted operating margins and grow the business.
During the nine months ended September 30, 2017, we used $48.4 million in connection with the acquisitions. We used $46.7 million in connection with the acquisition of Milgram. We used $1.8 million for a post-closing working capital adjustment due to the sellers of APC under the terms of the acquisition agreement.
Cash used for financing activities. We used $91.2 million and $28.2 million of cash flow for financing activities during Net payments on debt in the ninesix months ended SeptemberJune 30, 2017 and September 30, 2016.
During2023 were to reduce the ninecurrent portion of our debt outstanding. Net borrowings in the six months ended SeptemberJune 30, 2017, we had net short-term repayments of $21.0 million. During the nine months ended September 30, 2016, we had net short-term borrowings of $275.0 million.2022 were primarily to fund share repurchases and working capital needs. The outstanding balance on the revolving credit facility was $719.0 million as of September 30, 2017.
During the nine months ended September 30, 2017, we had long-term borrowings of $250.0 million on the Receivables Securitization Facility. The outstanding balance on the Receivables Securitization Facility was $250.0 million as of September 30, 2017. We weredecrease in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, and Receivables Securitization Facility as of September 30, 2017.
Wecash used $192.8 million and $191.1 million to pay cash dividends during the nine months ended September 30, 2017 and September 30, 2016. The increasefor share repurchases was primarily due to a dividend rate increase in 2017 compared to 2016, partially offset by a decrease in weighted average shares outstanding during the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016.
We used $130.0 million and $109.1 million on share repurchases during the nine months ended September 30, 2017 and September 30, 2016. The change was due to an increase in the number of shares repurchased and the average price of the repurchased shares during the ninesix months ended SeptemberJune 30, 2017, compared to the same period of 2016. In August 2013, the Board of Directors increased the number of shares authorized for repurchase by 15,000,000 shares. As of September 30, 2017, there were 2,654,301 shares remaining for future repurchases under the repurchase authorization.2023. The number of shares we repurchase, if any, during future periods will vary based on our cash position, other potential uses of our cash, and market conditions. Our Senior Notes, Series A and Receivables Securitization Facility have maturity dates remaining in 2023. To the extent we reduce our outstanding debt on these facilities or our other debt facilities, it may reduce the number of shares we repurchase in 2023. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. We may seek to retire or purchase our outstanding Senior Notes through open market cash purchases, privately negotiated transactions or otherwise.
We used $20.7 million and $36.2 million to acquire shares from employees through their withholding taxes resulting from the delivery of restricted equity during the nine months ended September 30, 2017 and September 30, 2016.
Management believesbelieve that, assuming no change in our current business plan, our available cash, together with expected future cash generated from operations, the amount available under our credit facilities, and credit available in the market, will be sufficient to satisfy our anticipated needs for working capital, capital expenditures, and cash dividends infor at least the next 12 months and the foreseeable future. We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed.
As of June 30, 2023, we were in compliance with all of the covenants under our debt agreements. Recently Issued Accounting Pronouncements
Refer to Note 1, Basis of Presentation, contained in this Quarterly Report and in the company's 2022 Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our condensed consolidated financial statements include accounts of the company and all majority-owned subsidiaries. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions. In certain circumstances, those estimates and assumptions can affect amounts reported in the accompanying condensed consolidated financial statements and related footnotes. In preparing our financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. We do not believe there is a great likelihood that materially different amounts would be reported relatedRefer to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Note 1 of the Notes to Consolidated Financial Statements in ourcompany's 2022 Annual Report on Form 10-K for the year ended December 31, 2016, includes a summary of the significantcomplete discussion regarding our critical accounting policies and methods used in the preparationestimates. As of our consolidated financial statements. The following is a brief discussion ofJune 30, 2023, there were no material changes to our critical accounting policies and estimates.
Revenue recognition. Total revenues consist of the total dollar value of goods and services purchased from us by customers. Net revenues are total revenues less the direct costs of transportation, products, and handling. We act principally as the service provider for these transactions and recognize revenue as these services are rendered or goods are delivered. At that time, our obligations to the transactions are completed and collection of receivables is reasonably assured. Most transactions in our Transportation and Sourcing businesses are recorded at the gross amount we charge our customers for the service we provide and goods we sell. In these transactions, we are the primary obligor, we have credit risk, we have discretion to select the supplier, and we have latitude in pricing decisions. Additionally, in our Sourcing business, we often take loss of inventory risk during shipment and have general inventory risk.
Certain transactions in customs brokerage, transportation management, and sourcing are recorded at the net amount we charge our customers for the service we provide because many of the factors stated above are not present.
Valuations for accounts receivable. Our allowance for doubtful accounts is calculated based upon the aging of our receivables, our historical experience of uncollectible accounts, and any specific customer collection issues that we have identified. The allowance was $44.4 million as of September 30, 2017 and $39.5 million as of December 31, 2016. We believe that the recorded allowance is sufficient and appropriate based on our customer aging trends, the exposures we have identified, and our historical loss experience.
Goodwill. Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets and identifiable intangible assets purchased and liabilities assumed.
Goodwill is tested at least annually for impairment and is tested for impairment more frequently if events or changes in circumstances indicate that the asset might be impaired. The impairment test is performed using a two-step process. In the first step, the fair value of each reporting unit is compared with the carrying amount of the reporting unit, including goodwill. If the estimated fair value is less than the carrying amount of the reporting unit, there is an indication that goodwill impairment exists, and a second step must be completed to determine the amount of the goodwill impairment, if any, that should be recorded. In the second step, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation.
The fair value of each reporting unit is determined using a discounted cash flow analysis and market approach. Projecting discounted future cash flows requires us to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry. Actual results may differ from those used in our valuations.
Stock-based compensation. The fair value of each share-based payment award is established on the date of grant. For grants of restricted shares and restricted units, the fair value is established based on the market price on the date of the grant, discounted for post-vesting holding restrictions. The discounts on outstanding grants vary from 15 percent to 22 percent and are calculated using the Black-Scholes option pricing model. Changes in the measured stock price volatility and interest rates are the primary reason for changes in the discount. For grants of options, we use the Black-Scholes option pricing model to estimate the fair value of share-based payment awards. The determination of the fair value of share-based awards is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate, and expected dividends.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We had $297.3 million of cash and cash equivalentsRefer to the company’s 2022 Annual Report on September 30, 2017. Substantially all of the cash equivalents are in demand accounts with financial institutions. The primary market risks associated with these investments are liquidity risks.
We areForm 10-K for a party to a credit agreement with various lenders consisting of a $900 million revolving loan facility. Interest accruesdiscussion on the revolving loan at variable rates based on LIBOR or "prime" plus the applicable add-on percentage as defined therein. At Septembercompany’s market risk. As of June 30, 2017,2023, there was $719 million outstanding on the revolving loan.
We are a party to the Note Purchase Agreement, as amended, with various institutional investors with fixed rates consisting of: (i) $175,000,000 ofwere no material changes in market risk from those disclosed in the company’s 3.97 percent Senior Notes, Series A, due August 27, 2023, (ii) $150,000,000 of the company’s 4.26 percent Senior Notes, Series B, due August 27, 2028, and (iii) $175,000,000 of the company’s 4.60 percent Senior Notes, Series C, due August 27, 2033. At September 30, 2017, there was $500 million outstanding2022 Annual Report on the notes.Form 10-K.
We are a party to a receivables securitization facility with various lenders and provides funding of up to $250 million. Interest accrues on the facility at variable rates based on the asset-backed commercial paper rate or the 30 day LIBOR plus the applicable add-on percentage as defined therein. At September 30, 2017, there was $250 million outstanding on the securitization facility.
A hypothetical 100-basis-point change in the interest rate would not have a material effect on our earnings. We do not use derivative financial instruments to manage interest rate risk or to speculate on future changes in interest rates. A rise in interest rates could negatively affect the fair value of our investments. Market risk arising from changes in foreign currency exchange rates are not material due to the size of our international operations.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
UnderWe maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the supervisionSecurities Exchange Act of 1934 (“Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and withreported within the participation oftime periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in RuleRules 13a-15(e) and 15d-15(e) under the Securities Exchange ActAct) as of 1934 (the “Exchange Act”).June 30, 2023. Based upon that evaluation, theour Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.effective at the reasonable assurance level as of June 30, 2023.
(b) Changes in internal controlscontrol over financial reporting.
There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the most recent fiscal quarterthree months ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company'sour internal control over financial reporting.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations.operations, including certain contingent auto liability cases. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are often unable to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report,Quarterly Report, you should carefully consider the factors discusseddisclosed in Part I, "ItemItem 1A. Risk Factors"Factors in our Annual Report on Form 10-K for the year ended December 31, 2016,2022, which could materially affect our business, financial condition, or future results. Except for the updates to this risk factors set forth below, there have not been material changes in our risk factors set forth in the company’s 2022 Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
We concluded our search for a new Chief Executive Officer with the appointment of David Bozeman as our President and Chief Executive Officer and a director, effective June 26, 2023.
We use, and may continue to expand our use of, machine learning and artificial intelligence (AI) technologies to deliver our services and operate our business. If we fail to successfully integrate AI into our platform and business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented AI developers and programmers, we may face a competitive disadvantage. At the same time, the use or offering of AI technologies may result in new or expanded risks and liabilities, including enhanced government or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, reputational harm and security risks. It is not possible to predict all of the risks related to the use of AI and changes in laws, rules, directives, and regulations governing the use of AI may adversely affect our ability to develop and use AI or subject us to legal liability. The cost of complying with laws and regulations governing AI could be significant and would increase our operating expenses, which could adversely affect our business, financial condition and results of operations. Further, market demand and acceptance of AI technologies are uncertain, and we may be unsuccessful in efforts to further incorporate AI into our processes.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table provides information about company purchases by the companyof common stock during the quarter ended SeptemberJune 30, 2017, of shares of the company's common stock.2023: | | | | | | | | | | | | | | | | | | | | | | | |
| Total Number of Shares (or Units) Purchased (1) | | Average Price Paid Per Share (or Unit) | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (2) | | Maximum Number of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (2) |
April 1, 2023 - April 30, 2023 | 111,642 | | | $ | 96.12 | | | 100,000 | | | 6,992,701 | |
May 1, 2023 - May 31, 2023 | 110,469 | | | 100.69 | | | 107,456 | | | 6,885,245 | |
June 1, 2023 - June 30, 2023 | 125,663 | | | 92.92 | | | 121,800 | | | 6,763,445 | |
Second Quarter 2023 | 347,774 | | | $ | 96.41 | | | 329,256 | | | 6,763,445 | |
|
| | | | | | | | | | | | |
| Total Number of Shares (or Units) Purchased (a) | | Average Price Paid Per Share (or Unit) | | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs (b) | | Maximum Number of Shares (or Units) That May Yet Be Purchased Under the Plans or Programs (b) |
July 1, 2017-July 31, 2017 | 306,403 |
| | $ | 67.48 |
| | 296,507 |
| | 3,234,848 |
|
August 1, 2017-August 31, 2017 | 63,559 |
| | 65.70 |
| | 60,926 |
| | 3,173,922 |
|
September 1, 2017-September 30, 2017 | 523,287 |
| | 73.12 |
| | 519,621 |
| | 2,654,301 |
|
Third quarter 2017 | 893,249 |
| | $ | 70.66 |
| | 877,054 |
| | 2,654,301 |
|
(a)(1) The total number of shares purchased based on trade date includes: (i) 877,054329,256 shares of common stock purchased under the authorization described below; and (ii) 16,19518,518 shares of common stock surrendered to satisfy minimum statutory tax obligations under our stock incentive plans.
(b)(2) In August 2013,December 2021, the Board of Directors increased the number of shares authorized for repurchase by 15,000,00020,000,000 shares. As of SeptemberJune 30, 2017,2023, there were 2,654,3016,763,445 shares remaining for future repurchases. PurchasesRepurchases can be made in the open market or in privately negotiated transactions, including Rule 10b5-1 plans and accelerated repurchase programs.
ITEM 3. DEFAULTS ONUPON SENIOR SECURITIES
NoneNone.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
NoneDuring the three months ended June 30, 2023, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
ITEM 6. EXHIBITS
Exhibits filed with, or incorporated by reference into, this report: Quarterly Report: | | | | | |
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31.1 | |
10.1 | |
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31.1 | |
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31.2 | |
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32.1 | |
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32.2 | |
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101 | Financial statements from the Quarterly Report on Form 10-Q of the company for the period ended SeptemberJune 30, 2017,2023 formatted in Inline XBRL (embedded within the Inline XBRL document) |
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104 | The cover page from the Quarterly Report on Form 10-Q of the company for the period ended June 30, 2023 formatted in Inline XBRL (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on November 8, 2017.August 4, 2023.
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C.H. ROBINSON WORLDWIDE, INC. |
| | |
C.H. ROBINSON WORLDWIDE, INC.By: | | /s/ David P. Bozeman |
| | David P. Bozeman |
By: | | /s/ John P. Wiehoff |
| | John P. Wiehoff |
| | Chief Executive Officer |
| | |
| | |
By: | | /s/ Andrew C. ClarkeMichael P. Zechmeister |
| | Andrew C. ClarkeMichael P. Zechmeister |
| | Chief Financial Officer (principal accounting officer) |