CHRW 8-K
C. H. Robinson Worldwide, Inc. (CHRW)
8-K
2021-10-26
For: 2021-10-26
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April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 26, 2021
(Date of earliest event reported)
(Exact name of registrant as specified in its charter)
Commission File Number: 000-23189
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||||||||||||||
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: 952 -937-8500
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
The following information is being "furnished" in accordance with the General Instruction B.2 of Form 8-K and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Furnished herewith as Exhibits 99.1 and 99.2, respectively, and incorporated by reference herein are the text of C.H. Robinson Worldwide, Inc.'s announcement regarding its financial results for the quarter ended September 30, 2021 and its earnings conference call slides.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Number | Description | ||||
| 99.1 | |||||
| 99.2 | |||||
| 104 | The cover page from the Current Report on Form 8-K formatted in Inline XBRL | ||||
SIGNATURE
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 hereunto duly authorized.
| C.H. ROBINSON WORLDWIDE, INC. | ||||||||
| By: | /s/ Ben G. Campbell | |||||||
| Ben G. Campbell | ||||||||
| Chief Legal Officer and Secretary | ||||||||
Date: October 26, 2021 | ||||||||
 | C.H. Robinson 14701 Charlson Rd. Eden Prairie, MN 55347 www.chrobinson.com | ||||
FOR INQUIRIES, CONTACT: Chuck Ives, Director of Investor Relations Email: [email protected] | |||||
FOR IMMEDIATE RELEASE
C.H. Robinson Reports 2021 Third Quarter Results
MINNEAPOLIS, MN, October 26, 2021 - C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended September 30, 2021.
Third Quarter Key Metrics:
•Total revenues increased 48.3% to $6.3 billion
•Gross profits increased 43.5% to $839.0 million
•Adjusted gross profits(1) increased 43.3% to $844.2 million
•Income from operations increased 84.7% to $310.8 million
•Adjusted operating margin(1) increased 820 basis points to 36.8%
•Diluted earnings per share (EPS) increased 85.0% to $1.85
•Cash used by operations improved by $95.1 million to $73.5 million
(1) Adjusted gross profits and adjusted operating margin are Non-GAAP financial measures. The same factors described in this release that impacted these Non-GAAP measures also impacted the comparable GAAP measures. Refer to page 10 for further discussion and a GAAP to Non-GAAP reconciliation.
"The third quarter was another quarter of progress and strong execution, resulting in record quarterly financial results," said Bob Biesterfeld, Chief Executive Officer of C.H. Robinson. "The trajectory of our business is heading in the right direction as we continue to leverage our tech-plus strategy to help customers navigate through an extremely challenging and capacity-constrained environment, which we expect to continue. Demand for our global suite of services and for the benefit of our powerful technology platform continues to be strong, and digitalization continues to take hold and be engrained in an increasing percentage of our business."
1
Summary of Third Quarter Results Compared to the Third Quarter of 2020
•Total revenues increased 48.3% to $6.3 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 43.5% to $839.0 million. Adjusted gross profits increased 43.3% to $844.2 million, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
•Operating expenses increased 26.7% to $533.4 million. Personnel expenses increased 32.0% to $399.9 million, primarily due to higher incentive compensation costs and also due to the benefit realized in the third quarter of 2020 from our short-term, pandemic-related cost reductions. Average headcount increased 7.1%. Selling, general and administrative ("SG&A") expenses of $133.5 million increased 13.0%, primarily due to the benefit realized in the third quarter of 2020 from our short-term, pandemic-related cost reductions.
•Income from operations totaled $310.8 million, up 84.7% due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 36.8% increased 820 basis points.
•Interest and other expenses totaled $16.7 million, consisting primarily of $13.1 million of interest expense, which increased $1.2 million versus last year due to a higher average debt balance. The third quarter also included a $3.8 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
•The effective tax rate in the quarter was 16.0% compared to 15.1% in the third quarter last year. The rate increase was due primarily to a lower tax benefit related to stock-based compensation.
•Net income totaled $247.1 million, up 81.0% from a year ago. Diluted EPS of $1.85 increased 85.0%.
2
Summary of Year-to-Date Results Compared to the Same Period in 2020
•Total revenues increased 42.4% to $16.6 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 29.6% to $2.3 billion. Adjusted gross profits increased 29.6% to $2.3 billion, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
•Operating expenses increased 15.0% to $1.5 billion. Personnel expenses increased 20.4% to $1.1 billion, primarily due to higher incentive compensation costs and also due to the benefit realized in 2020 from our short-term, pandemic-related cost reduction initiatives. SG&A expenses increased 1.6% to $377.4 million, primarily due to increases in purchased services and warehouse expenses, partially offset by lower credit losses, amortization and travel expenses.
•Income from operations totaled $794.7 million, up 70.4% from last year, primarily due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 34.6% increased 830 basis points.
•Interest and other expenses totaled $41.4 million, which primarily consists of $38.0 million of interest expense, which increased $1.4 million versus last year due to a higher average debt balance. The nine-month period also included an $8.6 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses. These expenses were partially offset by a $2.9 million local government subsidy in Asia for achieving specified performance criteria that was almost entirely offset by a reduction in foreign tax credits within the provision for income taxes.
•The effective tax rate for the nine months was 18.5% compared to 17.3% in the year-ago period. The rate increase was due primarily to a lower tax benefit related to stock-based compensation.
•Net income totaled $614.1 million, up 71.3% from a year ago. Diluted EPS of $4.56 increased 73.4%.
3
North American Surface Transportation Results
Summarized financial results of our NAST segment are as follows (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Total revenues | $ | 3,814,988 | $ | 2,923,842 | 30.5 | % | $ | 10,611,892 | $ | 8,222,879 | 29.1 | % | |||||||||||||||||||||||
Adjusted gross profits(1) | 460,149 | 367,943 | 25.1 | % | 1,317,853 | 1,120,277 | 17.6 | % | |||||||||||||||||||||||||||
| Income from operations | 149,035 | 122,526 | 21.6 | % | 436,911 | 357,898 | 22.1 | % | |||||||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.
Third quarter total revenues for C.H. Robinson's NAST segment totaled $3.8 billion, an increase of 30.5% over the prior year, primarily driven by higher truckload and less-than truckload ("LTL") pricing and an increase in truckload shipments. NAST adjusted gross profits increased 25.1% in the quarter to $460.1 million. Adjusted gross profits in truckload increased 36.5% due to a 30.0% increase in adjusted gross profit per load and a 4.5% increase in shipments. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 27.0% in the quarter, while truckload linehaul cost per mile, excluding fuel surcharges, increased approximately 26.0%. LTL adjusted gross profits increased 11.5% versus the year-ago period, as adjusted gross profit per order increased 10.5% and LTL volumes grew 1.0%. NAST overall volume growth was approximately 2.5%. Operating expenses increased 26.8% primarily due to higher incentive compensation and also due to the benefit realized in 2020 from our short-term, pandemic-related cost reduction initiatives. Income from operations increased 21.6% to $149.0 million, and adjusted operating margin declined 90 basis points to 32.4%. NAST average headcount was up 0.9% in the quarter.
4
Global Forwarding Results
Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Total revenues | $ | 1,978,901 | $ | 831,957 | 137.9 | % | $ | 4,585,734 | $ | 2,070,161 | 121.5 | % | |||||||||||||||||||||||
Adjusted gross profits(1) | 310,898 | 157,657 | 97.2 | % | 763,952 | 448,931 | 70.2 | % | |||||||||||||||||||||||||||
| Income from operations | 165,155 | 46,299 | 256.7 | % | 363,956 | 117,033 | 211.0 | % | |||||||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.
Third quarter total revenues for the Global Forwarding segment increased 137.9% to $2.0 billion, primarily driven by higher pricing and higher volume in both our ocean and air services, reflecting the strong demand environment, market share gains and strained capacity. Adjusted gross profits increased 97.2% in the quarter to $310.9 million. Ocean adjusted gross profits increased 141.7%, driven by a 116.5% increase in adjusted gross profit per shipment and a 12.0% increase in volumes. Adjusted gross profits in air increased 76.2% driven by a 50.5% increase in metric tons shipped and a 17.0% increase in adjusted gross profit per metric ton. Customs adjusted gross profits increased 13.4%, primarily driven by a 10.5% increase in transaction volume. Operating expenses increased 30.9%, primarily driven by increased salaries, technology and incentive compensation expenses and partially offset by lower amortization expense. Third quarter average headcount increased 12.2%. Income from operations increased 256.7% to $165.2 million, and adjusted operating margin expanded 2,370 basis points to 53.1% in the quarter.
5
All Other and Corporate Results
Total revenues and adjusted gross profits for Robinson Fresh, Managed Services and Other Surface Transportation are summarized as follows (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Total revenues | $ | 469,806 | $ | 469,001 | 0.2 | % | $ | 1,402,664 | $ | 1,364,614 | 2.8 | % | |||||||||||||||||||||||
Adjusted gross profits(1): | |||||||||||||||||||||||||||||||||||
| Robinson Fresh | $ | 26,651 | $ | 24,449 | 9.0 | % | $ | 81,539 | $ | 82,109 | (0.7) | % | |||||||||||||||||||||||
| Managed Services | 26,720 | 24,060 | 11.1 | % | 78,510 | 70,090 | 12.0 | % | |||||||||||||||||||||||||||
| Other Surface Transportation | 19,774 | 15,164 | 30.4 | % | 53,894 | 50,272 | 7.2 | % | |||||||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.
Third quarter Robinson Fresh adjusted gross profits increased 9.0% to $26.7 million, due to an increase in adjusted gross profit per case and a 2.5% increase in case volume. Managed Services adjusted gross profits increased 11.1% in the quarter, primarily due to a 12.5% increase in volume. Other Surface Transportation adjusted gross profits increased 30.4% to $19.8 million, primarily due to a 31.6% increase in Europe truckload adjusted gross profits, with the acquisition of Combinex Holding B.V. contributing 13.5 percentage points of growth to truckload adjusted gross profits.
Other Income Statement Items
The third quarter effective tax rate was 16.0%, up from 15.1% last year, but lower than our expectations, primarily due to a favorable mix of foreign earnings and U.S. tax incentives. We now expect our 2021 full-year effective tax rate to be 18% to 19% compared to our prior estimate of 20% to 22%.
Interest and other expenses totaled $16.7 million, consisting primarily of $13.1 million of interest expense, which increased $1.2 million versus last year due to a higher average debt balance. The third quarter also included a $3.8 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
Diluted weighted average shares outstanding in the quarter were down 2.7% due primarily to share repurchases over the past twelve months.
6
Cash Flow Generation and Capital Distribution
Cash used by operations totaled $73.5 million in the third quarter, compared to $168.6 million of cash used in the third quarter of 2020. The $95.1 million improvement in cash flow was driven primarily by an improvement in net income, partially offset by an increase in operating working capital in the third quarter of 2021. Sequentially, operating working capital increased by $411.8 million or 26.7% in the third quarter of 2021, compared to a sequential increase of 12.7% in total adjusted gross profits.
In the third quarter of 2021, $237.2 million of cash was returned to shareholders, with $168.1 million in total repurchases of common stock and $69.2 million in cash dividends.
Capital expenditures totaled $22.7 million in the quarter. We now expect 2021 capital expenditures, which are driven by technology-related investments, to be $70 million to $80 million.
Outlook
"Our strong financial results demonstrate that our integrated services model is working. Given the current structural constraints around expansion of supply, coupled with continued strong demand as we head into the holiday season, we expect capacity to remain tight and to perform well in that environment," Biesterfeld stated. "We’ll continue to leverage the strength of our diversified non-asset-based business model that delivers strong returns on invested capital. We'll stay the course with our strategy of pursuing market share gains that align with our profitability expectations, and we'll continue to invest back into the business, in order to drive innovation, improve service to our customers and carriers, and drive growth across our global suite of modes and services."
7
About C.H. Robinson
C.H. Robinson solves logistics problems for companies across the globe and across industries, from the simple to the most complex. With $26 billion in freight under management and 19 million shipments annually, we are one of the world’s largest logistics platforms. Our global suite of services accelerates trade to seamlessly deliver the products and goods that drive the world’s economy. With the combination of our multimodal transportation management system and expertise, we use our information advantage to deliver smarter solutions for our 105,000 customers and 73,000 contract carriers. Our technology is built by and for supply chain experts to bring faster, more meaningful improvements to our customers’ businesses. As a responsible global citizen, we are also proud to contribute millions of dollars to support causes that matter to our company, our Foundation and our employees. For more information, visit us at www.chrobinson.com (Nasdaq: CHRW).
Except for the historical information contained herein, the matters set forth in this release are forward-looking statements that represent our expectations, beliefs, intentions or strategies concerning future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to, such factors such as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; competition and growth rates within the third party logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to successfully integrate the operations of acquired companies with our historic operations; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with operations outside of the United States; risks associated with the potential impact of changes in government 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; risks related to the elimination of LIBOR; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports.
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. All remarks made during our financial results conference call will be current at the time of the call, and we undertake no obligation to update the replay.
Conference Call Information:
C.H. Robinson Worldwide Third Quarter 2021 Earnings Conference Call
Tuesday, October 26, 2021; 5:00 p.m. Eastern Time
Presentation slides and a simultaneous live audio webcast of the conference call may be accessed through the Investor Relations link on C.H. Robinson’s website at www.chrobinson.com.
To participate in the conference call by telephone, please call ten minutes early by dialing: 877-269-7756
International callers dial +1-201-689-7817
8
Adjusted Gross Profit by Service Line
(in thousands)
This table of summary results presents our service line adjusted gross profits on an enterprise basis. The service line adjusted gross profits in the table differ from the service line adjusted gross profits discussed within the segments as our segments have revenues from multiple service lines.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
Adjusted gross profits(1): | |||||||||||||||||||||||||||||||||||
| Transportation | |||||||||||||||||||||||||||||||||||
| Truckload | $ | 333,067 | $ | 251,072 | 32.7 | % | $ | 941,117 | $ | 794,364 | 18.5 | % | |||||||||||||||||||||||
| LTL | 132,482 | 118,561 | 11.7 | % | 383,903 | 339,426 | 13.1 | % | |||||||||||||||||||||||||||
| Ocean | 214,926 | 88,927 | 141.7 | % | 501,422 | 237,682 | 111.0 | % | |||||||||||||||||||||||||||
| Air | 60,552 | 34,977 | 73.1 | % | 159,503 | 115,720 | 37.8 | % | |||||||||||||||||||||||||||
| Customs | 25,466 | 22,464 | 13.4 | % | 75,201 | 63,118 | 19.1 | % | |||||||||||||||||||||||||||
| Other logistics services | 53,018 | 50,329 | 5.3 | % | 158,450 | 144,046 | 10.0 | % | |||||||||||||||||||||||||||
| Total transportation | 819,511 | 566,330 | 44.7 | % | 2,219,596 | 1,694,356 | 31.0 | % | |||||||||||||||||||||||||||
| Sourcing | 24,681 | 22,943 | 7.6 | % | 76,152 | 77,323 | (1.5) | % | |||||||||||||||||||||||||||
| Total adjusted gross profits | $ | 844,192 | $ | 589,273 | 43.3 | % | $ | 2,295,748 | $ | 1,771,679 | 29.6 | % | |||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained later in this release. The difference between adjusted gross profits and gross profits is not material.
9
GAAP to Non-GAAP Reconciliation
(unaudited, in thousands)
Our adjusted gross profit is a non-GAAP financial measure. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. We believe adjusted gross profit is a useful measure of our ability to source, add value, and sell services and products that are provided by third parties, and we consider adjusted gross profit to be a primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profit. The reconciliation of gross profit to adjusted gross profit is presented below (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Transportation | $ | 5,999,901 | $ | 3,944,981 | 52.1 | % | $ | 15,800,576 | $ | 10,835,710 | 45.8 | % | |||||||||||||||||||||||
| Sourcing | 263,794 | 279,819 | (5.7) | % | 799,714 | 821,944 | (2.7) | % | |||||||||||||||||||||||||||
| Total revenues | 6,263,695 | 4,224,800 | 48.3 | % | 16,600,290 | 11,657,654 | 42.4 | % | |||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 5,180,390 | 3,378,651 | 53.3 | % | 13,580,980 | 9,141,354 | 48.6 | % | |||||||||||||||||||||||||||
| Purchased products sourced for resale | 239,113 | 256,876 | (6.9) | % | 723,562 | 744,621 | (2.8) | % | |||||||||||||||||||||||||||
| Direct internally developed software amortization | 5,152 | 4,388 | 17.4 | % | 14,601 | 12,124 | 20.4 | % | |||||||||||||||||||||||||||
| Total direct expenses | 5,424,655 | 3,639,915 | 49.0 | % | 14,319,143 | 9,898,099 | 44.7 | % | |||||||||||||||||||||||||||
| Gross profit | $ | 839,040 | $ | 584,885 | 43.5 | % | $ | 2,281,147 | $ | 1,759,555 | 29.6 | % | |||||||||||||||||||||||
| Plus: Direct internally developed software amortization | 5,152 | 4,388 | 17.4 | % | 14,601 | 12,124 | 20.4 | % | |||||||||||||||||||||||||||
| Adjusted gross profit | $ | 844,192 | $ | 589,273 | 43.3 | % | $ | 2,295,748 | $ | 1,771,679 | 29.6 | % | |||||||||||||||||||||||
Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit which we consider a primary performance metric as discussed above. The comparison of operating margin to adjusted operating margin is presented below:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Total revenues | $ | 6,263,695 | $ | 4,224,800 | 48.3 | % | $ | 16,600,290 | $ | 11,657,654 | 42.4 | % | |||||||||||||||||||||||
| Operating income | 310,769 | 168,239 | 84.7 | % | 794,702 | 466,466 | 70.4 | % | |||||||||||||||||||||||||||
| Operating margin | 5.0 | % | 4.0 | % | 100 bps | 4.8 | % | 4.0 | % | 80 bps | |||||||||||||||||||||||||
| Adjusted gross profit | $ | 844,192 | $ | 589,273 | 43.3 | % | $ | 2,295,748 | $ | 1,771,679 | 29.6 | % | |||||||||||||||||||||||
| Operating income | 310,769 | 168,239 | 84.7 | % | 794,702 | 466,466 | 70.4 | % | |||||||||||||||||||||||||||
| Adjusted operating margin | 36.8 | % | 28.6 | % | 820 bps | 34.6 | % | 26.3 | % | 830 bps | |||||||||||||||||||||||||
10
Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Transportation | $ | 5,999,901 | $ | 3,944,981 | 52.1 | % | $ | 15,800,576 | $ | 10,835,710 | 45.8 | % | |||||||||||||||||||||||
| Sourcing | 263,794 | 279,819 | (5.7) | % | 799,714 | 821,944 | (2.7) | % | |||||||||||||||||||||||||||
| Total revenues | 6,263,695 | 4,224,800 | 48.3 | % | 16,600,290 | 11,657,654 | 42.4 | % | |||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 5,180,390 | 3,378,651 | 53.3 | % | 13,580,980 | 9,141,354 | 48.6 | % | |||||||||||||||||||||||||||
| Purchased products sourced for resale | 239,113 | 256,876 | (6.9) | % | 723,562 | 744,621 | (2.8) | % | |||||||||||||||||||||||||||
| Personnel expenses | 399,880 | 302,904 | 32.0 | % | 1,123,616 | 933,607 | 20.4 | % | |||||||||||||||||||||||||||
| Other selling, general, and administrative expenses | 133,543 | 118,130 | 13.0 | % | 377,430 | 371,606 | 1.6 | % | |||||||||||||||||||||||||||
| Total costs and expenses | 5,952,926 | 4,056,561 | 46.7 | % | 15,805,588 | 11,191,188 | 41.2 | % | |||||||||||||||||||||||||||
| Income from operations | 310,769 | 168,239 | 84.7 | % | 794,702 | 466,466 | 70.4 | % | |||||||||||||||||||||||||||
| Interest and other expense | (16,662) | (7,465) | 123.2 | % | (41,419) | (32,904) | 25.9 | % | |||||||||||||||||||||||||||
| Income before provision for income taxes | 294,107 | 160,774 | 82.9 | % | 753,283 | 433,562 | 73.7 | % | |||||||||||||||||||||||||||
| Provision for income taxes | 47,054 | 24,245 | 94.1 | % | 139,136 | 74,948 | 85.6 | % | |||||||||||||||||||||||||||
| Net income | $ | 247,053 | $ | 136,529 | 81.0 | % | $ | 614,147 | $ | 358,614 | 71.3 | % | |||||||||||||||||||||||
| Net income per share (basic) | $ | 1.87 | $ | 1.01 | 85.1 | % | $ | 4.61 | $ | 2.65 | 74.0 | % | |||||||||||||||||||||||
| Net income per share (diluted) | $ | 1.85 | $ | 1.00 | 85.0 | % | $ | 4.56 | $ | 2.63 | 73.4 | % | |||||||||||||||||||||||
| Weighted average shares outstanding (basic) | 131,845 | 135,671 | (2.8) | % | 133,201 | 135,385 | (1.6) | % | |||||||||||||||||||||||||||
| Weighted average shares outstanding (diluted) | 133,436 | 137,128 | (2.7) | % | 134,661 | 136,137 | (1.1) | % | |||||||||||||||||||||||||||
11
Business Segment Information
(unaudited, in thousands, except average headcount)
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Three Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| Total revenues | $ | 3,814,988 | $ | 1,978,901 | $ | 469,806 | $ | 6,263,695 | ||||||||||||||||||
Adjusted gross profits(1) | 460,149 | 310,898 | 73,145 | 844,192 | ||||||||||||||||||||||
| Income (loss) from operations | 149,035 | 165,155 | (3,421) | 310,769 | ||||||||||||||||||||||
| Depreciation and amortization | 6,620 | 5,427 | 10,359 | 22,406 | ||||||||||||||||||||||
Total assets (2) | 3,437,461 | 2,438,106 | 727,039 | 6,602,606 | ||||||||||||||||||||||
| Average headcount | 6,764 | 5,167 | 4,037 | 15,968 | ||||||||||||||||||||||
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Three Months Ended September 30, 2020 | ||||||||||||||||||||||||||
| Total revenues | $ | 2,923,842 | $ | 831,957 | $ | 469,001 | $ | 4,224,800 | ||||||||||||||||||
Adjusted gross profits(1) | 367,943 | 157,657 | 63,673 | 589,273 | ||||||||||||||||||||||
| Income (loss) from operations | 122,526 | 46,299 | (586) | 168,239 | ||||||||||||||||||||||
| Depreciation and amortization | 7,095 | 9,385 | 10,436 | 26,916 | ||||||||||||||||||||||
Total assets (2) | 3,041,974 | 1,148,118 | 884,746 | 5,074,838 | ||||||||||||||||||||||
| Average headcount | 6,702 | 4,607 | 3,595 | 14,904 | ||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained above. The difference between adjusted gross profits and gross profits is not material.
(2) All cash and cash equivalents are included in All Other and Corporate.
12
Business Segment Information
(unaudited, in thousands, except average headcount)
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Nine Months Ended September 30, 2021 | ||||||||||||||||||||||||||
| Total revenues | $ | 10,611,892 | $ | 4,585,734 | $ | 1,402,664 | $ | 16,600,290 | ||||||||||||||||||
Adjusted gross profits(1) | 1,317,853 | 763,952 | 213,943 | 2,295,748 | ||||||||||||||||||||||
| Income (loss) from operations | 436,911 | 363,956 | (6,165) | 794,702 | ||||||||||||||||||||||
| Depreciation and amortization | 19,779 | 17,352 | 31,490 | 68,621 | ||||||||||||||||||||||
Total assets (2) | 3,437,461 | 2,438,106 | 727,039 | 6,602,606 | ||||||||||||||||||||||
| Average headcount | 6,650 | 4,951 | 3,881 | 15,482 | ||||||||||||||||||||||
| NAST | Global Forwarding | All Other and Corporate | Consolidated | |||||||||||||||||||||||
| Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||
| Total revenues | $ | 8,222,879 | $ | 2,070,161 | $ | 1,364,614 | $ | 11,657,654 | ||||||||||||||||||
Adjusted gross profits(1) | 1,120,277 | 448,931 | 202,471 | 1,771,679 | ||||||||||||||||||||||
| Income (loss) from operations | 357,898 | 117,033 | (8,465) | 466,466 | ||||||||||||||||||||||
| Depreciation and amortization | 19,550 | 27,740 | 29,777 | 77,067 | ||||||||||||||||||||||
Total assets (2) | 3,041,974 | 1,148,118 | 884,746 | 5,074,838 | ||||||||||||||||||||||
| Average headcount | 6,870 | 4,716 | 3,591 | 15,177 | ||||||||||||||||||||||
____________________________________________
(1) Adjusted gross profits is a non-GAAP financial measure explained above. The difference between adjusted gross profits and gross profits is not material.
(2)All cash and cash equivalents are included in All Other and Corporate.
13
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
| September 30, 2021 | December 31, 2020 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 202,649 | $ | 243,796 | |||||||
| Receivables, net of allowance for credit loss | 3,721,571 | 2,449,577 | |||||||||
| Contract assets, net of allowance for credit loss | 416,971 | 197,176 | |||||||||
| Prepaid expenses and other | 89,472 | 51,152 | |||||||||
| Total current assets | 4,430,663 | 2,941,701 | |||||||||
| Property and equipment, net of accumulated depreciation and amortization | 177,418 | 178,949 | |||||||||
| Right-of-use lease assets | 297,249 | 319,785 | |||||||||
| Intangible and other assets, net of accumulated amortization | 1,697,276 | 1,703,823 | |||||||||
| Total assets | $ | 6,602,606 | $ | 5,144,258 | |||||||
| Liabilities and stockholders’ investment | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and outstanding checks | $ | 1,864,189 | $ | 1,283,364 | |||||||
| Accrued expenses: | |||||||||||
| Compensation | 173,353 | 138,460 | |||||||||
| Transportation expense | 319,154 | 153,574 | |||||||||
| Income taxes | 39,276 | 43,700 | |||||||||
| Other accrued liabilities | 157,251 | 154,460 | |||||||||
| Current lease liabilities | 66,470 | 66,174 | |||||||||
| Current portion of debt | 632,000 | — | |||||||||
| Total current liabilities | 3,251,693 | 1,839,732 | |||||||||
| Long-term debt | 1,093,950 | 1,093,301 | |||||||||
| Noncurrent lease liabilities | 245,902 | 268,572 | |||||||||
| Noncurrent income taxes payable | 25,449 | 26,015 | |||||||||
| Deferred tax liabilities | 20,259 | 22,182 | |||||||||
| Other long-term liabilities | 14,553 | 14,523 | |||||||||
| Total liabilities | 4,651,806 | 3,264,325 | |||||||||
| Total stockholders’ investment | 1,950,800 | 1,879,933 | |||||||||
| Total liabilities and stockholders’ investment | $ | 6,602,606 | $ | 5,144,258 | |||||||
14
Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
| Nine Months Ended September 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating activities: | |||||||||||
| Net income | $ | 614,147 | $ | 358,614 | |||||||
| Adjustments to reconcile net income to net cash provided by (used for) operating activities: | |||||||||||
| Depreciation and amortization | 68,621 | 77,067 | |||||||||
| Provision for credit losses | 3,979 | 12,701 | |||||||||
| Stock-based compensation | 93,962 | 33,127 | |||||||||
| Deferred income taxes | (11,683) | (9,468) | |||||||||
| Excess tax benefit on stock-based compensation | (10,830) | (17,127) | |||||||||
| Other operating activities | 1,384 | 13,104 | |||||||||
| Changes in operating elements, net of acquisitions: | |||||||||||
| Receivables | (1,290,485) | (367,538) | |||||||||
| Contract assets | (220,889) | (56,131) | |||||||||
| Prepaid expenses and other | (38,525) | 12,331 | |||||||||
| Accounts payable and outstanding checks | 595,036 | 186,755 | |||||||||
| Accrued compensation | 35,413 | 16,458 | |||||||||
| Accrued transportation expenses | 165,580 | 46,396 | |||||||||
| Accrued income taxes | 6,400 | 17,125 | |||||||||
| Other accrued liabilities | 4,947 | 8,907 | |||||||||
| Other assets and liabilities | 2,043 | 4,728 | |||||||||
| Net cash provided by operating activities | 19,100 | 337,049 | |||||||||
| Investing activities: | |||||||||||
| Purchases of property and equipment | (26,503) | (17,446) | |||||||||
| Purchases and development of software | (26,062) | (22,815) | |||||||||
| Acquisitions, net of cash acquired | (14,749) | (223,230) | |||||||||
| Other investing activities | — | 5,525 | |||||||||
| Net cash used for investing activities | (67,314) | (257,966) | |||||||||
| Financing activities: | |||||||||||
| Proceeds from stock issued for employee benefit plans | 43,183 | 100,542 | |||||||||
| Total repurchases of common stock | (454,047) | (85,098) | |||||||||
| Cash dividends | (208,926) | (207,428) | |||||||||
| Payments on long-term borrowings | (2,048) | — | |||||||||
| Proceeds from short-term borrowings | 2,768,000 | 1,043,600 | |||||||||
| Payments on short-term borrowings | (2,136,251) | (1,126,600) | |||||||||
| Net cash used for financing activities | 9,911 | (274,984) | |||||||||
| Effect of exchange rates on cash | (2,844) | 612 | |||||||||
| Net change in cash and cash equivalents | (41,147) | (195,289) | |||||||||
| Cash and cash equivalents, beginning of period | 243,796 | 447,858 | |||||||||
| Cash and cash equivalents, end of period | $ | 202,649 | $ | 252,569 | |||||||
| As of September 30, | |||||||||||
| Operational Data: | 2021 | 2020 | |||||||||
| Employees | 16,231 | 14,695 | |||||||||
Source: C.H. Robinson
CHRW-IR
15
1 Q3 2021 October 26, 2021 Earnings Presentation Bob Biesterfeld, CEO Mike Zechmeister, CFO Chuck Ives, Director of IR
2 Safe Harbor Statement Except for the historical information contained herein, the matters set forth in this presentation and the accompanying earnings release are forward-looking statements that represent our expectations, beliefs, intentions or strategies concerning future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to such factors as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; competition and growth rates within the third party logistics industry; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; our ability to successfully integrate the operations of acquired companies with our historic operations; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with operations outside of the United States; risks associated with the potential impact of changes in government 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; risks related to the elimination of LIBOR; changes due to catastrophic events including pandemics such as COVID-19; and other risks and uncertainties detailed in our Annual and Quarterly Reports.
3 Tech-plus strategy with best-in-class solutions delivered through a global network of experts that you can rely on • Technology built by and for supply chain experts—proven, tailored, market-leading solutions that drive better outcomes • A diversified, global suite of services—we can reliably meet all of your logistics services and technology needs today and in the future • An information advantage delivering smarter solutions, through our data, scale and experience • Delivered through people you can rely on as an extension of your team
4 Diversified, global suite of logistics services • Largest network of truckload and LTL carriers in North America • Industry-leading technology to automate the entire shipment lifecycle and provide better end-to-end visibility • Full suite of services including dry van, drop trailer, flatbed, temperature controlled, common carrier, consolidation, drayage, expedited, last mile & parcel North American Surface Transportation (NAST) • #1 Non-Vessel Operating Common Carrier (NVOCC) in the Transpacific Eastbound trade lane • Top 5 NVOCC within the global ocean carrier portfolio • Fast, reliable air freight services at all major hubs around the world Global Forwarding (GF) • Robinson Fresh - Providing cold chain solutions and a full line of high-quality fruits and vegetables to retailers and foodservice companies • Managed Services (TMC) - Outsourced logistics combining global TMS technology with logistics experts • Other Surface Transportation – Presence in 12 European countries All Other & Corporate Q3 2021 Total Revenue Mix Q3 2021 Adjusted Gross Profit Mix NAST GF All Other & Corporate 37% 9% 54% 61% 32% 7%
5 • NAST Truckload volume growth continues • Sixth consecutive quarter of year-over-year growth in Global Forwarding results • Digital investments are delivering differentiated value and unlocking growth • Capacity-constrained environment expected to continue into 2022 Q3 2021 Key Highlights Record quarterly financial results
6 Company Highlights 6
7 Results Q3 2021 ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Three Months Ended September 30 Nine Months Ended September 30 $ in thousands, except per share amounts 2021 2020 % CHANGE 2021 2020 % CHANGE Total Revenues $6,263,695 $4,224,800 48.3 % $16,600,290 $11,657,654 42.4 % Total Adjusted Gross Profits(1) $844,192 $589,273 43.3 % $2,295,748 $1,771,679 29.6 % Adjusted Gross Profit Margin % 13.5 % 13.9 % (40 bps) 13.8 % 15.2 % (140 bps) Personnel Expenses $399,880 $302,904 32.0 % $1,123,616 $933,607 20.4 % Selling, General, and Admin $133,543 $118,130 13.0 % $377,430 $371,606 1.6 % Income from Operations $310,769 $168,239 84.7 % $794,702 $466,466 70.4 % Adjusted Operating Margin % 36.8 % 28.6 % 820 bps 34.6 % 26.3 % 830 bps Depreciation and Amortization $22,406 $26,916 (16.8) % $68,621 $77,067 (11.0) % Net Income $247,053 $136,529 81.0 % $614,147 $358,614 71.3 % Earnings Per Share (Diluted) $1.85 $1.00 85.0 % $4.56 $2.63 73.4 % Average Headcount 15,968 14,904 7.1 % 15,482 15,177 2.0 % • Increase in adjusted gross profits driven by higher volume and higher profit per transaction across our primary services • Increase in personnel expenses driven primarily by higher incentive compensation costs that are aligned with our expected 2021 results and the impact of short-term, pandemic-driven, cost reductions in Q3 of 2020 (1) Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers.
8 Q3 2021 NAST Results by Service Truckload, LTL and Other ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Adjusted Gross Profits(1) ($ in thousands) Three Months Ended September 30 2021 2020 % Change Truckload $309,787 $226,992 36.5 % LTL $131,166 $117,602 11.5 % Other $19,196 $23,349 (17.8) % Total Adjusted Gross Profits $460,149 $367,943 25.1 % Adjusted Gross Profit Margin % 12.1 % 12.6 % (50 bps) • Truckload volume up 4.5% and volume per business day increased in each month of the quarter(2) • Truckload AGP per load increased 30.0% due to a higher AGP per load on both contractual and transactional volume(2) • LTL volume up 1.0% and AGP per order increased 10.5%(2) • 340,000 fully automated truckload bookings • Added 9,500 new carriers in the quarter (1) Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. (2) Growth rates are rounded to the nearest 0.5 percent.
9 • 60% / 40% truckload contractual to transactional volume mix, consistent with Q3 last year • Average routing guide depth of 1.7 in Managed Services business vs. 1.6 in Q3 last year Truckload Price and Cost Change(1)(2)(3) Yo Y % C ha ng e in P ric e an d C os t YoY Price Change YoY Cost Change 2016 2017 2018 2019 2020 2021 -20% -10% 0% 10% 20% 30% 40% 50% Truckload Q3 Volume(2)(4) +4.5% Pricing(1)(2)(3) +27.0% Cost(1)(2)(3) +26.0% Adjusted Gross Profit(4) +36.5% (1) Price and cost change represents YoY change for North America truckload shipments across all segments. (2) Growth rates are rounded to the nearest 0.5 percent. (3) Pricing and cost measures exclude fuel surcharges and costs. (4) Truckload volume and adjusted gross profit growth represents YoY change for NAST truckload.
10 Technology Advancements & Transformation Efforts Providing Meaningful Efficiencies Beginning of Increased Tech Investment Beginning of Increased Tech Investment (1) 2020 metrics based on average full-time equivalents rather than average headcount, due to the impact of furloughed employees in 2020. Average full-time equivalents excludes furloughed employees and accounts for employees with reduced work hours.
11 Q3 2021 NAST Operating Income • Improved operating income due to 25.1% increase in AGP • Operating expenses increased 26.8%, primarily due to higher incentive compensation and the impact of short- term, pandemic-driven, cost reductions in Q3 of 2020 • Average headcount increased 0.9% Operating Income Adjusted Operating Margin % Q3 2020 Q3 2021 (90 bps) 21.6% $122.5M $149.0M 33.3% 32.4% Q3 2020 Q3 2021
12 ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Q3 2021 Global Forwarding Results by Service Ocean, Air, Customs and Other Adjusted Gross Profits(1) ($ in thousands) Three Months Ended September 30 2021 2020 % Change Ocean $214,824 $88,878 141.7 % Air $59,621 $33,836 76.2 % Customs $25,468 $22,463 13.4 % Other $10,985 $12,480 (12.0) % Total Adjusted Gross Profits $310,898 $157,657 97.2 % Adjusted Gross Profit Margin % 15.7 % 19.0 % (330 bps) • Continuing to add new commercial relationships with strategic, multi-national customers • Benefiting from investments we have made in technology, data and analytics & our global network (1) Adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. (2) Growth rates are rounded to the nearest 0.5 percent. • Ocean AGP increased due to a 116.5% increase in profit per shipment and a 12.0% increase in shipments(2) • Ocean market impacted by strong demand and capacity shortages • Air AGP increased due to a 50.5% increase in metric tons shipped and a 17.0% increase in profit per metric ton shipped(2) • Air market impacted by strong demand, and air cargo capacity continues to be strained • Customs AGP increased due to a 10.5% increase in transaction volume(2)
13 Q3 2021 Global Forwarding Operating Income • Improved operating income due to 97.2% increase in AGP • Operating expenses increased 30.9%, primarily due to higher personnel expenses driven by incentive compensation and additional headcount, as well as technology investments, partially offset by lower amortization • 12.2% increase in average headcount Operating Income Adjusted Operating Margin % Q3 2020 Q3 2021 29.4% 53.1%2,370 bps Q3 2020 Q3 2021 $46.3M $165.2M 256.7%
14 Q3 2021 All Other and Corporate Results Robinson Fresh, Managed Services and Other Surface Transportation ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Adjusted Gross Profits(1) ($ in thousands) Three Months Ended September 30 2021 2020 % Change Robinson Fresh $26,651 $24,449 9.0% Managed Services $26,720 $24,060 11.1% Other Surface Transportation $19,774 $15,164 30.4% Total $73,145 $63,673 14.9% Robinson Fresh • Increase in profit per case and a 2.5% increase in case volume(2) Managed Services • 12.5% increase in transaction volume • Total freight under management up 28.5% to $1.6B in Q3(2) Other Surface Transportation • 31.6% increase in Europe truckload AGP, with the acquisition of Combinex Holding B.V. contributing 13.5 percentage points of growth (1) Adjusted gross profit is a non-GAAP financial measure. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. (2) Growth rates are rounded to the nearest 0.5 percent.
15 Q3 2021 Cash Flow and Capital Distribution • $95.1 million increase in cash flow driven primarily by an improvement in net income, partially offset by an increase in operating working capital • $22.7 million in capital expenditures • Expect 2021 capital expenditures to be $70 million - $80 million Cash Flow from Operations Capital Distribution • $237.2 million returned to shareholders • $69.2 million in cash dividends • $168.0 million in share repurchases ◦ 1.86 million shares repurchased at an average price of $90.58 per share Q3 2020 Q3 2021 Q3 2020 Q3 2021 ($73.5)M $(168.6)M 56% $71.9M $237.2M 230% Cash Dividends Share Repurchases
16 Q3 2021 Balance Sheet ITEM MEDICAL/SURGICAL MASK NON-MEDICAL MASK Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor Lorem ipsum dolor $ in thousands September 30, 2021 September 30, 2020 % CHANGE Accounts Receivable, Net(1) $4,138,542 $2,534,357 63.3% Accounts Payable(2) $2,183,343 $1,416,495 54.1% Net Operating Working Capital(3) $1,955,199 $1,117,862 74.9% • Increases in accounts receivable were driven primarily by increases in total revenues and a mix shift associated with higher revenue growth in Global Forwarding, where days sales outstanding are approximately double that of our NAST business. • Quality of receivables remains high • Increases in accounts payable driven primarily by increases in total cost of purchased transportation • Over the long term, we expect our net operating working capital to grow at a slower rate than our AGP (1) Accounts receivable amount includes contract assets, net of allowance for credit loss. (2) Accounts payable amount includes outstanding checks and accrued transportation expense. (3) Net operating working capital is defined as net accounts receivable less accounts payable.
17 Appendix
18 Q3 2021 Transportation Results(1) Three Months Ended September 30 Nine Months Ended September 30 Transportation ($ in thousands) 2021 2020 % Change 2021 2020 % Change Total Revenues $5,999,901 $3,944,981 52.1% $15,800,576 $10,835,710 45.8% Total Adjusted Gross Profits(2) $819,511 $566,330 44.7% $2,219,596 $1,694,356 31.0% Adjusted Gross Profit Margin % 13.7% 14.4% (70 bps) 14.0% 15.6% (160 bps) Transportation Adjusted Gross Profit Margin % 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 16.9% 16.3% 15.3% 16.8% 19.7% 17.3% 16.4% 18.6% 15.3% 14.9% Q2 14.9% 15.4% 16.0% 17.5% 19.3% 16.2% 16.2% 18.3% 17.5% 13.8% Q3 15.6% 15.0% 16.2% 18.4% 17.6% 16.4% 16.6% 16.9% 14.4% 13.7% Q4 15.8% 15.1% 15.9% 19.0% 17.2% 16.6% 17.7% 15.6% 14.3% Total 15.8% 15.4% 15.9% 17.9% 18.4% 16.6% 16.7% 17.3% 15.3% (1) Includes results across all segments. (2) Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material.
19 Q3 2021 NAST Results Three Months Ended September 30 Nine Months Ended September 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $3,814,988 $2,923,842 30.5% $10,611,892 $8,222,879 29.1% Total Adjusted Gross Profits(1) $460,149 $367,943 25.1% $1,317,853 $1,120,277 17.6% Adjusted Gross Profit Margin % 12.1% 12.6% (50 bps) 12.4% 13.6% (120 bps) Income from Operations $149,035 $122,526 21.6% $436,911 $357,898 22.1% Adjusted Operating Margin % 32.4% 33.3% (90 bps) 33.2% 31.9% 130 bps Depreciation and Amortization $6,620 $7,095 (6.7%) $19,779 $19,550 1.2% Total Assets $3,437,461 $3,041,974 13.0% $3,437,461 $3,041,974 13.0% Average Headcount 6,764 6,702 0.9% 6,650 6,870 (3.2%) (1) Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material.
20 Q3 2021 Global Forwarding Results Three Months Ended September 30 Nine Months Ended September 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $1,978,901 $831,957 137.9% $4,585,734 $2,070,161 121.5% Total Adjusted Gross Profits(1) $310,898 $157,657 97.2% $763,952 $448,931 70.2% Adjusted Gross Profit Margin % 15.7% 19.0% (330 bps) 16.7% 21.7% (500 bps) Income from Operations $165,155 $46,299 256.7% $363,956 $117,033 211.0% Adjusted Operating Margin % 53.1% 29.4% 2,370 bps 47.6 % 26.1 % 2,150 bps Depreciation and Amortization $5,427 $9,385 (42.2%) $17,352 $27,740 (37.4%) Total Assets $2,438,106 $1,148,118 112.4% $2,438,106 $1,148,118 112.4% Average Headcount 5,167 4,607 12.2% 4,951 4,716 5.0% (1) Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material.
21 Q3 2021 All Other and Corporate Results Three Months Ended September 30 Nine Months Ended September 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $469,806 $469,001 0.2% $1,402,664 $1,364,614 2.8% Total Adjusted Gross Profits(1) $73,145 $63,673 14.9% $213,943 $202,471 5.7% Income from Operations ($3,421) ($586) NM ($6,165) ($8,465) NM Depreciation and Amortization $10,359 $10,436 (0.7%) $31,490 $29,777 5.8% Total Assets $727,039 $884,746 (17.8%) $727,039 $884,746 (17.8%) Average Headcount 4,037 3,595 12.3% 3,881 3,591 8.1% (1) Adjusted gross profits is a non-GAAP financial measure explained later in this presentation. The difference between adjusted gross profits and gross profits is not material.
22 Non-GAAP Reconciliations Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020 Revenues: Transportation $ 5,999,901 $ 3,944,981 $ 15,800,576 $ 10,835,710 Sourcing 263,794 279,819 799,714 821,944 Total Revenues 6,263,695 4,224,800 16,600,290 11,657,654 Costs and expenses: Purchased transportation and related services 5,180,390 3,378,651 13,580,980 9,141,354 Purchased products sourced for resale 239,113 256,876 723,562 744,621 Direct internally developed software amortization 5,152 4,388 14,601 12,124 Total direct costs 5,424,655 3,639,915 14,319,143 9,898,099 Gross profit & Gross profit margin 839,040 13.4 % 584,885 13.8 % 2,281,147 13.7 % 1,759,555 15.1 % Plus: Direct internally developed software amortization 5,152 4,388 14,601 12,124 Adjusted gross profit / Adjusted gross profit margin 844,192 13.5 % 589,273 13.9 % 2,295,748 13.8 % 1,771,679 15.2 % Our adjusted gross profit and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profit is calculated as gross profit excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profit divided by total revenues. We believe adjusted gross profit and adjusted gross profit margin are useful measures of our ability to source, add value, and sell services and products that are provided by third parties, and we consider adjusted gross profit to be a primary performance measurement. The reconciliation of gross profit to adjusted gross profit and gross profit margin to adjusted gross profit margin are presented below (in thousands):
23 Non-GAAP Reconciliations Three Months Ended September 30 Nine Months Ended September 30 2021 2020 2021 2020 Total Revenues $ 6,263,695 $ 4,224,800 $ 16,600,290 $ 11,657,654 Operating income 310,769 168,239 794,702 466,466 Operating margin 5.0 % 4.0 % 4.8 % 4.0 % Adjusted gross profit $ 844,192 $ 589,273 $ 2,295,748 $ 1,771,679 Operating income 310,769 168,239 794,702 466,466 Adjusted operating margin 36.8 % 28.6 % 34.6 % 26.3 % Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below (in thousands):
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