chrw-20220202
0001043277false00010432772022-02-022022-02-02
    
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: February 2, 2022
(Date of earliest event reported)
chrw-20220202_g1.jpg
C.H. ROBINSON WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)

Commission File Number: 000-23189
Delaware 41-1883630
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

14701 Charlson Road
Eden Prairie, Minnesota 55347
(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:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 par valueCHRWNasdaq Global Select Market

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 1.01    Entry into a Material Definitive Agreement.

Amendment to Receivables Purchase Agreement

On February 1, 2022, C.H. Robinson Worldwide, Inc. (the “Company”) entered into an amendment (“Amendment”) to its existing Receivables Purchase Agreement dated as of November 19, 2021 among the Company, as initial master servicer and performance guarantor, C.H. Robinson Receivables, LLC, a wholly-owned subsidiary of the Company and bankruptcy-remote entity (“CHRR”), as seller, Bank of America, N.A. (“BoA”) and Wells Fargo Bank, National Association (“Wells Fargo”), as committed purchasers, BofA and Wells Fargo, as purchaser agents, and BofA, as administrative agent, which provides a receivables securitization facility (the “Facility”). The Amendment primarily increases the funding available to CHRR under the Facility from $300 million to $500 million pursuant to the provisions of the existing Facility that permit CHRR to request an increase in the total commitment of up to $500 million.

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 the Company's announcement regarding its financial results for the quarter ended December 31, 2021 and its earnings conference call slides.

Item 2.03    Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits.

(d)    Exhibits
NumberDescription
99.1
99.2
104The 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: February 2, 2022



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C.H. Robinson
14701 Charlson Rd.
Eden Prairie, MN 55347
www.chrobinson.com

FOR INQUIRIES, CONTACT:
Chuck Ives, Director of Investor Relations
FOR IMMEDIATE RELEASE

C.H. Robinson Reports 2021 Fourth Quarter Results
Eden Prairie, MN, February 2, 2022 - C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended December 31, 2021.
Fourth Quarter Key Metrics:
•Total revenues increased 42.9% to $6.5 billion
•Gross profits increased 33.7% to $850.7 million
•Adjusted gross profits(1) increased 33.7% to $856.3 million
•Income from operations increased 39.0% to $287.4 million
•Adjusted operating margin(1) increased 130 basis points to 33.6%
•Diluted earnings per share (EPS) increased 61.1% to $1.74
•Cash generated by operations decreased by $86.3 million to $75.9 million

Full-Year Key Metrics:
•Total revenues increased 42.5% to $23.1 billion
•Gross profits increased 30.7% to $3.1 billion
•Adjusted gross profits(1) increased 30.7% to $3.2 billion
•Income from operations increased 60.7% to $1.1 billion
•Adjusted operating margin(1) increased 640 basis points to 34.3 percent
•Diluted earnings per share (EPS) increased 69.6% to $6.31
•Cash flow from operations decreased 81.0% to $95.0 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 11 for further discussion and a GAAP to Non-GAAP reconciliation.
1


"In the face of some of the greatest disruption and tightest capacity the logistics industry has ever seen, C.H Robinson demonstrated strength, resilience and commitment to our global customers in 2021," said Bob Biesterfeld, President and Chief Executive Officer of C.H. Robinson. As a result of strategic planning and investments, as well as outstanding operational performance, we delivered record financial results for the year and strong results for the fourth quarter. Our tech-plus strategy continued to be a key differentiator for our company, enabling us to help our customers and carriers navigate the unprecedented level of supply chain disruption, while maintaining the superior service that our global customers have come to expect from C.H. Robinson. Looking ahead, we will continue capitalizing on opportunities to integrate our advanced innovation and technology to deliver best-in-class, comprehensive solutions across our combination of modes, services and geographies. The positive momentum of our business remains strong as demand for our global suite of services and for our digital freight platform continues to grow. We believe our strategies and competitive advantages will enable us to create more value for customers and in turn, win more business and increase our market share, while delivering higher profitability and return on invested capital."


2

Summary of Fourth Quarter Results Compared to the Fourth Quarter of 2020
•Total revenues increased 42.9% to $6.5 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 33.7% to $850.7 million. Adjusted gross profits increased 33.7% to $856.3 million, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
•Operating expenses increased 31.2% to $568.9 million. Personnel expenses increased 35.8% to $420.0 million, primarily due to higher incentive compensation costs and higher headcount, and also due to the benefit realized in the fourth quarter of 2020 from our short-term, pandemic-related cost reductions. Average headcount increased 11.9%. Selling, general and administrative ("SG&A") expenses of $148.9 million increased 19.6%, primarily due to higher purchased services and travel expenses, both of which were reduced in the fourth quarter of 2020 by short-term, pandemic-related cost reductions.
•Income from operations totaled $287.4 million, up 39.0% due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 33.6% increased 130 basis points.
•Interest and other expenses totaled $18.4 million, consisting primarily of $14.1 million of interest expense, which increased $1.8 million versus last year due to a higher average debt balance. The fourth quarter also included a $6.5 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
•The effective tax rate in the quarter was 14.5% compared to 24.1% in the fourth quarter last year. The rate decrease was due primarily to a favorable mix of foreign earnings and an increased benefit related to U.S. tax credits and incentives.
•Net income totaled $230.1 million, up 55.7% from a year ago. Diluted EPS of $1.74 increased 61.1%.


3

Summary of Full Year Results Compared to 2020

•Total revenues increased 42.5% to $23.1 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 30.7% to $3.1 billion. Adjusted gross profits increased 30.7% to $3.2 billion, primarily driven by higher adjusted gross profit per transaction and higher volume across most of our services.
•Operating expenses increased 19.0% to $2.1 billion. Personnel expenses increased 24.2% to $1.5 billion, primarily due to higher incentive compensation costs and higher headcount, and also due to the benefit realized in 2020 from our short-term, pandemic-related cost reduction initiatives. SG&A expenses increased 6.1% to $526.4 million, primarily due to increases in purchased services and warehouse expenses, partially offset by decreases in amortization and bad debt expenses and by an $11.5 million loss on the sale-leaseback of a company-owned data center in 2020.
•Income from operations totaled $1.1 billion, up 60.7% from last year, primarily due to the increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 34.3% increased 640 basis points.
•Interest and other expenses totaled $59.8 million, which primarily consists of $52.1 million of interest expense, which increased $3.0 million versus last year due to a higher average debt balance. The full year also included a $15.1 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 full year was 17.4% compared to 19.4% in the year-ago period. The rate decrease was due primarily to a favorable mix of foreign earnings and an increased benefit related to U.S. tax credits and incentives.
•Net income totaled $844.2 million, up 66.7% from a year ago. Diluted EPS of $6.31 increased 69.6%.



4

North American Surface Transportation Results
Summarized financial results of our NAST segment are as follows (dollars in thousands):
Three Months Ended December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Total revenues$3,896,025 $3,089,674 26.1 %$14,507,917 $11,312,553 28.2 %
Adjusted gross profits(1)
475,100 396,814 19.7 %1,792,953 1,517,091 18.2 %
Income from operations148,440 150,577 (1.4)%585,351 508,475 15.1 %
____________________________________________
(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.

Fourth quarter total revenues for C.H. Robinson's NAST segment totaled $3.9 billion, an increase of 26.1% 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 19.7% in the quarter to $475.1 million. Adjusted gross profits in truckload increased 22.2% due to a 15.0% increase in adjusted gross profit per load and a 6.0% increase in shipments. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 18.5% in the quarter, while truckload linehaul cost per mile, excluding fuel surcharges, increased approximately 18.0%. LTL adjusted gross profits increased 18.3% versus the year-ago period, as adjusted gross profit per order increased 23.5% and LTL volumes declined 4.0%. NAST overall volume growth was flat for the quarter. The fourth quarter of 2021 had one less business day than the fourth quarter of 2020. Truckload volume per business day increased 7.5% in the quarter, and LTL volume per business day declined 2.5%, resulting in overall NAST volume growth per business day of 1.5%. Operating expenses increased 32.7% primarily due to higher incentive compensation and higher headcount, and also due to the benefit realized in 2020 from our short-term, pandemic-related cost reduction initiatives. Income from operations decreased 1.4% to $148.4 million, and adjusted operating margin declined 670 basis points to 31.2%. NAST average headcount was up 7.5% in the quarter.


5

Global Forwarding Results
Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):
Three Months Ended December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Total revenues$2,144,056 $1,030,364 108.1 %$6,729,790 $3,100,525 117.1 %
Adjusted gross profits(1)
309,589 180,057 71.9 %1,073,541 628,988 70.7 %
Income from operations146,800 58,480 151.0 %510,756 175,513 191.0 %
____________________________________________
(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.

Fourth quarter total revenues for the Global Forwarding segment increased 108.1% to $2.1 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 71.9% in the quarter to $309.6 million. Ocean adjusted gross profits increased 86.5%, driven by a 78.0% increase in adjusted gross profit per shipment and a 5.0% increase in volumes. Adjusted gross profits in air increased 91.9% driven by a 37.5% increase in metric tons shipped and a 39.5% increase in adjusted gross profit per metric ton. Customs adjusted gross profits increased 5.7%, primarily driven by a 0.5% increase in transaction volume. Operating expenses increased 33.9%, primarily driven by increased salaries, incentive compensation and technology expenses. Fourth quarter average headcount increased 17.4%. Income from operations increased 151.0% to $146.8 million, and adjusted operating margin expanded 1,490 basis points to 47.4% in the quarter.


6

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 December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Total revenues$461,767 $429,414 7.5 %$1,864,431 $1,794,028 3.9 %
Adjusted gross profits(1):
Robinson Fresh$26,004 $23,591 10.2 %$107,543 $105,700 1.7 %
Managed Services26,554 24,738 7.3 %105,064 94,828 10.8 %
Other Surface Transportation19,094 15,378 24.2 %72,988 65,650 11.2 %
____________________________________________
(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.

Fourth quarter Robinson Fresh adjusted gross profits increased 10.2% to $26.0 million, due to an 11.5% increase in case volume. Managed Services adjusted gross profits increased 7.3% in the quarter, primarily due to a 2.5% increase in volume. Other Surface Transportation adjusted gross profits increased 24.2% to $19.1 million, primarily due to a 25.4% increase in Europe truckload adjusted gross profits, with the acquisition of Combinex Holding B.V. contributing 10.3 percentage points of growth to truckload adjusted gross profits.

Other Income Statement Items
The fourth quarter effective tax rate was 14.5%, down from 24.1% last year, and lower than our expectations, primarily due to a favorable mix of foreign earnings and an increased benefit from U.S. tax credits and incentives. We expect our 2022 full-year effective tax rate to be 19 to 21 percent.
Interest and other expenses totaled $18.4 million, consisting primarily of $14.1 million of interest expense, which increased $1.8 million versus last year due to a higher average debt balance. The fourth quarter also included a $6.5 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
Diluted weighted average shares outstanding in the quarter were down 3.3% due primarily to share repurchases over the past twelve months.


7

Cash Flow Generation and Capital Distribution
Cash from operations totaled $75.9 million in the fourth quarter, compared to $162.1 million of cash from operations in the fourth quarter of 2020. The $86.3 million decrease in cash flow was primarily due to a $199.9 million sequential increase in net operating working capital in the fourth quarter of 2021, compared to a $92.0 million sequential increase in the fourth quarter of 2020. The increase in net operating working capital in the fourth quarter of 2021 resulted primarily from a $278.6 million sequential increase in accounts receivable and contract assets, compared to a $78.7 million sequential increase in total accounts payable.
In the fourth quarter of 2021, $222.8 million of cash was returned to shareholders, with $154.4 million in total repurchases of common stock and $68.4 million in cash dividends.
Capital expenditures totaled $18.4 million in the quarter. Capital expenditures for 2022 are expected to be $90 million to $100 million, primarily driven by technology investments in our digital platform.
Subsequent to the end of the fourth quarter of 2021, the borrowing capacity on our accounts receivable securitization facility was expanded by an additional $200 million, bringing its total borrowing capacity to $500 million.


8

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 $28 billion in freight under management and 20 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 100,000 customers and 85,000 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 Fourth Quarter 2021 Earnings Conference Call
Wednesday, February 2, 2022; 8:30 a.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

9


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 December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Adjusted gross profits(1):
  Transportation
     Truckload$339,512 $277,509 22.3 %$1,280,629 $1,071,873 19.5 %
     LTL139,462 117,864 18.3 %523,365 457,290 14.4 %
     Ocean209,801 112,412 86.6 %711,223 350,094 103.2 %
     Air65,783 35,723 84.1 %225,286 151,443 48.8 %
     Customs25,338 23,977 5.7 %100,539 87,095 15.4 %
     Other logistics services52,508 51,113 2.7 %210,958 195,159 8.1 %
     Total transportation832,404 618,598 34.6 %3,052,000 2,312,954 32.0 %
  Sourcing23,937 21,980 8.9 %100,089 99,303 0.8 %
Total adjusted gross profits$856,341 $640,578 33.7 %$3,152,089 $2,412,257 30.7 %
____________________________________________
(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.
10

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 December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Revenues:
Transportation$6,245,998 $4,311,852 44.9 %$22,046,574 $15,147,562 45.5 %
Sourcing255,850 237,600 7.7 %1,055,564 1,059,544 (0.4)%
Total revenues6,501,848 4,549,452 42.9 %23,102,138 16,207,106 42.5 %
Costs and expenses:
Purchased transportation and related services5,413,594 3,693,254 46.6 %18,994,574 12,834,608 48.0 %
Purchased products sourced for resale231,913 215,620 7.6 %955,475 960,241 (0.5)%
Direct internally developed software amortization5,607 4,510 24.3 %20,208 16,634 21.5 %
Total direct expenses5,651,114 3,913,384 44.4 %19,970,257 13,811,483 44.6 %
Gross profit$850,734 $636,068 33.7 %$3,131,881 $2,395,623 30.7 %
Plus: Direct internally developed software amortization5,607 4,510 24.3 %20,208 16,634 21.5 %
Adjusted gross profit$856,341 $640,578 33.7 %$3,152,089 $2,412,257 30.7 %

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 December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Total revenues$6,501,848 $4,549,452 42.9 %$23,102,138 $16,207,106 42.5 %
Operating income287,406 206,802 39.0 %1,082,108 673,268 60.7 %
Operating margin4.4 %4.5 %(10) bps4.7 %4.2 %50 bps
Adjusted gross profit$856,341 $640,578 33.7 %$3,152,089 $2,412,257 30.7 %
Operating income287,406 206,802 39.0 %1,082,108 673,268 60.7 %
Adjusted operating margin33.6 %32.3 %130 bps34.3 %27.9 %640 bps

11

Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
Three Months Ended December 31,Twelve Months Ended December 31,
20212020% change20212020% change
Revenues:
 Transportation$6,245,998 $4,311,852 44.9 %$22,046,574 $15,147,562 45.5 %
 Sourcing255,850 237,600 7.7 %1,055,564 1,059,544 (0.4)%
   Total revenues6,501,848 4,549,452 42.9 %23,102,138 16,207,106 42.5 %
Costs and expenses:
 Purchased transportation and related services5,413,594 3,693,254 46.6 %18,994,574 12,834,608 48.0 %
 Purchased products sourced for resale231,913 215,620 7.6 %955,475 960,241 (0.5)%
 Personnel expenses419,994 309,260 35.8 %1,543,610 1,242,867 24.2 %
Other selling, general, and administrative expenses148,941 124,516 19.6 %526,371 496,122 6.1 %
   Total costs and expenses6,214,442 4,342,650 43.1 %22,020,030 15,533,838 41.8 %
Income from operations287,406 206,802 39.0 %1,082,108 673,268 60.7 %
Interest and other expense(18,398)(12,033)52.9 %(59,817)(44,937)33.1 %
Income before provision for income taxes269,008 194,769 38.1 %1,022,291 628,331 62.7 %
Provision for income taxes38,910 46,962 (17.1)%178,046 121,910 46.0 %
Net income$230,098 $147,807 55.7 %$844,245 $506,421 66.7 %
Net income per share (basic)$1.77 $1.09 62.4 %$6.37 $3.74 70.3 %
Net income per share (diluted)$1.74 $1.08 61.1 %$6.31 $3.72 69.6 %
Weighted average shares outstanding (basic)130,348 135,970 (4.1)%132,482 135,532 (2.3)%
Weighted average shares outstanding (diluted)132,617 137,176 (3.3)%133,834 136,173 (1.7)%

12

Business Segment Information
(unaudited, in thousands, except average headcount)
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended December 31, 2021
Total revenues$3,896,025 $2,144,056 $461,767 $6,501,848 
Adjusted gross profits(1)
475,100 309,589 71,652 856,341 
Income (loss) from operations148,440 146,800 (7,834)287,406 
Depreciation and amortization6,464 5,471 10,703 22,638 
Total assets (2)
3,349,578 2,843,239 835,295 7,028,112 
Average headcount7,044 5,430 4,080 16,554 
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended December 31, 2020
Total revenues$3,089,674 $1,030,364 $429,414 $4,549,452 
Adjusted gross profits(1)
396,814 180,057 63,707 640,578 
Income (loss) from operations150,577 58,480 (2,255)206,802 
Depreciation and amortization5,764 6,810 12,086 24,660 
Total assets (2)
2,946,409 1,392,411 805,438 5,144,258 
Average headcount6,555 4,626 3,610 14,791 
____________________________________________
(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

Business Segment Information
(unaudited, in thousands, except average headcount)
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Twelve Months Ended December 31, 2021
Total revenues$14,507,917 $6,729,790 $1,864,431 $23,102,138 
Adjusted gross profits(1)
1,792,953 1,073,541 285,595 3,152,089 
Income (loss) from operations585,351 510,756 (13,999)1,082,108 
Depreciation and amortization26,243 22,823 42,193 91,259 
Total assets (2)
3,349,578 2,843,239 835,295 7,028,112 
Average headcount6,764 5,071 3,926 15,761 
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Twelve Months Ended December 31, 2020
Total revenues$11,312,553 $3,100,525 $1,794,028 $16,207,106 
Adjusted gross profits(1)
1,517,091 628,988 266,178 2,412,257 
Income (loss) from operations508,475 175,513 (10,720)673,268 
Depreciation and amortization25,314 34,550 41,863 101,727 
Total assets (2)
2,946,409 1,392,411 805,438 5,144,258 
Average headcount6,811 4,708 3,600 15,119 

____________________________________________
(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.




14

Condensed Consolidated Balance Sheets
(unaudited, in thousands)
December 31, 2021December 31, 2020
Assets
   Current assets:
     Cash and cash equivalents$257,413 $243,796 
     Receivables, net of allowance for credit loss3,963,487 2,449,577 
     Contract assets, net of allowance for credit loss453,660 197,176 
     Prepaid expenses and other129,593 51,152 
        Total current assets4,804,153 2,941,701 
 
  Property and equipment, net of accumulated depreciation and amortization139,831 178,949 
  Right-of-use lease assets292,559 319,785 
  Intangible and other assets, net of accumulated amortization1,791,569 1,703,823 
Total assets$7,028,112 $5,144,258 
Liabilities and stockholders’ investment
  Current liabilities:
     Accounts payable and outstanding checks$1,919,301 $1,283,364 
     Accrued expenses:
        Compensation201,421 138,460 
        Transportation expense342,778 153,574 
        Income taxes100,265 43,700 
        Other accrued liabilities171,266 154,460 
Current lease liabilities66,311 66,174 
Current portion of debt525,000 — 
        Total current liabilities3,326,342 1,839,732 
Long-term debt1,393,649 1,093,301 
Noncurrent lease liabilities241,369 268,572 
Noncurrent income taxes payable28,390 26,015 
Deferred tax liabilities16,113 22,182 
  Other long-term liabilities315 14,523 
Total liabilities5,006,178 3,264,325 
Total stockholders’ investment2,021,934 1,879,933 
Total liabilities and stockholders’ investment$7,028,112 $5,144,258 

15

Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
Twelve Months Ended December 31,
20212020
Operating activities:
Net income$844,245 $506,421 
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 Depreciation and amortization91,259 101,727 
 Provision for credit losses10,649 17,281 
 Stock-based compensation129,977 43,995 
 Deferred income taxes(110,188)(32,984)
 Excess tax benefit on stock-based compensation(13,101)(17,581)
Other operating activities1,915 15,096 
Changes in operating elements, net of acquisitions:
Receivables(1,547,545)(452,145)
Contract assets (257,728)(65,454)
Prepaid expenses and other(43,819)27,237 
Accounts payable and outstanding checks660,028 180,272 
Accrued compensation63,912 22,547 
Accrued transportation expenses189,204 52,380 
Accrued income taxes72,665 51,916 
Other accrued liabilities1,607 26,503 
Other assets and liabilities1,875 21,980 
Net cash provided by operating activities94,955 499,191 
Investing activities:
Purchases of property and equipment(34,197)(23,133)
Purchases and development of software(36,725)(30,876)
Acquisitions, net of cash acquired(14,750)(223,230)
Other investing activities— 5,525 
Net cash used for investing activities(85,672)(271,714)
Financing activities:
Proceeds from stock issued for employee benefit plans70,669 107,657 
Total repurchases of common stock(608,476)(195,368)
Cash dividends(277,321)(209,956)
Proceeds from long-term borrowings300,000 — 
Payments on long-term borrowings(2,048)— 
Proceeds from short-term borrowings3,728,000 1,436,600 
Payments on short-term borrowings(3,203,251)(1,579,600)
Net cash provided by (used for) financing activities7,573 (440,667)
Effect of exchange rates on cash(3,239)9,128 
Net change in cash and cash equivalents13,617 (204,062)
Cash and cash equivalents, beginning of period243,796 447,858 
Cash and cash equivalents, end of period$257,413 $243,796 
As of December 31,
Operational Data:20212020
Employees 16,877 14,888 


Source: C.H. Robinson
CHRW-IR
16
1 Q4 2021 February 2, 2022 Earnings Presentation Bob Biesterfeld, CEO Mike Zechmeister, CFO Chuck Ives, Director of IR

 
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. 2©2022 C.H. Robinson Worldwide, Inc. All Rights Reserved.

 
Q4 Highlights: Balanced Growth Continues 3 ▪ 6% year-over-year Truckload volume growth ▪ Year-over-year AGP increases were driven by both higher AGP per shipment and higher volume in ocean, truckload and air ▪ Truckload AGP per mile continued to improve, marking the 5th consecutive quarter of flat to increasing AGP per mile ▪ Global Forwarding continues to execute well and provide creative solutions in an environment in which demand still exceeds capacity $6.5B Total Revenues +43% Y/Y $856.3M Adj. Gross Profit +34% Y/Y $287.4M Income from Ops. +39% Y/Y $1.74 Diluted Earnings/Share +61% Y/Y Q4 2021

 
FY’21 Highlights: Record Year, Momentum Remains Strong 4 ▪ Delivered record annual financial results ▪ Responsiveness of team and superior customer service enabled us to maintain customer loyalty ▪ Effectively helped our customers and carriers navigate the unprecedented level of supply chain disruption ▪ Increased demand for global suite of services – over half of total revenues and approximately half of transportation adjusted gross profits came from customers to whom we provide both surface transportation AND global forwarding services $23.1B Total Revenues +43% Y/Y $3.2B Adj. Gross Profit +31% Y/Y $1.1B Income from Ops. +61% Y/Y $6.31 Diluted Earnings/Share +70% Y/Y FY 2021

 
All Other & Corporate ▪ Robinson Fresh case volume up 11.5% in Q4 ▪ Managed Services 2021 FUM** up 33% ▪ Europe Surface Transportation continues to grow truckload AGP Global Forwarding (GF) ▪ Seven consecutive quarters of year-over-year growth in total revenues, AGP and operating income ▪ Continuing to add new commercial relationships with strategic, multi- national customers ▪ Continuing to make investments in technology, data and analytics & our global network North American Surface Transportation (NAST) ▪ Load-to-truck ratios still at historic highs, driven by structural constraints, strong import demand, port congestion, and COVID and winter storms impacts ▪ Digital investments continue to deliver customer value and unlock growth ▪ Volume delivered through real-time, dynamic pricing tools up 153% ▪ Adjusted gross profit (AGP) per load continued to improve in both TL and LTL ▪ Repriced more of our contractual portfolio, and focused on profitable market share growth Segment Highlights: Diversified, Global Suite of Services 5 34% 9% 57% FY 2021 Adjusted Gross Profit* +18.2% Y/Y +7.3% Y/Y +70.7% Y/Y • 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. ** FUM = Freight under Management Over half of 2021 total revenues and approximately half of 2021 transportation adjusted gross profits came from customers to whom we provide both surface transportation and global forwarding services.

 
NAST Q4’21 Results by Service 6 ▪ Truckload volume up 6.0% (2) ▪ Truckload AGP per load increased 15.0% due to a higher AGP per load on both contractual and transactional volume (2) ▪ Continued to reprice contractual portfolio with focus on profitable market share ▪ LTL volume down 4.0% and AGP per order increased 23.5% (2) ▪ 365,000 fully automated truckload bookings in Q4 and over 1,200,000 million for the full year ▪ Added 10,100 new carriers in the quarter Fourth Quarter Highlights 4Q21 4Q20 %▲ Truckload (“TL”) $316.0 $258.6 22.2 % Less than Truckload (“LTL”) $138.1 $116.7 18.3 % Other $21.1 $21.6 (2.3)% Total Adjusted Gross Profits $475.1 $396.8 19.7 % Adjusted Gross Profit Margin % 12.2 % 12.8 % (60 bps) Adjusted Gross Profit (1) ($ in millions) 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.

 
Truckload Price and Cost Change (1)(2)(3) 7 Truckload Q4 Volume(2)(4) +6.0% Pricing(1)(2)(3) +18.5% Cost(1)(2)(3) +18.0% Adjusted Gross Profit(4) +22.2% (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. -20% -10% 0% 10% 20% 30% 40% 50% YoY Price Change YoY Cost Change ▪ 55% / 45% truckload contractual to transactional volume mix, consistent with Q4 last year ▪ Average routing guide depth of 1.7 in Managed Services business vs. 1.8 in Q4 last year (3) Pricing and cost measures exclude fuel surcharges and costs. (4) Truckload volume and adjusted gross profit growth represents YoY change for NAST truckload.

 
Technology & Transformation Efforts Enhancing Efficiencies 8 (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 Beginning of Increased Tech Investment The decline over the past two quarters was driven by active hiring and expansion of our workforce to accommodate future demand and an extended cycle and in order to drive growth while new employees ramp up to expected productivity

 
Global Forwarding Q4’21 Results by Service 9 Fourth Quarter Highlights 4Q21 4Q20 %▲ Ocean $209.7 $112.4 86.5% Air $64.9 $33.8 91.9% Customs $25.3 $24.0 5.7% Other $9.7 $9.8 (1.5%) Total Adjusted Gross Profits $309.6 $180.1 71.9 % Adjusted Gross Profit Margin % 14.4% 17.5% (310 bps) Adjusted Gross Profit (1) ($ in millions) ▪ Ocean AGP increased due to a 78.0% increase in AGP per shipment and a 5.0% increase in shipments (2) ▪ Ocean market impacted by strong demand and capacity shortages ▪ Air AGP increased due to a 37.5% increase in metric tons shipped and a 39.5% increase in AGP 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 5.0% increase in AGP per transaction (2) 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. Fourth uarter ighlights

 
Fourth Quarter Highlights All Other & Corporate Q4’21 Results 10 Robinson Fresh ▪ 11.5% increase in case volume (2) Managed Services ▪ 2.5% increase in transaction volume (2) ▪ Total freight under management up 23.5% to $1.7B in Q4 (2) Other Surface Transportation ▪ 25.4% increase in Europe truckload AGP, with the acquisition of Combinex Holding B.V. contributing 10.3 percentage points of growth 4Q21 4Q20 %▲ Robinson Fresh $26.0 $23.6 10.2 % Managed Services $26.6 $24.7 7.3% Other Surface Transportation $19.1 $15.4 24.2 % Total $71.7 $63.7 12.5 % Adjusted Gross Profit (1) ($ in millions) 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.

 
Tech-Plus Strategy: Unlocking Growth Across Suite of Services ▪ Diversified, global suite of services ▪ Technology built by and for supply chain experts ▪ Proven, tailored, market-leading solutions that drive better outcomes ▪ Delivering smarter solutions, through our data, scale and experience ▪ Providing clear information advantage that help our carriers and clients win/succeed ▪ The “Plus” is delivered through people you can rely on as an extension of your team 11 Best-in-class solutions delivered through a global network of experts that you can rely on

 
Tech-Plus Strategy: Delivering Comprehensive Solutions 12 ✓ 153% year-over-year increase in volume driven through our real-time, dynamic pricing tools in 2021; $875 million of revenue through this digital channel, up 193% over 2020 ✓ 15%+ year-over-year growth in daily average users of our customer and carrier-facing products in 2021 ✓ Over 1.2 million fully automated bookings in NAST truckload business, an increase of 65% compared to 2020 ✓ Delivered a 620-basis point favorable spread in 2021 NAST productivity index

 
Q4'19 Q4'20 Q4'21 $137 $207 $287 Income from Operations ($M) Financial Performance: Record Q4 Revenue/AGP Results 13 Q4'19 Q4'20 Q4'21 $579 $641 $856 Adjusted Gross Profit ($M) Q4'19 Q4'20 Q4'21 $3.8 $4.5 $6.5 Total Revenues ($B) Q4'19 Q4'20 Q4'21 $0.73 $1.08 $1.74 Earnings Per Share ▪ Decrease in cash flow driven primarily by an increase in operating working capital, partially offset by improvement in net income ▪ When the cost of purchased transportation, and subsequently prices, come down from their current all-time highs, we expect a commensurate benefit to operating cash flow Cash Flow from Operations ($M)

 
Capital Allocation Priorities: Balanced and Opportunistic 14 ▪ Prioritize high-return, close-in investments to drive organic growth ▪ Opportunistically use M&A to drive total shareholder return by advancing tools, services and global skillset ▪ Maintain $600M-750M of liquid assets (cash & equivalents) ▪ Stagger debt maturities to reduce refinancing risk ▪ Grow dividends in alignment with long-term EBITDA ▪ Opportunistic approach to share buybacks ▪ 21.6M of share repurchase authorization remaining ▪ Minimize WACC by maintaining investment grade credit ratings ▪ Efficiently repatriate cash, resulting in holding only the cash needed to fund operations Optimize Balance SheetSustain & Drive Growth Min Risk, Max Cash Usage Return Capital Q4'20 Q4'21 2020 2021 $110 $154 $195 $608 $3 $68 $210 $277 Capital Distribution ($M) Share Repurchases Cash Dividends ▪ $886 million of cash returned to shareholders in 2021, up 119% ▪ Board authorized additional 20 million share repurchase authorization in December 2021 ▪ Board declared a 7.8% increase in regular quarterly dividend, from $0.51 per share to $0.55 per share, effective in with dividend paid in January 2022

 
Sustainable Growth Strategy 15 Take Share Grow Globally Digital Commitment Optimize Processes Spend Strategically Leverage position as world’s most powerful supply chain platform to sustainably outpace industry growth • Expand Global Forwarding (“GF”) business as provider of choice for multinational customers • Leverage scale to exploit secularly growing market and unique global footprint • Grow capabilities and presence in key trade lanes and geographies • Provide customers & carriers the digital products they value • Leverage data, scale and information advantage • Bring meaningful products, features and insights to both sides of the two-sided marketplace • Digitize more internal tools and processes • Free customer and carrier reps’ capacity for higher-value touchpoints • Drive more revenue synergy across business units • Support organic growth by leveraging strong consistent cash flow • Modernize core for future integrations • Complement with opportunistic M&A • Leverage integrated service model to take share and expand globally • Utilize “Tech Plus” strategy to out service competitors • Expand modal capabilities

 
2022 Priorities 16 ▪ Continue driving long-term diversified growth across an intentional combination of modes, services and geographic footprint ▪ Advance our tech-plus strategy to enhance, expand and leverage the most connected supply chain platform and deliver best-in-class, comprehensive solutions for our customers and carriers ▪ Maintain a healthy financial profile and attractive margins across the business by leveraging technology advantages and competitive pricing ▪ Uphold balanced approach to capital allocation to drive growth and return capital to shareholders ▪ Invest in talent and capabilities, as customers and carriers rely on our teams and digital products

 
17 Appendix

 
Q4 2021 Transportation Results(1) 18 Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $6,245,998 $4,311,852 44.9% $22,046,574 $15,147,562 45.5% Total Adjusted Gross Profits(2) $832,404 $618,598 34.6% $3,052,000 $2,312,954 32.0% Adjusted Gross Profit Margin % 13.3% 14.3% (100 bps) 13.8% 15.3% (150 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% 13.3% Total 15.8% 15.4% 15.9% 17.9% 18.4% 16.6% 16.7% 17.3% 15.3% 13.8% (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.

 
Q4 2021 NAST Results 19 (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. Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $3,896,025 $3,089,674 26.1% $14,507,917 $11,312,553 28.2% Total Adjusted Gross Profits(1) $475,100 $396,814 19.7% $1,792,953 $1,517,091 18.2% Adjusted Gross Profit Margin % 12.2% 12.8% (60 bps) 12.4% 13.4% (100 bps) Income from Operations $148,440 $150,577 (1.4%) $585,351 $508,475 15.1% Adjusted Operating Margin % 31.2% 37.9% (670 bps) 32.6% 33.5% (90 bps) Depreciation and Amortization $6,464 $5,764 12.1% $26,243 $25,314 3.7% Total Assets $3,349,578 $2,946,409 13.7% $3,349,578 $2,946,409 13.7% Average Headcount 7,044 6,555 7.5% 6,764 6,811 (0.7%)

 
Q4 2021 Global Forwarding Results 20 (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. Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $2,144,056 $1,030,364 108.1% $6,729,790 $3,100,525 117.1% Total Adjusted Gross Profits(1) $309,589 $180,057 71.9% $1,073,541 $628,988 70.7% Adjusted Gross Profit Margin % 14.4% 17.5% (310 bps) 16.0% 20.3% (430 bps) Income from Operations $146,800 $58,480 151.0% $510,756 $175,513 191.0% Adjusted Operating Margin % 47.4% 32.5% 1,490 bps 47.6% 27.9% 1,970 bps Depreciation and Amortization $5,471 $6,810 (19.7%) $22,823 $34,550 (33.9%) Total Assets $2,843,239 $1,392,411 104.2% $2,843,239 $1,392,411 104.2% Average Headcount 5,430 4,626 17.4% 5,071 4,708 7.7%

 
Q4 2021 All Other and Corporate Results 21 (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. Three Months Ended December 31 Twelve Months Ended December 31 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $461,767 $429,414 7.5% $1,864,431 $1,794,028 3.9% Total Adjusted Gross Profits(1) $71,652 $63,707 12.5% $285,595 $266,178 7.3% Income from Operations ($7,834) ($2,255) NM ($13,999) ($10,720) NM Depreciation and Amortization $10,703 $12,086 (11.4%) $42,193 $41,863 0.8% Total Assets $835,295 $805,438 3.7% $835,295 $805,438 3.7% Average Headcount 4,080 3,610 13.0% 3,926 3,600 9.1%

 
Non-GAAP Reconciliations 22 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:

 
Non-GAAP Reconciliations 23 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:

 
24 Thank you INVESTOR RELATIONS: Chuck Ives 952-683-2508 [email protected]