chrw-20210727
0001043277false00010432772021-07-272021-07-27

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: July 27, 2021
(Date of earliest event reported)
chrw-20210727_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 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 June 30, 2021 and its earnings conference call slides.


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: July 27, 2021



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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 Second Quarter Results
MINNEAPOLIS, MN, July 27, 2021 - C.H. Robinson Worldwide, Inc. (“C.H. Robinson”) (Nasdaq: CHRW) today reported financial results for the quarter ended June 30, 2021.
Second Quarter Key Metrics:
•Total revenues increased 52.5% to $5.5 billion
•Gross profits increased 21.9% to $744.4 million
•Adjusted gross profits(1) increased 21.9% to $749.2 million
•Income from operations increased 38.0% to $260.6 million
•Adjusted operating margin(1) increased 410 basis points to 34.8%
•Diluted earnings per share (EPS) increased 35.8% to $1.44
•Cash flow from operations decreased $297.8 million to $149.3 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.

"During the second quarter, we delivered record financial results by staying focused on serving the needs of our customers and keeping their global supply chains moving in a capacity-constrained environment," said Bob Biesterfeld, Chief Executive Officer of C.H. Robinson. "Our largest services delivered both year-over-year and sequential growth in total volumes, revenues and adjusted gross profit, which resulted in quarterly highs for Robinson in total volumes, revenues, adjusted gross profit and operating income. I believe the team at Robinson is the most capable team of supply chain experts in the world, and I’m incredibly proud of how our team has helped thousands of customers navigate globally disrupted supply chains and delivered strong results for our shareholders."

1

Second Quarter Results Summary
•Total revenues increased 52.5% to $5.5 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 21.9% to $744.4 million. Adjusted gross profits increased 21.9% to $749.2 million, primarily driven by higher volume in our ocean, truckload, less than truckload ("LTL") and air services and higher adjusted gross profit per shipment in our ocean and truckload services.
•Operating expenses increased 14.8% to $488.6 million, due to higher personnel expenses. Personnel expenses increased 20.8% to $362.9 million, primarily due to higher incentive compensation costs and also due to the benefit realized in the second quarter of 2020 from our short-term cost reduction initiatives. Average headcount increased 0.7%. Selling, general and administrative ("SG&A") expenses of $125.7 million increased 0.4%.
•Income from operations totaled $260.6 million, up 38.0% due to the increase in adjusted gross profits. Adjusted operating margin of 34.8% increased 410 basis points.
•Interest and other expenses totaled $13.5 million, consisting primarily of $12.7 million of interest expense, which increased $0.4 million versus last year due to a higher average debt balance. The second quarter also included a $1.9 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
•The effective tax rate in the quarter was 21.6% compared to 19.4% in the second quarter last year. The rate increase was due primarily to a tax benefit in the second quarter of 2020 from delivery of a one-time deferred stock award that was granted to the company's prior Chief Executive Officer in 2000.
•Net income totaled $193.8 million, up 34.6% from a year ago. Diluted EPS of $1.44 increased 35.8%.


2

Year-to-Date Results Summary

•Total revenues increased 39.1% to $10.3 billion, driven primarily by higher pricing and higher volume across most of our services.
•Gross profits increased 22.8% to $1.4 billion. Adjusted gross profits increased 22.8% to $1.5 billion, primarily driven by higher adjusted gross profit per shipment in our ocean and truckload services and higher volume in our ocean, less than truckload ("LTL") and air services.
•Operating expenses increased 9.4% to $1.0 billion. Personnel expenses increased 14.8% to $723.7 million, primarily due to higher incentive compensation costs and also due to the benefit realized in 2020 from our short-term cost reduction initiatives. SG&A expenses decreased 3.8% to $243.9 million, primarily due to lower credit losses and travel expenses.
•Income from operations totaled $483.9 million, up 62.3% from last year, primarily due to the increase in adjusted gross profits. Adjusted operating margin of 33.3% increased 810 basis points.
•Interest and other expenses totaled $24.8 million, which primarily consists of $24.9 million of interest expense. The six-month period also included a $4.8 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 six months was 20.1% compared to 18.6% in the year-ago period. The rate increase was due primarily to a tax benefit in 2020 from delivery of a one-time deferred stock award that was granted to the company's prior Chief Executive Officer in 2000.
•Net income totaled $367.1 million, up 65.3% from a year ago. Diluted EPS of $2.71 increased 65.2%.



3

North American Surface Transportation Results
Summarized financial results of our NAST segment are as follows (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
20212020% change20212020% change
Total revenues$3,585,481 $2,475,292 44.9 %$6,796,904 $5,299,037 28.3 %
Adjusted gross profits(1)
436,596 379,556 15.0 %857,704 752,334 14.0 %
Income from operations151,092 136,846 10.4 %287,876 235,372 22.3 %
____________________________________________
(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.

Second quarter total revenues for C.H. Robinson's NAST segment totaled $3.6 billion, an increase of 44.9% over the prior year, primarily driven by higher truckload pricing and an increase in LTL and truckload shipments. NAST adjusted gross profits increased 15.0% in the quarter to $436.6 million. Adjusted gross profits in truckload increased 13.6% due to a 7.0% 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 42.0% in the quarter, while truckload linehaul cost per mile, excluding fuel surcharges, increased approximately 47.5%. LTL adjusted gross profits increased 21.6% versus the year-ago period, as LTL volumes grew 23.5%. NAST overall volume growth was approximately 16.0%. Operating expenses increased 17.6% primarily due to higher incentive compensation and also due to the benefit realized in 2020 from our short-term cost reduction initiatives. Income from operations increased 10.4% to $151.1 million, and adjusted operating margin declined 150 basis points to 34.6%. NAST average headcount was down 5.5% in the quarter.


4

Global Forwarding Results
Summarized financial results of our Global Forwarding segment are as follows (dollars in thousands):
Three Months Ended June 30,Six Months Ended June 30,
20212020% change20212020% change
Total revenues$1,450,794 $707,820 105.0 %$2,606,833 $1,238,204 110.5 %
Adjusted gross profits(1)
238,754 162,960 46.5 %453,054 291,274 55.5 %
Income from operations108,212 58,775 84.1 %198,801 70,734 181.1 %
____________________________________________
(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.

Second quarter total revenues for the Global Forwarding segment increased 105.0% to $1.5 billion, primarily driven by higher pricing in ocean services 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 46.5% in the quarter to $238.8 million. Ocean adjusted gross profits increased 91.7%, driven by higher adjusted gross profit per shipment and a 29.0% increase in volumes. Adjusted gross profits in air increased 1.2% driven by a 42.5% increase in metric tons shipped. Customs adjusted gross profits increased 31.1%, primarily driven by a 34.0% increase in transaction volume. Operating expenses increased 25.3%, primarily driven by increased salaries, technology and incentive compensation expenses and partially offset by lower amortization expense. Second quarter average headcount increased 3.9%. Income from operations increased 84.1% to $108.2 million, and adjusted operating margin expanded 920 basis points to 45.3% 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 June 30,Six Months Ended June 30,
20212020% change20212020% change
Total revenues$496,451 $444,734 11.6 %$932,858 $895,613 4.2 %
Adjusted gross profits(1):
Robinson Fresh$29,940 $30,202 (0.9)%$54,888 $57,660 (4.8)%
Managed Services26,234 23,503 11.6 %51,790 46,030 12.5 %
Other Surface Transportation17,652 18,232 (3.2)%34,120 35,108 (2.8)%
____________________________________________
(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.

Second quarter Robinson Fresh adjusted gross profits decreased 0.9% to $29.9 million, primarily due to a decline in profit per case, partially offset by an 8.0% increase in volume. Managed Services adjusted gross profits increased 11.6% in the quarter, primarily due to an 18.5% increase in volume. Other Surface Transportation adjusted gross profits decreased 3.2% to $17.7 million, primarily due to a 5.2% decline in Europe truckload adjusted gross profits.


Other Income Statement Items
The second quarter effective tax rate was 21.6%, up from 19.4% last year. We expect our 2021 full-year effective tax rate to be 20% to 22%.
Interest and other expenses totaled $13.5 million, consisting primarily of $12.7 million of interest expense, which increased $0.4 million versus last year due to a higher average debt balance. The second quarter also included a $1.9 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.
Diluted weighted average shares outstanding in the quarter were down 0.6% due primarily to share repurchases over the prior nine months.


6

Cash Flow Generation and Capital Distribution
Cash from operations totaled $149.3 million in the second quarter, compared to $447.1 million of cash generated in the second quarter of 2020. The $297.8 million decrease in cash flow was driven primarily by an outsized improvement in operating working capital in second quarter of 2020. Sequentially, operating working capital increased by $81.8 million or 5.6% in the second quarter of 2021, compared to a sequential increase of 6.7% in total adjusted gross profits.
In the second quarter of 2021, $204.8 million of cash was returned to shareholders, with $135.1 million in total repurchases of common stock and $69.7 million in cash dividends.
Capital expenditures totaled $16.3 million in the quarter. We continue to expect 2021 capital expenditures to be $55 million to $65 million, with the majority dedicated to technology.


Outlook
"Our record results demonstrated the strength of our non-asset-based business model that includes a diverse portfolio of services. Given the current structural constraints around expansion of supply, coupled with a continued reopening of the economy and other factors, we expect the current market conditions to persist through 2021," Biesterfeld stated. "Within NAST, we expect to grow our truckload and LTL volume during the remaining quarters of this year. Within our Global Forwarding business, there continues to be a robust pipeline of business and, as we move toward the peak holiday season, we expect ocean and air demand to remain strong into early 2022. Overall, 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 $21 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 Second Quarter 2021 Earnings Conference Call
Tuesday, July 27, 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 June 30,Six Months Ended June 30,
20212020% change20212020% change
Adjusted gross profits(1):
  Transportation
     Truckload$308,027 $278,366 10.7 %$608,050 $543,292 11.9 %
     LTL129,868 106,956 21.4 %251,421 220,865 13.8 %
     Ocean150,986 78,853 91.5 %286,496 148,755 92.6 %
     Air53,057 52,405 1.2 %98,951 80,743 22.6 %
     Customs25,513 19,461 31.1 %49,735 40,654 22.3 %
     Other logistics services53,692 49,980 7.4 %105,432 93,717 12.5 %
     Total transportation721,143 586,021 23.1 %1,400,085 1,128,026 24.1 %
  Sourcing28,033 28,432 (1.4)%51,471 54,380 (5.3)%
Total adjusted gross profits$749,176 $614,453 21.9 %$1,451,556 $1,182,406 22.8 %
____________________________________________
(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 June 30,Six Months Ended June 30,
20212020% change20212020% change
Revenues:
Transportation$5,240,448 $3,348,611 56.5 %$9,800,675 $6,890,729 42.2 %
Sourcing292,278 279,235 4.7 %535,920 542,125 (1.1)%
Total revenues5,532,726 3,627,846 52.5 %10,336,595 7,432,854 39.1 %
Costs and expenses:
Purchased transportation and related services4,519,305 2,762,590 63.6 %8,400,590 5,762,703 45.8 %
Purchased products sourced for resale264,245 250,803 5.4 %484,449 487,745 (0.7)%
Direct internally developed software amortization4,802 3,991 20.3 %9,449 7,736 22.1 %
Total direct expenses4,788,352 3,017,384 58.7 %8,894,488 6,258,184 42.1 %
Gross profit$744,374 $610,462 21.9 %$1,442,107 $1,174,670 22.8 %
Plus: Direct internally developed software amortization4,802 3,991 20.3 %9,449 7,736 22.1 %
Adjusted gross profit$749,176 $614,453 21.9 %$1,451,556 $1,182,406 22.8 %

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 June 30,Six Months Ended June 30,
20212020% change20212020% change
Total revenues$5,532,726 $3,627,846 52.5 %$10,336,595 $7,432,854 39.1 %
Operating income260,604 188,787 38.0 %483,933 298,227 62.3 %
Operating margin4.7 %5.2 %(50) bps4.7 %4.0 %70 bps
Adjusted gross profit$749,176 $614,453 21.9 %$1,451,556 $1,182,406 22.8 %
Operating income260,604 188,787 38.0 %483,933 298,227 62.3 %
Adjusted operating margin34.8 %30.7 %410 bps33.3 %25.2 %810 bps

10

Condensed Consolidated Statements of Income
(unaudited, in thousands, except per share data)
Three Months Ended June 30,Six Months Ended June 30,
20212020% change20212020% change
Revenues:
 Transportation$5,240,448 $3,348,611 56.5 %$9,800,675 $6,890,729 42.2 %
 Sourcing292,278 279,235 4.7 %535,920 542,125 (1.1)%
   Total revenues5,532,726 3,627,846 52.5 %10,336,595 7,432,854 39.1 %
Costs and expenses:
 Purchased transportation and related services4,519,305 2,762,590 63.6 %8,400,590 5,762,703 45.8 %
 Purchased products sourced for resale264,245 250,803 5.4 %484,449 487,745 (0.7)%
 Personnel expenses362,901 300,483 20.8 %723,736 630,703 14.8 %
Other selling, general, and administrative expenses125,671 125,183 0.4 %243,887 253,476 (3.8)%
   Total costs and expenses5,272,122 3,439,059 53.3 %9,852,662 7,134,627 38.1 %
Income from operations260,604 188,787 38.0 %483,933 298,227 62.3 %
Interest and other expense(13,497)(10,211)32.2 %(24,757)(25,439)(2.7)%
Income before provision for income taxes247,107 178,576 38.4 %459,176 272,788 68.3 %
Provision for income taxes53,318 34,637 53.9 %92,082 50,703 81.6 %
Net income$193,789 $143,939 34.6 %$367,094 $222,085 65.3 %
Net income per share (basic)$1.45 $1.07 35.5 %$2.74 $1.64 67.1 %
Net income per share (diluted)$1.44 $1.06 35.8 %$2.71 $1.64 65.2 %
Weighted average shares outstanding (basic)133,275 135,010 (1.3)%133,888 135,241 (1.0)%
Weighted average shares outstanding (diluted)134,856 135,610 (0.6)%135,276 135,776 (0.4)%

11

Business Segment Information
(unaudited, in thousands, except average headcount)
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended June 30, 2021
Total revenues$3,585,481 $1,450,794 $496,451 $5,532,726 
Adjusted gross profits(1)
436,596 238,754 73,826 749,176 
Income from operations151,092 108,212 1,300 260,604 
Depreciation and amortization6,534 6,276 10,127 22,937 
Total assets (2)
3,278,540 1,852,473 775,551 5,906,564 
Average headcount6,580 4,909 3,916 15,405 
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Three Months Ended June 30, 2020
Total revenues$2,475,292 $707,820 $444,734 $3,627,846 
Adjusted gross profits(1)
379,556 162,960 71,937 614,453 
Income (loss) from operations136,846 58,775 (6,834)188,787 
Depreciation and amortization7,201 9,206 9,351 25,758 
Total assets (2)
2,793,290 1,029,203 1,003,196 4,825,689 
Average headcount6,960 4,726 3,608 15,294 
____________________________________________
(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)
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Six Months Ended June 30, 2021
Total revenues$6,796,904 $2,606,833 $932,858 $10,336,595 
Adjusted gross profits(1)
857,704 453,054 140,798 1,451,556 
Income (loss) from operations287,876 198,801 (2,744)483,933 
Depreciation and amortization13,159 11,925 21,131 46,215 
Total assets (2)
3,278,540 1,852,473 775,551 5,906,564 
Average headcount6,578 4,832 3,823 15,233 
NASTGlobal Forwarding
All
Other and Corporate
Consolidated
Six Months Ended June 30, 2020
Total revenues$5,299,037 $1,238,204 $895,613 $7,432,854 
Adjusted gross profits(1)
752,334 291,274 138,798 1,182,406 
Income (loss) from operations235,372 70,734 (7,879)298,227 
Depreciation and amortization12,455 18,355 19,341 50,151 
Total assets (2)
2,793,290 1,029,203 1,003,196 4,825,689 
Average headcount6,981 4,763 3,594 15,338 

____________________________________________
(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)
June 30, 2021December 31, 2020
Assets
   Current assets:
     Cash and cash equivalents$172,803 $243,796 
     Receivables, net of allowance for credit loss3,166,769 2,449,577 
     Contract assets, net of allowance for credit loss292,760 197,176 
     Prepaid expenses and other90,230 51,152 
        Total current assets3,722,562 2,941,701 
 
  Property and equipment, net of accumulated depreciation and amortization174,194 178,949 
  Right-of-use lease assets299,313 319,785 
  Intangible and other assets, net of accumulated amortization1,710,495 1,703,823 
Total assets$5,906,564 $5,144,258 
Liabilities and stockholders’ investment
  Current liabilities:
     Accounts payable and outstanding checks$1,689,368 $1,283,364 
     Accrued expenses:
        Compensation150,393 138,460 
        Transportation expense226,741 153,574 
        Income taxes29,711 43,700 
        Other accrued liabilities153,092 154,460 
Current lease liabilities65,859 66,174 
Current portion of debt271,215 — 
        Total current liabilities2,586,379 1,839,732 
Long-term debt1,095,798 1,093,301 
Noncurrent lease liabilities249,068 268,572 
Noncurrent income taxes payable25,968 26,015 
Deferred tax liabilities28,642 22,182 
  Other long-term liabilities14,539 14,523 
Total liabilities4,000,394 3,264,325 
Total stockholders’ investment1,906,170 1,879,933 
Total liabilities and stockholders’ investment$5,906,564 $5,144,258 

14

Condensed Consolidated Statements of Cash Flow
(unaudited, in thousands, except operational data)
Six Months Ended June 30,
20212020
Operating activities:
Net income$367,094 $222,085 
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 Depreciation and amortization46,215 50,151 
 Provision for credit losses(36)9,374 
 Stock-based compensation53,150 22,351 
 Deferred income taxes(2,474)(729)
 Excess tax benefit on stock-based compensation(9,367)(11,999)
Other operating activities933 12,341 
Changes in operating elements, net of acquisitions:
Receivables(717,340)(48,937)
Contract assets (96,154)(22,451)
Prepaid expenses and other(38,971)8,744 
Accounts payable and outstanding checks406,875 220,276 
Accrued compensation12,115 12,312 
Accrued transportation expenses73,167 20,284 
Accrued income taxes(4,431)14,423 
Other accrued liabilities210 (6,345)
Other assets and liabilities1,612 3,763 
Net cash provided by operating activities92,598 505,643 
Investing activities:
Purchases of property and equipment(12,856)(11,621)
Purchases and development of software(16,981)(13,418)
Acquisitions, net of cash acquired(14,749)(223,230)
Other investing activities— 5,525 
Net cash used for investing activities(44,586)(242,744)
Financing activities:
Proceeds from stock issued for employee benefit plans36,674 20,295 
Total repurchases of common stock(285,987)(83,529)
Cash dividends(139,756)(137,104)
Proceeds from short-term borrowings1,661,000 979,600 
Payments on short-term borrowings(1,390,038)(1,122,600)
Net cash used for financing activities(118,107)(343,338)
Effect of exchange rates on cash(898)(5,183)
Net change in cash and cash equivalents(70,993)(85,622)
Cash and cash equivalents, beginning of period243,796 447,858 
Cash and cash equivalents, end of period$172,803 $362,236 
As of June 30,
Operational Data:20212020
Employees 15,705 15,113 


Source: C.H. Robinson
CHRW-IR
15
1 Q2 2021 July 27, 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 ▪ Record quarter for Total Volumes, Revenues, Adjusted Gross Profit ("AGP") & Operating Income(1) ▪ Largest service lines delivered both year-over-year and sequential growth in total volumes, revenues & AGP ▪ Year-over-year volume growth in NAST Truckload & higher AGP/load ▪ Robust growth in Global Forwarding in a capacity- constrained environment ▪ Arun Rajan joining the company as Chief Product Officer to drive the next generation of innovation Q2 2021 Key Highlights (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.

 
4

 
5 Technology Advancements & Transformation Efforts Providing Meaningful Efficiencies Beginning of Increased Tech Investment Beginning of Increased Tech Investment

 
6 Results Q2 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 June 30 Six Months Ended June 30 $ in thousands, except per share amounts 2021 2020 % CHANGE 2021 2020 % CHANGE Total Revenues $5,532,726 $3,627,846 52.5 % $10,336,595 $7,432,854 39.1 % Total Adjusted Gross Profits(1) $749,176 $614,453 21.9 % $1,451,556 $1,182,406 22.8 % Adjusted Gross Profit Margin % 13.5 % 16.9 % (340 bps) 14.0 % 15.9 % (190 bps) Personnel Expenses $362,901 $300,483 20.8 % $723,736 $630,703 14.8 % Selling, General, and Admin $125,671 $125,183 0.4 % $243,887 $253,476 (3.8) % Income from Operations $260,604 $188,787 38.0 % $483,933 $298,227 62.3 % Adjusted Operating Margin % 34.8 % 30.7 % 410 bps 33.3 % 25.2 % 810 bps Depreciation and Amortization $22,937 $25,758 (11.0) % $46,215 $50,151 (7.8) % Net Income $193,789 $143,939 34.6 % $367,094 $222,085 65.3 % Earnings Per Share (Diluted) $1.44 $1.06 35.8 % $2.71 $1.64 65.2 % Average Headcount 15,405 15,294 0.7 % 15,233 15,338 (0.7) % • Increase in adjusted gross profits driven primarily by higher volume in our ocean, truckload, less than truckload ("LTL") and air service lines and higher profit per shipment in ocean and truckload service lines • 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 Q2 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.

 
7 Q2 2021 Cash Flow and Capital Distribution • $297.8 million decrease in cash flow driven primarily by an outsized improvement in operating working capital in second quarter of 2020 • $16.3 million in capital expenditures • Expect 2021 capital expenditures to be $55-65 million Cash Flow from Operations Capital Distribution • $204.8 million returned to shareholders • $69.7 million in cash dividends • $135.1 million in share repurchases ◦ 1,385,735 shares repurchased at an average price of $97.47 per share Q2 2020 Q2 2021 Q2 2020 Q2 2021 $149.3M $447.1M (67%) $68.4M $204.8M 199% Cash Dividends Share Repurchases

 
8 Q2 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 June 30, 2021 June 30, 2020 % CHANGE Accounts Receivable, Net(1) $3,459,529 $2,172,606 59.2% Accounts Payable(2) $1,916,109 $1,409,614 35.9% Net Operating Working Capital(3) $1,543,420 $762,992 102.3% • Increases in accounts receivable and accounts payable driven by increases in total revenues and the cost of purchased transportation, respectively • Total debt balance $1.37 billion • $600 million senior unsecured notes maturing April 2028, 4.20% coupon • $500 million private placement debt, 4.28% average coupon • $175 million maturing in August 2023, $150 million maturing in August 2028 and $175 million maturing in August 2033 • $271 million outstanding on $1.0 billion credit facility maturing October 2023, 1.20% average interest rate (LIBOR + 112.5 bps) • 3.7% weighted average interest rate in the quarter (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.

 
9 • 55% / 45% truckload contractual to transactional volume mix compared to 65% / 35% in Q2 last year • Average routing guide depth of 1.7 in Managed Services business vs. 1.2 in Q2 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 2013 2014 2015 2016 2017 2018 2019 2020 2021 -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% YoY Price Change YoY Cost Change Truckload Q2 Volume(2)(4) +6.0% Pricing(1)(2)(3) +42.0% Cost(1)(2)(3) +47.5% Adjusted Gross Profit(4) +13.6% (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 Q2 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 June 30 2021 2020 % Change Truckload $286,574 $252,165 13.6 % LTL $128,155 $105,428 21.6 % Other $21,867 $21,963 (0.4) % Total Adjusted Gross Profits $436,596 $379,556 15.0 % Adjusted Gross Profit Margin % 12.2 % 15.3 % (310 bps) • Truckload volume up 6.0% and LTL volume up 23.5%(2) • Truckload AGP per load increased 7.0% due to an increased mix of transactional volume and higher AGP per load on transactional volume(2) • 290,000 fully automated truckload bookings • Added 6,900 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.

 
11 Q2 2021 NAST Operating Income • Improved operating income due to 15.0% increase in AGP • Operating expenses increased 17.6%, primarily due to higher incentive compensation and the impact of short- term, pandemic-driven, cost reductions in Q2 of 2020 • Average headcount decreased 5.5% Operating Income Adjusted Operating Margin % Q2 2020 Q2 2021 (150 bps) 10.4% $136.8M $151.1M 36.1% 34.6% Q2 2020 Q2 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 Q2 2021 Global Forwarding Results by Service Ocean, Air, Customs and Other Adjusted Gross Profits(1) ($ in thousands) Three Months Ended June 30 2021 2020 % Change Ocean $150,916 $78,734 91.7 % Air $52,179 $51,541 1.2 % Customs $25,512 $19,459 31.1 % Other $10,147 $13,226 (23.3) % Total Adjusted Gross Profits $238,754 $162,960 46.5 % Adjusted Gross Profit Margin % 16.5 % 23.0 % (650 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 an increase in profit per shipment and a 29.0% increase in shipments(2) • Ocean market impacted by strong demand and capacity shortages • Air AGP increased due to a 42.5% increase in metric tons shipped(2) • Air market impacted by strong demand and air cargo capacity continues to be strained • Customs AGP increased due to a 34.0% increase in transaction volume(2)

 
13 Q2 2021 Global Forwarding Operating Income • Improved operating income due to 46.5% increase in AGP • Operating expenses increased 25.3%, primarily due to higher salaries, technology and incentive compensation expenses, partially offset by lower amortization • 3.9% increase in average headcount and 5.4% increase in full-time equivalents Operating Income Adjusted Operating Margin % Q2 2020 Q2 2021 36.1% 45.3%920 bps Q2 2020 Q2 2021 $58.8M $108.2M 84.1%

 
14 Q2 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 June 30 2021 2020 % Change Robinson Fresh $29,940 $30,202 (0.9)% Managed Services $26,234 $23,503 11.6% Other Surface Transportation $17,652 $18,232 (3.2)% Total $73,826 $71,937 2.6% Robinson Fresh • Decline in profit per case partially offset by an 8.0% increase in case volume(2) • Operating income up 5.3%, due to a 2.9% reduction in operating expenses, and operating margin up 150 bps Managed Services • 18.5% increase in transaction volume and 44.0% increase in total freight under management(2) • Operating income up 19.9% and operating margin up 130 bps Other Surface Transportation • 5.2% decline in Europe truckload AGP, due to higher AGP margin in 2020 caused by COVID lockdowns in Europe (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 Appendix

 
16 Q2 2021 Transportation Results(1) Three Months Ended June 30 Six Months Ended June 30 Transportation ($ in thousands) 2021 2020 % Change 2021 2020 % Change Total Revenues $5,240,448 $3,348,611 56.5% $9,800,675 $6,890,729 42.2% Total Adjusted Gross Profits(2) $721,143 $586,021 23.1% $1,400,085 $1,128,026 24.1% Adjusted Gross Profit Margin % 13.8% 17.5% (370 bps) 14.3% 16.4% (210 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% 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.

 
17 Q2 2021 NAST Results Three Months Ended June 30 Six Months Ended June 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $3,585,481 $2,475,292 44.9% $6,796,904 $5,299,037 28.3% Total Adjusted Gross Profits(1) $436,596 $379,556 15.0% $857,704 $752,334 14.0% Adjusted Gross Profit Margin % 12.2% 15.3% (310 bps) 12.6% 14.2% (160 bps) Income from Operations $151,092 $136,846 10.4% $287,876 $235,372 22.3% Adjusted Operating Margin % 34.6% 36.1% (150 bps) 33.6% 31.3% 230 bps Depreciation and Amortization $6,534 $7,201 (9.3%) $13,159 $12,455 5.7% Total Assets $3,278,540 $2,793,290 17.4% $3,278,540 $2,793,290 17.4% Average Headcount 6,580 6,960 (5.5%) 6,578 6,981 (5.8%) (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.

 
18 Q2 2021 Global Forwarding Results Three Months Ended June 30 Six Months Ended June 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $1,450,794 $707,820 105.0% $2,606,833 $1,238,204 110.5% Total Adjusted Gross Profits(1) $238,754 $162,960 46.5% $453,054 $291,274 55.5% Adjusted Gross Profit Margin % 16.5% 23.0% (650 bps) 17.4% 23.5% (610 bps) Income from Operations $108,212 $58,775 84.1% $198,801 $70,734 181.1% Adjusted Operating Margin % 45.3% 36.1% 920 bps 43.9 % 24.3 % 1,960 bps Depreciation and Amortization $6,276 $9,206 (31.8%) $11,925 $18,355 (35.0%) Total Assets $1,852,473 $1,029,203 80.0% $1,852,473 $1,029,203 80.0% Average Headcount 4,909 4,726 3.9% 4,832 4,763 1.4% (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.

 
19 Q2 2021 All Other and Corporate Results Three Months Ended June 30 Six Months Ended June 30 $ in thousands 2021 2020 % Change 2021 2020 % Change Total Revenues $496,451 $444,734 11.6% $932,858 $895,613 4.2% Total Adjusted Gross Profits(1) $73,826 $71,937 2.6% $140,798 $138,798 1.4% Income from Operations $1,300 ($6,834) NM ($2,744) ($7,879) NM Depreciation and Amortization $10,127 $9,351 8.3% $21,131 $19,341 9.3% Total Assets $775,551 $1,003,196 (22.7%) $775,551 $1,003,196 (22.7%) Average Headcount 3,916 3,608 8.5% 3,823 3,594 6.4% (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 Non-GAAP Reconciliations Three Months Ended June 30 Six Months Ended June 30 2021 2020 2021 2020 Revenues: Transportation $ 5,240,448 $ 3,348,611 $ 9,800,675 $ 6,890,729 Sourcing 292,278 279,235 535,920 542,125 Total Revenues 5,532,726 3,627,846 10,336,595 7,432,854 Costs and expenses: Purchased transportation and related services 4,519,305 2,762,590 8,400,590 5,762,703 Purchased products sourced for resale 264,245 250,803 484,449 487,745 Direct internally developed software amortization 4,802 3,991 9,449 7,736 Total direct costs 4,788,352 3,017,384 8,894,488 6,258,184 Gross profit & Gross profit margin 744,374 13.5 % 610,462 16.8 % 1,442,107 14.0 % 1,174,670 15.8 % Plus: Direct internally developed software amortization 4,802 3,991 9,449 7,736 Adjusted gross profit / Adjusted gross profit margin 749,176 13.5 % 614,453 16.9 % 1,451,556 14.0 % 1,182,406 15.9 % 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):

 
21 Non-GAAP Reconciliations Three Months Ended June 30 Six Months Ended June 30 2021 2020 2021 2020 Total Revenues $ 5,532,726 $ 3,627,846 $ 10,336,595 $ 7,432,854 Operating income 260,604 188,787 483,933 298,227 Operating margin 4.7 % 5.2 % 4.7 % 4.0 % Adjusted gross profit $ 749,176 $ 614,453 $ 1,451,556 $ 1,182,406 Operating income 260,604 188,787 483,933 298,227 Adjusted operating margin 34.8 % 30.7 % 33.3 % 25.2 % 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):

 
22 Thank you