Financial Data and Key Metrics Changes - In Q2 2023, total revenues were $4.4 billion, a decline of 35% year-over-year, with adjusted gross profit (AGP) also down 35% or $366 million, driven by a 45% decline in global forwarding and a 36% decline in NAST [56][27][28] - The company reported a net income decrease, partially offset by a $144 million sequential decrease in net operating working capital due to declining transportation costs [68][69] - Adjusted earnings per share, excluding restructuring charges, was $0.90, down from $0.75 in Q2 last year [67] Business Line Data and Key Metrics Changes - In the NAST truckload business, Q2 volume declined by approximately 6.5% year-over-year, with a mix of 70% contractual and 30% transactional volume [57][58] - The global forwarding segment generated revenue of $780 million and AGP of approximately $179 million, a 45% decline year-over-year [29] - In the LTL business, shipments were flat year-over-year but up 5% sequentially, with AGP per order declining 19% due to market conditions [60] Market Data and Key Metrics Changes - The freight market in Q2 was impacted by weak demand, high inventories, and excess capacity, leading to a competitive environment [27][53] - Total company AGP per business day was down 30% in April, down 39% in May, and down 37% in June compared to the previous year [28] - Routing guide depth of tender in managed services declined from 1.4 in Q2 last year to 1.1 in Q2 this year, the lowest level since the recession of 2009 [58] Company Strategy and Development Direction - The company aims to drive waste out of the system to achieve profitable growth, focusing on faster decision-making and innovation [18][19] - There is a strong emphasis on leveraging technology, including generative AI and machine learning, to enhance operational efficiency and customer service [32][49] - The management is committed to improving the value proposition, increasing market share, and enhancing overall profitability [88][89] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges in the near-term freight environment but expressed confidence in the company's strong position due to its scale, financial model, and investments in efficiency [87][89] - The focus will be on continuous improvement and leveraging technology to enhance productivity and competitiveness [78][88] - The company expects to see improvements in shipments per person per day and associated cost benefits through the remainder of 2023 [72][73] Other Important Information - The company has reduced headcount by approximately 12% year-over-year, which has contributed to productivity gains [6][63] - Q2 cash flow generated by operations was approximately $225 million, demonstrating the ability to generate cash despite market challenges [75] - The company ended Q2 with approximately $1.1 billion of liquidity, including a cash balance of $210 million [69] Q&A Session Summary Question: What is the most important area of focus for the next 12 months? - The focus will be on driving waste out of the system to achieve profitable growth and improving decision-making speed [18][19] Question: What are the expectations for sequential net revenue and earnings trends? - The market remains weak, and while there is potential for improvement, the company is navigating through a challenging environment [100][102] Question: How does the company view its competitive advantage? - The company believes that scale combined with technology will drive competitive advantage, and there is a focus on reducing waste and improving processes [113][120] Question: What is the mandate from the Board regarding company improvements? - The Board is focused on driving profitable growth and improving the company, with a clear connection to the management team [122] Question: What are the biggest incremental cost opportunities? - The company is currently diagnosing its operations to identify areas for cost reduction and efficiency improvements [145]

3 2. Growth rates are rounded to the nearest 0.5 percent. 18% 1 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 expectat ...

Revenue and Profit Decline - Total revenues decreased 32.3% to $4.6 billion, driven primarily by lower ocean and truckload pricing[113] - Adjusted gross profits decreased 24.3% to $685.6 million, primarily driven by lower adjusted gross profits per transaction in ocean and truckload[113] - Income from operations decreased 53.4% to $161.0 million, driven by decreased adjusted gross profits, partially offset by the decline in operating expenses[118] - Adjusted operating margin of 23.5% declined 1,460 basis points[118] - Net income totaled $114.9 million, down 57.5% from a year ago[120] - Diluted earnings per share (EPS) decreased 53.2% to $0.96[120] - NAST total revenues decreased by 19.7% to $3,304,187 in Q1 2023 compared to $4,114,889 in Q1 2022[129] - NAST adjusted gross profits decreased by 15.7% to $426,655 in Q1 2023, with Truckload adjusted gross profits down 21.9% and LTL down 9.1%[129] - Global Forwarding total revenues decreased by 64.0% to $789,978 in Q1 2023, with Ocean adjusted gross profits down 50.3% and Air down 49.0%[139] Cost and Expense Management - Personnel expenses decreased 7.3% to $383.1 million, primarily due to cost optimization efforts, including lower average employee headcount, which decreased 2.1%[114] - Average employee headcount decreased by 6.5% to 6,870 in Q1 2023 compared to 7,348 in Q1 2022[129] - Global Forwarding average employee headcount decreased by 2.5% to 5,471 in Q1 2023 compared to 5,610 in Q1 2022[139] Transportation and Logistics Performance - Ocean volumes decreased 14.5% while air freight tonnage decreased 18.5%[112] - The average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 28.5% during the first quarter of 2023[111] - NAST truckload linehaul rate per mile decreased by 27.5% in Q1 2023 compared to Q1 2022, while truckload linehaul cost per mile decreased by 28.5%[136] Cash Flow and Financial Position - Cash flow from operations improved $268.5 million in the three months ended March 31, 2023 driven by changes in operating working capital[120] - Cash provided by operating activities in Q1 2023 was $254.544 million, compared to a net use of $13.928 million in Q1 2022, representing a significant improvement[147] - Cash used for investing activities in Q1 2023 was $26.95 million, a 12.4% increase from $23.979 million in Q1 2022[147] - Cash used for financing activities in Q1 2023 was $205.992 million, compared to $21.77 million provided in Q1 2022[147] - Net change in cash and cash equivalents in Q1 2023 was $21.678 million, compared to a net decrease of $14.604 million in Q1 2022[147] - The company expects available cash, future cash from operations, and credit facilities to be sufficient for working capital, capital expenditures, and cash dividends for at least the next 12 months[150] Debt and Capital Management - Total debt as of March 31, 2023, was $1,873,031, with a borrowing capacity of $3,100,000 across various debt facilities[144] - Net payments on debt in Q1 2023 were used to reduce the current portion of outstanding debt, with potential impacts on future share repurchases[149] Tax and Accounting - Effective income tax rate for Q1 2023 was 13.5%, down from 18.4% in Q1 2022, primarily due to tax benefits from share-based payment awards and U.S. tax credits[127] - No material changes to critical accounting policies and estimates as of March 31, 2023[154] - No material changes in market risk as of March 31, 2023 compared to the 2022 Annual Report[155] Segment Performance - Robinson Fresh adjusted gross profits increased due to integrated supply chain solutions for foodservice and retail customers[143]

Financial Data and Key Metrics Changes - In Q1 2023, total revenues were $4.6 billion, a decline of 32% compared to $6.8 billion in Q1 2022 [165] - Adjusted gross profit (AGP) decreased by $221 million or 24.3% year-over-year, driven by a 45% decline in Global Forwarding and a 16% decline in NAST [165] - Q1 net income was $114.9 million, with diluted earnings per share at $0.96, down 52% from Q1 2022 [19][14] - Cash flow generated by operations improved to $254.5 million, compared to a cash outflow of $13.9 million in Q1 2022 [20] - Personnel expenses were $383.1 million, down $30 million or 7.3% year-over-year due to cost optimization efforts [152] Business Line Data and Key Metrics Changes - NAST truckload business volume declined by 3.5% year-over-year, with AGP per truckload shipment decreasing by 19% [156] - Global Forwarding AGP was $177.9 million, representing a year-over-year decrease of 45% [167] - Average truckload linehaul cost per mile paid to carriers decreased by 28.5% year-over-year, while the average linehaul rate billed to customers decreased by approximately 27.5% [157] Market Data and Key Metrics Changes - The freight transportation market has softened, with spot rates approaching breakeven costs, indicating a potential bottom of the industry cycle [6][9] - The balance of supply and demand has shifted from a tight market to one that is oversupplied, impacting pricing and demand [6] - Routing guide depth of tender in managed services declined from 1.7 in Q1 2022 to 1.2 in Q1 2023, the lowest level since the pandemic [166] Company Strategy and Development Direction - The company is focusing on improving customer and carrier experience while enhancing operational efficiency through increased digitization and automation [11][34] - A restructuring plan initiated in November aims to reduce personnel expenses by $100 million in 2023 [12] - The company is committed to maintaining an investment-grade credit rating and reducing debt to meet leverage targets [18] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures and a soft freight market present challenges, but the company remains focused on delivering superior services and capabilities [26][164] - The search for a new CEO is progressing, with expectations to name a candidate in the second quarter [153] - Management expressed confidence in the company's ability to navigate the current market conditions and continue to grow through strategic initiatives [154] Other Important Information - The company returned $125 million to shareholders in Q1 through dividends and share repurchases, down 50% from Q1 2022 [22] - The company ended Q1 with approximately $1.5 billion in liquidity, including $1.22 billion in committed funding and a cash balance of $239 million [23] Q&A Session Summary Question: What is the current state of the freight market? - Management indicated that the market is soft, with reduced total demand and customers managing elevated inventories [28] Question: Can you provide an update on the CEO search? - The search committee is focused on finding a proven leader with operational expertise, and a new CEO is expected to be named in the second quarter [43][53] Question: What are the expectations for the Global Forwarding cycle? - There has been softness in both ocean and air freight, but there are signs of potential demand recovery, though it is too early to confirm a trend [54][55] Question: How is the company addressing cost initiatives? - The company has increased its cost-saving goals, targeting $300 million in overall savings, with a focus on personnel expenses and simplifying operations [75][76] Question: What is the outlook for the truckload market? - Management believes the market is nearing the bottom, with expectations for capacity to exit the market as pricing approaches breakeven levels [116][118]

Financial Performance - Total Revenues decreased by 33.7% to $4327.97 million in Q1 2023 compared to $6528.35 million in Q1 2022[40] - Total Adjusted Gross Profits decreased by 25.2% to $656.93 million in Q1 2023[61] - Adjusted Gross Profit Margin increased by 170 bps to 15.2% in Q1 2023[41] - Global Forwarding Adjusted Gross Profits decreased by 44.7% to $177.92 million in Q1 2023[25, 78] - North American Surface Transportation (NAST) Adjusted Gross Profit decreased by 15.7% year-over-year[4] Segment Results - Truckload volume was down 3.5% year-over-year[7, 18] - Less than Truckload (LTL) Adjusted Gross Profit decreased by 9.1%[6] - Ocean Adjusted Gross Profit decreased by 50.3%[25] - Air Adjusted Gross Profit decreased by 49.0%[25] - Customs Adjusted Gross Profit decreased by 15.1%[25] - Robinson Fresh Adjusted Gross Profit increased by 2.1%[29]

[PART I](index=5&type=section&id=PART%20I) This section provides an overview of the company's business operations, associated risks, property details, and ongoing legal matters [Item 1. Business](index=5&type=section&id=Item%201.%20Business) C.H. Robinson is a global asset-light logistics provider offering diverse transportation and sourcing services, leveraging its proprietary technology platform [Overview and Segments](index=5&type=section&id=Overview%20and%20Segments) The company achieved **$24.7 billion** in 2022 revenues, operating through North American Surface Transportation and Global Forwarding segments - In 2022, the company achieved consolidated total revenues of **$24.7 billion**, handling approximately **20 million shipments** for **100,000 customers**[33](index=33&type=chunk)[54](index=54&type=chunk) - Operations are structured into **North American Surface Transportation (NAST)** and **Global Forwarding** segments, with other operations grouped into 'All Other and Corporate'[55](index=55&type=chunk) [Transportation and Logistics Services](index=6&type=section&id=Transportation%20and%20Logistics%20Services) The company offers comprehensive transportation and logistics services, accounting for **97%** of adjusted gross profits - The company provides a comprehensive suite of transportation and logistics services, including Truckload, Less Than Truckload (LTL), Ocean freight, Air freight, Customs brokerage, and other logistics services[37](index=37&type=chunk)[38](index=38&type=chunk)[58](index=58&type=chunk) - Transportation services accounted for approximately **97% of adjusted gross profits** in 2022[92](index=92&type=chunk) [Sourcing Services](index=7&type=section&id=Sourcing%20Services) Under the Robinson Fresh brand, the company provides sourcing services, primarily for fresh produce, contributing **3%** to adjusted gross profits - Under the trade name Robinson Fresh, the company provides sourcing services, primarily buying, selling, and marketing fresh fruits, vegetables, and other perishable items[35](index=35&type=chunk)[55](index=55&type=chunk) - Sourcing services accounted for approximately **3% of the company's adjusted gross profits** in 2022[67](index=67&type=chunk) [Proprietary Information Technology](index=8&type=section&id=Proprietary%20Information%20Technology) The company's operations are primarily run on Navisphere, a global transportation management system, supported by a large team of tech professionals - The company's operations are primarily run on **Navisphere**, a single global, multimodal transportation management system, serving as a key competitive advantage[73](index=73&type=chunk)[97](index=97&type=chunk) - Approximately **1,300 data scientists, engineers, and developers** innovate and enhance technology offerings, including tools like Emissions IQ™, Procure IQ®, and Market Rate IQ™[73](index=73&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) [Human Capital](index=11&type=section&id=Human%20Capital) As of December 31, 2022, the company had **17,399** employees globally, with specific metrics on diversity and turnover Employee Count by Region (as of Dec 31, 2022) | Region | Total Employees | | :--- | :--- | | North America | 12,276 | | Europe | 2,121 | | Asia | 2,113 | | Oceania | 504 | | South America | 385 | | **Total** | **17,399** | Diversity, Equity, and Inclusion (DEI) Metrics (as of Dec 31, 2022) | Metric | Percentage | | :--- | :--- | | Women in Workforce | 48% | | Management Positions Held by Women | 46% | | U.S. Racial and Ethnic Minorities in Workforce | 29% | | Management Positions Held by U.S. Minorities | 23% | - The employee turnover ratio for the 12 months ended December 31, 2022, was **19%**[90](index=90&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic downturns, intense competition, technology dependence, cybersecurity threats, international operations, and regulatory compliance - **Business Environment Risks:** The company is exposed to economic recessions, reduced freight volumes, credit risk, and intense industry competition[136](index=136&type=chunk)[191](index=191&type=chunk)[194](index=194&type=chunk) - **Company-Specific Risks:** The business is highly dependent on internally developed technology, vulnerable to system failures and cybersecurity attacks, and faces challenges in international operations and retaining key personnel[172](index=172&type=chunk)[179](index=179&type=chunk)[198](index=198&type=chunk) - **Governmental and Legal Risks:** The company must comply with numerous regulations and is subject to claims from transportation operations, potentially exceeding insurance coverage[183](index=183&type=chunk)[207](index=207&type=chunk) [Item 2. Properties](index=23&type=section&id=Item%202.%20Properties) The company's headquarters is in Eden Prairie, Minnesota, supplemented by approximately **250** leased global offices and **4.7 million** square feet of warehouse space - The company leases approximately **250 office locations** in **38 countries** and warehouse space totaling approximately **4.7 million square feet**[214](index=214&type=chunk) - In 2022, a **201,000 square foot facility** in Kansas City, Missouri, was sold and leased back for a ten-year term[214](index=214&type=chunk) [Item 3. Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation, with no expected material adverse effect on its financial position or operations - The company is not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of business[216](index=216&type=chunk) - Management does not expect the resolution of current legal proceedings to have a material adverse effect on the company's consolidated financial position, results of operations, or cash flows[216](index=216&type=chunk) [PART II](index=24&type=section&id=PART%20II) This section details the company's common stock market, financial performance analysis, market risk exposures, and audited financial statements [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq, with significant share repurchases in Q4 2022 and remaining authorization for future buybacks Q4 2022 Share Repurchases | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Oct 2022 | 2,665,000 | $95.94 | | Nov 2022 | 1,564,812 | $93.55 | | Dec 2022 | 115,100 | $94.48 | | **Q4 Total** | **4,344,912** | **$95.04** | - As of December 31, 2022, there were **7,409,198 shares** remaining for future repurchases under the company's share repurchase authorization[248](index=248&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes 2022 financial performance, highlighting revenue and net income growth, segment-specific trends, increased operating expenses, and a significant rise in operating cash flow [Consolidated Results of Operations](index=28&type=section&id=Consolidated%20Results%20of%20Operations) In 2022, the company reported increased revenues, adjusted gross profits, and net income, alongside higher personnel expenses and restructuring charges Consolidated Financial Highlights (FY 2022 vs. FY 2021) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $24.7 billion | $23.1 billion | +6.9% | | Adjusted Gross Profits | $3.6 billion | $3.15 billion | +14.0% | | Income from Operations | $1.3 billion | $1.08 billion | +17.1% | | Net Income | $940.5 million | $844.2 million | +11.4% | | Diluted EPS | $7.40 | $6.31 | +17.3% | - Personnel expenses increased **11.6% to $1.7 billion**, mainly due to an **11.7% increase in average employee headcount**[257](index=257&type=chunk) - The company recorded **$36.7 million in restructuring charges** in 2022, including **$21.5 million in personnel expenses** and **$15.2 million in other SG&A**[264](index=264&type=chunk)[511](index=511&type=chunk) [Segment Results of Operations](index=31&type=section&id=Segment%20Results%20of%20Operations) NAST showed strong performance driven by margin benefits, while Global Forwarding experienced declining volumes and pricing North American Surface Transportation (NAST) Results (FY 2022 vs. FY 2021) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $15.83 B | $14.51 B | +9.1% | | Adjusted Gross Profits | $2.20 B | $1.79 B | +22.5% | | Income from Operations | $833.3 M | $585.4 M | +42.4% | - NAST's strong performance was driven by higher adjusted gross profits per transaction, as declining purchased transportation costs benefited margins[295](index=295&type=chunk) Global Forwarding Results (FY 2022 vs. FY 2021) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $6.81 B | $6.73 B | +1.2% | | Adjusted Gross Profits | $1.08 B | $1.07 B | +0.9% | | Income from Operations | $449.4 M | $510.8 M | -12.0% | - Global Forwarding's income from operations declined due to decreasing volumes and pricing in the second half of 2022, with air freight volumes falling **9.0% year-over-year**[7](index=7&type=chunk)[269](index=269&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) Cash flow from operations significantly increased in 2022 due to reduced working capital, with anticipated capital expenditures of **$90 million to $100 million** in 2023 Cash Flow Summary (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash from Operating Activities | $1,650,171 | $94,955 | | Cash used for Investing Activities | ($64,918) | ($85,672) | | Cash used for Financing Activities | ($1,619,546) | $7,573 | - The significant increase in cash from operations was primarily due to a **$650 million sequential decrease in operating working capital**, driven by declining transportation costs and freight rates[304](index=304&type=chunk) - The company anticipates capital expenditures of approximately **$90 million to $100 million** in 2023[330](index=330&type=chunk) [Critical Accounting Policies and Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies involve judgment in revenue recognition for in-transit shipments, annual goodwill impairment testing, and establishing income tax reserves - **Revenue Recognition:** Management uses judgment and estimates to recognize revenue for in-transit shipments, with **$257.6 million recorded** for such services as of December 31, 2022[10](index=10&type=chunk)[310](index=310&type=chunk) - **Goodwill:** Goodwill is tested for impairment annually, with the Europe Surface Transportation reporting unit showing no impairment in 2022[11](index=11&type=chunk)[23](index=23&type=chunk)[313](index=313&type=chunk) - **Income Tax Reserves:** The company establishes reserves for uncertain tax positions, requiring significant judgment and reevaluation based on audits or changes in tax law[315](index=315&type=chunk)[340](index=340&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risks primarily stem from interest rate fluctuations on variable-rate debt and foreign currency exchange rate movements, with a hypothetical **10%** USD weakening impacting 2022 net income by **$20.4 million** - The company's primary market risks are interest rate changes on variable-rate debt and foreign currency fluctuations[364](index=364&type=chunk) - A hypothetical **10% weakening of the U.S. Dollar** against key foreign currencies would have decreased 2022 net income by approximately **$20.4 million**[367](index=367&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the audited consolidated financial statements, an unqualified auditor's opinion from **Deloitte & Touche LLP**, and disclosures on a critical audit matter regarding in-transit revenue estimation - The independent auditor, **Deloitte & Touche LLP**, issued an **unqualified opinion** on the financial statements and internal controls over financial reporting[347](index=347&type=chunk)[368](index=368&type=chunk) - A **Critical Audit Matter** was identified related to the high degree of judgment required in auditing the company's estimate of revenue for partially complete in-transit contracts[14](index=14&type=chunk)[349](index=349&type=chunk) - Total debt as of December 31, 2022, was **$1.97 billion**, consisting of revolving credit facilities, senior notes, and a receivables securitization facility[428](index=428&type=chunk) - In 2022, the company recognized **$36.7 million in restructuring charges** related to workforce reductions and software impairment[511](index=511&type=chunk) [PART III](index=69&type=section&id=PART%20III) This section provides information on the company's directors, executive officers, and corporate governance practices, primarily by reference to the Proxy Statement [Item 10. Directors, Executive Officers, and Corporate Governance](index=69&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement, alongside the company's code of ethics - Information regarding the Board of Directors and executive compensation is incorporated by reference from the company's Proxy Statement[521](index=521&type=chunk)[523](index=523&type=chunk) - The company has a code of ethics that applies to its principal officers, directors, and all employees, available on its investor relations website[522](index=522&type=chunk) [PART IV](index=70&type=section&id=PART%20IV) This section lists all documents filed as part of the Form 10-K, including financial statements, auditor's report, and an index of exhibits [Item 15. Exhibits, and Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits,%20and%20Financial%20Statement%20Schedules) This section provides a comprehensive list of exhibits filed with the Form 10-K, including financial statements, the auditor's report, and an index of corporate governance and material contract documents - This section includes the company's 2022 Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm, **Deloitte & Touche LLP**[528](index=528&type=chunk)[548](index=548&type=chunk) - An index of all exhibits filed with the report is provided, including key agreements such as the Credit Agreement, Note Purchase Agreement, and various equity incentive plan documents[529](index=529&type=chunk)[531](index=531&type=chunk)

Financial Performance - Total revenues for Q4 2022 were $5066821 thousand, a decrease of 22.1% year-over-year compared to $6501848 thousand in Q4 2021[39, 10] - Adjusted gross profit for Q4 2022 was $768174 thousand, a decrease of 10.3% year-over-year compared to $856341 thousand in Q4 2021[39, 10] - Net income per share decreased 54% year-over-year to $0.80 in Q4 2022[39] - The company returned $507 million of cash to shareholders in Q4 2022, up 128%[3] Segment Results - North American Surface Transportation (NAST) adjusted gross profit decreased 39% year-over-year in Q4 2022[41] - Global Forwarding adjusted gross profit decreased 39% year-over-year in Q4 2022, with ocean adjusted gross profit down 42.7% and air adjusted gross profit down 51.5%[41, 49] - Truckload volume in NAST decreased by 4% year-over-year, while truckload adjusted gross profit per shipment increased by 2%[20, 44] Strategic Initiatives - The company is focused on reducing net costs by $150 million on an annualized basis by Q4 2023[39] - The company is focused on scaling digitally to drive profitable growth[54] - Loads booked digitally by carriers increased 183% year-over-year in 2022[69]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission File Number: 000-23189 C.H. ROBINSON WORLDWIDE, INC. (Exact name of registrant as specified in its charter) Delaware 41-1883630 (State o ...

Financial Data and Key Metrics Changes - The company's Q3 total adjusted gross profit (AGP) increased by $43 million or 5% year-over-year, with growth in North American Surface Transportation (NAST) partially offset by a decline in Global Forwarding [30] - Q3 net income was $225.8 million, down 8.6% compared to Q3 last year, and diluted earnings per share were $1.78, down 4% year-over-year [36] - Q3 cash flow generated by operations reached a record $625.5 million, a significant improvement from a cash outflow of $73.5 million in Q3 of 2021 [37] Business Line Data and Key Metrics Changes - In the NAST Truckload business, year-over-year volume growth was 0.5%, with a mix of 65% contractual volume and 35% transactional volume [9][11] - The adjusted gross profit per shipment in NAST Truckload increased by 20.5% year-over-year, although it declined 15% sequentially from the previous quarter [10] - The NAST LTL business generated quarterly AGP of $161 million, up 23% year-over-year, driven by a 24.5% increase in AGP per order despite a 1.5% decline in volume [15] - Global Forwarding AGP decreased by 20% year-over-year to $248.4 million, with ocean forwarding AGP declining by 26% [16][17] Market Data and Key Metrics Changes - The routing guide depth of tender in managed services declined from 1.4 in Q2 to 1.3 in Q3, indicating a softening freight environment [12] - The national drive-in load-to-truck ratio declined throughout October, with the latest reading at approximately 2.6:1 [12] - The average truckload linehaul costs paid to carriers, excluding fuel, declined by approximately 17% year-over-year [13] Company Strategy and Development Direction - The company is focusing on digital transformation and cost reduction, expecting to generate $175 million in gross cost savings by Q4 2023, with net annualized cost reductions of $150 million anticipated [7][43] - The strategy includes expanding capabilities in key industry verticals and diversifying trade lanes to reduce reliance on specific markets [21][22] - The company aims to maintain a competitive edge through a non-asset-based business model and a focus on customer and carrier needs [45][46] Management's Comments on Operating Environment and Future Outlook - Management noted a deceleration in demand and a cooling freight market, with expectations for more normalized rates and fewer disruptions [5][6] - The company anticipates that inflation and other headwinds will result in net cost headwinds of $25 million in 2023, which will be partially offset by gross savings [7] - Management expressed confidence in the company's ability to deliver strong financial results despite economic pressures, emphasizing the importance of evolving the organization to focus on strategic priorities [45][46] Other Important Information - The company ended Q3 with approximately $1.1 billion in liquidity and a debt balance of $2.2 billion, reflecting an increase due to share repurchases [42] - Capital expenditures in Q3 were $31.3 million, with expectations to be at the high end of previous guidance for the year [39] Q&A Session Summary Question: Cost savings expectations for 2023 - Management indicated that cost reductions will primarily come from personnel and SG&A, with a focus on digitization efforts to drive efficiency [50][51][52] Question: Spot pricing in the Truckload sector - Management noted that the spot market is currently seeing a deceleration in pricing, with expectations for a cost floor around April-May 2023 [56] Question: Contract market conditions - Management explained that the AGP per truckload shipment in the contract business remains strong, but spot market volume has been pursued aggressively, impacting overall margins [61] Question: Legal settlements impact on SG&A - Management clarified that legal settlements represented about one-third of the increase in SG&A expenses for Q3, impacting the NAST business [62] Question: Forwarding business headcount increase - Management acknowledged that headcount in the forwarding segment was increased in anticipation of opportunities, despite a cautious market outlook [64] Question: Strategic portfolio review - Management emphasized the importance of continually reviewing the business portfolio to create long-term shareholder value, with no specific updates on monetizing non-core assets [65]

Company Overview and Market Position - C H Robinson is a global leader in freight and logistics, offering a diversified suite of services and holding market-leading positions in Truckload, Less-Than-Truckload (LTL), Ocean & Air[7] - The company has a significant market share opportunity in large addressable markets, with the 3PL Global Market expected to achieve an 85% CAGR from 2021 to 2028[13] - C H Robinson connects and serves a two-sided marketplace with 100,000 customers across the globe[9] - The company's top 500 customers account for 48% of adjusted gross profit in 2021, with an 86% retention rate for customers with 10+ years of partnership[9] Digital Strategy and Adoption - C H Robinson is focused on delivering scalable digital solutions to fuel future growth and productivity, creating value for the two-sided marketplace through product strategy & innovation[30, 31] - In 2021, $875 million of revenue was generated through digital channels, a 193% increase compared to 2020[33] - Over 12 million fully automated bookings occurred in the NAST truckload business, a 65% increase compared to 2020[33] - Following Navisphere Carrier enhancements, loads booked digitally by carriers increased 142% from January to June and 234% year-over-year in Q2 2022[33] Financial Performance and Capital Allocation - C H Robinson's strategy aims to improve operating performance and deliver premium shareholder returns through increased market share, global growth, digital scaling, process optimization, and strategic spending[25] - In 2021, the company returned $886 million of cash to shareholders, up 119% from the previous year, equating to 105% of the company's 2021 net income[41] - The company maintains a balanced capital allocation strategy, prioritizing high-return investments, opportunistic M&A, and growing dividends in alignment with long-term EBITDA[38, 39]