C.H. Robinson Worldwide (CHRW) is scheduled to report fourth-quarter 2023 results on Jan 31, after market close.C.H. Robinson has underperformed the Zacks Consensus Estimate in two of the preceding four quarters, met once and beat in the remaining occasion, the average miss being 6.06%.Let’s see how things have shaped up for C.H. Robinson this earnings season.Q4 ExpectationsThe Zacks Consensus Estimate for C.H. Robinson’s fourth-quarter 2023 revenues is pegged at $4.37 billion, indicating a 13.7% decline fr ...

C.H. Robinson Worldwide (CHRW) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended December 2023. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released o ...

PART I. Financial Information [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the periods ended September 30, 2023, and 2022, along with detailed notes on accounting policies and financial items [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of September 30, 2023, shows a decrease in total assets to **$5.32 billion** from **$5.95 billion** at year-end 2022, primarily driven by a reduction in receivables, while total stockholders' investment increased slightly to **$1.40 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $2,959,243 | $3,589,238 | | **Total assets** | $5,317,667 | $5,954,564 | | **Total current liabilities** | $2,649,543 | $3,322,852 | | **Total liabilities** | $3,913,083 | $4,601,142 | | **Total stockholders' investment** | $1,404,584 | $1,353,422 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the third quarter of 2023, total revenues fell **27.8%** to **$4.34 billion**, and net income dropped **63.7%** to **$81.9 million**, reflecting significant year-over-year declines in performance Q3 and Nine Months Performance Comparison (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | $4,341,030 | $6,015,376 | $13,374,556 | $19,629,804 | | **Income from operations** | $113,522 | $287,609 | $407,178 | $1,102,748 | | **Net income** | $81,949 | $225,798 | $294,156 | $844,331 | | **Diluted net income per share** | $0.68 | $1.78 | $2.46 | $6.50 | [Condensed Consolidated Statements of Stockholders' Investment](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Investment) This statement details changes in stockholders' investment, including net income, foreign currency adjustments, dividends, stock-based compensation, and share repurchases, leading to a net increase in total stockholders' investment to **$1.40 billion** for the nine months ended September 30, 2023 - Dividends of **$0.61 per share** were declared in each of the first three quarters of 2023[48](index=48&type=chunk) - The company repurchased common stock, reducing shares outstanding and treasury stock value during the period[48](index=48&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash from operating activities decreased to **$684.6 million** from **$876.8 million** in the prior year, primarily due to lower net income, with cash used for investing and financing activities Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $684,615 | $876,789 | | **Net cash used for investing activities** | ($66,651) | ($37,446) | | **Net cash used for financing activities** | ($651,519) | ($894,018) | | **Net change in cash and cash equivalents** | ($40,263) | ($69,881) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of accounting policies and specific financial items, including goodwill, financing arrangements totaling **$1.58 billion**, segment performance declines, and significant restructuring charges - As of September 30, 2023, total debt outstanding was approximately **$1.58 billion**, composed of a revolving credit facility, various Senior Notes, and a Receivables Securitization Facility[8](index=8&type=chunk) - In Q3 2023, the company initiated a restructuring program to divest its operations in Argentina, recognizing a **$21.1 million loss** on the disposal group[94](index=94&type=chunk)[168](index=168&type=chunk) - The company continued its 2022 restructuring program, recognizing an additional **$17.7 million** in charges in 2023, primarily for workforce reductions to align with digital transformation and market conditions[145](index=145&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant year-over-year decline in financial performance to a soft freight market with excess carrier capacity and weak demand, leading to suppressed transportation rates and cost optimization efforts [Market and Business Trends](index=24&type=section&id=Market%20and%20Business%20Trends) The North American surface transportation and global forwarding markets softened in Q3 2023 due to excess carrier capacity and weak demand, suppressing freight rates and impacting company revenues - The North America surface transportation market is characterized by **excess carrier capacity** exceeding shipper demand, leading to suppressed transportation rates near the cost of operating a truck[276](index=276&type=chunk) - The global forwarding market also softened as expanding ocean vessel capacity relative to weak demand suppressed ocean freight rates, resulting in less freight converting to air despite declining ocean schedule reliability[158](index=158&type=chunk) [Consolidated Results of Operations](index=25&type=section&id=Consolidated%20Results%20of%20Operations) For Q3 2023, consolidated total revenues decreased **27.8%** to **$4.3 billion**, and income from operations fell **60.5%** to **$113.5 million**, driven by lower pricing and partially offset by reduced personnel expenses Q3 2023 vs. Q3 2022 Consolidated Results Summary | Metric | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $4.3B | $6.0B | (27.8)% | | **Adjusted Gross Profits** | $634.8M | $887.2M | (28.4)% | | **Income from Operations** | $113.5M | $287.6M | (60.5)% | | **Diluted EPS** | $0.68 | $1.78 | (61.8)% | - Personnel expenses decreased by **21.5%** in Q3 2023, primarily due to cost optimization efforts, lower variable compensation, and a **13.7% reduction** in average employee headcount[203](index=203&type=chunk) - Other SG&A expenses increased **9.7%** in Q3 2023, mainly due to **$21.4 million** in restructuring expenses[178](index=178&type=chunk) [Segment Results](index=28&type=section&id=Segment%20Results) Both major segments experienced significant profit declines in Q3 2023, with North American Surface Transportation income from operations falling **47.1%** and Global Forwarding plummeting **95.9%** due to market conditions and restructuring Q3 2023 vs. Q3 2022 Income from Operations by Segment (in thousands) | Segment | Q3 2023 | Q3 2022 | % Change | | :--- | :--- | :--- | :--- | | **NAST** | $112,121 | $211,899 | (47.1)% | | **Global Forwarding** | $3,491 | $85,953 | (95.9)% | | **All Other and Corporate** | ($2,090) | ($10,243) | 79.6% | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2023, the company held **$174.7 million** in cash, with total debt at **$1.58 billion**, and believes existing liquidity is sufficient to fund operations and investments for the next 12 months - Cash and cash equivalents totaled **$174.7 million** as of September 30, 2023, down from **$217.5 million** at year-end 2022[226](index=226&type=chunk) Debt Facilities Summary (as of Sep 30, 2023, in thousands) | Facility | Carrying Value | Borrowing Capacity | | :--- | :--- | :--- | | Revolving credit facility | $163,000 | $1,000,000 | | Receivables Securitization | $499,966 | $500,000 | | Senior Notes (various) | $920,720 | $925,000 | | **Total debt** | **$1,583,686** | **$2,425,000** | - Cash flow from operating activities decreased by **21.9%** in the first nine months of 2023 compared to the same period in 2022, driven by a decline in net income[228](index=228&type=chunk)[246](index=246&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reported no material changes to its market risk exposures as of September 30, 2023, compared to its 2022 Annual Report on Form 10-K disclosures - No material changes in market risk were reported as of September 30, 2023, compared to the disclosures in the 2022 Annual Report on Form 10-K[252](index=252&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal control over financial reporting during Q3 - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023[231](index=231&type=chunk) - There were no material changes in internal control over financial reporting during the third quarter of 2023[232](index=232&type=chunk) PART II. Other Information [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to any pending or threatened litigation expected to have a material effect on its financial position, results of operations, or cash flows, only routine litigation - The company reports no pending litigation that is expected to have a material financial impact, only routine litigation from ordinary business operations[261](index=261&type=chunk)[130](index=130&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company directs readers to its 2022 Annual Report for risk factors and discloses a new risk related to the use of machine learning and artificial intelligence, highlighting potential competitive and regulatory challenges - A new risk factor was added concerning the use of machine learning and artificial intelligence (AI), which could create competitive, regulatory, compliance, and security risks[263](index=263&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) During Q3 2023, the company did not repurchase shares under its public program but acquired **20,270 shares** from employees for tax obligations, with **6,763,445 shares** remaining for future repurchase Issuer Purchases of Equity Securities (Q3 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | July 2023 | 7,981 | $95.72 | | August 2023 | 5,751 | $96.25 | | September 2023 | 6,538 | $89.36 | | **Total Q3 2023** | **20,270** | **$93.82** | - As of September 30, 2023, **6,763,445 shares** remained authorized for future repurchases under the company's plans[256](index=256&type=chunk)[265](index=265&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) The company reports that no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during Q3 2023 - No directors or officers adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended September 30, 2023[258](index=258&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including CEO and CFO certifications and financial statements formatted in Inline XBRL - Exhibits filed include CEO and CFO certifications pursuant to the Sarbanes-Oxley Act and financial data in Inline XBRL format[268](index=268&type=chunk)[298](index=298&type=chunk)

Financial Data and Key Metrics Changes - The company reported Q3 total revenues of $4.3 billion, down 28% year-over-year, with adjusted gross profit (AGP) also down 28% or $252 million, driven by a 31.4% decline in North American Surface Transportation (NAST) and a 31.6% decline in Global Forwarding [111] - Q3 cash flow generated from operations was $205 million, a decline from $626 million in Q3 of the previous year, primarily due to changes in net operating working capital [115] - The company ended Q3 with approximately $1 billion in liquidity, including $837 million of committed funding and a cash balance of $175 million [116] Business Line Data and Key Metrics Changes - In the NAST truckload business, Q3 volume declined approximately 6% year-over-year, with a 4.5% decline on a per business day basis [112] - The average truckload line haul rate, excluding fuel surcharges, declined 16.5% year-over-year, resulting in a 34% year-over-year decrease in truckload AGP per mile and a 36.5% decrease in AGP per load [113] - In the Global Forwarding business, AGP generated was approximately $170 million, a 32% decline year-over-year, with ocean forwarding AGP declining by 35% year-over-year [22][112] Market Data and Key Metrics Changes - The freight market remains soft, with global freight demand continuing to be weak in Q3, leading to low spot rates and a loose market [15][111] - The company noted a mix of 70% contractual volume and 30% transactional volume in the truckload business, indicating a suppressed spot market [20][121] - The company observed a seasonal bump in spot rates in Q4, driven by holiday demand and some carriers taking time off [8][9] Company Strategy and Development Direction - The company is focused on improving customer and carrier experiences through enhanced visibility and increased automation, which has resulted in positive feedback and high net promoter scores [96] - The leadership is driving productivity improvements, targeting a 15% year-over-year improvement in shipments per person per day, with an 18% year-to-date improvement achieved by Q3 [97][108] - The company is leveraging generative AI and technology to streamline processes, reduce manual touches, and improve overall efficiency [29][105] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's capacity to handle incremental volume without adding headcount, preparing for a market rebound [3][15] - The management highlighted the importance of maintaining financial strength and investing through cycles to meet customer needs [16] - The company expects to see continued pricing pressure in the LTL market due to temporary capacity exiting, but anticipates that some of this capacity will return [44][126] Other Important Information - The company has reduced Q3 operating expenses in NAST by 22% year-over-year, despite a volume decline of only 3.5% [97] - Personnel expenses for Q3 were $343.5 million, down 21.5% year-over-year, with a headcount reduction of 14.2% [24] - The company plans to return $76 million to shareholders in Q3 through dividends and share repurchases, equating to 92% of Q3 net income [31] Q&A Session Summary Question: How is October trending in terms of AGP? - Management noted that the mix of volume in truckload is currently 70% contract and 30% spot, with expectations for improved AGP as demand returns [121] Question: What is the outlook for personnel costs heading into Q4? - Personnel expenses are expected to increase from Q3 to Q4, primarily due to lower incentive costs in Q3 that are not expected to repeat [122] Question: What impact does the exit of certain competitors have on the market? - Management indicated that while the exit of competitors like Convoy does not have a material impact on results, it does create opportunities for capturing profitable volume [41][126] Question: How does the company plan to balance market share and profitability during the bid season? - The company aims to gain both margin and market share, operating within the current market dynamics while protecting margins [78]

Financial Performance - Total revenues decreased by 29.6% to $4.03 billion in Q3 2023 compared to $5.72 billion in Q3 2022[62] - Adjusted gross profits decreased by 28.4% year-over-year to $635 million[10] - Net income per share decreased by 61.8% year-over-year to $0.68[10] - North American Surface Transportation (NAST) adjusted gross profits decreased by 31.6% year-over-year[11] - Global Forwarding adjusted gross profits decreased by 31.6% year-over-year to $169.9 million[11, 21] Truckload Market - Truckload volume was down 6.0% year-over-year[8] - Truckload adjusted gross profit per shipment decreased by 36.5%[8] - Truckload contractual volume mix was 70% and transactional volume mix was 30% in Q3[38] - Price per mile decreased 16.5% year-over-year for truckload shipments[38] - Cost per mile decreased 13.5% year-over-year for truckload shipments[38] Global Forwarding - Ocean adjusted gross profit decreased by 35.0% to $103.8 million[21] - Air adjusted gross profit decreased by 36.8% to $29.7 million[21] - Customs adjusted gross profit decreased by 10.7% to $24.9 million due to an 8.0% decline in volume[20, 21] Other Segments - Robinson Fresh adjusted gross profit increased by 12.3% to $31.1 million[47] - Managed Services adjusted gross profit decreased slightly by 0.6% to $29.4 million[47] - Other Surface Transportation adjusted gross profit increased by 1.3% to $17.9 million[11, 47]

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents C.H. Robinson Worldwide, Inc.'s unaudited condensed consolidated financial statements for Q2 2023 and the six months ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$5.41 billion** from **$5.95 billion** at year-end 2022, primarily due to reduced receivables, while total liabilities also declined Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total current assets** | $3,051.5 | $3,589.2 | | **Total assets** | $5,405.3 | $5,954.6 | | **Total current liabilities** | $2,761.5 | $3,322.9 | | **Total liabilities** | $4,017.2 | $4,601.1 | | **Total stockholders' investment** | $1,388.1 | $1,353.4 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Q2 2023 total revenues declined **35.0%** to **$4.42 billion**, with net income decreasing **72.1%** to **$97.3 million** and diluted EPS falling to **$0.81** Q2 2023 vs Q2 2022 Performance (in millions, except per share data) | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Total Revenues | $4,421.9 | $6,798.5 | | Income from Operations | $132.6 | $469.7 | | Net Income | $97.3 | $348.2 | | Diluted EPS | $0.81 | $2.67 | [Condensed Consolidated Statements of Stockholders' Investment](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Investment) Stockholders' equity changes for H1 2023 include **$212.2 million** net income, **$147.2 million** in dividends, and **$62.8 million** in common stock repurchases Changes in Stockholders' Investment (Six Months Ended June 30, 2023, in millions) | Activity | Amount | | :--- | :--- | | Balance, Dec 31, 2022 | $1,353.4 | | Net Income (H1 2023) | $212.2 | | Dividends Declared | ($147.2) | | Repurchase of Common Stock | ($62.8) | | Balance, June 30, 2023 | $1,388.1 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly increased to **$479.4 million** from **$251.3 million** in H1 2023, while financing activities used **$432.1 million** for debt, dividends, and repurchases Cash Flow Summary (Six Months Ended June 30, in millions) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $479.4 | $251.3 | | Net cash used for investing activities | ($51.3) | ($6.2) | | Net cash used for financing activities | ($432.1) | ($257.2) | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies and financial items, including segment reporting, financing, stock-based compensation, and restructuring activities - The company's reportable segments are North American Surface Transportation (NAST) and Global Forwarding, with other activities grouped into All Other and Corporate[38](index=38&type=chunk) - As of June 30, 2023, the company had total debt of approximately **$1.74 billion** across various facilities, including a **$1 billion** revolving credit facility and a **$500 million** receivables securitization facility[23](index=23&type=chunk)[198](index=198&type=chunk) - The company recognized restructuring charges of **$14.1 million** in Q2 2023, primarily related to workforce reductions, with actions expected to be complete by the end of 2023[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2023 financial performance, attributing revenue and profit declines to challenging market conditions, excess carrier capacity, and suppressed freight rates - Market conditions in Q2 2023 were characterized by plentiful carrier capacity relative to demand in North American surface transportation, suppressing rates, with the truckload routing guide depth falling to **1.1**, its lowest level since Q2 2020[133](index=133&type=chunk) - In global forwarding, higher ocean vessel and air freight capacity than demand kept rates low, a trend that began in H2 2022, with weak consumer demand nearly eliminating port congestion and equipment shortages[107](index=107&type=chunk) Q2 2023 vs Q2 2022 Consolidated Performance | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $4,421.9M | $6,798.5M | (35.0)% | | Adjusted Gross Profits | $665.5M | $1,031.6M | (35.5)% | | Income from Operations | $132.6M | $469.7M | (71.8)% | | Diluted EPS | $0.81 | $2.67 | (69.7)% | [North American Surface Transportation (NAST) Segment Results](index=25&type=section&id=North%20American%20Surface%20Transportation%20(NAST)%20Segment%20Results) NAST segment income from operations fell **57.4%** to **$117.9 million** in Q2 2023, driven by lower pricing and margins in truckload services due to excess capacity NAST Q2 2023 vs Q2 2022 Performance (in millions) | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $3,079.3 | $4,147.0 | (25.7)% | | Adjusted Gross Profits | $400.5 | $624.6 | (35.9)% | | Income from Operations | $117.9 | $276.5 | (57.4)% | - The average truckload linehaul rate charged to customers decreased by approximately **23.0%**, while the cost per mile paid to carriers decreased by only **19.0%**, compressing margins[179](index=179&type=chunk)[134](index=134&type=chunk) [Global Forwarding Segment Results](index=27&type=section&id=Global%20Forwarding%20Segment%20Results) Global Forwarding operating income dropped **82.3%** to **$29.6 million** in Q2 2023, due to significantly lower margins and volumes in ocean and air freight services Global Forwarding Q2 2023 vs Q2 2022 Performance (in millions) | Metric | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $779.9 | $2,093.2 | (62.7)% | | Adjusted Gross Profits | $179.2 | $324.4 | (44.8)% | | Income from Operations | $29.6 | $167.6 | (82.3)% | - Volume declines in Q2 2023 vs Q2 2022 were significant: Ocean volumes decreased by **7.0%**, air freight tonnage by **2.0%**, and customs transactions by **14.5%**[192](index=192&type=chunk)[108](index=108&type=chunk) [All Other and Corporate Segment Results](index=28&type=section&id=All%20Other%20and%20Corporate%20Segment%20Results) All Other and Corporate segment reported a **$14.9 million** operating loss in Q2 2023, despite a **3.8%** increase in adjusted gross profits driven by Robinson Fresh and Managed Services All Other and Corporate Adjusted Gross Profits (Q2, in millions) | Business Line | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Robinson Fresh | $37.9 | $35.0 | 8.3% | | Managed Services | $29.0 | $27.6 | 4.8% | | Other Surface Transportation | $18.9 | $20.0 | (5.7)% | | **Total** | **$85.7** | **$82.6** | **3.8%** | - Growth in Robinson Fresh was driven by increased case volume and integrated supply chain solutions for foodservice customers, while Managed Services grew with existing and new customers[196](index=196&type=chunk)[3](index=3&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity, with cash from operations increasing to **$479.4 million** in H1 2023, sufficient for future needs despite debt repayments, dividends, and share repurchases - Cash flow from operations improved by **$228.0 million** in the first six months of 2023, despite a decrease in net income, due to changes in working capital from declining freight rates and lower volumes[169](index=169&type=chunk)[189](index=189&type=chunk) - The company remains committed to its quarterly dividend and share repurchases to enhance shareholder value, though the pace of repurchases may be affected by debt reduction plans[216](index=216&type=chunk) - As of June 30, 2023, the company was in compliance with all debt covenants[217](index=217&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of June 30, 2023, there were no material changes in the company's market risk compared to its 2022 Annual Report on Form 10-K - There were no material changes in market risk from those disclosed in the company's 2022 Annual Report on Form 10-K as of June 30, 2023[220](index=220&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2023[221](index=221&type=chunk) - There were no changes in internal control over financial reporting during Q2 2023 that have materially affected, or are reasonably likely to materially affect, internal controls[222](index=222&type=chunk) [PART II. Other Information](index=31&type=section&id=PART%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to any material pending or threatened litigation beyond routine business operations - The company reports no material litigation outside of routine proceedings from ordinary business operations, and any potential losses are not expected to have a material effect on financial results[224](index=224&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, including the appointment of a new CEO and a new risk concerning the use of machine learning and artificial intelligence - A new risk factor was added regarding the use of machine learning and AI, citing risks of falling behind in technological development, as well as potential liabilities from regulatory, ethical, and security concerns[226](index=226&type=chunk) - The company appointed David Bozeman as its new President and Chief Executive Officer, effective June 26, 2023[207](index=207&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **329,256** common shares at an average price of **$96.41** in Q2 2023, with **6,763,445** shares remaining authorized for future repurchases Share Repurchases in Q2 2023 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2023 | 111,642 | $96.12 | | May 2023 | 110,469 | $100.69 | | June 2023 | 125,663 | $92.92 | | **Q2 2023 Total** | **347,774** | **$96.41** | [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including the new CEO's employment letter and Sarbanes-Oxley certifications - Key exhibits filed include the employment agreement with new CEO David Bozeman and Sarbanes-Oxley certifications[210](index=210&type=chunk)

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]

Financial Performance - Total Revenues decreased by 36.8% year-over-year to $4421856 thousand for the three months ended June 30, 2023[103] - Adjusted Gross Profit decreased by 35.9% year-over-year to $400532 thousand for NAST[111] - Net income per share (diluted) is $0.81, while adjusted net income per share (diluted) is $0.90, excluding $14.1 million of restructuring charges[18] - Truckload Adjusted Gross Profit per shipment decreased 41.5% due to declining profit per shipment[21] - Global Forwarding Adjusted Gross Profit decreased 44.8% year-over-year[31] Operational Metrics - Truckload volume was down 6.5% year-over-year[21] - The company achieved a 12% year-to-date improvement in shipments per person per day, with a goal of 15% year-over-year improvement by Q4[18, 88] - Air Adjusted Gross Profit decreased due to a 39.5% decrease in Adjusted Gross Profit per metric ton shipped and a 2.0% decline in metric tons shipped[42] Strategic Initiatives - The company is focused on streamlining processes by removing waste and manual touches[18] - The company aims to provide a compelling offering that makes C H Robinson essential to customers' supply chains[17] - The company is exploring the potential benefits of generative AI in conjunction with existing machine learning and AI utilization[17]

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]