C. H. ROBINSON WORLDWIDE, INC. 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refer to the company’s 2019 Annual Report on Form 10-K for a complete discussion on the company’s market risk. As of September 30, 2020 there were no material changes in market risk from those disclosed in the company’s 2019 Annual Report on Form 10-K. 31 Table of Contents LIQUIDITY AND CAPITAL RESOURCES We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock. In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (dollars in thousands): Description Carrying Value as of September 30, 2020 Borrowing Capacity Maturity Revolving credit facility $ — $ 1,000,000 October 2023 Senior Notes, Series A 175,000 175,000 August 2023 Senior Notes, Series B 150,000 150,000 August 2028 Senior Notes, Series C 175,000 175,000 August 2033 Receivables securitization facility (1) 59,979 250,000 December 2020 Senior Notes (1) 593,087 600,000 April 2028 Total debt $ 1,153,066 $ 2,350,000 ______________________________________________ (1) Net of unamortized discounts and issuance costs. We expect to use our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, and share repurchases, although we temporarily suspended share repurchase activity as described below. Cash and cash equivalents totaled $252.6 million as of September 30, 2020 and $447.9 million as of December 31, 2019. Cash and cash equivalents held outside the United States totaled $242.0 million as of September 30, 2020 and $405.1 million as of December 31, 2019. Working capital increased slightly from $1.08 billion at December 31, 2019, to $1.09 billion at September 30, 2020. We prioritize our investments to grow the business, as we require some working capital and a relatively small amount of capital expenditures to grow. We are continually looking for acquisitions, but those acquisitions must fit our culture and enhance our growth opportunities. The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands): Nine Months Ended September 30, 2020 2019 % change Sources (uses) of cash: Cash provided by operating activities $ 337,049 $ 623,858 (46.0) % Capital expenditures (40,261) (50,943) Acquisitions, net of cash acquired (223,230) (59,188) Other investing activities 5,525 16,625 Cash used for investing activities (257,966) (93,506) 175.9 % Repurchase of common stock (68,563) (241,303) Cash dividends (207,428) (207,865) Net payments on debt (83,000) (94,000) Other financing activities 84,007 26,090 Cash used for financing activities (274,984) (517,078) (46.8) % Effect of exchange rates on cash and cash equivalents 612 (7,465) Net change in cash and cash equivalents $ (195,289) $ 5,809 32 Table of Contents Cash flow from operating activities. Cash flow from operating activities decreased significantly during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 due to unfavorable changes in working capital. The unfavorable changes in working capital were primarily related to a sequential increase in accounts receivable associated with increasing pricing in a number of service lines during the third quarter of 2020. Given the COVID-19 pandemic, we are closely monitoring credit and collections activities to minimize risk as well as working with our customers to facilitate the movement of goods across their supply chains while also ensuring timely payment. Cash used for investing activities. We used $222.7 million for the acquisition of Prime Distribution during the nine months ended September 30, 2020. We used $45.0 million for the acquisition of Space Cargo and $14.2 million for the acquisition of Dema Service during the nine months ended September 30, 2019. Capital expenditures consisted primarily of investments in information technology, which are intended to increase employee productivity, automate interactions with our customers and contracted carriers, and improve our internal workflows to help expand our operating margins and grow the business. During the nine months ended September 30, 2019, we sold a facility we owned in Chicago, Illinois for approximately $17.0 million. Cash used for financing acti vities. Net repayments on debt in the nine months ended September 30, 2020 and 2019 were to reduce the outstanding balance of the Receivables Securitization Facility. The slight decrease in cash dividends was due to a decrease in shares outstanding during the nine months ended September 30, 2020 and timing of dividends processed related to employee benefit plans, mostly offset by a $0.01 per share dividend increase in 2020 compared to 2019. The decrease in cash used for share repurchases was due to a decrease in the number of shares repurchased during the nine months ended September 30, 2020 as we temporarily suspended our share repurchase activity near the end of the first quarter of 2020 as we continue to assess the impacts of COVID-19. In addition, the average price paid per share decreased compared to the same period of 2019. The number of shares we repurchase, if any, during future periods will vary based on our cash position, other potential uses of our cash, and market conditions. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value, and we expect to resume our opportunistic share repurchase program in the fourth quarter of this year. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We may seek to retire or purchase our outstanding Senior Notes through open market cash purchases, privately negotiated transactions or otherwise. Although there is uncertainty related to the anticipated impact of the COVID-19 pandemic on our future results, we believe that, assuming no change in our current business plan, our available cash, together with expected future cash generated from operations, the amount available under our credit facilities, and credit available in the market, will be sufficient to satisfy our anticipated needs for working capital, capital expenditures, and cash dividends for at least the next 12 months. We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed. Recently Issued Accounting Pronouncements Refer to Note 1, Basis of Presentation , contained in this quarterly report and in the company's 2019 Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements.