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

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes. FORWARD-LOOKING INFORMATION Our quarterly report on Form 10-Q, including this discussion and analysis of our financial condition and results of operations and our disclosures about market risk, contains certain “forward-looking statements.” These statements represent our expectations, beliefs, intentions, or strategies concerning future events that, by their nature, involve risks and uncertainties. Forward-looking statements include, among others, statements about our future performance, the continuation of historical trends, the sufficiency of our sources of capital for future needs, the effects of acquisitions or dispositions, the expected impact of recently issued accounting pronouncements, and the outcome or effects of litigation. Risks that could cause actual results to differ materially from our current expectations include, but are not limited to, changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global 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; cyber-security related risks; risks associated with operations outside of the United States; 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 related to the elimination of LIBOR; risks associated with the potential impact of changes in government regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of war on the economy; changes to our capital structure; changes due to catastrophic events including pandemics such as COVID-19, and other risks and uncertainties, detailed in our Annual and Quarterly Reports. Therefore, actual results may differ materially from our expectations based on these and other risks and uncertainties, including those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 19, 2021 as well as the updates to these risk factors included in Part II—“Item 1A, Risk Factors,” herein. 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. 17 Table of Contents OVERVIEW C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the world's largest logistics platforms. Our mission is to improve the world's supply chains through our people, processes, and technology by delivering exceptional value to our customers and suppliers. We provide freight transportation services and logistics solutions to companies of all sizes in a wide variety of industries. We operate through a network of offices in North America, Europe, Asia, Oceania, and South America. We offer a global suite of services using tailored, market-leading technology built by and for supply chain experts. Our global network of supply chain experts work with our customers to drive better supply chain outcomes by leveraging our experience, data, technology, and scale. 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. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profit and adjusted gross profit margin. The reconciliation of gross profit to adjusted gross profit and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands): Three Months Ended March 31, 2021 2020 Revenues: Transportation $ 4,560,227 $ 3,542,118 Sourcing 243,642 262,890 Total revenues 4,803,869 3,805,008 Costs and expenses: Purchased transportation and related services 3,881,285 3,000,113 Purchased products sourced for resale 220,204 236,942 Direct internally developed software amortization 4,647 3,745 Total direct costs 4,106,136 3,240,800 Gross profit / Gross profit margin 697,733 14.5 % 564,208 14.8 % Plus: Direct internally developed software amortization 4,647 3,745 Adjusted gross profit / Adjusted gross profit margin $ 702,380 14.6 % $ 567,953 14.9 % 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 (dollars in thousands) : Three Months Ended March 31, 2021 2020 Total revenues $ 4,803,869 $ 3,805,008 Operating income 223,329 109,440 Operating margin 4.6 % 2.9 % Adjusted gross profit $ 702,380 $ 567,953 Operating income 223,329 109,440 Adjusted operating margin 31.8 % 19.3 % 18 Table of Contents MARKET TRENDS The North American surface transportation market continues to be impacted by tightening carrier capacity driven by an ongoing shortage of long-haul drivers. The demand for transportation has continued to improve as businesses attempt to replenish low inventory levels to meet rising consumer demand fueled by the re-opening of the economy and additional fiscal stimulus. These conditions have resulted in historically high pricing for purchased transportation. Industry freight volumes, as measured by the Cass Freight Index, increased approximately 7.5 percent during the first quarter of 2021 compared to the first quarter of 2020. One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business. Routing guide depth represents the number of carriers contacted prior to acceptance when procuring a transportation provider. The average routing guide depth of tender in the first quarter of 2021 was 1.7, representing that on average, the first or second carrier in a shipper's routing guide was executing the shipment in most cases. This routing guide penetration compares to 1.2 in the first quarter of 2020 and is reflective of the increasingly tight carrier capacity in the first quarter of 2021. As capacity continues to tighten and routing guides continue to degrade more loads move to the spot market driving sharp increases in purchased transportation costs. The global forwarding market continues to face unprecedented disruptions due to port congestion, shipping container shortages, and the ongoing air freight capacity shortage caused by a reduction of commercial flights resulting from the COVID-19 pandemic. These disruptions combined with strong demand across most industries, most notably retail, have resulted in significant increases in purchased transportation costs for both ocean and air freight. In addition, the ongoing air freight capacity shortage has continued to result in an increase in charter flights and larger than normal shipment sizes. BUSINESS TRENDS Our first quarter of 2021 surface transportation results are largely consistent with the overall market trends summarized above, although we did experience volume increases slightly below the industry trends as measured by the Cass Freight Index. Industry freight volumes increased approximately 7.5 percent compared to our combined NAST truckload and less than truckload ("LTL") volume increase of 7.0 percent per business day. We continued to work with our customers to meet our contractual commitments during the first quarter of 2021 while adapting our pricing to reflect the rising cost environment. The improving demand and tight carrier capacity conditions resulted in our average truckload linehaul cost per mile, excluding fuel costs, increasing 33.5 percent in the first quarter of 2021. Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, increased approximately 33.0 percent in the first quarter of 2021. In our global forwarding business, we continued to experience significant increases in purchased transportation costs for both ocean and air freight due to the disruptions and capacity shortages impacting the global forwarding market. This along with increased volumes has resulted in triple digit percentage growth in both total revenue and cost of transportation for our ocean and air freight service lines. Ocean volumes increased 27.0 percent with strong growth in all regions we serve driven by higher award sizes from existing customers, new customer growth, and the adverse impact the COVID-19 pandemic had on ocean volumes in the first quarter of 2020. On March 2, 2020, we acquired all of the outstanding shares of Prime Distribution Services (“Prime Distribution”), a leading provider of retail consolidation services in North America for $222.7 million in cash. This acquisition adds scale and value-added warehouse capabilities to our retail consolidation platform, adding to our global suite of services. The acquisition was effective as of February 29, 2020, and therefore the results of operations of Prime Distribution have been included as part of the North American Surface Transportation segment in our consolidated financial statements since March 1, 2020. SIGNIFICANT DEVELOPMENTS During the three months ended March 31, 2021, our financial results and operations were impacted by the COVID-19 pandemic described above and discussed throughout Item 2, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” The extent to which the COVID-19 pandemic impacts our financial results and operations for the remainder of 2021 and going forward will depend on future developments which are highly uncertain and cannot be predicted, including fluctuations in the severity of the outbreak and the actions being taken to contain and treat it. We have taken a variety of measures to ensure the availability, continuity, and security of our critical infrastructure, ensure the health and safety of our employees around the globe, and provide service and supply chain continuity to our customers and contracted carriers in order to deliver critical and essential goods and services. We continue to follow public and private sector policies and initiatives to reduce the transmission of COVID-19, such as requiring social distancing, wearing a mask, and limiting the number of employees to less than 50 percent capacity when in the office, in addition to the elimination of all non-essential travel. We have also adopted work-from-home arrangements, and as of March 31, 2021, over 80 percent of our employees were working remotely executing their duties and responsibilities. We do not believe these policies and initiatives will adversely impact our operations. 19 Table of Contents Due to the ongoing uncertainty around the severity and duration of the outbreak, we are not able at this time to estimate the impact COVID-19 may have on our financial results and operations for the remainder of 2021 and going forward. However, the impact could be material in all business segments and could be material during any future period affected either directly or indirectly by this pandemic. Many businesses continue to experience reduced production and output which could result in a decrease in freight volumes across a number of industries which may reduce our contractual and spot-market opportunities. In addition, a significant number of our contracted carriers may reduce their capacity or charge higher prices in light of the volatile market conditions which may reduce our adjusted gross profit margins as we honor our contractual freight rates. SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS The following summarizes select first quarter 2021 year-over-year operating comparisons to first quarter 2020: • Total revenues increased 26.3 percent to $4.8 billion, driven primarily by higher pricing and higher volume across most of our service lines. • Gross profits increased 23.7 percent to $697.7 million. Adjusted gross profits increased 23.7 percent to $702.4 million, primarily driven by higher pricing in our truckload, ocean and air service lines, higher volume in our ocean, LTL and air service lines and contributions from the acquisition of Prime Distribution. • Personnel expenses increased 9.3 percent to $360.8 million, primarily driven by higher incentive compensation costs. Average headcount decreased 2.9 percent, despite the Prime acquisition contributing approximately one percentage point of growth. • Other selling, general, and administrative (“SG&A”) expenses decreased 7.9 percent to $118.2 million primarily due to lower travel expenses and credit losses. • Income from operations totaled $223.3 million, up 104.1 percent due to the increase in adjusted gross profits. • Adjusted operating margin of 31.8 percent increased 1,250 basis points. • Interest and other expenses totaled $11.3 million, consisting primarily of $12.2 million of interest expense, which decreased $0.4 million versus last year due to a lower average debt balance and a lower average interest rate. The first quarter also included a $2.9 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses. • The effective tax rate in the quarter was 18.3 percent compared to 17.1 percent in the first quarter last year. This increase was primarily due to higher profits. • Diluted earnings per share (EPS) increased 124.6 percent to $1.28. • Cash flow from operations decreased $115.2 million driven by a large increase in working capital during the three months ended March 31, 2021. 20 Table of Contents CONSOLIDATED RESULTS OF OPERATIONS The following table summarizes our results of operations (dollars in thousands, except per share data): Three Months Ended March 31, 2021 2020 % change Revenues: Transportation $ 4,560,227 $ 3,542,118 28.7 % Sourcing 243,642 262,890 (7.3) % Total revenues 4,803,869 3,805,008 26.3 % Costs and expenses: Purchased transportation and related services 3,881,285 3,000,113 29.4 % Purchased products sourced for resale 220,204 236,942 (7.1) % Personnel expenses 360,835 330,220 9.3 % Other selling, general, and administrative expenses 118,216 128,293 (7.9) % Total costs and expenses 4,580,540 3,695,568 23.9 % Income from operations 223,329 109,440 104.1 % Interest and other expense (11,260) (15,228) (26.1) % Income before provision for income taxes 212,069 94,212 125.1 % Provision for income taxes 38,764 16,066 141.3 % Net income $ 173,305 $ 78,146 121.8 % Diluted net income per share $ 1.28 $ 0.57 124.6 % Average headcount 14,997 15,450 (2.9) % Adjusted gross profit margin percentage (1) Transportation 14.9 % 15.3 % (0.4) pts Sourcing 9.6 % 9.9 % (0.3) pts Total adjusted gross profit margin 14.6 % 14.9 % (0.3) pts ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above. A reconciliation of our reportable segments to our consolidated results can be found in Note 9, Segment Reporting, in Part I, Financial Information of this Quarterly Report on Form 10-Q. Consolidated Results of Operations—Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020 Total revenues and direct costs. Total transportation revenues increased driven by increased pricing in our truckload, ocean, and air freight service lines in addition to increased volumes in our ocean and LTL service lines. The increased pricing in truckload, ocean and air freight was driven by tightening carrier capacity as discussed above in the market trends section. These increases were partially offset by a decrease in truckload volumes. Total purchased transportation and related services increased, driven by higher average truckload linehaul costs per mile and higher costs of capacity in the ocean and air freight service lines, in addition to higher volumes in the ocean and LTL service lines. Our sourcing total revenue and purchased products sourced for resale decreased due to lower pricing and costs per case and a decline in volume. 21 Table of Contents Gross profits and adjusted gross profits. Our transportation adjusted gross profit increased due to improved pricing in truckload and the strong performance of our ocean and air freight service lines in addition to volume increases in LTL. Our transportation adjusted gross profit margin decreased driven by declines across most service lines but was partially offset by improved adjusted gross profit margin in truckload. Sourcing adjusted gross profit decreased due to a decrease in case volumes and lower adjusted gross profit per case in the retail industry. Operating expenses. Personnel expenses increased primarily due to increases in incentive compensation which was partially offset by a decrease in average headcount. Average headcount decreased 2.9 percent, despite the Prime Distribution acquisition contributing approximately one percentage point of growth. SG&A expenses decreased due to lower travel expenses and credit losses. Interest and other expense. Interest and other expense primarily consisted of interest expense of $12.2 million in the first quarter of 2021 and a $2.9 million unfavorable impact of 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. Interest expense decreased modestly driven by a lower average debt balance and a lower average interest rate in the first quarter of 2021 compared to the first quarter of 2020. The first quarter of 2020 included a $2.9 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses. Provision for income taxes. Our effective income tax rate was 18.3 percent for the first quarter of 2021 compared to 17.1 percent for the first quarter of 2020. The effective income tax rate for the first quarter ended March 31, 2021, was lower than the statutory federal income tax rate primarily due to the tax impact of share-based payment awards, which reduced the effective tax rate by 3.2 percentage points. Taxes on foreign earnings also contributed to a lower federal income tax rate, reducing our effective tax rate in the three months ended March 31, 2021 by 1.7 percentage points. These impacts were partially offset by state income tax expense, which increased the effective income tax rate. The effective income tax rate for the first quarter of 2020 was lower than the statutory federal income tax rate due to the tax impact of share-based payment awards, which reduced the effective tax rate by 3.6 percentage points, and foreign tax benefits recorded in the three months ended March 31, 2020 but were partially offset by state income taxes, net of federal benefit and foreign income taxes. 22 Table of Contents NAST Segment Results of Operations Three Months Ended March 31, (dollars in thousands) 2021 2020 % change Total revenues $ 3,211,423 $ 2,823,745 13.7 % Costs and expenses: Purchased transportation and related services 2,790,315 2,450,967 13.8 % Personnel expenses 183,929 172,832 6.4 % Other selling, general, and administrative expenses 100,395 101,420 (1.0) % Total costs and expenses 3,074,639 2,725,219 12.8 % Income from operations $ 136,784 $ 98,526 38.8 % Three Months Ended March 31, 2021 2020 % change Average headcount 6,537 7,038 (7.1) % Service line volume statistics Truckload (6.5) % LTL 15.0 % Adjusted gross profits (1) Truckload $ 280,304 $ 243,686 15.0 % LTL 120,117 112,330 6.9 % Other 20,687 16,762 23.4 % Total adjusted gross profits $ 421,108 $ 372,778 13.0 % ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above. Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020 Total revenues and direct costs. N AST total revenues and direct costs increased due to increased pricing in truckload and increased volumes in our LTL service line. The increased pricing in truckload was driven by tightening carrier capacity as discussed above in the market trends section. These increases were partially offset by a decrease in truckload volumes. Total purchased transportation and related services increased, driven by higher average truckload linehaul costs per mile in addition to higher volumes in the LTL service line. Gross profits and adjusted gross profits. NAST truckload adjusted gross profits increased driven primarily by improved pricing in truckload and volume increases in LTL. The improved pricing in truckload was the result of an increase in spot market opportunities and continued progress repricing our contractual truckload business to reflect the rising cost environment. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 33.0 percent in the first quarter of 2021 compared to the first quarter of 2020. Our truckload transportation costs, excluding fuel surcharges, increased approximately 33.5 percent. NAST LTL adjusted gross profits increased due to increased volumes including those due to acquisition, partially offset by lower adjusted gross profit per transaction. The acquisition of Prime Distribution contributed 3.0 percentage points to LTL adjusted gross profit growth in the first quarter of 2021. NAST other adjusted gross profits increased primarily due to incremental warehousing services related to the acquisition of Prime Distribution. Operating expenses. NAST personnel expense increased primarily due to increases in incentive compensation which were partially offset by a decrease in average headcount. The acquisition of Prime Distribution contributed 2.5 percentage points of growth to NAST average headcount. NAST SG&A expenses decreased slightly due to a reduction in the reserve for credit loss, decreases in other purchased services, and reduced travel expenses. These decreases were largely offset by an increase from the ongoing expenses of Prime Distribution. The operating expenses of NAST and all other segments include allocated corporate expenses. 23 Table of Contents Global Forwarding Segment Results of Operations Three Months Ended March 31, (dollars in thousands) 2021 2020 % change Total revenues $ 1,156,039 $ 530,384 118.0 % Costs and expenses: Purchased transportation and related services 941,739 402,070 134.2 % Personnel expenses 81,009 70,893 14.3 % Other selling, general, and administrative expenses 42,702 45,462 (6.1) % Total costs and expenses 1,065,450 518,425 105.5 % Income from operations $ 90,589 $ 11,959 657.5 % Three Months Ended March 31, 2021 2020 % change Average headcount 4,735 4,824 (1.8) % Service line volume statistics Ocean 27.0 % Air 7.0 % Customs 13.5 % Adjusted gross profits (1) Ocean $ 135,396 $ 69,810 93.9 % Air 45,247 26,877 68.3 % Customs 24,223 21,193 14.3 % Other 9,434 10,434 (9.6) % Total adjusted gross profits $ 214,300 $ 128,314 67.0 % ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above. Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020 Total revenues and direct costs. Global Forwarding total revenues and direct costs increased driven by significantly higher pricing and volumes in our ocean service line and, to a lesser extent, higher pricing and volumes in our air freight service line. The increased ocean pricing was driven by the significant disruptions impacting the industry resulting in tightening carrier capacity combined with strong demand as discussed above in the market trends section. Air freight pricing continued to be significantly impacted by reduced cargo capacity due to fewer commercial flights resulting from the COVID-19 pandemic, an increase in charter flights, and larger than normal shipment sizes which has created an environment with unusually high pricing. Gross profits and adjusted gross profits. Ocean transportation adjusted gross profits increased driven by significantly higher pricing and an increase in volumes. Air transportation adjusted gross profits also increased primarily due to higher pricing and to a lesser extent increased volumes. Customs adjusted gross profits increased driven by an increase in transaction volume. Operating expenses. Personnel expenses increased driven by an increase in incentive compensation due to the strong adjusted gross profit growth in the first quarter of 2021. This increase was partially offset by a decrease in average headcount. SG&A expenses decreased driven by lower amortization and travel expenses. 24 Table of Contents All Other and Corporate Segment Results of Operations All Other and Corporate includes our Robinson Fresh and Managed Services segment, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses. Three Months Ended March 31, (dollars in thousands) 2021 2020 % change Total revenues $ 436,407 $ 450,879 (3.2) % Income from operations (4,044) (1,045) N/M Adjusted gross profits (1) Robinson Fresh 24,948 27,458 (9.1) % Managed Services 25,556 22,527 13.4 % Other Surface Transportation 16,468 16,876 (2.4) % Total adjusted gross profits $ 66,972 $ 66,861 0.2 % ________________________________ (1) Adjusted gross profit margin is a non-GAAP financial measure explained above. Three Months Ended March 31, 2021 compared to Three Months Ended March 31, 2020 Total revenues decreased driven by lower pricing and a decline in volume within our Robinson Fresh business. Robinson Fresh adjusted gross profits declined due to a decrease in case volumes and lower adjusted gross profit per case in the retail industry . Managed Services adjusted gross profits increased driven by increased transaction volumes. Other Surface Transportation adjusted gross profits decreased as a result of a decline in Europe truckload volumes. 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 March 31, 2021 Borrowing Capacity Maturity Revolving credit facility $ 250,000 $ 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 Senior Notes (1) 593,517 600,000 April 2028 Total debt $ 1,343,517 $ 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. Cash and cash equivalents totaled $217.6 million as of March 31, 2021 and $243.8 million as of December 31, 2020. Cash and cash equivalents held outside the United States totaled $204.8 million as of March 31, 2021 and $230.9 million as of December 31, 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. 25 Table of Contents The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands): Three Months Ended March 31, 2021 2020 % change Sources (uses) of cash: Cash (used for) provided by operating activities $ (56,692) $ 58,499 (196.9) % Capital expenditures (13,506) (14,703) Acquisitions, net of cash acquired — (223,617) Cash used for investing activities (13,506) (238,320) (94.3) % Repurchase of common stock (130,204) (68,563) Cash dividends (70,030) (69,871) Net borrowings on debt 250,000 178,000 Other financing activities (3,003) (2,526) Cash provided by financing activities 46,763 37,040 26.3 % Effect of exchange rates on cash and cash equivalents (2,750) (10,505) Net change in cash and cash equivalents $ (26,185) $ (153,286) Cash flow from operating activities. Cash flow from operating activities decreased significantly during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 due to unfavorable changes in working capital. The unfavorable changes in working capital were primarily related to a sequential increase in accounts receivable and contract assets partially offset by a related increase in accounts payable and accrued transportation expense. Both increases were driven by higher pricing and volumes in nearly all service lines during the first quarter of 2021. Despite the increase in accounts receivables, we are not seeing a deterioration in the quality of our accounts receivables balance, and the results of the quarter include sequential and year-over-year improvements in credit losses and the percent of accounts receivable that are past due. Additionally, 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. 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 adjusted operating margins and grow the business. We used $223.1 million for the acquisition of Prime Distribution during the three months ended March 31, 2020. Cash used for financing acti vities. Net borrowings on debt in the three months ended March 31, 2021 and 2020 were to fund working capital needs. The increase in cash used for share repurchases was due to an increase in the number of shares repurchased during the three months ended March 31, 2021 as we temporarily suspended our share repurchase activity near the end of the first quarter of 2020 as we continued to assess the impacts of the COVID-19 pandemic. 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. 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. As of March 31, 2021, we were in compliance with all of the covenants under the Credit Agreement, Note Purchase Agreement, and Senior Notes. 26 Table of Contents Recently Issued Accounting Pronouncements Refer to Note 1, Basis of Presentation , contained in this quarterly report and in the company's 2020 Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Refer to the company's 2020 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates. As of March 31, 2021, there were no material changes to our critical accounting policies and estimates. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Refer to the company’s 2020 Annual Report on Form 10-K for a complete discussion on the company’s market risk. As of March 31, 2021 there were no material changes in market risk from those disclosed in the company’s 2020 Annual Report on Form 10-K.