What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-02 compared with 2024-05-03 · 236 added, 126 removed, 215 unchanged (63% of the section changed)

34 unchanged sentences

Robinson Worldwide, Inc.

Robinson,” “the company,” “we,” “us,” or “our”) is one of the world's largest logistics platforms.

We bring together customers, carriers, and suppliers to connect and grow supply chains.

We are grounded in our customer promise to use our technology, which is built by and for supply chain experts and powered by our information advantage, to deliver smarter solutions.

These global solutions, combined with the expertise of our people, deliver value–from improved cost reductions and reliability to sustainability and visibility–that our customers and carriers can rely on.

Robinson,” “the company,” “we,” “us,” or “our”) is one of the original logistics leaders.

Companies around the world look to us to reimagine supply chains, advance freight technology, and solve logistics challenges—from the simple to the most complex.

Through our unmatched expertise, unrivaled scale, and tailored solutions, we ensure the seamless delivery of goods across industries and continents via truckload, less-than-truckload, ocean, air, and beyond.

As a responsible global citizen, we make supply chains more sustainable and proudly contribute millions to the causes that matter most to our employees.

Our adjusted gross profits and adjusted gross profit margin are non-GAAP financial measures.

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The reconciliation of gross profits to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Transportation $ 4,121,930 $ 4,084,827 $ 8,204,518 $ 8,412,792

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The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands) :

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Total revenues $ 4,483,348 $ 4,421,856 $ 8,895,659 $ 9,033,526

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MARKET TRENDS

The North America surface transportation market continues to gradually move toward a balance of carrier supply and shipper demand.

Despite modest decreases in carrier counts, there remains an excess of carrier capacity, leading to continued soft market conditions.

The elevated capacity levels that entered the market in the latter half of 2020 and throughout 2021, driven by historically high demand during the COVID-19 pandemic, have contracted more slowly than typical capacity reductions at this stage of recent market cycles.

In the current state of the market, subtle volume increases—whether due to seasonality or improving demand—would likely be absorbed by available capacity, resulting in a continuation of soft market conditions in the near term.

The North America surface transportation market remains largely unchanged from the first quarter of 2024.

The market remains in a prolonged stage of oversupplied carrier capacity leading to continued soft market conditions.

The seasonal impacts from the floral and produce season have created regional demand spikes at higher transportation rates slowing the pace of carriers exiting the market even further in the second quarter of 2024 than would be typical at this stage of the market cycle.

Aside from these short-term seasonal impacts, shipper demand remains weak, which continues to suppress surface transportation rates at levels near the break-even cost to operate a truck.

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 average number of carriers contacted prior to acceptance when procuring a transportation provider.

The average routing guide depth of tender in the first quarter of 2024 remained low at 1.2, essentially in-line with the average routing guide depth experienced throughout 2023.

The average routing guide depth in the first quarter of 2024 represents that on average, the first carrier in a shipper's routing guide is accepting the shipment most of the time, resulting in a limited number of shipments reaching the spot market.

In the first quarter of 2024, the global forwarding market faced significant disruptions limiting the availability of several of the world’s most significant waterways.

These disruptions have resulted in increased re-routing and degrading schedule reliability for ocean shipments.

Ocean vessel capacity continues to expand although the challenges presented by these global disruptions have mitigated the impact on ocean freight pricing.

The ongoing global disruptions, coupled with emerging geopolitical conflicts and potential shifts in consumer demand, will likely continue to impact ocean freight pricing in the near term.

The challenges facing the ocean freight market are leading to increased ocean freight conversions, which alongside elevated e-commerce demand out of North Asia, have led to sharp increases in the cost of air freight in certain trade lanes.

The average routing guide depth of tender increased each month within the second quarter of 2024 but remained low at 1.2, consistent with the first quarter of 2024 and in-line with the average routing guide depth experienced throughout 2023.

The average routing guide depth in the second quarter of 2024 represents that on average, the first carrier in a shipper's routing guide is accepting the shipment most of the time, resulting in a limited number of shipments reaching the spot market.

The global forwarding market has continued to add carrier capacity in 2023 and into 2024.

Despite new capacity entering the market, it hasn’t been sufficient to meet the growing demand due to the necessity of re-routing and longer transit times caused by the Red Sea conflict.

In addition to the Red Sea conflict, there are increasing challenges related to container shortages and worsening port congestion impacting the market in certain parts of the world.

At the same time, there are indications that shippers may be accelerating the timing of traditional peak season volume in light of these challenges, macroeconomic and geopolitical uncertainty, as well as the potential for labor issues at the U.S.

East Coast ports, which are further straining available carrier capacity.

Consequently, ocean freight rates have significantly increased in the second quarter of 2024 compared to the prior year.

These ongoing global disruptions, coupled with the ongoing macroeconomic and geopolitical uncertainty, will likely continue to impact ocean freight pricing in the near term, although the extent of which remains uncertain.

The challenges facing the ocean freight market are leading to increased ocean freight conversions to air freight, which, alongside elevated e-commerce demand out of North Asia, have tightened air freight capacity, and led to sharp increases in the cost of air freight in certain trade lanes.

BUSINESS TRENDS

Our first quarter of 2024 surface transportation results were significantly impacted by the prevailing soft market conditions discussed in the market trends section.

These conditions led to most shipments moving under committed pricing agreements and suppressed freight rates for the limited number of shipments reaching the spot market.

Consequentially, our surface transportation total revenues and adjusted gross profits decreased in the first quarter of 2024 compared to the same period in 2023.

Industry freight volumes decreased in the first quarter of 2024 compared to the same period of 2023.

Despite these challenging market conditions, our combined North American Surface Transportation (“NAST”) truckload and less than truckload (“LTL”) volumes increased by 1.5 percent during the first quarter of 2024 compared to the first quarter of 2023.

In addition, our combined NAST truckload and LTL volumes along with our adjusted gross profits per transaction showed sequential improvement each month within the first quarter of 2024, driven by our improved execution and pricing discipline within our portfolio.

Our average truckload linehaul cost per mile and linehaul rate charged to our customers, excluding fuel surcharges, both decreased approximately 7.5 percent during the first quarter of 2024.

Our first quarter of 2024 global forwarding results were significantly impacted by the global disruptions discussed in the market trends section.

Specifically, we experienced a 23.0 percent increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions were driven by the disruptions affecting the market, which coupled with increased e-commerce demand out of North Asia, held the cost of air freight at elevated levels and led to lower adjusted gross profit per metric ton.

Despite the challenges posed by market disruptions, our ocean volumes increased 7.0 percent as the prior year period was significantly impacted by elevated inventory levels and weak consumer demand.

Our second quarter of 2024 surface transportation results continued to be impacted by the prevailing soft market conditions discussed in the market trends section.

These conditions led to most shipments moving under committed pricing agreements and suppressed freight rates for the limited number of shipments reaching the spot market and negatively impacted our surface transportation total revenues.

Despite these challenging market conditions, we were able to improve our adjusted gross profits per transaction in the second quarter of 2024 compared to the same period in 2023 as a result of disciplined pricing and capacity procurement efforts leading to better adjusted gross profits per transaction within our transactional portfolio.

Industry freight volumes decreased in the second quarter of 2024 compared to the same period of 2023.

Despite these challenging market conditions, our combined North American Surface Transportation (“NAST”) truckload and less than truckload (“LTL”) volumes increased by 1.5 percent during the second quarter of 2024 compared to the second quarter of 2023.

Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 3.5 percent during the second quarter of 2024.

Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 2.0 percent during the second quarter of 2024.

Our second quarter of 2024 global forwarding results were significantly impacted by the global disruptions and challenges discussed in the market trends section.

We experienced elevated purchased transportation costs for ocean freight in the second quarter of 2024, which resulted in growth in both ocean total revenues and cost of purchased transportation compared to the second quarter of 2023.

We experienced a 4.0 percent increase in ocean freight volumes.

We also experienced an 11.0 percent increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions were driven by the disruptions affecting the market, which, coupled with increased e-commerce demand out of North Asia, has continued to increase the cost of air freight, and led to lower adjusted gross profit per metric ton.

Subsequent to June 30, 2024, we entered into an agreement to sell our Europe Surface Transportation business.

The sale will include all assets and liabilities of the business other than our proprietary technology platform.

The assets and liabilities of the Europe Surface Transportation disposal group will be presented as held for sale beginning in the third quarter of 2024 and adjusted to fair market value, less costs to sell, which will result in a loss on sale compared to carrying value in the third quarter of 2024.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select first quarter 2024 year-over-year operating comparisons to the first quarter 2023:

• Total revenues decreased 4.3 percent to $4.4 billion, primarily driven by lower pricing in our truckload services, partially offset by higher pricing and increased volume in our ocean services.

• Gross profits decreased 4.5 percent to $647.5 million.

Adjusted gross profits decreased 4.1 percent to $657.7 million, primarily driven by lower adjusted gross profit per transaction in truckload.

• Personnel expenses decreased 1.0 percent to $379.1 million, primarily due to cost optimization efforts and lower average employee headcount, which decreased 11.3 percent, partially offset by higher restructuring charges related to workforce reductions.

• Other selling, general, and administrative (“SG&A”) expenses increased 7.1 percent to $151.5 million, primarily due to favorable credit losses in the prior year and restructuring charges in the current year related to impairment of internally developed software.

• Income from operations decreased 21.1 percent to $127.1 million, due to decreased adjusted gross profits.

• Adjusted operating margin of 19.3 percent declined 420 basis points.

• Interest and other income/expense, net totaled $16.8 million of expense, consisting primarily of $22.1 million of interest expense, which decreased $1.5 million compared to last year, due to a lower average debt balance, and a $3.9 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $9.6 million net loss in the prior year.

• The effective tax rate in the quarter was 15.8 percent compared to 13.5 percent in the first quarter last year.

• Net income totaled $92.9 million, a decrease of 19.1 percent from a year ago.

• Diluted earnings per share (EPS) decreased 18.8 percent to $0.78.

• Cash flow from operations decreased $287.9 million in the three months ended March 31, 2024, primarily driven by an increase in net operating working capital.

The following summarizes select second quarter 2024 year-over-year operating comparisons to the second quarter 2023:

• Total revenues increased 1.4 percent to $4.5 billion, primarily driven by higher pricing in our ocean services, partially offset by lower pricing in our truckload services.

• Gross profits increased 3.0 percent to $676.5 million.

Adjusted gross profits increased 3.3 percent to $687.4 million, primarily driven by higher adjusted gross profit per transaction in truckload and LTL services.

• Personnel expenses decreased 4.3 percent to $361.2 million, primarily due to cost optimization efforts and lower average employee headcount, which decreased 10.0 percent.

• Other selling, general, and administrative (“SG&A”) expenses decreased 4.8 percent to $148.1 million with reductions across several expense categories.

• Income from operations increased 34.3 percent to $178.1 million, due to the increase in adjusted gross profits and decrease in operating expenses.

• Adjusted operating margin of 25.9 percent increased 600 basis points.

• Interest and other income/expense, net totaled $21.5 million of expense, consisting primarily of $22.9 million of interest expense, which decreased $0.3 million compared to last year, due to a lower average debt balance, and a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $3.5 million net gain in the prior year.

• The effective tax rate in the quarter was 19.4 percent compared to 14.9 percent in the second quarter last year.

• Net income totaled $126.3 million, an increase of 29.7 percent from a year ago.

• Diluted earnings per share (EPS) increased 29.6 percent to $1.05.

• Cash flow from operations decreased $346.3 million in the six months ended June 30, 2024, primarily driven by an increase in net operating working capital.

CONSOLIDATED RESULTS OF OPERATIONS

The following table summarizes our results of operations (dollars in thousands, except per share data):

Three Months Ended March 31,

2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % change 2024 2023 % change

Transportation $ 4,121,930 $ 4,084,827 0.9 % $ 8,204,518 $ 8,412,792 (2.5) %

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Adjusted gross profit margin percentage (1)

Transportation 15.4 % 15.2 % 20 bps

Sourcing 9.1 % 10.1 % (100 bps)

Total adjusted gross profit margin 14.9 % 14.9 % 0 bps

Transportation 15.8 % 15.5 % 30 bps 15.6 % 15.3 % 30 bps

Sourcing 9.9 % 10.2 % (30 bps) 9.5 % 10.1 % (60 bps)

Total adjusted gross profit margin 15.3 % 15.1 % 20 bps 15.1 % 15.0 % 10 bps

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A reconciliation of our reportable segments to our consolidated results can be found in Note 8, Segment Reporting, in Part I, Financial Information of this Quarterly Report on Form 10-Q.

Consolidated Results of Operations—Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Consolidated Results of Operations—Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Total revenues and direct costs.

Total transportation revenues and direct costs decreased primarily due to reduced pricing and lower purchased transportation costs in truckload services.

This decline was partially offset by increased volume and higher pricing and purchased transportation costs in ocean services compared to the previous year.

The soft market conditions, characterized by weak demand and excess carrier capacity, continue to suppress freight rates in the surface transportation market as discussed in the market and business trends section above.

Conversely, the global forwarding market has shown improvement from the weak consumer demand experienced in the prior year, resulting in increased ocean volumes.

In addition, the disruptions facing the global forwarding market have led to elevated pricing and purchased transportation costs compared to the prior year.

Total transportation revenues and direct costs increased primarily due to increased pricing and purchased transportation costs in ocean services.

This increase was partially offset by lower pricing and purchased transportation costs in truckload services compared to the prior year.

The global forwarding market continued to be impacted by re-routing and longer transit times caused by the Red Sea conflict and experienced increasing challenges in the second quarter of 2024 related to container shortages and worsening port congestion in certain parts of the world.

These challenges combined with improving demand have significantly increased ocean freight rates in the second quarter of 2024 compared to the prior year.

The lower pricing and purchased transportation costs in truckload services continue to be driven by the ongoing soft market conditions as the market remains in a prolonged stage of oversupplied carrier capacity as discussed in the market and business trends section above.

Our sourcing total revenue and direct costs increased, driven by higher average pricing with retail customers and increased case volume with foodservice customers.

Gross profits and adjusted gross profits.

Our transportation adjusted gross profits decreased driven by lower adjusted gross profits per transaction and a slight volume decline in truckload services, and to a lesser extent lower adjusted gross profits in other logistic services.

The lower adjusted gross profit per transaction in truckload services was driven by the weak demand and excess capacity in the surface transportation market discussed in the market trends and business trends sections above, which have continued to suppress freight rates in the first quarter of 2024.

Despite the challenging market conditions, our combined NAST truckload and LTL volumes, along with our adjusted gross profits per transaction, showed sequential improvement each month within the first quarter of 2024, driven by improved execution and pricing discipline within our portfolio.

Sourcing adjusted gross profits increased, driven by integrated supply chain solutions for retail customers.

Our transportation adjusted gross profits increased driven by higher adjusted gross profits per transaction in truckload and LTL services, and to a lesser extent, higher adjusted gross profit per shipment and increased volume in ocean services.

The increased adjusted gross profit per transaction in truckload and LTL services was driven by improved execution and disciplined pricing and capacity procurement efforts within our transactional portfolio during the second quarter of 2024 compared to the prior year.

Despite the challenging surface transportation market conditions, our combined NAST truckload and LTL volumes increased by 1.5 percent during the second quarter of 2024 compared to the second quarter of 2023.

Sourcing adjusted gross profits increased, driven by integrated supply chain solutions for retail and foodservice customers.

Operating expenses.

Personnel expenses decreased primarily driven by cost optimization efforts, including lower average employee headcount.

These reductions were partially offset by an increase in stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Other SG&A expenses increased primarily due to higher credit losses.

This increase was driven by a decrease in the allowance for credit losses in the prior year period.

In addition to the above, our personnel expenses for 2024 included $7.9 million of severance and related personnel expenses.

We also incurred a $5.0 million impairment loss in other SG&A expenses primarily related to capitalized internally developed software.

These reductions were partially offset by an increase in variable compensation including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Other SG&A expenses decreased due to reductions in several expense categories.

In addition to the above, our personnel expenses for the second quarter of 2024 included $9.5 million of severance and related personnel expenses.

We also incurred $5.7 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Our personnel expenses for 2023 included $3.6 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Our personnel expenses for the second quarter of 2023 included $13.1 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the second quarter of 2023.

These expenses were both associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

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Interest and other income/expense, net primarily consisted of interest expense of $22.9 million.

Interest expense decreased $1.5 million during the first quarter of 2024, due to a lower average debt balance.

The current year included a $3.9 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $9.6 million net loss in the prior year.

Interest expense decreased $0.3 million during the second quarter of 2024, due to a lower average debt balance.

The current year included a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $3.5 million net gain in the prior year.

The second quarter of 2023 also included a $2.1 million foreign currency loss related to our operations in Argentina that were divested in the prior year.

Provision for income taxes.

Our effective income tax rate was 15.8 percent for the first quarter of 2024 compared to 13.5 percent for the first quarter of 2023.

The effective income tax rate for the first quarter of 2024 was lower than the statutory federal income tax rate primarily due to the tax impact of U.S.

Our effective income tax rate was 19.4 percent for the second quarter of 2024 compared to 14.9 percent for the second quarter of 2023.

The effective income tax rate for the second quarter of 2024 was lower than the statutory federal income tax rate primarily due to the tax impact of U.S.

tax credits and incentives, which reduced the effective tax rate by 5.0 percentage points.

These impacts were partially offset by a higher tax rate on state income taxes, net of federal benefit, which increased the effective income tax rate by 2.8 percentage points during the first quarter of 2024.

The effective income tax rate for the first quarter of 2023 was lower than the statutory federal income tax rate primarily due to the tax benefits of share-based payment awards, which reduced the effective tax rate by 5.6 percentage points, and U.S.

These impacts were partially offset by a higher tax rate on foreign earnings, which increased the effective income tax rate by 2.7 percentage points during the second quarter of 2024.

The effective income tax rate for the second quarter of 2023 was lower than the statutory federal income tax rate primarily due to foreign tax credits, which decreased the effective income tax rate by 6.2 percentage points, and U.S.

tax credits and incentives, which decreased the effective income tax rate by 3.9 percentage points.

These impacts were partially offset by a higher tax rate on state income taxes, net of federal benefit, which increased the effective income tax rate by 2.3 percentage points during the first quarter of 2023.

These impacts were partially offset by a higher tax rate on state income taxes, net of federal benefit, which increased the effective income tax rate by 2.4 percentage points during the second quarter of 2023.

Consolidated Results of Operations—Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Total revenues and direct costs.

Total transportation revenues and direct costs decreased driven by lower pricing and purchased transportation costs in truckload services, partially offset by higher pricing and purchased transportation costs in ocean services in addition to volume increases in all of our global forwarding transportation services.

The decline in truckload pricing and purchased transportation costs has been driven by the ongoing surface transportation soft market conditions as the market has remained in a prolonged stage of oversupplied carrier capacity during the six months ended June 30, 2024.

The higher pricing and purchased transportation costs in ocean services were driven by the ongoing disruptions, including the Red Sea conflict, which have significantly impacted carrier capacity and resulted in increased ocean freight rates in the six months ended June 30, 2024.

Our sourcing total revenue and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers.

Gross profits and adjusted gross profits.

Our transportation adjusted gross profits decreased due to lower adjusted gross profit per transaction in truckload and air services.

These decreases were partially offset by increased ocean shipments and higher adjusted gross profit per transaction and increased volume in LTL services.

The lower adjusted gross profit per transaction in truckload was driven by the continued soft market conditions in the surface transportation market which have suppressed freight rates in the six months ended June 30, 2024.

Ocean shipments increased driven by the improving demand for ocean freight compared to the weak demand experienced in the prior year.

Sourcing adjusted gross profits increased driven by an increase in integrated supply chain solutions for retail customers and foodservice customers.

Operating expenses.

Personnel expenses decreased primarily due to cost optimization efforts including lower average employee headcount, primarily offset by higher variable compensation including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Other SG&A expenses increased primarily due to a higher provision for credit losses as the prior year benefited from a reduction to the allowance for credit losses.

In addition to the above, our personnel expenses for the six months ended June 30, 2024, included $17.4 million of severance and related personnel expenses.

We also incurred $10.7 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Our personnel expenses for the six months ended June 30, 2023, included $16.7 million of severance and related personnel expenses.

We also incurred $1.1 million of restructuring related other SG&A expenses in the six months ended June 30, 2023.

These expenses were both associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Interest and other income/expense, net.

Interest and other income/expense, net primarily consisted of interest expense of $45.0 million, which decreased $1.8 million driven by lower average debt balances compared to the prior year.

The six months ended June 30, 2024, included a net $4.4 million favorable impact from foreign currency revaluation and realized foreign currency gains and losses.

The prior year included a net $6.0 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses primarily due to the impacts on intercompany assets and liabilities.

The six months ended June 30, 2023, also included a $3.8 million foreign currency loss related to our operations in Argentina that were divested in the prior year.

Provision for income taxes.

Our effective income tax rate was 17.9 percent for the six months ended June 30, 2024, and 14.1 percent for the six months ended June 30, 2023.

The effective income tax rate for the six months ended June 30, 2024, was lower than the statutory federal income tax rate primarily due to the tax impact of U.S.

tax credits and incentives which reduced the effective tax rate by 6.2 percentage points.

These impacts were partially offset by state income tax expense, net of federal benefit, and a higher tax rate on foreign earnings, which increased the effective income tax rate by 2.3 percentage points and 1.8 percentage points, respectively.

The effective income tax rate for the six months ended June 30, 2023 was lower than the statutory federal income tax rate primarily due to U.S.

tax credits and incentives, the tax impact of share-based payment awards, and the impact of foreign tax credits, which reduced the effective tax rate by 3.9 percentage points, 3.5 percentage points, and 3.3 percentage points, respectively.

These impacts were partially offset by state income tax expense, net of federal benefit, which increased the effective income tax rate by 2.3 percentage points.

NAST Segment Results of Operations

Three Months Ended March 31,

(dollars in thousands) 2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

Total revenues $ 2,989,909 $ 3,079,268 (2.9) % $ 5,990,222 $ 6,383,455 (6.2) %

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Income from operations $ 141,102 $ 117,859 19.7 % $ 249,997 $ 251,881 (0.7) %

Three Months Ended March 31,

2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % change 2024 2023 % change

Average employee headcount 5,868 6,497 (9.7) % 5,929 6,713 (11.7) %

1 unchanged sentence

Truckload 1.5 % 0.5 %

LTL 1.5 % 2.0 %

Adjusted gross profits (1)

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(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Total revenues and direct costs.

NAST total revenues and direct costs decreased primarily due to reduced pricing and lower purchased transportation costs in truckload services.

Partially offsetting the decline was an increase of 1.5 percent in combined NAST truckload and LTL volumes.

NAST total revenues and direct costs decreased primarily due to lower pricing and purchased transportation costs in truckload services.

Partially offsetting these declines were higher pricing and purchased transportation costs in LTL services and volume increases in both LTL and truckload services.

Gross profits and adjusted gross profits.

NAST adjusted gross profits decreased due to lower pricing in truckload services, resulting in lower adjusted gross profits per transaction.

The lower adjusted gross profit per transaction was driven by the soft market conditions discussed in the market trends and business trends sections above, resulting in lower pricing and limited spot market opportunities at attractive rates in the first quarter of 2024.

Our average truckload per mile linehaul cost and linehaul rate charged to customers, which excludes fuel surcharges, both decreased approximately 7.5 percent in the first quarter of 2024 compared to the first quarter of 2023.

Despite the challenging market conditions our combined NAST truckload and LTL volumes, along with our adjusted gross profits per transaction, showed sequential improvement each month within the first quarter of 2024, driven by improved execution and pricing discipline within our portfolio.

NAST other adjusted gross profits decreased, primarily driven by a decline in intermodal adjusted gross profits per transaction and decreased intermodal and warehousing adjusted gross profits.

These decreases were partially offset by an increase in LTL volumes.

NAST adjusted gross profits increased due to higher adjusted gross profit per transaction and an increase in volume in truckload and LTL services.

The higher adjusted gross profit per transaction was driven by improved execution and disciplined pricing and capacity procurement efforts within our transactional portfolio.

Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 2.0 percent in the second quarter of 2024 compared to the second quarter of 2023.

Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 3.5 percent in the second quarter of 2024 compared to the second quarter of 2023.

NAST other adjusted gross profits decreased, primarily driven by a decline in warehousing and intermodal adjusted gross profits.

Operating expenses.

NAST personnel expenses were essentially flat compared to the prior year.

Cost optimization efforts, including lower average headcount in addition to lower commission expenses, were mostly offset by an increase in stock-based compensation expense.

The prior year period included an accrual reversal related to certain performance-based awards.

NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses, which were partially offset by a benefit in the prior year from lower credit losses.

In addition to the above, NAST personnel expenses for 2024 included $3.0 million of severance and related personnel expenses.

We also incurred a $1.9 million impairment loss in other SG&A expenses related to capitalized internally developed software.

NAST personnel expenses increased driven by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

This was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses.

In addition to the above, NAST personnel expenses in the second quarter of 2024 included $4.8 million of severance and related personnel expenses.

We also incurred $3.8 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

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Remaining corporate allocations, including corporate functions and technology related expenses, are primarily included within each segment’s other SG&A expenses, and are allocated based upon relevant segment operating metrics.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Total revenues and direct costs.

NAST total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in truckload services.

The decline in truckload pricing and purchased transportation costs has been driven by the ongoing surface transportation soft market conditions as the market remained in a prolonged stage of oversupplied carrier capacity during the six months ended June 30, 2024.

Partially offsetting this decline was an increase in volumes for both truckload and LTL services.

Gross profits and adjusted gross profits.

NAST adjusted gross profits decreased primarily due to lower adjusted gross profit per transaction in truckload services.

The lower adjusted gross profit per transaction was driven by the continued soft market conditions in the surface transportation market which have suppressed freight rates in the six months ended June 30, 2024.

Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 5.0 percent.

Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 5.5 percent.

The decrease in truckload adjusted gross profits was partially offset by an increase in LTL volumes.

NAST other adjusted gross profits decreased, primarily driven by a decline in warehousing and intermodal adjusted gross profits.

Operating expenses.

NAST personnel expense increased driven by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

This was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses.

In addition to the above, NAST personnel expenses in the six months ended June 30, 2024, included $7.8 million of severance and related personnel expenses.

We also incurred $5.7 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the six months ended June 30, 2023, included $1.2 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Global Forwarding Segment Results of Operations

Three Months Ended March 31,

(dollars in thousands) 2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

Total revenues $ 921,223 $ 779,867 18.1 % $ 1,779,860 $ 1,569,845 13.4 %

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Income from operations $ 40,982 $ 29,647 38.2 % $ 72,534 $ 59,763 21.4 %

Three Months Ended March 31,

2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 % change 2024 2023 % change

Average employee headcount 4,652 5,225 (11.0) % 4,770 5,356 (10.9) %

Service line volume statistics

Ocean 4.0 % 5.5 %

Air 11.0 % 16.5 %

Customs 6.0 % 7.0 %

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(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Total revenues and direct costs.

Global Forwarding total revenues and direct costs increased driven by increased volume and higher pricing and purchased transportation costs in ocean services compared to the previous year.

The global forwarding market has shown improvement from the weak consumer demand experienced in the prior year.

Global Forwarding total revenues and direct costs increased driven by higher pricing and purchased transportation costs and increased volume in ocean services compared to the prior year.

These challenges combined with improving demand have significantly increased ocean freight rates in the second quarter of 2024 compared to the prior year.

In addition, the disruptions facing the global forwarding market have resulted in an increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions coupled with increased e-commerce demand out of North Asia have led to sharp increases to the price and cost of air freight in certain trade lanes compared to the prior year.

Gross profits and adjusted gross profits.

Global Forwarding adjusted gross profits increased driven by higher adjusted gross profit per shipment and increased volume in ocean services driven by the challenges facing the global forwarding market resulting in higher pricing.

Air freight adjusted gross profits decreased due to lower adjusted gross profits per metric ton shipped driven by the sharp increase to the cost of air freight in the second quarter of 2024.

This decrease was partially offset by an increase in metric tons shipped.

Customs adjusted gross profits increased driven by an increase in transaction volumes.

Operating expenses.

Personnel expenses decreased primarily due to cost optimization efforts, including lower average employee headcount.

This decrease was partially offset by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Global Forwarding other SG&A expenses decreased driven by lower allocated corporate expenses.

In addition to the above, Global Forwarding personnel expenses for the second quarter of 2024 included $2.2 million of severance and related personnel expenses.

We also incurred $1.3 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the second quarter of 2023 included $0.7 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Total revenues and direct costs.

Global Forwarding total revenues and direct costs increased driven by higher pricing and purchased transportation costs in ocean services in addition to volume increases in all of our global forwarding transportation services.

In addition, the disruptions facing the global forwarding market have resulted in an increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions coupled with increased e-commerce demand out of North Asia have led to sharp increases to the cost of air freight in certain trade lanes compared to the prior year.

Gross profits and adjusted gross profits.

Global Forwarding adjusted gross profits increased driven by increased volume in ocean services, partially offset by lower adjusted gross profits per shipment in ocean services.

Air freight adjusted gross profits decreased slightly as a significant increase in metric tons shipped was more than offset by lower adjusted gross profits per metric ton shipped.

The lower adjusted gross profit per metric ton shipped was driven by the elevated cost of air freight due to disruptions facing the market as discussed in the market trends and business trends sections above.

Customs adjusted gross profits increased driven by an increase in transaction volumes and higher adjusted gross profits per shipment.

Global Forwarding adjusted gross profits increased driven by increased ocean shipments due to improving demand for ocean freight compared to the weak demand experienced in the prior year.

Air freight adjusted gross profits decreased due to lower adjusted gross profits per metric ton shipped, which was partially offset by an increase in metric tons shipped.

The lower adjusted gross profit per metric ton shipped was driven by sharp increases to the cost of air freight in certain trade lanes compared to the prior year discussed above.

Customs adjusted gross profits increased driven by an increase in transaction volume.

Operating expenses.

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This increase was partially offset by cost optimization efforts, including lower average employee headcount.

Other SG&A expenses decreased driven by the completion of amortization of intangible assets related to a previously completed acquisition and lower allocated corporate expenses.

In addition to the above, Global Forwarding personnel expenses for 2024 included $3.2 million of severance and related personnel expenses associated with our 2024 Restructuring Program.

Personnel expenses for 2023 included $1.5 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Other SG&A expenses decreased driven by lower allocated corporate expenses and the completion of amortization of intangible assets related to a previously completed acquisition.

These decreases were partially offset by a higher provision for credit losses as the prior year benefited from a reduction to the allowance for credit losses.

In addition to the above, Global Forwarding personnel expenses for the six months ended June 30, 2024, included $5.4 million of severance and related personnel expenses.

We also incurred $1.6 million of restructuring related other SG&A expenses in 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the six months ended June 30, 2023, included $2.2 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

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All Other and Corporate includes our Robinson Fresh and Managed Services segments, 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) 2024 2023 % change

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

Total revenues $ 572,216 $ 562,721 1.7 % $ 1,125,577 $ 1,080,226 4.2 %

Income (loss) from operations (13,314) (3,105) N/M

Income (loss) from operations (3,994) (14,883) (73.2) % (17,308) (17,988) (3.8) %

Adjusted gross profits (1)

5 unchanged sentences

(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.

Three Months Ended March 31, 2024, Compared to the Three Months Ended March 31, 2023

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Total revenues and direct costs.

Total revenues and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers in our Robinson Fresh business.

This increase was partially offset by a modest decline in our European truckload revenues within our Other Surface Transportation business.

This increase was partially offset by a decline in our European truckload total revenues within our Other Surface Transportation business.

Gross profits and adjusted gross profits.

Robinson Fresh adjusted gross profits increased driven by a 1.5% increase in case volume and integrated supply chain solutions for retail customers.

Robinson Fresh adjusted gross profits increased due to an increase in integrated supply chain solutions for retail and foodservice customers.

Managed Services adjusted gross profits were essentially flat with the prior year.

Other Surface Transportation adjusted gross profits decreased primarily due to a decrease in adjusted gross profits per transaction in European truckload, partially offset by an increase in European truckload volumes.

Other Surface Transportation adjusted gross profits decreased due to a decrease in adjusted gross profits per transaction in European truckload and a decrease in European truckload volumes.

Restructuring expenses.

Personnel expenses in 2024 included $1.7 million of severance and related personnel expenses.

We also incurred a $2.9 million impairment loss in other SG&A expenses related to capitalized internally developed software.

Personnel expenses in the second quarter of 2024 included $2.5 million of severance and related personnel expenses.

We also incurred $0.6 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses in 2023 included $1.2 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Personnel expenses in the second quarter of 2023 included $12.1 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the second quarter of 2023.

These expenses were both associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Total revenues and direct costs.

Total revenues and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers in our Robinson Fresh business.

This increase was partially offset by a decline in our European truckload total revenues within our Other Surface Transportation business.

Gross profits and adjusted gross profits.

Robinson Fresh adjusted gross profits increased due to an increase in integrated supply chain solutions for retail and foodservice customers.

Managed Services adjusted gross profits were essentially flat with the prior year.

Other Surface Transportation adjusted gross profits decreased primarily due to a decrease in adjusted gross profits per transaction in European truckload.

Restructuring expenses.

Personnel expenses in the six months ended June 30, 2024 included $4.2 million of severance and related personnel expenses.

We also incurred $3.5 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses in the six months ended June 30, 2023 included $13.3 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the six months ended June 30, 2023.

These expenses were both associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (in thousands):

Description Carrying Value as of March 31, 2024 Borrowing Capacity Maturity

Description Carrying Value as of June 30, 2024 Borrowing Capacity Maturity

Revolving credit facility $ 188,000 $ 1,000,000 November 2027

9 unchanged sentences

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, share repurchases or other investments.

Cash and cash equivalents totaled $121.8 million as of March 31, 2024, and $145.5 million as of December 31, 2023.

Cash and cash equivalents held outside the United States totaled $118.1 million as of March 31, 2024, and $142.8 million as of December 31, 2023.

Cash and cash equivalents totaled $113.2 million as of June 30, 2024, and $145.5 million as of December 31, 2023.

Cash and cash equivalents held outside the United States totaled $108.2 million as of June 30, 2024, and $142.8 million as of December 31, 2023.

We prioritize our investments to grow our market share and expand globally in key industries, trade lanes, and geographies, and to digitize our customer, carrier, and internal tools to support our organic growth.

1 unchanged sentence

The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 % change

Sources (uses) of cash:

Cash (used for) provided by operating activities $ (33,323) $ 254,544 N/M

Cash provided by operating activities $ 133,099 $ 479,376 (72.2) %

Capital expenditures (41,811) (51,301)

4 unchanged sentences

Other financing activities (782) 14,831

Cash provided by (used for) financing activities 34,695 (205,992) N/M

Cash used for financing activities (120,065) (432,118) (72.2) %

Effect of exchange rates on cash and cash equivalents (3,581) (3,284)

2 unchanged sentences

Our operating cash flows benefited in the prior year from declining freight rates in ocean and truckload services, which resulted in a decrease in net operating working capital and drove strong operating cash flow.

In the current year, freight rates in ocean services have increased resulting in an increase in net operating working capital driving a decline in operating cash flows in the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

In the current year, freight rates in ocean services have increased resulting in an increase in net operating working capital driving a decline in operating cash flows in the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

We continue to closely monitor credit and collections activities and the quality of our accounts receivable balance to minimize risk as well as work with our customers to facilitate the movement of goods across their supply chains while also ensuring timely payment.

2 unchanged sentences

Cash used for financing activities.

Net borrowing on debt in the three months ended March 31, 2024 were to fund our working capital needs.

Net repayments on debt in the three months ended March 31, 2023 were primarily to reduce the current portion of our debt outstanding.

No shares were repurchased during the first quarter of 2024.

Net borrowing on debt in the six months ended June 30, 2024, were to fund our working capital needs.

Net repayments on debt in the six months ended June 30, 2023, were primarily to reduce the current portion of our debt outstanding.

No shares were repurchased in the six months ended June 30, 2024.

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.

4 unchanged sentences

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, 2024, we were in compliance with all of the covenants under our debt agreements.

As of June 30, 2024, we were in compliance with all of the covenants under our debt agreements.

Recently Issued Accounting Pronouncements

2 unchanged sentences

Refer to the company's 2023 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates.

As of March 31, 2024, there were no material changes to our critical accounting policies and estimates.

As of June 30, 2024, there were no material changes to our critical accounting policies and estimates.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to the company’s 2023 Annual Report on Form 10-K for a discussion on the company’s market risk.

As of March 31, 2024, there were no material changes in market risk from those disclosed in the company’s 2023 Annual Report on Form 10-K.

As of June 30, 2024, there were no material changes in market risk from those disclosed in the company’s 2023 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis