C. H. Robinson Worldwide 10-Q 2023-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number: 000-23189

C.H. ROBINSON WORLDWIDE, INC.

(Exact name of registrant as specified in its charter)

14701 Charlson Road

Eden Prairie, MN 55347

(Address of principal executive offices, including zip code)

952-937-8500

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2023, the number of shares outstanding of the registrant’s Common Stock, par value $0.10 per share, was 116,438,842.

C.H. ROBINSON WORLDWIDE, INC.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

C.H. ROBINSON WORLDWIDE, INC.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except per share data)

See accompanying notes to the condensed consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

Condensed Consolidated Statements of Operations and Comprehensive Income

(unaudited, in thousands except per share data)

See accompanying notes to the condensed consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

Condensed Consolidated Statements of Stockholders’ Investment

(unaudited, in thousands, except per share data)

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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; risks associated with significant disruptions in the transportation industry; changes in relationships with existing contracted truck, rail, ocean, and air carriers; changes in our customer base due to possible consolidation among our customers; risks with reliance on technology to operate our business; cyber-security related risks; risks associated with operations outside of the United States; our ability to identify or complete suitable acquisitions; our ability to successfully integrate the operations of acquired companies with our historic operations; risks related to our search for a permanent CEO and retention of key management personnel; climate change related risks; risks associated with our indebtedness; interest rate related risks; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with the potential impact of changes in government regulations; risks associated with the changes to income tax 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, 2022, filed with the Securities and Exchange Commission on February 17, 2023 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.

OVERVIEW

C.H. Robinson Worldwide, Inc. (“C.H. 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.

Our adjusted gross profits and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profits is calculated as gross profits excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profits divided by total revenues. We believe adjusted gross profits 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 profits to be a primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profits and adjusted gross profit margin. The reconciliation of gross profits to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands):

Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profits. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profits, 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):

MARKET TRENDS

The balance of supply and demand in the North American surface transportation market continued to shift towards a market with excess carrier capacity in the first quarter of 2023. As shippers continue to manage through elevated inventories amidst slowing economic growth, surface transportation rates have continued to decline. As surface transportation spot rates approach the breakeven cost per mile to operate a truck the market is likely at, or nearing, the bottom of the industry cycle which typically results in capacity exiting the market. Conversely, the first quarter of 2022 exhibited tight carrier capacity for much of the period until the signs of market softening began to appear which have continued into 2023. Industry freight volumes, as measured by the Cass Freight Index, were approximately flat in the first quarter of 2023 compared to the first quarter of 2022. 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 2023 declined to 1.2, which is the lowest level we have seen since the pandemic impacted the second quarter of 2020, compared to 1.7 average routing guide depth in the first quarter of 2022. The average routing guide depth in the first quarter of 2023 represents that on average, the first carrier in a shipper's routing guide was executing the shipment in most cases.

The global forwarding market continues to be negatively impacted by elevated inventory levels and the weak consumer demand experienced in the second half of 2022. This has resulted in ocean freight rates and volumes declining even further following the period of significant declines experienced in the second half of 2022. Several consecutive quarters of weak consumer demand has nearly eliminated the challenges from port congestion and transportation equipment shortages that were impacting the global forwarding market in recent years. In an effort to adapt to weak consumer demand, steamship lines continue rationalizing services by reducing capacity where possible with blank sailings and slow steaming. The slowdown of global demand also continues to significantly impact the air freight market. Air freight pricing and volumes have declined significantly driven by shippers maintaining higher inventory levels, declining consumer demand, and the declining price of ocean freight resulting in less ocean freight converting into air freight. There continues to be more than sufficient air freight capacity to support the weak demand which continues to drive rates lower in many trade lanes.

BUSINESS TRENDS

Our first quarter of 2023 surface transportation results were largely consistent with the trends discussed in the market trends section. The excess carrier capacity in the market led to significant declines in transportation rates. This resulted in declines in both our total revenues and adjusted gross profits in the first quarter of 2023 compared to the strong results achieved in the first quarter of 2022. The weak consumer demand combined with excess carrier capacity in the first quarter of 2023 resulted in lower adjusted gross profits per transaction, most significantly in our transactional or spot market opportunities. Industry freight volumes as measured by the Cass Freight Index were approximately flat in the first quarter of 2023 compared to the first quarter of 2022. Our combined NAST truckload and less than truckload (“LTL”) volume decreased 4.5 percent during the first quarter of 2023. Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 28.5 percent during the first quarter of 2023. Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 27.5 percent during the first quarter of 2023.

Our first quarter of 2023 global forwarding results were largely consistent with the trends discussed in the market trends section. We experienced a significant decline in both total revenues and adjusted gross profits in our ocean and air freight businesses compared to the levels achieved in the first quarter of 2022. These declines were driven by the elevated inventory levels and weak consumer demand that have resulted in significant declines in both ocean and air freight rates and volumes. Our ocean volumes decreased 14.5 percent while our air freight tonnage decreased 18.5 percent.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

The following summarizes select first quarter 2023 year-over-year operating comparisons to the first quarter 2022:

• Total revenues decreased 32.3 percent to $4.6 billion, driven primarily by lower ocean and truckload pricing.

• Gross profits decreased 24.7 percent to $678.3 million. Adjusted gross profits decreased 24.3 percent to $685.6 million, primarily driven by lower adjusted gross profits per transaction in ocean and truckload.

• Personnel expenses decreased 7.3 percent to $383.1 million, primarily due to cost optimization efforts, including lower average employee headcount, which decreased 2.1 percent, and lower variable compensation.

• Other selling, general, and administrative (“SG&A”) expenses decreased 4.0 percent to $141.5 million, primarily driven by decreased credit losses.

• Income from operations decreased 53.4 percent to $161.0 million, driven by decreased adjusted gross profits, partially offset by the decline in operating expenses.

• Adjusted operating margin of 23.5 percent declined 1,460 basis points.

• Interest and other income/expenses, net totaled $28.3 million, consisting primarily of $23.5 million of interest expense, which increased $9.0 million versus last year due primarily to higher variable interest rates, and a $9.6 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses primarily related to foreign currency impacts on intercompany assets and liabilities.

• The effective tax rate in the quarter was 13.5 percent compared to 18.4 percent in the first quarter last year.

• Net income totaled $114.9 million, down 57.5 percent from a year ago.

• Diluted earnings per share (EPS) decreased 53.2 percent to $0.96.

• Cash flow from operations improved $268.5 million in the three months ended March 31, 2023 driven by changes in operating working capital.

CONSOLIDATED RESULTS OF OPERATIONS

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

(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 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, 2023 Compared to the Three Months Ended March 31, 2022

Total revenues and direct costs. Total transportation revenues and direct costs decreased significantly primarily due to lower pricing and purchased transportation costs in ocean and truckload services, in addition to volume declines in nearly all service lines compared to the strong results in the prior year. The declines in pricing and purchased transportation costs were driven by the slowing global demand and excess carrier capacity discussed in the market trends and business trends sections above. This compared to the historically elevated pricing and volumes in the prior year driven by the continued supply chain disruptions that impacted the global forwarding and surface transportation markets in the first quarter of 2022. Our sourcing total revenue and direct costs decreased driven by declining pricing and cost per case with retail customers, partially offset by increased case volume with foodservice customers.

Gross profits and adjusted gross profits. Our transportation adjusted gross profits decreased driven by lower ocean and air freight adjusted gross profits in our global forwarding business driven by the slowing global demand discussed in the market trends and business trends sections above. Lower adjusted gross profits per transaction in truckload and LTL services from decreased pricing and lower volume in nearly all service lines also contributed to the decline in adjusted gross profits. Sourcing adjusted gross profits increased driven by integrated supply chain solutions within the foodservice and retail verticals.

Operating expenses. Personnel expenses decreased primarily due to lower variable compensation reflecting the decline in results relative to the prior year and lower average employee headcount. SG&A expenses decreased due to lower credit losses and lower expenditures for purchased services including temporary labor.

Interest and other income/expense, net. Interest and other income/expense, net primarily consisted of interest expense of $23.5 million and a $9.6 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses primarily related to foreign currency impacts on intercompany assets and liabilities. Interest expense increased $9.0 million during the first quarter of 2023, driven by higher variable interest rates. The first quarter of 2022 included a $1.5 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses.

Provision for income taxes. Our effective income tax rate was 13.5 percent for the first quarter of 2023 compared to 18.4 percent for the first quarter of 2022. 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 5.0 percentage points, and U.S. tax credits and incentives, which decreased the effective income tax rate by 3.8 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. The effective income tax rate for the first quarter of 2022 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 1.9 percentage points, and the tax benefits of share-based payment awards, which reduced the effective tax rate by 1.3 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 1.2 percentage points in the first quarter of 2022.

NAST Segment Results of Operations

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

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Total revenues and direct costs. NAST total revenues and direct costs decreased primarily due to significantly lower pricing and purchased transportation costs in truckload services, reflecting the excess carrier capacity and slowing economic growth discussed above in the market trends section. These conditions resulted in continued significant declines in surface transportation rates in the current quarter versus the historically elevated levels of truckload pricing in the first quarter of 2022. The elevated pricing and purchased transportation cost environment in the prior year was due to the tight carrier capacity caused by driver availability challenges and the supply chain disruptions facing the industry in the first quarter of 2022.

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 shipment most notably on transactional volume. A decline in truckload volumes also contributed to the decline in NAST adjusted gross profits. Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 27.5 percent in the first quarter of 2023 compared to the first quarter of 2022. Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 28.5 percent. NAST LTL adjusted gross profits decreased due to lower adjusted gross profits per transaction and a decline in LTL volumes. NAST other adjusted gross profits increased primarily driven by increased warehousing services.

Operating expenses. NAST personnel expenses decreased primarily due to lower variable compensation and lower average employee headcount. NAST SG&A expenses decreased primarily due to a decrease in credit losses and lower expenditures for purchased services including temporary labor. The operating expenses of NAST and all other segments include allocated corporate expenses. Allocated personnel expenses consist primarily of stock-based compensation allocated based upon segment participation levels in our equity plans. 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.

Global Forwarding Segment Results of Operations

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

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Total revenues and direct costs. Global Forwarding total revenues and direct costs decreased driven by weak consumer demand resulting in significant declines in both ocean and air freight rates and volumes discussed in the market and business trends sections above. The prior year included strong ocean freight volumes and air freight tonnage and was significantly impacted by supply chain disruptions caused by port congestion and transportation equipment shortages that resulted in elevated pricing and direct costs.

Gross profits and adjusted gross profits. Ocean and air freight transportation adjusted gross profits decreased due to lower adjusted gross profits per transaction in addition to a decrease in volume for both services. Customs adjusted gross profits decreased driven by a decrease in transaction volume.

Operating expenses. Personnel expenses decreased primarily due to lower variable compensation and a decrease in average employee headcount. SG&A expenses increased due to increased investments in technology, partially offset by lower credit losses.

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.

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

Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

Total revenues and direct costs. Total revenues and direct costs increased driven by higher truckload volume in Europe within our Other Surface Transportation business.

Gross profits and adjusted gross profits. Robinson Fresh adjusted gross profits increased driven by integrated supply chain solutions for foodservice and retail customers. Managed Services adjusted gross profits increased due to growth with existing and new customers. Other Surface Transportation adjusted gross profits increased driven by higher Europe truckload adjusted gross profits.

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 (in thousands):

(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 $239.2 million as of March 31, 2023 and $217.5 million as of December 31, 2022. Cash and cash equivalents held outside the United States totaled $223.2 million as of March 31, 2023 and $204.7 million as of December 31, 2022.

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):

Cash flow from operating activities. Cash provided by (used for) operating activities improved in the first quarter of 2023 compared to the first quarter of 2022 due to a decrease in net operating working capital driven by declining freight rates, most notably in our ocean and truckload services as discussed in the market and business trends sections. This impact was partially offset by a decline in net income in the first quarter of 2023. The prior year was impacted by increasing net operating working capital due to increasing pricing and volumes in nearly all services, most notably in global forwarding, which resulted in a net use of cash for operating activities in the first quarter of 2022. 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.

Cash used for investing activities. Capital expenditures consisted primarily of investments in software, which are intended to develop and deliver scalable solutions by transforming our processes, accelerate the pace of development and prioritizing data integrity, improve our customer and carrier experience, and increase efficiency to help expand our adjusted operating margins and grow the business.

Cash used for financing activities. Net payments on debt in the first quarter of 2023 were to reduce the current portion of our debt outstanding. Net borrowings in the first quarter of 2022 were primarily to fund share repurchases and working capital needs. The decrease in cash used for share repurchases was primarily due to a decrease in the number of shares repurchased during the first quarter of 2023. 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. Our 364-day revolving credit facility, Senior Notes, Series A, and Receivables Securitization Facility all have maturity dates in 2023. To the extent we reduce our outstanding debt on these facilities or our other debt facilities, it may reduce the number of shares we repurchase in 2023. 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.

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 and the foreseeable future. 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, 2023, we were in compliance with all of the covenants under our debt agreements.

Recently Issued Accounting Pronouncements

Refer to Note 1, Basis of Presentation, contained in this Quarterly Report and in the company's 2022 Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Refer to the company's 2022 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates. As of March 31, 2023, there were no material changes to our critical accounting policies and estimates.

Refer to the company’s 2022 Annual Report on Form 10-K for a discussion on the company’s market risk. As of March 31, 2023, there were no material changes in market risk from those disclosed in the company’s 2022 Annual Report on Form 10-K.

(a) Evaluation of disclosure controls and procedures.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Our management, including our Interim Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2023. Based upon that evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2023.

(b) Changes in internal control over financial reporting.

There were no changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the three months ended March 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not subject to any pending or threatened litigation other than routine litigation arising in the ordinary course of our business operations, including certain contingent auto liability cases. For some legal proceedings, we have accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to our consolidated financial position, results of operations, or cash flows. Because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the inconsistent treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings, we are often unable to estimate an amount or range of any reasonably possible additional losses. However, based upon our historical experience, the resolution of these proceedings is not expected to have a material effect on our consolidated financial position, results of operations, or cash flows.

In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors disclosed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. As of March 31, 2023, there were no material changes to the risk factors set forth in the company’s 2022 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about company purchases of common stock during the quarter ended March 31, 2023:

(1) The total number of shares purchased based on trade date includes: (i) 316,497 shares of common stock purchased under the authorization described below; and (ii) 192,380 shares of common stock surrendered to satisfy minimum statutory tax obligations under our stock incentive plans.

(2) In December 2021, the Board of Directors increased the number of shares authorized for repurchase by 20,000,000 shares. As of March 31, 2023, there were 7,092,701 shares remaining for future repurchases. Repurchases can be made in the open market or in privately negotiated transactions, including Rule 10b5-1 plans and accelerated repurchase programs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

None.

Exhibits filed with, or incorporated by reference into, this Quarterly Report:

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on April 28, 2023.