Item 1. FINANCIAL STATEMENTS

C.H. ROBINSON WORLDWIDE, INC.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except per share data)

			March 31, 2023						December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents			$	239,160					$	217,482
Receivables, net of allowance for credit loss of $18,567 and $28,749			2,681,580						2,991,753
Contract assets, net of allowance for credit loss			191,711						257,597
Prepaid expenses and other			122,195						122,406
Total current assets			3,234,646						3,589,238
Property and equipment, net of accumulated depreciation and amortization			160,864						159,432
Goodwill			1,470,686						1,470,813
Other intangible assets, net of accumulated amortization			58,397						64,026
Right-of-use lease assets			357,044						372,141
Deferred tax assets			190,919						181,602
Other assets			123,028						117,312
Total assets			$	5,595,584					$	5,954,564
LIABILITIES AND STOCKHOLDERS’ INVESTMENT
Current liabilities:
Accounts payable			$	1,411,371					$	1,466,998
Outstanding checks			71,876						103,561
Accrued expenses:
Compensation			108,069						242,605
Transportation expense			145,210						199,092
Income taxes			9,333						15,210
Other accrued liabilities			176,292						168,009
Current lease liabilities			72,958						73,722
Current portion of debt			952,759						1,053,655
Total current liabilities			2,947,868						3,322,852
Long-term debt			920,272						920,049
Noncurrent lease liabilities			301,168						313,742
Noncurrent income taxes payable			27,009						28,317
Deferred tax liabilities			15,330						14,256
Other long-term liabilities			2,549						1,926
Total liabilities			4,214,196						4,601,142
Stockholders’ investment:
Preferred stock, $0.10 par value, 20,000 shares authorized; no shares issued or outstanding			—						—
Common stock, $0.10 par value, 480,000 shares authorized; 179,204 and 179,204 shares issued, 116,437 and 116,323 outstanding			11,644						11,632
Additional paid-in capital			730,363						743,288
Retained earnings			5,631,750						5,590,440
Accumulated other comprehensive loss			(86,383)						(88,860)
Treasury stock at cost (62,767 and 62,881 shares)			(4,905,986)						(4,903,078)
Total stockholders’ investment			1,381,388						1,353,422
Total liabilities and stockholders’ investment			$	5,595,584					$	5,954,564

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)

									Three Months Ended March 31,
															2023						2022
Revenues:
Transportation															$	4,327,965					$	6,528,351
Sourcing															283,705						287,602
Total revenues															4,611,670						6,815,953
Costs and expenses:
Purchased transportation and related services															3,671,031						5,650,224
Purchased products sourced for resale															254,999						259,533
Personnel expenses															383,106						413,361
Other selling, general, and administrative expenses															141,501						147,361
Total costs and expenses															4,450,637						6,470,479
Income from operations															161,033						345,474
Interest and other income/expense, net															(28,265)						(14,174)
Income before provision for income taxes															132,768						331,300
Provision for income taxes															17,877						60,952
Net income															114,891						270,348
Other comprehensive income															2,477						6,870
Comprehensive income															$	117,368					$	277,218
Basic net income per share															$	0.97					$	2.07
Diluted net income per share															$	0.96					$	2.05
Basic weighted average shares outstanding															118,636						130,499
Dilutive effect of outstanding stock awards															1,273						1,656
Diluted weighted average shares outstanding															119,909						132,155

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)

			Common Shares Outstanding						Amount						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock						Total Stockholders’ Investment
Balance December 31, 2022			116,323						$	11,632					$	743,288					$	5,590,440					$	(88,860)					$	(4,903,078)					$	1,353,422
Net income																					114,891																		114,891
Foreign currency adjustments																											2,477												2,477
Dividends declared, $0.61 per share																					(73,581)																		(73,581)
Stock issued for employee benefit plans			430						44						(28,532)																		28,113						(375)
Stock-based compensation expense			—						—						15,607																		—						15,607
Repurchase of common stock			(316)						(32)																								(31,021)						(31,053)
Balance March 31, 2023			116,437						$	11,644					$	730,363					$	5,631,750					$	(86,383)					$	(4,905,986)					$	1,381,388

			Common Shares Outstanding						Amount						Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Loss						Treasury Stock						Total Stockholders’ Investment
Balance December 31, 2021			129,186						$	12,919					$	673,628					$	4,936,861					$	(61,134)					$	(3,540,340)					$	2,021,934
Net income																					270,348																		270,348
Foreign currency adjustments																											6,870												6,870
Dividends declared, $0.55 per share																					(72,542)																		(72,542)
Stock issued for employee benefit plans			418						42						(17,377)																		26,239						8,904
Stock-based compensation expense			—						—						24,606																		—						24,606
Repurchase of common stock			(1,593)						(160)																								(164,458)						(164,618)
Balance March 31, 2022			128,011						$	12,801					$	680,857					$	5,134,667					$	(54,264)					$	(3,678,559)					$	2,095,502

See accompanying notes to the condensed consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

			Three Months Ended March 31,
			2023						2022
OPERATING ACTIVITIES
Net income			$	114,891					$	270,348
Adjustments to reconcile net income to net cash used for operating activities:
Depreciation and amortization			24,380						22,486
Provision for credit losses			(6,637)						1,672
Stock-based compensation			15,607						24,606
Deferred income taxes			(10,272)						(2,916)
Excess tax benefit on stock-based compensation			(7,011)						(4,965)
Other operating activities			942						42
Changes in operating elements, net of acquisitions:
Receivables			326,244						(424,025)
Contract assets			66,124						(51,439)
Prepaid expenses and other			433						(11,924)
Accounts payable and outstanding checks			(90,724)						143,980
Accrued compensation			(134,795)						(79,885)
Accrued transportation expense			(53,882)						42,825
Accrued income taxes			(40)						48,502
Other accrued liabilities			8,169						8,099
Other assets and liabilities			1,115						(1,334)
Net cash provided by (used for) operating activities			254,544						(13,928)
INVESTING ACTIVITIES
Purchases of property and equipment			(11,371)						(10,046)
Purchases and development of software			(15,579)						(16,183)
Proceeds from sale of property and equipment			—						2,250
Net cash used for investing activities			(26,950)						(23,979)
FINANCING ACTIVITIES
Proceeds from stock issued for employee benefit plans			19,673						25,366
Stock tendered for payment of withholding taxes			(20,048)						(16,462)
Repurchase of common stock			(31,182)						(161,279)
Cash dividends			(73,435)						(72,855)
Proceeds from long-term borrowings			—						200,000
Proceeds from short-term borrowings			739,000						1,062,000
Payments on short-term borrowings			(840,000)						(1,015,000)
Net cash (used for) provided by financing activities			(205,992)						21,770
Effect of exchange rates on cash and cash equivalents			76						1,533
Net change in cash and cash equivalents			21,678						(14,604)
Cash and cash equivalents, beginning of period			217,482						257,413
Cash and cash equivalents, end of period			$	239,160					$	242,809

See accompanying notes to the condensed consolidated financial statements.

C.H. ROBINSON WORLDWIDE, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

C.H. Robinson Worldwide, Inc. and our subsidiaries (“the company,” “we,” “us,” or “our”) are a global provider of transportation services and logistics solutions operating through a network of offices located in North America, Europe, Asia, Oceania, South America, and the Middle East. The consolidated financial statements include the accounts of C.H. Robinson Worldwide, Inc. and our majority owned and controlled subsidiaries. Our minority interests in subsidiaries are not significant. All intercompany transactions and balances have been eliminated in the consolidated financial statements.

Our reportable segments are North American Surface Transportation (“NAST”) and Global Forwarding, with all other segments included in All Other and Corporate. The All Other and Corporate reportable segment includes Robinson Fresh, Managed Services, Other Surface Transportation outside of North America, and other miscellaneous revenues and unallocated corporate expenses. For financial information concerning our reportable segments, refer to Note 8, Segment Reporting.

The condensed consolidated financial statements, which are unaudited, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, these financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the financial statements for the interim periods presented. Interim results are not necessarily indicative of results for a full year.

Consistent with SEC rules and regulations, we have condensed or omitted certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States. You should read the condensed consolidated financial statements and related notes in conjunction with the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2022.

RECENTLY ISSUED ACCOUNTING STANDARDS

For the three months ended March 31, 2023, there were no recently issued or newly adopted accounting pronouncements that had, or are expected to have, a material impact to our consolidated financial statements.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 includes a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements.

NOTE 2. GOODWILL AND OTHER INTANGIBLE ASSETS

The change in carrying amount of goodwill is as follows (in thousands):

			NAST						Global Forwarding						All Other and Corporate						Total
Balance, December 31, 2022			$	1,188,076					$	206,189					$	76,548					$	1,470,813
Foreign currency translation			(865)						408						330						(127)
Balance, March 31, 2023			$	1,187,211					$	206,597					$	76,878					$	1,470,686

Goodwill is tested at least annually for impairment on November 30, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of our reporting units is less than their respective carrying value (“Step Zero Analysis”). If the Step Zero Analysis indicates it is more likely than not that the fair value of our reporting units is less than their respective carrying value, an additional impairment assessment is performed (“Step One Analysis”). As part of our Step Zero Analysis, we determined that more likely than not criteria had not been met, and therefore a Step One Analysis was not required as of March 31, 2023.

Identifiable intangible assets consisted of the following (in thousands):

			March 31, 2023																		December 31, 2022
			Cost						Accumulated Amortization						Net						Cost						Accumulated Amortization						Net
Finite-lived intangibles
Customer relationships			$	161,844					$	(112,047)					$	49,797					$	162,358					$	(106,932)					$	55,426
Indefinite-lived intangibles
Trademarks			8,600						—						8,600						8,600						—						8,600
Total intangibles			$	170,444					$	(112,047)					$	58,397					$	170,958					$	(106,932)					$	64,026

Amortization expense for other intangible assets is as follows (in thousands):

									Three Months Ended March 31,
															2023						2022
Amortization expense															$	5,815					$	6,034

Finite-lived intangible assets, by reportable segment, as of March 31, 2023, will be amortized over their remaining lives as follows (in thousands):

			NAST						Global Forwarding						All Other and Corporate						Total
Remainder of 2023			$	6,063					$	7,986					$	823					$	14,872
2024			8,008						3,539						1,097						12,644
2025			7,857						2,322						1,097						11,276
2026			7,857						377						751						8,985
2027			1,310						—						503						1,813
Thereafter			—						—						207						207
Total																					$	49,797

NOTE 3. FAIR VALUE MEASUREMENT

Accounting guidance on fair value measurements for certain financial assets and liabilities requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

• Level 1 — Quoted market prices in active markets for identical assets or liabilities.

• Level 2 — Observable market-based inputs or unobservable inputs that are corroborated by market data.

• Level 3 — Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets.

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level of input that is significant to the fair value measurement.

We had no Level 3 assets or liabilities as of and during the periods ended March 31, 2023 and December 31, 2022. There were no transfers between levels during the period.

NOTE 4. FINANCING ARRANGEMENTS

The components of our short-term and long-term debt and the associated interest rates were as follows (dollars in thousands):

						Average interest rate as of																		Carrying value as of
						March 31, 2023						December 31, 2022						Maturity						March 31, 2023						December 31, 2022
Revolving credit facility						5.97		%				—		%				November 2027						$	4,000					$	—
364-day revolving credit facility						5.62		%				5.12		%				May 2023						274,000						379,000
Senior Notes, Series A						3.97		%				3.97		%				August 2023						175,000						175,000
Senior Notes, Series B						4.26		%				4.26		%				August 2028						150,000						150,000
Senior Notes, Series C						4.60		%				4.60		%				August 2033						175,000						175,000
Receivables Securitization Facility (1)						5.57		%				5.01		%				November 2023						499,759						499,655
Senior Notes (1)						4.20		%				4.20		%				April 2028						595,272						595,049
Total debt																								1,873,031						1,973,704
Less: Current maturities and short-term borrowing																								(952,759)						(1,053,655)
Long-term debt																								$	920,272					$	920,049

---

(1) Net of unamortized discounts and issuance costs.

SENIOR UNSECURED REVOLVING CREDIT FACILITY

We have a senior unsecured revolving credit facility (the “Credit Agreement”) with a total availability of $1 billion and a maturity date of November 19, 2027. Borrowings under the Credit Agreement generally bear interest at a variable rate determined by a pricing schedule or the base rate (which is the highest of (a) the administrative agent's prime rate, (b) the federal funds rate plus 0.50 percent, or (c) the sum of one-month SOFR plus a specified margin). As of March 31, 2023, the variable rate equaled SOFR and a Credit Spread Adjustment of 0.10 percent plus 1.0 percent. In addition, there is a commitment fee on the average daily undrawn stated amount under the facility ranging from 0.07 percent to 0.15 percent. The recorded amount of borrowings outstanding, if any, approximates fair value because of the short maturity period of the debt; therefore, we consider these borrowings to be a Level 2 financial liability.

The Credit Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.75 to 1.00. The Credit Agreement also contains customary events of default.

364-DAY UNSECURED REVOLVING CREDIT FACILITY

On May 6, 2022, we entered into an unsecured revolving credit facility (the “364-day Credit Agreement”) with a total availability of $500 million and a maturity date of May 5, 2023. Borrowings under the 364-day Credit Agreement generally bear interest at an alternate base rate plus a margin or a term SOFR-based rate plus a margin of 0.625 percent to 1.25 percent. The alternate base rate is determined by a pricing schedule (which is the highest of (a) 0 percent, (b) U.S. Bank’s prime rate, (c) the federal funds effective rate plus 0.50 percent, or (d) a term SOFR-based rate plus 1.00 percent). In addition, there is a commitment fee on the aggregate unused commitments under the 364-day Credit Agreement ranging from 0.05 percent to 0.175 percent per annum. The recorded amount of borrowings outstanding approximates fair value because of the short maturity period of the debt.

The 364-day Credit Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including an initial maximum leverage ratio of 3.00 to 1.00. The 364-day Credit Agreement also contains customary events of default.

NOTE PURCHASE AGREEMENT

On August 23, 2013, we entered into a Note Purchase Agreement with certain institutional investors (the “Purchasers”). On August 27, 2013, the Purchasers purchased an aggregate principal amount of $500 million of our Senior Notes Series A, Senior Notes Series B, and Senior Notes Series C (collectively, the “Notes”). Interest on the Notes is payable semi-annually in arrears. The fair value of the Notes approximated $476.5 million on March 31, 2023. We estimate the fair value of the Notes primarily using an expected present value technique, which is based on observable market inputs using interest rates currently available to companies of similar credit standing for similar terms and remaining maturities and considering our own risk. If the Notes were recorded at fair value, they would be classified as Level 2. Series A matures in August 2023 and is classified as current portion of debt in our Condensed Consolidated Balance Sheets as of March 31, 2023.

The Note Purchase Agreement contains various restrictions and covenants that require us to maintain certain financial ratios, including a maximum leverage ratio of 3.50 to 1.00, a minimum interest coverage ratio of 2.00 to 1.00, and a maximum consolidated priority debt to consolidated total asset ratio of 10 percent.

The Note Purchase Agreement provides for customary events of default. The occurrence of an event of default would permit certain Purchasers to declare certain Notes then outstanding to be immediately due and payable. Under the terms of the Note Purchase Agreement, the Notes are redeemable, in whole or in part, at 100 percent of the principal amount being redeemed together with a “make-whole amount” (as defined in the Note Purchase Agreement), and accrued and unpaid interest with respect to each Note. The obligations of the company under the Note Purchase Agreement and the Notes are guaranteed by C.H. Robinson Company, a Delaware corporation and a wholly-owned subsidiary of the company, and by C.H. Robinson Company, Inc., a Minnesota corporation and an indirect wholly-owned subsidiary of the company. On November 21, 2022, we executed a third amendment to the Note Purchase Agreement to among other things, facilitate the terms of the Credit Agreement.

U.S. TRADE ACCOUNTS RECEIVABLE SECURITIZATION

On November 19, 2021, we entered into a receivables purchase agreement and related transaction documents with Bank of America, N.A. and Wells Fargo Bank, N.A. to provide a receivables securitization facility (the “Receivables Securitization Facility”). The Receivables Securitization Facility is based on the securitization of our U.S. trade accounts receivable with a total availability of $500 million as of March 31, 2023. The interest rate on borrowings under the Receivables Securitization Facility is based on Bloomberg Short Term Bank Yield Index (“BSBY”) plus a margin. There is also a commitment fee we are required to pay on any unused portion of the facility. The Receivables Securitization Facility expires on November 17, 2023, unless extended by the parties. The recorded amount of borrowings outstanding on the Receivables Securitization Facility approximates fair value because it can be redeemed on short notice and the interest rate floats. We consider these borrowings to be a Level 2 financial liability. Borrowings on the Receivables Securitization Facility are included within proceeds on current borrowings on the consolidated statement of cash flows.

The Receivables Securitization Facility contains various customary affirmative and negative covenants, and it also contains customary default and termination provisions, which provide for acceleration of amounts owed under the Receivables Securitization Facility upon the occurrence of certain specified events.

On February 1, 2022, we amended the Receivables Securitization Facility primarily to increase the total availability from $300 million to $500 million pursuant to the provisions of the existing agreement. On July 7, 2022, we amended the Receivables Securitization Facility to effectively increase the receivables pool available with respect to the Receivables Securitization Facility.

SENIOR NOTES

On April 9, 2018, we issued senior unsecured notes (“Senior Notes”) through a public offering. The Senior Notes bear an annual interest rate of 4.20 percent payable semi-annually on April 15 and October 15, until maturity on April 15, 2028. Taking into effect the amortization of the original issue discount and all underwriting and issuance expenses, the Senior Notes have an effective yield to maturity of approximately 4.39 percent per annum. The fair value of the Senior Notes, excluding debt discounts and issuance costs, approximated $578.0 million as of March 31, 2023, based primarily on the market prices quoted from external sources. The carrying value of the Senior Notes was $595.3 million as of March 31, 2023.

We may redeem the Senior Notes, in whole or in part, at any time and from time to time prior to their maturity at the applicable redemption prices described in the Senior Notes. Upon the occurrence of a “change of control triggering event” as defined in the Senior Notes (generally, a change of control of us accompanied by a reduction in the credit rating for the Senior Notes), we will generally be required to make an offer to repurchase the Senior Notes from holders at 101 percent of their principal amount plus accrued and unpaid interest to the date of repurchase.

The Senior Notes were issued under an indenture that contains covenants imposing certain limitations on our ability to incur liens or enter into sale and leaseback transactions above certain limits; and consolidate, or merge or transfer substantially all of our assets and those of our subsidiaries on a consolidated basis. It also provides for customary events of default (subject in certain cases to customary grace and cure periods), which include, among other things nonpayment, breach of covenants in the indenture, and certain events of bankruptcy and insolvency. If an event of default occurs and is continuing with respect to the Senior Notes, the trustee or holders of at least 25 percent in principal amount outstanding of the Senior Notes may declare the principal and the accrued and unpaid interest, if any, on all of the outstanding Senior Notes to be due and payable. These covenants and events of default are subject to a number of important qualifications, limitations, and exceptions that are described in the indenture. The indenture does not contain any financial ratios or specified levels of net worth or liquidity to which we must adhere.

In addition to the above financing agreements, we have a $15 million discretionary line of credit with U.S. Bank of which $9.9 million is currently utilized for standby letters of credit related to insurance collateral as of March 31, 2023. These standby letters of credit are renewed annually and were undrawn as of March 31, 2023.

NOTE 5. INCOME TAXES

A reconciliation of the provision for income taxes using the statutory federal income tax rate to our effective income tax rate is as follows:

									Three Months Ended March 31,
															2023						2022
Federal statutory rate															21.0		%				21.0		%
State income taxes, net of federal benefit															2.3						1.2
Share based payment awards															(5.0)						(1.3)
Foreign tax credits															(0.7)						(0.8)
Other U.S. tax credits and incentives															(3.8)						(1.9)
Foreign															(1.0)						(0.6)
Other															0.7						0.8
Effective income tax rate															13.5		%				18.4		%

In the quarter ended March 31, 2023, management made the determination that it is no longer indefinitely reinvested with regard to the unremitted earnings of any foreign subsidiaries although it remains indefinitely reinvested related to other taxable differences that may exist with regard to these subsidiaries. The change results in a one-time increase to tax expense of approximately $2.0 million.

As of March 31, 2023, we have $42.0 million of unrecognized tax benefits and related interest and penalties. It is possible the amount of unrecognized tax benefit could change in the next 12 months as a result of a lapse of the statute of limitations and settlements with taxing authorities. The total liability for unrecognized tax benefits is expected to decrease by approximately $1.3 million in the next 12 months due to the lapsing of statutes of limitations. With few exceptions, we are no longer subject to audits of U.S. federal, state and local, or non-U.S. income tax returns before 2015. We are currently under a limited Internal Revenue Service audit for the 2015 to 2017 tax years, while the 2018 U.S. Federal statute of limitations is closed.

NOTE 6. STOCK AWARD PLANS

Stock-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense as it vests. A summary of our total compensation expense recognized in our condensed consolidated statements of operations and comprehensive income for stock-based compensation is as follows (in thousands):

									Three Months Ended March 31,
															2023						2022
Stock options															$	2,218					$	3,219
Stock awards															12,012						20,063
Company expense on ESPP discount															1,377						1,324
Total stock-based compensation expense															$	15,607					$	24,606

On May 5, 2022, our shareholders approved a 2022 Equity Incentive Plan (the “Plan”) and authorized an initial 4,261,884 shares for issuance of awards thereunder. The Plan allows us to grant certain stock awards, including stock options at fair market value, performance-based restricted stock units and shares, and time-based restricted stock units, to our key employees and non-employee directors. Shares subject to awards under the Plan or certain of our prior plans that expire or are canceled without delivery of shares or that are settled in cash generally become available again for issuance under the Plan. There were 3,227,872 shares available for stock awards under the Plan as of March 31, 2023.

Stock Options - We have awarded stock options to certain key employees that vest primarily based on their continued employment. The fair value of these options was established based on the market price on the date of grant calculated using the Black-Scholes option pricing model. Changes in measured stock price volatility and interest rates were the primary reasons for changes in the fair value. These grants are being expensed based on the terms of the awards. As of March 31, 2023, unrecognized compensation expense related to stock options was $11.2 million.

Stock Awards - We have awarded performance-based restricted shares, performance-based restricted stock units (“PSUs”), and time-based restricted stock units. Nearly all of our awards contain restrictions on the awardees’ ability to sell or transfer vested awards for a specified period of time. The fair value of these awards is established based on the market price on the date of grant, discounted for any post-vesting holding restrictions. The discounts on outstanding grants with post-vesting holding restrictions vary from 11 percent to 24 percent and are calculated using the Black-Scholes option pricing model-protective put method. The duration of the restriction period to sell or transfer vested awards, changes in the measured stock price volatility and changes in interest rates are the primary reasons for changes in the discount. These grants are being expensed based on the terms of the awards.

Performance-based Awards

We have awarded performance-based restricted shares through 2020 to certain key employees. These awards vest over a five-year period based on the company’s dilutive earnings per share growth. Beginning in 2021, we have awarded annually PSUs to certain key employees. These PSUs vest over a three-year period based achieving certain dilutive earnings per share, adjusted gross profits, and adjusted operating margin targets. These PSUs contain an upside opportunity of up to 200 percent of target contingent upon obtaining certain targets mentioned above over their respective performance period.

Time-based Awards

We award time-based restricted stock units to certain key employees. Time-based awards granted through 2020 vest over a five-year period. Beginning in 2021, we have granted annually time-based awards that vest over a three-year period. These awards vest primarily based on the passage of time and the employee’s continued employment.

We granted 272,455 PSUs at target and 688,341 time-based restricted stock units in February 2023. The PSUs and time-based restricted stock unit awards had a weighted average grant date fair value of $92.15 and $92.74, respectively, and vest over a three-year period as described above.

We have also awarded restricted stock units to certain key employees and non-employee directors, which are fully vested upon date of grant. These units contain restrictions on the awardees’ ability to sell or transfer vested units for a specified period of time. The fair value of these units is established using the same method discussed above. These awards have been expensed on the date of grant.

As of March 31, 2023, there was unrecognized compensation expense of $226.3 million related to previously granted stock awards assuming maximum achievement is obtained on our PSUs. The amount of future expense to be recognized will be based

on the passage of time, and contingent upon obtaining certain dilutive earnings per share, adjusted gross profits, and adjusted operating margin targets, and certain other conditions.

Employee Stock Purchase Plan - Our 1997 Employee Stock Purchase Plan (“ESPP”) allows our employees to contribute up to $10,000 of their annual cash compensation to purchase company stock. The purchase price is determined using the closing price on the last day of each quarter discounted by 15 percent. Shares vest immediately. The following is a summary of the employee stock purchase plan activity (dollars in thousands):

Three Months Ended March 31, 2023
Shares purchased by employees						Aggregate cost to employees						Expense recognized by the company
92,373						$	7,802					$	1,377

NOTE 7. LITIGATION

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 condensed 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.

NOTE 8. SEGMENT REPORTING

Our reportable segments are based on our method of internal reporting, which generally segregates the segments by service line and the primary services they provide to our customers. We identify two reportable segments in addition to All Other and Corporate as summarized below:

• North American Surface Transportation—**NAST provides freight transportation services across North America through a network of offices in the United States, Canada, and Mexico. The primary services provided by NAST include truckload and less than truckload (“LTL”) transportation services.

• Global Forwarding—**Global Forwarding provides global logistics services through an international network of offices in North America, Europe, Asia, Oceania, South America, and the Middle East and also contracts with independent agents worldwide. The primary services provided by Global Forwarding include ocean freight services, air freight services, and customs brokerage.

• All Other and Corporate—**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. Robinson Fresh provides sourcing services including the buying, selling, and marketing of fresh fruits, vegetables, and other perishable items. Managed Services provides Transportation Management Services, or Managed TMS®. Other Surface Transportation revenues are primarily earned by our Europe Surface Transportation segment. Europe Surface Transportation provides transportation and logistics services including truckload and groupage services across Europe.

The internal reporting of segments is defined, based in part, on the reporting and review process used by our chief operating decision maker (“CODM”), our Interim Chief Executive Officer. The accounting policies of our reportable segments are the same as those described in the summary of significant accounting policies located in Note 1 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022. We do not report our intersegment revenues by reportable segment to our CODM and do not believe they are a meaningful metric for evaluating the performance of our reportable segments. Reportable segment information is as follows (dollars in thousands):

			NAST						Global Forwarding						All Other and Corporate						Consolidated
Three Months Ended March 31, 2023
Total revenues			$	3,304,187					$	789,978					$	517,505					$	4,611,670
Income (loss) from operations			134,022						30,116						(3,105)						161,033
Depreciation and amortization			5,651						5,480						13,249						24,380
Total assets(1)			3,240,898						1,194,575						1,160,111						5,595,584
Average employee headcount			6,870						5,471						4,561						16,902
			NAST						Global Forwarding						All Other and Corporate						Consolidated
Three Months Ended March 31, 2022
Total revenues			$	4,114,889					$	2,194,397					$	506,667					$	6,815,953
Income (loss) from operations			182,354						167,638						(4,518)						345,474
Depreciation and amortization			6,239						5,555						10,692						22,486
Total assets(1)			3,701,164						2,940,486						879,688						7,521,338
Average employee headcount			7,348						5,610						4,300						17,258

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(1) All cash and cash equivalents are included in All Other and Corporate.

NOTE 9. REVENUE FROM CONTRACTS WITH CUSTOMERS

A summary of our total revenues disaggregated by major service line and timing of revenue recognition is presented below for each of our reportable segments (in thousands):

			Three Months Ended March 31, 2023
			NAST						Global Forwarding						All Other and Corporate						Total
Major Service Lines
Transportation and logistics services(1)			$	3,304,187					$	789,978					$	233,800					$	4,327,965
Sourcing(2)			—						—						283,705						283,705
Total			$	3,304,187					$	789,978					$	517,505					$	4,611,670
			Three Months Ended March 31, 2022
			NAST						Global Forwarding						All Other and Corporate						Total
Major Service Lines
Transportation and logistics services(1)			$	4,114,889					$	2,194,397					$	219,065					$	6,528,351
Sourcing(2)			—						—						287,602						287,602
Total			$	4,114,889					$	2,194,397					$	506,667					$	6,815,953

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(1) Transportation and logistics services performance obligations are completed over time.

(2) Sourcing performance obligations are completed at a point in time.

We typically do not receive consideration and amounts are not due from our customers prior to the completion of our performance obligation and as such contract liabilities, as of March 31, 2023, and revenue recognized in the three months ended March 31, 2023 and 2022 resulting from contract liabilities, were not significant. Contract assets and accrued expenses-transportation expense fluctuate from period to period primarily based upon shipments in-transit at period end and the timing of customer invoicing.

NOTE 10. LEASES

We determine if our contractual agreements contain a lease at inception. A lease is identified when a contract allows us the right to control an identified asset for a period of time in exchange for consideration. Our lease agreements consist primarily of operating leases for office space, warehouses, office equipment, trailers, and a small number of intermodal containers. We do not have material financing leases. Frequently, we enter into contractual relationships with a wide variety of transportation companies for freight capacity and utilize those relationships to efficiently and cost-effectively arrange the transport of our customers’ freight. These contracts typically have a term of 12 months or less and do not allow us to direct the use or obtain substantially all of the economic benefits of a specifically identified asset. Accordingly, these agreements are not considered leases.

Our operating leases are included on the consolidated balance sheets as right-of-use lease assets and lease liabilities. A right-of-use lease asset represents our right to use an underlying asset over the term of a lease, while a lease liability represents our obligation to make lease payments arising from the lease. Current and noncurrent lease liabilities are recognized on commencement date at the present value of lease payments, including non-lease components, which consist primarily of common area maintenance and parking charges. Right-of-use lease assets are also recognized on the commencement date as the total lease liability plus prepaid rents. As our leases typically do not provide an implicit rate, we use our fully collateralized incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is influenced by market interest rates, our credit rating, and lease term and as such, may differ for individual leases.

Our lease agreements typically do not contain variable lease payments, residual value guarantees, purchase options, or restrictive covenants. Many of our leases include the option to renew for a period of months to several years. The term of our leases may include the option to renew when it is reasonably certain that we will exercise that option although these occurrences are seldom. We have lease agreements with lease components (e.g., payments for rent) and non-lease components (e.g., payments for common area maintenance and parking), which are all accounted for as a single lease component.

We do not have material lease agreements that have not yet commenced that are expected to create significant rights or obligations as of March 31, 2023.

Information regarding lease expense, remaining lease term, discount rate, and other select lease information is presented below as of March 31, 2023 and December 31, 2022, and for the three months ended March 31, 2023 and 2022, is as follows (dollars in thousands):

									Three Months Ended March 31,
Lease Costs															2023						2022
Operating lease expense															$	24,653					$	21,645
Short-term lease expense															1,414						2,460
Total lease expense															$	26,067					$	24,105

			Three Months Ended March 31,
Other Lease Information			2023						2022
Operating cash flows from operating leases			$	24,815					$	21,381
Right-of-use lease assets obtained in exchange for new lease liabilities			6,739						23,646

Lease Term and Discount Rate			As of March 31, 2023						As of December 31, 2022
Weighted average remaining lease term (in years)			6.3						6.4
Weighted average discount rate			3.5		%				3.5		%

The maturities of lease liabilities as of March 31, 2023, were as follows (in thousands):

Maturity of Lease Liabilities						Operating Leases
Remaining 2023						$	63,212
2024						80,204
2025						65,986
2026						54,217
2027						43,301
Thereafter						115,175
Total lease payments						422,095
Less: Interest						(47,969)
Present value of lease liabilities						$	374,126

NOTE 11. ALLOWANCE FOR CREDIT LOSSES

Our allowance for credit losses is computed using a number of factors including our past credit loss experience, the aging of amounts due from our customers, and our customers' credit ratings, in addition to other customer-specific factors. We have also considered recent trends and developments related to the current macroeconomic environment in determining our ending allowance for credit losses for both accounts receivable and contract assets. The allowance for credit losses on contract assets was not significant as of March 31, 2023.

A rollforward of our allowance for credit losses on our accounts receivable balance is presented below (in thousands):

Balance, December 31, 2022			$	28,749
Provision			(6,400)
Write-offs			(3,782)
Balance, March 31, 2023			$	18,567

Recoveries of amounts previously written off were not significant for the three months ended March 31, 2023.

NOTE 12. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS

Accumulated other comprehensive loss is included in Stockholders' Investment on our condensed consolidated balance sheets. The recorded balance on March 31, 2023 and December 31, 2022, was $86.4 million and $88.9 million, respectively. The recorded balance on March 31, 2023 and December 31, 2022 is comprised solely of foreign currency adjustments, including foreign currency translation.

Other comprehensive income was $2.5 million for the three months ended March 31, 2023, primarily driven by fluctuations in the Euro. Other comprehensive income was $6.9 million for the three months ended March 31, 2022, primarily driven by fluctuations in the Australian Dollar and Singapore Dollar.

NOTE 13: RESTRUCTURING

In 2022, we announced organizational changes to support our enterprise strategy of accelerating our digital transformation and productivity initiatives. We continued to execute upon these digital transformation and productivity initiatives in 2023, which resulted in further restructuring charges to better align our workforce as a result of these initiatives and in consideration of the changing freight transportation market. We recognized additional restructuring charges of $3.7 million in the first quarter of 2023 primarily related to workforce reductions. We expect to complete our restructuring actions by the end of 2023.

For severance and other operating expenses related to restructuring activities, we paid $15.2 million in cash in the first quarter of 2023 with the majority of the remaining $7.5 million accrued as of March 31, 2023 expected to be paid by the end of 2023.

A summary of the restructuring charges recognized is presented below (in thousands):

			Three Months Ended March 31,
			2023
Severance(1)			$	3,138
Other personnel expenses(1)			460
Other selling, general, and administrative expenses(2)			124
Total			$	3,722

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(1) Amounts are included within personnel expenses in our consolidated statements of operations.

(2) Amounts are included within other selling, general, and administrative expenses in our consolidated statements of operations.

The following table summarizes restructuring charges by reportable segment for the three months ended March 31, 2023 (dollars in thousands):

			NAST						Global Forwarding						All Other and Corporate						Consolidated
Personnel expenses			$	829					$	1,538					$	1,231					$	3,598
Other selling, general, and administrative expenses			—						124						—						124

The following table summarizes activity related to our restructuring initiatives and reserves included in our consolidated balance sheets as of December 31, 2022 and March 31, 2023:

			Accrued Severance and Other Personnel Expenses						Accrued Other Selling, General, and Administrative Expenses									Total
Balance, December 31, 2022			$	18,976					$	—								$	18,976
Restructuring charges			3,598						124									3,722
Cash payments			(15,178)						—									(15,178)
Accrual adjustments(1)			5						—									5
Balance, March 31, 2023			$	7,401					$	124								$	7,525

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(1) Accrual adjustments primarily relate to changes in estimates for certain employee termination costs, including those settling for an amount different than originally estimated and foreign currency adjustments.