C. H. ROBINSON WORLDWIDE, INC. (CHRW)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics providers in the world, with consolidated total revenues of $17.7 billion in 2024. We deliver logistics like no one else. Companies around the world look to us to reimagine supply chains, advance freight technology, and solve logistics

challenges—from the simple to the complex. We are grounded in our promise to deliver exceptional customer success, using our expertise, scale, and tailored solutions to help customers navigate increasingly complex global supply chains.

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 profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit, which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands):

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MARKET TRENDS

The North America surface transportation market continued to experience excess carrier capacity relative to shipper demand throughout 2024, which resulted in an oversupplied and very competitive market. These conditions are typically referred to as a soft market and resulted in transportation rates at, or near, the estimated cost to operate a truck for much of 2024. Although carrier capacity has begun exiting the market, it has been at rates much slower than is typically seen at this stage of the market cycle. One of the key metrics we use to measure market conditions is the truckload routing guide depth from our Managed Solutions business. Routing guide depth represents the average number of carriers contacted prior to acceptance when procuring a transportation provider. Average routing guide depth has remained low throughout 2024 and finished the year at 1.3, representing that on average, the first carrier in a shipper’s routing guide was executing the shipment in most cases. Average routing guide depth at the end of 2023 was 1.2 and held at that level before increasing slightly at the end of 2024.

The global forwarding market experienced significant volatility in 2024, impacted by re-routing, extended transit times, and improving demand. Most carriers avoided the Suez Canal for the majority of 2024 due to the Red Sea conflict, which increased transit times, straining global carrier capacity. Consequently, ocean freight rates have remained elevated compared to the prior year. Uncertainty remains on how the Red Sea conflict, along with geopolitical factors and new capacity entering the market, will impact the global forwarding market in 2025. The global air freight market has largely stabilized, although air freight costs remain elevated compared to the prior year. The elevated ecommerce export demand from Asia during much of 2024 resulted in the repositioning of air freight capacity to that trade lane, causing freighter capacity shortages in other trade lanes and driving up pricing in the market in certain trade lanes.

BUSINESS TRENDS

Our 2024 surface transportation results were largely consistent with the trends discussed in the market trends section and similar to trends experienced in the prior year. The weak freight demand and excess carrier capacity in the market resulted in most shipments moving under committed pricing agreements and suppressed freight rates on the limited number of shipments reaching the spot market for most of 2024. Despite these challenging market conditions, we were able to improve our adjusted gross profit per transaction in 2024 compared to 2023 as a result of disciplined pricing and capacity procurement efforts leading to better adjusted gross profits per transaction within our transactional portfolio. Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 5.5 percent during 2024. Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 5.0 percent during 2024.

Our 2024 Global Forwarding results were largely consistent with the trends discussed above in the market trends section. We experienced elevated purchased transportation costs in 2024 compared to the prior year, resulting in increased total revenues and cost of purchased transportation in ocean services. In 2024, the global forwarding market faced disruptions that led to a significant rise in freight rates. This contrasts with 2023, which saw weak demand and elevated levels of capacity. These market dynamics resulted in a notable increase in both total revenues and cost of purchased transportation compared to the previous year. Our total ocean freight volumes increased 5.5 percent while our air freight tonnage increased 17.0 percent in 2024 compared to the prior year.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

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

•Total revenues increased 0.7 percent to $17.7 billion, primarily driven by higher pricing and volume in our ocean services, partially offset by lower pricing and volume in our truckload services.

•Gross profits increased 5.8 percent to $2.7 billion. Adjusted gross profits increased 6.2 percent to $2.8 billion, primarily driven by higher adjusted gross profit per transaction in our truckload and ocean services.

•Personnel expenses decreased 0.6 percent to $1.5 billion, primarily due to cost optimization efforts and productivity improvements, partially offset by higher variable compensation and higher restructuring charges related to workforce reductions. Average employee headcount decreased 10.3 percent.

•Other selling, general, and administrative (“SG&A”) expenses increased 2.5 percent to $639.6 million, primarily due to a $44.5 million loss on the divestiture of our Europe Surface Transportation business. The prior year included

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$19.6 million of charges, primarily related to the divestiture of our operations in Argentina. In addition, other SG&A expenses decreased across several expense categories in the current year.

•Income from operations totaled $669.1 million, up 30.0 percent from last year, due to an increase in adjusted gross profits, partially offset by the increase in operating expenses. Adjusted operating margin of 24.2 percent increased 440 basis points.

•Interest and other income/expenses, net totaled $89.9 million, which primarily consisted of $85.9 million of interest expense, which decreased $4.3 million versus last year due to a lower average debt balance. The current year results also included a $7.4 million net loss from foreign currency revaluation and realized foreign currency gains and losses.

•The effective tax rate for 2024 was 19.6 percent compared to 20.5 percent in 2023. The lower rate in the current year was driven by the impact of non-recurring discrete items and higher U.S. tax credits, partially offset by higher pre-tax income and lower foreign tax credits.

•Net income totaled $465.7 million, up 43.2 percent from a year ago. Diluted earnings per share increased 41.9 percent to $3.86.

CONSOLIDATED RESULTS OF OPERATIONS

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

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

The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the twelve months ended December 31, 2024, to the twelve months ended December 31, 2023. A similar discussion and analysis that compares the twelve months ended December 31, 2023, to the twelve months ended December 31, 2022, can be

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found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2023 Annual Report on Form 10-K filed with the SEC on February 16, 2024.

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

Consolidated Results of Operations—Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023

Total revenues and direct costs. Total revenues and direct costs were essentially flat with the prior year with significant offsetting impacts from ocean and truckload services. Ocean transportation revenues and direct costs increased, driven by the volatile market conditions experienced in 2024, as discussed in the market trends section above, which significantly impacted carrier capacity and led to increased ocean freight rates. Conversely, truckload transportation revenues and direct costs decreased compared to the prior year. This decline in truckload pricing and purchased transportation costs was driven by the soft market conditions in surface transportation, characterized by an oversupply of carrier capacity throughout most of 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 increased due to higher adjusted gross profits per transaction in ocean and truckload services, in addition to increased volumes in our ocean service line. The higher adjusted gross profits per transaction in ocean services were driven by the challenges facing the global forwarding market, which resulted in elevated pricing. In truckload services, the increase was driven by the improved execution and disciplined pricing and capacity procurement efforts from our team within our transactional portfolio during 2024. Sourcing adjusted gross profits increased, driven by an increase in integrated supply chain solutions for retail and foodservice customers.

Operating expenses. Personnel expenses decreased, primarily due to cost optimization efforts including lower average employee headcount partially offset by higher variable compensation reflecting the improved results compared to the prior year. Other SG&A expenses increased primarily due to the divestiture of our Europe Surface Transportation business, which was partially offset by the impact of the divestiture of our Argentina operations in 2023 discussed below.

In addition to the above, our personnel expenses for 2024 included $24.1 million of severance and related personnel expenses related to our 2024 Restructuring Program. We also incurred $66.2 million in other SG&A expenses in 2024. These expenses were primarily due to a $44.5 million loss related to the divestiture of our Europe Surface Transportation business and $21.9 million related to our 2024 Restructuring Program.

Our personnel expenses for 2023 included $18.4 million of severance and related expenses related to our 2022 Restructuring Program. We also incurred $19.6 million of other SG&A expenses primarily related to the divestiture of our Argentina operations. Refer to Note 14, Restructuring, for further discussion related to our 2024 and 2022 Restructuring Programs. Refer to Note 15, Divestitures, for further discussion related to the divestiture of our Europe Surface Transportation business and Argentina operations.

Interest and other income/expense, net. Interest and other income/expense, net was $89.9 million, primarily consisted of $85.9 million of interest expense, which decreased $4.3 million compared to the prior year due to a lower average debt balance. The current year also included a $7.4 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses. The prior year included a $24.4 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses driven by a $16.4 million foreign currency loss related to the devaluation of the Argentine Peso.

Provision for income taxes. Our effective income tax rate was 19.6 percent in 2024 and 20.5 percent in 2023. The effective income tax rate for the twelve months ended December 31, 2024, was lower than the statutory federal income tax rate primarily due to the tax impact of U.S. tax credits and incentives and share-based payment awards, which reduced the effective tax rate by 5.3 percentage points and 1.8 percentage points, respectively. These impacts were partially offset by foreign tax credits and state income taxes, net of federal benefit, which increased the effective tax rate by 2.5 percentage points and 1.9 percentage points, respectively. The effective income tax rate for the twelve months ended December 31, 2023, was lower than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits, U.S. tax credits and incentives, and the tax impact of share-based payment awards, which reduced the effective tax rate by 9.5 percentage points, 3.4 percentage points, and 2.7 percentage points, respectively. These impacts were partially offset by a higher tax rate on foreign earnings and the impact of a Section 199 domestic production activities settlement, which increased the effective tax rate by 5.8 percentage points and 4.7 percentage points, respectively.

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NAST Segment Results of Operations

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

Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 2023

Total revenues and direct costs. NAST total revenues and direct costs decreased, driven by lower pricing and purchased transportation costs and a decline in volume in truckload services. The lower pricing and purchased transportation costs in truckload services were driven by the soft market conditions experienced throughout 2024 as the market remained in a prolonged stage of oversupplied carrier capacity. These declines were partially offset by increased revenues and direct costs in LTL services driven by increased volumes.

Gross profits and adjusted gross profits. NAST adjusted gross profits increased, driven by truckload services due to higher adjusted gross profits per transaction partially offset by a decline in truckload service volumes. This improvement was driven by improved execution and disciplined pricing and capacity procurement within our transactional portfolio in 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. Additionally, LTL services adjusted gross profits per transaction increased, driven by the improved execution and disciplined pricing efforts across our portfolio, in addition to an increase in volumes. NAST other adjusted gross profits decreased, primarily due to a decline in warehousing and intermodal adjusted gross profits.

Operating expenses. NAST personnel expenses increased, driven by an increase in variable compensation reflecting the improved results compared to the prior year. This increase was partially offset by cost optimization efforts, including lower average employee headcount in addition to lower allocated corporate expenses.

In addition to the above, NAST personnel expenses for 2024 included $10.2 million of severance and related personnel expenses. We also incurred $6.9 million in other SG&A expenses in 2024. These expenses were both associated with our 2024 Restructuring Program. Personnel expenses for 2023 included $1.1 million of severance and related personnel expenses associated with our 2022 Restructuring Program. Refer to Note 14, Restructuring, for further discussion related to our 2024 and 2022 Restructuring Programs.

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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 allocated based upon relevant segment operating metrics.

Global Forwarding Segment Results of Operations

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

Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 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 across all global forwarding transportation services. The higher pricing and purchased transportation costs in ocean services were driven by the volatile market conditions in 2024 discussed in the market trends section above, which significantly impacted carrier capacity and led to increased ocean freight rates in 2024. Additionally, disruptions in the ocean freight market resulted in increased air freight tonnage in 2024, driven by ocean freight conversions in many trade lanes. These ocean freight conversions, coupled with heightened ecommerce demand out of North Asia and stronger peak season volumes compared to 2023, elevated air freight costs in certain trade lanes in 2024. The volatile market conditions in 2024 contrasted with the weak demand, elevated capacity, and suppressed freight rates experienced in 2023.

Gross profits and adjusted gross profits. Global Forwarding adjusted gross profits increased, driven by higher adjusted gross profits per shipment and an increase in volumes in ocean services driven by the challenges facing the global forwarding market, which resulted in elevated pricing. This compared to a market characterized by weak freight demand and excess carrier capacity in 2023. Air freight adjusted gross profits increased due an increase in metric tons shipped which was partially offset by lower adjusted gross profits per metric ton shipped. The decrease in adjusted gross profits per metric ton shipped, was driven by sharp increases to the cost of air freight in certain trade lanes during 2024 compared to 2023. Customs adjusted gross profits increased, driven by higher transaction volumes and an increase in adjusted gross profits per transaction.

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Operating expenses. Personnel expenses increased primarily due to increased variable compensation reflecting the improved results relative to the prior year. This increase was partially offset by cost optimization efforts, including lower average employee headcount. Other SG&A expenses decreased, as the prior year included an $18.0 million loss related to the divestiture of our Argentina operations. Additionally, other SG&A expenses declined in the current year related to lower allocated corporate expenses and lower amortization expenses following the completion of amortization of intangible assets from a prior 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, personnel expenses for 2024 included $6.9 million of severance and related personnel expenses. We also incurred $4.7 million in other SG&A expenses in 2024. These expenses were both associated with our 2024 Restructuring Program. Personnel expenses for 2023 included $3.8 million of severance and related personnel expenses. Other SG&A in 2023 included $18.2 million primarily related to disposal and exit activities, including asset impairments. These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations. Refer to Note 14, Restructuring, for further discussion related to our 2024 and 2022 Restructuring Programs. Refer to Note 15, Divestitures, for further discussion related to the divestiture of our Argentina operations.

All Other and Corporate Segment Results of Operations

All Other and Corporate includes our Robinson Fresh and Managed Solutions segments, as well as Other Surface Transportation outside of North America and other miscellaneous revenues and unallocated corporate expenses.

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

Twelve Months Ended December 31, 2024 Compared to Twelve Months Ended December 31, 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 European truckload pricing and volume in our Other Surface Transportation business resulting in a decline in total revenues and direct costs.

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

Operating expenses. Personnel expenses in 2024, for All Other and Corporate included $7.0 million of severance and related personnel expenses primarily associated with our 2024 Restructuring Program. We also incurred $54.5 million of other SG&A expenses in 2024, that included a $44.5 million loss related to the divestiture of our Europe Surface Transportation business. Personnel expenses in 2023, included $13.5 million of severance and related personnel expenses. We also incurred $1.5 million of other SG&A expenses in 2023. These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations. Refer to Note 14, Restructuring, for further discussion related to our 2024 and 2022 Restructuring Programs. Refer to Note 15, Divestitures, for further discussion related to the divestitures of our Europe Surface Transportation business and Argentina operations.

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LIQUIDITY AND CAPITAL RESOURCES

We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock. In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (dollars in thousands):

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(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, share repurchases, or other investments.

Cash and cash equivalents totaled $145.8 million as of December 31, 2024, and $145.5 million as of December 31, 2023. Cash and cash equivalents held outside the United States totaled $134.0 million as of December 31, 2024, and $142.8 million as of December 31, 2023. Working capital decreased from $828.7 million at December 31, 2023, to $644.7 million at December 31, 2024.

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. 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):

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Cash flow from operating activities. We generated significant cash flow from operating activities in 2024, driven by our strong operating results and increased net income. The increase to net income was offset by elevated freight rates in ocean services, driven by the factors discussed in the market trends and business trends sections above, which resulted in an increase in net operating working capital and negatively impacted our cash flow from operations. In 2023, our results were adversely impacted by weak freight demand and excess carrier capacity, which significantly decreased our net operating working capital and benefited our cash flow from operations. 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. Our investing activities consist primarily of capital expenditures and cash paid for acquisitions. Capital expenditures consisted primarily of investments in software, which are intended to deliver scalable solutions by transforming our processes, accelerating the pace of development, prioritizing data integrity, improving our customer and carrier experience, and increasing our efficiency to help expand our adjusted operating margins and grow the business.

During 2022, we sold an office building in Kansas City, Missouri, for a sales price of $55.0 million and recognized a gain of $23.5 million on the sale. We simultaneously entered into an agreement to lease the office building for 10 years.

We anticipate capital expenditures in 2025 to be approximately $75 million to $85 million.

Cash used for financing activities. We had net repayments on debt in 2024 and 2023 and net borrowings on debt in 2022. Net repayments in 2024 were primarily to decrease the outstanding balance on the Revolving Credit Facility and the Receivables Securitization Facility. Net repayments in 2023 were primarily to repay the Senior Notes Series A, which matured in August 2023, and the 364-Day Unsecured Revolving Credit Facility, which matured in May 2023. Net borrowings in 2022 were primarily to fund share repurchases and working capital needs in the first half of 2022.

The decrease in cash used for share repurchases was due to a significant decrease in the number of shares repurchased in 2023 compared to 2022 as minimal shares were repurchased in the second half of 2023. No shares were repurchased in 2024.

In December 2022, the Board of Directors increased the number of shares authorized to be repurchased by 20,000,000 shares. As of December 31, 2024, there were 6,763,445 shares remaining for future repurchases. The number of shares we repurchase, if any, during future periods will vary based on our cash position, other potential uses of our cash, and market conditions. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. We may seek to retire or purchase our outstanding Senior Notes through open market cash purchases, privately negotiated transactions, or otherwise.

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 thereafter. We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed.

As of December 31, 2024, we were in compliance with all of the covenants under our debt agreements.

CRITICAL ACCOUNTING ESTIMATES

Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 1, Summary of Significant Accounting Policies, of the Notes to the Consolidated Financial Statements, included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K. We consider the following items in our consolidated financial statements to require significant estimation or judgment.

REVENUE RECOGNITION. At contract inception, we assess the goods and services promised in our contracts with customers and identify our performance obligations to provide distinct goods and services to our customers. Our transportation and logistics service arrangements often require management to use judgment and make estimates that impact the amounts and timing of revenue recognition.

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Transportation and Logistics Services. As a global logistics provider, our primary performance obligation under our customer contracts is to utilize our relationships with a wide variety of transportation companies to efficiently and cost-effectively transport our customers’ freight. Revenue is recognized for these performance obligations as they are satisfied over the contract term, which generally represents the transit period. The transit period can vary based upon the method of transport; generally, a number of days for over the road, rail, and air transportation, or several weeks in the case of an ocean shipment.

Recognizing revenue for contracts where the transit period is partially complete or completed and not yet invoiced at period end requires management to make judgments that affect the amounts and timing of revenue recognized at period end. As of December 31, 2024, we recorded revenue of $200.3 million for services we have provided while a shipment was still in-transit, but for which we had not yet completed our performance obligation or had not yet invoiced our customer compared to $189.9 million at December 31, 2023. The amount of revenue recognized for contracts where the transit period was partially complete increased as of December 31, 2024, compared to December 31, 2023, driven by the macroeconomic and industry factors impacting the cost of purchased transportation in ocean services. See Item 7 of Part II, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further information.

We utilize our historical knowledge of shipping lanes and estimated transit times to determine the transit period in cases where our customers’ freight has not reached its intended destination. In addition, we analyze contract data for the first few days following the reporting date combined with our historical experience of trends related to partially completed contracts as of the reporting date to determine our right to consideration for the services we have provided where the transit period is partially complete or completed and not yet invoiced at period end. Differences in contract data for the first few days following the reporting date compared with our historical experience or disruptions such as weather events, port congestion, or other delays could cause the actual amount of revenue earned at period end to differ from these estimates.

Total revenues represent the total dollar value of revenue recognized from contracts with customers for the goods and services we provide. Substantially all of our revenue is attributable to contracts with our customers. Most transactions in our transportation and sourcing businesses are recorded at the gross amount we charge our customers for the services we provide and goods we sell. In these transactions, we are primarily responsible for fulfilling the promise to provide the specified good or service to our customer and we have discretion in establishing the price for the specified good or service. Additionally, in our sourcing business, in some cases we take inventory risk before the specified good has been transferred to our customer.

Customs brokerage, managed solutions, freight forwarding, and sourcing managed procurement transactions are recorded at the net amount we charge our customers for the service we provide because many of the factors stated above are not present. See also Note 1, Summary of Significant Accounting Policies, for further information regarding our revenue recognition policies.

GOODWILL. Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible assets and identifiable intangible assets purchased and liabilities assumed.

Goodwill is tested for impairment annually on November 30, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Typically, 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”).

When we perform a Step One Analysis, the fair value of each reporting unit is compared with the carrying amount of the reporting unit, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.

In the Step One Analysis, the fair value of each reporting unit is determined using either a discounted cash flow analysis, the market approach, or a combination of both. Projecting discounted future cash flows requires the use of significant judgement to make significant estimates regarding future revenues and expenses, projected capital expenditures, changes in working capital, and the appropriate discount rate. Use of the market approach consists of comparisons to comparable publicly-traded companies that are similar in size and industry. Actual results may differ from those used in our valuations when a Step One Analysis is performed.

On July 27, 2024, we entered into an agreement to sell our Europe Surface Transportation business. The sale included the assets and liabilities of the Europe Surface Transportation business other than its proprietary technology platform (the “disposal group”). As a result of the divestiture, the Europe Surface Transportation disposal group was classified as held for sale as of December 31, 2024. We have tested the goodwill of the Europe Surface Transportation reporting unit as of December 31, 2024, by performing Step One Analysis, before measuring the fair value of the disposal group to be presented as held for sale. We determined that the $28.6 million goodwill balance was not impaired.

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Our Europe Surface Transportation Step One Analysis was completed using a combination of the market approach and a discounted cash flow analysis. The market approach was completed to determine the fair value of the Europe Surface Transportation business, excluding its proprietary technology platform, and was equal to the agreed-upon sale price of the business. As the sale does not include a technology platform necessary to run the business, a discounted cash flow analysis was completed to determine the fair value of the Europe Surface Transportation proprietary technology platform. The computed fair value of the reporting unit exceeded its carrying value. As noted in Note 15, Divestitures, the sale of the Europe Surface Transportation disposal group was completed in February 2025.

As part of our annual Step Zero Analysis performed in 2024 for all other reporting units, there were no factors identified suggesting that it was more likely than not that the fair value was less than their respective carrying value. As such, a Step One Analysis was not completed for any other reporting units and no impairments have been recorded in any period presented in the financial statements.

INCOME TAX RESERVES. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We establish reserves when, despite our belief that our tax return positions are fully supportable, we believe that certain positions are likely to be challenged, and we may or may not prevail in full or in part. Under U.S. GAAP, if we determine a tax position, more likely than not, will be sustained upon audit based solely on the technical merits of the position, we recognize the benefit. We measure the benefit by determining the amount that is greater than 50 percent likely of being realized upon resolution. We presume all tax positions will be examined by a taxing authority with full knowledge of all relevant information.

We regularly monitor our tax positions and tax liabilities. We reevaluate the technical merits of our tax positions and recognize an uncertain tax benefit, or derecognize a previously recorded tax benefit, when there is (i) a completion of a tax audit, (ii) effective settlement of an issue, (iii) litigation of the issue, including appeals, (iv) a change in applicable tax law including a tax case or legislative guidance, or (v) the expiration of the applicable statute of limitations. Significant judgment is required in accounting for income tax reserves. Although we believe we have adequately provided for liabilities resulting from tax assessments by taxing authorities, positions taken by these tax authorities could have a material impact on our effective tax rate, consolidated earnings, financial position, and/or cash flows. Uncertain income tax positions are included in “Accrued income taxes” or “Noncurrent income taxes payable” in the consolidated balance sheets.

DISCLOSURES ABOUT CONTRACTUAL OBLIGATIONS AND COMMERCIAL CONTINGENCIES

The following table aggregates all contractual commitments and commercial obligations, due by period, which affect our financial condition and liquidity position as of December 31, 2024 (dollars in thousands):

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(1)Amounts payable relate to the semi-annual interest due on the senior and long-term notes and the principal amount at maturity.

(2) We maintain operating leases for office space, warehouses, office equipment, and trailers. See Note 10, Leases, for further information.

(3) Purchase obligations include agreements for services that are enforceable and legally binding and that specify all significant terms. As of December 31, 2024, such obligations primarily include ocean and air freight capacity, telecommunications services, third-party software contracts, maintenance contracts, and information technology related capacity. In some instances, our contractual commitments may be usage based or require estimates as to the timing of cash settlement.

We have no financing lease obligations. Long-term liabilities consist primarily of noncurrent taxes payable and long-term notes payable. Due to the uncertainty with respect to the amounts or timing of future cash flows associated with our unrecognized tax benefits as of December 31, 2024, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective taxing authority. Therefore, $23.5 million of unrecognized tax benefits have been excluded from the contractual obligations table above. See Note 5, Income Taxes, to the consolidated financial statements for a discussion on income taxes. As of December 31, 2024, we do not have significant off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the largest global logistics companies in the world, with consolidated total revenues of $17.6 billion in 2023. 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 profit. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profit, which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands):

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MARKET TRENDS

The North America surface transportation market continues to experience weak freight demand combined with excess carrier capacity, which is resulting in an oversupplied and very competitive market. These conditions are typically referred to as a soft market and have existed throughout most of 2023 with transportation rates at, or near, the estimated cost to operate a truck. This compared to historically elevated transportation rates in the first half of 2022 before global demand began to slow and market conditions began to soften in the middle 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. Average routing guide depth has remained low throughout 2023 and finished the year at 1.2, representing that on average, the first carrier in a shipper's routing guide was executing the shipment in most cases. Average routing guide depth started at 1.7 in 2022 before the softening market conditions resulted in a decline to 1.2 at the end of 2022 and holding at those levels throughout 2023.

Similar to the North America surface transportation market, the global forwarding market was soft throughout 2023 as ocean vessel capacity has continued to expand relative to demand. These softening market conditions began in the middle of 2022 and continued throughout 2023. New vessel deliveries are expected to continue in the near term and further increase capacity in the industry and put downward pressure on ocean freight rates into the coming year. Partially offsetting these factors are global disruptions, which are impacting the capacity market and resulting in transit interruptions and vessel reroutings. These are expected to strain capacity in the coming year and result in elevated pricing, although the timeline to resolve these disruptions remains unclear. There continues to be more than sufficient air freight capacity in the market, which has kept air freight rates suppressed throughout 2023.

BUSINESS TRENDS

Our 2023 surface transportation results were largely consistent with the trends discussed in the market trends section. The weak freight demand and excess carrier capacity in the market has resulted in most shipments moving under committed pricing agreements and suppressed freight rates on the limited number of shipments reaching the spot market. This resulted in declines in both our total revenues and adjusted gross profits in 2023. This compared to the prior year where surface transportation rates were declining from historically elevated levels, which benefited our results in 2022 as periods where the cost of transportation declines often results in improved adjusted gross profits per shipment in our portfolio. Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 18.5 percent during 2023. Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 21.0 percent during 2023.

Our 2023 Global Forwarding results were largely consistent with the trends discussed above in the market trends section. We experienced a decline in both total revenues and adjusted gross profits in our ocean and air freight businesses in 2023 compared to the prior year. These declines were largely driven by the weak global demand and the excess ocean vessel capacity in the market during 2023. The prior year benefited from elevated demand and higher transportation rates in the first half of 2022 before they began to rapidly decline in the second half of 2022 and into 2023. Our total ocean freight volumes decreased 5.0 percent while our air freight tonnage decreased 6.5 percent in 2023.

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SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

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

•Total revenues decreased 28.7 percent to $17.6 billion, primarily driven by lower pricing in our ocean and truckload services.

•Gross profits decreased 27.9 percent to $2.6 billion. Adjusted gross profits decreased 27.5 percent to $2.6 billion, primarily driven by lower adjusted gross profits per transaction in truckload and ocean services.

•Personnel expenses decreased 14.9 percent to $1.5 billion, primarily due to cost optimization efforts and lower variable compensation. Average employee headcount decreased 8.9 percent.

•Other selling, general, and administrative (“SG&A”) expenses increased 3.5 percent to $624.3 million, primarily due to a $25.3 million gain on the sale-leaseback of our Kansas City regional center recorded in the prior year, partially offset by decreased purchased and contracted services in the current year.

•Income from operations totaled $514.6 million, down 59.4 percent from last year, due to a decline in adjusted gross profits, partially offset by the decline in operating expenses. Adjusted operating margin of 19.8 percent decreased 1,550 basis points.

•Interest and other expenses, net totaled $105.4 million, which primarily consisted of $90.2 million of interest expense, which increased $13.1 million versus last year due to higher average variable interest rates. The current year results also included a $24.4 million net loss from foreign currency revaluation and realized foreign currency gains and losses.

•The effective tax rate for 2023 was 20.5 percent compared to 19.4 percent in 2022. The higher rate in 2023 was due primarily due to the higher tax rate on foreign earnings and the impact of the Section 199 domestic production activities settlement, partially offset by the tax impact of foreign tax credits.

•Net income totaled $325.1 million, down 65.4 percent from a year ago. Diluted earnings per share decreased 63.2 percent to $2.72.

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CONSOLIDATED RESULTS OF OPERATIONS

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

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

The following discussion and analysis of our Results of Operations and Liquidity and Capital Resources includes a comparison of the twelve months ended December 31, 2023, to the twelve months ended December 31, 2022. A similar discussion and analysis that compares the twelve months ended December 31, 2022, to the twelve months ended December 31, 2021, can be found in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our 2022 Annual Report on Form 10-K filed with the SEC on February 17, 2023.

A reconciliation of our reportable segments to our consolidated results can be found in Note 9, Segment Reporting, in Part II, Financial Information of this Annual Report on Form 10-K.

Consolidated Results of Operations—Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022

Total revenues and direct costs. Total transportation revenues and direct costs decreased driven by lower pricing and freight costs in nearly all service lines, most notably ocean and truckload services. In addition, volume declined in nearly all transportation services compared to the prior year. Transportation rates have declined from the prior year driven by the weak freight demand combined with excess carrier capacity experienced throughout most of 2023 in both the surface transportation and global forwarding markets. Transportation rates remained historically elevated for the first half of 2022 before global demand began to slow and market conditions began to soften in the middle of 2022 and continued throughout 2023. Our sourcing total revenue and direct costs increased, driven by an increase in case volume with foodservice and retail customers.

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Gross profits and adjusted gross profits. Our transportation adjusted gross profits decreased due to lower adjusted gross profits per transaction in truckload and ocean services, in addition to decreased volumes in nearly all service lines. The lower adjusted gross profits per transaction was driven by the weak freight demand and excess capacity in the surface transportation and global forwarding markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the twelve months ended December 31, 2023. Our prior year surface transportation adjusted gross profits per transaction benefited from market conditions beginning to soften, resulting in the declining cost of purchased transportation relative to our contractual rates negotiated in prior quarters. Similarly, freight demand and transportation rates remained historically elevated in the first half of 2022 in the global forwarding market until they began to rapidly decline in the second half of 2022 and into 2023. Sourcing adjusted gross profits increased, driven by integrated supply chain solutions for foodservice and wholesale customers as well as increased pricing and volume in the retail industry.

Operating expenses. Personnel expenses decreased primarily due to cost optimization efforts including lower average employee headcount in addition to lower variable compensation decreased reflecting the decline in results relative to the prior year. Other SG&A expenses increased primarily due to a $23.5 million gain on the sale-leaseback of a facility in Kansas City in the prior year. This increase was partially offset by decreased purchased and contracted services, including temporary labor in 2023.

Operating expenses in 2023 also included $18.4 million of severance and related expenses primarily related to our 2022 Restructuring Program and $19.6 million of other SG&A expenses related to exit and disposal costs including asset impairments from our South American Restructuring Program. Operating expenses in 2022 included $21.5 million of severance and related expenses and $15.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software from our 2022 Restructuring Program. Refer to Note 15, Restructuring, in this report for further discussion related to our 2022 Restructuring and South American Restructuring Programs.

Interest and other income/expense, net. Interest and other expense of $105.4 million, primarily consisted of $90.2 million of interest expense, which increased $13.1 million compared to the prior year due to a higher average variable interest rates compared to the prior year. The current year also included a $24.4 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses driven by a $16.4 million foreign currency loss related to the devaluation of the Argentine Peso. The prior year included a $23.5 million unfavorable impact of foreign currency revaluation and realized foreign currency gains and losses driven primarily by balances denominated in U.S. Dollars, including intercompany balances, in regions where the U.S. Dollar is not the functional currency and a $9.3 million foreign currency loss related to the devaluation of the Argentine Peso.

Provision for income taxes. Our effective income tax rate was 20.5 percent in 2023 and 19.4 percent in 2022. The effective income tax rate for the twelve months ended December 31, 2023 was lower than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits, U.S. tax credits and incentives, and the tax impact of share-based payment awards, which reduced the effective tax rate by 9.5 percentage points, 3.4 percentage points, and 2.2 percentage points, respectively. These impacts were partially offset by a higher tax rate on foreign earnings and the impact of the Section 199 domestic production activities settlement, which increased the effective tax rate by 6.7 percentage points and 4.7 percentage points, respectively. The effective income tax rate for the twelve months ended December 31, 2022, was lower than the statutory federal income tax rate primarily due to the tax benefit from U.S. tax credits and incentives, foreign tax credits, and the tax impact of share-based payment awards, which reduced the effective tax rate by 2.0 percentage points, 1.2 percentage points, and 1.1 percentage points, respectively. These impacts were partially offset by state income taxes, net of federal benefits, which increased the effective tax rate by 2.1 percentage points.

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NAST Segment Results of Operations

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

Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022

Total revenues and direct costs. NAST total revenues and direct costs decreased driven by lower pricing and freight costs in truckload and LTL services compared to the prior year in addition to volume declines in both services. Transportation rates have declined from the prior year driven by weak freight demand resulting in declining volume combined with the excess carrier capacity experienced throughout most of 2023 in the surface transportation market. Transportation rates remained historically elevated for the first half of 2022 before global demand began to slow and market conditions began to soften in the middle of 2022, which continued throughout 2023.

Gross profits and adjusted gross profits. NAST adjusted gross profits decreased due to lower adjusted gross profits per transaction in truckload services and, to a lesser extent, LTL services. Volumes also declined in both services. The lower adjusted gross profits per transaction was driven by the weak freight demand and excess capacity in the surface transportation markets discussed in the market trends and business trends sections above, which have suppressed freight rates in the twelve months ended December 31, 2023. NAST adjusted gross profits per transaction in the twelve months ended December 31, 2022, benefited from market conditions beginning to soften, resulting in the declining cost of purchased transportation relative to our previously negotiated contractual rates. Our average truckload linehaul rate per mile charged to our customers decreased approximately 21.0 percent. Our truckload transportation costs, excluding fuel surcharges, decreased approximately 18.5 percent.

Operating expenses. NAST personnel expenses decreased primarily due to cost optimization efforts, including lower average employee headcount, in addition to decreased variable compensation, reflecting the decline in results relative to the prior year. NAST SG&A expenses decreased primarily due to lower allocated corporate expenses and the impact of elevated legal settlements included in the prior year.

NAST operating expenses also included $1.1 million and $6.3 million of severance and related expenses from our 2022 Restructuring Program in the twelve months ended December 31, 2023 and 2022, respectively. The twelve months ended December 31, 2022, also included $3.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized

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internal developed software from our 2022 Restructuring Program. Refer to Note 15, Restructuring, for further discussion related to our 2022 Restructuring Program.

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 allocated based upon relevant segment operating metrics.

Global Forwarding Segment Results of Operations

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

Twelve Months Ended December 31, 2023 Compared to Twelve Months Ended December 31, 2022

Total revenues and direct costs. Global Forwarding total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in both ocean and air freight and, to a lesser extent, volume declines in both service lines. Transportation rates have declined from the prior year driven by the weak freight demand resulting in declining volume combined with excess carrier capacity experienced throughout most of 2023. In the prior year, freight demand and transportation rates in the global forwarding market remained historically elevated in the first half of 2022 until they began to rapidly decline in the second half of 2022 and into 2023.

Gross profits and adjusted gross profits. Global Forwarding adjusted gross profits decreased due to lower adjusted gross profits per transaction in ocean and air freight services in addition to volume declines in both services. The lower adjusted gross profits per transaction was driven by the weak freight demand and excess carrier capacity in the global forwarding market discussed in the market trends and business trends sections above, which have suppressed freight rates in the twelve months ended December 31, 2023. In the prior year, freight demand and transportation rates remained historically elevated in the first half of 2022, resulting in elevated adjusted gross profits per transaction before they began to decline in the second half of 2022 to the levels experienced for most of the twelve months ended December 31, 2023. Customs adjusted gross profits decreased driven by a decline in transaction volumes.

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Operating expenses. Personnel expenses decreased primarily due to cost optimization efforts, including lower average employee headcount and lower variable compensation, reflecting the decline in results relative to the prior year. Other SG&A expenses increased driven by an increase in restructuring expenses in the current year discussed below, partially offset by lower expenditures for purchased and contracted services, including those for temporary labor.

Global Forwarding personnel expenses in the twelve months ended December 31, 2023, also included $3.8 million of severance and related expenses from our 2022 Restructuring and South American Restructuring Programs. The twelve months ended December 31, 2023, included $18.2 million of other SG&A expenses primarily related to losses on disposal and exit activities, including asset impairments from our South American Restructuring Program. The twelve months ended December 31, 2022, included $3.8 million of severance and related expenses and $3.2 million of other SG&A expenses, primarily due to the impairment of certain capitalized internally developed software projects related to our 2022 Restructuring Program. Refer to Note 15, Restructuring, for further discussion related to our 2022 Restructuring and our South American Restructuring Programs.

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.