Expeditors International of Washington(EXPD) - 2024 Q3 - Quarterly Report

Financial Performance - Operating income increased by 40% from the third quarter of 2023 and 35% from the second quarter of 2024[44] - Net earnings to shareholders increased by 34% from the third quarter of 2023 and 31% from the second quarter of 2024[45] - Operating income increased by 40% to $301,524 thousand for the three months ended September 30, 2024, compared to the same period in 2023[51] - Net earnings attributable to shareholders rose by 34% to $229,574 thousand for the three months ended September 30, 2024[51] Revenue Growth - Ocean containers shipped increased by 12% and airfreight tonnage increased by 19% compared to the third quarter of 2023[44] - Airfreight services revenues increased by 36% to $986,950 thousand for the three months ended September 30, 2024, compared to the same period in 2023, driven by a 19% increase in tonnage and higher average sell and buy rates[51][53] - Ocean freight and ocean services revenues surged by 82% to $1,017,618 thousand for the three months ended September 30, 2024, primarily due to a 101% increase in average sell rates and a 12% rise in containers shipped[51][54] - Customs brokerage and other services revenues grew by 10% to $995,563 thousand for the three months ended September 30, 2024, mainly due to higher shipment volumes in North America[51][56] - Ocean freight consolidation revenues increased by 125% for the three months ended September 30, 2024, due to a 101% rise in average sell rates and a 12% increase in containers shipped[54] - North Asia and South Asia ocean freight and ocean services revenues increased by 135% and 164%, respectively, for the three months ended September 30, 2024[54] Cash Flow and Capital Management - Cash from operations was $90 million, down from $190 million in the third quarter of 2023, due to significant investment in working capital[45] - The company returned $140 million to shareholders through common stock repurchases[45] - Net cash provided by operating activities for the three and nine months ended September 30, 2024 was $90 million and $474 million, respectively, compared to $190 million and $895 million in the same periods in 2023[64] - Working capital at September 30, 2024 was $1,707 million, including cash and cash equivalents of $1,293 million[64] - Cash used in investing activities for the three and nine months ended September 30, 2024 was $13 million and $30 million, respectively, primarily for capital expenditures[64] - Cash used in financing activities during the three and nine months ended September 30, 2024 was $659 million and $1,247 million, respectively, primarily for repurchasing common stock[64] - Cash and cash equivalents at September 30, 2024 were $1,293 million, with $614 million invested at short-term market interest rates[68] Market and Demand Trends - Strong demand for ocean transportation led to higher volumes and sharp increases in average buy and sell rates[44] - Demand for airfreight out of Asia remained high due to capacity constraints and e-commerce business demand[44] - Historical seasonal demand trends show the first quarter as the weakest and the third and fourth quarters as the strongest[47] - The company's revenues are significantly impacted by consumer demand, trade tariffs, and supply chain disruptions[47] - Airfreight services tonnage increased by 19% for the three months ended September 30, 2024, driven by higher demand in healthcare and technology sectors[53] Operational Costs and Expenses - Salaries and related costs increased by 9% to $450,308 thousand for the three months ended September 30, 2024, due to higher commissions and bonuses[57] - The consolidated effective income tax rate was 26.4% for both the three and nine months ended September 30, 2024[59] Foreign Currency Impact - Net foreign currency losses for the three months ended September 30, 2024 were approximately $11 million, compared to less than $1 million in the same period in 2023[60] - Net foreign currency gains for the nine months ended September 30, 2024 were less than $1 million, compared to net losses of approximately $6 million in the same period in 2023[60] - A hypothetical 10% weakening of the U.S. dollar would have increased operating income by approximately $45 million for the nine months ended September 30, 2024[66] Liabilities and Obligations - Borrowings under international unsecured bank lines of credit at September 30, 2024 were $48 million, with $87 million in contingent liabilities from standby letters of credit and guarantees[65] - Fixed lease payment obligations at September 30, 2024 totaled $699 million, with $141 million payable within 12 months[65] Global Operations and Risks - The company operates in over 60 countries and is influenced by global economic and political conditions, including tariffs and trade restrictions[46]