Expeditors International of Washington(EXPD) - 2025 Q3 - Quarterly Report

Revenue Performance - Revenues declined 4% due to a significant drop in ocean services, with ocean freight and other services decreasing by 27%[61] - Customs brokerage and other services revenues increased by 13%, while airfreight services revenues grew by 3%[61] - Airfreight services revenues increased by 3% to $1,020,258, while expenses rose by 4% to $766,783 for the three months ended September 30, 2025, compared to the same period in 2024[72] - Ocean freight services revenues decreased by 27% to $746,120, and expenses decreased by 31% to $542,304 for the three months ended September 30, 2025, compared to the same period in 2024[77] - Customs brokerage and other services revenues increased by 13% to $1,128,373, with expenses rising by 11% to $630,570 for the three months ended September 30, 2025, compared to the same period in 2024[84] - Ocean freight consolidation revenues decreased by 35% for the three months ended September 30, 2025, primarily due to a 33% decrease in average sell rates[78] - North Asia ocean freight revenues decreased by 43% for the three months ended September 30, 2025, driven by lower volumes and average rates[79] Operating Income and Earnings - Operating income decreased by 4% and net earnings to shareholders decreased by 3% compared to Q3 2024[61] - Operating income for the three months ended September 30, 2025, was $288,042, a decrease of 4% compared to $301,524 in the same period in 2024[72] - Net earnings attributable to shareholders decreased by 3% to $222,256 for the three months ended September 30, 2025, compared to $229,574 in the same period in 2024[72] - Earnings per share increased by 1% to $1.64, with cash from operating activities rising to $201 million from $90 million in Q3 2024[61] Costs and Expenses - Salaries and related costs increased by 9% to $490,437 for the three months ended September 30, 2025, primarily due to a 7% increase in headcount[88] - Other overhead expenses increased by 14% to $176,615 for the three months ended September 30, 2025, driven by technology-related expenses and higher rental costs[92] Cash Flow and Capital Expenditures - Net cash provided by operating activities for Q3 2025 was $201 million, up from $90 million in Q3 2024, and for the nine months ended September 30, 2025, it was $723 million compared to $474 million in the same period in 2024, reflecting an increase of $111 million and $249 million respectively due to changes in working capital[99] - Cash used in investing activities for Q3 2025 was $10 million, compared to $13 million in Q3 2024, and for the nine months ended September 30, 2025, it was $39 million versus $30 million in the same period in 2024, primarily for capital expenditures[103] - Cash used in financing activities during Q3 2025 was $150 million, compared to $76 million in Q3 2024, and for the nine months ended September 30, 2025, it was $655 million versus $659 million in the same period in 2024[104] - Total anticipated capital expenditures for 2025 are estimated to be approximately $60 million, including routine capital expenditures, leasehold and building improvements, and investments in technology[103] Tax and Currency Impact - The effective income tax rate decreased to 25.2% for the three months ended September 30, 2025, compared to 26.4% in the same period in 2024[94] - An average 10% weakening of the U.S. dollar would have raised operating income by approximately $46 million for the nine months ended September 30, 2025[113] - Net foreign currency transactional losses for Q3 2025 were approximately $3 million, a decrease from $11 million in Q3 2024, while for the nine months ended September 30, 2025, losses were approximately $20 million compared to gains of less than $1 million in the same period in 2024[114] Trade Environment and Regulatory Changes - The U.S. government has imposed significantly higher tariffs on imports, affecting trade dynamics and creating an unpredictable environment[62] - The termination of the "de minimis" exemption for goods made in China and Hong Kong has added complexity to customs declarations[62] - High demand for customs brokerage services has resulted in increased revenues from customs declaration fees due to a dynamic trade environment[61] - The global economic environment remains uncertain, with inflation, high interest rates, and geopolitical conflicts impacting trade[65] - Seasonal demand trends indicate that the first quarter is typically the weakest, while the third and fourth quarters are the strongest[66] Financial Position - As of September 30, 2025, working capital was $1,627 million, including cash and cash equivalents of $1,190 million, with no long-term obligations or debt other than recorded lease liabilities[99] - At September 30, 2025, borrowings under international unsecured bank lines of credit were $36 million, with contingent liabilities of $80 million from standby letters of credit and guarantees[107] - The company had approximately $132 million of net unsettled intercompany transactions as of September 30, 2025, with the majority resolved within 30 days[114] - The company had fixed lease payment obligations of $724 million as of September 30, 2025, with $143 million payable within 12 months[108]