Expeditors International Of Washington Inc 10-Q for FY2024 Q2
Expeditors International Of Washington Inc (EXPD)
About this 10-Q
Expeditors International Of Washington Inc filed this 10-Q on August 8, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).
Headline figures
Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.44B
- up 8.9% from $2.24B a year earlier
- Net income
- $175.47M
- down 10.8% from net income of $196.8M a year earlier
- Diluted EPS
- $1.24
- down 4.6% from $1.30 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification Number) |
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(Address of principal executive offices) |
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(Registrant’s telephone number, including area code): (
Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
At August 5, 2024, the number of shares outstanding of the issuer’s common stock was
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
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June 30, |
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December 31, |
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Assets: |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowance for credit loss of |
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Deferred contract costs |
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Other |
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Total current assets |
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Property and equipment, less accumulated depreciation and amortization |
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Operating lease right-of-use assets |
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Goodwill |
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Deferred federal and state income taxes, net |
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Other assets, net |
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Total assets |
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$ |
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$ |
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Liabilities: |
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Current Liabilities: |
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Accounts payable |
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Accrued liabilities, primarily salaries and related costs |
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Contract liabilities |
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Current portion of operating lease liabilities |
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Federal, state and foreign income taxes |
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Total current liabilities |
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Noncurrent portion of operating lease liabilities |
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Shareholders’ Equity: |
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Preferred stock, |
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Common stock, par value $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total shareholders’ equity |
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Noncontrolling interest |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
2
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)
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Three months ended June 30, |
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Six months ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenues: |
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Airfreight services |
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$ |
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$ |
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$ |
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$ |
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Ocean freight and ocean services |
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Customs brokerage and other services |
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Total revenues |
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Operating Expenses: |
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Airfreight services |
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Ocean freight and ocean services |
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Customs brokerage and other services |
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Salaries and related |
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Rent and occupancy |
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Depreciation and amortization |
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Selling and promotion |
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Other |
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Total operating expenses |
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Operating income |
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Other Income (Expense): |
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Interest income |
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Other, net |
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Other income, net |
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Earnings before income taxes |
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Income tax expense |
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Net earnings |
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Less net (losses) earnings attributable to the noncontrolling interest |
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Net earnings attributable to shareholders |
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$ |
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$ |
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$ |
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$ |
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Diluted earnings attributable to shareholders per share |
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$ |
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$ |
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$ |
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$ |
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Basic earnings attributable to shareholders per share |
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$ |
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$ |
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$ |
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$ |
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Weighted average diluted shares outstanding |
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Weighted average basic shares outstanding |
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See accompanying notes to condensed consolidated financial statements.
3
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
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Three months ended June 30, |
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Six months ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net earnings |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive (loss) income, net of tax: |
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Foreign currency translation adjustments, net of income tax expense (benefit) of $ |
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Other comprehensive (loss) income |
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Comprehensive income |
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Less comprehensive (loss) income attributable to the noncontrolling interest |
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Comprehensive income attributable to shareholders |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
4
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three months ended June 30, |
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Six months ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Operating Activities: |
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Net earnings |
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$ |
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$ |
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$ |
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Adjustments to reconcile net earnings to net cash from |
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Provisions for losses (recoveries) on accounts receivable |
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Deferred income tax benefit |
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Stock compensation expense |
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Depreciation and amortization |
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Other, net |
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Changes in operating assets and liabilities: |
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(Increase) decrease in accounts receivable |
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Increase (decrease) in accounts payable and accrued liabilities |
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( |
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(Increase) decrease in deferred contract costs |
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( |
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Increase (decrease) in contract liabilities |
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( |
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( |
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Decrease in income taxes payable, net |
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( |
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( |
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Increase in other, net |
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Net cash from operating activities |
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Investing Activities: |
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Purchase of property and equipment |
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Other, net |
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Net cash from investing activities |
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( |
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( |
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( |
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Financing Activities: |
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Proceeds from borrowings on lines of credit |
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Payments on borrowings on lines of credit |
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( |
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Proceeds from issuance of common stock |
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Repurchases of common stock |
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Dividends paid |
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( |
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( |
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Payments for taxes related to net share settlement of equity |
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( |
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( |
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Net cash from financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Change in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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$ |
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$ |
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Taxes Paid: |
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Income taxes |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
5
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Equity
(In thousands)
(Unaudited)
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Three months ended June 30, |
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Six months ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Total Shareholders' Equity, Beginning of Period |
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$ |
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$ |
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$ |
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$ |
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Common Stock Par Value |
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Beginning of period |
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Shares issued under employee stock plans, net |
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Shares repurchased under provisions of stock |
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End of period |
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Additional Paid-In Capital |
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Beginning of period |
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Shares issued under employee stock plans, net |
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( |
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( |
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( |
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Shares repurchased under provisions of stock |
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( |
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( |
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( |
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Stock compensation expense |
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Dividend equivalents paid |
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End of period |
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Retained Earnings |
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Beginning of period |
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Shares repurchased under provisions of stock |
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( |
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Net earnings |
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Dividend and dividend equivalents paid |
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( |
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( |
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End of period |
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Accumulated Other Comprehensive Loss |
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Beginning of period |
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Other comprehensive income (loss) |
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( |
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( |
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End of period |
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( |
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( |
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( |
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Total Shareholders' Equity |
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End of period |
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Noncontrolling Interest |
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Beginning of period |
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Net (losses) earnings |
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Other comprehensive income (loss) |
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End of period |
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Total Equity |
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End of period |
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$ |
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$ |
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$ |
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$ |
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Common Shares Outstanding |
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Beginning of period |
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Shares issued under employee stock plans, net |
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Shares repurchased under provisions of stock |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
End of period |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See accompanying notes to condensed consolidated financial statements.
6
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(In thousands, except per share data)
(Unaudited)
Note 1. Summary of Significant Accounting Policies
Expeditors International of Washington, Inc. (the Company) is a non-asset based provider of global logistics services operating through a worldwide network of offices and exclusive or non-exclusive agents. The Company’s customers include retailing and wholesaling, electronics, high technology, industrial and manufacturing companies around the world.
The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Form 10-K as filed with the Securities and Exchange Commission on February 23, 2024.
All significant intercompany accounts and transactions have been eliminated in consolidation. All dollar amounts in the notes are presented in thousands except for per share data or unless otherwise specified. Certain prior year amounts have been reclassified to conform to the current year presentation of other income (expense) in the condensed consolidated statement of earnings.
The Company derives its revenues by entering into agreements that are generally comprised of a single performance obligation, which is that freight is shipped for and received by the customer. Each performance obligation is comprised of one or more of the Company’s services. The Company's three principal services are the revenue categories presented in the condensed consolidated statements of earnings: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services.
The Company typically satisfies its performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one to two month-period and contracts with customers have an original expected duration of less than one year. The Company satisfied nearly all performance obligations for the contract liabilities recorded as of March 31, 2024.
The Company evaluates whether amounts billed to customers should be reported as revenues on a gross or net basis. Generally, revenue is recorded on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the services, when it assumes the risk of loss, when it has discretion in setting the prices for the services to the customers, and when the Company has the ability to direct the use of the services provided by the third party. When revenue is recorded on a net basis, the amounts earned are determined using a fixed fee, a per unit of activity fee or a combination thereof. For revenues earned in other capacities, for instance, when the Company does not issue a House Airway Bill (HAWB), a House Ocean Bill of Lading (HOBL) or a House Sea Waybill or otherwise act solely as an agent for the shipper, only the commissions and fees earned for such services are included in revenues. In these transactions, the Company is not a principal and reports only the commissions and fees earned in revenues.
7
The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. All ROU assets and lease liabilities are recognized at the commencement date at the present value of lease payments over the lease term. ROU assets are adjusted for lease incentives and initial direct costs. The lease term includes renewal options exercisable at the Company's sole discretion when the Company is reasonably certain to exercise that option. As the Company's leases generally do not have an implicit rate, the Company uses an estimated incremental borrowing rate based on market information available at the commencement date to determine the present value. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. The Company excludes variable payments from ROU assets and lease liabilities to the extent not considered fixed, and instead expenses variable payments as incurred. Lease expense is recognized on a straight-line basis over the lease term and is included in rent and occupancy expenses in the condensed consolidated statement of earnings.
Additionally, the Company elected to apply the short-term lease exemption for leases with a non-cancelable period of twelve months or less and has chosen not to separate non-lease components from lease components and instead to account for each as a single lease component.
The Company’s trade accounts receivable present similar credit risk characteristics and the allowance for credit loss is estimated on a collective basis, using a credit loss-rate method that uses historical credit loss information and considers the current economic environment. Additional allowances may be necessary in the future if changes in economic conditions are significant enough to affect expected credit losses. The Company has recorded an allowance for credit loss in the amounts of $
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The Company uses estimates primarily in the following areas: accounts receivable valuation, accrual of costs related to ancillary services the Company performs, typically at the destination location, self-insured liabilities, accrual of various tax liabilities and accrual of loss contingencies, calculation of share-based compensation expense and estimates related to determining the lease term and discount rate when measuring ROU assets and lease liabilities.
F. Recent Accounting Pronouncements
Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (FASB) issued an Accounting Standard Update (ASU) which makes improvements to reportable segment disclosures, by requiring, among other things, the disclosure in interim periods about a reportable segment’s profit or loss and assets that are currently required annually, and disclosures of significant segment expenses and profit and loss measures provided to the chief operating decision maker. The ASU does not change how the Company identifies its operating segments. The Company expects to adopt this standard in its 2024 annual report on Form 10-K and for interim periods starting on January 1, 2025, including retrospective presentation to all prior periods presented in the financial statements. The Company is currently evaluating the impact of this ASU on its segment disclosures and expects no impact on its consolidated financial statements, cash flows and financial condition.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued an ASU which expands income tax disclosures by requiring the disclosure, on an annual basis, of a tabular rate reconciliation using both percentages and currency amounts, broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, disclosure is required of income taxes paid, net of refunds received, disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. This standard will become effective for the Company on January 1, 2025. The Company may apply this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods or may apply the amendments retrospectively by providing the revised disclosures for all periods presented. The Company expects this ASU to only impact its disclosures with no impacts to its consolidated financial statements, cash flows and financial condition.
8
Note 2. Share-Based Compensation
The Company has historically granted the majority of its share-based awards during the second quarter of each fiscal year.
In the second quarter of 2024 and 2023, the Company awarded
The Company also awarded
The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are made in the third quarter of each fiscal year.
The Company recognizes stock compensation expense based on the fair value of awards granted to employees and directors under the Company’s Amended and Restated 2017 Omnibus Plan and employee stock purchase rights plans. This expense, adjusted for expected performance and forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related costs on the condensed consolidated statements of earnings. Restricted stock units (RSUs) and performance share units (PSUs) awarded to certain employees meeting specific retirement eligibility criteria at the time of grant are expensed immediately as there is no substantive service period associated with those awards.
Note 3. Income Taxes
U.S. corporate income tax laws and regulations include a territorial tax framework and provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries, Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies as well as U.S. income tax deductions for Foreign-derived intangible income (FDII). The Company treats GILTI as a discrete adjustment as a component of current income tax expense. Earnings of the Company's foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.
The Company is subject to taxation in various states and many foreign jurisdictions including the People’s Republic of China, including Hong Kong, Taiwan, Vietnam, India, Mexico, Brazil, Canada, Netherlands and the United Kingdom. The Company believes that its tax positions, including intercompany transfer pricing policies, are reasonable and consistent with established transfer pricing methodologies and norms. The Company is under, or may be subject to, audit or examination and assessments by the relevant authorities in respect to these and any other jurisdictions primarily for years 2009 and thereafter. Sometimes audits result in proposed assessments where the ultimate resolution could result in significant additional tax, penalties and interest payments being required. The Company establishes liabilities when, despite its belief that the tax filing positions are appropriate and consistent with tax law, it concludes that it may not be successful in realizing the tax position. In evaluating a tax position, the Company determines whether it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and in consultation with qualified legal and tax advisors.
9
The total amount of the Company’s tax contingencies may increase in 2024. In addition, changes in state, federal, and foreign tax laws, including transfer pricing and changes in interpretations of these laws, may increase the Company’s existing tax contingencies. The timing of the resolution of income tax examinations can be highly uncertain, and the amounts ultimately paid including interest and penalties, if any, upon resolution of the issues raised by the taxing authorities may differ from the amounts recorded. It is reasonably possible that within the next twelve months the Company or its subsidiaries will undergo further audits and examinations by various tax authorities and possibly may reach resolution related to income tax and indirect tax examinations in one or more jurisdictions. These assessments or settlements could result in changes to the Company’s contingencies related to positions on tax filings in future years. The estimate of any ultimate tax liability contains assumptions based on experiences, judgments about potential actions by taxing jurisdictions as well as judgments about the likely outcome of issues that have been raised by the taxing jurisdiction. The Company cannot currently provide an estimate of the range of possible outcomes.
The Company recognizes interest expense related to unrecognized tax benefits or underpayment of income taxes in interest expense and recognizes penalties in operating expenses.
The Company’s consolidated effective income tax rate was
10
Note 4. Basic and Diluted Earnings per Share
Diluted earnings attributable to shareholders per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential shares represent outstanding stock options, including purchase options under the Company's employee stock purchase plan, and unvested restricted stock units. Basic earnings attributable to shareholders per share is calculated using the weighted average number of common shares outstanding without taking into consideration dilutive potential common shares outstanding.
The following table reconciles the numerator and the denominator of the basic and diluted per share computations for earnings attributable to shareholders:
|
|
Three months ended June 30, |
|
|||||||||
|
|
Net earnings |
|
|
Weighted |
|
|
Earnings per |
|
|||
2024 |
|
|
|
|
|
|
|
|
|
|||
Basic earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Effect of dilutive potential common shares |
|
|
— |
|
|
|
|
|
|
— |
|
|
Diluted earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
2023 |
|
|
|
|
|
|
|
|
|
|||
Basic earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Effect of dilutive potential common shares |
|
|
— |
|
|
|
|
|
|
— |
|
|
Diluted earnings attributable to shareholders |
|
|
|
|
|
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
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|||
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|
|
|||
|
|
Six months ended June 30, |
|
|||||||||
|
|
Net earnings |
|
|
Weighted |
|
|
Earnings per |
|
|||
2024 |
|
|
|
|
|
|
|
|
|
|||
Basic earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Effect of dilutive potential common shares |
|
|
— |
|
|
|
|
|
|
— |
|
|
Diluted earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
2023 |
|
|
|
|
|
|
|
|
|
|||
Basic earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Effect of dilutive potential common shares |
|
|
— |
|
|
|
|
|
|
— |
|
|
Diluted earnings attributable to shareholders |
|
$ |
|
|
|
|
|
$ |
|
|||
Substantially all outstanding potential common shares as of June 30, 2024 and 2023 were dilutive.
11
Note 5. Shareholders' Equity
The Company has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding common stock. The Board of Directors last amended the plan on February 19, 2024 to authorize repurchases down from
Accumulated other comprehensive loss consisted entirely of foreign currency translation adjustments, net of related income tax effects, for all the periods presented.
On
Note 6. Fair Value of Financial Instruments
The Company’s financial instruments, other than cash, consist primarily of cash equivalents, accounts receivable, accounts payable and accrued expenses. The carrying value of these financial instruments approximates their fair value. All highly liquid investments with a maturity of three months or less at date of purchase are considered to be cash equivalents.
Cash and cash equivalents consist of the following:
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||
|
|
Cost |
|
|
Fair Value |
|
|
Cost |
|
|
Fair Value |
|
||||
Cash and Cash Equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and overnight deposits |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Corporate commercial paper |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Time deposits and money market funds |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The fair value of corporate commercial paper and time deposits is based on the use of market interest rates for identical or similar assets (Level 2 fair value measurement).
Note 7. Contingencies
The Company is involved in claims, lawsuits, government investigations, income and indirect tax audits and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal and tax advisors, none of these matters are expected to have a material effect on the Company's operations, cash flows or financial position. The changes in the amounts recorded for claims, lawsuits, government investigations and other legal matters are not significant to the Company's operations, cash flows or financial position. At this time, the Company is unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters.
12
Note 8. Business Segment Information
Financial information regarding the Company’s operations by geographic area is as follows:
|
|
UNITED |
|
OTHER |
|
|
LATIN |
|
|
NORTH |
|
|
SOUTH |
|
|
EUROPE |
|
|
MIDDLE |
|
|
ELIMI- |
|
|
CONSOLI- |
|
|||||||||
For the three months ended June 30, 2024: |
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
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|
|||||||||
Revenues |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Directly related cost of transportation |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Salaries and other operating expenses2 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Operating income |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Identifiable assets at period end |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Capital expenditures |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|||||||||
Equity |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
For the three months ended June 30, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenues |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Directly related cost of transportation |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Salaries and other operating expenses2 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Operating income |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||
Identifiable assets at period end |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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( |
) |
|
|
|
||||||||
Capital expenditures |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|||||||||
Equity |
|
$ |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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( |
) |
|
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||||||||
|
|
|
|
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|
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|
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|
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|
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|
|
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|
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|
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|
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|
|||||||||
|
|
UNITED |
|
OTHER |
|
|
LATIN |
|
|
NORTH |
|
|
SOUTH |
|
|
EUROPE |
|
|
MIDDLE |
|
|
ELIMI- |
|
|
CONSOLI- |
|
|||||||||
For the six months ended June 30, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||
Revenues |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Directly related cost of transportation |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Salaries and other operating expenses2 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Operating income |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Identifiable assets at period end |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Capital expenditures |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Equity |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
For the six months ended June 30, 2023: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|||||||||
Revenues |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Directly related cost of transportation |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Salaries and other operating expenses2 |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Operating income |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||
Identifiable assets at period end |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
Capital expenditures |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||||
Equity |
|
$ |
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||||||
1
2
13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Safe Harbor for Forward-Looking Statements Under Private Securities Litigation Reform Act Of 1995; Certain Cautionary Statements
Certain portions of this report on Form 10-Q including the sections entitled "Overview," "Summary of Second Quarter 2024," "Industry Trends, Trade Conditions and Competition," "Seasonality," "Critical Accounting Estimates," "Results of Operations," "Income tax expense," "Currency and Other Risk Factors" and "Liquidity and Capital Resources" contain forward-looking statements. Words such as "will likely result," "expects", "are expected to," "would expect," "would not expect," "will continue," "is anticipated," "estimate," "project," "plan," "believe," "probable," "reasonably possible," "may," "could," "should," "would," "intends," "foreseeable future" or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, any statements that refer to projections of future financial performance, our anticipated growth and trends in the Company's businesses, signs of a slowing economy and drop in demand, future supply chain and transportation disruptions and other characterizations of disruptive events or circumstances are forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties, including risks associated with tax audits and other contingencies, that could cause actual results to differ materially from our historical experience and our present expectations or projections. These statements must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. Attention should be given to the risk factors identified and discussed in Part I, Item 1A in the Company’s annual report on Form 10-K filed on February 23, 2024 and in Part II, Item 1A in this report. Management believes that these forward-looking statements are reasonable as of this filing date and we do not assume any obligations to update these statements except as required by law.
Overview
Expeditors International of Washington, Inc. (herein referred to as "Expeditors," the "Company," "we," "us," "our") provides a full suite of global logistics services. Our services include air and ocean freight consolidation and forwarding, customs brokerage, warehousing and distribution, purchase order management, vendor consolidation, time-definite transportation services, temperature-controlled transit, cargo insurance, specialized cargo monitoring and tracking, and other supply chain solutions. We do not compete for overnight courier or small parcel business. As a non-asset based carrier, we do not own or operate transportation assets.
We derive our revenues by entering into agreements that are generally comprised of a single performance obligation, which is that freight is shipped for and received by our customer. Each performance obligation is comprised of one or more of the Company's services. We typically satisfy our performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. Our three principal services are the revenue categories presented in our financial statements: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services. The most significant drivers of changes in gross revenues and related transportation expenses are volume, sell rates and buy rates. Volume has a similar effect on the change in both gross revenues and related transportation expenses in each of our three primary sources of revenue.
We generate the major portion of our air and ocean freight revenues by purchasing transportation services on a volume basis from direct (asset-based) carriers and then reselling that space to our customers. The rate billed to our customers (the sell rate) is recognized as revenues and the rate we pay to the carrier (the buy rate) is recognized in operating expenses as the directly related cost of transportation and other expenses. By consolidating shipments from multiple customers and concentrating our buying power, we are able to negotiate favorable buy rates from the direct carriers, while at the same time offering lower sell rates than customers would otherwise be able to negotiate themselves.
In most cases, we act as an indirect carrier. When acting as an indirect carrier, we issue a House Airway Bill (HAWB), a House Ocean Bill of Lading (HOBL) or a House Sea Waybill to customers as the contract of carriage. In turn, when the freight is physically tendered to a direct carrier, we receive a contract of carriage known as a Master Airway Bill for airfreight shipments and a Master Ocean Bill of Lading for ocean shipments.
14
Customs brokerage and other services involve providing services at destination, such as helping customers clear shipments through customs by preparing and filing required documentation, calculating, and providing for payment of duties and other taxes on behalf of customers as well as arranging for any required inspections by governmental agencies, and import services such as arranging for local pick up, storage and delivery at destination. These are complicated functions requiring technical knowledge of customs rules and regulations in the multitude of countries in which we have offices. We also provide other value-added services at destination, such as warehousing and distribution, time-definitive transportation services and consulting.
We manage our company along five geographic areas of responsibility: Americas; North Asia; South Asia; Europe; and Middle East, Africa and India (MAIR). Each area is divided into sub-regions that are composed of operating units with individual profit and loss responsibility. Our business involves shipments between operating units and typically touches more than one geographic area. The nature of the international logistics business necessitates a high degree of communication and cooperation among operating units. Because of this inter-relationship between operating units, it is very difficult to examine any one geographic area and draw meaningful conclusions as to its contribution to our overall success on a stand-alone basis.
Our operating units share revenue using the same arms-length pricing methodologies that we use when our offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit margin. Our strategy closely links compensation with operating unit profitability, which includes shared revenues and allocated costs. Therefore, individual success is closely linked to cooperation with other operating units within our network. The mix of services varies by segment based primarily on the import or export orientation of local operations in each of our regions.
Summary of Second Quarter 2024
The significant impacts are discussed within “Results of Operations” and summarized below.
15
Industry Trends, Trade Conditions and Competition
We operate in over 60 countries in the competitive global logistics industry and our activities are closely tied to the global economy. International trade is influenced by many factors, including economic and political conditions in the United States and abroad, currency exchange rates, laws and policies relating to tariffs, trade restrictions, foreign investment and taxation. Periodically, governments consider a variety of changes to tariffs and impose trade restrictions and accords. Currently, the United States and China have increased concerns affecting certain imports and exports and are considering additional tariffs. We cannot predict the outcome of changes in tariffs, or interpretations, and trade restrictions and accords and the effects they will have on our business. As governments implement restrictions on imports and exports, manufacturers may change sourcing patterns, to the extent possible, and, over time, may shift manufacturing to other countries. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being influenced by governmental policies and inter-governmental disputes concerning international trade, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade, oil prices and security costs. We do not have employees, assets, or operations in Russia, Ukraine, Israel, the Gaza Strip or the West Bank. While limited, any shipment activity is conducted with independent agents in those countries in compliance with all applicable trade sanctions, laws and regulations.
Our ability to provide services to our customers is highly dependent on good working relationships with a variety of entities, including airlines, ocean carrier lines and ground transportation providers, as well as governmental agencies. We select and engage with best-in-class, compliance-focused, efficiently run, growth-oriented partners, based upon defined value elements and are intentional in our relationship and performance management activity, reinforcing success by awarding service providers who consistently achieve at the highest levels with additional business. We consider our current working relationships with these entities to be satisfactory. However, changes in the financial stability and operating capabilities and capacity of asset-based carriers, capacity allotments available from carriers, governmental regulation or deregulation efforts, modernization of the regulations governing customs brokerage, and/or changes in governmental restrictions, quota restrictions or trade accords could affect our business in unpredictable ways. When the market experiences seasonal peaks or any sort of disruption, the carriers often increase their pricing suddenly. This carrier behavior creates pricing volatility that could impact Expeditors' ability to maintain historical unitary profitability.
The global economic and trade environments remain uncertain, including inflation remaining higher than historical levels, greater volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. In the second quarter of 2024, we saw capacity constraints on exports out of Asia resulting in increases in average buy and sell rates. However, if demand remains soft, if disruptions in the Red Sea improve, then additional ocean transportation capacity will become available. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to lower demand, changing fuel prices, security risks and react to governmental trade policies and other regulations. Additionally, we cannot predict the direct or indirect impact that further changes in purchasing behavior, such as the evolution of international direct e-commerce platforms, could have on our business. Some customers have begun shifting manufacturing to other countries in response to governments implementing higher tariffs on imports, to reduce their supply chain risks, and in response to pandemic disruptions or geopolitical risks, which could negatively impact us.
Seasonality
Historically, our operating results have been subject to seasonal demand trends with the first quarter being the weakest and the third and fourth quarters being the strongest; however, there is no assurance that this seasonal trend will occur in the future or to what degree it will be impacted by an uncertain economy. This historical pattern has been the result of, or influenced by, numerous factors, including weather patterns, national holidays, consumer demand, new product launches, just-in-time inventory models, economic conditions, pandemics, governmental policies and inter-governmental disputes and a myriad of other similar and subtle forces.
A significant portion of our revenues is derived from customers in the retail and technology industries whose shipping patterns are tied closely to consumer demand, and from customers in industries whose shipping patterns are dependent upon just-in-time production schedules. Therefore, the timing of our revenues is, to a large degree, impacted by factors out of our control, such as a sudden change in consumer demand for retail goods, changes in trade tariffs, product launches, disruptions in supply-chains and/or manufacturing production delays. Additionally, many customers ship a significant portion of their goods at or near the end of a quarter and, therefore, we may not learn of a shortfall in revenues until late in a quarter.
16
To the extent that a shortfall in revenues or earnings was not expected by securities analysts or investors, any such shortfall from levels predicted by securities analysts or investors could have an immediate and adverse effect on the trading price of our stock. We cannot accurately forecast many of these factors, nor can we estimate accurately the relative influence of any particular factor and, as a result, there can be no assurance that historical patterns will continue in future periods.
Critical Accounting Estimates
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments. We base our estimates on historical experience and on assumptions that we believe are reasonable. Our critical accounting estimates are discussed in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our annual report on Form 10-K for the year ended December 31, 2023, filed on February 23, 2024 to the critical accounting estimates previously disclosed in that report.
Results of Operations
The following table shows the revenues, the directly related cost of transportation and other expenses for our principal services and our overhead expenses for the three and six months ended June 30, 2024 and 2023, including the respective percentage changes comparing 2024 and 2023.
The table and the accompanying discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto in this quarterly report.
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||||
(in thousands) |
|
2024 |
|
|
2023 |
|
|
Percentage |
|
2024 |
|
|
2023 |
|
|
Percentage |
||||
Airfreight services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
$ |
860,323 |
|
|
$ |
751,171 |
|
|
15% |
|
$ |
1,619,697 |
|
|
$ |
1,656,074 |
|
|
(2)% |
Expenses |
|
|
645,168 |
|
|
|
525,027 |
|
|
23 |
|
|
1,182,759 |
|
|
|
1,191,049 |
|
|
(1) |
Ocean freight services and ocean services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
651,675 |
|
|
|
593,801 |
|
|
10 |
|
|
1,222,461 |
|
|
|
1,291,108 |
|
|
(5) |
Expenses |
|
|
478,121 |
|
|
|
405,807 |
|
|
18 |
|
|
892,104 |
|
|
|
889,489 |
|
|
— |
Customs brokerage and other services: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revenues |
|
|
927,003 |
|
|
|
894,780 |
|
|
4 |
|
|
1,803,521 |
|
|
|
1,885,159 |
|
|
(4) |
Expenses |
|
|
516,119 |
|
|
|
488,349 |
|
|
6 |
|
|
997,825 |
|
|
|
1,057,747 |
|
|
(6) |
Overhead expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Salaries and related costs |
|
|
426,431 |
|
|
|
428,558 |
|
|
— |
|
|
839,593 |
|
|
|
878,406 |
|
|
(4) |
Other |
|
|
149,243 |
|
|
|
143,514 |
|
|
4 |
|
|
294,703 |
|
|
|
291,184 |
|
|
1 |
Total overhead expenses |
|
|
575,674 |
|
|
|
572,072 |
|
|
1 |
|
|
1,134,296 |
|
|
|
1,169,590 |
|
|
(3) |
Operating income |
|
|
223,919 |
|
|
|
248,497 |
|
|
(10) |
|
|
438,695 |
|
|
|
524,466 |
|
|
(16) |
Other income, net |
|
|
12,002 |
|
|
|
17,686 |
|
|
(32) |
|
|
30,408 |
|
|
|
42,295 |
|
|
(28) |
Earnings before income taxes |
|
|
235,921 |
|
|
|
266,183 |
|
|
(11) |
|
|
469,103 |
|
|
|
566,761 |
|
|
(17) |
Income tax expense |
|
|
60,770 |
|
|
|
70,390 |
|
|
(14) |
|
|
123,552 |
|
|
|
144,970 |
|
|
(15) |
Net earnings |
|
|
175,151 |
|
|
|
195,793 |
|
|
(11) |
|
|
345,551 |
|
|
|
421,791 |
|
|
(18) |
Less net (losses) earnings attributable to |
|
|
(318 |
) |
|
|
(1,007 |
) |
|
(68) |
|
|
930 |
|
|
|
(1,020 |
) |
|
(191) |
Net earnings attributable to shareholders |
|
$ |
175,469 |
|
|
$ |
196,800 |
|
|
(11)% |
|
$ |
344,621 |
|
|
$ |
422,811 |
|
|
(18)% |
17
Airfreight services:
Airfreight services revenues and expenses increased 15% and 23%, respectively, during the three months ended June 30, 2024, as compared with the same period in 2023, due to 2% and 9% increases in average sell and buy rates, respectively, and a 15% increase in tonnage. Average sell rates increases were outpaced by rapidly increasing buy rates resulting from capacity constraints in Asia.
Airfreight services revenues and expenses decreased 2% and 1%, respectively, during the six months ended June 30, 2024, as compared with the same period in 2023, due to 11% and 9% decreases in average sell and buy rates, respectively, offset by a 10% increase in tonnage. Average sell rates decreased during the six months ended June 30, 2024 as a result of lower buy rates. Buy rates declined from still high rates in the first quarter of 2023 due to residual impacts from supply chain congestion and continued to decline until stabilizing in the fourth quarter of 2023.
Tonnage improved for the three and six months in 2024 as a result of increased market demand compared to a slow first half of 2023 and some transportation shifting in the second quarter of 2024 from ocean shipping due to the conflicts in the Middle East.
Average buy rates increased during the three months ended June 30, 2024 on exports out of North Asia due to high demand from international direct e-commerce. Average buy rates also increased on exports out of South Asia and India as demand for airfreight grew from manufacturing relocations in that region and shippers shifting to airfreight due to longer transits in ocean as a result of the conflicts in the Middle East. Average sell and buy rates decreased during the three months and six months ended June 30, 2024 on exports out of North America and Europe due to excess available capacity over slower demand and still high buy rates in the first quarter of 2023. Tonnage increased in all regions during the three and six months ended June 30, 2024, respectively, with the largest increases coming from exports out of North Asia, South Asia and Europe.
Seasonal changes in demand, impact from disruptions in the ocean market due to security concerns and variable demand for airfreight capacity from e-commerce business cause volatility in average buy rates on certain lanes. Additionally, continued uncertainty in the economy including the impacts of inflation and interest rates could negatively affect demand for airfreight services which could reduce our volumes and average sell rates. These conditions could result in further decreases in our revenues, expenses and operating income. We are unable to predict how these uncertainties and any future disruptions will affect our operations or financial results prospectively.
Ocean freight and ocean services:
Ocean freight consolidation, direct ocean forwarding, and order management are the three basic services that constitute and are collectively referred to as ocean freight and ocean services. Ocean freight and ocean services revenues and expense increased 10% and 18%, respectively, for the three months ended June 30, 2024 as compared with the same periods in 2023. Ocean freight and ocean services revenues decreased 5% while expenses remained flat for the six months ended June 30, 2024 as compared with the same periods in 2023.The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 66% and 68% of ocean freight and ocean services revenue for the six months ended June 30, 2024 and 2023, respectively.
Ocean freight consolidation revenues and expenses increased 13% and 22%, respectively for the three months ended June 30, 2024, as compared with the same period in 2023, primarily due to 16% and 25% increases in average sell and buy rates, respectively, offset by a 3% decline in containers shipped. Average buy rates per container increased due to longer transit times, congestion and capacity issues caused by the disruptions in the Red Sea and outpaced average sell rates increases. Ocean freight consolidation revenues decreased 8% while expenses remained flat for the six months ended June 30, 2024, as compared with the same period in 2023, primarily due to an 8% decrease in average sell rates while average buy rates and containers shipped remained flat. As supply chain congestion cleared and excess available capacity exceeded demand, average buy rates declined throughout 2023. Overall, average sell rate reductions exceeded buy rate declines driven by North America and Europe in response to market conditions. We expect carrier capacity to grow more than customer demand for the remainder of the year which could result in lower buy and sell rates. If utilization of the Red Sea passage returns to historical levels, additional capacity will become available as a result of shorter transit times which will put additional pressure on pricing.
North Asia and South Asia ocean freight and ocean services revenues increased 28% and 45% and expenses increased 34% and 63%, respectively, for the three months ended June 30, 2024, compared to the same period in 2023. North Asia and South Asia ocean freight and ocean services revenues increased 15% and 20% and expenses increased 22% and 31%, respectively, for the six months ended June 30, 2024, compared to the same periods in 2023. Increases were primarily due to higher average sell and buy rates due to the factors above.
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North America and Europe ocean freight and ocean services revenues decreased 16% and 19% and expenses decreased 14% and 20%, respectively, for the three months ended June 30, 2024, compared to the same period in 2023. North America and Europe ocean freight and ocean services revenues decreased 24% and 31% and expenses decreased 22% and 33%, respectively, for the six months ended June 30, 2024, compared to the same period in 2023. Decreases were primarily due to lower average sell and buy rates.
Order management revenues increased 20% and 19%, respectively, and expenses increased 22% and 19%, respectively, for the three and six months ended June 30, 2024, due to increases in volumes from new and existing customers. Direct ocean freight forwarding revenues decreased 4% while expenses remained flat for the three months ended June 30, 2024, principally due to lower volumes and lower rates for ancillary services in the United States. Direct ocean freight forwarding revenues and expenses decreased 8% and 6%, respectively, for the six months ended June 30, 2024.
Global economic conditions remain uncertain. Further, carriers are adding new vessels which will increase capacity. In addition, if the conflicts in the Middle East improve, additional capacity will become available due to shorter transit times. These conditions could depress sell and buy rates. We expect that pricing volatility will continue as carriers adapt to fluctuations in fuel prices, new regulations, security risks and manage available capacity. As customers seek lower pricing and react to governmental trade policies and other regulations, this could result in further decreases in our revenues and operating income.
Customs brokerage and other services:
Customs brokerage and other services revenues increased 4% and expenses increased 6% for the three months ended June 30, 2024, respectively, as compared with the same period in 2023, primarily due to increases in customs clearances and road freight shipments, principally in North America.
Customs brokerage and other services revenues decreased 4% and expenses decreased 6% for the six months ended June 30, 2024, respectively, as compared with the same period in 2023, primarily due to lower volumes for local drayage and storage and warehouse and distribution services in the first quarter of 2024, principally in North America. Import services, including charges at ports such as detention, drayage, terminal charges and delivery, decreased significantly in the first quarter 2024 as compared to the first quarter of 2023 that still had residual effects from the supply chain congestion. Road freight, warehousing and distribution services also declined in the first quarter of 2024 due to lower volumes and decreased trucking, storage and labor costs.
While customers continue to value our brokerage services due to changing tariffs and increasing complexity in the declaration process, some customers are opting to use back up customs brokerage service providers as a risk reduction strategy. Customers continue to seek knowledgeable customs brokers with sophisticated computerized capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment. Should international trade slow, volumes shipped and pricing could further negatively impact our revenues and expenses.
Overhead expenses:
Salaries and related costs remained flat for the three months ended June 30, 2024, but decreased 4% for the six months ended June 30, 2024, as compared with the same periods in 2023. Decreases in commissions and bonuses earned from lower revenues and operating income and a 4% decrease in headcount were partially offset by increases in salaries.
Historically, the relatively consistent relationship between salaries and operating income has been the result of a compensation philosophy that has been maintained since the inception of our company: offer a modest base salary and the opportunity to share in a fixed and determinable percentage of the operating profit of the business unit controlled by each key employee. Using this compensation model, changes in individual incentive compensation occur in proportion to changes in our operating income, creating an alignment between branch and corporate performance and shareholder interests.
Our management compensation programs have always been incentive-based and performance driven. Total bonuses to field and executive management for the six months ended June 30, 2024, decreased 15% when compared to the same periods in 2023, primarily due to the 16% decrease in operating income.
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Because our management incentive compensation programs are also cumulative, generally no management bonuses can be paid unless the relevant business unit is, from inception, cumulatively profitable. Any operating losses must be offset in their entirety by operating profits before management is eligible for a bonus. Executive management, in limited circumstances, makes exceptions at the branch operating unit level. Since the most significant portion of management compensation comes from the incentive bonus programs, we believe that this cumulative feature is a disincentive to excessive risk taking by our managers. The outcome of any higher risk transactions, such as overriding established credit limits, would be known in a relatively short time frame. Management believes that when the potential and certain impact on the bonus is fully considered in light of the short operating cycle of our services, the potential for short-term gains that could be generated by engaging in risky business practices is sufficiently mitigated to discourage excessive and inappropriate risk taking. Management believes that both the stability and the long-term growth in revenues, operating income and net earnings are a result of the incentives inherent in our compensation programs.
Other overhead expenses increased 4% and 1% for the three and six months ended June 30, 2024, as compared with the same periods in 2023 due to higher rental expenses, bad debt and technology related expenses.
So long as the economic environment remains uncertain, we will be focused on aligning operational headcount and our overhead expenses commensurate with our transactional volumes. We expect to continue to enhance the effectiveness and security of our systems and deploy additional protection technologies and processes which will result in increased expenses in the future. We will also continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.
Income tax expense:
Our consolidated effective income tax rate was 25.8% and 26.3% for the three and six months ended June 30, 2024, as compared to 26.4% and 25.6% in the comparable periods of 2023. For the three and six months ended June 30, 2024, and 2023, there was no BEAT expense and GILTI expense was insignificant. All periods benefited from U.S. income tax deductions for FDII as well as available U.S. Federal foreign tax credits principally from withholding taxes related to our foreign operations. We have no liability as of June 30, 2024, for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023 in the U.S., under the Inflation Reduction Act. Some elements of the recorded impacts of the Inflation Reduction Act could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or Treasury which could impact the estimates of the amounts the Company would be required to record for BMT in the future.
Currency and Other Risk Factors
The nature of our worldwide operations necessitates transacting in a multitude of currencies other than the U.S. dollar. That exposes us to the inherent risks of volatile international currency markets and governmental interference. Some of the countries where we maintain offices and/or have agency relationships maintain strict currency control regulations that influence our ability to hedge foreign currency exposure. We try to compensate for these exposures by accelerating international currency settlements among our offices and agents. We may enter into foreign currency hedging transactions where there are regulatory or commercial limitations on our ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to mitigate short-term exchange losses. Any such hedging activity during the three and six months ended June 30, 2024 and 2023 was insignificant. We had no foreign currency derivatives outstanding at June 30, 2024 and December 31, 2023. For the three months ended June 30, 2024, net foreign currency gains were approximately $5 million compared to net foreign currency losses of approximately $3 million in the same period in 2023. During the six months ended June 30, 2024, net foreign currency gains were approximately $12 million compared to net foreign currency losses of approximately $6 million in the same period in 2023.
Historically, our business has not been adversely affected by inflation. Beginning in 2021 and continuing through 2024, many countries including the United States experienced increasing levels of inflation. As a result our business continues to experience rising labor costs, service provider rate increases, higher rent and occupancy and other expenses. While buy rates for freight transportation capacity started declining in the second half of 2022, purchase prices for labor and other expenditures have continued to increase. Due to the high degree of competition in the marketplace we may not be able to increase our prices to our customers to offset this inflationary pressure, which could lead to an erosion in our margins and operating income in the future. Conversely, raising our prices to keep pace with inflationary pressure may result in a decrease in volume and customer demand for our services. As we are not required to purchase or maintain extensive property and equipment and have not otherwise incurred substantial interest rate-sensitive indebtedness, we currently have limited direct exposure to increased costs resulting from increases in interest rates.
20
There is uncertainty as to how future regulatory requirements and volatility in oil prices will continue to impact future buy rates. Because fuel is an integral part of carriers' costs and impacts both our buy rates and sell rates, we would expect our revenues and costs to be impacted as carriers adjust rates for the effect of changing fuel prices. To the extent that future fuel prices increase, and we are unable to pass through the increase to our customers, fuel price increases could adversely affect our operating income.
Liquidity and Capital Resources
Our principal source of liquidity is cash and cash equivalents and cash generated from operating activities. Net cash provided by operating activities for the three and six months ended June 30, 2024 was $127 million and $384 million as compared with $158 million and $705 million for the same period in 2023. The decreases of $31 million and $321 million for the three and six months ended June 30, 2024, were primarily due to lower net earnings and changes in working capital. At June 30, 2024, working capital was $1,536 million, including cash and cash equivalents of $1,272 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at June 30, 2024. Management believes that our current cash position and operating cash flows will be sufficient to meet our capital and liquidity requirements for at least the next 12 months and thereafter for the foreseeable future, including meeting any contingent liabilities related to standby letters of credit and other obligations.
As a customs broker, we make significant cash advances for a select group of our credit-worthy customers. These cash advances are for customer obligations such as the payment of duties and taxes to customs authorities in various countries throughout the world. Increases in duty rates could result in increases in the amounts we advance on behalf of our customers. Cash advances are a “pass through” and are not recorded as a component of revenue and expense. The billings of such advances to customers are accounted for as a direct increase in accounts receivable from the customer and a corresponding increase in accounts payable to governmental customs authorities. As a result of these “pass through” billings, the conventional Days Sales Outstanding or DSO calculation does not directly measure collection efficiency. For customers that meet certain criteria, we have agreed to extend payment terms beyond our customary terms. Management believes that it has established effective credit control procedures, and historically has experienced relatively insignificant collection problems.
Our business historically has been subject to seasonal fluctuations, and this is expected to continue in the future. Cash flows fluctuate as a result of this seasonality. Historically, the first quarter shows an excess of customer collections over customer billings. This results in positive cash flow. The increased activity associated with periods of higher demand (typically commencing late second or early third quarter and continuing well into the fourth quarter) causes an excess of customer billings over customer collections. This cyclical growth in customer receivables consumes available cash. However, there is no assurance that this seasonal trend will occur in the future or to what degree it will continue to be impacted in 2024 by an uncertain global economy.
Cash used in investing activities for the three and six months ended June 30, 2024 was $8 million and $18 million as compared with $11 million and $21 million for the same periods in 2023, primarily for capital expenditures. Capital expenditures in the three and six months ended June 30, 2024 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Total anticipated capital expenditures in 2024 are currently estimated to be $60 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology.
Cash used in financing activities during the three and six months ended June 30, 2024 was $207 million and $582 million as compared with $792 million and $1,018 million for the same period in 2023. We use the proceeds from stock option exercises and available cash to repurchase our common stock on the open market to reduce outstanding shares. During the three and six months ended June 30, 2024, we used cash to repurchase 0.9 million and 3.9 million shares of common stock, compared to 6.0 million and 8.0 million shares of common stock during the same period in 2023.
We follow established guidelines relating to credit quality, diversification and maturities of our investments to preserve principal and maintain liquidity. Historically, our investment portfolio has not been adversely impacted by disruptions occurring in the credit markets. However, there can be no assurance that our investment portfolio will not be adversely affected in the future.
We cannot predict what further impact ongoing uncertainties in the global economy, inflation, future interest rates, and political conflicts and uncertainty, may have on our operating results, freight volumes, pricing, amounts advanced on behalf of our customers, changes in consumer demand, carrier stability and capacity, customers’ abilities to pay or changes in competitors' behavior.
21
We maintain international unsecured bank lines of credit for short-term working capital purposes. A few of these credit lines are supported by standby letters of credit issued by a United States bank or guarantees issued by the Company to the foreign banks issuing the credit line. At June 30, 2024, borrowings under these credit lines were $36 million and we were contingently liable for $95 million from standby letters of credit and guarantees. The standby letters of credit and guarantees primarily relate to obligations of our foreign subsidiaries for credit extended in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals available from governmental entities responsible for customs and value-added-tax (VAT) taxation. The total underlying amounts due and payable for transportation and governmental excises are properly recorded as obligations in the accounting records of the respective foreign subsidiaries, and there would be no need to record additional expense in the unlikely event the parent company is required to perform.
Our foreign subsidiaries regularly remit dividends to the U.S. parent company after evaluating their working capital requirements and funds necessary to finance local capital expenditures. In some cases, our ability to repatriate funds from foreign operations may be subject to foreign exchange controls. At June 30, 2024, cash and cash equivalent balances of $572 million were held by our non-United States subsidiaries, of which $2 million was held in banks in the United States. Earnings of our foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of our business. These risks are primarily related to foreign exchange risk and changes in short-term interest rates. The potential impact of our exposure to these risks is presented below:
Foreign Exchange Risk
We conduct business in many different countries and currencies. Our business often results in billings issued in a country and currency that differs from that where the expenses related to the service are incurred. In the ordinary course of business, we create numerous intercompany transactions and may have receivables, payables and currencies that are not denominated in the local functional currency. This brings foreign exchange risk to our earnings. The principal foreign exchange risks to which Expeditors is exposed include Chinese Yuan, Indian Rupee, Euro, Mexican Peso, Canadian Dollar and British Pound.
Foreign exchange rate sensitivity analysis can be quantified by estimating the impact on our earnings as a result of hypothetical changes in the value of the U.S. dollar, our functional currency, relative to the other currencies in which we transact business. All other things being equal, an average 10% weakening of the U.S. dollar, throughout the six months ended June 30, 2024, would have had the effect of raising operating income by approximately $29 million. An average 10% strengthening of the U.S. dollar, for the same period, would have the effect of reducing operating income by approximately $24 million. This analysis does not take into account changes in shipping patterns based upon this hypothetical currency fluctuation. For example, a weakening in the U.S. dollar would be expected to increase exports from the United States and decrease imports into the United States over some relevant period of time, but the exact effect of this change cannot be quantified without making speculative assumptions.
We currently do not use derivative financial instruments to manage foreign currency risk and only enter into foreign currency hedging transactions in limited locations where regulatory or commercial limitations restrict our ability to move money freely. Any such hedging activity throughout the three and six months ended June 30, 2024 and 2023 was insignificant. For the three and six months ended June 30, 2024 and 2023, net foreign currency gains were approximately $5 million and $12 million compared to approximately $3 million and $6 million of net losses during the same periods in 2023. We had no foreign currency derivatives outstanding at June 30, 2024 and December 31, 2023. We instead follow a policy of accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings. As of June 30, 2024, we had approximately $58 million of net unsettled intercompany transactions. The majority of intercompany billings are resolved within 30 days.
Interest Rate Risk
At June 30, 2024, we had cash and cash equivalents of $1,272 million of which $636 million was invested at various short-term market interest rates. We had no long-term debt at June 30, 2024. A hypothetical change in the interest rate of 10 basis points at June 30, 2024 would not have a significant impact on our earnings. In management’s opinion, there has been no material change in our interest rate risk exposure in the second quarter of 2024.
22
Item 4. Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report due to material weaknesses in internal control over financial reporting that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Management concluded that unauthorized changes to custom databases could have gone undetected as a control to review and authorize direct changes to databases that support several key operational and accounting systems excluded certain database changes from review, and as such did not operate effectively as designed. In addition, the system logic used to record direct database changes excluded certain changes from being captured within the change logs used as the basis for population of the manual review. These control deficiencies related to personnel without specific training and experience to fulfill internal control responsibilities related to information technology general controls over custom databases resulting in an ineffective information and communication process that identifies and assesses the source of and controls necessary to ensure the reliability of information used in financial reporting. As a consequence of these control deficiencies, the Company concluded that it did not effectively design, implement and operate process-level controls across its financial reporting processes.
In light of the material weaknesses, management performed additional analysis and other procedures to ensure that our consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (GAAP). Accordingly, management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows as of and for the periods presented, in accordance with U.S. GAAP.
Remediation
As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2023, we have taken steps to remediate the identified material weaknesses, including:
Based on testing completed this quarter, the steps described above are designed and operating effectively, however, the material weaknesses will not be considered fully remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through additional testing, that these controls are operating effectively. We expect that full remediation of these material weaknesses will be completed in 2024.
Changes in Internal Controls
Except for on-going remediation related to the material weaknesses, there were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are developing a new accounting system, which is being implemented on a worldwide basis over the next several years. This system is expected to improve the efficiency of certain financial and transactional processes and reporting. This transition affects the processes that constitute our internal control over financial reporting and requires testing for operating effectiveness.
An internal control system, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of such internal controls are met. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all internal control systems, no evaluation of controls can provide absolute assurance that all of our control issues and instances of fraud, if any, have been detected.
23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Expeditors is involved in claims, lawsuits, government investigations, income and indirect tax audits and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal and tax advisors, none of these matters are expected to have a material effect on our operations, cash flows or financial position. As of June 30, 2024, the amounts recorded for claims, lawsuits, government investigations and other legal matters are not significant to our operations, cash flows or financial position. At this time, we are unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters.
Item 1A. Risk Factors
In addition to the other information set forth in this report, careful consideration should be given to the risk factors under Item 1A Risk Factors in our Annual Report on Form 10-K filed on February 23, 2024. There have been no material changes in Expeditors' risk factors from those disclosed under Item 1A Risk Factors in our annual report on Form 10-K filed on February 23, 2024, except for the following:
Operational Risks
We face risks associated with the handling, transporting, and storing of customer inventory, including high value commodities.
Under some of our agreements, we maintain and transport the inventory of our customers, some of which may be high value in nature. Our failure to properly handle and safeguard such inventory exposes us to potential claims and expenses as well as harm to our business and reputation.
Our insurance coverage does not cover all potential losses and significant uninsured losses could adversely impact our financial results.
We carry insurance coverage for property damage, personal injury and other insurable events resulting from certain events such as fire, accidents, and other perils under extended coverage policies. Our insurance coverages contain policy specifications and insured limits customarily carried for similar locations, business activities and markets. We believe we are adequately insured. Certain losses, however, including losses from floods, earthquakes, acts of war, acts of terrorism or riots, cybersecurity events and pandemics, generally are not insured against or not fully insured against because it is not deemed economically feasible or prudent to do so. In some instances, the value of our customers’ goods stored in a single facility or contained in a single shipment may be high in nature and may exceed our general property damage insurance policy limits. If an uninsured loss or a loss in excess of insured limits occurs with respect to one or more of our facilities in the future, we could experience a significant loss of assets, including customer inventory (inclusive of high value commodities), and future operations could be harmed resulting in a loss of revenues or higher claims and operating expenses.
Furthermore, we cannot be sure that the insurance companies will be able to continue to offer products with sufficient coverage at commercially reasonable rates. If we experience a loss that is uninsured or that exceeds insured limits, then we could incur additional expenses or a loss of future revenues from a facility that is damaged. Any such losses or higher insurance costs could adversely affect our business.
24
General Risks
We identified a material weakness in our internal control over financial reporting related to an ineffective information technology general control which, if not remediated appropriately or timely, could result in loss of investor confidence and adversely impact our stock price.
Internal controls related to the operation of technology systems are critical to maintaining adequate internal control over financial reporting. As disclosed in Part II, Item 9A, during the fourth quarter of 2022, management identified a material weakness in internal control related to certain database changes made to an information technology (IT) system that supports the Company’s financial reporting processes. As a result, management concluded that our internal control over financial reporting was not effective as of December 31, 2022 and 2023. As a result of identifying this issue, management implemented certain enhancements designed to strengthen IT program change management processes in 2024. Management has concluded that the necessary enhancements to controls have been implemented and are designed and operating effectively as of June 30, 2024. However, the material weaknesses will not be considered fully remediated, until the applicable controls operate for a sufficient period of time and management has concluded through additional testing that these controls are operating effectively. To the extent management is unable to ultimately conclude that the identified issues have been remediated, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
25
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
ISSUER PURCHASES OF EQUITY SECURITIES
Period |
|
Total number |
|
|
Average price |
|
|
Total number |
|
|
Maximum |
|
||||
April 1-30, 2024 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11,115 |
|
May 1-31, 2024 |
|
|
875 |
|
|
$ |
116.88 |
|
|
|
875 |
|
|
|
10,601 |
|
June 1-30, 2024 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,633 |
|
Total |
|
|
875 |
|
|
$ |
116.88 |
|
|
|
875 |
|
|
|
10,633 |
|
In November 2001, Expeditors' Board of Directors authorized a Discretionary Stock Repurchase Plan for the purpose of repurchasing our common stock in the open market to reduce the issued and outstanding stock down to 200 million outstanding shares. Subsequently, the Board of Directors has from time to time increased the amount of our common stock that may be repurchased. On February 19, 2024, the Board of Directors last authorized repurchases from 140 million shares of common stock down to 130 million outstanding shares of common stock. The maximum number of shares available for repurchase under this plan will increase as the total number of outstanding shares increases. This authorization has no expiration date.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
26
Item 6. Exhibits
Exhibits required by Item 601 of Regulation S-K.
Exhibit Number |
|
Description |
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32 |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
104 |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, has been formatted in Inline XBRL. |
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. |
|
|
|
Aug 8, 2024 |
|
/s/ JEFFREY S. MUSSER |
|
|
Jeffrey S. Musser, President, Chief Executive Officer and Director |
|
|
|
Aug 8, 2024 |
|
/s/ BRADLEY S. POWELL |
|
|
Bradley S. Powell, Senior Vice President and Chief Financial Officer |
28
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Jeffrey S. Musser, certify that:
Date: Aug 8, 2024
/s/ JEFFREY S. MUSSER |
Jeffrey S. Musser President, Chief Executive Officer and Director |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Bradley S. Powell, certify that:
Date: Aug 8, 2024
/s/ BRADLEY S. POWELL |
Bradley S. Powell Senior Vice President and Chief Financial Officer |
EXHIBIT 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Expeditors International of Washington, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Jeffrey S. Musser, President, Chief Executive Officer and Director, and Bradley S. Powell, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
Aug 8, 2024 |
/s/ JEFFREY S. MUSSER |
Jeffrey S. Musser President, Chief Executive Officer and Director |
|
|
|
Aug 8, 2024 |
/s/ BRADLEY S. POWELL |
Bradley S. Powell Senior Vice President and Chief Financial Officer |