What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-02 · 202 added, 192 removed, 259 unchanged (60% of the section changed)

44 unchanged sentences

The reconciliation of gross profits to adjusted gross profits and gross profit margin to adjusted gross profit margin is presented below (dollars in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

13 unchanged sentences

The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands) :

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

6 unchanged sentences

MARKET TRENDS

The North America surface transportation market remains largely unchanged from the first quarter of 2024.

The market remains in a prolonged stage of oversupplied carrier capacity leading to continued soft market conditions.

The seasonal impacts from the floral and produce season have created regional demand spikes at higher transportation rates slowing the pace of carriers exiting the market even further in the second quarter of 2024 than would be typical at this stage of the market cycle.

Aside from these short-term seasonal impacts, shipper demand remains weak, which continues to suppress surface transportation rates at levels near the break-even cost to operate a truck.

One of the metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business.

Routing guide depth represents the average number of carriers contacted prior to acceptance when procuring a transportation provider.

The average routing guide depth of tender increased each month within the second quarter of 2024 but remained low at 1.2, consistent with the first quarter of 2024 and in-line with the average routing guide depth experienced throughout 2023.

The average routing guide depth in the second quarter of 2024 represents that on average, the first carrier in a shipper's routing guide is accepting the shipment most of the time, resulting in a limited number of shipments reaching the spot market.

The global forwarding market has continued to add carrier capacity in 2023 and into 2024.

Despite new capacity entering the market, it hasn’t been sufficient to meet the growing demand due to the necessity of re-routing and longer transit times caused by the Red Sea conflict.

In addition to the Red Sea conflict, there are increasing challenges related to container shortages and worsening port congestion impacting the market in certain parts of the world.

At the same time, there are indications that shippers may be accelerating the timing of traditional peak season volume in light of these challenges, macroeconomic and geopolitical uncertainty, as well as the potential for labor issues at the U.S.

East Coast ports, which are further straining available carrier capacity.

Consequently, ocean freight rates have significantly increased in the second quarter of 2024 compared to the prior year.

These ongoing global disruptions, coupled with the ongoing macroeconomic and geopolitical uncertainty, will likely continue to impact ocean freight pricing in the near term, although the extent of which remains uncertain.

The challenges facing the ocean freight market are leading to increased ocean freight conversions to air freight, which, alongside elevated e-commerce demand out of North Asia, have tightened air freight capacity, and led to sharp increases in the cost of air freight in certain trade lanes.

Carrier capacity in the North America surface transportation market continues to exceed shipper demand, resulting in suppressed transportation rates near the estimated cost to operate a truck.

These conditions, which have prevailed for over a year, are commonly referred to as a soft market.

One of the key metrics we use to measure market conditions is the truckload routing guide depth from our Managed Services business.

This metric measures the average number of carriers contacted before securing a transportation provider.

In the recent soft market, routing guides have operated efficiently, as carriers are less likely to reject freight tenders.

Due to the soft market conditions, the average routing guide depth has remained consistently low at 1.2 throughout 2023 and 2024.

This indicates that the first carrier in a shipper’s routing guide typically accepts the shipment, thereby limiting the number of shipments reaching the spot market.

Despite potential impacts from seasonality, severe weather events, or port labor issues creating short-term regional pressure on available carrier capacity, these soft market conditions are expected to persist until carrier capacity better aligns with shipper demand.

The global forwarding market remains volatile, impacted by re-routing and extended transit times.

Most carriers continue to avoid the Suez Canal due to the Red Sea conflict, which has increased transit times and is straining global carrier capacity.

Despite being brief, recent port worker strikes on the U.S.

East Coast compounded the challenges, causing re-routings, equipment shortages, and worsening port congestion.

These conditions, combined with the traditional peak season volumes and severe weather events, are more than offsetting the impact of new capacity which continues to enter the market.

Consequently, ocean freight rates have remained elevated compared to the prior year.

These ongoing global disruptions, coupled with macroeconomic and geopolitical uncertainty, are likely to continue affecting ocean freight pricing in the near term, although the extent remains uncertain.

Despite the challenges facing the ocean freight market, the global air freight market has largely stabilized, although air freight costs remain elevated compared to the prior year.

The elevated e-commerce export demand from Asia continues to result in the repositioning of air freight capacity to that trade lane, causing freighter capacity shortages in other trade lanes.

BUSINESS TRENDS

Our second quarter of 2024 surface transportation results continued to be impacted by the prevailing soft market conditions discussed in the market trends section.

Our third quarter of 2024 surface transportation results continued to be impacted by the prevailing soft market conditions discussed in the market trends section.

These conditions led to most shipments moving under committed pricing agreements and suppressed freight rates for the limited number of shipments reaching the spot market and negatively impacted our surface transportation total revenues.

Despite these challenging market conditions, we were able to improve our adjusted gross profits per transaction in the second quarter of 2024 compared to the same period in 2023 as a result of disciplined pricing and capacity procurement efforts leading to better adjusted gross profits per transaction within our transactional portfolio.

Industry freight volumes decreased in the second quarter of 2024 compared to the same period of 2023.

Despite these challenging market conditions, our combined North American Surface Transportation (“NAST”) truckload and less than truckload (“LTL”) volumes increased by 1.5 percent during the second quarter of 2024 compared to the second quarter of 2023.

Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 3.5 percent during the second quarter of 2024.

Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, decreased approximately 2.0 percent during the second quarter of 2024.

Our second quarter of 2024 global forwarding results were significantly impacted by the global disruptions and challenges discussed in the market trends section.

We experienced elevated purchased transportation costs for ocean freight in the second quarter of 2024, which resulted in growth in both ocean total revenues and cost of purchased transportation compared to the second quarter of 2023.

We experienced a 4.0 percent increase in ocean freight volumes.

We also experienced an 11.0 percent increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions were driven by the disruptions affecting the market, which, coupled with increased e-commerce demand out of North Asia, has continued to increase the cost of air freight, and led to lower adjusted gross profit per metric ton.

Subsequent to June 30, 2024, we entered into an agreement to sell our Europe Surface Transportation business.

The sale will include all assets and liabilities of the business other than our proprietary technology platform.

The assets and liabilities of the Europe Surface Transportation disposal group will be presented as held for sale beginning in the third quarter of 2024 and adjusted to fair market value, less costs to sell, which will result in a loss on sale compared to carrying value in the third quarter of 2024.

Despite these challenging market conditions, we were able to improve our adjusted gross profits per transaction in the third quarter of 2024 compared to the same period in 2023 as a result of disciplined pricing and capacity procurement efforts leading to better adjusted gross profits per transaction within our transactional portfolio.

Industry freight volumes, as measured by the Cass Freight Index, decreased in the third quarter of 2024 compared to the same period of 2023.

Despite these challenging market conditions, our combined North American Surface Transportation (“NAST”) truckload and less than truckload (“LTL”) volumes increased modestly during the third quarter of 2024 compared to the third quarter of 2023.

Our average truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 0.5 percent during the third quarter of 2024 compared to the third quarter of 2023.

Our average truckload linehaul rate charged to our customers, excluding fuel surcharges, increased approximately 2.5 percent during the third quarter of 2024.

Our third quarter of 2024 global forwarding results continue to be impacted by the volatile market conditions discussed in the market trends section.

We experienced significantly elevated purchased transportation costs for ocean freight in the third quarter of 2024, which resulted in significant increases to both ocean total revenues and the cost of purchased transportation compared to the third quarter of 2023.

The global forwarding market in the third quarter of 2023 was experiencing weak demand and elevated levels of capacity which has added to the significant year over year change when compared to the more volatile market conditions for much of 2024.

Our ocean freight volumes increased 7.0 percent while our air freight tonnage increased 20.0 percent compared to the third quarter of 2023 driven by the strong execution of our global forwarding team and the improved freight demand relative to the prior year.

SELECTED OPERATING PERFORMANCE AND OTHER SIGNIFICANT ITEMS

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

• Total revenues increased 1.4 percent to $4.5 billion, primarily driven by higher pricing in our ocean services, partially offset by lower pricing in our truckload services.

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

• Total revenues increased 7.0 percent to $4.6 billion, primarily driven by higher pricing and volume in our ocean services, partially offset by lower pricing and volume in our truckload services.

• Gross profits increased 15.5 percent to $723.8 million.

Adjusted gross profits increased 3.3 percent to $687.4 million, primarily driven by higher adjusted gross profit per transaction in truckload and LTL services.

• Personnel expenses decreased 4.3 percent to $361.2 million, primarily due to cost optimization efforts and lower average employee headcount, which decreased 10.0 percent.

• Other selling, general, and administrative (“SG&A”) expenses decreased 4.8 percent to $148.1 million with reductions across several expense categories.

• Income from operations increased 34.3 percent to $178.1 million, due to the increase in adjusted gross profits and decrease in operating expenses.

Adjusted gross profits increased 15.8 percent to $735.3 million, primarily driven by higher adjusted gross profit per transaction in our ocean and truckload services.

• Personnel expenses increased 5.2 percent to $361.6 million, primarily due to higher variable compensation, partially offset by cost optimization efforts and lower average employee headcount, which decreased 9.6 percent.

• Other selling, general, and administrative (“SG&A”) expenses increased 8.9 percent to $193.6 million primarily due to the $57.0 million loss on the planned divestiture of our Europe Surface Transportation business that was partially offset by cost reductions across several expense categories.

The prior year also included $21.4 million of expenses primarily related to the divestiture of our Argentina operations.

• Income from operations increased 58.7 percent to $180.1 million, due to the increase in adjusted gross profit, partially offset by the increase in operating expenses.

• Adjusted operating margin of 24.5 percent increased 660 basis points.

• Interest and other income/expense, net totaled $21.5 million of expense, consisting primarily of $22.9 million of interest expense, which decreased $0.3 million compared to last year, due to a lower average debt balance, and a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $3.5 million net gain in the prior year.

• The effective tax rate in the quarter was 19.4 percent compared to 14.9 percent in the second quarter last year.

• Interest and other income/expense, net totaled $36.3 million of expense, consisting primarily of $22.1 million of interest expense, which increased $0.2 million compared to last year, and a $15.1 million net loss from foreign currency revaluation and realized foreign currency gains and losses.

• The effective tax rate in the quarter was 32.4 percent compared to 11.7 percent in the third quarter last year.

• Net income totaled $97.2 million, an increase of 18.6 percent from a year ago.

• Diluted earnings per share (EPS) increased 17.6 percent to $0.80.

• Cash flow from operations decreased $346.3 million in the six months ended June 30, 2024, primarily driven by an increase in net operating working capital.

• Cash flow from operations decreased $443.5 million in the nine months ended September 30, 2024, primarily driven by an increase in net operating working capital.

CONSOLIDATED RESULTS OF OPERATIONS

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 % change 2024 2023 % change

22 unchanged sentences

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

Consolidated Results of Operations—Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Consolidated Results of Operations—Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023

Total revenues and direct costs.

1 unchanged sentence

This increase was partially offset by lower pricing and purchased transportation costs in truckload services compared to the prior year.

The global forwarding market continued to be impacted by re-routing and longer transit times caused by the Red Sea conflict and experienced increasing challenges in the second quarter of 2024 related to container shortages and worsening port congestion in certain parts of the world.

These challenges combined with improving demand have significantly increased ocean freight rates in the second quarter of 2024 compared to the prior year.

The lower pricing and purchased transportation costs in truckload services continue to be driven by the ongoing soft market conditions as the market remains in a prolonged stage of oversupplied carrier capacity as discussed in the market and business trends section above.

The global forwarding market continued to face disruptions from re-routing and longer transit times caused by the Red Sea conflict, along with increasing challenges in the third quarter of 2024, including port worker uncertainty on the U.S.

East Coast, equipment shortages and worsening port congestion in certain regions.

These challenges, coupled with rising demand compared to the weak global demand of the prior year, have driven up ocean freight rates in the third quarter of 2024.

Conversely, the lower pricing and purchased transportation costs in truckload services are attributed to the ongoing soft market conditions, characterized by an oversupply of carrier capacity as

discussed in the market and business trends section above.

Our sourcing total revenue and direct costs increased, driven by higher average pricing with retail customers and increased case volume with foodservice customers.

Gross profits and adjusted gross profits.

Our transportation adjusted gross profits increased driven by higher adjusted gross profits per transaction in truckload and LTL services, and to a lesser extent, higher adjusted gross profit per shipment and increased volume in ocean services.

The increased adjusted gross profit per transaction in truckload and LTL services was driven by improved execution and disciplined pricing and capacity procurement efforts within our transactional portfolio during the second quarter of 2024 compared to the prior year.

Despite the challenging surface transportation market conditions, our combined NAST truckload and LTL volumes increased by 1.5 percent during the second quarter of 2024 compared to the second quarter of 2023.

Sourcing adjusted gross profits increased, driven by integrated supply chain solutions for retail and foodservice customers.

Our transportation adjusted gross profits increased, driven by higher adjusted gross profits per transaction in ocean and truckload services, as well as an increase in ocean freight volumes.

The higher adjusted gross profits per transaction in ocean services were driven by the challenges facing the global forwarding market, which resulted in elevated pricing.

In truckload services, the increase was driven by the improved execution and disciplined pricing and capacity procurement efforts from our team within our transactional portfolio during the third quarter of 2024 compared to the prior year.

Sourcing adjusted gross profits increased, driven by an increase in integrated supply chain solutions for retail and foodservice customers.

Operating expenses.

Personnel expenses decreased primarily driven by cost optimization efforts, including lower average employee headcount.

These reductions were partially offset by an increase in variable compensation including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Other SG&A expenses decreased due to reductions in several expense categories.

In addition to the above, our personnel expenses for the second quarter of 2024 included $9.5 million of severance and related personnel expenses.

We also incurred $5.7 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Our personnel expenses for the second quarter of 2023 included $13.1 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the second quarter of 2023.

Personnel expenses increased primarily due to variable compensation reflecting the improved results compared to the prior year.

This increase was partially offset by cost optimization efforts, including lower average employee headcount.

Other SG&A expenses increased due to the planned divestiture of our Europe Surface Transportation business and was partially offset by the impact of the divestiture of our Argentina operations in the prior year discussed below.

In addition to the above, our personnel expenses for the third quarter of 2024 included $2.8 million of severance and related personnel expenses.

We also incurred $1.6 million of restructuring related other SG&A expenses in the third quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Our other SG&A expenses in the third quarter of 2024 included a $57.0 million loss related to the planned divestiture of our Europe Surface Transportation business.

Our personnel expenses for the third quarter of 2023 included $3.0 million of severance and related personnel expenses associated with our 2022 Restructuring Program and the divestiture of our Argentina operations.

Other SG&A expenses in the third quarter of 2023 included $21.4 million related to disposal and exit activities, including asset impairments.

These expenses were associated with the divestiture of our Argentina operations and our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Europe Surface Transportation business and Argentina operations.

Interest and other income/expense, net.

Interest and other income/expense, net primarily consisted of interest expense of $22.1 million.

Interest expense decreased $0.3 million during the second quarter of 2024, due to a lower average debt balance.

The current year included a $0.5 million net gain from foreign currency revaluation and realized foreign currency gains and losses, compared to a $3.5 million net gain in the prior year.

The second quarter of 2023 also included a $2.1 million foreign currency loss related to our operations in Argentina that were divested in the prior year.

Interest expense increased $0.2 million during the third quarter of 2024, due to higher interest rates.

The current year included a $15.1 million net loss from foreign currency revaluation and realized foreign currency gains and losses, compared to a $0.1 million net gain in the prior year.

The $0.1 million net gain in the prior year was the result of a $5.1 million loss related to the devaluation of the Argentine Peso that was more than offset by gains related to other foreign currencies.

Provision for income taxes.

Our effective income tax rate was 19.4 percent for the second quarter of 2024 compared to 14.9 percent for the second quarter of 2023.

The effective income tax rate for the second quarter of 2024 was lower than the statutory federal income tax rate primarily due to the tax impact of U.S.

tax credits and incentives, which reduced the effective tax rate by 5.0 percentage points.

These impacts were partially offset by a higher tax rate on foreign earnings, which increased the effective income tax rate by 2.7 percentage points during the second quarter of 2024.

The effective income tax rate for the second quarter of 2023 was lower than the statutory federal income tax rate primarily due to foreign tax credits, which decreased the effective income tax rate by 6.2 percentage points, and U.S.

tax credits and incentives, which decreased the effective income tax rate by 3.9 percentage points.

These impacts were partially offset by a higher tax rate on state income taxes, net of federal benefit, which increased the effective income tax rate by 2.4 percentage points during the second quarter of 2023.

Consolidated Results of Operations—Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Our effective income tax rate was 32.4 percent for the third quarter of 2024 compared to 11.7 percent for the third quarter of 2023.

The effective income tax rate for the third quarter of 2024 was higher than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits and business divestitures, which increased the effective tax rate by 13.7 percentage points and 7.9 percentage points, respectively.

These impacts were partially offset by U.S.

tax credits and incentives and a lower tax rate on foreign earnings which decreased the effective income tax rate by 5.1 percentage points and 4.5 percentage points, respectively, during the third quarter of 2024.

The effective income tax rate for the third quarter of 2023 was lower than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits, U.S.

tax credits and incentives, and business divestitures, which reduced the effective tax rate by 9.0 percentage points, 6.1 percentage points, and 5.9 percentage points, respectively.

These impacts were partially offset by a higher tax rate on foreign earnings, which increased the effective income tax rate by 8.4 percentage points during the third quarter of 2023.

Consolidated Results of Operations—Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Total revenues and direct costs.

Total transportation revenues and direct costs decreased driven by lower pricing and purchased transportation costs in truckload services, partially offset by higher pricing and purchased transportation costs in ocean services in addition to volume increases in all of our global forwarding transportation services.

The decline in truckload pricing and purchased transportation costs has been driven by the ongoing surface transportation soft market conditions as the market has remained in a prolonged stage of oversupplied carrier capacity during the six months ended June 30, 2024.

The higher pricing and purchased transportation costs in ocean services were driven by the ongoing disruptions, including the Red Sea conflict, which have significantly impacted carrier capacity and resulted in increased ocean freight rates in the six months ended June 30, 2024.

Total revenues and direct costs were essentially flat with the prior year with significant offsetting impacts from ocean and truckload services.

Ocean transportation revenues and direct costs increased driven by the ongoing volatile market conditions, as discussed in the market trends section above, which significantly impacted carrier capacity and led to increased ocean freight rates in the nine months ended September 30, 2024.

Conversely, truckload transportation revenues and direct costs decreased compared to the prior year.

This decline in truckload pricing and purchased transportation costs was driven by the ongoing soft market conditions in surface transportation, characterized by an oversupply of carrier capacity during the nine months ended September 30, 2024.

Our sourcing total revenue and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers.

Gross profits and adjusted gross profits.

Our transportation adjusted gross profits decreased due to lower adjusted gross profit per transaction in truckload and air services.

These decreases were partially offset by increased ocean shipments and higher adjusted gross profit per transaction and increased volume in LTL services.

The lower adjusted gross profit per transaction in truckload was driven by the continued soft market conditions in the surface transportation market which have suppressed freight rates in the six months ended June 30, 2024.

Ocean shipments increased driven by the improving demand for ocean freight compared to the weak demand experienced in the prior year.

Sourcing adjusted gross profits increased driven by an increase in integrated supply chain solutions for retail customers and foodservice customers.

Our transportation adjusted gross profits increased, driven by higher adjusted gross profits per transaction in our ocean and truckload services, as well as an increase in ocean freight volumes.

The higher adjusted gross profits per transaction in ocean services were driven by the challenges facing the global forwarding market, which resulted in elevated pricing.

Sourcing adjusted gross profits increased due to an increase in integrated supply chain solutions for retail and foodservice customers.

Operating expenses.

Personnel expenses decreased primarily due to cost optimization efforts including lower average employee headcount, primarily offset by higher variable compensation including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Other SG&A expenses increased primarily due to a higher provision for credit losses as the prior year benefited from a reduction to the allowance for credit losses.

In addition to the above, our personnel expenses for the six months ended June 30, 2024, included $17.4 million of severance and related personnel expenses.

We also incurred $10.7 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Our personnel expenses for the six months ended June 30, 2023, included $16.7 million of severance and related personnel expenses.

We also incurred $1.1 million of restructuring related other SG&A expenses in the six months ended June 30, 2023.

These expenses were both associated with our 2022 Restructuring Program.

Personnel expenses decreased primarily due to cost optimization efforts including lower average employee headcount, partially offset by higher variable compensation reflecting the improved results compared to the prior year.

Other SG&A expenses increased primarily due to the planned divestiture of our Europe Surface Transportation business and was partially offset by the impact of the divestiture of our Argentina operations in the prior year discussed below and cost reductions across several expense categories in the current year.

In addition to the above, our personnel expenses for the nine months ended September 30, 2024, included $20.2 million of severance and related personnel expenses.

We also incurred $69.4 million of other SG&A expenses in the nine months ended September 30, 2024.

These expenses were associated with our 2024 Restructuring Program and a $57.0 million loss on the planned divestiture of our Europe Surface Transportation business.

Our personnel expenses for the nine months ended September 30, 2023, included $19.7 million of severance and related personnel expenses.

Other SG&A expenses in the nine months ended September 30, 2023, were $22.6 million related to disposal and exit activities, including asset impairments.

These expenses were associated with our 2022 Restructuring Program and a $21.3 million loss on the divestiture of our Argentina operations.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Europe Surface Transportation business and Argentina operations.

Interest and other income/expense, net.

Interest and other income/expense, net primarily consisted of interest expense of $67.1 million, which decreased $1.5 million driven by lower average debt balances compared to the prior year.

The six months ended June 30, 2024, included a net $4.4 million favorable impact from foreign currency revaluation and realized foreign currency gains and losses.

The prior year included a net $6.0 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses primarily due to the impacts on intercompany assets and liabilities.

The six months ended June 30, 2023, also included a $3.8 million foreign currency loss related to our operations in Argentina that were divested in the prior year.

The nine months ended September 30, 2024, included a net $10.7 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses.

The prior year included a net $5.9 million unfavorable impact from foreign currency revaluation and realized foreign currency gains and losses primarily driven by an $8.9 million foreign currency loss related to our operations in Argentina that were divested in the prior year.

Provision for income taxes.

Our effective income tax rate was 17.9 percent for the six months ended June 30, 2024, and 14.1 percent for the six months ended June 30, 2023.

The effective income tax rate for the six months ended June 30, 2024, was lower than the statutory federal income tax rate primarily due to the tax impact of U.S.

tax credits and incentives which reduced the effective tax rate by 6.2 percentage points.

These impacts were partially offset by state income tax expense, net of federal benefit, and a higher tax rate on foreign earnings, which increased the effective income tax rate by 2.3 percentage points and 1.8 percentage points, respectively.

The effective income tax rate for the six months ended June 30, 2023 was lower than the statutory federal income tax rate primarily due to U.S.

tax credits and incentives, the tax impact of share-based payment awards, and the impact of foreign tax credits, which reduced the effective tax rate by 3.9 percentage points, 3.5 percentage points, and 3.3 percentage points, respectively.

These impacts were partially offset by state income tax expense, net of federal benefit, which increased the effective income tax rate by 2.3 percentage points.

Our effective income tax rate was 23.0 percent for the nine months ended September 30, 2024, and 13.5 percent for the nine months ended September 30, 2023.

The effective income tax rate for the nine months ended September 30, 2024, was higher than the statutory federal income tax rate primarily due to the tax impact of foreign tax credits, the tax impact of business divestitures, and state income tax expense, net of federal benefit, which increased the effective tax rate by 3.8 percentage points, 2.8 percentage points, and 2.7 percentage points, respectively.

These impacts were partially offset by the tax impact of U.S.

tax credits and incentives, which decreased the effective income tax rate by 5.8 percentage points.

The effective income tax rate for the nine months ended September 30, 2023 was lower than the statutory federal income tax rate due to the tax impact of foreign tax credits, U.S.

tax credits and incentives, and the tax impact of share-based payment awards, which reduced the effective tax rate by 4.8 percentage points, 4.5 percentage points, and 2.9 percentage points, respectively.

These impacts were partially offset by state income tax expense, net of federal benefit, and a lower tax rate on foreign earnings, which increased the effective income tax rate by 2.4 percentage points and 2.1 percentage points, respectively.

NAST Segment Results of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

6 unchanged sentences

Income from operations $ 148,767 $ 112,121 32.7 % $ 398,764 $ 364,002 9.5 %

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 % change 2024 2023 % change

10 unchanged sentences

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

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023

Total revenues and direct costs.

NAST total revenues and direct costs decreased primarily due to lower pricing and purchased transportation costs in truckload services.

NAST total revenues and direct costs decreased primarily due to lower pricing and purchased transportation costs and a decline in volume in truckload services.

Partially offsetting these declines were higher pricing and purchased transportation costs in LTL services and volume increases in both LTL and truckload services.

Partially offsetting these declines were increased volumes and higher pricing and purchased transportation costs in LTL services.

Gross profits and adjusted gross profits.

NAST adjusted gross profits increased due to higher adjusted gross profit per transaction and an increase in volume in truckload and LTL services.

The higher adjusted gross profit per transaction was driven by improved execution and disciplined pricing and capacity procurement efforts within our transactional portfolio.

Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 2.0 percent in the second quarter of 2024 compared to the second quarter of 2023.

Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 3.5 percent in the second quarter of 2024 compared to the second quarter of 2023.

NAST other adjusted gross profits decreased, primarily driven by a decline in warehousing and intermodal adjusted gross profits.

NAST adjusted gross profits increased due to higher adjusted gross profits per transaction in truckload services and an increase in volume in LTL services.

The improvement in truckload services was driven by improved execution and disciplined pricing and capacity procurement within our transactional portfolio.

Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, increased approximately 2.5 percent in the third quarter of 2024 compared to the third quarter of 2023.

Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 0.5 percent in the third quarter of 2024 compared to the third quarter of 2023.

NAST other adjusted gross profits decreased, primarily due to a decline in warehousing and intermodal adjusted gross profits.

Operating expenses.

NAST personnel expenses increased driven by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

This was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses.

In addition to the above, NAST personnel expenses in the second quarter of 2024 included $4.8 million of severance and related personnel expenses.

We also incurred $3.8 million of restructuring related other SG&A expenses in the second quarter of 2024.

NAST personnel expenses increased driven by an increase in variable compensation reflecting the improved results compared to the prior year.

This increase was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased across several categories driven by cost optimization efforts in addition to lower credit losses.

In addition to the above, NAST personnel expenses in the third quarter of 2024 included $1.2 million of severance and related personnel expenses.

We also incurred $0.6 million of restructuring related other SG&A expenses in the third quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

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Allocated personnel expenses consist primarily of stock-based compensation allocated based upon segment participation levels in our equity plans.

Remaining corporate allocations, including corporate functions and technology related expenses, are primarily included within each segment’s other SG&A expenses, and are allocated based upon relevant segment operating metrics.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Remaining corporate allocations, including corporate functions and technology related expenses, are included within each segment’s other SG&A expenses, and are allocated based upon relevant segment operating metrics.

Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Total revenues and direct costs.

NAST total revenues and direct costs decreased driven by lower pricing and purchased transportation costs in truckload services.

The decline in truckload pricing and purchased transportation costs has been driven by the ongoing surface transportation soft market conditions as the market remained in a prolonged stage of oversupplied carrier capacity during the six months ended June 30, 2024.

Partially offsetting this decline was an increase in volumes for both truckload and LTL services.

NAST total revenues and direct costs decreased driven by lower pricing and purchased transportation costs and a decline in volume in truckload services.

Partially offsetting these declines were increased volumes and higher pricing and purchased transportation costs in LTL services.

Gross profits and adjusted gross profits.

NAST adjusted gross profits decreased primarily due to lower adjusted gross profit per transaction in truckload services.

The lower adjusted gross profit per transaction was driven by the continued soft market conditions in the surface transportation market which have suppressed freight rates in the six months ended June 30, 2024.

NAST adjusted gross profits increased driven by truckload services due to higher adjusted gross profits per transaction despite a decline in truckload service volumes.

This improvement was driven by improved execution and disciplined pricing and capacity procurement within our transactional portfolio in the nine months ended September 30, 2024.

Our average truckload linehaul rate per mile charged to our customers, which excludes fuel surcharges, decreased approximately 2.5 percent.

Our truckload linehaul cost per mile, excluding fuel surcharges, decreased approximately 4.0 percent.

The decrease in truckload adjusted gross profits was partially offset by an increase in LTL volumes.

NAST other adjusted gross profits decreased, primarily driven by a decline in warehousing and intermodal adjusted gross profits.

Additionally, adjusted gross profits per transaction and volumes also increased in LTL services.

NAST other adjusted gross profits decreased, primarily due to a decline in warehousing and intermodal adjusted gross profits.

Operating expenses.

NAST personnel expense increased driven by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

This was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased primarily due to lower allocated corporate expenses.

In addition to the above, NAST personnel expenses in the six months ended June 30, 2024, included $7.8 million of severance and related personnel expenses.

We also incurred $5.7 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

NAST personnel expense increased driven by an increase in variable compensation reflecting the improved results compared to the prior year.

This increase was partially offset by cost optimization efforts, including lower average employee headcount.

NAST other SG&A expenses decreased primarily due to cost optimization efforts resulting in lower allocated corporate expenses.

In addition to the above, NAST personnel expenses in the nine months ended September 30, 2024, included $9.0 million of severance and related personnel expenses.

We also incurred $6.2 million of restructuring related other SG&A expenses in the nine months ended September 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the six months ended June 30, 2023, included $1.2 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Personnel expenses for the nine months ended September 30, 2023, included $1.1 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Global Forwarding Segment Results of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

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Total costs and expenses 1,053,075 715,554 47.2 % 2,760,401 2,225,636 24.0 %

Income from operations $ 40,982 $ 29,647 38.2 % $ 72,534 $ 59,763 21.4 %

Three Months Ended June 30, Six Months Ended June 30,

Income from operations $ 88,115 $ 3,491 N/M $ 160,649 $ 63,254 154.0 %

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 % change 2024 2023 % change

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

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023

Total revenues and direct costs.

Global Forwarding total revenues and direct costs increased driven by higher pricing and purchased transportation costs and increased volume in ocean services compared to the prior year.

These challenges combined with improving demand have significantly increased ocean freight rates in the second quarter of 2024 compared to the prior year.

In addition, the disruptions facing the global forwarding market have resulted in an increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions coupled with increased e-commerce demand out of North Asia have led to sharp increases to the price and cost of air freight in certain trade lanes compared to the prior year.

Global Forwarding total revenues and direct costs increased driven by higher pricing and purchased transportation costs and increased volume in ocean services, and to a lesser extent in air freight, compared to the prior year.

In the third quarter of 2023, the global forwarding market faced weak demand and elevated capacity levels.

However, market conditions have become more volatile in the third quarter of 2024.

This volatility has been driven by re-routing and extended transit times caused by the Red Sea conflict, along with increasing challenges related to port worker strikes, equipment shortages, and worsening port congestion.

These issues, combined with traditional peak season volumes and severe weather events, have significantly elevated ocean and air freight rates and purchased transportation costs in the third quarter of 2024 compared to the suppressed levels of the prior year.

Gross profits and adjusted gross profits.

Global Forwarding adjusted gross profits increased driven by higher adjusted gross profit per shipment and increased volume in ocean services driven by the challenges facing the global forwarding market resulting in higher pricing.

Air freight adjusted gross profits decreased due to lower adjusted gross profits per metric ton shipped driven by the sharp increase to the cost of air freight in the second quarter of 2024.

This decrease was partially offset by an increase in metric tons shipped.

Customs adjusted gross profits increased driven by an increase in transaction volumes.

Global Forwarding adjusted gross profits increased driven by higher adjusted gross profits per shipment in ocean services, and to a lesser extent in air freight, driven by the challenges facing the global forwarding market resulting in elevated pricing.

Our ocean and air freight volumes also increased compared to the weak freight demand levels experienced in the prior year.

Customs adjusted gross profits increased driven by both an increase in adjusted gross profits per transaction and an increase in transaction volumes.

Operating expenses.

Personnel expenses decreased primarily due to cost optimization efforts, including lower average employee headcount.

This decrease was partially offset by an increase in variable compensation, including stock-based compensation expense as the prior year period included an accrual reversal related to certain performance-based awards.

Global Forwarding other SG&A expenses decreased driven by lower allocated corporate expenses.

In addition to the above, Global Forwarding personnel expenses for the second quarter of 2024 included $2.2 million of severance and related personnel expenses.

We also incurred $1.3 million of restructuring related other SG&A expenses in the second quarter of 2024.

Personnel expenses increased primarily due to an increase in variable compensation reflecting the improved results relative to the prior year.

This increase was partially offset by cost optimization efforts, including lower average employee headcount.

Global Forwarding other SG&A expenses decreased, as the prior year included a $21.0 million loss related to the divestiture of our Argentina operations.

Additionally, other SG&A expenses declined in the current year across several categories, including lower amortization expenses following the completion of amortization of intangible assets from a previous acquisition.

In addition to the above, Global Forwarding personnel expenses for the third quarter of 2024 included $0.5 million of severance and related personnel expenses.

We also incurred $0.9 million of restructuring related other SG&A expenses in the third quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the second quarter of 2023 included $0.7 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Personnel expenses for the third quarter of 2023 included $2.5 million of severance and related personnel expenses.

Other SG&A expenses in the third quarter of 2023 included $21.1 million related to disposal and exit activities, including asset impairments.

These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Argentina operations.

Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Total revenues and direct costs.

Global Forwarding total revenues and direct costs increased driven by higher pricing and purchased transportation costs in ocean services in addition to volume increases in all of our global forwarding transportation services.

In addition, the disruptions facing the global forwarding market have resulted in an increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions coupled with increased e-commerce demand out of North Asia have led to sharp increases to the cost of air freight in certain trade lanes compared to the prior year.

Global Forwarding total revenues and direct costs increased, driven by higher pricing and purchased transportation costs in ocean services in addition to volume increases across all global forwarding transportation services.

The higher pricing and purchased transportation costs in ocean services were driven by the ongoing volatile market conditions discussed in the market trends section above, which significantly impacted carrier capacity and led to increased ocean freight rates in the nine months ended September 30, 2024.

Additionally, disruptions in the ocean freight market have resulted in an increase in air freight tonnage, driven by ocean freight conversions in many trade lanes.

These ocean freight conversions, coupled with heightened e-commerce demand out of North Asia and stronger peak season volumes compared to the prior year, have elevated air freight costs in certain trade lanes.

The volatile market conditions in the nine months ended September 30, 2024, contrast with the weak demand, elevated capacity, and suppressed freight rates experienced in the same period in 2023.

Gross profits and adjusted gross profits.

Global Forwarding adjusted gross profits increased driven by increased ocean shipments due to improving demand for ocean freight compared to the weak demand experienced in the prior year.

Air freight adjusted gross profits decreased due to lower adjusted gross profits per metric ton shipped, which was partially offset by an increase in metric tons shipped.

The lower adjusted gross profit per metric ton shipped was driven by sharp increases to the cost of air freight in certain trade lanes compared to the prior year discussed above.

Customs adjusted gross profits increased driven by an increase in transaction volume.

Global Forwarding adjusted gross profits increased, driven by higher adjusted gross profits per shipment driven by the challenges facing the global forwarding market, which resulted in elevated pricing and volume increases compared to the weak demand experienced in the prior year.

Air freight adjusted gross profits were essentially flat, as lower adjusted gross profits per metric ton shipped were mostly offset by an increase in metric tons shipped.

The decrease in adjusted gross profits per metric ton shipped was driven by sharp increases to the cost of air freight in certain trade lanes compared to the prior year.

Customs adjusted gross profits increased, driven by higher transaction volumes and an increase in adjusted gross profits per transaction.

Operating expenses.

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This increase was partially offset by cost optimization efforts, including lower average employee headcount.

Other SG&A expenses decreased driven by lower allocated corporate expenses and the completion of amortization of intangible assets related to a previously completed acquisition.

Other SG&A expenses decreased, as the prior year included a $21.0 million loss related to the divestiture of our Argentina operations.

Additionally, other SG&A expenses declined in the current year related to lower allocated corporate expenses and lower amortization expenses following the completion of amortization of intangible assets from a prior acquisition.

These decreases were partially offset by a higher provision for credit losses as the prior year benefited from a reduction to the allowance for credit losses.

In addition to the above, Global Forwarding personnel expenses for the six months ended June 30, 2024, included $5.4 million of severance and related personnel expenses.

In addition to the above, Global Forwarding personnel expenses for the nine months ended September 30, 2024, included $5.9 million of severance and related personnel expenses.

We also incurred $2.4 million of restructuring related other SG&A expenses in 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses for the six months ended June 30, 2023, included $2.2 million of severance and related personnel expenses associated with our 2022 Restructuring Program.

Personnel expenses for the nine months ended September 30, 2023, included $4.7 million of severance and related personnel expenses.

Other SG&A expenses in the nine months ended September 30, 2023, included $21.2 million related to disposal and exit activities, including asset impairments.

These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Argentina operations.

All Other and Corporate Segment Results of Operations

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(dollars in thousands) 2024 2023 % change 2024 2023 % change

Total revenues $ 568,834 $ 535,015 6.3 % $ 1,694,411 $ 1,615,241 4.9 %

Income (loss) from operations (3,994) (14,883) (73.2) % (17,308) (17,988) (3.8) %

Income (loss) from operations (56,763) (2,090) N/M (74,071) (20,078) N/M

Adjusted gross profits (1)

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

Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023

Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023

Total revenues and direct costs.

Total revenues and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers in our Robinson Fresh business.

This increase was partially offset by a decline in our European truckload total revenues within our Other Surface Transportation business.

This increase was partially offset by a decline in European truckload volume in our Other Surface Transportation business resulting in a decline in total revenues and direct costs.

Gross profits and adjusted gross profits.

Robinson Fresh adjusted gross profits increased due to an increase in integrated supply chain solutions for retail and foodservice customers.

Managed Services adjusted gross profits were essentially flat with the prior year.

Managed Services adjusted gross profits decreased due to lower transaction volume.

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

Restructuring expenses.

Personnel expenses in the second quarter of 2024 included $2.5 million of severance and related personnel expenses.

We also incurred $0.6 million of restructuring related other SG&A expenses in the second quarter of 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses in the second quarter of 2023 included $12.1 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the second quarter of 2023.

These expenses were both associated with our 2022 Restructuring Program.

Restructuring and divestiture expenses.

Personnel expenses in the third quarter of 2024 included $1.2 million of severance and related personnel expenses primarily associated with our 2024 Restructuring Program.

We also incurred $57.1 million of other SG&A expenses in the third quarter of 2024 that included a $57.0 million loss related to the planned divestiture of our Europe Surface Transportation business.

Personnel expenses in the third quarter of 2023 included $0.6 million of severance and related personnel expenses.

We also incurred $0.4 million of other SG&A expenses in the third quarter of 2023.

These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Europe Surface Transportation business and Argentina operations.

Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023

Total revenues and direct costs.

Total revenues and direct costs increased driven by higher average pricing with retail customers and increased case volume with foodservice customers in our Robinson Fresh business.

This increase was partially offset by a decline in our European truckload total revenues within our Other Surface Transportation business.

This increase was partially offset by a decline in European truckload pricing and volume in our Other Surface Transportation business resulting in a decline in total revenues and direct costs.

Gross profits and adjusted gross profits.

Robinson Fresh adjusted gross profits increased due to an increase in integrated supply chain solutions for retail and foodservice customers.

Managed Services adjusted gross profits were essentially flat with the prior year.

Other Surface Transportation adjusted gross profits decreased primarily due to a decrease in adjusted gross profits per transaction in European truckload.

Restructuring expenses.

Personnel expenses in the six months ended June 30, 2024 included $4.2 million of severance and related personnel expenses.

We also incurred $3.5 million of restructuring related other SG&A expenses in the six months ended June 30, 2024.

These expenses were both associated with our 2024 Restructuring Program.

Personnel expenses in the six months ended June 30, 2023 included $13.3 million of severance and related personnel expenses.

We also incurred $1.0 million of restructuring related other SG&A expenses in the six months ended June 30, 2023.

These expenses were both associated with our 2022 Restructuring Program.

Managed Services adjusted gross profits decreased due to lower transaction volume.

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

Restructuring and divestiture expenses.

Personnel expenses in the nine months ended September 30, 2024, included $5.4 million of severance and related personnel expenses primarily associated with our 2024 Restructuring Program.

We also incurred $60.6 million of other SG&A expenses in the nine months ended September 30, 2024, that included a $57.0 million loss related to the planned divestiture of our Europe Surface Transportation business.

Personnel expenses in the nine months ended September 30, 2023, included $13.9 million of severance and related personnel expenses.

We also incurred $1.3 million of other SG&A expenses in the nine months ended September 30, 2023.

These expenses were associated with our 2022 Restructuring Program and the divestiture of our Argentina operations.

Refer to Note 13, Restructuring , for further discussion related to our 2024 and 2022 Restructuring Programs.

Refer to Note 14, Divestitures , for further discussion related to the divestiture of our Europe Surface Transportation business and Argentina operations.

LIQUIDITY AND CAPITAL RESOURCES

1 unchanged sentence

In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (in thousands):

Description Carrying Value as of June 30, 2024 Borrowing Capacity Maturity

Description Carrying Value as of September 30, 2024 Borrowing Capacity Maturity

Revolving credit facility $ 150,000 $ 1,000,000 November 2027

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We expect to use our current debt facilities and potentially other indebtedness incurred in the future to assist us in continuing to fund working capital, capital expenditures, possible acquisitions, dividends, share repurchases or other investments.

Cash and cash equivalents totaled $113.2 million as of June 30, 2024, and $145.5 million as of December 31, 2023.

Cash and cash equivalents held outside the United States totaled $108.2 million as of June 30, 2024, and $142.8 million as of December 31, 2023.

Cash and cash equivalents totaled $142.7 million, including $11.0 million of cash and cash equivalents presented as assets held for sale related to the divestiture of our Europe Surface Transportation business as of September 30, 2024, and $145.5 million as of December 31, 2023.

Cash and cash equivalents held outside the United States totaled $136.2 million as of September 30, 2024, and $142.8 million as of December 31, 2023.

We prioritize our investments to grow our market share and expand globally in key industries, trade lanes, and geographies, and to digitize our customer, carrier, and internal tools to support our organic growth.

1 unchanged sentence

The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 % change

2 unchanged sentences

Capital expenditures (59,099) (67,975)

Sale of property and equipment — 1,324

Cash used for investing activities (59,099) (66,651) (11.3) %

1 unchanged sentence

Cash dividends (220,256) (218,942)

Net borrowing (payments) on debt 28,000 (238,000)

Net payments on debt (20,000) (391,000)

Other financing activities 56,012 22,307

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Effect of exchange rates on cash and cash equivalents (653) (6,708)

Net change in cash and cash equivalents $ (32,358) $ (7,327)

Net change in cash and cash equivalents, including cash and cash equivalents classified within assets held for sale $ (2,842) $ (40,263)

Cash flow from operating activities.

Our operating cash flows benefited in the prior year from declining freight rates in ocean and truckload services, which resulted in a decrease in net operating working capital and drove strong operating cash flow.

In the current year, freight rates in ocean services have increased resulting in an increase in net operating working capital driving a decline in operating cash flows in the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

In the current year, freight rates in ocean services have increased resulting in an increase in net operating working capital driving a decline in operating cash flows in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.

We continue to closely monitor credit and collections activities and the quality of our accounts receivable balance to minimize risk as well as work with our customers to facilitate the movement of goods across their supply chains while also ensuring timely payment.

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Cash used for financing activities.

Net borrowing on debt in the six months ended June 30, 2024, were to fund our working capital needs.

Net repayments on debt in the six months ended June 30, 2023, were primarily to reduce the current portion of our debt outstanding.

No shares were repurchased in the six months ended June 30, 2024.

Net repayments on debt in the nine months ended September 30, 2024, and the nine months ended September 30, 2023, were primarily to reduce the outstanding balance on the Receivables Securitization Facility and our revolving credit facility.

No shares were repurchased in the nine months ended September 30, 2024.

The number of shares we repurchase, if any, during future periods will vary based on our cash position, other potential uses of our cash, and market conditions.

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

As of June 30, 2024, we were in compliance with all of the covenants under our debt agreements.

As of September 30, 2024, we were in compliance with all of the covenants under our debt agreements.

Recently Issued Accounting Pronouncements

2 unchanged sentences

Refer to the company's 2023 Annual Report on Form 10-K for a complete discussion regarding our critical accounting policies and estimates.

As of June 30, 2024, there were no material changes to our critical accounting policies and estimates.

As of September 30, 2024, there were no material changes to our critical accounting policies and estimates.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Refer to the company’s 2023 Annual Report on Form 10-K for a discussion on the company’s market risk.

As of June 30, 2024, there were no material changes in market risk from those disclosed in the company’s 2023 Annual Report on Form 10-K.

As of September 30, 2024, there were no material changes in market risk from those disclosed in the company’s 2023 Annual Report on Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis