EXPEDITORS INTERNATIONAL OF WASHINGTON INC

Previous wording

Certain portions of this report on Form 10-Q including the sections entitled "Overview," "Summary of First Quarter 2025," "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 the impact of tariffs or other government actions on global trade volumes and economies, and 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 21, 2025 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.

Current wording

Certain portions of this report on Form 10-Q including the sections entitled "Overview," "Summary of Second Quarter 2025," "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 the impact of tariffs or other government actions on global trade volumes and economies, and 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 21, 2025 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.

Previous wording

Strong demand for all our services as importers front loaded shipments in anticipation of higher trade tariffs resulted in increased volumes and sustained high sell and buy rates.

Current wording

Strong demand for all our services, in part due to U.S. importers managing shipments in anticipation of higher trade tariffs, which resulted in increased volumes and volatility in average sell and buy rates.

Previous wording

Ocean containers shipped increased 8% and airfreight tonnage was up 9% compared to a relatively weak first quarter in 2024.

Current wording

Ocean containers shipped and airfreight tonnage both increased 7% compared to a relatively weak second quarter in 2024.

Previous wording

As a result of the rates and volumes noted above, revenues and expenses in all our services performed well. Operating income increased 24% and net earnings to shareholders increased 20%, from the first quarter of 2024.

Current wording

As a result of the rates and volumes noted above, revenues in all our services performed well and expenses increased proportionally.

Previous wording

Cash from operating activities was $343 million, up from $257 million from the first quarter 2024.

Current wording

Cash from operating activities was $179 million, up from $127 million from the second quarter 2024.

Previous wording

We returned $177 million to shareholders in common stock repurchases.

Current wording

We returned $335 million to shareholders in common stock repurchases and dividends.

Previous wording

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 changes to tariffs, impose trade restrictions and accords. Currently, the United States has undertaken a substantial global tariff rebalancing effort resulting in significantly higher tariffs on imports. Increased tariffs on certain sectors for Canada, China, and Mexico took effect in the first quarter of 2025, with reciprocal tariffs by country taking effect in April 2025, which are currently paused for 90 days. The United States has also imposed significantly higher tariffs on goods made in China, which are in effect. These measures have led to threatened or actual retaliatory tariffs and trade actions from several countries, including China, the European Union, and Canada. The potential for further tariff changes and trade restrictions remains high, creating an unpredictable environment for international trade. In addition, the "de minimis exemption", which exempted from tariffs shipments of goods made in China and Hong Kong of less than $800, was terminated on May 2, 2025. Changes in import and export regulations may impact the flow of trade and the global economy. We cannot predict how changes in tariffs and trade restrictions will affect our business. As governments impose import and export restrictions, shippers may adjust their sourcing patterns on a temporary or longer-term basis and potentially shift manufacturing to other countries over time. Additionally, the constant changes in trade regulations since the beginning of 2025 are adding complexity to the customs declarations process, making compliance with regulations increasingly challenging.

Current wording

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 changes to tariffs, impose trade restrictions and accords. Currently, the United States has undertaken a substantial global trade policies rebalancing effort resulting in significantly higher tariffs on imports. Increased tariffs on certain sectors for Canada, China, and Mexico took effect in the first quarter of 2025. Additionally, reciprocal tariffs on certain countries were expected to take effect in April 2025, but were later postponed to July and are now paused until August 2025, while trade negotiations by country are taking place. The United States has also imposed significantly higher tariffs on goods made in China, which are in effect. These measures have led to threatened or actual retaliatory tariffs and trade actions from several countries, including China and Canada. The potential for further tariff changes and trade restrictions remains high, creating an unpredictable environment for international trade. In addition, the "de minimis exemption", which exempted shipments of goods made in China and Hong Kong of less than $800 from tariffs, was terminated on May 2, 2025. Changes in import and export regulations may further impact the flow of trade and the global economy. We cannot predict how changes in tariffs and trade restrictions will affect our business. As governments impose import and export restrictions, shippers may adjust their sourcing patterns on a temporary or longer-term basis and potentially shift manufacturing to other countries over time. Additionally, the constant changes in trade regulations since the beginning of 2025 are adding complexity to the customs declarations process, making compliance with regulations increasingly challenging.

Previous wording

The global economic and trade environments remain highly uncertain; including inflation remaining higher than historical levels, volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. In the first quarter of 2025, we saw high demand on exports out of Asia resulting in high average buy and sell rates. However, we believe additional ocean and air transportation capacity will become available if demand softens due to uncertainty in economic and trade regulations, safe passage through the Red Sea resumes, and the revocation of the de minimis tariff exemption for low-value goods made in China and Hong Kong. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to changes in demand, changing fuel prices, available capacity, 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 are relocating manufacturing to other countries to mitigate the impact of higher tariffs on imports, reduce their supply chain risks, address disruptions caused by pandemics and geopolitical issues. These changes could negatively affect our business.

Current wording

The global economic and trade environments remain highly uncertain; including inflation remaining higher than historical levels, volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. In the first quarter of 2025, we saw high demand on exports out of Asia and continued to see high demand on exports out of South Asia in the second quarter 2025, resulting in high average buy and sell rates where demand exceeded carrier capacity. However, we believe additional ocean and air transportation capacity will become available if demand softens due to uncertainty in economic and trade regulations, safe passage through the Red Sea resumes, and the capacity made available by the revocation of the de minimis tariff exemption for low-value goods made in China and Hong Kong. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to changes in demand, changing fuel prices, available capacity, 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 are relocating manufacturing to other countries to mitigate the impact of higher tariffs on imports, reduce their supply chain risks, address disruptions caused by pandemics and geopolitical issues. These changes could negatively affect our business.

Previous wording

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 months ended March 31, 2025 and 2024, including the respective percentage changes comparing 2025 and 2024.

Current wording

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, 2025 and 2024, including the respective percentage changes comparing 2025 and 2024.

Previous wording

Tonnage increased most significantly on exports out of South Asia and North Asia during the three months ended March 31, 2025, as compared with the same periods in 2024, as a result of increased market demand primarily from technology customers. Tonnage in the first quarter 2025 was elevated as shippers accelerated orders to front load deliveries in anticipation of higher tariffs.

Current wording

Tonnage increased in most regions during the three and six months ended June 30, 2025, as compared with the same periods in 2024, as a result of increased market demand primarily from technology customers. Tonnage in the first half of 2025 was elevated as shippers accelerated orders to front load deliveries in anticipation of higher tariffs in 2025.

Previous wording

Average sell and buy rates increased during the three months ended March 31, 2025 on exports out of South Asia and MAIR due to elevated demand and limited capacity. The imbalance between demand and capacity is due to sourcing relocations in those regions and was also fueled by higher volumes due to potential tariff increases.

Current wording

Average sell and buy rates increased during the three and six months ended June 30, 2025 on exports out of South Asia and Europe due to elevated demand and limited capacity. The imbalance between demand and capacity is due to sourcing relocations to South Asia and was also fueled by higher volumes due to potential tariff increases. Average sell and buy rates for North Asia and MAIR exports also increased during the six months ended June 30, 2025, mainly due to strong first-quarter demand in advance of the elimination of the de minimis exemption and increase in tariffs.

Previous wording

Seasonal changes in demand, impact from disruptions in the ocean market due to security and port congestion concerns, variable demand for airfreight capacity from direct e-commerce business, including the elimination of low-value de minimis exemption on shipments from China could cause volatility in average buy rates on certain lanes. Additionally, geopolitical concerns, inter-governmental trade disputes, new tariffs on imports into the US and retaliatory actions from other countries create uncertainty in the economy and the trade environment. As shippers and carriers react to these volatile conditions, it may negatively affect demand for airfreight services, which could significantly reduce our volumes and average sell and buy rates in the coming quarters. Though we are unable to predict how these uncertainties and any future disruptions will affect our operations or financial results prospectively, these conditions could result in significant decreases in our revenues and operating income.

Current wording

Seasonal changes in demand, impact from disruptions in the ocean market due to security concerns, variable demand for airfreight capacity from direct e-commerce business, including the effects of the elimination of low-value de minimis exemption on shipments from China could cause volatility in average buy rates on certain lanes. Additionally, geopolitical concerns, inter-governmental trade disputes, new tariffs on imports into the US and retaliatory actions from other countries create uncertainty in the economy and the trade environment. As shippers and carriers react to these volatile conditions, it may negatively affect demand for airfreight services, which could significantly reduce our volumes and average sell and buy rates in the coming quarters. Though we are unable to predict how these uncertainties and any future disruptions may affect our operations or financial results prospectively, these conditions could result in significant decreases in our revenues and operating income.

Previous wording

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 37% and 39%, respectively, for the three months ended March 31, 2025 as compared with the same period in 2024. The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 71% and 65% of ocean freight and ocean services revenue for the three month ended March 31, 2025 and 2024, respectively.

Current wording

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 4% and 1%, respectively, for the three months ended June 30, 2025 as compared with the same period in 2024. Ocean freight and ocean services revenues and expense both increased 19%, for the six months ended June 30, 2025 as compared with the same period in 2024. The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 69% and 66% of ocean freight and ocean services revenue for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Containers shipped were higher, most significantly on exports out of North and South Asia. North and South Asia ocean freight and ocean services revenues increased 43% and 73%, and expenses increased 44% and 80%, respectively, for the three months ended March 31, 2025, compared to a relatively weak first quarter in 2024. Increases were primarily due to higher average sell and buy rates and containers shipped due to the factors above. For the three months ended March 31, 2025, North America ocean freight and ocean services revenues increased 22%, compared to the same period in 2024, primarily due to higher revenues on imports driven by higher buy rates on exports while expenses only increased 7%.

Current wording

Containers shipped were higher, most significantly on exports out of South Asia due to shippers managing shipments in anticipation of higher tariffs and relocating sourcing to that region. South Asia ocean freight and ocean services revenues increased 26% and expenses increased 24%, respectively, for the three months ended June 30, 2025 due to a 27% increase in containers shipped. For the six months ended June 30, 2025, South Asia ocean freight and ocean services revenues increased 46% and expenses increased 48%, respectively. Increases were primarily due to higher average sell and buy rates and a 23% increase in containers shipped due to the factors above.

Previous wording

Order management revenues and expenses increased 29%, and 32%, respectively, for the three months ended March 31, 2025, compared to the same period in 2024 due to increases in volumes from new customers. Direct ocean freight forwarding revenues and expenses increased 3% and 4%, respectively, for the three months ended March 31, 2025, principally due to higher volumes for ancillary services in the United States.

Current wording

Order management revenues increased 7%, and 17%, respectively, for the three and six months ended June 30, 2025, and expenses increased 6% and 19% compared to the same periods in 2024 due to increases in volumes from new customers. Direct ocean freight forwarding revenues increased 9% and 6%, respectively, for the three and six months ended June 30, 2025, and expenses increased 11% and 8% principally due to higher volumes and increased ancillary services in the United States.

Previous wording

The global economic and trade environment are increasingly uncertain and dynamic, with increases in trade tariffs and inter-governmental disputes. As shippers and carriers react to these volatile conditions, it may negatively affect demand, which could significantly reduce our volumes and average sell and buy rates in the coming quarters. Further, carriers are adding new vessels which will increase capacity. In addition, if safe passage through the Red Sea resumes, additional capacity will become available due to shorter transit times. Subsequent to March 31, 2025, we are seeing early signs that China to U.S. ocean volumes are declining significantly. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to China-specific tariffs, it is too early to know what the overall decline in volumes might be. Speculation regarding additional tariffs may cause more customers to pause or cancel shipments entirely. These conditions could result in significant decreases in our revenues and operating income.

Current wording

The global economic and trade environment are increasingly uncertain and dynamic, with increases in trade tariffs and inter-governmental disputes. As shippers and carriers react to these volatile conditions, it may negatively affect demand, which could reduce our volumes and average sell and buy rates in the coming quarters. Further, carriers are adding new vessels which will increase capacity and which may also put downward pressure on rates. Sequentially, ocean containers shipped out of North Asia declined 11% in the second quarter compared to the first quarter of 2025. While some of those volumes are shifting to other lanes, as customers look to mitigate their exposure to U.S./China-specific tariffs, it is too early to know what the overall decline in volumes might be. These conditions could result in significant decreases in our revenues and operating income.

Previous wording

Customs brokerage and other services revenues and expenses increased 12% and 15% for the three months ended March 31, 2025, respectively, as compared with the same period in 2024, primarily due to increases in customs clearances, import services, road freight and warehousing and distribution from higher shipment volumes, principally in North America and Europe. North America and Europe revenues increased 14% and 7%, respectively and expenses increased 16% and 10%, respectively, for the three months ended March 31, 2025, respectively, as compared with the same period in 2024.

Current wording

Customs brokerage and other services revenues increased 10% and 11% and expenses increased 11% and 13% for the three and six months ended June 30, 2025, respectively, as compared with the same periods in 2024. These changes are primarily due to increases in customs clearances, import services, road freight and warehousing and distribution from higher shipment volumes, principally from shipments into North America and Europe.

Previous wording

Import services, including charges at ports such as detention, drayage, terminal charges and delivery, and road freight services increased significantly in the first quarter of 2025 because of higher volumes from shippers front loading deliveries in anticipation of higher tariffs.

Current wording

Import services, including charges at ports such as detention, drayage, terminal charges and delivery, and road freight services increased significantly in the first half of 2025 because of higher volumes from shippers front loading deliveries in anticipation of higher tariffs.

Previous wording

Customers value our brokerage services due to an increasingly dynamic and complex trade environment, and its impact on the declaration process. They 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, lower volumes and pricing could significantly reduce our revenues and operating income.

Current wording

Customers value our brokerage services due to an increasingly dynamic and complex trade environment, and its impact on the declaration process. They seek knowledgeable customs brokers with sophisticated systems 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, lower volumes and pricing could significantly reduce our revenues and operating income.

Previous wording

Salaries and related costs increased 11% for the three months ended March 31, 2025 as compared with the same period in 2024, principally due to increased incentive compensation from improved operating results. Base salaries & benefits and headcount both increased 4% in the three months ended March 31, 2025 compared to 2024.

Current wording

Salaries and related costs increased 11% for both the three and six months ended June 30, 2025 as compared with the same periods in 2024, principally due to increase in salaries & benefits and incentive compensation from improved operating results. Headcount increased 6% in 2025 compared to 2024 primarily in our operations and information technology. We hired employees in operations to support the added complexity and higher demand for customs brokerage services, primarily in North America, and support the growth in volumes transacted in certain regions such as South Asia, Europe and Latin America. We also continued to hire IT personnel to support essential investments which further strengthens our critical information systems.

Previous wording

Our management compensation programs have always been incentive-based and performance driven. Total bonuses to field and executive management for the three months ended March 31, 2025, increased 31% when compared to the same periods in 2024, primarily due to higher operating income.

Current wording

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, 2025, increased 21% and 16%, respectively, when compared to the same period in 2024, primarily due to higher operating income.

Previous wording

Other overhead expenses increased 14% or $20 million for the three months ended March 31, 2025, as compared with the same period in 2024. This increase is primarily due to technology related expenses along with increased consulting expenses, higher rental and occupancy expenses, and claims partially offset by a $4 million decrease in expenses related to indirect tax contingencies.

Current wording

Other overhead expenses increased 20% and 17% for the three and six months ended June 30, 2025, respectively, as compared with the same periods in 2024. This increase is primarily due to technology related expenses, increased consulting, higher rental and occupancy expenses, and indirect taxes.

Previous wording

Our consolidated effective income tax rate was 26.0% for the three months ended March 31, 2025, as compared to 26.9% in the comparable period of 2024. For the three months ended March 31, 2025, and 2024, 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 March 31, 2025, 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.

Current wording

Our consolidated effective income tax rate increased to 28.7% and 27.3% for the three and six months ended June 30, 2025, as compared to 25.8% and 26.3% in the comparable periods of 2024 principally from higher foreign tax expense driven by changes in foreign currency exchange ratesand certain non-deductible expenses. For the three and six months ended June 30, 2025 and 2024, 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, 2025 and December 31, 2024 for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023. For the periods ended June 30, 2025 and 2024, the amount of Pillar Two income tax expense was insignificant.

Previous wording

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. Historically, derivative financial instruments have not been used to manage foreign currency risk. In lieu of the use of foreign currency derivatives we instead try to compensate for these exposures by accelerating international currency settlements among our offices and agents. In the future, we may enter into foreign currency hedging transactions to manage our foreign currency risk. There are also regulatory or commercial limitations on our ability to move money freely, which could be impacted by inter-governmental disputes or new trade restrictions. We had no foreign currency derivatives outstanding at March 31, 2025 and December 31, 2024. For the three months ended March 31, 2025, net foreign currency losses were approximately $5 million compared to net foreign currency gains of approximately $7 million in the same period in 2024.

Current wording

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. Historically, derivative financial instruments have not been used to manage foreign currency risk. In lieu of the use of foreign currency derivatives we instead try to compensate for these exposures by accelerating international currency settlements among our offices and agents. In the future, we may enter into foreign currency hedging transactions to manage our foreign currency risk. There are also regulatory or commercial limitations on our ability to move money freely, which could be impacted by inter-governmental disputes or new trade restrictions. We had no foreign currency derivatives outstanding at June 30, 2025 and December 31, 2024. For the three months ended June 30, 2025, net foreign currency losses were approximately $12 million compared to net foreign currency gains of approximately $5 million in the same period in 2024. During the six months ended June 30, 2025, net foreign currency losses were approximately $17 million compared to net foreign currency gains of approximately $12 million in the same period in 2024.

Previous wording

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 months ended March 31, 2025 was $343 million as compared with $257 million for the same period in 2024. The increase of $86 million for the three months ended March 31, 2025, was primarily due to the collection of accounts receivable and higher net earnings. At March 31, 2025, working capital was $1,650 million, including cash and cash equivalents of $1,319 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at March 31, 2025. 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.

Current wording

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, 2025 was $179 million and $522 million as compared with $127 million and $384 million for the same periods in 2024. The increases of $52 million and $138 million for the three and six months ended June 30, 2025, were primarily due changes in working capital and higher net earnings. At June 30, 2025, working capital was $1,535 million, including cash and cash equivalents of $1,156 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at June 30, 2025. 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.

Previous wording

As a customs broker, we make significant short-term 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 have resulted in increases in the amounts we advance on behalf of our customers. Given the short time frame until we are reimbursed, we do not expect these outlays to have a significant effect on our liquidity. Cash advances are a “pass through” and are not recorded as a component of revenue and expense, except for fees associated with this service charged to customers. 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.

Current wording

As a customs broker, we make significant short-term 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. Higher duty rates have resulted in increases in the amounts we advance on behalf of our customers. Given the short time frame until we are reimbursed, we do not expect these outlays to have a significant effect on our liquidity. Cash advances are a “pass through” and are not recorded as a component of revenue and expense, except for fees associated with this service charged to customers. 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.

Previous wording

Cash used in investing activities for the three months ended March 31, 2025 was $13 million as compared with $10 million for the same periods in 2024, primarily for capital expenditures. Capital expenditures in the three months ended March 31, 2025 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Total anticipated capital expenditures in 2025 are currently estimated to be $50 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology.

Current wording

Cash used in investing activities for the three and six months ended June 30, 2025 was $16 million and $29 million as compared with $8 million and $18 million for the same periods in 2024, primarily for capital expenditures. Capital expenditures in the three and six months ended June 30, 2025 were primarily related to continuing investments in building and leasehold improvements, technology and equipment. Total anticipated capital expenditures in 2025 are currently estimated to be approximately $60 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology.

Previous wording

Cash used in financing activities during the three months ended March 31, 2025 was $166 million as compared with $375 million for the same period in 2024. We use the proceeds from stock option exercises, employee stock purchases and available cash to repurchase our common stock on the open market to reduce outstanding shares. During the three months ended March 31, 2025, we used cash to repurchase 1.5 million shares of common stock, compared to 3.0 million shares of common stock during the same periods in 2024.

Current wording

Cash used in financing activities during the three and six months ended June 30, 2025 was $340 million and $506 million as compared with $207 million and $582 million for the same periods in 2024. 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, 2025, we used cash to repurchase 2.0 million and 3.5 million shares of common stock, compared to 0.9 million and 3.9 million shares of common stock during the same periods in 2024.

Previous wording

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 March 31, 2025, borrowings under these credit lines were $32 million and we were contingently liable for $72 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.

Current wording

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, 2025, borrowings under these credit lines were $34 million and we were contingently liable for $80 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.

Previous wording

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,or could be impacted by inter-governmental disputes or new trade restrictions. At March 31, 2025, cash and cash equivalent balances of $561 million were held by our non-United States subsidiaries, of which $11 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.

Current wording

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, or could be impacted by inter-governmental disputes or new trade restrictions. At June 30, 2025, cash and cash equivalent balances of $541 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.