EXPEDITORS INTERNATIONAL OF WASHINGTON INC

Previous wording

Certain portions of this report on Form 10-Q including the sections entitled "Overview," "Summary of Second Quarter 2024," "Industry Trends, Trade Conditions and Competition," "Seasonality," "Critical Accounting Estimates," "Results of Operations," "Income tax expense," "Currency and Other Risk Factors" and "Liquidity and Capital Resources" contain forward-looking statements. Words such as "will likely result," "expects", "are expected to," "would expect," "would not expect," "will continue," "is anticipated," "estimate," "project," "plan," "believe," "probable," "reasonably possible," "may," "could," "should," "would," "intends," "foreseeable future" or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, any statements that refer to projections of future financial performance, our anticipated growth and trends in the Company's businesses, signs of a slowing economy and drop in demand, future supply chain and transportation disruptions and other characterizations of disruptive events or circumstances are forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties, including risks associated with tax audits and other contingencies, that could cause actual results to differ materially from our historical experience and our present expectations or projections. These statements must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. Attention should be given to the risk factors identified and discussed in Part I, Item 1A in the Company’s annual report on Form 10-K filed on February 23, 2024 and in Part II, Item 1A in this report. Management believes that these forward-looking statements are reasonable as of this filing date and we do not assume any obligations to update these statements except as required by law.

Current wording

Certain portions of this report on Form 10-Q including the sections entitled "Overview," "Summary of Third Quarter 2024," "Industry Trends, Trade Conditions and Competition," "Seasonality," "Critical Accounting Estimates," "Results of Operations," "Income tax expense," "Currency and Other Risk Factors" and "Liquidity and Capital Resources" contain forward-looking statements. Words such as "will likely result," "expects", "are expected to," "would expect," "would not expect," "will continue," "is anticipated," "estimate," "project," "plan," "believe," "probable," "reasonably possible," "may," "could," "should," "would," "intends," "foreseeable future" or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, any statements that refer to projections of future financial performance, our anticipated growth and trends in the Company's businesses, signs of a slowing economy and drop in demand, future supply chain and transportation disruptions and other characterizations of disruptive events or circumstances are forward-looking statements. In addition, forward-looking statements are subject to certain risks and uncertainties, including risks associated with tax audits and other contingencies, that could cause actual results to differ materially from our historical experience and our present expectations or projections. These statements must be considered in connection with the discussion of the important factors that could cause actual results to differ materially from the forward-looking statements. Attention should be given to the risk factors identified and discussed in Part I, Item 1A in the Company’s annual report on Form 10-K filed on February 23, 2024 and in Part II, Item 1A in this report. Management believes that these forward-looking statements are reasonable as of this filing date and we do not assume any obligations to update these statements except as required by law.

Previous wording

Air and ocean average buy rates increased sharply out of Asia in the second quarter of 2024 due to capacity constraints from longer ocean transit time, resulting from the Red Sea disruptions, and e-commerce business demand on airfreight. Overall average buy rate increases outpaced average sell rate changes, negatively affecting profitability.

Current wording

Demand for airfreight out of Asia remained high in the third quarter of 2024 due in part to continued capacity constraints from longer ocean transit times, resulting from the Red Sea disruptions, and e-commerce business demand on airfreight capacity. This resulted in growth in volumes and increases in overall average buy and sell rates.

Previous wording

As a result of the rates and volumes noted above, revenues and expenses in airfreight and ocean services were up compared to the second quarter of 2023, while margins and operating income declined.

Current wording

As a result of the rates and volumes noted above, revenues and expenses in all our services performed well. Operating income increased 40% from the third quarter of 2023 and 35% from the second quarter of 2024.

Previous wording

Net earnings to shareholders decreased 18% from the second quarter of 2023 and increased 4% from the first quarter of 2024.

Current wording

Net earnings to shareholders increased 34% from the third quarter of 2023 and 31% from the second quarter of 2024.

Previous wording

Cash from operations was $127 million and we returned $205 million to shareholders in common stock repurchases and dividends.

Current wording

We returned $140 million to shareholders in common stock repurchases.

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 a variety of changes to tariffs and impose trade restrictions and accords. Currently, the United States and China have increased concerns affecting certain imports and exports and are considering additional tariffs. We cannot predict the outcome of changes in tariffs, or interpretations, and trade restrictions and accords and the effects they will have on our business. As governments implement restrictions on imports and exports, manufacturers may change sourcing patterns, to the extent possible, and, over time, may shift manufacturing to other countries. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being influenced by governmental policies and inter-governmental disputes concerning international trade, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade, oil prices and security costs. We do not have employees, assets, or operations in Russia, Ukraine, Israel, the Gaza Strip or the West Bank. While limited, any shipment activity is conducted with independent agents in those countries in compliance with all applicable trade sanctions, laws and regulations.

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 a variety of changes to tariffs and impose trade restrictions and accords. Currently, the United States and China have increased concerns affecting certain imports and exports and are considering additional tariffs. We cannot predict the outcome of changes in tariffs, or interpretations, and trade restrictions and accords and the effects they will have on our business. As governments implement restrictions on imports and exports, manufacturers may change sourcing patterns, to the extent possible, and, over time, may shift manufacturing to other countries. Doing business in foreign locations also subjects us to a variety of risks and considerations not normally encountered by domestic enterprises. In addition to being influenced by governmental policies and inter-governmental disputes concerning international trade, our business may also be negatively affected by political developments and changes in government personnel or policies in the United States and other countries, as well as economic turbulence, political unrest and security concerns in the nations and on the trade shipping lanes in which we conduct business and the future impact that these events may have on international trade, oil prices and security costs. We do not have employees, assets, or operations in Russia, Ukraine, Israel, the Gaza Strip or the West Bank. While limited, any shipment activity is conducted with independent agents in those countries in compliance with all applicable trade sanctions, laws and regulations. We have a branch and employees in Lebanon but no significant assets.

Previous wording

The global economic and trade environments remain uncertain, including inflation remaining higher than historical levels, greater volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. In the second quarter of 2024, we saw capacity constraints on exports out of Asia resulting in increases in average buy and sell rates. However, if demand remains soft, if disruptions in the Red Sea improve, then additional ocean transportation capacity will become available. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to lower demand, changing fuel prices, security risks and react to governmental trade policies and other regulations. Additionally, we cannot predict the direct or indirect impact that further changes in purchasing behavior, such as the evolution of international direct e-commerce platforms, could have on our business. Some customers have begun shifting manufacturing to other countries in response to governments implementing higher tariffs on imports, to reduce their supply chain risks, and in response to pandemic disruptions or geopolitical risks, which could negatively impact us.

Current wording

The global economic and trade environments remain uncertain, including inflation remaining higher than historical levels, greater volatility in oil prices, high interest rates and the conflicts in the Middle East and Ukraine. Starting in the second quarter of 2024, we saw capacity constraints on exports out of Asia resulting in increases in average buy and sell rates. However, if demand softens or safe passage through the Red Sea resumes, then additional ocean transportation capacity will become available. These conditions could result in declines in average sell and buy rates. We also expect that pricing volatility will continue as carriers adapt to lower demand, changing fuel prices, security risks and react to governmental trade policies and other regulations. Additionally, we cannot predict the direct or indirect impact that further changes in purchasing behavior, such as the evolution of international direct e-commerce platforms, could have on our business. Some customers have begun shifting manufacturing to other countries in response to governments implementing higher tariffs on imports, to reduce their supply chain risks, and in response to pandemic disruptions or geopolitical risks, which could negatively impact us.

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 and six months ended June 30, 2024 and 2023, including the respective percentage changes comparing 2024 and 2023.

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 nine months ended September 30, 2024 and 2023, including the respective percentage changes comparing 2024 and 2023.

Previous wording

Airfreight services revenues and expenses increased 15% and 23%, respectively, during the three months ended June 30, 2024, as compared with the same period in 2023, due to 2% and 9% increases in average sell and buy rates, respectively, and a 15% increase in tonnage. Average sell rates increases were outpaced by rapidly increasing buy rates resulting from capacity constraints in Asia.

Current wording

Airfreight services revenues and expenses increased 36% and 43%, respectively, during the three months ended September 30, 2024, as compared with the same period in 2023, due to 20% and 25% increases in average sell and buy rates, respectively, and a 19% increase in tonnage.

Previous wording

Tonnage improved for the three and six months in 2024 as a result of increased market demand compared to a slow first half of 2023 and some transportation shifting in the second quarter of 2024 from ocean shipping due to the conflicts in the Middle East.

Current wording

Tonnage increased during the three and nine months ended September 30,2024, as compared with the same periods in 2023, as a result of increased market demand primarily in healthcare and technology sectors compared to a slow first nine months in 2023 and some transportation shifting from ocean shipping in the second and third quarter of 2024 due to the conflicts in the Middle East. Tonnage increased in all regions during the three and nine months ended September 30, 2024.

Previous wording

Average buy rates increased during the three months ended June 30, 2024 on exports out of North Asia due to high demand from international direct e-commerce. Average buy rates also increased on exports out of South Asia and India as demand for airfreight grew from manufacturing relocations in that region and shippers shifting to airfreight due to longer transits in ocean as a result of the conflicts in the Middle East. Average sell and buy rates decreased during the three months and six months ended June 30, 2024 on exports out of North America and Europe due to excess available capacity over slower demand and still high buy rates in the first quarter of 2023. Tonnage increased in all regions during the three and six months ended June 30, 2024, respectively, with the largest increases coming from exports out of North Asia, South Asia and Europe.

Current wording

Average sell and buy rates increased during the three and nine months ended September 30, 2024 on exports out of North Asia due to high demand from international direct e-commerce. Average buy rates also increased on exports out of South Asia and India as demand for airfreight grew from manufacturing relocations in that region and shippers shifting to airfreight due to longer transits in ocean as a result of the conflicts in the Middle East. Average sell and buy rates decreased during the three months and nine months ended September 30, 2024 on exports out of North America and Europe due to excess available capacity over slower demand and still high buy rates in the first quarter of 2023.

Previous wording

Seasonal changes in demand, impact from disruptions in the ocean market due to security concerns and variable demand for airfreight capacity from e-commerce business cause volatility in average buy rates on certain lanes. Additionally, continued uncertainty in the economy including the impacts of inflation and interest rates could negatively affect demand for airfreight services which could reduce our volumes and average sell rates. These conditions could result in further decreases in our revenues, expenses and operating income. We are unable to predict how these uncertainties and any future disruptions will affect our operations or financial results prospectively.

Current wording

Seasonal changes in demand, impact from disruptions in the ocean market due to security and port congestion concerns and variable demand for airfreight capacity from direct e-commerce business cause volatility in average buy rates on certain lanes. Additionally, continued uncertainty in the economy including the impacts of geopolitical concerns could negatively affect demand for airfreight services which could reduce our volumes and average sell rates. These conditions could result in decreases in our revenues, expenses and operating income. We are unable to predict how these uncertainties and any future disruptions will affect our operations or financial results prospectively.

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 10% and 18%, respectively, for the three months ended June 30, 2024 as compared with the same periods in 2023. Ocean freight and ocean services revenues decreased 5% while expenses remained flat for the six months ended June 30, 2024 as compared with the same periods in 2023.The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 66% and 68% of ocean freight and ocean services revenue for the six months ended June 30, 2024 and 2023, respectively.

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 82% and 102%, respectively, for the three months ended September 30, 2024 as compared with the same period in 2023. Ocean freight and ocean services revenues and expense increased 21% and 31%, respectively, for the nine months ended September 30, 2024 as compared with the same period in 2023.The largest component of our ocean freight and ocean services revenue is derived from ocean freight consolidation, which represented 70% and 66% of ocean freight and ocean services revenue for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Ocean freight consolidation revenues and expenses increased 13% and 22%, respectively for the three months ended June 30, 2024, as compared with the same period in 2023, primarily due to 16% and 25% increases in average sell and buy rates, respectively, offset by a 3% decline in containers shipped. Average buy rates per container increased due to longer transit times, congestion and capacity issues caused by the disruptions in the Red Sea and outpaced average sell rates increases. Ocean freight consolidation revenues decreased 8% while expenses remained flat for the six months ended June 30, 2024, as compared with the same period in 2023, primarily due to an 8% decrease in average sell rates while average buy rates and containers shipped remained flat. As supply chain congestion cleared and excess available capacity exceeded demand, average buy rates declined throughout 2023. Overall, average sell rate reductions exceeded buy rate declines driven by North America and Europe in response to market conditions. We expect carrier capacity to grow more than customer demand for the remainder of the year which could result in lower buy and sell rates. If utilization of the Red Sea passage returns to historical levels, additional capacity will become available as a result of shorter transit times which will put additional pressure on pricing.

Current wording

Ocean freight consolidation revenues and expenses increased 29% and 41% for the nine months ended September 30, 2024, as compared with the same period in 2023, primarily due to increases of 24% in average sell rates and 35% in average buy rates. Overall, the sharp rise in average buy and sell rates in the third quarter offset declines in the first half of the year. Containers shipped increased 4%. We expect carrier capacity to grow more than customer demand in the near term and average buy and sell rates to decline as a result. If safe passage through the Red Sea resumes, additional capacity will become available as a result of shorter transit times, which will put additional pressure on pricing.

Previous wording

North Asia and South Asia ocean freight and ocean services revenues increased 28% and 45% and expenses increased 34% and 63%, respectively, for the three months ended June 30, 2024, compared to the same period in 2023. North Asia and South Asia ocean freight and ocean services revenues increased 15% and 20% and expenses increased 22% and 31%, respectively, for the six months ended June 30, 2024, compared to the same periods in 2023. Increases were primarily due to higher average sell and buy rates due to the factors above.

Current wording

North Asia and South Asia ocean freight and ocean services revenues increased 135% and 164% and expenses increased 161% and 210%, respectively, for the three months ended September 30, 2024, compared to the same period in 2023. North Asia and South Asia ocean freight and ocean services revenues increased 55% and 68% and expenses increased 68% and 91%, respectively, for the nine months ended September 30, 2024, compared to the same periods in 2023. Increases were primarily due to higher average sell and buy rates due to the factors above.

Previous wording

North America and Europe ocean freight and ocean services revenues decreased 16% and 19% and expenses decreased 14% and 20%, respectively, for the three months ended June 30, 2024, compared to the same period in 2023. North America and Europe ocean freight and ocean services revenues decreased 24% and 31% and expenses decreased 22% and 33%, respectively, for the six months ended June 30, 2024, compared to the same period in 2023. Decreases were primarily due to lower average sell and buy rates.

Current wording

North America ocean freight and ocean services revenues increased 7% primarily due to higher revenues on imports while expenses decreased 24% due to lower buy rates on exports and a 1% decline in containers shipped, for the three months ended September 30, 2024, compared to the same period in 2023. North America and Europe ocean freight and ocean services revenues decreased 14% and 21%, respectively, and expenses decreased 23% for both for the nine months ended September 30, 2024, compared to 2023. Decreases were primarily due to lower average sell and buy rate and declines in container shipped.

Previous wording

Order management revenues increased 20% and 19%, respectively, and expenses increased 22% and 19%, respectively, for the three and six months ended June 30, 2024, due to increases in volumes from new and existing customers. Direct ocean freight forwarding revenues decreased 4% while expenses remained flat for the three months ended June 30, 2024, principally due to lower volumes and lower rates for ancillary services in the United States. Direct ocean freight forwarding revenues and expenses decreased 8% and 6%, respectively, for the six months ended June 30, 2024.

Current wording

Order management revenues increased 35% and 25%, respectively, and expenses increased 40% and 27%, respectively, for the three and nine months ended September 30, 2024, due to increases in volumes from new and existing customers. Direct ocean freight forwarding revenues and expenses increased 2% and 6%, respectively, for the three months ended September 30, 2024. Direct ocean freight forwarding revenues and expenses decreased 5% and 2%, respectively, for the nine months ended September 30, 2024 principally due to lower volumes and lower rates for ancillary services in the United States.

Previous wording

Global economic conditions remain uncertain. Further, carriers are adding new vessels which will increase capacity. In addition, if the conflicts in the Middle East improve, additional capacity will become available due to shorter transit times. These conditions could depress sell and buy rates. We expect that pricing volatility will continue as carriers adapt to fluctuations in fuel prices, new regulations, security risks and manage available capacity. As customers seek lower pricing and react to governmental trade policies and other regulations, this could result in further decreases in our revenues and operating income.

Current wording

Global economic conditions remain uncertain. 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. These conditions could depress sell and buy rates. We expect that pricing volatility will continue as carriers adapt to fluctuations in fuel prices, new regulations, security risks and manage available capacity. As customers seek lower pricing and react to governmental trade policies and other regulations, this could result in further decreases in our revenues and operating income.

Previous wording

Customs brokerage and other services revenues increased 4% and expenses increased 6% for the three months ended June 30, 2024, respectively, as compared with the same period in 2023, primarily due to increases in customs clearances and road freight shipments, principally in North America.

Current wording

Customs brokerage and other services revenues increased 10% and expenses increased 14% for the three months ended September 30, 2024, respectively, as compared with the same period in 2023, primarily due to increases in customs clearances, import services and road freight from higher shipment volumes, principally in North America.

Previous wording

Customs brokerage and other services revenues decreased 4% and expenses decreased 6% for the six months ended June 30, 2024, respectively, as compared with the same period in 2023, primarily due to lower volumes for local drayage and storage and warehouse and distribution services in the first quarter of 2024, principally in North America. Import services, including charges at ports such as detention, drayage, terminal charges and delivery, decreased significantly in the first quarter 2024 as compared to the first quarter of 2023 that still had residual effects from the supply chain congestion. Road freight, warehousing and distribution services also declined in the first quarter of 2024 due to lower volumes and decreased trucking, storage and labor costs.

Current wording

Customs brokerage and other services revenues remained flat while expenses increased 1% for the nine months ended September 30, 2024, respectively, as compared with the same period in 2023, primarily as increases in customs clearances and road freight shipments were offset by lower volumes for local drayage and storage and warehouse and distribution services, principally in North America. Import services, including charges at ports such as detention, drayage, terminal charges and delivery, decreased significantly in the first quarter 2024 as compared to the first quarter of 2023 that still had residual effects from the supply chain congestion. Road freight, warehousing and distribution services also declined in the first quarter of 2024 due to lower volumes and decreased trucking, storage and labor costs.

Previous wording

While customers continue to value our brokerage services due to changing tariffs and increasing complexity in the declaration process, some customers are opting to use back up customs brokerage service providers as a risk reduction strategy. Customers continue to seek knowledgeable customs brokers with sophisticated computerized capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment. Should international trade slow, volumes shipped and pricing could further negatively impact our revenues and expenses.

Current wording

While customers continue to value our brokerage services due to changing tariffs and increasing complexity in the declaration process, some customers are opting to use back up customs brokerage service providers as a risk reduction strategy. Customers continue to seek knowledgeable customs brokers with sophisticated computerized capabilities critical to an overall logistics management program that are necessary to rapidly respond to changes in the regulatory and security environment. Should international trade slow, volumes shipped and pricing could negatively impact our revenues and expenses.

Previous wording

Salaries and related costs remained flat for the three months ended June 30, 2024, but decreased 4% for the six months ended June 30, 2024, as compared with the same periods in 2023. Decreases in commissions and bonuses earned from lower revenues and operating income and a 4% decrease in headcount were partially offset by increases in salaries.

Current wording

Salaries and related costs increased 9% for the three months ended September 30, 2024 as compared with the same period in 2023 principally due to increases in commissions and bonuses earned from higher revenues and operating income while headcount remained flat. During the nine months ended September 30, 2024, salaries and related costs remained flat, consistent with operating income and headcount.

Previous 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, 2024, decreased 15% when compared to the same periods in 2023, primarily due to the 16% decreasein 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 nine months ended September 30, 2024, decreased 1% when compared to the same periods in 2023, primarily due tooperating income remaining flat.

Previous wording

So long as the economic environment remains uncertain, we will be focused on aligning operational headcount and our overhead expenses commensurate with our transactional volumes. We expect to continue to enhance the effectiveness and security of our systems and deploy additional protection technologies and processes which will result in increased expenses in the future. We will also continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.

Current wording

So long as the economic environment remains uncertain, we will be focused on aligning operational headcount and our overhead expenses commensurate with our transactional volumes. We expect to continue to enhance security and internal controls over our technology and systems and plan to deploy additional solutions which will result in increased expenses in the future. We will also continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.

Previous wording

Our consolidated effective income tax rate was 25.8% and 26.3% for the three and six months ended June 30, 2024, as compared to 26.4% and 25.6% in the comparable periods of 2023. For the three and six months ended June 30, 2024, and 2023, there was no BEAT expense and GILTI expense was insignificant. All periods benefited from U.S. income tax deductions for FDII as well as available U.S. Federal foreign tax credits principally from withholding taxes related to our foreign operations. We have no liability as of June 30, 2024, for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023 in the U.S., under the Inflation Reduction Act. Some elements of the recorded impacts of the Inflation Reduction Act could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or Treasury which could impact the estimates of the amounts the Company would be required to record for BMT in the future.

Current wording

Our consolidated effective income tax rate was 26.4% for both the three and nine months ended September 30, 2024, as compared to 26.3% and 25.8% in the comparable periods of 2023. For the three and nine months ended September 30, 2024, and 2023, there was no BEAT expense and GILTI expense was insignificant. All periods benefited from U.S. income tax deductions for FDII as well as available U.S. Federal foreign tax credits principally from withholding taxes related to our foreign operations. We have no liability as of September 30, 2024, for the 15% corporate alternative minimum tax based on financial statement income (BMT), which became effective in 2023 in the U.S., under the Inflation Reduction Act. Some elements of the recorded impacts of the Inflation Reduction Act could be impacted by further legislative action as well as additional interpretations and guidance issued by the Internal Revenue Service or Treasury which could impact the estimates of the amounts the Company would be required to record for BMT in the future.

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. We try to compensate for these exposures by accelerating international currency settlements among our offices and agents. We may enter into foreign currency hedging transactions where there are regulatory or commercial limitations on our ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to mitigate short-term exchange losses. Any such hedging activity during the three and six months ended June 30, 2024 and 2023 was insignificant. We had no foreign currency derivatives outstanding at June 30, 2024 and December 31, 2023. For the three months ended June 30, 2024, net foreign currency gains were approximately $5 million compared to net foreign currency losses of approximately $3 million in the same period in 2023. During the six months ended June 30, 2024, net foreign currency gains were approximately $12 million compared to net foreign currency losses of approximately $6 million in the same period in 2023.

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. We try to compensate for these exposures by accelerating international currency settlements among our offices and agents. We may enter into foreign currency hedging transactions where there are regulatory or commercial limitations on our ability to move money freely around the world or the short-term financial outlook in any country is such that hedging is the most time-sensitive way to mitigate short-term exchange losses. Any such hedging activity during the three and nine months ended September 30, 2024 and 2023 was insignificant. We had no foreign currency derivatives outstanding at September 30, 2024 and December 31, 2023. For the three months ended September 30, 2024, net foreign currency losses were approximately $11 million compared to net foreign currency losses of less than $1 million in the same period in 2023. During the nine months ended September 30, 2024, net foreign currency gains were less than $1 million compared to net foreign currency losses of approximately $6 million in the same period in 2023.

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 and six months ended June 30, 2024 was $127 million and $384 million as compared with $158 million and $705 million for the same period in 2023. The decreases of $31 million and $321 million for the three and six months ended June 30, 2024, were primarily due to lower net earnings and changes in working capital. At June 30, 2024, working capital was $1,536 million, including cash and cash equivalents of $1,272 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at June 30, 2024. Management believes that our current cash position and operating cash flows will be sufficient to meet our capital and liquidity requirements for at least the next 12 months and thereafter for the foreseeable future, including meeting any contingent liabilities related to standby letters of credit and other obligations.

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 nine months ended September 30, 2024 was $90 million and $474 million as compared with $190 million and $895 million for the same period in 2023. The decreases of $100 million and $421 million for the three and nine months ended September 30, 2024, were primarily due to changes in working capital. At September 30, 2024, working capital was $1,707 million, including cash and cash equivalents of $1,293 million. Other than our recorded lease liabilities, we had no long-term obligations or debt at September 30, 2024. Management believes that our current cash position and operating cash flows will be sufficient to meet our capital and liquidity requirements for at least the next 12 months and thereafter for the foreseeable future, including meeting any contingent liabilities related to standby letters of credit and other obligations.

Previous wording

Our business historically has been subject to seasonal fluctuations, and this is expected to continue in the future. Cash flows fluctuate as a result of this seasonality. Historically, the first quarter shows an excess of customer collections over customer billings. This results in positive cash flow. The increased activity associated with periods of higher demand (typically commencing late second or early third quarter and continuing well into the fourth quarter) causes an excess of customer billings over customer collections. This cyclical growth in customer receivables consumes available cash. However, there is no assurance that this seasonal trend will occur in the future or to what degree it will continue to be impacted in 2024 by an uncertain global economy.

Current wording

Our business historically has been subject to seasonal fluctuations, and this is expected to continue in the future. Cash flows fluctuate as a result of this seasonality. Historically, the first quarter shows an excess of customer collections over customer billings. This results in positive cash flow. The increased activity associated with periods of higher demand (typically commencing late second or early third quarter and continuing well into the fourth quarter) causes an excess of customer billings over customer collections. This cyclical growth in customer receivables consumes available cash. However, there is no assurance that this seasonal trend will occur in the future.

Previous wording

Cash used in investing activities for the three and six months ended June 30, 2024 was $8 million and $18 million as compared with $11 million and $21 million for the same periods in 2023, primarily for capital expenditures. Capital expenditures in the three and six months ended June 30, 2024 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Total anticipated capital expenditures in 2024 are currently estimated to be $60 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology.

Current wording

Cash used in investing activities for the three and nine months ended September 30, 2024 was $13 million and $30 million as compared with $8 million and $29 million for the same periods in 2023, primarily for capital expenditures. Capital expenditures in the three and nine months ended September 30, 2024 were primarily related to continuing investments in building and leasehold improvements and technology and facilities equipment. Total anticipated capital expenditures in 2024 are currently estimated to be $50 million. This includes routine capital expenditures, leasehold and building improvements and investments in technology.

Previous wording

Cash used in financing activities during the three and six months ended June 30, 2024 was $207 million and $582 million as compared with $792 million and $1,018 million for the same period in 2023. We use the proceeds from stock option exercises and available cash to repurchase our common stock on the open market to reduce outstanding shares. During the three and six months ended June 30, 2024, we used cash to repurchase 0.9 million and 3.9 million shares of common stock, compared to 6.0 million and 8.0 million shares of common stock during the same period in 2023.

Current wording

Cash used in financing activities during the three and nine months ended September 30, 2024 was $76 million and $659 million as compared with $229 million and $1,247 million for the same period in 2023. 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 both the three and nine months ended September 30, 2024, we used cash to repurchase 1.2 million and 5.1 million shares of common stock, compared to 2.6 million and 10.5 million shares of common stock during the same periods in 2023.

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 June 30, 2024, borrowings under these credit lines were $36 million and we were contingently liable for $95 million from standby letters of credit and guarantees. The standby letters of credit and guarantees primarily relate to obligations of our foreign subsidiaries for credit extended in the ordinary course of business by direct carriers, primarily airlines, and for duty and tax deferrals available from governmental entities responsible for customs and value-added-tax (VAT) taxation. The total underlying amounts due and payable for transportation and governmental excises are properly recorded as obligations in the accounting records of the respective foreign subsidiaries, and there would be no need to record additional expense in the unlikely event the parent company is required to perform.

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 September 30, 2024, borrowings under these credit lines were $48 million and we were contingently liable for $87 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. At June 30, 2024, cash and cash equivalent balances of $572 million were held by our non-United States subsidiaries, of which $2 million was held in banks in the United States. Earnings of our foreign subsidiaries are not considered to be indefinitely reinvested outside of the United States.

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. At September 30, 2024, cash and cash equivalent balances of $635 million were held by our non-United States subsidiaries, of which $4 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.