filings.toolsItem 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
68K characters. Original on sec.gov · Markdown
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes.
FORWARD-LOOKING INFORMATION
Our Quarterly Report on Form 10-Q, including this discussion and analysis of our financial condition and results of operations and our disclosures about market risk, contains certain “forward-looking statements.” These statements represent our expectations, beliefs, intentions, or strategies concerning future events that, by their nature, involve risks and uncertainties. Forward-looking statements represent our expectations, beliefs, intentions, or strategies concerning future events. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience or our present expectations, including, but not limited to, factors such as changes in economic conditions, including uncertain consumer demand; changes in market demand and pressures on the pricing for our services; fuel price increases or decreases, or fuel shortages; competition and growth rates within the global logistics industry that could adversely impact our profitability; freight levels and increasing costs and availability of truck capacity or alternative means of transporting freight; risks associated with seasonal changes or significant disruptions in the transportation industry; risks associated with identifying and completing suitable acquisitions; our dependence upon and changes in relationships with existing contracted truck, rail, ocean, and air carriers; risks associated with the loss of significant customers; risks associated with reliance on technology to operate our business; cyber-security related risks; our ability to staff and retain employees; risks associated with operations outside of the U.S.; our ability to successfully integrate the operations of acquired companies with our historic operations; climate change related risks; risks associated with our indebtedness; risks associated with interest rates; risks associated with litigation, including contingent auto liability and insurance coverage; risks associated with the potential impact of changes in government regulations including environmental-related regulations; risks associated with the changes to income tax regulations; risks associated with the produce industry, including food safety and contamination issues; the impact of changes in political and governmental conditions; changes to our capital structure; changes due to catastrophic events; risks associated with the usage of artificial intelligence technologies; and other risks and uncertainties detailed in our Annual and Quarterly Reports. Therefore, actual results may differ materially from our expectations based on these and other risks and uncertainties, including those described in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 16, 2024, as well as the updates to these risk factors included in Part II—“Item 1A, Risk Factors,” herein.
Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update such statement to reflect events or circumstances arising after such date.
OVERVIEW
C.H. Robinson Worldwide, Inc. (“C.H. Robinson,” “the company,” “we,” “us,” or “our”) is one of the original logistics leaders. Companies around the world look to us to reimagine supply chains, advance freight technology, and solve logistics challenges—from the simple to the most complex. Through our unmatched expertise, unrivaled scale, and tailored solutions, we ensure the seamless delivery of goods across industries and continents via truckload, less-than-truckload, ocean, air, and beyond. As a responsible global citizen, we make supply chains more sustainable and proudly contribute millions to the causes that matter most to our employees.
Our adjusted gross profits and adjusted gross profit margin are non-GAAP financial measures. Adjusted gross profits are calculated as gross profits excluding amortization of internally developed software utilized to directly serve our customers and contracted carriers. Adjusted gross profit margin is calculated as adjusted gross profits divided by total revenues. We believe adjusted gross profits and adjusted gross profit margin are useful measures of our ability to source, add value, and sell services and products that are provided by third parties, and we consider adjusted gross profits to be a primary performance measurement. Accordingly, the discussion of our results of operations often focuses on the changes in our adjusted gross profits and adjusted gross profit margin.
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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Transportation | $ | 4,278,300 | $ | 4,029,407 | $ | 12,482,818 | $ | 12,442,199 | |||||||||||||||||||||||||||
| Sourcing | 366,341 | 311,623 | 1,057,482 | 932,357 | |||||||||||||||||||||||||||||||
| Total revenues | 4,644,641 | 4,341,030 | 13,540,300 | 13,374,556 | |||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 3,575,983 | 3,421,960 | 10,501,362 | 10,546,551 | |||||||||||||||||||||||||||||||
| Purchased products sourced for resale | 333,405 | 284,221 | 958,547 | 842,020 | |||||||||||||||||||||||||||||||
| Direct internally developed software amortization | 11,441 | 8,233 | 32,546 | 24,299 | |||||||||||||||||||||||||||||||
| Total direct costs | 3,920,829 | 3,714,414 | 11,492,455 | 11,412,870 | |||||||||||||||||||||||||||||||
| Gross profits / Gross profit margin | 723,812 | 15.6% | 626,616 | 14.4% | 2,047,845 | 15.1% | 1,961,686 | 14.7% | |||||||||||||||||||||||||||
| Plus: Direct internally developed software amortization | 11,441 | 8,233 | 32,546 | 24,299 | |||||||||||||||||||||||||||||||
| Adjusted gross profits / Adjusted gross profit margin | $ | 735,253 | 15.8% | $ | 634,849 | 14.6% | $ | 2,080,391 | 15.4% | $ | 1,985,985 | 14.8% |
Our adjusted operating margin is a non-GAAP financial measure calculated as operating income divided by adjusted gross profits. We believe adjusted operating margin is a useful measure of our profitability in comparison to our adjusted gross profits, which we consider a primary performance metric as discussed above. The reconciliation of operating margin to adjusted operating margin is presented below (dollars in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Total revenues | $ | 4,644,641 | $ | 4,341,030 | $ | 13,540,300 | $ | 13,374,556 | |||||||||||||||
| Income from operations | 180,119 | 113,522 | 485,342 | 407,178 | |||||||||||||||||||
| Operating margin | 3.9% | 2.6% | 3.6% | 3.0% | |||||||||||||||||||
| Adjusted gross profits | $ | 735,253 | $ | 634,849 | $ | 2,080,391 | $ | 1,985,985 | |||||||||||||||
| Income from operations | 180,119 | 113,522 | 485,342 | 407,178 | |||||||||||||||||||
| Adjusted operating margin | 24.5% | 17.9% | 23.3% | 20.5% |
MARKET TRENDS
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 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 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 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 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 $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 $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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Transportation | $ | 4,278,300 | $ | 4,029,407 | 6.2 | % | $ | 12,482,818 | $ | 12,442,199 | 0.3 | % | |||||||||||||||||||||||
| Sourcing | 366,341 | 311,623 | 17.6 | % | 1,057,482 | 932,357 | 13.4 | % | |||||||||||||||||||||||||||
| Total revenues | 4,644,641 | 4,341,030 | 7.0 | % | 13,540,300 | 13,374,556 | 1.2 | % | |||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 3,575,983 | 3,421,960 | 4.5 | % | 10,501,362 | 10,546,551 | (0.4) | % | |||||||||||||||||||||||||||
| Purchased products sourced for resale | 333,405 | 284,221 | 17.3 | % | 958,547 | 842,020 | 13.8 | % | |||||||||||||||||||||||||||
| Personnel expenses | 361,559 | 343,532 | 5.2 | % | 1,101,868 | 1,103,915 | (0.2) | % | |||||||||||||||||||||||||||
| Other selling, general, and administrative expenses | 193,575 | 177,795 | 8.9 | % | 493,181 | 474,892 | 3.9 | % | |||||||||||||||||||||||||||
| Total costs and expenses | 4,464,522 | 4,227,508 | 5.6 | % | 13,054,958 | 12,967,378 | 0.7 | % | |||||||||||||||||||||||||||
| Income from operations | 180,119 | 113,522 | 58.7 | % | 485,342 | 407,178 | 19.2 | % | |||||||||||||||||||||||||||
| Interest and other income/expense, net | (36,282) | (20,748) | 74.9 | % | (74,587) | (67,272) | 10.9 | % | |||||||||||||||||||||||||||
| Income before provision for income taxes | 143,837 | 92,774 | 55.0 | % | 410,755 | 339,906 | 20.8 | % | |||||||||||||||||||||||||||
| Provision for income taxes | 46,608 | 10,825 | 330.6 | % | 94,371 | 45,750 | 106.3 | % | |||||||||||||||||||||||||||
| Net income | $ | 97,229 | $ | 81,949 | 18.6 | % | $ | 316,384 | $ | 294,156 | 7.6 | % | |||||||||||||||||||||||
| Diluted net income per share | $ | 0.80 | $ | 0.68 | 17.6 | % | $ | 2.63 | $ | 2.46 | 6.9 | % | |||||||||||||||||||||||
| Average employee headcount | 14,085 | 15,577 | (9.6) | % | 14,537 | 16,240 | (10.5) | % | |||||||||||||||||||||||||||
| Adjusted gross profit margin percentage**(1)** | |||||||||||||||||||||||||||||||||||
| Transportation | 16.4 | % | 15.1 | % | 130 bps | 15.9 | % | 15.2 | % | 70 bps | |||||||||||||||||||||||||
| Sourcing | 9.0 | % | 8.8 | % | 20 bps | 9.4 | % | 9.7 | % | (30 bps) | |||||||||||||||||||||||||
| Total adjusted gross profit margin | 15.8 | % | 14.6 | % | 120 bps | 15.4 | % | 14.8 | % | 60 bps |
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
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 September 30, 2024, Compared to the Three Months Ended September 30, 2023
Total revenues and direct costs. Total transportation revenues and direct costs increased primarily due to increased pricing and purchased transportation costs in ocean services. 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 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 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 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 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 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 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 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. 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 nine months ended September 30, 2024. 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, 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 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 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | % change | 2024 | 2023 | % change | |||||||||||||||||||||||||||||
| Total revenues | $ | 2,934,617 | $ | 3,086,970 | (4.9) | % | $ | 8,924,839 | $ | 9,470,425 | (5.8) | % | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 2,513,953 | 2,700,460 | (6.9) | % | 7,687,408 | 8,256,728 | (6.9) | % | |||||||||||||||||||||||||||
| Personnel expenses | 164,122 | 157,409 | 4.3 | % | 510,110 | 496,710 | 2.7 | % | |||||||||||||||||||||||||||
| Other selling, general, and administrative expenses | 107,775 | 116,980 | (7.9) | % | 328,557 | 352,985 | (6.9) | % | |||||||||||||||||||||||||||
| Total costs and expenses | 2,785,850 | 2,974,849 | (6.4) | % | 8,526,075 | 9,106,423 | (6.4) | % | |||||||||||||||||||||||||||
| Income from operations | $ | 148,767 | $ | 112,121 | 32.7 | % | $ | 398,764 | $ | 364,002 | 9.5 | % | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||
| Average employee headcount | 5,595 | 6,278 | (10.9) | % | 5,800 | 6,574 | (11.8) | % | |||||||||||||||||||||||||||
| Service line volume statistics | |||||||||||||||||||||||||||||||||||
| Truckload | (3.5) | % | (1.0) | % | |||||||||||||||||||||||||||||||
| LTL | 2.5 | % | 2.5 | % | |||||||||||||||||||||||||||||||
| Adjusted gross profits(1) | |||||||||||||||||||||||||||||||||||
| Truckload | $ | 259,961 | $ | 222,991 | 16.6 | % | $ | 750,516 | $ | 720,604 | 4.2 | % | |||||||||||||||||||||||
| LTL | 141,412 | 136,358 | 3.7 | % | 425,050 | 408,863 | 4.0 | % | |||||||||||||||||||||||||||
| Other | 19,291 | 27,161 | (29.0) | % | 61,865 | 84,230 | (26.6) | % | |||||||||||||||||||||||||||
| Total adjusted gross profits | $ | 420,664 | $ | 386,510 | 8.8 | % | $ | 1,237,431 | $ | 1,213,697 | 2.0 | % |
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
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 and a decline in volume in truckload services. 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. 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 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 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. Refer to Note 13, Restructuring, for further discussion related to our 2024 Restructuring Program.
The operating expenses of NAST and all other segments include allocated corporate expenses. 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 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 and a decline in volume in truckload services. 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 during the nine months ended September 30, 2024. 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 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. 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 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 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | % change | 2024 | 2023 | % change | |||||||||||||||||||||||||||||
| Total revenues | $ | 1,141,190 | $ | 719,045 | 58.7 | % | $ | 2,921,050 | $ | 2,288,890 | 27.6 | % | |||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Purchased transportation and related services | 906,554 | 549,152 | 65.1 | % | 2,322,302 | 1,761,847 | 31.8 | % | |||||||||||||||||||||||||||
| Personnel expenses | 92,419 | 90,957 | 1.6 | % | 279,077 | 276,157 | 1.1 | % | |||||||||||||||||||||||||||
| Other selling, general, and administrative expenses | 54,102 | 75,445 | (28.3) | % | 159,022 | 187,632 | (15.2) | % | |||||||||||||||||||||||||||
| Total costs and expenses | 1,053,075 | 715,554 | 47.2 | % | 2,760,401 | 2,225,636 | 24.0 | % | |||||||||||||||||||||||||||
| 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 | ||||||||||||||||||||||||||||||
| Average employee headcount | 4,552 | 5,082 | (10.4) | % | 4,714 | 5,276 | (10.7) | % | |||||||||||||||||||||||||||
| Service line volume statistics | |||||||||||||||||||||||||||||||||||
| Ocean | 7.0 | % | 6.0 | % | |||||||||||||||||||||||||||||||
| Air | 20.0 | % | 17.5 | % | |||||||||||||||||||||||||||||||
| Customs | 6.5 | % | 7.0 | % | |||||||||||||||||||||||||||||||
| Adjusted gross profits(1) | |||||||||||||||||||||||||||||||||||
| Ocean | $ | 163,272 | $ | 103,755 | 57.4 | % | $ | 392,757 | $ | 321,299 | 22.2 | % | |||||||||||||||||||||||
| Air | 33,143 | 29,745 | 11.4 | % | 93,790 | 94,126 | (0.4) | % | |||||||||||||||||||||||||||
| Customs | 28,266 | 24,905 | 13.5 | % | 81,015 | 73,367 | 10.4 | % | |||||||||||||||||||||||||||
| Other | 9,955 | 11,488 | (13.3) | % | 31,186 | 38,251 | (18.5) | % | |||||||||||||||||||||||||||
| Total adjusted gross profits | $ | 234,636 | $ | 169,893 | 38.1 | % | $ | 598,748 | $ | 527,043 | 13.6 | % |
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
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, 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 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 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 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. 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 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 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. Personnel expenses increased primarily due to increased 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. 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 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 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 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 | (56,763) | (2,090) | N/M | (74,071) | (20,078) | N/M | |||||||||||||||||||||||||||||
| Adjusted gross profits(1) | |||||||||||||||||||||||||||||||||||
| Robinson Fresh | 36,708 | 31,083 | 18.1 | % | 110,327 | 100,123 | 10.2 | % | |||||||||||||||||||||||||||
| Managed Services | 27,949 | 29,427 | (5.0) | % | 85,637 | 87,350 | (2.0) | % | |||||||||||||||||||||||||||
| Other Surface Transportation | 15,296 | 17,936 | (14.7) | % | 48,248 | 57,772 | (16.5) | % | |||||||||||||||||||||||||||
| Total adjusted gross profits | $ | 79,953 | $ | 78,446 | 1.9 | % | $ | 244,212 | $ | 245,245 | (0.4) | % |
(1) Adjusted gross profit margin is a non-GAAP financial measure explained above.
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 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 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 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. 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 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 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
We have historically generated substantial cash from operations, which has enabled us to fund our organic growth while paying cash dividends and repurchasing stock. In addition, we maintain the following debt facilities as described in Note 4, Financing Arrangements (in thousands):
| Description | Carrying Value as of September 30, 2024 | Borrowing Capacity | Maturity | |||||||||||||||||
| Revolving credit facility | $ | 150,000 | $ | 1,000,000 | November 2027 | |||||||||||||||
| Senior Notes, Series B | 150,000 | 150,000 | August 2028 | |||||||||||||||||
| Senior Notes, Series C | 175,000 | 175,000 | August 2033 | |||||||||||||||||
| Receivables Securitization Facility (1) | 489,729 | 500,000 | November 2025 | |||||||||||||||||
| Senior Notes (1) | 596,627 | 600,000 | April 2028 | |||||||||||||||||
| Total debt | $ | 1,561,356 | $ | 2,425,000 |
(1) Net of unamortized discounts and issuance costs.
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 $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. We are continually looking for acquisitions, but those acquisitions must fit our culture and enhance our growth opportunities.
The following table summarizes our major sources and uses of cash and cash equivalents (dollars in thousands):
| Nine Months Ended September 30, | |||||||||||||||||
| 2024 | 2023 | % change | |||||||||||||||
| Sources (uses) of cash: | |||||||||||||||||
| Cash provided by operating activities | $ | 241,154 | $ | 684,615 | (64.8) | % | |||||||||||
| Capital expenditures | (59,099) | (67,975) | |||||||||||||||
| Sale of property and equipment | — | 1,324 | |||||||||||||||
| Cash used for investing activities | (59,099) | (66,651) | (11.3) | % | |||||||||||||
| Repurchase of common stock | — | (63,884) | |||||||||||||||
| Cash dividends | (220,256) | (218,942) | |||||||||||||||
| Net payments on debt | (20,000) | (391,000) | |||||||||||||||
| Other financing activities | 56,012 | 22,307 | |||||||||||||||
| Cash used for financing activities | (184,244) | (651,519) | (71.7) | % | |||||||||||||
| Effect of exchange rates on cash and cash equivalents | (653) | (6,708) | |||||||||||||||
| 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 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.
Cash used for investing activities. Capital expenditures consisted primarily of investments in software, which are intended to develop and deliver scalable solutions by transforming our processes, accelerate the pace of development and prioritizing data integrity, improve our customer and carrier experience, and increase efficiency to help expand our adjusted operating margins and grow the business.
Cash used for financing activities. 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. Over the long term, we remain committed to our quarterly dividend and share repurchases to enhance shareholder value. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. We may seek to retire or purchase our outstanding Senior Notes through open market cash purchases, privately negotiated transactions or otherwise.
We believe that, assuming no change in our current business plan, our available cash, together with expected future cash generated from operations, the amount available under our credit facilities, and credit available in the market, will be sufficient to satisfy our anticipated needs for working capital, capital expenditures, and cash dividends for at least the next 12 months and the foreseeable future. We also believe we could obtain funds under lines of credit or other forms of indebtedness on short notice, if needed.
As of September 30, 2024, we were in compliance with all of the covenants under our debt agreements.
Recently Issued Accounting Pronouncements
Refer to Note 1, Basis of Presentation, contained in this Quarterly Report and in the company's 2023 Annual Report on Form 10-K for a discussion of recently issued accounting pronouncements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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 September 30, 2024, there were no material changes to our critical accounting policies and estimates.
Previous: Item 1. FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK