REPORTABLE SEGMENTS

12 Months Ended

Dec. 31, 2024

REPORTABLE SEGMENTS

REPORTABLE SEGMENTS

3.REPORTABLE SEGMENTS

Reportable segments are components of an enterprise that engage in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. The Company’s CODM is its Chief Executive Officer.

The Company identified two reportable segments on the basis of internal information provided to the CODM: Ocean Transportation and Logistics which are described in Note 1. Each segment is managed separately based upon fundamental differences in the operations of each segment. The Company’s Ocean Transportation service primarily involves the transportation of customer cargo on Company owned and chartered vessels. The Company’s Logistics service provides customers with logistics solutions primarily using third-party purchased transportation. The Company’s CODM assesses the performance of each segment using operating income. The Company’s CODM reviews the performance of each segment using monthly internal reports which provide variance analysis of actual results by segment compared to budget, forecast and prior year. The Company’s CODM uses this information when making decisions about the allocation of operating and capital resources to each segment. Segment balance sheet information is not provided to the CODM as capital decisions are based upon the Company’s consolidated balance sheet.

Reportable segment financial information for the years ended December 31, 2024, 2023 and 2022, are as follows:

	Year Ended						Year Ended						Year Ended
	December 31, 2024						December 31, 2023						December 31, 2022
(In millions)	Ocean Transportation		Logistics		Total		Ocean Transportation		Logistics		Total		Ocean Transportation		Logistics		Total
Operating Revenue (1)(2)	$	2,809.7	$	612.1	$	3,421.8	$	2,477.0	$	617.6	$	3,094.6	$	3,544.6	$	798.4	$	4,343.0
Operating Expenses:
Operating costs:
Direct cargo expense		980.1		—		980.1		946.2		—		946.2		1,003.8		—		1,003.8
Vessel operating expense		610.5		—		610.5		580.4		—		580.4		703.6		—		703.6
Operating overhead (3)		329.1		—		329.1		297.7		—		297.7		301.2		—		301.2
Direct operating costs		—		493.1		493.1		—		504.2		504.2		—		663.7		663.7
Depreciation and amortization		141.1		12.0		153.1		130.6		11.6		142.2		131.1		8.1		139.2
Total operating costs		2,060.8		505.1		2,565.9		1,954.9		515.8		2,470.7		2,139.7		671.8		2,811.5
Loss (Income) from SSAT		1.0		—		1.0		(2.2)		—		(2.2)		(83.1)		—		(83.1)
General and administrative		247.0		56.6		303.6		229.5		53.8		283.3		206.8		54.2		261.0
Total Costs and Expenses		2,308.8		561.7		2,870.5		2,182.2		569.6		2,751.8		2,263.4		726.0		2,989.4
Operating Income:	$	500.9	$	50.4		551.3	$	294.8	$	48.0		342.8	$	1,281.2	$	72.4		1,353.6
Interest income						48.3						36.0						8.2
Interest expense						(7.5)						(12.2)						(18.0)
Other income (expense), net						7.3						6.4						8.5
Income before Taxes						599.4						373.0						1,352.3
Income taxes						(123.0)						(75.9)						(288.4)
Net Income					$	476.4					$	297.1					$	1,063.9
Capital Expenditures (4)	$	298.9	$	11.2	$	310.1	$	240.2	$	8.2	$	248.4	$	190.9	$	18.4	$	209.3

(1) Ocean Transportation operating revenue excludes inter-segment revenue of $92.8 million, $76.5 million and $93.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(2) Logistics operating revenue excludes inter-segment revenue of $153.0 million, $132.2 million and $177.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(3) Ocean Transportation operating overhead includes dry-docking amortization of $27.2 million, $25.3 million and $24.9 million for the year ended December 31, 2024, 2023 and 2022, respectively.

(4) Capital expenditures exclude accrued capital expenditures of $7.9 million, $10.8 million and $5.5 million as of December 31, 2024, 2023 and 2022, respectively.

Ocean Transportation’s operating expenses includes the following:

● Operating costs includes:

o Direct Cargo Expense includes terminal handling costs including labor and wharfage, outside purchased transportation and other related costs.

o Vessel Operating Expense includes crew wages and related costs; fuel; pilots, tugs, lines and related costs; vessel charter expenses; and other vessel operating related expenses.

o Operating Overhead Expense includes vessel repair and maintenance costs, inactive vessel costs, dry-docking amortization, equipment lease costs, equipment repair costs, insurance, port engineers and other maintenance costs, other vessel and shoreside related overhead and other indirect costs.

o Depreciation and Amortization Expense includes depreciation of property and equipment and amortization of intangible assets.

● Income from SSAT includes the Company’s share of income from its equity investment in SSAT and has been aggregated into the Ocean Transportation segment due to the operations of SSAT being an integral part of the Company’s Ocean Transportation business (see Note 4).

● General and Administrative Expense includes employee salaries, wages and other related costs, equipment maintenance, computer hardware and software, professional fees and other general and administrative expenses.

Logistics’ operating expenses includes the following:

● Operating costs includes:

o Direct Operating Expense includes transportation costs, transportation brokerage expenses, agency commissions, leases of warehouses, cross-dock and other facility operating costs, wages and other related costs, and other operating overhead.

o Depreciation and Amortization Expense includes depreciation of property and equipment and amortization of intangible assets.

● General and Administrative Expense includes employee salaries, wages and other related costs, computer hardware and software, professional fees and other general and administrative expenses.

The Company’s Ocean Transportation segment provides ocean transportation services to the Logistics segment, and the Logistics segment provides logistics services to the Ocean Transportation segment in certain transactions. Accordingly, inter-segment revenue of $245.8 million, $208.7 million and $270.9 million for the years ended December 31, 2024, 2023 and 2022, respectively, have been eliminated from operating revenues. In arrangements where the customer purchases ocean transportation and logistics services, the revenues are allocated to each reportable segment based upon the contractual amounts for each type of service.

Customer Concentration: The Company’s Ocean Transportation segment serves customers in numerous industries and carries a wide variety of cargo, mitigating its dependence upon any single customer or single type of cargo. The Company’s 10 largest Ocean Transportation customers account for approximately 18 percent of the Company’s Ocean Transportation revenue.

The Company’s Logistics segment serves customers in numerous industries. The Company’s 10 largest logistics customers account for approximately 17 percent of the Company’s Logistics revenue.