• Expeditors Reports Second Quarter 2017 EPS of $0.60

    Source: Nasdaq GlobeNewswire / 08 Aug 2017 08:30:46   America/New_York

    SEATTLE, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2017 financial results including the following highlights compared to the same quarter of 2016:

    • Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 5% to $0.60
    • Net Earnings Attributable to Shareholders decreased 6% to $109 million
    • Operating Income decreased 6% to $168 million
    • Revenues increased 13% to $1.7 billion
    • Net Revenues2 increased 2% to $564 million
    • Airfreight tonnage volume increased 9% and ocean container volume increased 4%

    “Volumes remain strong across all of our services and we believe we continue to take profitable market share,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our order management, warehousing and distribution, Transcon, and customs brokerage businesses performed exceptionally well during the quarter. While we experienced similar margin pressures that we have seen in recent quarters in our air and ocean offerings, we recorded some of the highest freight volumes in our company’s history. As always, our people provided outstanding customer service and performed extremely well in this environment.

    “Global demand for air and ocean capacity continues to be stronger than we have seen in the past few years, which has led to a scarcity of favorable pricing. As the rate environment continues to shift, we are being increasingly disciplined in how we work both with our customers and with our carrier partners to secure access to capacity. In June, we initiated rate increases in certain high-volume lanes in response to the current market and expect to see strong demand, tight capacity, and rate volatility to continue throughout the remainder of the year.”

    Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “All regions have added people to process additional shipment volumes in order to maintain our high level of customer service. We are handling more shipments and are doing so more efficiently than ever before. We continue to focus on implementing process improvements and investing in our core technologies that allow us to grow our business profitably. As the industry continues to evolve and innovate at a more rapid pace, we are also making additional investments to develop strategies, including the use of technologies that allow us to maintain our leadership position.”

    Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 177 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions.

    _______________________
    1Diluted earnings attributable to shareholders per share.
    2Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.
    NOTE:  See Disclaimer on Forward-Looking Statements on the following page of this release.

    Expeditors International of Washington, Inc.
    Second Quarter 2017 Earnings Release, August 8, 2017
    Financial Highlights for the Three and Six months ended June 30, 2017 and 2016 (Unaudited)
    (in 000's of US dollars except per share data)

     Three months ended June 30,   Six months ended June 30,  
     2017 2016 %
    Change
     2017 2016 %
    Change
    Revenues$1,672,279  $1,475,164     13% $3,217,411  $2,893,636     11%
    Net revenues1$563,633  $553,117  2% $1,091,238  $1,070,186  2%
    Operating income2$168,240  $178,864  (6)% $314,354  $330,690  (5)%
    Net earnings attributable to shareholders$108,851  $116,052  (6)% $202,115  $212,636  (5)%
    Diluted earnings attributable to shareholders per share    $0.60  $0.63  (5)% $1.11  $1.16  (4)%
    Basic earnings attributable to shareholders per share$0.60  $0.64  (6)% $1.12  $1.17  (4)%
    Diluted weighted average shares outstanding182,033  183,132    182,091  183,110   
    Basic weighted average shares outstanding180,012  181,753    180,037  181,882   

    _______________________
    1Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.

    2Includes recovery of certain legal and related fees totaling $8 million for both the quarter and year-to date periods ended June 30, 2017 compared to $5 million in the same periods in 2016 and the favorable resolution of an indirect tax contingency of $6 million in the second quarter of 2017. We do not expect further recoveries in either matter.

    During the three and six-month periods ended June 30, 2017, we repurchased 1.5 million and 2.5 million shares of common stock at an average price of $55.02 and $55.58 per share, respectively. During the three and six-month periods ended June 30, 2016, the Company repurchased 1.9 million and 3.4 million shares of common stock at an average price of $49.47 and $48.75 per share, respectively.

        Employee headcount as of June 30,  
     2017 2016
    North America6,002  5,732 
    Europe2,915  2,764 
    North Asia2,524  2,461 
    Middle East, Africa and India          1,521  1,480 
    South Asia1,447  1,338 
    Latin America782  754 
    Information Systems892  795 
    Corporate366  341 
    Total16,449  15,665 


         Year-over-year percentage increase in:  
      Airfreight kilos Ocean freight FEU
    2017    
    April               9%                   2%
    May 11% 2%
    June 7% 7%
    Quarter                                       9% 4%

    _______________________
    Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 11, 2017 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 21, 2017.

    Disclaimer on Forward-Looking Statements:
    Certain portions of this release contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on continuing to take profitable market share, the global demand for air and ocean capacity, favorable pricing, the shifting rate environment, our ability to secure access to capacity, our expectation that we will see strong demand, tight capacity, and rate volatility throughout the remainder of the year, our ability to maintain a high level of customer service, our ability to handle more shipments more efficiently than ever before, our ability to implement process improvements and invest in core technologies that allow us to grow our business profitably, and our ability to make investments to develop strategies, including the use of additional technologies that allow us to maintain our leadership position. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, the future success of our business model, our ability to maintain consistent and stable operating results, our ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, changes in global trade volumes, customers’ inventory build-up, decreased consumer confidence, volatility in equity markets, energy and fuel prices, geopolitical changes, foreign exchange rates, regulatory actions or changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.


    EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
    AND SUBSIDIARIES

    Condensed Consolidated Balance Sheets
    (In thousands, except per share data)
    (Unaudited)
     
        June 30,    
    2017
     December 31,
    2016
    Assets   
    Current Assets:   
    Cash and cash equivalents$1,114,910  $974,435 
    Accounts receivable, net1,215,278  1,190,130 
    Other current assets164,128  54,014 
     Total current assets2,494,316  2,218,579 
    Property and equipment, net490,776  536,572 
    Goodwill7,927  7,927 
    Other assets, net29,737  27,793 
     $3,022,756  $2,790,871 
    Liabilities and Equity   
    Current Liabilities:   
    Accounts payable$774,941  $726,571 
    Accrued expenses, primarily salaries and related costs211,376    185,502 
    Federal, state and foreign income taxes21,329  17,858 
     Total current liabilities1,007,646  929,931 
    Deferred Federal and state income taxes36,473  13,727 
        
    Commitments and contingencies   
        
    Shareholders’ Equity:   
    Preferred stock; none issued   
    Common stock, par value $0.01 per share. Issued and outstanding 179,637 shares at June 30,
    2017 and 179,857 shares at December 31, 2016
    1,796  1,799 
    Additional paid-in capital11,152  2,642 
    Retained earnings2,049,403  1,944,789 
    Accumulated other comprehensive loss(86,507) (104,592)
    Total shareholders’ equity1,975,844  1,844,638 
    Noncontrolling interest2,793  2,575 
    Total equity1,978,637  1,847,213 
     $3,022,756  $2,790,871 


    EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
    AND SUBSIDIARIES

    Condensed Consolidated Statements of Earnings
    (In thousands, except per share data)
    (Unaudited)
     
     Three months ended Six months ended
     June 30, June 30,
     2017 2016 2017 2016
    Revenues:       
    Airfreight services$671,868  $582,093  $1,287,413  $1,142,946 
    Ocean freight and ocean services528,585  464,692  1,022,344  918,884 
    Customs brokerage and other services471,826  428,379  907,654  831,806 
    Total revenues1,672,279  1,475,164  3,217,411  2,893,636 
    Operating Expenses:       
    Airfreight services499,418  403,419  942,822  792,196 
    Ocean freight and ocean services385,927  323,699  751,990  646,719 
    Customs brokerage and other services223,301  194,929  431,361  384,535 
    Salaries and related costs318,529  293,532  611,109  576,887 
    Rent and occupancy costs29,163  27,079  57,293  53,938 
    Depreciation and amortization12,042  11,642  23,969  22,971 
    Selling and promotion10,953  10,251  21,868  19,683 
    Other24,706  31,749  62,645  66,017 
    Total operating expenses1,504,039  1,296,300  2,903,057  2,562,946 
    Operating income168,240  178,864  314,354  330,690 
    Other Income (Expense):       
    Interest income3,380  2,890  6,121  5,669 
    Other, net2,190  1,603  2,488  2,482 
    Other income (expense), net5,570    4,493    8,609    8,151 
    Earnings before income taxes173,810  183,357  322,963  338,841 
    Income tax expense65,055  66,918  120,641  125,355 
    Net earnings108,755  116,439  202,322  213,486 
    Less net (loss) earnings attributable to the noncontrolling interest  (96) 387  207  850 
    Net earnings attributable to shareholders$108,851  $116,052  $202,115  $212,636 
    Diluted earnings attributable to shareholders per share$0.60  $0.63  $1.11  $1.16 
    Basic earnings attributable to shareholders per share$0.60  $0.64  $1.12  $1.17 
    Dividends declared and paid per common share$0.42  $0.40  $0.42  $0.40 
    Weighted average diluted shares outstanding182,033  183,132  182,091  183,110 
    Weighted average basic shares outstanding180,012  181,753  180,037  181,882 


    EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
    AND SUBSIDIARIES

    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (Unaudited)
     
     Three months ended Six months ended
     June 30, June 30,
     2017   2016   2017   2016
    Operating Activities:       
    Net earnings$108,755  $116,439  $202,322  $213,486 
    Adjustments to reconcile net earnings to net cash from operating activities:         
    Provision for losses on accounts receivable515  562  1,446  1,140 
    Deferred income tax expense (benefit)7,261  (6,115) 12,854  3,781 
    Stock compensation expense17,203  12,957  27,826  23,788 
    Depreciation and amortization12,042  11,642  23,969  22,971 
    Other, net(174) (6) (525) 30 
    Changes in operating assets and liabilities:       
    (Increase) decrease in accounts receivable(73,142) (48,344) 2,312  64,366 
    Increase in accounts payable and accrued expenses52,623  51,422  34,299  36,078 
    Decrease in income taxes payable, net(47,159) (34,734) (27,335) (23,809)
    Decrease (increase) in other current assets3,290  1,361  (275) (694)
    Net cash from operating activities81,214  105,184  276,893  341,137 
    Investing Activities:       
    Purchase of property and equipment(20,380) (13,279) (33,141) (27,314)
    Other, net40  4,414  (631) 3,855 
    Net cash from investing activities(20,340) (8,865) (33,772) (23,459)
    Financing Activities:       
    Proceeds from issuance of common stock51,501  48,488  96,866  90,123 
    Repurchases of common stock(84,052) (96,115) (137,960) (166,407)
    Dividends paid(75,726) (73,000) (75,726) (73,000)
    Net cash from financing activities(108,277) (120,627) (116,820) (149,284)
    Effect of exchange rate changes on cash and cash equivalents6,270  (9,345) 14,174  4,074 
    (Decrease) increase in cash and cash equivalents(41,133) (33,653) 140,475  172,468 
    Cash and cash equivalents at beginning of period1,156,043  1,013,917  974,435  807,796 
    Cash and cash equivalents at end of period$1,114,910  $980,264  $1,114,910  $980,264 
    Taxes paid:       
    Income taxes$103,508  $108,369  $132,654  $146,353 


    EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
    AND SUBSIDIARIES
    Business Segment Information
    (In thousands)
    (Unaudited)
     
     UNITED
    STATES
     OTHER
    NORTH
    AMERICA
     LATIN
    AMERICA
     NORTH
    ASIA
     SOUTH
    ASIA
     EUROPE MIDDLE
    EAST,
    AFRICA

    AND INDIA
     ELIMI-
    NATIONS
     CONSOLI-
    DATED
    Three months ended June
    30, 2017:  
                     
    Revenues from unaffiliated
    customers
    $452,217  62,554  23,463  620,050  157,698  259,533  96,764    1,672,279 
    Transfers between
    geographic areas
    28,155  2,825  3,759  4,835  5,408  9,664  5,034  (59,680)  
    Total revenues$480,372  65,379  27,222  624,885  163,106  269,197  101,798  (59,680) 1,672,279 
    Net revenues$250,027  28,173  14,008  120,959  38,228  80,896  30,286  1,056  563,633 
    Operating income$64,265  12,317  2,246  58,093  12,513  13,419  5,390  (3) 168,240 
    Identifiable assets$1,487,582  129,830  48,064  576,655  129,002  437,628  207,191  6,804  3,022,756 
    Capital expenditures$6,852  569  957  663  409  10,501  429    20,380 
    Depreciation and amortization      $7,731  386  300  1,362  556  1,227  480    12,042 
    Equity$1,147,962  61,957  24,320  402,211  117,077  135,726  124,628  (35,244) 1,978,637 
    Three months ended June
    30, 2016:
                     
    Revenues from unaffiliated
    customers
    $417,735  56,674  21,169  517,489  151,890  229,882  80,325    1,475,164 
    Transfers between
    geographic areas
    28,973  2,671  4,187  5,385  6,326  10,097  5,507  (63,146)  
    Total revenues$446,708  59,345  25,356  522,874  158,216  239,979  85,832  (63,146) 1,475,164 
    Net revenues$232,860  30,815  14,468  122,117  46,257  77,639  28,975  (14) 553,117 
    Operating income$67,214  9,600  3,836  61,721  18,354  11,838  6,315  (14) 178,864 
    Identifiable assets$1,343,669  84,358  58,570  471,832  118,352  378,859  225,877  5,938  2,687,455 
    Capital expenditures$8,778  445  317  678  351  2,140  570    13,279 
    Depreciation and amortization$7,366  380  288  1,388  543  1,188  489    11,642 
    Equity$1,069,876  38,638  39,482  309,557  78,668  133,387  141,315  (31,418) 1,779,505 


    (in thousands)UNITED
    STATES
     OTHER
    NORTH
    AMERICA 
     LATIN
    AMERICA
     NORTH
    ASIA
     SOUTH
    ASIA
     EUROPE MIDDLE
    EAST,
    AFRICA
    AND INDIA
     ELIMI-
    NATIONS
     CONSOLI-
    DATED
    Six months ended June
    30, 2017:
                     
    Revenues from unaffiliated
    customers
    $878,236  122,453  45,566  1,186,478  304,938  490,990  188,750    3,217,411 
    Transfers between
    geographic areas
    52,468  5,464  7,394  9,886  10,839  18,986  9,998  (115,035)  
    Total revenues$930,704  127,917  52,960  1,196,364  315,777  509,976  198,748  (115,035) 3,217,411 
    Net revenues$480,812  53,966  28,924  232,792  76,223  156,854  60,017  1,650  1,091,238 
    Operating income$116,611  17,368  5,697  111,445  25,737  25,065  12,433  (2) 314,354 
    Identifiable assets at period end  $1,487,582  129,830  48,064  576,655  129,002  437,628  207,191  6,804  3,022,756 
    Capital expenditures$12,094  803  1,212  1,903  782  15,579  768    33,141 
    Depreciation and amortization$15,484  758  620  2,682  1,087  2,398  940    23,969 
    Equity$1,147,962  61,957  24,320  402,211  117,077  135,726  124,628  (35,244) 1,978,637 
    Six months ended June
    30, 2016:
                     
    Revenues from unaffiliated
    customers
    $825,561  108,780  41,233  1,014,721  288,308  451,779  163,254    2,893,636 
    Transfers between
    geographic areas
    55,007  5,371  7,788  10,481  12,132  20,458  10,901  (122,138)  
    Total revenues$880,568  114,151  49,021  1,025,202  300,440  472,237  174,155  (122,138) 2,893,636 
    Net revenues$453,558  58,193  28,201  232,908  85,775  152,180  59,382  (11) 1,070,186 
    Operating income$115,419  16,891  7,688  116,939  34,045  24,091  15,628  (11) 330,690 
    Identifiable assets at period end$1,343,669  84,358  58,570  471,832  118,352  378,859  225,877  5,938  2,687,455 
    Capital expenditures$16,915  756  802  1,763  1,006  4,259  1,813    27,314 
    Depreciation and amortization$14,698  744  541  2,707  1,055  2,286  940    22,971 
    Equity$1,069,876  38,638  39,482  309,557  78,668  133,387  141,315  (31,418) 1,779,505 


    Net Revenues (Non-GAAP measure)

    We commonly refer to the term “net revenues” when commenting about our Company and the results of its operations. Net revenues are a Non-GAAP measure calculated as revenues less directly related operations expenses attributable to the Company's principal services. We believe that net revenues are a better measure than are total revenues when analyzing and discussing our effectiveness in managing our principal services since total revenues earned as a freight consolidator must consider the carriers' charges to us for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by us. Net revenue is one of our primary operational and financial measures and demonstrates our ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings. Using net revenues also provides a commonality for comparison among various services. The following table presents the calculation of net revenues.

     Three months ended Six months ended
     June 30, June 30,
    (in thousands)2017   2016   2017   2016
    Total revenues$1,672,279  $1,475,164  $3,217,411  $2,893,636 
    Expenses:       
    Airfreight services499,418  403,419  942,822  792,196 
    Ocean freight and ocean services385,927  323,699  751,990  646,719 
    Customs brokerage and other services  223,301  194,929  431,361  384,535 
    Net revenues$563,633  $553,117  $1,091,238  $1,070,186 

     

    CONTACTS:
    
    Jeffrey S. Musser
    President and Chief Executive Officer
    (206) 674-3433
    
    Bradley S. Powell
    Senior Vice President and Chief Financial Officer
    (206) 674-3412
    
    Geoffrey Buscher
    Director - Investor Relations
    (206) 892-4510

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