Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced second quarter 2019 financial results including the
following highlights compared to the same quarter of 2018:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) increased 11% to $0.88
- Net Earnings Attributable to Shareholders increased 9% to $153
million
- Operating Income increased 5% to $192 million
- Revenues increased 4% to $2 billion
- Net Revenues2 increased 3% to $662 million
- Airfreight tonnage volume decreased 5% and ocean container
volume increased 2%
“During the quarter and throughout the first half of the year,
we have shown our ability to manage uncertainty and deliver
profitable growth,” said Jeffrey S. Musser, President and Chief
Executive Officer. “While our air freight business was challenged
as a result of a slowdown in export volumes out of North Asia and
the United States, we continued to enhance our efforts on growing
these two important markets as a focus of our key strategic
initiatives. Additionally, the current climate of geopolitical
volatility has created uncertainty, but our organization continues
to show that the strength of our global presence and customer focus
has never been more important in our relentless drive to grow while
maintaining our profitability.
“In addition, we continued to grow our customs brokerage and
import services, Transcon, and warehouse and distribution services
by winning business with new customers as well as from existing
accounts. For a second consecutive quarter, we increased the volume
of ocean freight containers that we handled and boosted net revenue
per container. Except for comparatively soft demand in certain air
markets, this was a strong quarter and our people performed at
their highest level.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “We grew net revenues ahead of overhead expenses,
even as we continue to make important investments in people and
systems, such as our integrated order management, quoting, booking,
visibility, security, reporting and analytics platform. While we
boosted operating efficiency (operating income as a percentage of
net revenue) compared to the first quarter, it remained below our
target 30%, due again to lower air freight net revenues. Our
effective tax rate declined from 25.8% in the second quarter of
2018 to 23.6% in 2019, largely due to the benefit from
Foreign-derived intangible income deductions and a state tax
refund."
Expeditors is a global logistics company headquartered in
Seattle, Washington. The Company employs trained professionals in
176 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 2019 Earnings
Release, August 6, 2019
Financial Highlights for the
three and six months ended June 30, 2019 and 2018
(Unaudited)
(in 000's of US dollars except
per share data)
Three months ended June
30,
Six months ended June
30,
2019
2018
%
Change
2019
2018
%
Change
Revenues
$
2,035,579
$
1,957,559
4%
$
4,055,630
$
3,811,821
6%
Net revenues1
$
661,695
$
642,546
3%
$
1,315,809
$
1,278,384
3%
Operating income
$
192,201
$
183,584
5%
$
379,802
$
376,402
1%
Net earnings attributable to
shareholders
$
153,149
$
140,605
9%
$
292,848
$
276,297
6%
Diluted earnings attributable to
shareholders per share
$
0.88
$
0.79
11%
$
1.67
$
1.54
8%
Basic earnings attributable to
shareholders per share
$
0.90
$
0.80
13%
$
1.71
$
1.58
8%
Diluted weighted average shares
outstanding
174,466
178,603
174,953
179,120
Basic weighted average shares
outstanding
171,003
174,754
171,425
175,324
___________________
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.
The three and six months ended June 30, 2019 include the effect
of changing our presentation of certain import services from a net
to a gross basis and our revised presentation of destination
services, which increased revenues and directly related operating
expenses in customs brokerage and other services but did not change
net revenues.
During the three and six months ended June 30, 2019, we
repurchased 2.6 million and 3.2 million shares of common stock at
an average price of $73.03 and $73.47 per share, respectively.
During the three and six months ended June 30, 2018, we repurchased
3.1 million and 5.8 million shares of common stock at an average
price of $76.22 and $70.92 per share, respectively.
Employee Full-time Equivalents
June 30, 2019
2019
2018
North America
6,893
6,414
Europe
3,439
3,205
North Asia
2,532
2,616
South Asia
1,661
1,604
Middle East, Africa and India
1,550
1,466
Latin America
873
801
Information Systems
922
892
Corporate
379
351
Total
18,249
17,349
Second quarter year-over-year
percentage increase (decrease) in:
Airfreight kilos
Ocean freight FEU
2019
April
(4
)%
5
%
May
(2
)%
—
%
June
(7
)%
—
%
Quarter
(5
)%
2
%
___________________
Investors may submit written questions via
e-mail to: investor@expeditors.com. Questions received by the end
of business on August 9, 2019 will be considered in management's
8-K “Responses to Selected Questions.”
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 our ability to extract value from investment in key
systems; the impact of the 2017 Tax Act and related interpretations
on our effective tax rate; and 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, 2019
December 31, 2018
Assets:
Current Assets:
Cash and cash equivalents
$
1,082,650
$
923,735
Accounts receivable, less allowance for
doubtful accounts of $13,391 at June 30, 2019 and $15,345 at
December 31, 2018
1,382,070
1,581,530
Deferred contract costs
143,651
159,510
Other
103,089
70,041
Total current assets
2,711,460
2,734,816
Property and equipment, less accumulated
depreciation and amortization of $465,983 at June 30, 2019 and
$446,977 at December 31, 2018
499,233
504,105
Operating lease right-of-use assets
377,423
—
Goodwill
7,927
7,927
Deferred federal and state income taxes,
net
33,617
40,465
Other assets, net
17,330
27,246
Total assets
$
3,646,990
$
3,314,559
Liabilities:
Current Liabilities:
Accounts payable
$
811,144
$
902,259
Accrued expenses, primarily salaries and
related costs
217,463
215,813
Contract liabilities
169,055
190,343
Current portion of operating lease
liabilities
61,267
—
Federal, state and foreign income
taxes
19,891
18,424
Total current liabilities
1,278,820
1,326,839
Noncurrent portion of operating lease
liabilities
315,776
—
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 170,040 shares at June 30, 2019 and 171,582
shares at December 31, 2018
1,701
1,716
Additional paid-in capital
12,433
1,896
Retained earnings
2,140,935
2,088,707
Accumulated other comprehensive loss
(104,096
)
(105,481
)
Total shareholders’ equity
2,050,973
1,986,838
Noncontrolling interest
1,421
882
Total equity
2,052,394
1,987,720
Total liabilities and equity
$
3,646,990
$
3,314,559
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Earnings
(In thousands, except per share
data)
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Revenues:
Airfreight services
$
741,577
$
801,761
$
1,456,478
$
1,532,988
Ocean freight and ocean services
543,809
530,008
1,112,450
1,050,891
Customs brokerage and other services
750,193
625,790
1,486,702
1,227,942
Total revenues
2,035,579
1,957,559
4,055,630
3,811,821
Operating Expenses:
Airfreight services
542,639
593,325
1,051,849
1,106,829
Ocean freight and ocean services
390,299
385,156
810,630
764,574
Customs brokerage and other services
440,946
336,532
877,342
662,034
Salaries and related
356,351
350,948
713,261
690,843
Rent and occupancy
40,897
38,071
82,420
74,984
Depreciation and amortization
12,677
13,576
26,070
27,498
Selling and promotion
11,643
10,788
22,719
21,753
Other
47,926
45,579
91,537
86,904
Total operating expenses
1,843,378
1,773,975
3,675,828
3,435,419
Operating income
192,201
183,584
379,802
376,402
Other Income (Expense):
Interest income
6,516
5,153
12,622
9,467
Other, net
2,262
1,167
3,927
1,791
Other income (expense), net
8,778
6,320
16,549
11,258
Earnings before income taxes
200,979
189,904
396,351
387,660
Income tax expense
47,449
48,958
102,710
110,514
Net earnings
153,530
140,946
293,641
277,146
Less net earnings attributable to the
noncontrolling interest
381
341
793
849
Net earnings attributable to
shareholders
$
153,149
$
140,605
$
292,848
$
276,297
Diluted earnings attributable to
shareholders per share
$
0.88
$
0.79
$
1.67
$
1.54
Basic earnings attributable to
shareholders per share
$
0.90
$
0.80
$
1.71
$
1.58
Weighted average diluted shares
outstanding
174,466
178,603
174,953
179,120
Weighted average basic shares
outstanding
171,003
174,754
171,425
175,324
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Cash Flows
(In thousands)
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Operating Activities:
Net earnings
$
153,530
$
140,946
$
293,641
$
277,146
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for losses (recoveries) on
accounts receivable
1,584
528
(304
)
263
Deferred income tax expense
3,697
3,235
5,805
6,088
Stock compensation expense
23,824
18,002
37,206
29,269
Depreciation and amortization
12,677
13,576
26,070
27,498
Other, net
(29
)
56
160
104
Changes in operating assets and
liabilities:
(Increase) decrease in accounts
receivable
(28,187
)
(46,876
)
202,290
53,771
Increase (decrease) in accounts payable
and accrued expenses
39,900
58,075
(82,383
)
12,231
(Increase) decrease in deferred contract
costs
(13,010
)
(20,019
)
18,249
(16,612
)
Increase (decrease) in contract
liabilities
13,003
20,294
(23,722
)
12,893
(Decrease) increase in income taxes
payable, net
(49,606
)
(38,059
)
(32,613
)
(18,550
)
(Decrease) increase in other, net
(1,676
)
(1,202
)
791
(68
)
Net cash from operating activities
155,707
148,556
445,190
384,033
Investing Activities:
Purchase of property and equipment
(12,987
)
(12,113
)
(22,422
)
(25,909
)
Other, net
1,038
(1,564
)
1,293
(1,995
)
Net cash from investing activities
(11,949
)
(13,677
)
(21,129
)
(27,904
)
Financing Activities:
Proceeds from issuance of common stock
32,287
95,363
59,477
121,760
Repurchases of common stock
(190,589
)
(235,572
)
(234,923
)
(407,932
)
Dividends Paid
(85,184
)
(79,180
)
(85,184
)
(79,180
)
Payments for taxes related to net share
settlement of equity awards
(6,674
)
(3,215
)
(6,674
)
(3,215
)
Net cash from financing activities
(250,160
)
(222,604
)
(267,304
)
(368,567
)
Effect of exchange rate changes on cash
and cash equivalents
(377
)
(24,322
)
2,158
(17,807
)
Change in cash and cash equivalents
(106,779
)
(112,047
)
158,915
(30,245
)
Cash and cash equivalents at beginning of
period
1,189,429
1,132,901
923,735
1,051,099
Cash and cash equivalents at end of
period
$
1,082,650
$
1,020,854
$
1,082,650
$
1,020,854
Taxes Paid:
Income taxes
$
97,715
$
85,612
$
134,968
$
124,131
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
For the three months ended June 30,
2019:
Revenues2
$
681,076
85,537
38,757
621,951
181,380
319,331
108,311
(764
)
2,035,579
Net revenues1
$
294,983
35,201
16,714
134,397
48,893
98,655
33,222
(370
)
661,695
Operating income
$
87,923
8,858
2,346
64,453
15,513
9,315
3,799
(6
)
192,201
Identifiable assets at period end
$
1,819,718
176,151
73,197
580,311
193,771
581,518
229,692
(7,368
)
3,646,990
Capital expenditures
$
8,985
768
145
300
428
1,914
447
—
12,987
Depreciation and amortization
$
7,687
459
380
1,384
496
1,775
496
—
12,677
Equity
$
1,303,381
83,417
31,014
282,192
107,229
168,570
109,790
(33,199
)
2,052,394
For the three months ended June 30,
2018:
Revenues2
$
598,076
84,244
42,618
680,227
179,528
330,775
114,005
(71,914
)
1,957,559
Net revenues1
$
271,880
34,749
15,923
140,583
44,886
102,371
33,125
(971
)
642,546
Operating income
$
63,628
10,077
2,701
70,359
13,374
16,958
6,490
(3
)
183,584
Identifiable assets at period end
$
1,488,060
153,827
54,186
540,954
157,479
526,607
217,716
(5,997
)
3,132,832
Capital expenditures
$
6,032
2,191
167
559
695
1,225
1,244
—
12,113
Depreciation and amortization
$
8,447
473
395
1,303
542
1,955
461
—
13,576
Equity
$
1,196,226
56,702
26,625
250,513
112,259
157,493
127,032
(34,291
)
1,892,559
UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH
ASIA
SOUTH
ASIA
EUROPE
MIDDLE
EAST,
AFRICA
AND
INDIA
ELIMI- NATIONS
CONSOLI- DATED
For the six months ended June 30,
2019:
Revenues2
$
1,340,859
176,947
72,936
1,254,804
358,559
632,021
220,986
(1,482
)
4,055,630
Net revenues1
$
587,412
70,370
31,777
268,604
96,262
195,450
66,394
(460
)
1,315,809
Operating income
$
161,936
19,818
4,982
130,233
31,420
23,267
8,160
(14
)
379,802
Identifiable assets at period end
$
1,819,718
176,151
73,197
580,311
193,771
581,518
229,692
(7,368
)
3,646,990
Capital expenditures
$
15,900
996
238
644
604
2,896
1,144
—
22,422
Depreciation and amortization
$
15,909
926
812
2,791
1,032
3,606
994
—
26,070
Equity
$
1,303,381
83,417
31,014
282,192
107,229
168,570
109,790
(33,199
)
2,052,394
For the six months ended June 30,
2018:
Revenues2
$
1,161,826
164,331
78,727
1,316,816
354,678
650,755
224,542
(139,854
)
3,811,821
Net revenues1
$
549,065
65,196
30,668
277,791
89,292
201,006
66,326
(960
)
1,278,384
Operating income
$
133,276
19,095
5,071
140,282
28,506
36,236
13,928
8
376,402
Identifiable assets at period end
$
1,488,060
153,827
54,186
540,954
157,479
526,607
217,716
(5,997
)
3,132,832
Capital expenditures
$
9,203
3,719
672
1,343
1,024
8,416
1,532
—
25,909
Depreciation and amortization
$
17,212
871
763
2,679
1,125
3,931
917
—
27,498
Equity
$
1,196,226
56,702
26,625
250,513
112,259
157,493
127,032
(34,291
)
1,892,559
1Net revenues are a non-GAAP measure
calculated as revenues less directly related operating expenses
attributable to the Company's principal services. The Company's
management believes that net revenues are a better measure than
total revenues when evaluating the Company's operating segment
performance since total revenues earned as a freight consolidator
include the carriers' charges for carrying the shipment, whereas
revenues earned in other capacities include primarily the
commissions and fees earned by the Company. Net revenue is one of
the Company's primary operational and financial measures and
demonstrates the Company's ability to concentrate and leverage
purchasing power through effective consolidation of shipments from
customers utilizing a variety of transportation carriers and
optimal routings.
2In 2019, the Company revised its process
to record the transfer, between its geographic operating segments,
of revenues and the directly related cost of transportation
expenses for freight service transactions between Company origin
and destination locations. This change better aligns revenue
reporting with the location where the services are performed, as
well as the transactional reporting being developed as part of the
Company’s new accounting systems and processes. Prior year segment
revenues have not been revised. The change in presentation had no
impact on consolidated or segment net revenues or operating income.
The impact on reported segment revenues and expenses was
immaterial.
The following table presents the
calculation of net revenues:
Three months ended June
30,
Six months ended June
30,
2019
2018
2019
2018
Revenues
$
2,035,579
$
1,957,559
$
4,055,630
$
3,811,821
Expenses:
Airfreight services
542,639
593,325
1,051,849
1,106,829
Ocean freight and ocean services
390,299
385,156
810,630
764,574
Customs brokerage and other services
440,946
336,532
877,342
662,034
Net revenues
$
661,695
$
642,546
$
1,315,809
$
1,278,384
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190806005208/en/
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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