Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced third quarter 2019 financial results including the
following highlights compared to the same quarter of 2018:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) remained constant at $0.92
- Net Earnings Attributable to Shareholders decreased 2% to $160
million
- Operating Income increased 2% to $207 million
- Revenues decreased 1% to $2.1 billion
- Airfreight tonnage volume decreased 7% and ocean container
volume decreased 2%
“The third quarter presented challenges that were not unexpected
in terms of growth in the global economy and ongoing trade disputes
that extend well beyond just the United States and China,” said
Jeffrey S. Musser, President and Chief Executive Officer. “We saw
volumes drop in our air and ocean products but believe this was
consistent with the overall market. In addition to volume changes,
we also believe the market experienced corresponding changes in
buy/sell rates and we were adept at negotiating in the changing
pricing environment.
“We’ve always believed that a true global network of offices is
critical to achieving success in the supply chain, and that played
out as expected with outsized growth in regions where business has
transitioned. Further, the trade environment has placed an
increased need for products such as customs brokerage, and our
results show that we continue to execute well in this area. A broad
range of solutions, technology and expertise has never been more
important to help mitigate the uncertainty and ambiguity of the
current marketplace.
“Our focus on providing an extremely high level of service,
coupled with deep knowledge and expertise, remains a winning
strategy. We can’t execute this strategy without our global team
and, as always, we are incredibly thankful for their effort and
dedication.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “We again demonstrated strong performance in our
customs brokerage, Transcon, ocean forwarding, and order management
businesses during the quarter. In addition, we boosted our
operating efficiency by paying close attention to costs across our
global network.” Mr. Powell also noted that the Company’s effective
tax rate was 24.9% in the quarter, compared to 21.8% in the third
quarter of 2018. The three-month period ended 2018 benefited from
required discrete adjustments as a result of interpretations issued
related to the 2017 Tax Act for foreign tax credits earned as a
result of withholding taxes paid on repatriated foreign earnings
and a state income tax refund that settled during the quarter in
2018.
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.
NOTE: See Disclaimer on Forward-Looking
Statements on the following page of this release.
Expeditors International of Washington,
Inc.
Third Quarter 2019 Earnings Release,
November 5, 2019
Financial Highlights for the three and
nine months ended September 30, 2019 and 2018 (Unaudited)
(in 000's of US dollars except per share
data)
Three months ended September
30,
Nine months ended September
30,
2019
2018
% Change
2019
2018
% Change
Revenues
$
2,074,855
$
2,090,947
(1)%
$
6,130,485
$
5,902,768
4%
Directly related cost of transportation
and
other expenses1
$
1,400,499
$
1,429,633
(2)%
$
4,140,320
$
3,963,070
4%
Salaries and other operating
expenses2
$
467,806
$
458,160
2%
$
1,403,813
$
1,360,142
3%
Operating income
$
206,550
$
203,154
2%
$
586,352
$
579,556
1%
Net earnings attributable to
shareholders
$
160,221
$
162,692
(2)%
$
453,069
$
438,989
3%
Diluted earnings attributable
to
shareholders per share
$
0.92
$
0.92
—%
$
2.60
$
2.46
6%
Basic earnings attributable to
shareholders
per share
$
0.94
$
0.94
—%
$
2.65
$
2.51
6%
Diluted weighted average shares
outstanding
173,483
177,173
174,463
178,447
Basic weighted average shares
outstanding
170,415
173,394
171,084
174,675
_____________________
1Directly related cost of transportation
and other expenses totals Operating Expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
2Salaries and other operating expenses
totals Salaries and related, Rent and occupancy, Depreciation and
amortization, Selling and promotion and Other as shown in the
Condensed Consolidated Statements of Earnings.
The three and nine months ended September 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
operating income.
During the three and nine months ended September 30, 2019, we
repurchased 0.9 million and 4.1 million shares of common stock at
an average price of $69.51 and $72.60 per share, respectively.
During the three and nine months ended September 30, 2018, we
repurchased 2.0 million and 7.8 million shares of common stock at
an average price of $73.47 and $71.58 per share, respectively.
Employee Full-time Equivalents
September 30, 2019
2019
2018
North America
6,861
6,635
Europe
3,427
3,270
North Asia
2,483
2,655
South Asia
1,674
1,640
Middle East, Africa and India
1,565
1,478
Latin America
860
831
Information Systems
939
904
Corporate
383
351
Total
18,192
17,764
Third quarter year-over-year
percentage increase (decrease) in:
Airfreight kilos
Ocean freight FEU
2019
July
(5)%
2%
August
(9)%
(1)%
September
(9)%
(7)%
Quarter
(7)%
(2)%
___________________
Investors may submit written questions via
e-mail to: investor@expeditors.com. Questions received by the end
of business on November 8, 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 maintain a differentiated, knowledgeable
workforce; 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)
September 30, 2019
December 31, 2018
Assets:
Current Assets:
Cash and cash equivalents
$
1,215,970
$
923,735
Accounts receivable, less allowance for
doubtful accounts of $11,853 at September 30, 2019 and $15,345 at
December 31, 2018
1,319,032
1,581,530
Deferred contract costs
130,690
159,510
Other
103,521
70,041
Total current assets
2,769,213
2,734,816
Property and equipment, less accumulated
depreciation and amortization of $468,059 at September 30, 2019 and
$446,977 at
December 31, 2018
494,153
504,105
Operating lease right-of-use assets
374,231
—
Goodwill
7,927
7,927
Deferred federal and state income taxes,
net
44,351
40,465
Other assets, net
16,578
27,246
Total assets
$
3,706,453
$
3,314,559
Liabilities:
Current Liabilities:
Accounts payable
$
744,002
$
902,259
Accrued expenses, primarily salaries and
related costs
207,752
215,813
Contract liabilities
152,717
190,343
Current portion of operating lease
liabilities
61,842
—
Federal, state and foreign income
taxes
17,273
18,424
Total current liabilities
1,183,586
1,326,839
Noncurrent portion of operating lease
liabilities
313,580
—
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 170,243 shares at September 30, 2019 and
171,582
shares at December 31, 2018
1,702
1,716
Additional paid-in capital
23,301
1,896
Retained earnings
2,301,156
2,088,707
Accumulated other comprehensive loss
(118,774
)
(105,481
)
Total shareholders’ equity
2,207,385
1,986,838
Noncontrolling interest
1,902
882
Total equity
2,209,287
1,987,720
Total liabilities and equity
$
3,706,453
$
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 September
30,
Nine months ended September
30,
2019
2018
2019
2018
Revenues:
Airfreight services
$
715,450
$
833,338
$
2,171,928
$
2,366,326
Ocean freight and ocean services
585,374
585,810
1,697,824
1,636,701
Customs brokerage and other services
774,031
671,799
2,260,733
1,899,741
Total revenues
2,074,855
2,090,947
6,130,485
5,902,768
Operating Expenses:
Airfreight services
522,868
620,554
1,574,717
1,727,383
Ocean freight and ocean services
424,215
435,313
1,234,845
1,199,887
Customs brokerage and other services
453,416
373,766
1,330,758
1,035,800
Salaries and related
356,331
351,577
1,069,592
1,042,420
Rent and occupancy
41,987
38,202
124,407
113,186
Depreciation and amortization
12,386
13,335
38,456
40,833
Selling and promotion
10,133
10,632
32,852
32,385
Other
46,969
44,414
138,506
131,318
Total operating expenses
1,868,305
1,887,793
5,544,133
5,323,212
Operating income
206,550
203,154
586,352
579,556
Other Income (Expense):
Interest income
5,501
4,704
18,123
14,171
Other, net
1,895
566
5,822
2,357
Other income (expense), net
7,396
5,270
23,945
16,528
Earnings before income taxes
213,946
208,424
610,297
596,084
Income tax expense
53,319
45,357
156,029
155,871
Net earnings
160,627
163,067
454,268
440,213
Less net earnings attributable to the
noncontrolling
interest
406
375
1,199
1,224
Net earnings attributable to
shareholders
$
160,221
$
162,692
$
453,069
$
438,989
Diluted earnings attributable to
shareholders per share
$
0.92
$
0.92
$
2.60
$
2.46
Basic earnings attributable to
shareholders per share
$
0.94
$
0.94
$
2.65
$
2.51
Weighted average diluted shares
outstanding
173,483
177,173
174,463
178,447
Weighted average basic shares
outstanding
170,415
173,394
171,084
174,675
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Cash Flows
(In thousands)
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2019
2018
2019
2018
Operating Activities:
Net earnings
$
160,627
$
163,067
$
454,268
$
440,213
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for losses on accounts
receivable
757
1,969
453
2,232
Deferred income tax benefit
(5,822
)
(23,610
)
(17
)
(17,522
)
Stock compensation expense
12,155
13,902
49,361
43,171
Depreciation and amortization
12,386
13,335
38,456
40,833
Other, net
652
666
812
770
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable
43,885
(210,092
)
246,175
(156,321
)
(Decrease) increase in accounts payable
and accrued
expenses
(58,816
)
115,629
(141,199
)
127,860
Decrease (increase) in deferred contract
costs
10,301
(34,623
)
28,550
(51,235
)
(Decrease) increase in contract
liabilities
(13,211
)
36,256
(36,933
)
49,149
(Decrease) increase in income taxes
payable, net
(671
)
9,292
(33,284
)
(9,258
)
(Decrease) increase in other, net
(744
)
930
47
862
Net cash from operating activities
161,499
86,721
606,689
470,754
Investing Activities:
Purchase of property and equipment
(15,521
)
(11,733
)
(37,943
)
(37,642
)
Other, net
232
1,109
1,525
(886
)
Net cash from investing activities
(15,289
)
(10,624
)
(36,418
)
(38,528
)
Financing Activities:
Proceeds from issuance of common stock
60,713
47,806
120,190
169,566
Repurchases of common stock
(61,999
)
(147,828
)
(296,922
)
(555,760
)
Dividends Paid
—
—
(85,184
)
(79,180
)
Payments for taxes related to net share
settlement of equity awards
—
—
(6,674
)
(3,215
)
Distributions to noncontrolling
interest
—
(633
)
—
(633
)
Purchase of noncontrolling interest
—
(613
)
—
(613
)
Net cash from financing activities
(1,286
)
(101,268
)
(268,590
)
(469,835
)
Effect of exchange rate changes on cash
and cash equivalents
(11,604
)
(5,071
)
(9,446
)
(22,878
)
Change in cash and cash equivalents
133,320
(30,242
)
292,235
(60,487
)
Cash and cash equivalents at beginning of
period
1,082,650
1,020,854
923,735
1,051,099
Cash and cash equivalents at end of
period
$
1,215,970
$
990,612
$
1,215,970
$
990,612
Taxes Paid:
Income taxes
$
61,201
$
59,313
$
196,169
$
183,444
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 September
30, 2019:
Revenues1
$
692,229
88,088
38,341
624,351
196,569
320,769
115,397
(889
)
2,074,855
Directly related cost of transportation
and
other expenses2
$
389,254
51,420
22,990
489,195
145,345
221,149
81,592
(446
)
1,400,499
Salaries and other operating expenses3
$
210,767
25,731
14,547
70,410
32,482
86,156
28,151
(438
)
467,806
Operating income
$
92,208
10,937
804
64,746
18,742
13,464
5,654
(5
)
206,550
Identifiable assets at period end
$
2,059,345
128,336
72,029
489,322
164,976
563,289
226,657
2,499
3,706,453
Capital expenditures
$
7,644
513
833
523
631
5,119
258
—
15,521
Equity
$
1,578,682
60,526
27,217
216,061
77,733
169,450
111,355
(31,737
)
2,209,287
For the three months ended September
30, 2018:
Revenues1
$
629,043
92,875
43,443
748,589
205,392
327,212
118,047
(73,654
)
2,090,947
Directly related cost of transportation
and
other expenses2
$
345,236
58,464
27,635
601,699
158,226
227,418
83,992
(73,037
)
1,429,633
Salaries and other operating expenses3
$
204,240
23,935
13,399
74,067
31,623
84,136
27,384
(624
)
458,160
Operating income
$
79,567
10,476
2,409
72,823
15,543
15,658
6,671
7
203,154
Identifiable assets at period end
$
1,694,556
174,402
53,322
540,465
156,887
508,855
212,817
(6,504
)
3,334,800
Capital expenditures
$
6,889
301
227
1,280
910
751
1,375
—
11,733
Equity
$
1,334,952
66,399
25,663
197,939
86,048
157,973
119,718
(31,360
)
1,957,332
UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH
ASIA
SOUTH
ASIA
EUROPE
MIDDLE
EAST,
AFRICA
AND
INDIA
ELIMI- NATIONS
CONSOLI- DATED
For the nine months ended September 30,
2019:
Revenues1
$
2,033,088
265,035
111,277
1,879,155
555,128
952,790
336,383
(2,371
)
6,130,485
Directly related cost of transportation
and
other expenses2
$
1,142,701
157,997
64,149
1,475,395
407,642
657,720
236,184
(1,468
)
4,140,320
Salaries and other operating expenses3
$
636,243
76,283
41,342
208,781
97,324
258,339
86,385
(884
)
1,403,813
Operating income
$
254,144
30,755
5,786
194,979
50,162
36,731
13,814
(19
)
586,352
Identifiable assets at period end
$
2,059,345
128,336
72,029
489,322
164,976
563,289
226,657
2,499
3,706,453
Capital expenditures
$
23,544
1,509
1,071
1,167
1,235
8,015
1,402
—
37,943
Equity
$
1,578,682
60,526
27,217
216,061
77,733
169,450
111,355
(31,737
)
2,209,287
For the nine months ended September 30,
2018:
Revenues1
$
1,790,869
257,206
122,170
2,065,405
560,070
977,967
342,589
(213,508
)
5,902,768
Directly related cost of transportation
and
other expenses2
$
957,997
157,599
75,694
1,640,724
423,612
677,167
242,208
(211,931
)
3,963,070
Salaries and other operating expenses3
$
620,029
70,036
38,996
211,576
92,409
248,906
79,782
(1,592
)
1,360,142
Operating income
$
212,843
29,571
7,480
213,105
44,049
51,894
20,599
15
579,556
Identifiable assets at period end
$
1,694,556
174,402
53,322
540,465
156,887
508,855
212,817
(6,504
)
3,334,800
Capital expenditures
$
16,092
4,020
899
2,623
1,934
9,167
2,907
—
37,642
Equity
$
1,334,952
66,399
25,663
197,939
86,048
157,973
119,718
(31,360
)
1,957,332
1In 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 operating income. The 2019
results also include the effect of changing the presentation of
certain import services from a net to a gross basis, which
increased segment revenues and directly related operating expenses
but did not change operating income. The impact of these changes on
reported segment revenues was immaterial and prior year segment
revenues have not been revised.
2Directly related cost of transportation
and other expenses totals Operating Expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
3Salaries and other operating expenses
totals Salaries and related, Rent and occupancy, Depreciation and
amortization, Selling and promotion and Other as shown in the
Condensed Consolidated Statements of Earnings.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191105005348/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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