Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced second quarter 2023 financial results including the
following comparisons to the same quarter of 2022:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) decreased 43% to $1.30
- Net Earnings Attributable to Shareholders decreased 48% to $197
million
- Operating Income decreased 51% to $248 million
- Revenues decreased 51% to $2.2 billion
- Airfreight tonnage volume decreased 15% and ocean container
volume decreased 13%
“The freight marketplace has continued to reset and has reverted
closer to pre-pandemic levels of activity,” said Jeffrey S. Musser,
President and Chief Executive Officer. “Average buy and sell rates
in the second quarter are still above their pre-COVID levels but
are falling, and volumes have continued to decline at the same time
that air capacity has scaled up and ocean capacity is readily
available. Pricing is becoming a more critical determining factor
to shippers the further away we get from the severe supply chain
disruptions brought on by the pandemic, which impacted revenues
this quarter, primarily in our air and ocean businesses. There is
now ample and, in some cases, excess capacity in both air and ocean
freight, as global supply chain congestion of recent years has
effectively disappeared.
"With the return of passenger belly space, total air cargo
capacity now exceeds pre-pandemic levels. Driven by robust
passenger demand, carriers continue to bring new and idled aircraft
back into service, which is coupled with persistent higher
utilization of freighter capacity compared to pre-pandemic levels.
Despite increased air capacity, shippers face uncertain demand for
their products, as consumers remain cautious amidst declines in
their purchasing power. In that regard, second-quarter operating
conditions were very much a continuation of what we experienced in
the immediately prior two quarters.
“Ocean buy and sell rates also have continued to fall
significantly for the third consecutive quarter as capacity
exceeded demand despite carrier efforts to rationalize the
availability of space. Our customs brokerage fees and Transcon
revenue also were lower due to declines in volumes.
“Looking forward, we will continue to thoughtfully manage down
our headcount and exert other efforts to align our costs with these
lower levels of demand. In many ways, current conditions are very
much the reverse of what we experienced in the early days of the
pandemic, as the current marketplace shifts to a lower gear on
increased capacity and falling rates and demand. We do not see
those conditions changing meaningfully before the end of the
current year. Shippers are cautious, the economy remains uncertain,
and carrier capacity does not adequately reflect the current levels
of marketplace demand.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “It is critical that while we keep costs in check,
we also prepare ourselves for the future when operating conditions
eventually stabilize and demand and volumes begin to recover and
grow. While focused on controlling and carefully managing our cash,
we still were able to return $1 billion to shareholders in
repurchased stock and dividends paid out during the first six
months of the year, and more than $2.1 billion over the past 12
months. While our first priority always is to invest in the growth
of our business, we will continue to focus on controlling costs,
improving operational efficiencies, and returning capital to
investors as we have done for more than 40 years.”
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 in this release.
Disclaimer on Forward-Looking
Statements:
Certain statements contained in this news release are
“forward-looking statements,” based on management’s views with
respect to future events and underlying assumptions that involve
risks and uncertainties. These forward-looking statements include
statements regarding our uncertain short-term outlook; a normalized
supply chain; increased air capacity due to robust passenger
demand; falling rates; declining volumes; sufficient and in some
cases excess air and ocean capacity; shipper uncertainty given the
current economic outlook; rising inflation and financing costs; and
signs of a slowing economy and drop in demand. Future financial
performance could differ materially because of factors such as: our
ability to thoughtfully manage down our headcount and exert other
efforts to align our costs; our ability to predict when operating
conditions may eventually stabilize and demand and volumes begin to
recover and grow; our ability to leverage the strength of our
carrier relationships; the strength of our non-asset-based
operating model; our ability to align expenses with revenues and to
enhance our productivity; our ability to maintain our existing
accounts and gain new business; our ability to invest in our
strategic efforts to explore new areas for profitable growth; and
our ability to remain a strong, healthy, unified and resilient
organization. The normalizing of the supply chain at the end of the
pandemic, along with the current uncertainty in the global economy,
could have the effect of heightening many of the other risks
described in Item 1A of our Annual Report on Form 10-K, including,
without limitation, those related to the success of our strategy
and desire to maintain historical unitary profitability, our
ability to attract and retain customers, our ability to manage
costs, interruptions to our information technology systems, the
ability of third-party providers to perform and potential
litigation as updated by our reports on Form 10-Q, filed with the
Securities and Exchange Commission. These and other factors are
discussed in the Company’s regulatory filings with the Securities
and Exchange Commission, including those in “Item 1A. Risk Factors”
of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2022 and the Company’s most recent Form 10-Q.
The forward-looking statements contained in this news release speak
only as of this date and the Company does not assume any obligation
to update them except as required by law.
Expeditors International of Washington, Inc.
Second Quarter 2023 Earnings Release,
August 8, 2023
Financial Highlights for the three
months ended June 30, 2023 and 2022 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended June
30,
Six months ended June
30,
2023
2022
% Change
2023
2022
% Change
Revenues
$
2,239,752
$
4,603,312
(51)%
$
4,832,341
$
9,267,610
(48)%
Directly related cost of transportation
and other expenses 1
$
1,419,183
$
3,440,948
(59)%
$
3,138,285
$
6,957,059
(55)%
Salaries and other operating
expenses 2
$
572,072
$
656,382
(13)%
$
1,169,590
$
1,342,809
(13)%
Operating income 3
$
248,497
$
505,982
(51)%
$
524,466
$
967,742
(46)%
Net earnings attributable to
shareholders
$
196,800
$
377,805
(48)%
$
422,811
$
723,914
(42)%
Diluted earnings attributable to
shareholders per share
$
1.30
$
2.27
(43)%
$
2.75
$
4.31
(36)%
Basic earnings attributable to
shareholders per share
$
1.31
$
2.29
(43)%
$
2.78
$
4.35
(36)%
Diluted weighted average shares
outstanding
151,563
166,474
153,516
167,980
Basic weighted average shares
outstanding
150,435
165,092
152,291
166,423
_______________________
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.
3Operating income in the three and six
months ended June 30, 2022 includes $26 million and $88 million in
expenses incurred as a result of the Company's global systems
downtime and investigation, recovery and remediation efforts caused
by a targeted cyber-attack that occurred in the first quarter of
2022. In the three and six months ended June 30, 2023, amounts
related to the cyber-attack recorded in Operating Income were
insignificant.
During the three and six months ended June 30, 2023, we
repurchased 6.0 million and 8.0 million shares of common stock at
an average price of $114.61 and $113.23 per share. During the three
and six months ended June 30, 2022 we repurchased 5.0 million
shares of common stock at an average price of $109.81.
Employee Full-time Equivalents
as of
June 30, 2023
December 31, 2022
June 30, 2022
North America
7,154
7,778
7,770
Europe
3,946
4,228
4,099
North Asia
2,340
2,448
2,488
South Asia
1,731
1,851
1,821
Middle East, Africa and India
1,459
1,540
1,533
Latin America
765
859
854
Information Systems
1,242
1,173
1,093
Corporate
416
425
438
Total
19,053
20,302
20,096
Second quarter year-over-year
percentage increase (decrease) in:
2023
Airfreight kilos
Ocean freight FEU
April
(6)%
(15)%
May
(16)%
(13)%
June
(22)%
(12)%
Quarter
(15)%
(13)%
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on August 11, 2023 will be considered in management's 8-K
“Responses to Selected Questions.”
_______________________
NOTE: See Disclaimer on Forward-Looking
Statements in this release.
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except per share
data)
(Unaudited)
June 30, 2023
December 31, 2022
Assets:
Current Assets:
Cash and cash equivalents
$
1,698,587
$
2,034,131
Accounts receivable, less allowance for
credit loss of $5,802 at June 30, 2023 and $9,466 at December 31,
2022
1,423,622
2,107,645
Deferred contract costs
175,723
257,545
Other
184,614
118,696
Total current assets
3,482,546
4,518,017
Property and equipment, less accumulated
depreciation and amortization $590,490 at June 30, 2023 and
$567,758 at December 31, 2022
494,539
501,916
Operating lease right-of-use assets
514,958
507,503
Goodwill
7,927
7,927
Deferred federal and state income taxes,
net
43,550
37,449
Other assets, net
20,520
17,622
Total assets
$
4,564,040
$
5,590,434
Liabilities:
Current Liabilities:
Accounts payable
$
815,514
$
1,108,996
Accrued expenses, primarily salaries and
related costs
422,134
479,262
Contract liabilities
218,561
323,101
Current portion of operating lease
liabilities
99,962
95,621
Federal, state and foreign income
taxes
22,936
47,075
Total current liabilities
1,579,107
2,054,055
Noncurrent portion of operating lease
liabilities
426,829
422,844
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 147,222 shares at June 30, 2023 and 154,313
shares at December 31, 2022
1,472
1,543
Additional paid-in capital
—
139
Retained earnings
2,752,461
3,310,892
Accumulated other comprehensive loss
(198,001
)
(202,553
)
Total shareholders’ equity
2,555,932
3,110,021
Noncontrolling interest
2,172
3,514
Total equity
2,558,104
3,113,535
Total liabilities and equity
$
4,564,040
$
5,590,434
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,
2023
2022
2023
2022
Revenues:
Airfreight services
$
751,171
$
1,602,566
$
1,656,074
$
3,201,121
Ocean freight and ocean services
593,801
1,759,646
1,291,108
3,735,892
Customs brokerage and other services
894,780
1,241,100
1,885,159
2,330,597
Total revenues
2,239,752
4,603,312
4,832,341
9,267,610
Operating Expenses:
Airfreight services
525,027
1,212,503
1,191,049
2,355,049
Ocean freight and ocean services
405,807
1,402,365
889,489
3,002,608
Customs brokerage and other services
488,349
826,080
1,057,747
1,599,402
Salaries and related
428,558
508,222
878,406
1,047,162
Rent and occupancy
58,205
51,598
115,837
102,526
Depreciation and amortization
15,506
14,254
30,767
27,229
Selling and promotion
6,314
5,887
12,698
9,935
Other
63,489
76,421
131,882
155,957
Total operating expenses
1,991,255
4,097,330
4,307,875
8,299,868
Operating income
248,497
505,982
524,466
967,742
Other Income (Expense):
Interest income
17,792
2,720
36,567
4,612
Interest expense
(395
)
(58
)
(3,040
)
(561
)
Other, net
289
164
8,768
8,194
Other income, net
17,686
2,826
42,295
12,245
Earnings before income taxes
266,183
508,808
566,761
979,987
Income tax expense
70,390
126,582
144,970
248,281
Net earnings
195,793
382,226
421,791
731,706
Less net (losses) earnings attributable to
the noncontrolling interest
(1,007
)
4,421
(1,020
)
7,792
Net earnings attributable to
shareholders
$
196,800
$
377,805
$
422,811
$
723,914
Diluted earnings attributable to
shareholders per share
$
1.30
$
2.27
$
2.75
$
4.31
Basic earnings attributable to
shareholders per share
$
1.31
$
2.29
$
2.78
$
4.35
Weighted average diluted shares
outstanding
151,563
166,474
153,516
167,980
Weighted average basic shares
outstanding
150,435
165,092
152,291
166,423
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,
2023
2022
2023
2022
Operating Activities:
Net earnings
$
195,793
$
382,226
$
421,791
$
731,706
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for (recoveries) losses on
accounts receivable
(167
)
4,763
905
4,347
Deferred income tax benefit
(3,560
)
(8,622
)
(1,524
)
(11,858
)
Stock compensation expense
18,595
25,518
31,083
37,121
Depreciation and amortization
15,506
14,254
30,767
27,229
Other, net
2,564
(1,746
)
3,723
(1,291
)
Changes in operating assets and
liabilities:
Decrease in accounts receivable
174,321
378,291
682,927
245,943
(Decrease) increase in accounts payable
and accrued liabilities
(149,986
)
(133,171
)
(352,909
)
7,020
Decrease in deferred contract costs
18,166
37,138
85,787
211,068
Decrease in contract liabilities
(23,803
)
(45,574
)
(108,250
)
(238,931
)
Increase in income taxes payable, net
(93,817
)
(93,430
)
(93,726
)
(47,171
)
Decrease (increase) in other, net
4,834
(1,001
)
4,284
7,409
Net cash from operating activities
158,446
558,646
704,858
972,592
Investing Activities:
Purchase of property and equipment
(10,481
)
(38,158
)
(20,607
)
(52,570
)
Other, net
(794
)
(134
)
(219
)
(55
)
Net cash from investing activities
(11,275
)
(38,292
)
(20,826
)
(52,625
)
Financing Activities:
Payments on borrowings on lines of
credit
(5,743
)
(5,382
)
(32,145
)
(8,484
)
Proceeds from borrowings on lines of
credit
7,054
33,953
18,549
56,545
Proceeds from issuance of common stock
9,176
5,682
18,464
11,433
Repurchases of common stock
(687,689
)
(549,065
)
(901,191
)
(549,065
)
Dividends Paid
(102,263
)
(109,828
)
(102,263
)
(109,828
)
Payments for taxes related to net share
settlement of equity awards
(12,056
)
(11,851
)
(19,501
)
(19,333
)
Net cash from financing activities
(791,521
)
(636,491
)
(1,018,087
)
(618,732
)
Effect of exchange rate changes on cash
and cash equivalents
(7,857
)
(46,518
)
(1,489
)
(52,956
)
Change in cash and cash equivalents
(652,207
)
(162,655
)
(335,544
)
248,279
Cash and cash equivalents at beginning of
period
2,350,794
2,139,626
2,034,131
1,728,692
Cash and cash equivalents at end of
period
$
1,698,587
$
1,976,971
$
1,698,587
$
1,976,971
Taxes Paid:
Income taxes
$
173,670
$
236,791
$
244,456
$
314,751
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,
2023:
Revenues
$
805,948
110,255
49,972
510,027
199,868
440,916
123,972
(1,206
)
2,239,752
Directly related cost of transportation
and other expenses1
$
426,121
69,108
29,428
387,973
134,477
288,808
83,890
(623
)
1,419,182
Salaries and other operating expenses2
$
256,277
34,793
16,265
68,290
44,048
125,196
27,820
(616
)
572,073
Operating income (loss)
$
123,550
6,354
4,279
53,764
21,343
26,912
12,262
33
248,497
Identifiable assets at period end
$
2,553,553
192,362
115,458
495,229
213,026
748,449
258,849
(12,886
)
4,564,040
Capital expenditures
$
6,623
161
46
352
168
2,336
795
—
10,481
Equity
$
1,873,220
45,252
59,289
220,638
93,476
146,174
158,133
(38,078
)
2,558,104
For the three months ended June 30,
2022:
Revenues
$
1,265,363
144,988
66,136
1,582,475
611,246
658,307
275,948
(1,151
)
4,603,312
Directly related cost of transportation
and other expenses1
$
797,179
85,806
43,298
1,323,354
507,473
464,399
220,162
(723
)
3,440,948
Salaries and other operating expenses2
$
314,726
31,308
14,496
104,896
38,728
115,394
37,258
(424
)
656,382
Operating income
$
153,458
27,874
8,342
154,225
65,045
78,514
18,528
(4
)
505,982
Identifiable assets at period end
$
3,681,137
304,799
144,303
1,275,808
554,166
1,081,246
365,532
(45,849
)
7,361,142
Capital expenditures
$
26,394
1,038
177
766
436
7,666
1,681
—
38,158
Equity
$
2,435,088
127,428
54,762
307,453
217,437
297,572
134,388
(38,865
)
3,535,263
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,
2023:
Revenues
$
1,751,442
220,105
104,667
1,092,448
423,995
975,380
266,675
(2,371
)
4,832,341
Directly related cost of transportation
and other expenses1
$
966,078
138,313
61,730
840,315
292,100
661,068
179,839
(1,159
)
3,138,284
Salaries and other operating expenses2
$
523,960
70,617
35,767
139,430
90,846
252,568
57,652
(1,249
)
1,169,591
Operating income
$
261,404
11,175
7,170
112,703
41,049
61,744
29,184
37
524,466
Identifiable assets at period end
$
2,553,553
192,362
115,458
495,229
213,026
748,449
258,849
(12,886
)
4,564,040
Capital expenditures
$
12,067
630
276
942
335
5,319
1,038
—
20,607
Equity
$
1,873,220
45,252
59,289
220,638
93,476
146,174
158,133
(38,078
)
2,558,104
For the six months ended June 30,
2022:
Revenues
$
2,506,587
249,598
123,843
3,351,491
1,257,575
1,234,098
546,629
(2,211
)
9,267,610
Directly related cost of transportation
and other expenses1
$
1,560,602
150,038
77,155
2,803,447
1,046,356
882,019
438,262
(820
)
6,957,059
Salaries and other operating expenses2
$
648,375
56,177
27,597
228,009
84,057
224,663
75,300
(1,369
)
1,342,809
Operating income
$
297,610
43,383
19,091
320,035
127,162
127,416
33,067
(22
)
967,742
Identifiable assets at period end
$
3,681,137
304,799
144,303
1,275,808
554,166
1,081,246
365,532
(45,849
)
7,361,142
Capital expenditures
$
35,871
2,116
286
1,297
726
9,724
2,550
—
52,570
Equity
$
2,435,088
127,428
54,762
307,453
217,437
297,572
134,388
(38,865
)
3,535,263
1 Directly 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.
2 Salaries 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/20230807971584/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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