EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD), today announced net earnings attributable to shareholders of $54,070,000 for the second quarter of 2009, as compared with $71,249,000 for the same quarter of 2008, a decrease of 24%. Net revenues for the second quarter of 2009 decreased 17% to $330,047,000 as compared with $397,325,000 reported for the second quarter of 2008. Total revenues and operating income were $895,360,000 and $86,927,000 in 2009, as compared with $1,454,255,000 and $112,971,000 for the same quarter of 2008, decreases of 38% and 23%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $.25, as compared with $.32 for the same quarter in 2008, a decrease of 22%. The Company also reported that same store net revenues and operating income decreased 17% and 23%, respectively, for the second quarter of 2009 when compared with 2008.

For the six months ended June 30, 2009, net earnings attributable to shareholders was $113,330,000, as compared with $137,721,000 in 2008, a decrease of 18%. Net revenues for the six months decreased to $666,562,000 from $771,653,000 for 2008, down 14%. Total revenues and operating income for the six months were $1,808,045,000 and $178,401,000 in 2009, as compared with $2,761,576,000 and $218,535,000 for the same period in 2008, decreases of 35% and 18%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2009 were $.52, as compared with $.62 for the same period of 2008, a decrease of 16%. Same store net revenues and operating income decreased 14% and 18%, respectively, for the six months ended June 30, 2009, when compared with same period of 2008.

“While our pre-announcement took away the apprehension traditionally associated with a quarterly earnings release, once the final numbers were in, we still have a pretty good story to tell,” said Peter J. Rose, Chairman and Chief Executive Officer. “There aren’t many companies in today’s environment that can say they have record cash balances ($916 million), have recorded a 136% increase in cash flow provided by operations (compared with the second quarter of 2008), have had no layoffs and remain debt-free. We continue to be well positioned to maintain the value of our people, our culture and our customer relationships. These assets are critical differentiators for us,” Rose continued.

“We are aware of Wall Street’s expectations for the remainder of 2009. We would reiterate that Expeditors’ strategy has never been driven by Wall Street’s expectations. We will continue to invest in our people, in our systems and in our customer service capabilities. Continued focus on these factors is what grows market share and allows us to maintain our long-term positioning in today’s environment,” Rose went on to say. “You can’t go around some challenges; you just have to go through them, and we’re doing that. Expeditors didn’t progress from having 20 employees in 1981 to become a Fortune 500 company in 2007 through the efforts of employees living in constant fear of being laid off. It is our people who are responsible for those accomplishments. We need them all, and the leadership culture that permeates this company, at all levels, now more than ever. Despite published statistics showing record declines in year-over-year shipping volumes, we continue to attract new customers. As the economy improves, and we believe it will, shippers will ship more. When they do, we expect to reap the benefits of these new relationships,” Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 183 full-service offices, 66 satellite locations and 4 international service centers located on six continents linked into a seamless worldwide network through an integrated information management system. Services include air and ocean freight forwarding, vendor consolidation, customs clearance, marine insurance, distribution and other value-added international logistics services.

1 Diluted 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.

2nd Quarter 2009 Earnings Release

August 4, 2009

 

Expeditors International of Washington, Inc.

Financial Highlights

Three months and Six months ended

June 30, 2009 and 2008

Unaudited

(in 000's except share data)

  Three Months Ended June 30,     Six Months Ended June 30,  

2009

 

2008

  %

Decrease

2009

 

2008

  %

Decrease

Revenues $ 895,360 $ 1,454,255 (38 ) % $ 1,808,045 $ 2,761,576 (35 ) % Net revenues $ 330,047 $ 397,325 (17 ) % $ 666,562 $ 771,653 (14 ) % Operating income $ 86,927 $ 112,971 (23 ) % $ 178,401 $ 218,535 (18 ) % Net earnings attributable to shareholders $ 54,070 $ 71,249 (24 ) % $ 113,330 $ 137,721 (18 ) % Diluted earnings attributable to shareholders $ .25 $ .32 (22 ) % $ .52 $ .62 (16 ) % Basic earnings attributable to shareholders $ .25 $ .33 (24 ) % $ .53 $ .65 (18 ) % Diluted weighted average shares outstanding

 

216,653,968

 

220,515,987

 

 

216,519,551

 

220,490,452

 

Basic weighted average shares outstanding

 

212,116,679

 

213,275,229

 

212,108,636

 

213,168,730

 

 

During the second quarter of 2009, the Company opened two full-service offices: 1) in Muscat, Sultanate of Oman (formerly an agent location); and 2) Wuhan, People’s Republic of China (formerly a satellite of Chongqing, People’s Republic of China). The Company closed one satellite office in Graz, Austria.

Investors may submit written questions via e-mail to: investor@expeditors.com

Or by fax to: (206) 674-3459

Questions received by the end of business on August 7, 2009, will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about August 14, 2009.

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 future economic trends. 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, our ability to maintain consistent and stable operating results, future success of our business model, ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political changes, or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual and Quarterly Reports filed with the Securities and Exchange Commission.

  EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited)     June 30, December 31,

Assets

2009 2008   Current assets: Cash and cash equivalents $ 915,982 $ 741,028 Short-term investments 636 658 Accounts receivable, net 577,302 788,176 Deferred Federal and state income taxes 8,506 7,986 Other current assets   32,482     35,511   Total current assets   1,534,908     1,573,359     Property and equipment, net 496,362 493,129 Goodwill, net 7,927 7,927 Other intangibles, net 5,607 6,503 Other assets   29,140     19,921   $ 2,073,944   $ 2,100,839  

Liabilities and Shareholders' Equity

  Current liabilities: Accounts payable 397,735 491,823 Accrued expenses, primarily salaries and related costs 156,757 150,487 Federal, state and foreign income taxes   19,236     28,039   Total current liabilities   573,728     670,349     Deferred Federal and state income taxes 45,533 46,574   Shareholders' equity: Preferred stock; none issued -- --

Common stock, par value $.01 per share; issued and outstanding 212,061,173 shares at June 30, 2009, and 211,973,377 shares at December 31, 2008

2,121 2,120 Additional paid-in capital 4,706 7,150 Retained earnings 1,445,409 1,372,356 Accumulated other comprehensive loss   (6,668 )   (15,208 ) Total shareholders' equity   1,445,568     1,366,418     Noncontrolling interest   9,115     17,498   Total equity   1,454,683     1,383,916       $ 2,073,944   $ 2,100,839           EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited)   Three months ended Six months ended June 30, June 30, 2009 2008 2009 2008 Revenues: Airfreight services $ 371,359 $ 658,882 $ 745,815 $ 1,258,645 Ocean freight and ocean services 299,292 516,473 617,926 963,265 Customs brokerage and other services   224,709     278,900     444,304     539,666   Total revenues   895,360     1,454,255     1,808,045     2,761,576     Operating expenses: Airfreight consolidation 257,016 517,683 507,385 978,782 Ocean freight consolidation 218,891 419,767 457,117 780,207 Customs brokerage and other services 89,406 119,480 176,981 230,934 Salaries and related costs 189,565 215,535 376,774 421,350 Rent and occupancy costs 17,954 19,374 36,678 38,809 Depreciation and amortization 10,244 10,056 20,202 19,828 Selling and promotion 5,547 9,744 11,769 19,248 Other   19,810     29,645     42,738     53,883   Total operating expenses   808,433     1,341,284     1,629,644     2,543,041     Operating income   86,927     112,971     178,401     218,535     Interest income 2,433 4,915 6,039 9,879 Interest expense (64 ) (75 ) (79 ) (146 ) Other, net   2,081     (162 )   6,634     1,112   Other income, net   4,450     4,678     12,594     10,845     Earnings before income taxes 91,377 117,649 190,995 229,380   Income tax expense 37,563 46,043 77,812 91,253         Net earnings   53,814     71,606     113,183     138,127     Net earnings attributable to noncontrolling interest 256 (357 ) 147 (406 )         Net earnings attributable to shareholders $ 54,070   $ 71,249   $ 113,330   $ 137,721     Diluted earnings attributable to shareholders per share $ 0.25   $ 0.32   $ 0.52   $ 0.62     Basic earnings attributable to shareholders per share $ 0.25   $ 0.33   $ 0.53   $ 0.65     Dividends declared and paid per common share $ 0.19   $ 0.16   $ 0.19   $ 0.16     Weighted average diluted shares outstanding   216,653,968     220,515,987     216,519,551     220,490,452     Weighted average basic shares outstanding   212,116,679     213,275,229     212,108,636     213,168,730       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, 2009 2008 2009 2008 Operating Activities: Net earnings $ 53,814 $ 71,606 $ 113,183 $ 138,127 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on accounts receivable (1,075 ) (396 ) 1,569 (573 ) Deferred income tax (benefit) expense (12,695 ) 7,647 (6,244 ) 16,473 Excess tax benefits from stock plans (2,073 ) (7,889 ) (5,135 ) (9,395 ) Stock compensation expense 11,371 11,323 18,271 22,603 Depreciation and amortization 10,244 10,056 20,202 19,828 Gain on sale of assets (6 ) (30 ) (10 ) (605 ) Other 365 515 727 932 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 60,379 (91,778 ) 214,343 (32,024 ) (Increase) decrease in other current assets (1,308 ) 622 (1,323 ) 677

(Decrease) increase in accounts payable and accrued expenses

(20,329 ) 67,024 (100,499 ) 82,102 (Decrease) increase in income taxes payable, net   (13,601 )   (32,697 )   2,284     (23,437 ) Net cash provided by operating activities   85,086     36,003     257,368     214,708     Investing Activities: (Increase) decrease in short-term investments (13 ) 169 31 216 Purchase of property and equipment (7,166 ) (14,316 ) (15,822 ) (24,526 ) Proceeds from sale of property and equipment 33 139 77 181 Prepayment on long-term land lease (7,344 ) - (7,344 ) - Other   (109 )   (308 )   (1,591 )   55   Net cash used in investing activities   (14,599 )   (14,316 )   (24,649 )   (24,074 )   Financing Activities: Repayments of short-term debt, net - (810 ) - - Proceeds from issuance of common stock 8,868 15,537 17,404 20,151 Repurchases of common stock (23,760 ) (50,970 ) (42,972 ) (69,588 ) Excess tax benefits from stock plans 2,073 7,889 5,135 9,395 Dividends paid (40,276 ) (34,163 ) (40,276 ) (34,163 ) Distributions to noncontrolling interests - - - (107 ) Purchases of noncontrolling interest   -     -     (2,122 )   -   Net cash used in financing activities   (53,095 )   (62,517 )   (62,831 )   (74,312 )   Effect of exchange rate changes on cash   14,911     3,352     5,066     12,567     Increase (decrease) in cash and cash equivalents 32,303 (37,478 ) 174,954 128,889   Cash and cash equivalents at beginning of period   883,679     740,966     741,028     574,599     Cash and cash equivalents at end of period $ 915,982   $ 703,488   $ 915,982   $ 703,488     Interest and taxes paid: Interest $ 65 75 $ 80 146 Income taxes 59,746 67,613 75,110 91,885     EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited)            

 

     

Middle

Other Europe

East

United North Latin and and Austral- Elimi- Consoli- States America America Asia Africa India asia nations dated Three months ended June 30, 2009 Revenues from unaffiliated customers $ 222,569 29,500 14,804 427,914 135,259 50,466 14,848 895,360 Transfers between geographic areas   18,046 1,742 3,069 3,903 5,826 3,700 2,552 (38,838 ) - Total revenues $ 240,615 31,242 17,873 431,817 141,085 54,166 17,400 (38,838 ) 895,360   Net revenues $ 129,236 14,852 11,173 91,492 53,648 19,382 10,264 330,047 Operating income $ 27,345 3,082 3,716 35,894 7,996 5,599 3,295 86,927 Identifiable assets $ 1,023,955 62,133 32,222 452,563 360,322 114,673 27,824 252 2,073,944 Capital expenditures $ 5,514 142 180 470 256 558 46 7,166 Depreciation and amortization $ 5,470 347 246 1,913 1,492 619 157 10,244 Equity $ 1,591,475 39,227 12,813 352,426 142,949 69,815 18,034 (772,056 ) 1,454,683   Three months ended June 30, 2008 Revenues from unaffiliated customers $ 322,644 41,397 22,260 768,086 209,297 67,164 23,407 1,454,255 Transfers between geographic areas   26,957 2,623 3,534 5,629 11,257 4,539 2,158 (56,697 ) - Total revenues $ 349,601 44,020 25,794 773,715 220,554 71,703 25,565 (56,697 ) 1,454,255   Net revenues $ 154,697 18,009 13,308 104,688 72,286 21,212 13,125 397,325 Operating income $ 31,179 3,670 3,517 48,147 16,568 5,629 4,261 112,971 Identifiable assets $ 1,008,102 75,321 57,181 501,484 485,926 111,532 41,521 8,177 2,289,244 Capital expenditures $ 7,164 855 500 3,207 1,684 747 159 14,316 Depreciation and amortization $ 5,442 328 304 1,499 1,681 555 247 10,056 Equity $ 1,472,819 37,579 28,146 407,330 186,359 56,927 27,047 (876,065 ) 1,340,142   Six months ended June 30, 2009 Revenues from unaffiliated customers $ 458,897 59,268 30,933 856,196 268,125 107,579 27,047 1,808,045 Transfers between geographic areas   36,554 3,624 6,511 7,636 12,599 7,267 4,853 (79,044 ) - Total revenues $ 495,451 62,892 37,444 863,832 280,724 114,846 31,900 (79,044 ) 1,808,045   Net revenues $ 260,381 31,052 21,686 186,190 107,765 40,458 19,030 666,562 Operating income $ 57,981 7,422 6,080 74,121 16,767 9,938 6,092 178,401 Identifiable assets $ 1,023,955 62,133 32,222 452,563 360,322 114,673 27,824 252 2,073,944 Capital expenditures $ 11,612 291 411 1,010 1,341 899 258 - 15,822 Depreciation and amortization $ 10,780 673 485 3,845 2,897 1,214 308 - 20,202 Equity $ 1,591,475 39,227 12,813 352,426 142,949 69,815 18,034 (772,056 ) 1,454,683   Six months ended June 30, 2008 Revenues from unaffiliated customers $ 622,716 76,466 41,994 1,447,936 394,861 134,357 43,246 2,761,576 Transfers between geographic areas   51,146 4,696 6,733 10,740 21,759 8,536 4,292 (107,902 ) - Total revenues $ 673,862 81,162 48,727 1,458,676 416,620 142,893 47,538 (107,902 ) 2,761,576   Net revenues $ 304,528 34,683 25,177 203,429 138,059 40,953 24,824 771,653 Operating income $ 61,407 7,193 6,799 94,767 29,796 10,713 7,860 218,535 Identifiable assets $ 1,008,102 75,321 57,181 501,484 485,926 111,532 41,521 8,177 2,289,244 Capital expenditures $ 10,802 1,191 769 6,510 3,294 1,607 353 24,526 Depreciation and amortization $ 10,805 640 602 2,753 3,449 1,083 496 19,828 Equity $ 1,472,819 37,579 28,146 407,330 186,359 56,927 27,047 (876,065 ) 1,340,142