Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced net earnings attributable to shareholders of $83,955,000
for the second quarter of 2012, as compared with $95,000,000 for
the same quarter of 2011, a decrease of (12)%. Net revenues for the
second quarter of 2012 decreased (4)% to $453,651,000 as compared
with $472,561,000 reported for the second quarter of 2011. Total
revenues and operating income were $1,504,952,000 and $132,403,000
in the second quarter of 2012, as compared with $1,581,368,000 and
$152,275,000 for the same quarter of 2011, decreases of (5)% and
(13)%, respectively. Diluted net earnings attributable to
shareholders per share for the second quarter were $.39, as
compared with $.44 for the same quarter in 2011, a decrease of
(11)%.
For the six months ended June 30, 2012, net earnings
attributable to shareholders was $160,662,000, as compared with
$186,232,000 in 2011, a decrease of (14)%. Net revenues for the six
months decreased to $900,222,000 from $926,476,000 for 2011, down
(3)%. Total revenues and operating income for the six months were
$2,916,322,000 and $257,674,000 in 2012, as compared with
$3,042,216,000 and $299,505,000 for the same period in 2011,
decreases of (4)% and (14)%, respectively. Diluted net earnings
attributable to shareholders per share for the first two quarters
of 2012 were $0.75, as compared with $0.86 for the same period of
2011, a decrease of (13)%.
“The same market trends we experienced during our 2012 first
quarter, as we suggested at the time, continued into the second
quarter. That said, we saw volume growth in all areas of our
business with the exception of airfreight, despite navigating in
what people are finally acknowledging is a very challenging and
uncertain global economy,” said Peter J. Rose, Chairman and Chief
Executive Officer. “Ocean freight yields dipped, sequentially, as
is typical of the second quarter, due to the time lag between when
carrier rate increases during annual May contract negotiations are
commercially implemented and on a year-over-year basis, reflecting
the magnitude of this years' buy rate increases, as carriers moved
aggressively to stabilize their precarious financial situation.
This was mitigated somewhat by 7% net revenue growth in our direct
ocean forwarding product. In spite of flat shipment counts, we
continued to experience similar year-over-year trends with respect
to airfreight tonnage (smaller shipments, diminished global
airfreight demand, lower levels of customer specific infrastructure
and projects) that we highlighted in our 2012 first quarter
release. Customs brokerage and other services, posted positive
growth in net revenue, primarily due to the contributions from our
continued international roll out of our domestic time definite
product, Transcon services,” Rose continued.
“We remain focused on controlling the parts of our business
which have the greatest immediate impact to our stakeholders: our
customers; our shareholders; and ultimately our people. That
includes focusing on customer retention and profitable market share
expansion. While our operating margin (29.2% based on net revenue)
hovers below the mark we've enjoyed the last two years (average of
32%), it still remains very healthy from both a competitive and a
historical perspective,” Rose went on to say. “Very importantly,
our cash position and strong operating cash flow have allowed us to
continue to pursue our strategic investments, particularly in
customer service proficiency and in productivity enhancements via
both information system and process engineering solutions. We also
bought back just over 2 million shares of stock during the quarter.
Expeditors was founded in tough times and we've been through plenty
of them since our founding. Being able to get through tough times
without letting tough times get through us is deeply embedded in
our DNA. Until there is more certainty in the global economy, these
trends could continue for the short to medium term. Regardless of
what happens, it won't change who we are and what we do for our
stakeholders. We continue to be grateful for the resilience of our
people, their dedication to our customers and our culture which
recognizes, reinforces and rewards the key to our long-term success
being tied to servicing our customers. These tough times too will
pass and it should go without saying, at the end of the day, we'd
rather be us, than anyone else inside or outside this industry,”
Rose concluded.
Expeditors is a global logistics company headquartered in
Seattle, Washington. The company employs trained professionals in
185 full-service offices and 65 satellite locations 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, domestic time definite services 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. Second
Quarter 2012 Earnings Release, August 7, 2012
Financial Highlights for the Three and Six months ended June 30,
2012 and 2011 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended June
Six months ended June 30,
30,
%
%
2012 2011
Decrease
2012 2011
Increase
Revenues $ 1,504,952 $ 1,581,368 (5 )% $ 2,916,322 $
3,042,216 (4 )%
Net revenues $ 453,651 $ 472,561 (4 )% $
900,222 $ 926,476 (3 )%
Operating income $ 132,403 $ 152,275
(13 )% $ 257,674 $ 299,505 (14 )%
Net earnings attributable to
shareholders $ 83,955 $ 95,000 (12 )% $ 160,662 $ 186,232 (14
)%
Diluted earnings attributable to shareholders $ .39 $ .44
(11 )% $ .75 $ .86 (13 )%
Basic earnings attributable to
shareholders $ .40 $ .45 (11 )% $ .76 $ .88 (14 )%
Diluted
weighted average shares outstanding 213,212,912 215,659,043
213,683,587 215,780,230
Basic weighted average shares
outstanding 211,724,082 212,136,164 211,910,872 212,112,643
Employee headcount as of June 30,
2012 2011 North America
4,764 4,528
Asia Pacific 3,979 4,053
Europe and
Africa 2,308 2,168
Middle East 1,249 1,222
South
America 660 625
Information Systems 577 551
Corporate 243 212
Total 13,780 13,359
Year-over-year percentage increase
(decrease) in: Airfreight kilos
Ocean freight FEU 2012 April (17 )% (1 )%
May (7 )% 1 %
June (6 )% 3 %
Quarter (10 )% 1
%
During the second quarter of 2012, the Company opened one full
service office in Montevideo, Uruguay, opened one satellite office
in Xuzhou, China and closed one full service office in Colombo, Sri
Lanka. The Company also transitioned its Tampa, Florida office from
a full service office to a satellite office of its full-service
office in Orlando, Florida and merged its satellite office in
Adana, Turkey with its nearby full-service office in Mersin,
Turkey.
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 trends in the global economy and duration of
these trends, future air and ocean volume levels; ability to retain
customers, expand profitable market share, maintain operating
margins and cash flows, achieve productivity enhancements in
information systems and process engineering and expansion of
domestic time definite product Transcon services. 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, customers’ inventory build-up, decreased
consumer confidence, volatility in equity markets, energy prices,
political changes, 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 share data) (Unaudited)
June 30, December 31,
2012 2011
Assets
Current Assets: Cash and cash equivalents $ 1,364,247 $
1,294,356 Short-term investments 376 472 Accounts receivable, net
983,131 934,752 Deferred Federal and state income taxes 10,234
10,415 Other current assets 47,409 46,888
Total current assets
2,405,397 2,286,883 Property and equipment, net
546,754 538,806 Goodwill and other intangibles, net 10,003 10,557
Other assets, net 30,218 30,581 $ 2,992,372 $
2,866,827
Liabilities and
Equity
Current Liabilities: Accounts payable 672,836 606,628
Accrued expenses, primarily salaries and related costs 184,114
169,445 Federal, state and foreign income taxes 25,948
20,072 Total current liabilities 882,898 796,145
Deferred Federal and state income taxes 59,417 60,613
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued — — Common stock, par value $.01 per
share; issued and outstanding 210,503,675 shares at June 30, 2012
and 212,003,662 shares at December 31, 2011 2,105 2,120 Additional
paid-in capital 1,013 13,260 Retained earnings 2,044,682 1,991,222
Accumulated other comprehensive loss (4,345 ) (2,964 ) Total
shareholders’ equity 2,043,455 2,003,638
Noncontrolling interest 6,602 6,431 Total equity
2,050,057 2,010,069 $ 2,992,372 $2,866,827
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, 2012
2011 2012 2011 Revenues:
Airfreight services $ 638,541 $ 749,861 $ 1,277,453 $
1,450,784 Ocean freight and ocean services 518,998 486,831 953,334
926,972 Customs brokerage and other services 347,413 344,676
685,535 664,460 Total revenues 1,504,952
1,581,368 2,916,322 3,042,216
Operating Expenses: Airfreight consolidation 484,311 576,280
965,354 1,100,916 Ocean freight consolidation 413,447 377,805
745,401 717,354 Customs brokerage and other services 153,543
154,722 305,345 297,470 Salaries and related costs 249,925 249,114
496,057 486,929 Rent and occupancy costs 20,853 21,354 42,029
42,735 Depreciation and amortization 9,670 9,257 19,215 18,431
Selling and promotion 8,860 10,022 17,523 19,185 Other 31,940
30,539 67,724 59,691 Total operating
expenses 1,372,549 1,429,093 2,658,648
2,742,711 Operating income 132,403 152,275
257,674 299,505 Interest income 3,050 2,312
6,410 4,632 Interest expense (222 ) (229 ) (842 ) (443 ) Other, net
3,682 857 4,779 1,974 Other income, net
6,510 2,940 10,347 6,163 Earnings
before income taxes 138,913 155,215 268,021 305,668 Income tax
expense 54,892 60,195 107,278 119,441
Net earnings 84,021 95,020 160,743 186,227
Less net earnings (losses) attributable to the
noncontrolling interest 66 20 81 (5 ) Net
earnings attributable to shareholders $ 83,955 $ 95,000
$ 160,662 $ 186,232 Diluted earnings
attributable to shareholders per share $ .39 $ .44 $
.75 $ .86 Basic earnings attributable to shareholders
per share $ .40 $ .45 $ .76 $ .88
Dividends declared and paid per common share $ .28 $ .25
$ .28 $ .25 Weighted average diluted shares
outstanding 213,212,912 215,659,043 213,683,587
215,780,230 Weighted average basic shares outstanding
211,724,082 212,136,164 211,910,872
212,112,643 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,
2012 2011 2012
2011 Operating Activities: Net earnings $ 84,021 $
95,020 $ 160,743 $ 186,227 Adjustments to reconcile net earnings to
net cash from operating activities: Provision for losses on
accounts receivable (388 ) (63 ) (855 ) 1,790 Deferred income tax
(benefit) expense (5,739 ) 1,601 (258 ) (335 ) Excess tax benefits
from stock plans (806 ) (2,285 ) (4,232 ) (4,531 ) Stock
compensation expense 10,926 10,236 21,526 20,708 Depreciation and
amortization 9,670 9,257 19,215 18,431 Gain on sale of assets (65 )
(21 ) (130 ) (51 ) Other 271 311 553 618 Changes in operating
assets and liabilities: Increase in accounts receivable (63,260 )
(14,173 ) (50,292 ) (7,490 ) Decrease in other current assets 1,642
3,896 3,566 2,481 Increase in accounts payable and accrued expenses
70,674 7,943 84,233 38,130 (Decrease) increase in income taxes
payable, net (14,132 ) (33,665 ) 6,142 (88 ) Net cash from
operating activities 92,814 78,057 240,211
255,890
Investing Activities: Decrease (increase) in
short-term investments, net 15,878 (449 ) 98 (538 ) Purchase of
property and equipment (9,814 ) (17,110 ) (26,902 ) (38,235 )
Proceeds from sale of property and equipment 141 42 253 85 Other
(232 ) (64 ) 126 (1,506 ) Net cash from investing activities
5,973 (17,581 ) (26,425 ) (40,194 )
Financing
Activities: Proceeds from issuance of common stock 7,482 15,821
20,402 23,625 Repurchases of common stock (84,401 ) (45,690 )
(106,266 ) (65,274 ) Excess tax benefits from stock plans 806 2,285
4,232 4,531 Dividends paid (59,358 ) (53,014 ) (59,358 ) (53,014 )
Net cash from financing activities (135,471 ) (80,598 ) (140,990 )
(90,132 ) Effect of exchange rate changes on cash and cash
equivalents (11,984 ) 7,481 (2,905 ) 15,801
(Decrease) increase in cash and cash equivalents (48,668 ) (12,641
) 69,891 141,365 Cash and cash equivalents at beginning of period
1,412,915 1,238,471 1,294,356 1,084,465
Cash and cash equivalents at end of period $ 1,364,247 $
1,225,830 $ 1,364,247 $ 1,225,830
Interest
and taxes paid: Interest $ 233 $ 13 $ 420 $ 17 Income taxes
77,583 91,035 104,095 117,311 EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In
thousands) (Unaudited)
OTHER MIDDLE UNITED NORTH
LATIN ASIA EUROPE and EAST and
ELIMI- CONSOLI-
STATES
AMERICA AMERICA PACIFIC AFRICA
INDIA NATIONS DATED Three months
ended June 30, 2012: Revenues from unaffiliated customers $
379,126 49,802 21,366 780,858 202,301 71,499 — 1,504,952 Transfers
between geographic areas
22,504
2,466 4,791 11,038 9,603 4,670 (55,072 ) — Total revenues $
401,630 52,268 26,157 791,896 211,904 76,169 (55,072 )
1,504,952 Net revenues $ 182,291 25,115 14,724 135,908 71,497
24,116 — 453,651 Operating income $ 49,193 8,085 4,118 51,768
12,951 6,288 — 132,403 Identifiable assets $ 1,597,543 93,374
52,019 687,586 412,752 152,754 (3,656 ) 2,992,372 Capital
expenditures $ 5,236 153 400 2,602 1,111 312 — 9,814 Depreciation
and amortization $ 5,756 181 207 1,645 1,430 451 — 9,670 Equity $
1,295,963 51,248 31,903 462,123 144,659 94,892 (30,731 ) 2,050,057
Three months ended June 30, 2011: Revenues from unaffiliated
customers $ 390,806 47,816 21,136 816,350 229,724 75,536 —
1,581,368 Transfers between geographic areas
25,973
2,783 5,220 10,170 11,355 4,500 (60,001 ) — Total revenues $
416,779 50,599 26,356 826,520 241,079 80,036 (60,001 ) 1,581,368
Net revenues $ 181,603 21,581 15,157 150,616 78,828 24,776 —
472,561 Operating income $ 57,752 5,761 4,486 61,542 16,877 5,857 —
152,275 Identifiable assets $ 1,411,881 91,678 58,396 678,668
479,852 155,503 2,026 2,878,004 Capital expenditures $ 3,350 448
144 4,622 7,881 665 — 17,110 Depreciation and amortization $ 4,926
277 264 1,847 1,416 527 — 9,257 Equity $ 1,123,482 52,814 33,784
420,962 184,252 94,447 (30,591 ) 1,879,150
Six months
ended June 30, 2012: Revenues from unaffiliated
customers $ 756,428 99,756 40,635 1,468,928 408,572 142,003 —
2,916,322 Transfers between geographic areas
44,712
4,931 9,870 22,010 19,070 9,321 (109,914 ) — Total revenues $
801,140 104,687 50,505 1,490,938 427,642 151,324 (109,914 )
2,916,322 Net revenues $ 363,766 47,357 29,559 267,722 143,030
48,788 — 900,222 Operating income $ 94,718 14,454 8,880 99,006
27,198 13,418 — 257,674 Identifiable assets $ 1,597,543 93,374
52,019 687,586 412,752 152,754 (3,656 ) 2,992,372 Capital
expenditures $ 14,995 329 655 7,889 2,053 981 — 26,902 Depreciation
and amortization $ 11,378 368 424 3,269 2,834 942 — 19,215 Equity $
1,295,963 51,248 31,903 462,123 144,659 94,892 (30,731 ) 2,050,057
Six months ended June 30, 2011: Revenues from unaffiliated
customers $ 767,911 91,663 41,469 1,544,480 443,335 153,358 —
3,042,216 Transfers between geographic areas
49,938
5,465 10,841 19,353 22,062 8,709 (116,368 ) — Total revenues $
817,849 97,128 52,310 1,563,833 465,397 162,067 (116,368 )
3,042,216 Net revenues $ 359,537 42,282 30,260 292,104 152,753
49,540 — 926,476 Operating income $ 111,486 11,550 9,249 120,980
34,584 11,656 — 299,505 Identifiable assets $ 1,411,881 91,678
58,396 678,668 479,852 155,503 2,026 2,878,004 Capital expenditures
$ 7,380 608 300 9,334 19,587 1,026 — 38,235 Depreciation and
amortization $ 9,911 580 533 3,816 2,526 1,065 — 18,431 Equity $
1,123,482 52,814 33,784 420,962 184,252 94,447 (30,591 ) 1,879,150
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