Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced net earnings attributable to shareholders of $84,208,000
for the fourth quarter of 2012, as compared with $92,843,000 for
the same quarter of 2011, a decrease of (9)%. Net revenues for the
fourth quarter of 2012 decreased (4)% to $458,738,000 as compared
with $476,155,000 reported for the fourth quarter of 2011. Total
revenues and operating income were $1,532,957,000 and $128,025,000
in 2012, as compared with $1,501,914,000 and $155,064,000 for the
same quarter of 2011, an increase of 2% and a decrease of (17)%,
respectively. Diluted net earnings attributable to shareholders per
share for the fourth quarter were $.40, as compared with $.43 for
the same quarter in 2011, a decrease of (7)%.
For the year ended December 31, 2012, net earnings
attributable to shareholders was $333,360,000, as compared with
$385,679,000 in 2011, a decrease of (14)%. Net revenues for the
year decreased to $1,824,098,000 from $1,896,477,000 for 2011, down
(4)%. Total revenues and operating income for the year were
$5,980,943,000 and $530,798,000 in 2012, as compared with
$6,150,498,000 and $618,327,000 for the same period in 2011,
decreases of (3)% and (14)%, respectively. Diluted net earnings
attributable to shareholders per share for the year ended
December 31, 2012 were $1.57, as compared with $1.79 for the
same period of 2011, a decrease of (12)%.
“We obviously would have liked better results for the annual
2012 and fourth quarter, not withstanding 2012 was our third most
profitable year on record," said Peter J. Rose, Chairman and Chief
Executive Officer. "The market has been challenged throughout the
year by air carriers reducing capacity to optimize their pricing
and load factors as market volumes declined, primarily in the
hi-tech and computer industry, traditionally among the prime users
of airfreight space. As airfreight tonnage spiked during the latter
part of the fourth quarter, carriers imposed rate increases so
quickly that we were unable to commercially adjust our
corresponding sell rates to avoid temporary yield declines. That
all said, we still have much to be proud of this year. We remain
highly efficient and profitable with strong cash flow and an
operating margin just under 30%2. We have a balance sheet as solid
as the Rock of Gibraltar, abundant cash and the wherewithal to make
strategic investments to increase growth and continue technological
enhancements. And finally, we successfully concluded our part of
the five year DOJ investigation into our industry. As we reflect
back on the goals and aspirations we held at the start of 2012, we
executed to protect the long-term value of Expeditors, particularly
given global economic uncertainties. We made the safe-guarding of
our people a priority; we continued to make essential investments
in systems and new services, such as Transcon, our time definite
transportation service; and we continued to provide consistently
high-quality service to our customers. We also made record stock
buybacks of $302 million and paid out record dividends of $117
million," Rose continued.
"Early in 2012, while eschewing layoffs, we asked our managers
to focus on being more efficient with current staff, to be cautious
with hiring decisions and to only add headcount in instances where
attrition or new business required it, so as to not compromise our
customer service standards. We concentrated our efforts on managing
and developing the investments in our most valuable assets, our
people. Our final 2012 headcount is only 0.2% above 2011 levels,
but even that slight increase reflects targeted investments in new
offices, strategic business initiatives and information systems
which will allow us to drive future productivity and on-board new
customers more efficiently. As we move into 2013, we have taken
several steps to enhance our ability to retain existing customers
while attracting new business. We have refined our pricing regimen
to ensure that we are focusing on market share expansion through
more timely and efficient rate quotation; we are in the
process of rolling out our internally-developed customer
relationship management system; we have increased our emphasis on
our customer-facing network engineering offerings which have been
very successful in assisting customer supply-chain optimization
initiatives; and, of course, we will continue to train, measure and
emphasize our foundational commitment to customer service. We
think those are winning combinations to help our people manage
whatever 2013 will bring," Rose concluded.
Expeditors is a global logistics company headquartered in
Seattle, Washington. The company employs trained professionals in
188 full-service offices and numerous satellite 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, domestic time
definite transportation services, purchase order management and
customized logistics solutions.
1 Diluted earnings attributable to shareholders per share.
2 Operating margin is calculated as operating income divided by
net revenues.
NOTE: See Disclaimer on Forward-Looking Statements on the
following page of this release.
Expeditors International of Washington, Inc. 4th Quarter
2012 Earnings Release, February 26, 2013 Financial
Highlights for the Three months and Years ended December 31, 2012
and 2011 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended December 31, Years ended
December 31, % Increase
% 2012 2011 (Decrease) 2012
2011 Decrease Revenues $ 1,532,957 $ 1,501,914
2 % $ 5,980,943 $ 6,150,498 (3 )%
Net revenues $ 458,738 $
476,155 (4 )% $ 1,824,098 $ 1,896,477 (4 )%
Operating income
$ 128,025 $ 155,064 (17 )% $ 530,798 $ 618,327 (14 )%
Net
earnings attributable to shareholders $ 84,208 $ 92,843 (9 )% $
333,360 $ 385,679 (14 )%
Diluted earnings attributable to
shareholders $ .40 $ .43 (7 )% $ 1.57 $ 1.79 (12 )%
Basic
earnings attributable to shareholders $ .41 $ .44 (7 )% $ 1.58
$ 1.82 (13 )%
Diluted weighted average shares outstanding
208,963,216 214,159,723 211,935,171 215,033,580
Basic weighted
average shares outstanding 207,766,619 211,988,482 210,422,945
212,117,511
Employee headcount as of
December 31, 2012 2011 North
America 4,726 4,666
Asia Pacific 3,914 4,083
Europe
and Africa 2,332 2,262
Middle East 1,236 1,250
South
America 672 645
Information Systems 600 569
Corporate 248 228
Total 13,728 13,703
Year-over-year percentage increase
(decrease) in: Airfreight kilos
Ocean freight FEU 2012 October 3 % (9 )%
November 8 % (4 )%
December 2 % (4 )%
Quarter
5 % (6 )%
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 global economic uncertainties; challenges in
the airfreight industry and reducing capacity to optimize their
pricing and loan factors; ability to maintain or improve
profitability, cash flow, operating margins and efficiencies;
ability to make strategic investments that increase growth and
enhance our technology, systems and new services; ability to
safeguard, manage and develop our people; ability to maintain and
improve high quality services to customers; ability to continue
stock buy-backs and dividends; ability to retain existing customers
or attract new business; ability to operate new offices profitably;
ability to drive future productivity, or on-board new customers;
ability to refine our pricing regimen to ensure we are focusing on
market-share expansion or timing and efficient rate quotation;
success of internally developed systems; success of network
engineering offerings; and success in optimizing customer supply
chain initiatives. 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)
December 31, December 31, 2012 2011
Assets
Current Assets: Cash and cash equivalents $ 1,260,842 $
1,294,356 Accounts receivable, net 1,031,376 934,752 Deferred
Federal and state income taxes 12,102 10,415 Other current assets
53,279 47,360 Total current assets 2,357,599 2,286,883
Property and equipment, net 556,204 538,806 Goodwill 7,927
7,927 Other assets, net 32,395 33,211 $ 2,954,125 $
2,866,827
Liabilities and
Equity
Current Liabilities: Accounts payable 641,593 606,628
Accrued expenses, primarily salaries and related costs 178,995
169,445 Federal, state and foreign income taxes 21,970 20,072
Total current liabilities 842,558 796,145 Deferred
Federal and state income taxes 78,997 60,613 Commitments and
contingencies
Shareholders’ Equity: Preferred stock; none
issued — — Common stock, par value $.01 per share; issued and
outstanding 206,392,013 shares at December 31, 2012 and 212,003,662
shares at December 31, 2011 2,064 2,120 Additional paid-in capital
1,283 13,260 Retained earnings 2,018,618 1,991,222 Accumulated
other comprehensive income (loss) 5,734 (2,964 ) Total
shareholders’ equity 2,027,699 2,003,638 Noncontrolling
interest 4,871 6,431 Total equity 2,032,570 2,010,069
$ 2,954,125 $ 2,866,827 EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated
Statements of Earnings (In thousands, except share data)
(Unaudited)
Three months
ended Twelve months ended December 31,
December 31, 2012 2011
2012 2011 Revenues: Airfreight
services $ 700,785 $ 705,744 $ 2,600,916 $ 2,893,474 Ocean freight
and ocean services 472,307 441,102 1,974,891 1,878,595 Customs
brokerage and other services 359,865 355,068
1,405,136 1,378,429 Total revenues 1,532,957
1,501,914 5,980,943 6,150,498
Operating
Expenses: Airfreight consolidation 546,395 534,159 1,983,696
2,193,122 Ocean freight consolidation 364,251 333,567 1,542,170
1,443,170 Customs brokerage and other services 163,573 158,033
630,979 617,729 Salaries and related costs 246,096 247,917 995,052
993,358 Rent and occupancy costs 24,711 20,578 88,044 84,665
Depreciation and amortization 10,695 9,146 39,940 36,776 Selling
and promotion 8,814 10,447 34,184 38,974 Other 40,397 33,003
136,080 124,377 Total operating expenses
1,404,932 1,346,850 5,450,145 5,532,171
Operating income 128,025 155,064 530,798
618,327 Interest income 3,522 2,715 12,763 10,235
Interest expense (227 ) (248 ) (1,251 ) (970 ) Other, net 2,072
(2,330 ) 8,083 10,436 Other income, net 5,367
137 19,595 19,701 Earnings before
income taxes 133,392 155,201 550,393 638,028 Income tax expense
49,893 62,061 217,424 251,785 Net
earnings 83,499 93,140 332,969 386,243
Less net (losses) earnings attributable to the noncontrolling
interest (709 ) 297 (391 ) 564 Net earnings
attributable to shareholders $ 84,208 $ 92,843 $
333,360 $ 385,679 Diluted earnings attributable to
shareholders per share $ .40 $ .43 $ 1.57 $
1.79 Basic earnings attributable to shareholders per share $
.41 $ .44 $ 1.58 $ 1.82 Dividends
declared and paid per common share $ .28 $ .25 $ .56
$ .50 Weighted average diluted shares outstanding
208,963,216 214,159,723 211,935,171
215,033,580 Weighted average basic shares outstanding
207,766,619 211,988,482 210,422,945
212,117,511 EXPEDITORS INTERNATIONAL OF WASHINGTON,
INC. AND SUBSIDIARIES Condensed Consolidated Statements of
Cash Flows (In thousands) (Unaudited)
Three months ended Twelve months ended
December 31, December 31, 2012
2011 2012 2011 Operating
Activities: Net earnings $ 83,499 $ 93,140 $ 332,969 $ 386,243
Adjustments to reconcile net earnings to net cash provided by
operating activities: Provision for losses (recoveries) on accounts
receivable 302 166 (90 ) 1,327 Deferred income tax expense
(benefit) 7,309 5,598 11,639 (4,065 ) Excess tax benefits from
stock plans (1,110 ) (232 ) (5,401 ) (5,300 ) Stock compensation
expense 11,212 10,832 44,058 44,278 Depreciation and amortization
10,695 9,146 39,940 36,776 Other 3,181 722 4,864 2,496 Changes in
operating assets and liabilities: (Increase) decrease in accounts
receivable (16,044 ) 58,717 (89,856 ) 46,915 Decrease (increase) in
other current assets 3,566 (1,620 ) (63 ) (7,483 ) (Decrease)
increase in accounts payable and accrued expenses (30,341 ) (54,879
) 30,625 (40,819 ) (Decrease) increase in income taxes payable, net
(11,520 ) (13,654 ) 1,441 (3,237 ) Net cash from operating
activities 60,749 107,936 370,126 457,131
Investing Activities: Purchase of property and
equipment (10,554 ) (19,261 ) (47,626 ) (78,115 ) Prepayment on
long-term leases, net — — — (936 ) Other 146 343 632
(1,288 ) Net cash from investing activities (10,408 )
(18,918 ) (46,994 ) (80,339 )
Financing Activities: Proceeds
from issuance of common stock 7,510 2,055 52,511 56,646 Repurchases
of common stock (108,921 ) (3,499 ) (302,414 ) (112,071 ) Excess
tax benefits from stock plans 1,110 232 5,401 5,300 Dividends paid
(57,905 ) (52,997 ) (117,263 ) (106,011 ) Distribution to
noncontrolling interest (105 ) (133 ) (1,282 ) (955 ) Net cash from
financing activities (158,311 ) (54,342 ) (363,047 ) (157,091 )
Effect of exchange rate changes on cash and cash equivalents 1,170
(1,134 ) 6,401 (9,810 ) (Decrease) increase in cash
and cash equivalents (106,800 ) 33,542 (33,514 ) 209,891 Cash and
cash equivalents at beginning of period 1,367,642 1,260,814
1,294,356 1,084,465 Cash and cash equivalents
at end of period $ 1,260,842 $ 1,294,356 $ 1,260,842
$ 1,294,356
Interest and taxes paid: Interest
$ 68 $ 231 $ 515 $ 296 Income taxes 52,168 83,454 207,174 266,621
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
SUBSIDIARIES Business Segment Information (In thousands)
(Unaudited)
OTHER
EUROPE
MIDDLE UNITED
NORTH LATIN ASIA and EAST and
ELIMI- CONSOLI- STATES AMERICA
AMERICA PACIFIC AFRICA INDIA
NATIONS DATED Three months ended December 31,
2012: Revenues from unaffiliated customers $ 379,018 51,557
20,887 800,804 210,231 70,460 — 1,532,957 Transfers between
geographic areas 25,386 2,868 4,770 11,035 10,097 4,300 (58,456 ) —
Total revenues $ 404,404 54,425 25,657 811,839 220,328 74,760
(58,456 ) 1,532,957 Net revenues $ 186,176 25,029 14,258 136,497
73,393 23,385 — 458,738 Operating income $ 28,201 11,045 4,237
57,933 18,804 7,805 — 128,025 Identifiable assets $ 1,459,425
92,075 48,995 776,902 428,053 147,871 804 2,954,125 Capital
expenditures $ 7,412 281 241 1,452 794 374 — 10,554 Depreciation
and amortization $ 6,358 200 229 1,850 1,605 453 — 10,695 Equity $
1,197,239 58,071 29,504 538,710 167,752 74,950 (33,656 ) 2,032,570
Three months ended December 31, 2011: Revenues from
unaffiliated customers $ 383,830 48,839 19,490 761,092 218,074
70,589 — 1,501,914 Transfers between geographic areas 24,639 2,641
5,356 10,159 10,570 4,592 (57,957 ) — Total revenues $ 408,469
51,480 24,846 771,251 228,644 75,181 (57,957 ) 1,501,914 Net
revenues $ 183,381 24,367 14,673 150,262 76,950 26,522 — 476,155
Operating income $ 41,652 10,314 5,056 68,971 19,048 10,023 —
155,064 Identifiable assets $ 1,521,657 86,020 48,221 667,171
401,518 141,379 861 2,866,827 Capital expenditures $ 8,404 199 166
8,760 1,288 444 — 19,261 Depreciation and amortization $ 5,222 208
226 1,605 1,400 485 — 9,146 Equity $ 1,285,812 49,571 27,346
448,613 145,998 85,605 (32,876 ) 2,010,069
Twelve months
ended December 31, 2012: Revenues from unaffiliated customers $
1,519,276 201,521 82,337 3,074,587 816,927 286,295 — 5,980,943
Transfers between geographic areas 94,521 10,476 18,780 43,721
38,791 18,128 (224,417 ) — Total revenues $ 1,613,797 211,997
101,117 3,118,308 855,718 304,423 (224,417 ) 5,980,943 Net revenues
$ 737,679 95,798 57,795 551,211 286,264 95,351 — 1,824,098
Operating income $ 179,015 32,385 17,356 216,559 59,314 26,169 —
530,798 Identifiable assets $ 1,459,425 92,075 48,995 776,902
428,053 147,871 804 2,954,125 Capital expenditures $ 28,088 832
1,301 11,275 4,323 1,807 — 47,626 Depreciation and amortization $
23,678 756 873 6,810 5,994 1,829 — 39,940 Equity $ 1,197,239 58,071
29,504 538,710 167,752 74,950 (33,656 ) 2,032,570
Twelve months
ended December 31, 2011: Revenues from unaffiliated customers $
1,540,477 189,843 82,312 3,144,641 891,185 302,040 — 6,150,498
Transfers between geographic areas 101,738 11,095 21,222 40,012
43,359 17,897 (235,323 ) — Total revenues $ 1,642,215 200,938
103,534 3,184,653 934,544 319,937 (235,323 ) 6,150,498 Net revenues
$ 732,299 90,432 59,968 605,151 307,471 101,156 — 1,896,477
Operating income $ 210,702 29,209 19,151 258,952 72,248 28,065 —
618,327 Identifiable assets $ 1,521,657 86,020 48,221 667,171
401,518 141,379 861 2,866,827 Capital expenditures $ 23,219 1,122
628 25,295 25,856 1,995 — 78,115 Depreciation and amortization $
20,037 1,038 999 7,243 5,414 2,045 — 36,776 Equity $ 1,285,812
49,571 27,346 448,613 145,998 85,605 (32,876 ) 2,010,069
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