Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced net earnings attributable to shareholders of $83,824,000
for the first quarter of 2014, as compared with $80,315,000 for the
same quarter of 2013, an increase of 4%. Net revenues2 for the
first quarter of 2014 increased 4% to $464,586,000 as compared with
$448,007,000 for the same quarter in 2013. Total revenues and
operating income were $1,491,645,000 and $135,203,000 in the first
quarter of 2014, as compared with $1,413,208,000 and $128,518,000
for the same quarter of 2013, increases of 6% and 5%, respectively.
Diluted net earnings attributable to shareholders per share for the
first quarter were $.42, as compared with $.39 for the same quarter
in 2013, an increase of 8%.
“There were several significant external challenges this
quarter, including weather issues and continued concern over the
strength of the economy. We’ve always believed that challenging
times can only be managed through disciplined execution. Despite a
relatively slow start, we are very encouraged by how the 2014 first
quarter finished up. Ocean freight and airfreight volume increased
12% and 6%, respectively. Disciplined execution was responsible for
increasing our operating margin3 percentage from the 2013 first
quarter, while also efficiently handling the acceleration in
business we experienced during the last part of the quarter,” said
Jeffrey S. Musser, President and Chief Executive Officer. “From a
geographic standpoint, we had strong double digit operating income
growth from our Americas group, while our Asia-Pacific and Europe,
Africa, Near/Middle East, and Indian Subcontinent (“EMAIR”) groups,
though steady, were essentially flat. From a product perspective,
while we continued to manage through short cycles of rate
instability and volatility, we successfully gained market share in
both the ocean and airfreight markets. Customs and other services,
led by our customs brokerage and Transcon products, grew revenues
by 8%, illustrating the reliable and strategic anchor they are in
our knowledge-based service offerings. Also noteworthy is our
repurchase of 5.7 million shares of stock during the 2014 first
quarter. This brings our outstanding share count to 197.2 million
shares, the lowest share-count, on a split adjust basis, since
going public nearly 30 years ago,” Musser continued.
“For the remainder of the year, we’ll focus our attention on
actively pursuing opportunities for profitable market share
expansion and driving efficiencies in operational processes. We’re
currently conducting a very comprehensive strategic reassessment of
our various market positions and organizational structures, the
objective of which will be to bring greater alignment and focus on
the most cost-beneficial opportunities. We won’t be changing our
culture, but we will be refining our focus,” Musser went on to say.
“Finally, we appreciate the support of our customers, our service
providers and, most importantly, all the members of the Expeditors
family who come to work every day and strive to live up to the
values and goals of customer service excellence we’ve always
believed makes the true difference in who we are and what we can
do,” Musser concluded.
Expeditors is a global logistics company headquartered in
Seattle, Washington. The company employs trained professionals in
185 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, time-definite
transportation, order management, warehousing distribution and
customized logistics solutions.
1Diluted earnings attributable to shareholders per share.
2Non-GAAP measure calculated as revenues less directly related
operating expenses attributable to the Company’s principal
services. See reconciliation on the last page of this release.
3Operating 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.
First Quarter 2014 Earnings Release, May 7, 2014
Financial Highlights for the Three months ended March 31, 2014
and 2013 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended March 31,
2014 2013 % Change
Revenues $ 1,491,645 $ 1,413,208 6%
Net
revenues1 $ 464,586 $ 448,007 4%
Operating income
$ 135,203 $ 128,518 5%
Net earnings attributable to
shareholders $ 83,824 $ 80,315 4%
Diluted earnings
attributable to shareholders $ .42 $ .39 8%
Basic earnings
attributable to shareholders $ .42 $ .39 8%
Diluted weighted
average shares outstanding 201,843,858 207,613,863
Basic
weighted average shares outstanding 201,118,390 206,475,095
1Non-GAAP measure calculated as revenues less directly related
operating expenses attributable to the Company’s principal
services. See reconciliation on the last page of this release.
Employee headcount as of March 31
2014 2013 North America 4,926
4,705
Asia Pacific 3,889 3,867
Europe and Africa
2,343 2,361
Middle East and India 1,221 1,216
Latin
America 713 665
Information Systems 633 628
Corporate 292 273
Total 14,017 13,715
Year-over-year percentage increase in:
Airfreight kilos Ocean freight FEU
2014 January 3% 15%
February 5% 1%
March 7% 17%
Quarter 6% 12%
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on May 9, 2014 will be considered in management’s 8-K “Responses to
Selected Questions” expected to be filed on or about May 16,
2014.
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 ability to increase operating margins,
efficiently handle accelerating business, manage through rate
instability and volatility, gain market share in both ocean and air
markets, obtain profitable market share, improve operational
processes and successfully complete and implement comprehensive
strategic reassessment to improve alignment and operations. 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, foreign exchange rates, 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)
March 31, December 31,
2014 2013
Assets
Current Assets: Cash and cash equivalents $ 1,131,046 $
1,247,652 Short-term investments 86,491 26,337 Accounts receivable,
net 1,062,924 1,073,500 Deferred Federal and state income taxes
18,248 18,396 Other current assets 36,284 49,384
Total current assets 2,334,993 2,415,269 Property and
equipment, net 556,071 563,064 Goodwill 7,927 7,927 Other assets,
net 26,513 28,552 $ 2,925,504 $ 3,014,812
Liabilities and
Equity
Current Liabilities: Accounts payable 677,582 648,156
Accrued expenses, primarily salaries and related costs 196,157
200,301 Federal, state and foreign income taxes 27,754
21,743 Total current liabilities 901,493 870,200
Deferred Federal and state income taxes 63,997 58,281
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued — — Common stock, par value $.01 per
share. Issued and outstanding 197,166,665 shares at March 31, 2014
and 202,553,220 shares at December 31, 2013 1,972 2,025 Additional
paid-in capital 728 1,647 Retained earnings 1,964,122 2,087,376
Accumulated other comprehensive loss (8,691 ) (6,265 ) Total
shareholders’ equity 1,958,131 2,084,783
Noncontrolling interest 1,883 1,548 Total equity
1,960,014 2,086,331 $ 2,925,504 $ 3,014,812
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES Condensed Consolidated Statements of
Earnings (In thousands, except share data) (Unaudited)
Three months ended March 31,
2014 2013 Revenues: Airfreight
services $ 647,138 $ 620,374 Ocean freight and ocean services
469,224 445,479 Customs brokerage and other services 375,283
347,355 Total revenues 1,491,645 1,413,208
Operating
Expenses: Airfreight services 482,882 464,919 Ocean freight and
ocean services 367,375 344,923 Customs brokerage and other services
176,802 155,359 Salaries and related costs 255,942 248,417 Rent and
occupancy costs 25,162 24,193 Depreciation and amortization 12,382
11,278 Selling and promotion 8,173 7,257 Other 27,724 28,344
Total operating expenses 1,356,442 1,284,690 Operating
income 135,203 128,518 Interest income 2,697 3,243
Other, net (281 ) 1,531 Other income, net 2,416 4,774
Earnings before income taxes 137,619 133,292 Income tax expense
53,424 52,682 Net earnings 84,195 80,610 Less net
earnings attributable to the noncontrolling interest 371 295
Net earnings attributable to shareholders $ 83,824 $ 80,315
Diluted earnings attributable to shareholders per share $ .42
$ .39 Basic earnings attributable to shareholders per share
$ .42 $ .39 Weighted average diluted shares outstanding
201,843,858 207,613,863 Weighted average basic shares
outstanding 201,118,390 206,475,095 EXPEDITORS
INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Cash Flows (In thousands) (Unaudited)
Three months ended March
31, 2014 2013 Operating
Activities: Net earnings $ 84,195 $ 80,610 Adjustments to
reconcile net earnings to net cash from operating activities:
(Recoveries) provision for losses on accounts receivable (1,115 )
941 Deferred income tax expense 7,194 7,122 Excess tax benefits
from stock plans (489 ) (1,099 ) Stock compensation expense 10,294
11,005 Depreciation and amortization 12,382 11,278 Other 138 208
Changes in operating assets and liabilities: Decrease in accounts
receivable 12,228 38,856 Increase (decrease) in accounts payable
and accrued expenses 29,546 (1,390 ) Increase in income taxes
payable, net 18,205 18,218 Increase (decrease) in other current
assets 1,279 (485 ) Net cash from operating activities
173,857 165,264
Investing Activities:
(Increase) decrease in short-term investments, net (60,154 ) 38
Purchase of property and equipment (8,760 ) (10,068 ) Other, net
1,670 (444 ) Net cash from investing activities (67,244 )
(10,474 )
Financing Activities: Proceeds from issuance of
common stock 7,892 10,929 Repurchases of common stock (226,725 )
(17,681 ) Excess tax benefits from stock plans 489 1,099 Purchase
of noncontrolling interest — (7,730 ) Distribution to
noncontrolling interest (85 ) — Net cash from financing
activities (218,429 ) (13,383 ) Effect of exchange rate changes on
cash and cash equivalents (4,790 ) (7,562 ) (Decrease) increase in
cash and cash equivalents (116,606 ) 133,845 Cash and cash
equivalents at beginning of period 1,247,652 1,260,842
Cash and cash equivalents at end of period $ 1,131,046
$ 1,394,687
Taxes paid: Income taxes $ 27,496
$ 26,951 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 March 31,
2014: Revenues from unaffiliated customers $ 400,739 51,584
20,629 714,384 227,508 76,801 — 1,491,645 Transfers between
geographic areas 20,011 2,375 5,204 12,009 8,957 4,862
(53,418 ) — Total revenues $ 420,750 53,959 25,833 726,393 236,465
81,663 (53,418 ) 1,491,645 Net revenues $ 192,082 26,161 15,357
133,274 73,057 24,655 — 464,586 Operating income $ 51,898 8,375
4,859 52,841 11,066 6,164 — 135,203 Identifiable assets $ 1,437,768
105,070 61,503 697,614 457,614 162,249 3,686 2,925,504 Capital
expenditures $ 3,928 264 301 3,126 852 289 — 8,760 Depreciation and
amortization $ 7,852 280 212 2,108 1,492 438 — 12,382 Equity $
1,151,455 69,702 32,017 448,196 205,060 89,068 (35,484 ) 1,960,014
Three months ended March 31, 2013: Revenues from
unaffiliated customers $ 374,374 51,729 19,864 694,137 202,513
70,591 — 1,413,208 Transfers between geographic areas 20,026
2,544 4,876 10,630 8,880 4,327 (51,283 ) — Total revenues $ 394,400
54,273 24,740 704,767 211,393 74,918 (51,283 ) 1,413,208 Net
revenues $ 180,343 23,781 14,411 135,550 70,614 23,308 — 448,007
Operating income $ 47,353 6,612 4,089 52,884 11,926 5,654 — 128,518
Identifiable assets $ 1,502,795 96,555 53,935 795,946 406,801
158,569 3,198 3,017,799 Capital expenditures $ 5,379 187 259 2,552
1,198 493 — 10,068 Depreciation and amortization $ 6,757 207 241
1,988 1,629 456 — 11,278 Equity $ 1,231,424 62,267 32,638 568,609
165,014 79,434 (34,765 ) 2,104,621
Net Revenues (Non-GAAP measure)
We commonly refer to the term “net revenues” when commenting
about our Company and the results of its operations. Net revenues
are a Non-GAAP measure calculated as revenues less directly related
operations expenses attributable to the Company’s principal
services. We believe that net revenues are a better measure than
are total revenues when analyzing and discussing our effectiveness
in managing our principal services since total revenues earned as a
freight consolidator must consider the carriers’ charges to us for
carrying the shipment, whereas revenues earned in other capacities
include primarily the commissions and fees earned by us. Net
revenue is one of our primary operational and financial measures
and demonstrates our ability to concentrate and leverage purchasing
power through effective consolidation of shipments from customers
utilizing a variety of transportation carriers and optimal
routings. Using net revenues also provides a commonality for
comparison among various services. The following table presents the
calculation of net revenues.
Three months ended March 31,
(in thousands) 2014 2013 Total
revenues $ 1,491,645 $ 1,413,208
Expenses: Airfreight
services 482,882 464,919 Ocean freight and ocean services 367,375
344,923 Customs brokerage and other services 176,802 155,359 Net
revenues $ 464,586 $ 448,007
Expeditors International of Washington, Inc.R. Jordan Gates,
206-674-3427President and Chief Operating OfficerorBradley S.
Powell, 206-674-3412Senior Vice President and Chief Financial
Officer
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