EXPD Expeditors International of Washington Inc

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $106,704,000 for the first quarter of 2015, as compared with $83,824,000 for the same quarter of 2014, an increase of 27%. Net revenues2 for the first quarter of 2015 increased 14% to $529,486,000 as compared with $464,586,000 for the same quarter in 2014. Total revenues and operating income were $1,677,526,000 and $168,883,000 in the first quarter of 2015, as compared with $1,491,645,000 and $135,203,000 for the same quarter of 2014, increases of 12% and 25%, respectively. Diluted net earnings attributable to shareholders per share for the first quarter were $0.55, as compared with $0.42 for the same quarter in 2014, an increase of 31%.

“The 2015 first quarter saw ocean and airfreight volume increases of 12% and 13%, respectively, with total net revenues increasing 14%. While there was some degree of unquantifiable benefit to airfreight volumes that we attribute to a combination of last year's West Coast labor dispute backlogs and the timing of Chinese New Year, we thought it noteworthy that ocean volumes still showed strong, double digit growth,” commented Bradley S. Powell, Senior Vice President and Chief Financial Officer. “We also benefited from our ability to leverage our operating expenses. Our efficiency and productivity this quarter, as measured by our operating income as a percentage of net revenue ratio, grew to 32%. Being able to absorb this growth without a corresponding increase in overhead costs resulted in a 25% increase in our operating income, the highest year-over-year quarterly increase in nearly four years,” Powell went on to say.

“We were both encouraged and, quite frankly, more than pleasantly surprised by the strength of these results. It’s always great to have ‘one of those quarters’ where everything seems to be firing on all cylinders and it’s particularly good when that occurs during the first quarter. This has created a solid foundation for us to move forward into 2015,” said Jeffrey S. Musser, President and Chief Executive Officer. “March was the most profitable month in the history of the company. We do understand that we will have stiffer comparables the last half of the year than we experienced in the 2015 first quarter. We are also aware of the continuing, and we believe warranted, concerns about the global economy. Despite these factors, we remain committed to our objective of returning the company to sustainable double digit growth. To that end, we remain focused on implementing our strategic initiatives. Technically speaking, these programs weren’t fully in effect during the first quarter as we were still completing our roll-out. We believe, however, that the increased focus and collaboration that were a by-product of developing and rolling out our strategic initiatives created synergies that showed up in our results. Our people executed impeccably during the first quarter and we’re grateful to them for their outstanding efforts. They have always been our most valuable assets and are the ones who truly differentiate Expeditors. Finally, we would also point out that the cumulative effect of returning capital to our shareholders through stock re-purchases contributed to a very healthy year-over-year growth in earnings per share of 31%,” 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. NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.     Expeditors International of Washington, Inc. First Quarter 2015 Earnings Release, May 6, 2015   Financial Highlights for the Three months ended March 31, 2015 and 2014 (Unaudited)

(in 000's of US dollars except share data)

      Three months ended     March 31,

%

2015     2014

Change

Revenues $ 1,677,526 $ 1,491,645 12% Net revenues1 $ 529,486 $ 464,586 14% Operating income $ 168,883 $ 135,203 25% Net earnings attributable to shareholders $ 106,704 $ 83,824 27% Diluted earnings attributable to shareholders per share $ 0.55 $ 0.42 31% Basic earnings attributable to shareholders per share $ 0.56 $ 0.42 33% Diluted weighted average shares outstanding 192,707,093 201,843,858 Basic weighted average shares outstanding 191,627,750 201,118,390   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.  

During the three-month period ended March 31, 2015, the Company repurchased 535,476 shares of common stock, net of issuances.

      Employee headcount as of March 31, 2015     2014 North America 5,399 4,926 Europe 2,552 2,273 North Asia 2,476 2,540 Middle East, Africa and India 1,369 1,353 South Asia 1,289 1,287 Latin America 784 713 Information Systems 705 645 Corporate 308 280 Total 14,882 14,017         Year-over-year percentage increase (decrease) in: Airfreight kilos     Ocean freight FEU 2015 January 13 % 8 % February 18 % 42 % March 9 %

(6

)%

Quarter 13 % 12 %  

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 8, 2015 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about May 15, 2015.

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 benefits to airfreight volumes that we attribute to a combination of the recent West Coast labor dispute backlogs, condition of the global economy, ability to achieve sustainable double digit growth, ability to achieve benefits from new strategies and organization structure and ability to achieve strategic goals. 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 and fuel 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, 2015 2014

Assets

Current Assets: Cash and cash equivalents $ 1,033,144 $ 927,107 Short-term investments 61 40,336 Accounts receivable, net 1,253,639 1,236,042 Deferred Federal and state income taxes 20,402 20,279 Other current assets   44,914     65,486   Total current assets   2,352,160     2,289,250   Property and equipment, net 528,988 538,415 Goodwill 7,927 7,927 Other assets, net   54,703     55,313   $ 2,943,778   $ 2,890,905  

Liabilities and Equity

Current Liabilities: Accounts payable 749,246 770,238 Accrued expenses, primarily salaries and related costs 203,810 192,468 Federal, state and foreign income taxes   26,163     21,077   Total current liabilities   979,219     983,783   Deferred Federal and state income taxes 37,028 35,514   Commitments and contingencies   Shareholders’ Equity: Preferred stock; none issued — — Common stock, par value $0.01 per share. Issued and outstanding 191,120,214 shares at March 31, 2015 and 191,655,690 shares at December 31, 2014 1,911 1,916 Additional paid-in capital 5,241 1,113 Retained earnings 1,974,830 1,903,196 Accumulated other comprehensive loss   (57,091 )   (37,817 ) Total shareholders’ equity   1,924,891     1,868,408   Noncontrolling interest   2,640     3,200   Total equity   1,927,531     1,871,608   $ 2,943,778   $ 2,890,905       EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Earnings (In thousands, except share data) (Unaudited)         Three months ended March 31, 2015     2014 Revenues: Airfreight services $ 707,444 $ 647,138 Ocean freight and ocean services 565,717 469,224 Customs brokerage and other services   404,365   375,283   Total revenues   1,677,526   1,491,645   Operating Expenses: Airfreight services 513,001 482,882 Ocean freight and ocean services 445,456 367,375 Customs brokerage and other services 189,583 176,802 Salaries and related costs 278,878 255,942 Rent and occupancy costs 25,388 25,162 Depreciation and amortization 11,529 12,382 Selling and promotion 9,247 8,173 Other   35,561   27,724   Total operating expenses   1,508,643   1,356,442   Operating income   168,883   135,203   Other Income (Expense): Interest income 2,732 2,697 Other, net   34   (281 ) Other income, net   2,766   2,416   Earnings before income taxes 171,649 137,619 Income tax expense   64,317   53,424   Net earnings   107,332   84,195   Less net earnings attributable to the noncontrolling interest   628   371   Net earnings attributable to shareholders $ 106,704 $ 83,824   Diluted earnings attributable to shareholders per share $ 0.55 $ 0.42   Basic earnings attributable to shareholders per share $ 0.56 $ 0.42   Weighted average diluted shares outstanding   192,707,093   201,843,858   Weighted average basic shares outstanding   191,627,750   201,118,390       EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)         Three months ended March 31, 2015     2014 Operating Activities: Net earnings $ 107,332 $ 84,195 Adjustments to reconcile net earnings to net cash from operating activities: Provision for losses (recoveries) on accounts receivable 277 (1,115 ) Deferred income tax expense 11,937 7,194 Excess tax benefits from stock plans (1,480 ) (489 ) Stock compensation expense 9,907 10,294 Depreciation and amortization 11,529 12,382 Other 86 138 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (46,790 ) 12,228 Increase in accounts payable and accrued expenses 14,895 29,546 Increase in income taxes payable, net 23,132 18,205 Decrease in other current assets   3,569     1,279   Net cash from operating activities   134,394     173,857   Investing Activities: Decrease (increase) in short-term investments, net 40,274 (60,154 ) Purchase of property and equipment (9,445 ) (8,760 ) Other, net   198     1,670   Net cash from investing activities   31,027     (67,244 ) Financing Activities: Proceeds from issuance of common stock 35,048 7,892 Repurchases of common stock (77,368 ) (226,725 ) Excess tax benefits from stock plans 1,480 489 Distribution to noncontrolling interest   (857 )   (85 ) Net cash from financing activities   (41,697 )   (218,429 ) Effect of exchange rate changes on cash and cash equivalents   (17,687 )   (4,790 ) Increase (decrease) in cash and cash equivalents 106,037 (116,606 ) Cash and cash equivalents at beginning of period   927,107     1,247,652   Cash and cash equivalents at end of period $ 1,033,144   $ 1,131,046   Taxes paid: Income taxes $ 28,261 $ 27,496     EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Business Segment Information (In thousands) (Unaudited)                                 MIDDLE         EAST, OTHER AFRICA UNITED NORTH LATIN NORTH SOUTH and ELIMI- CONSOLI- STATES AMERICA AMERICA ASIA   ASIA EUROPE INDIA NATIONS DATED Three months ended March 31, 2015: Revenues from unaffiliated customers $ 444,181 54,794 24,081 645,444 181,381 242,086 85,559 — 1,677,526 Transfers between geographic areas   27,675 2,814 4,777 5,697 5,915 9,637 5,067 (61,582 ) — Total revenues $ 471,856 57,608 28,858 651,141 187,296 251,723 90,626 (61,582 ) 1,677,526 Net revenues $ 219,603 30,678 16,559 117,405 42,200 75,888 27,153 — 529,486 Operating income $ 59,181 11,091 5,356 57,056 13,880 15,071 7,248 — 168,883 Identifiable assets $ 1,451,103 109,180 57,232 541,983 143,910 430,338 198,954 11,078 2,943,778 Capital expenditures $ 6,325 288 617 290 319 1,148 458 — 9,445 Depreciation and amortization $ 7,393 292 268 1,399 530 1,246 401 — 11,529 Equity $ 1,182,808 58,998 34,604 306,775 106,139 154,343 120,086 (36,222 ) 1,927,531 Three months ended March 31, 2014: Revenues from unaffiliated customers $ 400,739 51,584 20,629 568,689 140,743 233,683 75,578 — 1,491,645 Transfers between geographic areas   20,011 2,375 5,204 5,417 6,550 9,319 4,542 (53,418 ) — Total revenues $ 420,750 53,959 25,833 574,106 147,293 243,002 80,120 (53,418 ) 1,491,645 Net revenues $ 192,082 26,161 15,357 93,394 39,093 74,331 24,168 — 464,586 Operating income $ 51,898 8,375 4,859 40,054 12,470 11,642 5,905 — 135,203 Identifiable assets $ 1,437,768 105,070 61,503 545,148 151,184 437,857 183,288 3,686 2,925,504 Capital expenditures $ 3,928 264 301 2,660 456 866 285 — 8,760 Depreciation and amortization $ 7,852 280 212 1,502 596 1,507 433 — 12,382 Equity $ 1,151,455 69,702 32,017 333,871 112,090 188,354 108,009 (35,484 ) 1,960,014  

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) 2015     2014 Total revenues $ 1,677,526 $ 1,491,645 Expenses: Airfreight services 513,001 482,882 Ocean freight and ocean services 445,456 367,375 Customs brokerage and other services   189,583   176,802 Net revenues $ 529,486 $ 464,586

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