Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced first quarter 2016 financial results including the
following highlights compared to the same quarter of 2015:
- Diluted Net Earnings Attributable to
Shareholders per share decreased 4% to $0.53
- Net Earnings Attributable to
Shareholders decreased 9% to $97 million
- Operating Income decreased 10% to $152
million
- Net Revenues2 decreased 2% to $517
million while yields expanded 489 basis points to 36.5%
- Airfreight tonnage volume decreased 9%
and ocean container volume decreased 3%
- Revenues decreased 15% to $1.4
billion
“We knew that comparing our 2016 results to our record year in
2015 would be challenging, especially when considering the current
headwinds from slowing global trade,” commented Jeffrey S. Musser,
President and Chief Executive Officer. “The business drivers in Q1
2015 were quite different from those in Q1 2016. In Q1 2015 we
delivered solutions to customers who navigated around and through
issues in the U.S. West Coast ports, and in Q1 2016 we worked with
carriers to adjust pricing in over-supplied air and ocean markets
to maintain and grow profitable market share. When reviewing the
underlying fundamentals that drove these latest results, we are
pleased with how things turned out. The outstanding customer
service and efficiency that our people provide are critical to our
success during this period of shifting balance of supply and
demand.
“We are continuing our investment tied to the strategy that we
laid out approximately two years ago. We have chosen the right
areas of focus and our teams continue to execute extremely well.
The high level of customer service offered by our employees,
combined with our focus on implementing process improvements, are
allowing us to continue to expand market share even in a difficult
market.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “Our people performed very well as we adapted to a
rapidly changing marketplace affected by slowing global trade and
excess carrier capacity. Similar to our Q4 2015 results, net
revenue yields and cash flow from operations in Q1 2016 are among
our best. Many of our customers are being cautious about how to
spend their logistics dollar, taking advantage of abundant capacity
in search of lower rates where possible, and we are aligning
ourselves to address their needs. While volumes and average sell
rates in air and ocean were lower compared to both Q1 and Q4 2015,
we continued to benefit from available ocean and air carrier
capacity and favorable market buying opportunities. We continued to
invest in our people and our systems while carefully controlling
our overhead expenses. Looking forward to Q2 and the rest of 2016,
we expect rate volatility to continue and are aware of the
uncertainties and challenges with the global economy and global
trade and how they may continue to impact the comparisons to our
2015 financial results.”
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.
Financial
Highlights for the Three months ended March 31, 2016 and 2015
(Unaudited)
(in 000's of US dollars except per share
data)
Three months ended March 31,
2016 2015 % Change
Revenues $ 1,418,472 $ 1,677,526 (15 )%
Net
revenues1 $ 517,069 $ 529,486 (2 )%
Operating
income $ 151,826 $ 168,883 (10 )%
Net earnings attributable
to shareholders $ 96,584 $ 106,704 (9 )%
Diluted earnings
attributable to shareholders per share $ 0.53 $ 0.55 (4 )%
Basic earnings attributable to shareholders per share $ 0.53
$ 0.56 (5 )%
Diluted weighted average shares outstanding
183,018 192,707
Basic weighted average shares outstanding
182,010 191,628 _______________________ 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 periods ended March 31, 2016 and
2015, respectively, the Company repurchased 1.5 million and 1.6
million shares of common stock at an average price of $47.79 and
$47.86 per share.
Employee headcount as of March 31, 2016
2015 North America 5,652 5,399
Europe 2,731
2,552
North Asia 2,457 2,476
Middle East, Africa and
India 1,479 1,369
South Asia 1,327 1,289
Latin
America 775 784
Information Systems 765 705
Corporate 332 308
Total 15,518 14,882
Year-over-year percentage increase (decrease) in:
Airfreight kilos Ocean freight FEU 2016
January (9 )% (2 )%
February (12 )% (15 )%
March (7 )% 8 %
Quarter (9 )% (3 )%
_______________________
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on May 6, 2016 will be considered in management's 8-K “Responses to
Selected Questions” expected to be filed on or about May 13,
2016.
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 pricing volatility and impacts on
margins, ability to maintain current margin levels, condition of
the global economy and global trade, ability to grow profitable
market share, ability to achieve benefits from strategies, and
availability of carrier capacity and low rates. 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 per share data) (Unaudited)
March 31, 2016 December 31, 2015
Assets
Current Assets: Cash and cash equivalents $ 1,013,917 $
807,796 Accounts receivable, net 1,010,667 1,112,260 Deferred
Federal and state income taxes 18,203 16,861 Other current assets
44,693 56,453 Total current assets 2,087,480
1,993,370 Property and equipment, net 526,941 524,724
Goodwill 7,927 7,927 Other assets, net 57,395 56,417
$ 2,679,743 $ 2,582,438
Liabilities and
Equity
Current Liabilities: Accounts payable 623,699 645,304
Accrued expenses, primarily salaries and related costs 202,284
186,571 Federal, state and foreign income taxes 28,432
29,498 Total current liabilities 854,415 861,373
Deferred Federal and state income taxes 42,817 26,389
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued — — Common stock, par value $0.01 per
share. Issued and outstanding 181,562 shares at March 31, 2016 and
182,067 shares at December 31, 2015 1,816 1,821 Additional paid-in
capital 3,851 31 Retained earnings 1,845,356 1,771,379 Accumulated
other comprehensive loss (71,772 ) (81,238 ) Total shareholders’
equity 1,779,251 1,691,993 Noncontrolling interest
3,260 2,683 Total equity 1,782,511 1,694,676
$ 2,679,743 $ 2,582,438 EXPEDITORS
INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed
Consolidated Statements of Earnings (In thousands, except per share
data) (Unaudited)
Three months ended March
31, 2016 2015 Revenues: Airfreight
services $ 560,853 $ 707,444 Ocean freight and ocean services
454,192 565,717 Customs brokerage and other services 403,427
404,365 Total revenues 1,418,472 1,677,526
Operating
Expenses: Airfreight services 388,777 513,001 Ocean freight and
ocean services 323,020 445,456 Customs brokerage and other services
189,606 189,583 Salaries and related costs 283,355 278,878 Rent and
occupancy costs 26,859 25,388 Depreciation and amortization 11,329
11,529 Selling and promotion 9,432 9,247 Other 34,268 35,561
Total operating expenses 1,266,646 1,508,643 Operating
income 151,826 168,883
Other Income (Expense):
Interest income 2,779 2,732 Other, net 879 34 Other income,
net 3,658 2,766 Earnings before income taxes 155,484 171,649
Income tax expense 58,437 64,317 Net earnings 97,047
107,332 Less net earnings attributable to the noncontrolling
interest 463 628 Net earnings attributable to shareholders $
96,584 $ 106,704 Diluted earnings attributable to
shareholders per share $ 0.53 $ 0.55 Basic earnings
attributable to shareholders per share $ 0.53 $ 0.56
Weighted average diluted shares outstanding 183,018 192,707
Weighted average basic shares outstanding 182,010 191,628
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
SUBSIDIARIES Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Three months ended
March 31, 2016 2015 Operating
Activities: Net earnings $ 97,047 $ 107,332 Adjustments to
reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable 578 277 Deferred income
tax expense 9,896 11,937 Excess tax benefits from stock plans —
(1,480 ) Stock compensation expense 10,831 9,907 Depreciation and
amortization 11,329 11,529 Other 36 86 Changes in operating assets
and liabilities: Decrease (increase) in accounts receivable 112,710
(46,790 ) (Decrease) increase in accounts payable and accrued
expenses (15,344 ) 14,895 Increase in income taxes payable, net
10,925 23,132 (Increase) decrease in other current assets (2,055 )
3,569 Net cash from operating activities 235,953
134,394
Investing Activities: (Increase) decrease in
short-term investments, net (35 ) 40,274 Purchase of property and
equipment (14,035 ) (9,445 ) Other, net (524 ) 198 Net cash
from investing activities (14,594 ) 31,027
Financing
Activities: Proceeds from issuance of common stock 41,635
35,048 Repurchases of common stock (70,292 ) (77,368 ) Excess tax
benefits from stock plans — 1,480 Distribution to noncontrolling
interest — (857 ) Net cash from financing activities (28,657
) (41,697 ) Effect of exchange rate changes on cash and cash
equivalents 13,419 (17,687 ) Increase in cash and cash
equivalents 206,121 106,037 Cash and cash equivalents at beginning
of period 807,796 927,107 Cash and cash equivalents
at end of period $ 1,013,917 $ 1,033,144
Taxes
paid: Income taxes $ 37,984 $ 28,261 EXPEDITORS
INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment
Information (In thousands) (Unaudited)
UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH ASIA SOUTH ASIA
EUROPE MIDDLE
EAST, AFRICA
and
INDIA
ELIMI-
NATIONS
CONSOLI-
DATED
Three months ended March 31, 2016: Revenues from
unaffiliated customers $ 407,826 52,106 20,064 497,232 136,418
221,897 82,929 — 1,418,472 Transfers between geographic areas
26,034 2,700 3,601 5,096 5,806
10,361 5,394 (58,992 ) — Total revenues $ 433,860
54,806 23,665 502,328 142,224
232,258 88,323 (58,992 ) 1,418,472 Net revenues $
220,698 27,378 13,733 110,791 39,518 74,541 30,407 3 517,069
Operating income $ 48,205 7,291 3,852 55,218 15,691 12,253 9,313 3
151,826 Identifiable assets $ 1,255,099 119,258 56,334 455,973
133,940 438,711 216,576 3,852 2,679,743 Capital expenditures $
8,137 311 485 1,085 655 2,119 1,243 — 14,035 Depreciation and
amortization $ 7,332 364 253 1,319 512 1,098 451 — 11,329 Equity $
978,426 79,312 37,325 300,188 115,606 167,726 137,112 (33,184 )
1,782,511
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
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) 2016 2015 Total revenues $
1,418,472 $ 1,677,526
Expenses: Airfreight services 388,777
513,001 Ocean freight and ocean services 323,020 445,456 Customs
brokerage and other services 189,606 189,583 Net revenues $
517,069 $ 529,486
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version on businesswire.com: http://www.businesswire.com/news/home/20160503005571/en/
Expeditors International of Washington, Inc.President and Chief
Executive OfficerJeffrey S. Musser, 206-674-3433orSenior Vice
President and Chief Financial OfficerBradley S. Powell,
206-674-3412orDirector - Investor RelationsGeoffrey Buscher,
206-892-4510
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