Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced third quarter 2022 financial results including the
following highlights compared to the same quarter of 2021:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) increased 22% to $2.54
- Net Earnings Attributable to Shareholders increased 15% to $414
million
- Operating Income increased 8% to $527 million
- Revenues increased 1% to $4.4 billion
- Airfreight tonnage volume and ocean container volume decreased
13% and 10%, respectively
“We continued to perform at a very high level, generating
another strong quarter of financial performance and cash flow,”
said Jeffrey S. Musser, President and Chief Executive Officer. “We
accomplished this despite uncertain economic conditions that
resulted in declines in tonnage and volumes, reductions in both buy
and sell rates, and an overall rebalancing of capacity in the
logistics freight markets. These conditions have continued in
recent weeks and we believe that inflation, high energy costs, and
government fiscal and monetary measures will continue to exert
pressure on global supply chains. Additionally, many shippers are
now looking to shrink retail inventories that were overstocked
earlier in the year in reaction to COVID-related supply chain
disruptions.
“All of our people and products performed well during the
quarter, as buy and sell rates remained volatile while declining
from their pandemic peaks. Once again, we were able to adjust
quickly to rapidly evolving operating conditions in which
pandemic-induced demand and supply chain constraints gave way to
falling demand, and while not completely eliminated, an easing of
many of the labor and equipment shortages and the bottlenecks that
had so severely constrained capacity and impeded throughput at the
ports over the past two years. We are also seeing air capacity
return to higher levels, with Hong Kong and other origins in Asia
reopening. In addition, the largely land- and port-based
constraints that had so severely impacted the ocean market have
significantly improved to where carriers are once again starting to
manage capacity in certain trade lanes in an effort to address
declining demand while sustaining falling rates.
“Based on what we currently see, these changing conditions that
involve decelerating demand and an overall decline in rates are
likely to continue for the remainder of 2022 and into 2023. Just as
we quickly adapted to unprecedented operating conditions spurred by
the pandemic, we are adjusting for this new operating environment
and continue to make focused efforts to control costs. Most
critically, we remain fully engaged with our customers to
accommodate their needs for capacity and services, while looking
forward to when the economy eventually reverses course and demand
starts to increase again.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “As we have commented previously, we did not expect
the unprecedented COVID-related operating conditions to persist
long-term. We believe we are now seeing a changing environment.
While many concurrent disruptions continue to plague our industry,
including the quarantines in China, the conflict in Ukraine, and
the shortage of labor and certain equipment, conditions are
starting to ease. We now believe we are seeing a shift towards
slowing volumes and falling rates. We have been here before and
know which levers to pull to enhance our efficiencies and control
costs. We are ready to further align ourselves with a post-COVID
environment of higher inflation and tapered demand. We do not know
how long these new conditions will last. We will continue to invest
appropriately for the long-term in our people, processes, and
technology, and we believe we will be fully capable of meeting the
eventual upturn in demand.” Mr. Powell noted that the Company
benefitted from a favorable tax rate during the quarter and
returned over $1 billion to shareholders via repurchased stock so
far this year.
Expeditors is a global logistics company headquartered in
Seattle, Washington. The Company employs trained professionals in
176 district offices and numerous branch 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 and distribution and
customized logistics solutions.
_______________________
1Diluted earnings attributable to
shareholders per share.
NOTE: See Disclaimer on Forward-Looking
Statements in this release.
Disclaimer on Forward-Looking
Statements:
Certain statements contained in this news release are
“forward-looking statements,” based on management’s views with
respect to future events and underlying assumptions that involve
risks and uncertainties. These forward-looking statements include
statements regarding the future stabilization of supply/demand
imbalance and rate volatility; the continued unsettled operating
environment due to uncertain air and ocean capacity; volatile air
and ocean pricing and uneven demand for such services; port
congestion; equipment imbalances; labor shortages; uncertain
availability of warehouse and pier space; trade disruptions; rising
fuels costs; the conflict in Ukraine; inflation, high energy costs,
government fiscal and monetary measures, and signs of a slowing
economy and drop in demand; and the uneven lifting of the COVID-19
pandemic restrictions around the world. Future financial
performance could differ materially because of factors such as: our
ability to leverage the strength of our carrier relationships to
secure space; the strength of our non-asset-based operating model;
our expectation that the supply/demand imbalance, rate volatility,
and various on-shore bottlenecks may continue; our ability to
control costs and continue to enhance our productivity; our ability
to invest in our strategic efforts to explore new areas for
profitable growth; and our ability to remain a strong, healthy,
unified and resilient organization. The ongoing impact of the
COVID-19 pandemic could have the effect of heightening many of the
other risks described in Item 1A of our Annual Report on Form 10-K,
including, without limitation, those related to the success of our
strategy and desire to maintain historical unitary profitability,
our ability to attract and retain customers, our ability to manage
costs, interruptions to our information technology systems, the
ability of third-party providers to perform and potential
litigation as updated by our reports on Form 10-Q, filed with the
Securities and Exchange Commission. These and other factors are
discussed in the Company’s regulatory filings with the Securities
and Exchange Commission, including those in “Item 1A. Risk Factors”
of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2021 and the Company’s most recent Form 10-Q.
The forward-looking statements contained in this news release speak
only as of this date and the Company does not assume any obligation
to update them except as required by law.
Expeditors International of Washington,
Inc.
Third Quarter 2022 Earnings Release,
November 8, 2022
Financial Highlights for the three and
nine months ended September 30, 2022 and 2021 (Unaudited)
(in 000's of US dollars except per share
data)
Three months ended September
30,
Nine months ended September
30,
2022
2021
% Change
2022
2021
% Change
Revenues
$
4,362,146
$
4,319,261
1%
$
13,629,756
$
11,127,174
22%
Directly related cost of transportation
and other expenses1
$
3,194,273
$
3,185,490
-
$
10,151,332
$
8,031,407
26%
Salaries and other operating
expenses2
$
640,950
$
644,134
-
$
1,983,759
$
1,809,970
10%
Operating income
$
526,923
$
489,637
8%
$
1,494,665
$
1,285,797
16%
Net earnings attributable to
shareholders
$
414,209
$
359,068
15%
$
1,138,123
$
962,660
18%
Diluted earnings attributable to
shareholders per share
$
2.54
$
2.09
22%
$
6.84
$
5.61
22%
Basic earnings attributable to
shareholders per share
$
2.56
$
2.12
21%
$
6.90
$
5.68
21%
Diluted weighted average shares
outstanding
163,250
171,565
(5)%
166,398
171,549
(3)%
Basic weighted average shares
outstanding
162,029
169,633
(4)%
164,944
169,398
(3)%
_______________________
1
Directly related cost of transportation
and other expenses totals Operating Expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
2
Salaries and other operating expenses
totals Salaries and related, Rent and occupancy, Depreciation and
amortization, Selling and promotion and Other as shown in the
Condensed Consolidated Statements of Earnings.
Employee Full-time Equivalents
as of
September 30,
2022
2021
North America
7,799
7,315
Europe
4,194
3,860
North Asia
2,488
2,440
South Asia
1,845
1,740
Middle East, Africa and India
1,549
1,507
Latin America
851
801
Information Systems
1,144
976
Corporate
399
395
Total
20,269
19,034
Third quarter
year-over-year
percentage decrease
in:
2022
Airfreight
kilos
Ocean freight
FEU
July
(11)%
(9)%
August
(14)%
(11)%
September
(15)%
(10)%
Quarter
(13)%
(10)%
During the three and nine months ended September 30, 2022, we
repurchased 4.5 million and 9.5 million shares of common stock at
$103.56 and $106.84 per share, respectively. During the three and
nine months ended September 30, 2021, we repurchased 0.6 million
and 2.0 million shares of common stock at an average price of
$124.95 and $110.45 per share, respectively.
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on November 11, 2022 will be considered in management's 8-K
“Responses to Selected Questions.”
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except per share
data)
(Unaudited)
September 30,
2022
December 31,
2021
Assets:
Current Assets:
Cash and cash equivalents
$
2,154,534
$
1,728,692
Accounts receivable, less allowance for
credit loss of $9,760 at September 30, 2022 and $6,686 at December
31, 2021
2,748,322
3,810,286
Deferred contract costs
499,935
987,266
Other
184,765
108,801
Total current assets
5,587,556
6,635,045
Property and equipment, less accumulated
depreciation and amortization of $548,585 at September 30, 2022 and
$541,677 at December 31, 2021
480,941
487,870
Operating lease right-of-use assets
486,980
459,158
Goodwill
7,927
7,927
Deferred federal and state income taxes,
net
27,295
729
Other assets, net
16,827
19,200
Total assets
$
6,607,526
$
7,609,929
Liabilities:
Current Liabilities:
Accounts payable
1,544,757
2,012,461
Accrued liabilities, primarily salaries
and related costs
404,207
403,625
Contract liabilities
594,244
1,142,026
Current portion of operating lease
liabilities
88,535
82,019
Federal, state and foreign income
taxes
74,507
86,166
Total current liabilities
2,706,250
3,726,297
Noncurrent portion of operating lease
liabilities
409,883
385,641
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 159,128 shares at September 30, 2022 and
167,210 shares at December 31, 2021
1,591
1,672
Additional paid-in capital
118
3,160
Retained earnings
3,738,600
3,620,008
Accumulated other comprehensive loss
(258,129
)
(130,414
)
Total shareholders’ equity
3,482,180
3,494,426
Noncontrolling interest
9,213
3,565
Total equity
3,491,393
3,497,991
Total liabilities and equity
$
6,607,526
$
7,609,929
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Earnings
(In thousands, except per share
data)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2022
2021
2022
2021
Revenues:
Airfreight services
$
1,480,955
$
1,628,115
$
4,682,076
$
4,477,599
Ocean freight and ocean services
1,684,579
1,598,597
5,420,471
3,651,059
Customs brokerage and other services
1,196,612
1,092,549
3,527,209
2,998,516
Total revenues
4,362,146
4,319,261
13,629,756
11,127,174
Operating Expenses:
Airfreight services
1,104,812
1,244,381
3,459,861
3,335,253
Ocean freight and ocean services
1,343,355
1,254,334
4,345,963
2,859,020
Customs brokerage and other services
746,106
686,775
2,345,508
1,837,134
Salaries and related
499,341
519,611
1,546,503
1,452,902
Rent and occupancy
52,715
46,730
155,241
137,376
Depreciation and amortization
15,187
12,753
42,416
38,415
Selling and promotion
6,239
4,237
16,174
10,479
Other
67,468
60,803
223,425
170,798
Total operating expenses
3,835,223
3,829,624
12,135,091
9,841,377
Operating income
526,923
489,637
1,494,665
1,285,797
Other Income (Expense):
Interest income
7,835
2,462
12,447
6,596
Other, net
98
733
7,731
6,382
Other income, net
7,933
3,195
20,178
12,978
Earnings before income taxes
534,856
492,832
1,514,843
1,298,775
Income tax expense
120,694
132,922
368,975
333,941
Net earnings
414,162
359,910
1,145,868
964,834
Less net (losses) earnings attributable to
the noncontrolling interest
(47
)
842
7,745
2,174
Net earnings attributable to
shareholders
$
414,209
$
359,068
$
1,138,123
$
962,660
Diluted earnings attributable to
shareholders per share
$
2.54
$
2.09
$
6.84
$
5.61
Basic earnings attributable to
shareholders per share
$
2.56
$
2.12
$
6.90
$
5.68
Weighted average diluted shares
outstanding
163,250
171,565
166,398
171,549
Weighted average basic shares
outstanding
162,029
169,633
164,944
169,398
EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements
of Cash Flows
(In thousands)
(Unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2022
2021
2022
2021
Operating Activities:
Net earnings
$
414,162
$
359,910
$
1,145,868
$
964,834
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for losses on accounts
receivable
5,570
3,739
9,917
6,028
Deferred income tax (benefit) expense
(3,070
)
(7,658
)
(14,928
)
2,343
Stock compensation expense
14,175
15,204
51,296
57,298
Depreciation and amortization
15,187
12,753
42,416
38,415
Other, net
1,435
626
144
1,523
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable
634,421
(714,300
)
880,364
(1,377,997
)
(Decrease) increase in accounts payable
and accrued expenses
(350,922
)
436,343
(343,902
)
769,525
Decrease (increase) in deferred contract
costs
226,087
(328,932
)
437,155
(550,572
)
(Decrease) increase in contract
liabilities
(249,895
)
381,192
(488,826
)
635,286
(Decrease) increase in income taxes
payable, net
(31,397
)
33,378
(78,568
)
32,022
(Increase) decrease in other, net
(5,369
)
(14,884
)
2,040
(15,208
)
Net cash from operating activities
670,384
177,371
1,642,976
563,497
Investing Activities:
Purchase of property and equipment
(15,928
)
(9,870
)
(68,498
)
(24,800
)
Other, net
(590
)
(157
)
(645
)
(53
)
Net cash from investing activities
(16,518
)
(10,027
)
(69,143
)
(24,853
)
Financing Activities:
Payments from borrowing on lines of
credit
(21,117
)
(1,045
)
(29,601
)
(2,570
)
Proceeds from borrowing on lines of
credit
—
8,524
56,545
10,138
Proceeds from issuance of common stock
61,885
56,965
73,318
99,433
Repurchases of common stock
(469,041
)
(76,595
)
(1,018,106
)
(225,064
)
Dividends paid
—
—
(109,828
)
(98,387
)
Payments for taxes related to net share
settlement of equity awards
—
(4
)
(19,333
)
(15,172
)
Distribution to noncontrolling
interest
(543
)
(1,631
)
(543
)
(1,631
)
Net cash from financing activities
(428,816
)
(13,786
)
(1,047,548
)
(233,253
)
Effect of exchange rate changes on cash
and cash equivalents
(47,487
)
(7,573
)
(100,443
)
(13,076
)
Change in cash and cash equivalents
177,563
145,985
425,842
292,315
Cash and cash equivalents at beginning of
period
1,976,971
1,674,121
1,728,692
1,527,791
Cash and cash equivalents at end of
period
$
2,154,534
$
1,820,106
$
2,154,534
$
1,820,106
Taxes Paid:
Income taxes
$
150,960
$
104,617
$
465,711
$
295,153
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
For the three months ended September
30, 2022:
Revenues
$
1,244,515
140,622
68,057
1,489,331
518,780
637,411
264,518
(1,088
)
4,362,146
Directly related cost of transportation
and other expenses1
$
742,826
80,116
41,638
1,250,872
416,817
453,248
209,248
(492
)
3,194,273
Salaries and other operating expenses2
$
314,442
30,151
15,057
98,758
37,577
109,308
36,181
(524
)
640,950
Operating income
$
187,247
30,355
11,362
139,701
64,386
74,855
19,089
(72
)
526,923
Identifiable assets at period end
$
3,553,279
272,527
137,472
915,895
421,148
1,020,756
322,160
(35,711
)
6,607,526
Capital expenditures
$
9,278
556
419
581
426
3,619
1,049
—
15,928
Equity
$
2,430,632
129,346
59,494
304,496
180,855
289,595
140,147
(43,172
)
3,491,393
For the three months ended September
30, 2021:
Revenues
$
1,134,096
116,404
54,303
1,690,381
538,780
564,810
221,777
(1,290
)
4,319,261
Directly related cost of transportation
and other expenses1
$
661,515
63,031
34,216
1,417,283
445,970
389,208
174,733
(466
)
3,185,490
Salaries and other operating expenses2
$
238,943
33,077
14,759
141,109
54,003
126,475
36,598
(830
)
644,134
Operating income
$
233,638
20,296
5,328
131,989
38,807
49,127
10,446
6
489,637
Identifiable assets at period end
$
3,417,496
256,638
110,406
1,558,109
457,615
990,123
328,671
(42,675
)
7,076,383
Capital expenditures
$
6,001
248
175
435
351
2,254
406
—
9,870
Equity
$
2,451,584
93,084
37,087
368,535
129,941
258,805
123,304
(41,748
)
3,420,592
UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH
ASIA
SOUTH
ASIA
EUROPE
MIDDLE
EAST,
AFRICA
AND
INDIA
ELIMI-
NATIONS
CONSOLI-
DATED
For the nine months ended September 30,
2022:
Revenues
$
3,751,102
390,220
191,900
4,840,822
1,776,355
1,871,509
811,147
(3,299
)
13,629,756
Directly related cost of transportation
and other expenses1
$
2,303,428
230,154
118,793
4,054,319
1,463,173
1,335,267
647,510
(1,312
)
10,151,332
Salaries and other operating expenses2
$
962,817
86,328
42,654
326,767
121,634
333,971
111,481
(1,893
)
1,983,759
Operating income
$
484,857
73,738
30,453
459,736
191,548
202,271
52,156
(94
)
1,494,665
Identifiable assets at period end
$
3,553,279
272,527
137,472
915,895
421,148
1,020,756
322,160
(35,711
)
6,607,526
Capital expenditures
$
45,149
2,672
705
1,878
1,152
13,343
3,599
—
68,498
Equity
$
2,430,632
129,346
59,494
304,496
180,855
289,595
140,147
(43,172
)
3,491,393
For the nine months ended September 30,
2021:
Revenues
$
3,007,053
311,986
146,148
4,208,811
1,306,264
1,576,092
574,469
(3,649
)
11,127,174
Directly related cost of transportation
and other expenses1
$
1,731,032
175,392
86,868
3,471,453
1,051,133
1,072,973
444,132
(1,576
)
8,031,407
Salaries and other operating expenses2
$
718,762
90,114
41,871
354,841
146,214
359,338
100,899
(2,069
)
1,809,970
Operating income
$
557,259
46,480
17,409
382,517
108,917
143,781
29,438
(4
)
1,285,797
Identifiable assets at period end
$
3,417,496
256,638
110,406
1,558,109
457,615
990,123
328,671
(42,675
)
7,076,383
Capital expenditures
$
11,931
434
300
1,192
1,462
7,908
1,573
—
24,800
Equity
$
2,451,584
93,084
37,087
368,535
129,941
258,805
123,304
(41,748
)
3,420,592
1Directly related cost of transportation
and other expenses totals operating expenses from Airfreight
services, Ocean freight and ocean services and Customs brokerage
and other services as shown in the Condensed Consolidated
Statements of Earnings.
2Salaries and other operating expenses
totals salaries and related, rent and occupancy, depreciation and
amortization, selling and promotion and other as shown in the
Condensed Consolidated Statements of Earnings.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221107006017/en/
Jeffrey S. Musser President and Chief Executive Officer (206)
674-3433
Bradley S. Powell Senior Vice President and Chief Financial
Officer (206) 674-3412
Geoffrey Buscher Director – Investor Relations (206)
892-4510
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