Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced net earnings attributable to shareholders of $99,381,000
for the fourth quarter of 2014, as compared with $83,496,000 for
the same quarter of 2013, an increase of 19%. Net revenues2 for the
fourth quarter of 2014 increased 9% to $518,871,000 as compared
with $478,072,000 reported for the fourth quarter of 2013. Total
revenues and operating income were $1,768,830,000 and $157,871,000
in 2014, as compared with $1,625,859,000 and $133,663,000 for the
same quarter of 2013, increases of 9% and 18%, respectively.
Diluted net earnings attributable to shareholders per share for the
fourth quarter were $0.51, as compared with $0.41 for the same
quarter in 2013, an increase of 24%.
For the year ended December 31, 2014, net earnings
attributable to shareholders was $376,888,000, as compared with
$348,526,000 in 2013, an increase of 8%. Net revenues for the year
increased to $1,981,427,000 from $1,882,853,000 for 2013, up 5%.
Total revenues and operating income for the year were
$6,564,721,000 and $594,648,000 in 2014, as compared with
$6,080,257,000 and $552,073,000 for the same period in 2013, both
increases of 8%. Diluted net earnings attributable to shareholders
per share for the year ended December 31, 2014 were $1.92, as
compared with $1.68 for the same period of 2013, an increase of
14%.
“During the 2014 fourth quarter we saw strong year-over-year
increases in both air and ocean freight volumes. Despite the 10
basis point reduction in overall net revenue margin, airfreight and
ocean freight net revenues both managed double digit increases, up
10% and 11%, respectively, as overall net revenue increased 9%. We
think this is significant,” said Bradley S. Powell, Senior Vice
President and Chief Financial Officer. “The percentage growth in
fourth quarter operating income was substantially in double digits,
even when one-time charges in the 2013 fourth quarter are
normalized. Operating income as a percentage of net revenue during
the 2014 fourth quarter was just above our target of 30%, something
we also view as significant. Net earnings per share for the fourth
quarter saw a 24% increase, to $.51 per share and was significantly
influenced by the $551 million in capital we returned to
shareholders in the form of stock buybacks during 2014,” Powell
continued.
“These fourth quarter results are a great affirmation of our
efforts to date. We’ve worked steadily to improve our performance
throughout 2014, being able to see the effects of our focus and
concentration reflected this quarter in double digit operating
income growth, as well as double digit growth in both air and ocean
freight net revenue has provided us with some important positive
reinforcement at a very opportune time. This is particularly true
in light of a global economy that still struggles to gain
traction,” said Jeffrey S. Musser, President and Chief Executive
Officer. “We continue to be grateful for the dedication of our
people, whose efforts, day in and day out, are what made these
results happen. We would be particularly remiss not to acknowledge
the long hours and extraordinary efforts by our ocean team to
assist our customers in working through a most difficult and
challenging ocean freight environment caused by the US West Coast
labor situation,” Musser went on to say. “While this year has been
one of change at Expeditors, the impact of greater synergies among
the various parts of our internal and external network is becoming
increasingly more visible. As we work to embrace new strategies and
adapt to new organizational structures, we are already seeing the
benefits of more global consistency and greater accountability, all
which are necessary for us to achieve our strategic goals. While we
still have much to do in fully implementing our strategic
assessment, we feel good about moving into 2015 with the momentum
created in the last several quarters,” Musser concluded.
Expeditors is a global logistics company headquartered in
Seattle, Washington. The company employs trained professionals in
186 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,
warehousing and distribution and customized logistics
solutions.
1 Diluted earnings attributable to shareholders per share. 2
Non-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. 4th Quarter 2014 Earnings Release, February
24, 2015 Financial Highlights for the Three months
and Years ended December 31, 2014 and 2013 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended December 31,
Years ended December 31,
2014 2013
%Increase
2014 2013
%Increase
Revenues $ 1,768,830 $ 1,625,859 9% $ 6,564,721 $ 6,080,257
8%
Net revenues $ 518,871 $ 478,072 9% $ 1,981,427 $
1,882,853 5%
Operating income3
$ 157,871 $ 133,663 18% $ 594,648 $ 552,073 8%
Net earnings
attributable to shareholders $ 99,381 $ 83,496 19% $ 376,888 $
348,526 8%
Diluted earnings attributable to shareholders $
0.51 $ 0.41 24% $ 1.92 $ 1.68 14%
Basic earnings attributable to
shareholders $ 0.52 $ 0.41 27% $ 1.92 $ 1.69 14%
Diluted
weighted average shares outstanding 193,307,389 205,526,229
196,768,067 206,895,473
Basic weighted average shares
outstanding 192,708,729 204,558,152 196,146,676 205,994,656
3 In the fourth quarter of 2013 the
Company recorded $8 million of additional Salary and related costs
related to the retirement bonus of Peter J. Rose, the Company’s
Chairman and Chief Executive Officer, whose retirement was
announced on October 7, 2013.
Employee headcount as of December
31, 2014 2013 North America
5,279 4,860
Asia Pacific 3,824 3,891
Europe 2,472
2,291
Middle East, Africa and India 1,344 1,316
Latin
America 748 685
Information Systems 702 648
Corporate 290 277
Total 14,659 13,968
Year-over-year percentage increase in:
Airfreight kilos Ocean freight FEU
2014 October 9% 11%
November 7% 10%
December 19% 6%
Quarter 11% 9%
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on February 27, 2015 will be considered in management's 8-K
“Responses to Selected Questions” expected to be filed on or about
March 13, 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, including positive trends in air
tonnage and ocean volumes and related net revenues, strength of the
global economy, ability to continue to improve our performance,
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)
December 31, December 31,
2014 2013
Assets
Current Assets: Cash and cash equivalents $ 927,107 $
1,247,652 Short-term investments 40,336 26,337 Accounts receivable,
net 1,236,042 1,073,500 Deferred Federal and state income taxes
20,279 18,396 Other current assets 65,486 49,384
Total current assets 2,289,250 2,415,269 Property and
equipment, net 538,415 563,064 Goodwill 7,927 7,927 Other assets,
net 55,313 28,552
$ 2,890,905 $ 3,014,812
Liabilities and
Equity
Current Liabilities: Accounts payable $ 770,238 $ 648,156
Accrued expenses, primarily salaries and related costs 192,468
200,301 Federal, state and foreign income taxes 21,077
21,743 Total current liabilities 983,783 870,200
Deferred Federal and state income taxes 35,514 58,281
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued — — Common stock, par value $0.01 per
share; issued and outstanding 191,655,690 shares at December 31,
2014 and 202,553,220 shares at December 31, 2013 1,916 2,025
Additional paid-in capital 1,113 1,647 Retained earnings 1,903,196
2,087,376 Accumulated other comprehensive loss (37,817 ) (6,265 )
Total shareholders’ equity 1,868,408 2,084,783
Noncontrolling interest 3,200 1,548 Total equity
1,871,608 2,086,331 $ 2,890,905 $ 3,014,812
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,
2014 2013 2014
2013 Revenues: Airfreight services $ 780,011 $
742,371 $ 2,780,840 $ 2,633,830 Ocean freight and ocean services
568,249 495,552 2,174,394 1,958,231 Customs brokerage and other
services 420,570 387,936 1,609,487 1,488,196 Total revenues
1,768,830 1,625,859 6,564,721 6,080,257
Operating Expenses:
Airfreight services 600,713 579,740 2,103,777 1,994,374 Ocean
freight and ocean services 446,244 386,041 1,712,795 1,521,340
Customs brokerage and other services 203,002 182,006 766,722
681,690 Salaries and related costs 276,072 267,002 1,065,329
1,032,601 Rent and occupancy costs 25,851 24,990 102,810 98,437
Depreciation and amortization 11,752 12,490 49,292 48,071 Selling
and promotion 11,421 9,352 38,125 33,243 Other 35,904 30,575
131,223 118,428 Total operating expenses 1,610,959 1,492,196
5,970,073 5,528,184 Operating income 157,871 133,663 594,648
552,073 Interest income 2,519 2,530 10,773 11,810 Other, net
223 1,645 5,468 8,713 Other income, net 2,742 4,175 16,241 20,523
Earnings before income taxes 160,613 137,838 610,889 572,596 Income
tax expense 59,873 53,829 231,429 222,585 Net earnings 100,740
84,009 379,460 350,011 Less net earnings attributable to the
noncontrolling interest 1,359 513 2,572 1,485 Net earnings
attributable to shareholders $ 99,381 $ 83,496 $ 376,888 $ 348,526
Diluted earnings attributable to shareholders per share $ 0.51 $
0.41 $ 1.92 $ 1.68 Basic earnings attributable to shareholders per
share $ 0.52 $ 0.41 $ 1.92 $ 1.69 Dividends declared and paid per
common share $ 0.32 $ 0.30 $ 0.64 $ 0.60 Weighted average diluted
shares outstanding 193,307,389 205,526,229 196,768,067 206,895,473
Weighted average basic shares outstanding 192,708,729 204,558,152
196,146,676 205,994,656 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,
2014 2013 2014
2013 Operating Activities: Net earnings $ 100,740 $
84,009 $ 379,460 $ 350,011 Adjustments to reconcile net earnings to
net cash from operating activities: Provision for losses
(recoveries) on accounts receivable 818 (421 ) 763 2,116 Deferred
income tax benefit (14,576 ) (730 ) (6,576 ) (20,975 ) Excess tax
benefits from stock plans (84 ) (656 ) (1,115 ) (2,339 ) Stock
compensation expense 10,313 10,753 42,533 43,813 Depreciation and
amortization 11,752 12,490 49,292 48,071 Other (5 ) 208 340 844
Changes in operating assets and liabilities: Increase in accounts
receivable (75,513 ) (50,093 ) (206,887 ) (64,575 ) Increase in
accounts payable and accrued expenses 39,388 9,335 153,424 44,150
Increase (decrease) in income taxes payable, net 14,117 (6,205 )
(12,998 ) 8,435 Decrease (increase) in other current assets 2,582
3,263 (3,270 ) (2,015 ) Net cash from operating
activities 89,532 61,953 394,966 407,536
Investing Activities: (Increase) decrease in
short-term investments, net (20 ) 73,489 (14,000 ) (26,201 )
Purchase of property and equipment (10,822 ) (10,720 ) (37,472 )
(53,411 ) Escrow deposit on land acquisition — — (27,101 ) — Other,
net (842 ) 1,680 (338 ) 2,806 Net cash from investing
activities (11,684 ) 64,449 (78,911 ) (76,806 )
Financing
Activities: Proceeds from issuance of common stock 10,800 7,660
69,269 59,752 Repurchases of common stock (75,621 ) (136,730 )
(550,781 ) (261,936 ) Excess tax benefits from stock plans 84 656
1,115 2,339 Dividends paid (61,827 ) (61,393 ) (124,634 ) (123,292
) Purchase of noncontrolling interest — — — (7,730 ) Distribution
to noncontrolling interest (418 ) — (503 ) (1,161 ) Net cash
from financing activities (126,982 ) (189,807 ) (605,534 ) (332,028
) Effect of exchange rate changes on cash and cash equivalents
(14,239 ) 727 (31,066 ) (11,892 ) Decrease in cash and cash
equivalents (63,373 ) (62,678 ) (320,545 ) (13,190 ) Cash and cash
equivalents at beginning of period 990,480 1,310,330
1,247,652 1,260,842 Cash and cash equivalents at end
of period $ 927,107 $ 1,247,652 $ 927,107 $
1,247,652
Taxes paid: Income taxes $ 59,081 $ 61,169
$ 254,439 $ 235,368 EXPEDITORS INTERNATIONAL OF
WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In
thousands) (Unaudited)
UNITEDSTATES
OTHERNORTHAMERICA
LATINAMERICA
ASIAPACIFIC4
EUROPE4
MIDDLEEAST,AFRICAand INDIA4
ELIMI-NATIONS
CONSOLI-DATED
Three months ended December 31, 2014: Revenues from
unaffiliated customers $ 438,744 56,599 23,464 902,310
267,923
79,790 — 1,768,830 Transfers between geographic areas 29,762 3,062
4,669 12,357 10,610 5,016 (65,476 ) — Total revenues $ 468,506
59,661 28,133 914,667 278,533 84,806 (65,476 ) 1,768,830 Net
revenues $ 215,603 29,614 16,219 152,415 79,012 26,008 — 518,871
Operating income $ 40,516 13,320 5,430 69,193 20,586 8,826 —
157,871 Identifiable assets $ 1,408,598 111,324 53,815 655,148
447,349 208,684 5,987 2,890,905 Capital expenditures $ 6,964 392
733 1,161 1,130 442 — 10,822 Depreciation and amortization $ 7,453
291 246 2,023 1,314 425 — 11,752 Equity $ 1,165,488 54,338 34,386
361,529 169,117 121,520 (34,770 ) 1,871,608
Three months ended
December 31, 2013: Revenues from unaffiliated customers $
394,835 54,651 22,629 838,881 236,302 78,561 — 1,625,859 Transfers
between geographic areas 24,262 3,067 5,578 12,353 10,430 4,119
(59,809 ) — Total revenues $ 419,097 57,718 28,207 851,234 246,732
82,680 (59,809 ) 1,625,859 Net revenues $ 197,560 27,388 15,918
138,453 74,203 24,550 — 478,072 Operating income $ 34,509 12,201
1,727 59,009 17,791 8,426 — 133,663 Identifiable assets $ 1,582,557
104,735 58,027 668,032 414,710 180,646 6,105 3,014,812 Capital
expenditures $ 6,503 336 459 2,400 775 247 — 10,720 Depreciation
and amortization $ 7,928 267 221 2,096 1,538 440 — 12,490 Equity $
1,330,262 72,772 29,590 406,728 178,729 102,628 (34,378 ) 2,086,331
Twelve months ended December 31, 2014: Revenues from
unaffiliated customers $ 1,694,819 218,735 89,058 3,233,539
1,012,389 316,181 — 6,564,721 Transfers between geographic areas
97,028 10,891 20,634 49,599 39,541 19,654 (237,347 ) — Total
revenues $ 1,791,847 229,626 109,692 3,283,138 1,051,930 335,835
(237,347 ) 6,564,721 Net revenues $ 823,111 108,631 65,016 570,793
313,325 100,551 — 1,981,427 Operating income $ 221,166 36,475
19,855 230,092 62,101 24,959 — 594,648 Identifiable assets $
1,408,598 111,324 53,815 655,148 447,349 208,684 5,987 2,890,905
Capital expenditures $ 19,610 1,439 1,574 9,073 4,246 1,530 —
37,472 Depreciation and amortization $ 31,553 1,170 911 8,233 5,690
1,735 — 49,292 Equity $ 1,165,488 54,338 34,386 361,529 169,117
121,520 (34,770 ) 1,871,608
Twelve months ended December 31,
2013: Revenues from unaffiliated customers $ 1,561,468 215,968
86,050 3,046,039 876,967 293,765 — 6,080,257 Transfers between
geographic areas 89,570 11,038 21,711 46,578 38,728 16,698 (224,323
) — Total revenues $ 1,651,038 227,006 107,761 3,092,617 915,695
310,463 (224,323 ) 6,080,257 Net revenues $ 770,519 102,864 61,478
560,900 288,407 98,685 — 1,882,853 Operating income $ 195,799
35,224 15,734 223,980 53,294 28,042 — 552,073 Identifiable assets $
1,582,557 104,735 58,027 668,032 414,710 180,646 6,105 3,014,812
Capital expenditures $ 28,699 1,870 1,010 17,231 3,313 1,288 —
53,411 Depreciation and amortization $ 29,569 882 901 8,381 6,569
1,769 — 48,071 Equity $ 1,330,262 72,772 29,590 406,728 178,729
102,628 (34,378 ) 2,086,331 4Effective in the fourth quarter
of 2014, management made changes to the reporting structure of the
geographic operating segments. Africa is now reported as Middle
East, Africa and India ("MAIR") and certain countries have shifted
between designated geographic areas. Amounts for 2013 have been
recast to conform to the 2014 presentation.
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 include 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
Twelve months ended December 31, December 31,
(in thousands) 2014 2013
2014 2013 Total revenues $ 1,768,830 $
1,625,859 $ 6,564,721 $ 6,080,257
Expenses: Airfreight
services 600,713 579,740 2,103,777 1,994,374 Ocean freight and
ocean services 446,244 386,041 1,712,795 1,521,340 Customs
brokerage and other services 203,002 182,006 766,722 681,690 Net
revenues $ 518,871 $ 478,072 $ 1,981,427 $ 1,882,853
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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