Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced first quarter 2019 financial results including the
following highlights compared to the same quarter of 2018:
- Diluted Net Earnings Attributable to
Shareholders per share (EPS1) increased 5% to $0.80
- Net Earnings Attributable to
Shareholders increased 3% to $140 million
- Operating Income decreased 3% to $188
million
- Revenues increased 9% to $2.02
billion
- Net Revenues2 increased 3% to $654
million
- Airfreight tonnage volume decreased 4%
and ocean container volume increased 6%
“We are pleased with our results in Q1 2019, especially when we
look at the comparison period last year that produced so many
records and set an extremely high bar,” said Jeffrey S. Musser,
President and Chief Executive Officer. “Customs brokerage and
import services led the way this quarter on increased volumes and
on-boarding new customers. Transcon, warehouse and distribution
also posted solid gains on expanded business with current
customers, as well as by winning new business. We increased the
volume of ocean freight containers shipped by 6%, while also
improving net revenue per container, particularly from exports out
of North and South Asia. The air market was the only area that was
challenged, particularly as customers reduced export volumes out of
North Asia. I credit our air group for their efforts in a volatile
pricing environment, and I thank everyone throughout our global
network for their ongoing effort to handle the increase in volumes
and business activity.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “Operating efficiency (operating income as a
percentage of net revenue) dipped below 30% this quarter, due
largely to lower air net revenues, as well as our continuing
investments in people at the district level to handle the increase
in volumes, and investments in technology and facilities. Our
effective tax rate declined from 31.1% in the first quarter of 2018
to 28.3% in 2019, largely due to the benefit from share-based
compensation deductions, higher foreign tax credits and deductions
for foreign derived investment income."
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. 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 2019
Earnings Release, May 7, 2019
Financial Highlights for the Three
months ended March 31, 2019 and 2018 (Unaudited)
(in 000's of US dollars except per share
data)
Three months ended March 31,
2019 2018 % Change
Revenues $ 2,020,051 $ 1,854,262 9 %
Net
revenues1 $ 654,114 $ 635,838 3 %
Operating
income $ 187,601 $ 192,818 (3
)%
Net earnings attributable to shareholders $ 139,699 $
135,692 3 %
Diluted earnings attributable to shareholders per
share $ 0.80 $ 0.76 5 %
Basic earnings attributable to
shareholders per share $ 0.81 $ 0.77 5 %
Diluted weighted
average shares outstanding 175,388 179,416
Basic weighted
average shares outstanding 171,818 175,900
_______________________ 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, 2019, we
repurchased 0.6 million shares of common stock at an average price
of $75.40 per share. During the three-month period ended
March 31, 2018, we repurchased 2.7 million shares of common
stock at an average price of $64.76 per share.
Employee Full-timeEquivalents as
ofMarch 31,
2019 2018 North America 6,806
6,264
Europe 3,404 3,132
North Asia 2,540
2,579
South Asia 1,654 1,582
Middle East, Africa and
India 1,541 1,478
Latin America 862 811
Information
Systems 915 888
Corporate 380 351
Total
18,102 17,085
First quarter
year-over-yearpercentage increase (decrease) in:
Airfreight kilos Ocean freight FEU
2019 January (2)% 8%
February (6)% 3%
March (2)% 6%
Quarter (4)% 6%
_______________________
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on May 10, 2019 will be considered in management's 8-K “Responses
to Selected Questions.”
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 our continued ability to manage increased volumes and
business activity; the impact of the 2017 Tax Act and related
interpretations on our effective tax rate; and 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, 2019 December 31, 2018
Assets
Current Assets: Cash and cash equivalents $ 1,189,429 $
923,735 Accounts receivable, less allowance for doubtful accounts
of $12,727 at March 31, 2019 and $15,345 at December 31, 2018
1,353,725 1,581,530 Deferred contract costs 131,535 159,510 Other
current assets 54,305 70,041 Total current assets
2,728,994 2,734,816 Property and equipment, less
accumulated depreciation and amortization of $457,513 at March 31,
2019 and $446,977 at December 31, 2018 500,853 504,105 Operating
lease right-of-use assets 349,140 — Goodwill 7,927 7,927 Deferred
federal and state income taxes, net 37,781 40,465 Other assets, net
18,217 27,246 $ 3,642,912 $ 3,314,559
Liabilities and
Equity
Current Liabilities: Accounts payable $ 768,665 $ 902,259
Accrued expenses, primarily salaries and related costs 220,085
215,813 Contract liabilities 157,040 190,343 Current portion of
operating lease liabilities 58,635 — Federal, state and foreign
income taxes 23,502 18,424 Total current liabilities
1,227,927 1,326,839 Noncurrent portion of operating
lease liabilities 289,551 — Commitments and contingencies
Shareholders’ Equity: Preferred stock; none issued —
— Common stock, par value $0.01 per share. Issued and outstanding
171,648 shares at March 31, 2019 and 171,582 shares at December 31,
2018 1,716 1,716 Additional paid-in capital 3,978 1,896 Retained
earnings 2,222,562 2,088,707 Accumulated other comprehensive loss
(103,986 ) (105,481 ) Total shareholders’ equity 2,124,270
1,986,838 Noncontrolling interest 1,164 882 Total equity
2,125,434 1,987,720 $ 3,642,912 $ 3,314,559
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
SUBSIDIARIES Condensed Consolidated Statements of Earnings
(In thousands, except per share data) (Unaudited)
Three months ended March 31, 2019
2018 Revenues: Airfreight services $ 714,901 $
731,227 Ocean freight and ocean services 568,641 520,883 Customs
brokerage and other services 736,509 602,152 Total revenues
2,020,051 1,854,262
Operating Expenses: Airfreight
services 509,210 513,504 Ocean freight and ocean services 420,331
379,418 Customs brokerage and other services 436,396 325,502
Salaries and related costs 356,910 339,895 Rent and occupancy costs
41,523 36,913 Depreciation and amortization 13,393 13,922 Selling
and promotion 11,076 10,965 Other 43,611 41,325 Total
operating expenses 1,832,450 1,661,444 Operating income
187,601 192,818
Other Income (Expense): Interest
income 6,106 4,314 Other, net 1,665 624 Other income
(expense), net 7,771 4,938 Earnings before income taxes
195,372 197,756 Income tax expense 55,261 61,556 Net
earnings 140,111 136,200 Less net earnings attributable to
the noncontrolling interest 412 508 Net earnings
attributable to shareholders $ 139,699 $ 135,692 Diluted
earnings attributable to shareholders per share $ 0.80 $
0.76 Basic earnings attributable to shareholders per share $ 0.81
$ 0.77 Weighted average diluted shares outstanding 175,388
179,416 Weighted average basic shares outstanding 171,818
175,900 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES Condensed Consolidated Statements of Cash
Flows (In thousands) (Unaudited)
Three months
ended March 31, 2019 2018
Operating Activities: Net earnings $ 140,111 $ 136,200
Adjustments to reconcile net earnings to net cash from operating
activities: Recoveries on accounts receivable (1,888 ) (265 )
Deferred income tax expense 2,108 2,853 Stock compensation expense
13,382 11,267 Depreciation and amortization 13,393 13,922 Other,
net 189 48 Changes in operating assets and liabilities: Decrease in
accounts receivables 230,477 100,647 Decrease in accounts payable
and accrued expenses (122,283 ) (45,844 ) Decrease in deferred
contract costs 31,259 3,407
Decrease in contract liabilities
(36,725 ) (7,401 ) Increase in income taxes payable, net 16,993
19,509 Decrease in other, net 2,467 1,134 Net cash
from operating activities 289,483 235,477
Investing Activities: Purchase of property and equipment
(9,435 ) (13,796 ) Other, net 255 (431 ) Net cash from
investing activities (9,180 ) (14,227 )
Financing
Activities: Proceeds from issuance of common stock 27,190
26,397 Repurchases of common stock (44,334 ) (172,360 ) Net cash
from financing activities (17,144 ) (145,963 ) Effect of exchange
rate changes on cash and cash equivalents 2,535 6,515
Increase in cash and cash equivalents 265,694 81,802 Cash and cash
equivalents at beginning of period 923,735 1,051,099
Cash and cash equivalents at end of period $ 1,189,429 $
1,132,901
Taxes paid: Income taxes 37,253 38,519
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND
SUBSIDIARIES Business Segment Information (In thousands)
(Unaudited)
UNITEDSTATES
OTHERNORTH
AMERICA
LATINAMERICA
NORTHASIA
SOUTHASIA
EUROPE
MIDDLEEAST,AFRICAAND INDIA
ELIMI-NATIONS
CONSOLI-DATED
Three months ended March 31, 2019: Revenues from
unaffiliated customers $ 681,424 85,103 35,949 617,000 171,930
320,049 108,596 — 2,020,051 Transfers between geographic areas 1 $
(21,640 ) 6,307 (1,770 ) 15,853 5,249 (7,359 )
4,079 (719 ) — Total revenues $ 659,784 91,410
34,179 632,853 177,179 312,690 112,675
(719 ) 2,020,051 Net revenues $ 292,429 35,169 15,063
134,207 47,369 96,795 33,172 (90 ) 654,114 Operating income $
74,013 10,960 2,636 65,780 15,907 13,952 4,361 (8 ) 187,601
Identifiable assets $ 1,906,278 175,034 71,168 511,589 174,512
579,924 234,195 (9,788 ) 3,642,912 Capital expenditures $ 6,915 228
93 344 176 982 697 — 9,435 Depreciation and amortization $ 8,222
467 432 1,407 536 1,831 498 — 13,393 Equity $ 1,401,450
82,170 28,581 238,518 114,290 165,718
126,953 (32,246 ) 2,125,434
Three months ended
March 31, 2018: Revenues from unaffiliated customers $ 534,869
76,525 32,722 630,572 168,600 305,792 105,182 — 1,854,262 Transfers
between geographic areas $ 28,881 3,562 3,387
6,017 6,550 14,188 5,355 (67,940 ) —
Total revenues $ 563,750 80,087 36,109 636,589
175,150 319,980 110,537 (67,940 )
1,854,262 Net revenues $ 277,185 30,447 14,745 137,208 44,406
98,635 33,201 11 635,838 Operating income $ 69,648 9,018 2,370
69,923 15,132 19,278 7,438 11 192,818 Identifiable assets $
1,558,181 165,368 55,036 542,965 153,411 533,012 208,173 (3,665 )
3,212,481 Capital expenditures $ 3,171 1,528 505 784 329 7,191 288
— 13,796 Depreciation and amortization $ 8,765 398 368 1,376 583
1,976 456 — 13,922 Equity $ 1,247,522 68,050 27,226 278,651 105,642
160,038 128,487 (33,350 ) 1,982,266 1During the quarter
ended March 31, 2019, the Company revised the process used to
record the transfer, between its geographic operating segments, of
revenues and the directly related cost of transportation expenses
for freight service transactions between Company origin and
destination locations. There were no changes for services rendered
at the origin, such as pick-up and delivery to port, nor for
services rendered at the destination, such as customs clearance and
final delivery. The change in process had no impact on reported
segment net revenues or operating income nor on reported
consolidated revenues or expenses. Prior year segment revenues have
not been revised.
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
revenues are 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) 2019 2018 Total revenues $
2,020,051 $ 1,854,262
Expenses: Airfreight services 509,210
513,504 Ocean freight and ocean services 420,331 379,418 Customs
brokerage and other services 436,396 325,502 Net revenues $
654,114 $ 635,838
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005325/en/
Jeffrey S. MusserPresident and Chief Executive Officer(206)
674-3433
Bradley S. PowellSenior Vice President and Chief Financial
Officer(206) 674-3412
Geoffrey BuscherDirector - Investor Relations(206) 892-4510
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