• Expeditors Reports First Quarter 2018 EPS of $0.76

    Source: Nasdaq GlobeNewswire / 08 May 2018 08:30:37   America/New_York

    SEATTLE, May 08, 2018 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first quarter 2018 financial results including the following highlights compared to the same quarter of 2017:

    • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 49% to $0.76
    • Net Earnings Attributable to Shareholders increased 45% to $136 million
    • Operating Income increased 32% to $193 million
    • Revenues increased 20% to $1.9 billion
    • Net Revenues2 increased 21% to $636 million
    • Airfreight tonnage volume and ocean container volume both increased 5%

    “Building from a strong second half of 2017, we continued to execute well across all of our services during the quarter,” commented Jeffrey S. Musser, President and Chief Executive Officer. “We added profitable growth from new and existing customers and benefitted from favorable buying opportunities in certain markets. All across our global network, our people exercised pricing discipline while securing capacity to deliver the services and solutions our customers need. All told, this quarter showcases the best of our Company’s capabilities and our relentless drive for excellence."

    “Compared with the robust volume growth in the first quarter a year ago,” Mr. Musser continued, “this quarter’s volume increases and financial performance track more in line with our historical performance and demonstrates our ability to execute and generate profitable growth. Demand has remained strong and we have continued to invest in people, processes and technology to efficiently handle the increased volumes across all products.”

    Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “These investments, including investments in facilities and equipment, will enhance our efficiencies. While investing for growth, we remain deliberate in how we commit resources and once again realized our target 30% operating efficiency (operating income as a percentage of net revenue) during the quarter.” Mr. Powell further commented that the Company’s effective tax rate for the quarter was 31.1%, compared to 37.3% a year ago. He also reiterated that the impact of the 2017 Tax Act on the Company’s effective tax rate in future periods will largely depend on the mix of pretax earnings that are generated in its U.S. and foreign operations, as well as further interpretation of and guidance to be issued on the new tax law.

    Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 177 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 2018 Earnings Release, May 8, 2018
    Financial Highlights for the Three months ended March 31, 2018 and 2017 (Unaudited)
    (in 000's of US dollars except per share data)

     Three months ended March 31,
     2018 2017 % Change
    Revenues1$1,854,262  $1,545,132  20%
    Net revenues2$635,838  $527,605  21%
    Operating income$192,818  $146,114  32%
    Net earnings attributable to shareholders$135,692  $93,264  45%
    Diluted earnings attributable to shareholders per share$0.76  $0.51  49%
    Basic earnings attributable to shareholders per share$0.77  $0.52  48%
    Diluted weighted average shares outstanding179,416  182,094   
    Basic weighted average shares outstanding175,900  180,062   

    1Effective January 1, 2018, the Company adopted required new revenue recognition guidance, resulting in a $22 million net reduction to the opening balance of retained earnings. In addition, in conjunction with the adoption of new revenue recognition guidance, the Company also changed the presentation of certain warehouse and distribution revenues from a net to a gross basis, which increased both revenues and operating expenses in customs brokerage and other services by approximately $50 million in the first quarter of 2018. Comparative prior year revenues (and the related volume information in the table below) has not been adjusted and continues to be reported under the Company's historical policies.  2018 reported revenues (and the related volume information) are reported under the Company's new revenue recognition accounting policies.
    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.

    During the three-month periods ended March 31, 2018 and 2017, we repurchased 2.7 million and 1.0 million shares of common stock at an average price of $64.76 and $56.49 per share, respectively.

     Employee Full-
    time Equivalents
    as of March 31,
     2018 2017
    North America6,264  5,947 
    Europe3,132  2,816 
    North Asia2,579  2,645 
    South Asia1,582  1,494 
    Middle East, Africa and India1,478  1,544 
    Latin America811  770 
    Information Systems888  873 
    Corporate351  340 
    Total17,085  16,429 

      First quarter year-over-year percentage
    increase (decrease) in:
      Airfreight kilos Ocean freight FEU
    January 10% (1)%
    February 1% 27%
    March 3% (5)%
    Quarter 5% 5%

    Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 11, 2018 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about May 21, 2018.

    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 our ability to execute and generate profitable growth; benefitting from favorable buying opportunities in certain markets; the strength of demand; our ability to efficiently handle increased volumes across all products; our ability to reach and maintain our target rate of operating efficiency; investments enhancing our efficiency; the impact of the 2017 Tax Act on our effective tax rate; 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; 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.

    Condensed Consolidated Balance Sheets
    (In thousands, except per share data)
     March 31,
     December 31,
    Current Assets:   
    Cash and cash equivalents$1,132,901  $1,051,099 
    Accounts receivable, net1,326,168  1,414,741 
    Deferred contract costs120,861   
    Other current assets58,161  75,612 
    Total current assets2,638,091  2,541,452 
    Property and equipment, net531,068  525,203 
    Goodwill7,927  7,927 
    Deferred Federal and state income taxes, net7,402  13,207 
    Other assets, net27,993  29,219 
     $3,212,481  $3,117,008 
    Liabilities and Equity   
    Current Liabilities:   
    Accounts payable$812,200  $866,305 
    Accrued expenses, primarily salaries and related costs222,212  206,320 
    Contract liabilities147,236   
    Federal, state and foreign income taxes17,233  20,494 
    Total current liabilities1,198,881  1,093,119 
    Noncurrent Federal income taxes payable31,334  29,516 
    Commitments and contingencies   
    Shareholders’ Equity:   
    Preferred stock; none issued   
    Common stock, par value $0.01 per share. Issued and outstanding 174,308 shares at March 31, 2018 and 176,374 shares at December 31, 20171,743  1,764 
    Additional paid-in capital1,198  546 
    Retained earnings2,041,520  2,063,512 
    Accumulated other comprehensive loss(64,992) (73,964)
    Total shareholders’ equity1,979,469  1,991,858 
    Noncontrolling interest2,797  2,515 
    Total equity1,982,266  1,994,373 
     $3,212,481  $3,117,008 

    Condensed Consolidated Statements of Earnings
    (In thousands, except per share data)
     Three months ended
     March 31,
     2018 2017
    Airfreight services$731,227  $615,545 
    Ocean freight and ocean services520,883  493,759 
    Customs brokerage and other services602,152  435,828 
    Total revenues1,854,262  1,545,132 
    Operating Expenses:   
    Airfreight services513,504  443,404 
    Ocean freight and ocean services379,418  366,063 
    Customs brokerage and other services325,502  208,060 
    Salaries and related costs339,895  292,580 
    Rent and occupancy costs36,913  28,130 
    Depreciation and amortization13,922  11,927 
    Selling and promotion10,965  10,915 
    Other41,325  37,939 
    Total operating expenses1,661,444  1,399,018 
    Operating income192,818  146,114 
    Other Income (Expense):   
    Interest income4,314  2,741 
    Other, net624  298 
    Other income (expense), net4,938  3,039 
    Earnings before income taxes197,756  149,153 
    Income tax expense61,556  55,586 
    Net earnings136,200  93,567 
    Less net earnings attributable to the noncontrolling interest508  303 
    Net earnings attributable to shareholders$135,692  $93,264 
    Diluted earnings attributable to shareholders per share$0.76  $0.51 
    Basic earnings attributable to shareholders per share$0.77  $0.52 
    Weighted average diluted shares outstanding179,416  182,094 
    Weighted average basic shares outstanding175,900  180,062 

    Condensed Consolidated Statements of Cash Flows
    (In thousands)
     Three months ended
     March 31,
     2018 2017
    Operating Activities:   
    Net earnings$136,200  $93,567 
    Adjustments to reconcile net earnings to net cash from operating activities:   
    (Recoveries) provision for losses on accounts receivable(265) 931 
    Deferred income tax expense2,853  5,593 
    Stock compensation expense11,267  10,623 
    Depreciation and amortization13,922  11,927 
    Other, net48  (351)
    Changes in operating assets and liabilities:   
    Decrease in accounts receivable100,647  75,454 
    Decrease in accounts payable and accrued expenses(45,844) (18,324)
    Decrease in deferred contract costs3,407   
    Decrease in contract liabilities(7,401)  
    Increase in income taxes payable, net19,509  19,824 
    Decrease (increase) in other current assets1,134  (3,565)
    Net cash from operating activities235,477  195,679 
    Investing Activities:   
    Purchase of property and equipment(13,796) (12,761)
    Other, net(431) (671)
    Net cash from investing activities(14,227) (13,432)
    Financing Activities:   
    Proceeds from issuance of common stock26,397  45,365 
    Repurchases of common stock(172,360) (53,908)
    Net cash from financing activities(145,963) (8,543)
    Effect of exchange rate changes on cash and cash equivalents6,515  7,904 
    Increase in cash and cash equivalents81,802  181,608 
    Cash and cash equivalents at beginning of period1,051,099  974,435 
    Cash and cash equivalents at end of period$1,132,901  $1,156,043 
    Taxes paid:   
    Income taxes$38,519  $29,146 

    Business Segment Information
    (In thousands)

    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 areas28,881  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 
    Three months ended March 31, 2017:                 
    Revenues from unaffiliated customers$426,019  59,899  22,103  566,428  147,240  231,457  91,986    1,545,132 
    Transfers between geographic areas24,313  2,639  3,635  5,051  5,431  9,322  4,964  (55,355)  
    Total revenues$450,332  62,538  25,738  571,479  152,671  240,779  96,950  (55,355) 1,545,132 
    Net revenues$230,785  25,793  14,916  111,833  37,995  75,958  29,731  594  527,605 
    Operating income$52,346  5,051  3,451  53,352  13,224  11,646  7,043  1  146,114 
    Identifiable assets$1,536,520  106,068  50,344  514,509  122,765  379,853  188,098  4,562  2,902,719 
    Capital expenditures$5,242  234  255  1,240  373  5,078  339    12,761 
    Depreciation and amortization$7,753  372  320  1,320  531  1,171  460    11,927 
    Equity$1,192,601  51,812  27,248  371,152  105,726  118,211  119,627  (34,657) 1,951,720 

    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)2018 2017
    Total revenues$1,854,262  $1,545,132 
    Airfreight services513,504  443,404 
    Ocean freight and ocean services379,418  366,063 
    Customs brokerage and other services325,502  208,060 
    Net revenues$635,838  $527,605 


    Jeffrey S. MusserBradley S. PowellGeoffrey Buscher
    President and Chief Executive OfficerSenior Vice President and Chief Financial OfficerDirector - Investor Relations
    (206) 674-3433(206) 674-3412(206) 892-4510


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