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Expeditors Reports First Quarter 2017 EPS of $0.51

SEATTLE, May 02, 2017 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first quarter 2017 financial results including the following highlights compared to the same quarter of 2016:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 4% to $0.51
  • Net Earnings Attributable to Shareholders decreased 3% to $93 million
  • Operating Income decreased 4% to $146 million
  • Revenues increased 9% to $1.5 billion
  • Net Revenues2 increased 2% to $528 million
  • Airfreight tonnage volume increased 16% and ocean container volume increased 7%

“Similar to the past few quarters, our people continued to execute well and we again increased volumes and grew market share,” said Jeffrey S. Musser, President and Chief Executive Officer. “We were especially pleased with the performance of our Transcon and customs brokerage teams, as they increased business with existing customers and also brought on new customers, proving our investments in those areas are bearing fruit. We remain deeply committed to the strategy we have laid out that continues to develop and grow our core business, leading to the purposeful growth in market share that we have been seeing. At the same time, we understand that we must continue to make future investments to remain in the market leading position our customers expect from us in terms of execution and innovation. Technology continues to advance at a rapid pace and we expect to remain at the leading edge of those changes.

“As expected and previously noted, we continued to experience the rate pressure that we have seen in recent quarters. Over the long term, we expect this rate volatility to subside and that we will return to more historical pricing patterns. In the meantime, we continue to refine our processes and carefully execute against our strategy to position our company for further growth.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Operating income as a percentage of net revenue was 28%, which is below our 30% operating benchmark, largely due to volume increases being offset by lower average net rates. Employee headcount and operating expenses increased during the quarter, as we continued to invest in people to handle the increases in freight volumes and to develop and deliver improved technology and processes related to our global network. We will continue to make these important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for long-term profitable growth.”

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 2017 Earnings Release, May 2, 2017
Financial Highlights for the Three months ended March 31, 2017 and 2016 (Unaudited)
(in 000's of US dollars except per share data)

Three months ended March 31,
2017 2016 %
Change
Revenues $1,545,132 $1,418,472 9%
Net revenues1 $527,605 $517,069 2%
Operating income $146,114 $151,826 (4)%
Net earnings attributable to shareholders $93,264 $96,584 (3)%
Diluted earnings attributable to shareholders per share $0.51 $0.53 (4)%
Basic earnings attributable to shareholders per share $0.52 $0.53 (2)%
Diluted weighted average shares outstanding 182,094 183,018
Basic weighted average shares outstanding 180,062 182,010

_______________________
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, 2017 and 2016, we repurchased 1 million and 1.5 million shares of common stock at an average price of $56.49 and $47.79 per share, respectively.

Employee headcount as of March 31,
2017 2016
North America 5,902 5,652
Europe 2,887 2,731
North Asia 2,503 2,457
Middle East, Africa and India 1,503 1,479
South Asia 1,414 1,327
Latin America 777 775
Information Systems 874 765
Corporate 362 332
Total 16,222 15,518


Year-over-year percentage increase
(decrease) in:
Airfreight kilos Ocean freight FEU
2017
January 10% 15%
February 17% (1)%
March 20% 6%
Quarter 16% 7%

_______________________
Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 5, 2017 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about May 12, 2017.

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 margin expectations, ability to adapt to changing business cycles, ability to increase volumes and manage buy and sell rates, quality growth over the long term, expectations for rate volatility and the current rate environment, driving incremental efficiencies in our processes, investing in people and technology, executing our strategic initiatives, and our ability to remain at the forefront of technological innovation. 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, the future success of our business model, our ability to maintain consistent and stable operating results, our ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, changes in global trade volumes, customers’ inventory build-up, decreased consumer confidence, volatility in equity markets, energy and fuel prices, geopolitical 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,
2017
December 31,
2016
Assets
Current Assets:
Cash and cash equivalents $1,156,043 $974,435
Accounts receivable, net 1,126,488 1,190,130
Other current assets 119,265 54,014
Total current assets 2,401,796 2,218,579
Property and equipment, net 463,604 536,572
Goodwill 7,927 7,927
Other assets, net 29,392 27,793
$2,902,719 $2,790,871
Liabilities and Equity
Current Liabilities:
Accounts payable $701,122 $726,571
Accrued expenses, primarily salaries and related costs 205,255 185,502
Federal, state and foreign income taxes 20,427 17,858
Total current liabilities 926,804 929,931
Deferred Federal and state income taxes 24,195 13,727
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued
Common stock, par value $0.01 per share. Issued and outstanding 179,924 shares at March 31,
2017 and 179,857 shares at December 31, 2016
1,800 1,799
Additional paid-in capital 4,721 2,642
Retained earnings 2,038,053 1,944,789
Accumulated other comprehensive loss (95,678) (104,592)
Total shareholders’ equity 1,948,896 1,844,638
Noncontrolling interest 2,824 2,575
Total equity 1,951,720 1,847,213
$2,902,719 $2,790,871




EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2017 2016
Revenues:
Airfreight services $615,545 $560,853
Ocean freight and ocean services 493,759 454,192
Customs brokerage and other services 435,828 403,427
Total revenues 1,545,132 1,418,472
Operating Expenses:
Airfreight services 443,404 388,777
Ocean freight and ocean services 366,063 323,020
Customs brokerage and other services 208,060 189,606
Salaries and related costs 292,580 283,355
Rent and occupancy costs 28,130 26,859
Depreciation and amortization 11,927 11,329
Selling and promotion 10,915 9,432
Other 37,939 34,268
Total operating expenses 1,399,018 1,266,646
Operating income 146,114 151,826
Other Income (Expense):
Interest income 2,741 2,779
Other, net 298 879
Other income (expense), net 3,039 3,658
Earnings before income taxes 149,153 155,484
Income tax expense 55,586 58,437
Net earnings 93,567 97,047
Less net earnings attributable to the noncontrolling interest 303 463
Net earnings attributable to shareholders $93,264 $96,584
Diluted earnings attributable to shareholders per share $0.51 $0.53
Basic earnings attributable to shareholders per share $0.52 $0.53
Weighted average diluted shares outstanding 182,094 183,018
Weighted average basic shares outstanding 180,062 182,010



EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended
March 31,
2017 2016
Operating Activities:
Net earnings $93,567 $97,047
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable 931 578
Deferred income tax expense 5,593 9,896
Stock compensation expense 10,623 10,831
Depreciation and amortization 11,927 11,329
Other, net (351) 36
Changes in operating assets and liabilities:
Decrease in accounts receivable 75,454 112,710
Decrease in accounts payable and accrued expenses (18,324) (15,344)
Increase in income taxes payable, net 19,824 10,925
Increase in other current assets (3,565) (2,055)
Net cash from operating activities 195,679 235,953
Investing Activities:
Purchase of property and equipment (12,761) (14,035)
Other, net (671) (559)
Net cash from investing activities (13,432) (14,594)
Financing Activities:
Proceeds from issuance of common stock 45,365 41,635
Repurchases of common stock (53,908) (70,292)
Net cash from financing activities (8,543) (28,657)
Effect of exchange rate changes on cash and cash equivalents 7,904 13,419
Increase in cash and cash equivalents 181,608 206,121
Cash and cash equivalents at beginning of period 974,435 807,796
Cash and cash equivalents at end of period $1,156,043 $1,013,917
Taxes paid:
Income taxes $29,146 $37,984



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, 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 areas 24,313 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
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 $1,236,896 119,258 56,334 455,973 133,940 438,711 216,576 3,852 2,661,540
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

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) 2017 2016
Total revenues $1,545,132 $1,418,472
Expenses:
Airfreight services 443,404 388,777
Ocean freight and ocean services 366,063 323,020
Customs brokerage and other services 208,060 189,606
Net revenues $527,605 $517,069


CONTACTS: 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

Source:Expeditors International of Washington, Inc.