Expeditors Reports Second Quarter 2017 EPS of $0.60

SEATTLE, Aug. 08, 2017 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second 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 5% to $0.60
  • Net Earnings Attributable to Shareholders decreased 6% to $109 million
  • Operating Income decreased 6% to $168 million
  • Revenues increased 13% to $1.7 billion
  • Net Revenues2 increased 2% to $564 million
  • Airfreight tonnage volume increased 9% and ocean container volume increased 4%

“Volumes remain strong across all of our services and we believe we continue to take profitable market share,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our order management, warehousing and distribution, Transcon, and customs brokerage businesses performed exceptionally well during the quarter. While we experienced similar margin pressures that we have seen in recent quarters in our air and ocean offerings, we recorded some of the highest freight volumes in our company’s history. As always, our people provided outstanding customer service and performed extremely well in this environment.

“Global demand for air and ocean capacity continues to be stronger than we have seen in the past few years, which has led to a scarcity of favorable pricing. As the rate environment continues to shift, we are being increasingly disciplined in how we work both with our customers and with our carrier partners to secure access to capacity. In June, we initiated rate increases in certain high-volume lanes in response to the current market and expect to see strong demand, tight capacity, and rate volatility to continue throughout the remainder of the year.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “All regions have added people to process additional shipment volumes in order to maintain our high level of customer service. We are handling more shipments and are doing so more efficiently than ever before. We continue to focus on implementing process improvements and investing in our core technologies that allow us to grow our business profitably. As the industry continues to evolve and innovate at a more rapid pace, we are also making additional investments to develop strategies, including the use of technologies that allow us to maintain our leadership position.”

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.
Second Quarter 2017 Earnings Release, August 8, 2017
Financial Highlights for the Three and Six months ended June 30, 2017 and 2016 (Unaudited)
(in 000's of US dollars except per share data)

Three months ended June 30, Six months ended June 30,
2017 2016 %
Change
2017 2016 %
Change
Revenues$1,672,279 $1,475,164 13% $3,217,411 $2,893,636 11%
Net revenues1$563,633 $553,117 2% $1,091,238 $1,070,186 2%
Operating income2$168,240 $178,864 (6)% $314,354 $330,690 (5)%
Net earnings attributable to shareholders$108,851 $116,052 (6)% $202,115 $212,636 (5)%
Diluted earnings attributable to shareholders per share $0.60 $0.63 (5)% $1.11 $1.16 (4)%
Basic earnings attributable to shareholders per share$0.60 $0.64 (6)% $1.12 $1.17 (4)%
Diluted weighted average shares outstanding182,033 183,132 182,091 183,110
Basic weighted average shares outstanding180,012 181,753 180,037 181,882

_______________________
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.

2Includes recovery of certain legal and related fees totaling $8 million for both the quarter and year-to date periods ended June 30, 2017 compared to $5 million in the same periods in 2016 and the favorable resolution of an indirect tax contingency of $6 million in the second quarter of 2017. We do not expect further recoveries in either matter.

During the three and six-month periods ended June 30, 2017, we repurchased 1.5 million and 2.5 million shares of common stock at an average price of $55.02 and $55.58 per share, respectively. During the three and six-month periods ended June 30, 2016, the Company repurchased 1.9 million and 3.4 million shares of common stock at an average price of $49.47 and $48.75 per share, respectively.

Employee headcount as of June 30,
2017 2016
North America6,002 5,732
Europe2,915 2,764
North Asia2,524 2,461
Middle East, Africa and India 1,521 1,480
South Asia1,447 1,338
Latin America782 754
Information Systems892 795
Corporate366 341
Total16,449 15,665


Year-over-year percentage increase in:
Airfreight kilos Ocean freight FEU
2017
April 9% 2%
May 11% 2%
June 7% 7%
Quarter 9% 4%

_______________________
Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 11, 2017 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 21, 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 continuing to take profitable market share, the global demand for air and ocean capacity, favorable pricing, the shifting rate environment, our ability to secure access to capacity, our expectation that we will see strong demand, tight capacity, and rate volatility throughout the remainder of the year, our ability to maintain a high level of customer service, our ability to handle more shipments more efficiently than ever before, our ability to implement process improvements and invest in core technologies that allow us to grow our business profitably, and our ability to make investments to develop strategies, including the use of additional technologies that allow us to maintain our leadership position. 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)
June 30,
2017
December 31,
2016
Assets
Current Assets:
Cash and cash equivalents$1,114,910 $974,435
Accounts receivable, net1,215,278 1,190,130
Other current assets164,128 54,014
Total current assets2,494,316 2,218,579
Property and equipment, net490,776 536,572
Goodwill7,927 7,927
Other assets, net29,737 27,793
$3,022,756 $2,790,871
Liabilities and Equity
Current Liabilities:
Accounts payable$774,941 $726,571
Accrued expenses, primarily salaries and related costs211,376 185,502
Federal, state and foreign income taxes21,329 17,858
Total current liabilities1,007,646 929,931
Deferred Federal and state income taxes36,473 13,727
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued
Common stock, par value $0.01 per share. Issued and outstanding 179,637 shares at June 30,
2017 and 179,857 shares at December 31, 2016
1,796 1,799
Additional paid-in capital11,152 2,642
Retained earnings2,049,403 1,944,789
Accumulated other comprehensive loss(86,507) (104,592)
Total shareholders’ equity1,975,844 1,844,638
Noncontrolling interest2,793 2,575
Total equity1,978,637 1,847,213
$3,022,756 $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 Six months ended
June 30, June 30,
2017 2016 2017 2016
Revenues:
Airfreight services$671,868 $582,093 $1,287,413 $1,142,946
Ocean freight and ocean services528,585 464,692 1,022,344 918,884
Customs brokerage and other services471,826 428,379 907,654 831,806
Total revenues1,672,279 1,475,164 3,217,411 2,893,636
Operating Expenses:
Airfreight services499,418 403,419 942,822 792,196
Ocean freight and ocean services385,927 323,699 751,990 646,719
Customs brokerage and other services223,301 194,929 431,361 384,535
Salaries and related costs318,529 293,532 611,109 576,887
Rent and occupancy costs29,163 27,079 57,293 53,938
Depreciation and amortization12,042 11,642 23,969 22,971
Selling and promotion10,953 10,251 21,868 19,683
Other24,706 31,749 62,645 66,017
Total operating expenses1,504,039 1,296,300 2,903,057 2,562,946
Operating income168,240 178,864 314,354 330,690
Other Income (Expense):
Interest income3,380 2,890 6,121 5,669
Other, net2,190 1,603 2,488 2,482
Other income (expense), net5,570 4,493 8,609 8,151
Earnings before income taxes173,810 183,357 322,963 338,841
Income tax expense65,055 66,918 120,641 125,355
Net earnings108,755 116,439 202,322 213,486
Less net (loss) earnings attributable to the noncontrolling interest (96) 387 207 850
Net earnings attributable to shareholders$108,851 $116,052 $202,115 $212,636
Diluted earnings attributable to shareholders per share$0.60 $0.63 $1.11 $1.16
Basic earnings attributable to shareholders per share$0.60 $0.64 $1.12 $1.17
Dividends declared and paid per common share$0.42 $0.40 $0.42 $0.40
Weighted average diluted shares outstanding182,033 183,132 182,091 183,110
Weighted average basic shares outstanding180,012 181,753 180,037 181,882


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2017 2016 2017 2016
Operating Activities:
Net earnings$108,755 $116,439 $202,322 $213,486
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable515 562 1,446 1,140
Deferred income tax expense (benefit)7,261 (6,115) 12,854 3,781
Stock compensation expense17,203 12,957 27,826 23,788
Depreciation and amortization12,042 11,642 23,969 22,971
Other, net(174) (6) (525) 30
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(73,142) (48,344) 2,312 64,366
Increase in accounts payable and accrued expenses52,623 51,422 34,299 36,078
Decrease in income taxes payable, net(47,159) (34,734) (27,335) (23,809)
Decrease (increase) in other current assets3,290 1,361 (275) (694)
Net cash from operating activities81,214 105,184 276,893 341,137
Investing Activities:
Purchase of property and equipment(20,380) (13,279) (33,141) (27,314)
Other, net40 4,414 (631) 3,855
Net cash from investing activities(20,340) (8,865) (33,772) (23,459)
Financing Activities:
Proceeds from issuance of common stock51,501 48,488 96,866 90,123
Repurchases of common stock(84,052) (96,115) (137,960) (166,407)
Dividends paid(75,726) (73,000) (75,726) (73,000)
Net cash from financing activities(108,277) (120,627) (116,820) (149,284)
Effect of exchange rate changes on cash and cash equivalents6,270 (9,345) 14,174 4,074
(Decrease) increase in cash and cash equivalents(41,133) (33,653) 140,475 172,468
Cash and cash equivalents at beginning of period1,156,043 1,013,917 974,435 807,796
Cash and cash equivalents at end of period$1,114,910 $980,264 $1,114,910 $980,264
Taxes paid:
Income taxes$103,508 $108,369 $132,654 $146,353


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 June
30, 2017:
Revenues from unaffiliated
customers
$452,217 62,554 23,463 620,050 157,698 259,533 96,764 1,672,279
Transfers between
geographic areas
28,155 2,825 3,759 4,835 5,408 9,664 5,034 (59,680)
Total revenues$480,372 65,379 27,222 624,885 163,106 269,197 101,798 (59,680) 1,672,279
Net revenues$250,027 28,173 14,008 120,959 38,228 80,896 30,286 1,056 563,633
Operating income$64,265 12,317 2,246 58,093 12,513 13,419 5,390 (3) 168,240
Identifiable assets$1,487,582 129,830 48,064 576,655 129,002 437,628 207,191 6,804 3,022,756
Capital expenditures$6,852 569 957 663 409 10,501 429 20,380
Depreciation and amortization $7,731 386 300 1,362 556 1,227 480 12,042
Equity$1,147,962 61,957 24,320 402,211 117,077 135,726 124,628 (35,244) 1,978,637
Three months ended June
30, 2016:
Revenues from unaffiliated
customers
$417,735 56,674 21,169 517,489 151,890 229,882 80,325 1,475,164
Transfers between
geographic areas
28,973 2,671 4,187 5,385 6,326 10,097 5,507 (63,146)
Total revenues$446,708 59,345 25,356 522,874 158,216 239,979 85,832 (63,146) 1,475,164
Net revenues$232,860 30,815 14,468 122,117 46,257 77,639 28,975 (14) 553,117
Operating income$67,214 9,600 3,836 61,721 18,354 11,838 6,315 (14) 178,864
Identifiable assets$1,343,669 84,358 58,570 471,832 118,352 378,859 225,877 5,938 2,687,455
Capital expenditures$8,778 445 317 678 351 2,140 570 13,279
Depreciation and amortization$7,366 380 288 1,388 543 1,188 489 11,642
Equity$1,069,876 38,638 39,482 309,557 78,668 133,387 141,315 (31,418) 1,779,505


(in thousands)UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH
ASIA
SOUTH
ASIA
EUROPE MIDDLE
EAST,
AFRICA
AND INDIA
ELIMI-
NATIONS
CONSOLI-
DATED
Six months ended June
30, 2017:
Revenues from unaffiliated
customers
$878,236 122,453 45,566 1,186,478 304,938 490,990 188,750 3,217,411
Transfers between
geographic areas
52,468 5,464 7,394 9,886 10,839 18,986 9,998 (115,035)
Total revenues$930,704 127,917 52,960 1,196,364 315,777 509,976 198,748 (115,035) 3,217,411
Net revenues$480,812 53,966 28,924 232,792 76,223 156,854 60,017 1,650 1,091,238
Operating income$116,611 17,368 5,697 111,445 25,737 25,065 12,433 (2) 314,354
Identifiable assets at period end $1,487,582 129,830 48,064 576,655 129,002 437,628 207,191 6,804 3,022,756
Capital expenditures$12,094 803 1,212 1,903 782 15,579 768 33,141
Depreciation and amortization$15,484 758 620 2,682 1,087 2,398 940 23,969
Equity$1,147,962 61,957 24,320 402,211 117,077 135,726 124,628 (35,244) 1,978,637
Six months ended June
30, 2016:
Revenues from unaffiliated
customers
$825,561 108,780 41,233 1,014,721 288,308 451,779 163,254 2,893,636
Transfers between
geographic areas
55,007 5,371 7,788 10,481 12,132 20,458 10,901 (122,138)
Total revenues$880,568 114,151 49,021 1,025,202 300,440 472,237 174,155 (122,138) 2,893,636
Net revenues$453,558 58,193 28,201 232,908 85,775 152,180 59,382 (11) 1,070,186
Operating income$115,419 16,891 7,688 116,939 34,045 24,091 15,628 (11) 330,690
Identifiable assets at period end$1,343,669 84,358 58,570 471,832 118,352 378,859 225,877 5,938 2,687,455
Capital expenditures$16,915 756 802 1,763 1,006 4,259 1,813 27,314
Depreciation and amortization$14,698 744 541 2,707 1,055 2,286 940 22,971
Equity$1,069,876 38,638 39,482 309,557 78,668 133,387 141,315 (31,418) 1,779,505


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 Six months ended
June 30, June 30,
(in thousands)2017 2016 2017 2016
Total revenues$1,672,279 $1,475,164 $3,217,411 $2,893,636
Expenses:
Airfreight services499,418 403,419 942,822 792,196
Ocean freight and ocean services385,927 323,699 751,990 646,719
Customs brokerage and other services 223,301 194,929 431,361 384,535
Net revenues$563,633 $553,117 $1,091,238 $1,070,186


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.