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Expeditors Reports Third Quarter 2017 EPS of $0.66

SEATTLE, Nov. 07, 2017 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2017 financial results including the following highlights compared to the same quarter of 2016:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 12% to $0.66
  • Net Earnings Attributable to Shareholders increased 12% to $120 million
  • Operating Income increased 12% to $187 million
  • Revenues increased 15% to $1.8 billion
  • Net Revenues2 increased 10% to $599 million
  • Airfreight tonnage volume increased 12% and ocean container volume increased 4%

“This quarter represents the culmination of the efforts from our staff over the last few quarters,” said Jeffrey S. Musser, President and Chief Executive Officer. “We’ve spent a significant amount of time working with our customers to bring pricing back in line with the changes that have taken place in the market. While accomplishing that task, our staff has also continued to provide the high level of service that our customers have come to expect from Expeditors. We remain extremely thankful for the exceptional employees and customers with whom we get to work each day.

“While our current focus has shifted somewhat from volume growth - due to the margin impacts that can occur - we continued to record strong performance in all of our services, winning new business and growing volumes with existing customers. We think the numbers speak for themselves with regards to the quality of volume growth that we are experiencing.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Despite the highly unpredictable rate environment, our people exercised careful restraint to bring our benchmark operating income as a percentage of net revenue back above 30% for the quarter, as compared to the first two quarters of 2017. We are managing expenses well, as our growth in volumes has significantly outpaced our growth in headcount. At the same time, we continue to make critical investments in our technology and create additional efficiencies for both ourselves and our customers."

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.
Third Quarter 2017 Earnings Release, November 7, 2017
Financial Highlights for the Three and Nine months ended September 30, 2017 and 2016 (Unaudited)
(in 000's of US dollars except per share data)
Three months ended September 30, Nine months ended September 30,
2017 2016 % Change 2017 2016 % Change
Revenues$1,802,166 $1,562,394 15% $5,019,577 $4,456,030 13%
Net revenues1$599,142 $545,259 10% $1,690,380 $1,615,445 5%
Operating income$186,895 $167,263 12% $501,249 $497,953 1%
Net earnings attributable to shareholders$120,263 $107,581 12% $322,378 $320,217 1%
Diluted earnings attributable to shareholders per share$0.66 $0.59 12% $1.77 $1.75 1%
Basic earnings attributable to shareholders per share$0.67 $0.59 14% $1.79 $1.76 2%
Diluted weighted average shares outstanding181,788 182,692 181,951 182,958
Basic weighted average shares outstanding179,416 181,177 179,827 181,645

_______________________
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 and nine-month periods ended September 30, 2017, we repurchased 3.6 million and 6.1 million shares of common stock at an average price of $56.18 and $55.93 per share, respectively. During the three and nine-month periods ended September 30, 2016, the Company repurchased 2.0 million and 5.4 million shares of common stock at an average price of $51.16 and $49.64 per share, respectively.

Employee headcount as of September 30,
2017 2016
North America6,043 5,769
Europe3,013 2,846
North Asia2,548 2,498
Middle East, Africa and India1,503 1,494
South Asia1,495 1,364
Latin America800 758
Information Systems889 810
Corporate357 338
Total16,648 15,877


Year-over-year percentage increase in:
Airfreight kilos Ocean freight FEU
2017
July 7% 6%
August 10% 2%
September 17% 3%
Quarter 12% 4%

_______________________
Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 10, 2017 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about November 20, 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 our ability to implement price adjustments, the quality of the volume growth that we are experiencing, the highly unpredictable rate environment, and our ability to manage expenses well. 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, 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)
September 30, 2017 December 31, 2016
Assets
Current Assets:
Cash and cash equivalents$1,033,444 $974,435
Accounts receivable, net1,349,854 1,190,130
Other current assets135,623 54,014
Total current assets2,518,921 2,218,579
Property and equipment, net513,070 536,572
Goodwill7,927 7,927
Other assets, net28,963 27,793
$3,068,881 $2,790,871
Liabilities and Equity
Current Liabilities:
Accounts payable$836,055 $726,571
Accrued expenses, primarily salaries and related costs216,146 185,502
Federal, state and foreign income taxes23,853 17,858
Total current liabilities1,076,054 929,931
Deferred Federal and state income taxes11,746 13,727
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued
Common stock, par value $0.01 per share. Issued and outstanding 177,559 shares at September 30, 2017 and 179,857 shares at December 31, 20161,776 1,799
Additional paid-in capital1,464 2,642
Retained earnings2,053,723 1,944,789
Accumulated other comprehensive loss(78,960) (104,592)
Total shareholders’ equity1,978,003 1,844,638
Noncontrolling interest3,078 2,575
Total equity1,981,081 1,847,213
$3,068,881 $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 Nine months ended
September 30, September 30,
2017 2016 2017 2016
Revenues:
Airfreight services$735,164 $621,566 $2,022,577 $1,764,512
Ocean freight and ocean services563,386 495,460 1,585,730 1,414,344
Customs brokerage and other services503,616 445,368 1,411,270 1,277,174
Total revenues1,802,166 1,562,394 5,019,577 4,456,030
Operating Expenses:
Airfreight services547,595 444,359 1,490,417 1,236,555
Ocean freight and ocean services411,061 359,991 1,163,051 1,006,710
Customs brokerage and other services244,368 212,785 675,729 597,320
Salaries and related costs319,050 291,204 930,159 868,091
Rent and occupancy costs30,533 27,091 87,826 81,029
Depreciation and amortization12,272 11,882 36,241 34,853
Selling and promotion10,608 10,134 32,476 29,817
Other39,784 37,685 102,429 103,702
Total operating expenses1,615,271 1,395,131 4,518,328 3,958,077
Operating income186,895 167,263 501,249 497,953
Other Income (Expense):
Interest income3,444 2,924 9,565 8,593
Other, net96 925 2,584 3,407
Other income (expense), net3,540 3,849 12,149 12,000
Earnings before income taxes190,435 171,112 513,398 509,953
Income tax expense69,829 63,163 190,470 188,518
Net earnings120,606 107,949 322,928 321,435
Less net earnings attributable to the noncontrolling interest343 368 550 1,218
Net earnings attributable to shareholders$120,263 $107,581 $322,378 $320,217
Diluted earnings attributable to shareholders per share$0.66 $0.59 $1.77 $1.75
Basic earnings attributable to shareholders per share$0.67 $0.59 $1.79 $1.76
Dividends declared and paid per common share$ $ $0.42 $0.40
Weighted average diluted shares outstanding181,788 182,692 181,951 182,958
Weighted average basic shares outstanding179,416 181,177 179,827 181,645


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
Operating Activities:
Net earnings$120,606 $107,949 $322,928 $321,435
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses on accounts receivable1,741 1,321 3,187 2,461
Deferred income tax (benefit) expense(28,854) (1,439) (16,000) 2,342
Stock compensation expense11,210 10,476 39,036 34,264
Depreciation and amortization12,272 11,882 36,241 34,853
Other, net377 11 (148) 41
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(126,102) (58,279) (123,790) 6,087
Increase in accounts payable and accrued expenses61,833 38,070 96,132 74,148
Increase (decrease) in income taxes payable, net38,149 7,197 10,814 (16,612)
Increase in other current assets(5,872) (1,395) (6,147) (2,089)
Net cash from operating activities85,360 115,793 362,253 456,930
Investing Activities:
Purchase of property and equipment(34,462) (12,659) (67,603) (39,973)
Other, net(261) 1,617 (892) 5,472
Net cash from investing activities(34,723) (11,042) (68,495) (34,501)
Financing Activities:
Proceeds from issuance of common stock65,915 57,522 162,781 147,645
Repurchases of common stock(202,776) (101,690) (340,736) (268,097)
Dividends paid (75,726) (73,000)
Net cash from financing activities(136,861) (44,168) (253,681) (193,452)
Effect of exchange rate changes on cash and cash equivalents4,758 1,853 18,932 5,927
(Decrease) increase in cash and cash equivalents(81,466) 62,436 59,009 234,904
Cash and cash equivalents at beginning of period1,114,910 980,264 974,435 807,796
Cash and cash equivalents at end of period$1,033,444 $1,042,700 $1,033,444 $1,042,700
Taxes paid:
Income taxes$58,257 $58,696 $190,911 $205,049


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 September 30, 2017:
Revenues from unaffiliated customers$476,575 65,544 24,181 686,915 170,225 273,606 105,120 1,802,166
Transfers between geographic areas26,888 2,782 3,679 5,253 5,681 10,302 5,318 (59,903)
Total revenues$503,463 68,326 27,860 692,168 175,906 283,908 110,438 (59,903) 1,802,166
Net revenues$257,030 30,664 14,710 138,667 41,411 85,390 29,956 1,314 599,142
Operating income$74,645 9,215 2,652 72,070 11,697 11,124 5,495 (3) 186,895
Identifiable assets$1,636,293 100,651 52,238 446,826 143,893 473,509 212,210 3,261 3,068,881
Capital expenditures$7,398 263 2,436 589 390 23,138 248 34,462
Depreciation and amortization$7,905 405 310 1,313 569 1,309 461 12,272
Equity$1,345,266 52,212 25,709 231,831 102,477 139,688 119,649 (35,751) 1,981,081
Three months ended September 30, 2016:
Revenues from unaffiliated customers$423,362 56,747 21,592 590,622 154,156 228,256 87,659 1,562,394
Transfers between geographic areas24,610 2,770 3,724 5,368 6,206 9,938 5,551 (58,167)
Total revenues$447,972 59,517 25,316 595,990 160,362 238,194 93,210 (58,167) 1,562,394
Net revenues$229,773 30,211 14,063 124,251 42,711 74,888 29,363 (1) 545,259
Operating income$69,457 6,200 3,328 59,682 14,045 7,018 7,534 (1) 167,263
Identifiable assets$1,410,287 95,390 56,192 480,587 117,333 388,543 237,104 8,788 2,794,224
Capital expenditures$8,319 720 139 739 319 2,127 296 12,659
Depreciation and amortization$7,566 369 328 1,404 594 1,116 505 11,882
Equity$1,145,293 41,542 37,765 293,383 87,926 129,989 150,395 (32,360) 1,853,933


(in thousands)UNITED
STATES
OTHER
NORTH
AMERICA
LATIN
AMERICA
NORTH ASIA SOUTH ASIA EUROPE MIDDLE
EAST, AFRICA
AND INDIA
ELIMI-
NATIONS
CONSOLI-
DATED
Nine months ended September 30, 2017:
Revenues from unaffiliated customers$1,354,811 187,997 69,747 1,873,393 475,163 764,596 293,870 5,019,577
Transfers between geographic areas79,356 8,246 11,073 15,139 16,520 29,288 15,316 (174,938)
Total revenues$1,434,167 196,243 80,820 1,888,532 491,683 793,884 309,186 (174,938) 5,019,577
Net revenues$737,842 84,630 43,634 371,459 117,634 242,244 89,973 2,964 1,690,380
Operating income$191,256 26,583 8,349 183,515 37,434 36,189 17,928 (5) 501,249
Identifiable assets at period end$1,636,293 100,651 52,238 446,826 143,893 473,509 212,210 3,261 3,068,881
Capital expenditures$19,492 1,066 3,648 2,492 1,172 38,717 1,016 67,603
Depreciation and amortization$23,389 1,163 930 3,995 1,656 3,707 1,401 36,241
Equity$1,345,266 52,212 25,709 231,831 102,477 139,688 119,649 (35,751) 1,981,081
Nine months ended September 30, 2016:
Revenues from unaffiliated customers$1,248,923 165,527 62,825 1,605,343 442,464 680,035 250,913 4,456,030
Transfers between geographic areas79,617 8,141 11,512 15,849 18,338 30,396 16,452 (180,305)
Total revenues$1,328,540 173,668 74,337 1,621,192 460,802 710,431 267,365 (180,305) 4,456,030
Net revenues$683,331 88,404 42,264 357,159 128,486 227,068 88,745 (12) 1,615,445
Operating income$184,876 23,091 11,016 176,621 48,090 31,109 23,162 (12) 497,953
Identifiable assets at period end$1,410,287 95,390 56,192 480,587 117,333 388,543 237,104 8,788 2,794,224
Capital expenditures$25,234 1,476 941 2,502 1,325 6,386 2,109 39,973
Depreciation and amortization$22,264 1,113 869 4,111 1,649 3,402 1,445 34,853
Equity$1,145,293 41,542 37,765 293,383 87,926 129,989 150,395 (32,360) 1,853,933


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 Nine months ended
September 30, September 30,
(in thousands)2017 2016 2017 2016
Total revenues$1,802,166 $1,562,394 $5,019,577 $4,456,030
Expenses:
Airfreight services547,595 444,359 1,490,417 1,236,555
Ocean freight and ocean services411,061 359,991 1,163,051 1,006,710
Customs brokerage and other services244,368 212,785 675,729 597,320
Net revenues$599,142 $545,259 $1,690,380 $1,615,445


CONTACTS:

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


Source:Expeditors International of Washington, Inc.