EXPD
$100.53
Expeditors Intl
$.04
.04%
Earnings Details
1st Quarter March 2022
Tuesday, May 3, 2022 8:30:00 AM
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Summary

Expeditors Intl (EXPD) Recent Earnings

Expeditors Intl (EXPD) reported 1st Quarter March 2022 earnings of $2.05 per share on revenue of $4.7 billion. The consensus earnings estimate was $1.77 per share on revenue of $4.2 billion. Revenue grew 38.9% on a year-over-year basis.

Expeditors International of Washington Inc is engaged in the business of providing logistics services. The Company offers its customers a seamless international network supporting the movement and strategic positioning of goods.

Results
Reported Earnings
$2.05
Earnings Whisper
-
Consensus Estimate
$1.77
Reported Revenue
$4.66 Bil
Revenue Estimate
$4.21 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Expeditors Reports First Quarter 2022 EPS of $2.05

SEATTLE--(BUSINESS WIRE)--Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first quarter 2022 financial results including the following highlights compared to the same quarter of 2021:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 23% to $2.05
  • Net Earnings Attributable to Shareholders increased 21% to $346 million
  • Operating Income increased 20% to $462 million
  • Revenues increased 46% to $4.7 billion
  • Airfreight tonnage volume and ocean container volume decreased 18% and 3%, respectively

“Given all that we have been through following the February cyber-attack, I have never been more proud of our employees’ ability to adapt – nor have I ever been more grateful to our loyal customers, carriers, and service providers for their unprecedented level of support while we worked through this crisis,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our core systems are operational, thanks to the around-the-clock efforts of our entire organization. Our people performed magnificently and we are proud of the financial results, especially considering the additional expenses and reduced volumes as a result of the cyber-attack. We are extremely appreciative that the vast majority of our customers chose to keep their business with us while we worked to resolve the impact of the cyber-attack.

“All of our products suffered as a result of the cyber-attack, particularly during the first three weeks after the attack, as we quickly adjusted to a new and unfamiliar operating environment in which our core systems were taken offline to protect our network. Nevertheless, our Air and Ocean businesses both outperformed strong year-ago results, as rates remained elevated due to ongoing supply chain bottlenecks and capacity constraints, while tonnage and volumes declined principally as a result of the cyber-attack. Air freight continues to be impacted by the extreme imbalance between capacity and demand, particularly with exports out of Asia. While the cyber-attack constrained our volumes in air during the quarter, we continued to process shipments and serve our customers, particularly as shippers turned to air in an effort to get around the severe disruptions on the seas. Ocean volumes, in turn, continued to be hampered by port congestion due to labor and equipment shortages, which disrupted sailing schedules and kept rates well above historical norms. None of the issues in the air, on the water, or at the ports have appreciably improved or are likely to in 2022.”

Christopher J. McClincy, Senior Vice President and Chief Information Officer, commented further on the cyber-attack: “As soon as we learned of the attack, we quickly shut down most of our connectivity, operating and accounting systems worldwide to protect the health of our global systems environment, and we initiated our cybersecurity incident response plan. Over the subsequent days and weeks, our response teams, in collaboration with external cybersecurity experts and law enforcement, remediated the attack. The systems impact related to the cyber-attack limited our ability to arrange shipments or manage customs and distribution activities, or to perform certain accounting functions, for approximately three weeks after the attack. While we continue to navigate residual effects and incorporate learnings from the cyber-attack, our core systems are being utilized to drive our services. I join Jeff in thanking all of our employees and partners for their exceptional performance during the most trying episode in our company’s history.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Despite our temporary systems shutdown, our employees were able to find alternative solutions to keep freight moving, although on a limited basis, until we were able to restore our systems. While we believe the bulk of the expenses related to the cyber-attack are now behind us, we expect to continue to incur additional expenses related to further system enhancements. Supply and demand in both air and ocean and are likely to remain out of balance for the foreseeable future, but we would continue to caution that should demand and rates return to pre-pandemic levels – whenever that may be – our revenues, expenses, and operating income are likely to decline from the all-time highs that we experienced in 2021.”

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.

NOTE: See Disclaimer on Forward-Looking Statements in this release.

Expeditors International of Washington, Inc.

First Quarter 2022 Earnings Release, May 3, 2022

Financial Highlights for the three months ended March 31, 2022 and 2021 (Unaudited)

(in 000's of US dollars except per share data)

 

 

 

Three months ended March 31,

 

 

2022

 

2021

 

% Change

Revenues3

 

$

4,664,298

 

 

$

3,198,820

 

 

46%

Directly related cost of transportation and other expenses1, 3

 

$

3,516,111

 

 

$

2,247,284

 

 

56%

Salaries and other operating expenses2

 

$

686,427

 

 

$

566,021

 

 

21%

Operating income

 

$

461,760

 

 

$

385,515

 

 

20%

Net earnings attributable to shareholders

 

$

346,109

 

 

$

287,220

 

 

21%

Diluted earnings attributable to shareholders per share

 

$

2.05

 

 

$

1.67

 

 

23%

Basic earnings attributable to shareholders per share

 

$

2.07

 

 

$

1.70

 

 

22%

Diluted weighted average shares outstanding

 

 

169,216

 

 

 

171,551

 

 

 

Basic weighted average shares outstanding

 

 

167,499

 

 

 

169,214

 

 

 

_______________________

1Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

2Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

3Certain prior year amounts have been revised to correct for immaterial errors as previously disclosed in the Company’s second quarter results on Form 10-Q filed on August 5, 2021 and in the 2021 annual report on Form 10-K filed on March 15, 2022.

Financial Impact of the Cyber-Attack

In the first quarter the Company incurred, as a result of our inability to timely process and move shipments through ports, approximately $40 million in incremental demurrage charges, where the Company has direct liability for this obligation. These costs are recorded in customs brokerage and other services expenses.

Additionally, in the first quarter, the Company incurred investigation, recovery, and remediation expenses, including costs to recover its operational and accounting systems and to enhance cybersecurity protections. These costs are primarily comprised of various consulting services including cybersecurity experts, outside legal advisors, and other IT professional expenses. The Company also recorded estimated liabilities for potential shipment-related claims. Total amounts recorded for the items above were approximately $20 million and are reported in other operating expenses. The Company does not expect to incur significant capital expenditures as a result of the cyber-attack.

The Company may incur additional expenses which could include third-party expenses, incremental information services costs, legal fees, or indemnities to customers or business partners. When the Company’s operating systems were down, many customers worked with other providers to meet their logistics needs, resulting in lower shipment volumes in the first quarter for which the financial impact on revenues and operating income cannot be quantified. Such costs and the ongoing impacts from the down time caused by the cyber-attack could have a further material adverse impact on the Company’s business, revenues, expenses, results of operations, cash flows and reputation. The Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack.

 

 

Employee Full-time Equivalents as of
March 31,

 

 

2022

 

2021

North America

 

 

7,697

 

 

 

6,819

 

Europe

 

 

4,046

 

 

 

3,595

 

North Asia

 

 

2,513

 

 

 

2,379

 

South Asia

 

 

1,792

 

 

 

1,640

 

Middle East, Africa and India

 

 

1,535

 

 

 

1,477

 

Latin America

 

 

831

 

 

 

773

 

Information Systems

 

 

1,042

 

 

 

973

 

Corporate

 

 

411

 

 

 

399

 

Total

 

 

19,867

 

 

 

18,055

 

 

 

First quarter year-over-year
percentage increase (decrease) in:

2022

 

Airfreight
kilos

 

Ocean freight
FEU

January

 

10%

 

(1)%

February

 

(11)%

 

March

 

(45)%

 

(8)%

Quarter

 

(18)%

 

(3)%

During the three months ended March 31, 2022, we did not repurchase any shares of common stock compared to the three months ended March 31, 2021, when we repurchased 0.9 million shares of common stock at an average price of $92.98 per share.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 6, 2022 will be considered in management's 8-K “Responses to Selected Questions.”

Disclaimer on Forward-Looking Statements:

Certain statements contained in this news release are “forward-looking statements,” based on management’s views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding the financial and operational impact of the cyber-attack; the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions around the world. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue in 2022, and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; our ability to invest in our strategic efforts to explore new areas for profitable growth; our ability to avoid another material cyber-attack; and our ability to remain a strong, healthy, unified and resilient organization. The ongoing impact of the COVID-19 pandemic could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company’s regulatory filings with the Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

March 31,
2022

 

December 31,
2021

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,139,626

 

 

$

1,728,692

 

Accounts receivable, less allowance for credit loss of $5,677 at March 31, 2022 and $6,686 at December 31, 2021

 

 

3,934,856

 

 

 

3,810,286

 

Deferred contract costs

 

 

817,435

 

 

 

987,266

 

Other

 

 

70,812

 

 

 

108,801

 

Total current assets

 

 

6,962,729

 

 

 

6,635,045

 

Property and equipment, less accumulated depreciation and amortization of $553,048 at March 31, 2022 and $541,677 at December 31, 2021

 

 

504,125

 

 

 

487,870

 

Operating lease right-of-use assets

 

 

458,637

 

 

 

459,158

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Deferred federal and state income taxes, net

 

 

5,573

 

 

 

729

 

Other assets, net

 

 

17,002

 

 

 

19,200

 

Total assets

 

$

7,955,993

 

 

$

7,609,929

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,980,439

 

 

$

2,012,461

 

Accrued liabilities, primarily salaries and related costs

 

 

607,882

 

 

 

403,625

 

Contract liabilities

 

 

952,370

 

 

 

1,142,026

 

Current portion of operating lease liabilities

 

 

85,076

 

 

 

82,019

 

Federal, state and foreign income taxes

 

 

96,205

 

 

 

86,166

 

Total current liabilities

 

 

3,721,972

 

 

 

3,726,297

 

Noncurrent portion of operating lease liabilities

 

 

384,690

 

 

 

385,641

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

 

Common stock, par value $0.01 per share. Issued and outstanding: 167,477 shares at March 31, 2022 and 167,210 shares at December 31, 2021

 

 

1,675

 

 

 

1,672

 

Additional paid-in capital

 

 

13,343

 

 

 

3,160

 

Retained earnings

 

 

3,965,803

 

 

 

3,620,008

 

Accumulated other comprehensive loss

 

 

(137,429

)

 

 

(130,414

)

Total shareholders’ equity

 

 

3,843,392

 

 

 

3,494,426

 

Noncontrolling interest

 

 

5,939

 

 

 

3,565

 

Total equity

 

 

3,849,331

 

 

 

3,497,991

 

Total liabilities and equity

 

$

7,955,993

 

 

$

7,609,929

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

 

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended March 31,

 

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,598,555

 

 

$

1,325,915

 

Ocean freight and ocean services

 

 

1,976,246

 

 

 

953,912

 

Customs brokerage and other services

 

 

1,089,497

 

 

 

918,993

 

Total revenues

 

 

4,664,298

 

 

 

3,198,820

 

Operating Expenses:

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,142,546

 

 

 

954,544

 

Ocean freight and ocean services

 

 

1,600,243

 

 

 

742,435

 

Customs brokerage and other services

 

 

773,322

 

 

 

550,305

 

Salaries and related

 

 

538,940

 

 

 

452,105

 

Rent and occupancy

 

 

50,928

 

 

 

45,280

 

Depreciation and amortization

 

 

12,975

 

 

 

12,987

 

Selling and promotion

 

 

4,048

 

 

 

3,070

 

Other

 

 

79,536

 

 

 

52,579

 

Total operating expenses

 

 

4,202,538

 

 

 

2,813,305

 

Operating income

 

 

461,760

 

 

 

385,515

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest income

 

 

1,892

 

 

 

1,946

 

Other, net

 

 

7,527

 

 

 

3,000

 

Other income, net

 

 

9,419

 

 

 

4,946

 

Earnings before income taxes

 

 

471,179

 

 

 

390,461

 

Income tax expense

 

 

121,699

 

 

 

102,511

 

Net earnings

 

 

349,480

 

 

 

287,950

 

Less net earnings attributable to the noncontrolling interest

 

 

3,371

 

 

 

730

 

Net earnings attributable to shareholders

 

$

346,109

 

 

$

287,220

 

Diluted earnings attributable to shareholders per share

 

$

2.05

 

 

$

1.67

 

Basic earnings attributable to shareholders per share

 

$

2.07

 

 

$

1.70

 

Weighted average diluted shares outstanding

 

 

169,216

 

 

 

171,551

 

Weighted average basic shares outstanding

167,499

169,214

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three months ended March 31,

 

 

2022

 

2021

Operating Activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

349,480

 

 

$

287,950

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

 

 

 

 

 

(Recoveries) provisions for losses on accounts receivable

 

 

(416

)

 

 

1,199

 

Deferred income tax (benefit) expense

 

 

(3,236

)

 

 

8,151

 

Stock compensation expense

 

 

11,603

 

 

 

11,185

 

Depreciation and amortization

 

 

12,975

 

 

 

12,987

 

Other, net

 

 

455

 

 

 

551

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(132,348

)

 

 

(252,914

)

Increase in accounts payable and accrued liabilities

 

 

140,191

 

 

 

233,238

 

Decrease (increase) in deferred contract costs

 

 

173,930

 

 

 

(71,258

)

(Decrease) increase in contract liabilities

 

 

(193,357

)

 

 

79,590

 

Increase in income taxes payable, net

 

 

46,259

 

 

 

46,638

 

Decrease (increase) in other, net

 

 

8,410

 

 

 

(1,488

)

Net cash from operating activities

 

 

413,946

 

 

 

355,829

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(14,412

)

 

 

(8,391

)

Other, net

 

 

79

 

 

 

(34

)

Net cash from investing activities

 

 

(14,333

)

 

 

(8,425

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from borrowing on lines of credit, net

 

 

19,490

 

 

 

(85

)

Proceeds from issuance of common stock

 

 

5,751

 

 

 

19,757

 

Repurchases of common stock

 

 

 

 

 

(85,997

)

Payments for taxes related to net share settlement of equity awards

 

 

(7,482

)

 

 

(1,275

)

Net cash from financing activities

 

 

17,759

 

 

 

(67,600

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(6,438

)

 

 

(14,202

)

Change in cash and cash equivalents

 

 

410,934

 

 

 

265,602

 

Cash and cash equivalents at beginning of period

 

 

1,728,692

 

 

 

1,527,791

 

Cash and cash equivalents at end of period

 

$

2,139,626

 

 

$

1,793,393

 

Taxes Paid:

 

 

 

 

 

 

 

 

Income taxes

 

$

77,960

 

 

$

46,607

 

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

For the three months ended March 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,241,224

 

 

 

104,610

 

 

 

57,707

 

 

 

1,769,016

 

 

 

646,329

 

 

575,791

 

 

270,681

 

 

 

(1,060

)

 

 

4,664,298

 

Directly related cost of transportation
and other expenses1

 

$

763,423

 

 

 

64,232

 

 

 

33,857

 

 

 

1,480,093

 

 

 

538,883

 

 

417,620

 

 

218,100

 

 

 

(97

)

 

 

3,516,111

 

Salaries and other operating expenses2

 

$

333,649

 

 

 

24,869

 

 

 

13,101

 

 

 

123,113

 

 

 

45,329

 

 

109,269

 

 

38,042

 

 

 

(945

)

 

 

686,427

 

Operating income

 

$

144,152

 

 

 

15,509

 

 

 

10,749

 

 

 

165,810

 

 

 

62,117

 

 

48,902

 

 

14,539

 

 

 

(18

)

 

 

461,760

 

Identifiable assets at period end

 

$

4,199,798

 

 

 

283,674

 

 

 

147,391

 

 

 

1,329,469

 

 

 

591,672

 

 

1,076,451

 

 

358,722

 

 

 

(31,184

)

 

 

7,955,993

 

Capital expenditures

 

$

9,477

 

 

 

1,078

 

 

 

109

 

 

 

531

 

 

 

290

 

 

2,058

 

 

869

 

 

 

 

 

 

14,412

 

Equity

 

$

2,753,888

 

 

 

108,208

 

 

 

52,188

 

 

 

337,802

 

 

 

189,168

 

 

317,436

 

 

133,250

 

 

 

(42,609

)

 

 

3,849,331

 

For the three months ended March 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

875,390

 

 

 

94,117

 

 

 

44,864

 

 

 

1,209,048

 

 

 

349,766

 

 

466,333

 

 

160,506

 

 

 

(1,204

)

 

 

3,198,820

 

Directly related cost of transportation
and other expenses1,3

 

$

502,635

 

 

 

53,050

 

 

 

26,700

 

 

 

967,529

 

 

 

269,944

 

 

306,909

 

 

121,109

 

 

 

(592

)

 

 

2,247,284

 

Salaries and other operating expenses2

 

$

238,698

 

 

 

25,737

 

 

 

12,377

 

 

 

106,920

 

 

 

43,165

 

 

109,455

 

 

30,275

 

 

 

(606

)

 

 

566,021

 

Operating income

 

$

134,057

 

 

 

15,330

 

 

 

5,787

 

 

 

134,599

 

 

 

36,657

 

 

49,969

 

 

9,122

 

 

 

(6

)

 

 

385,515

 

Identifiable assets at period end

 

$

2,747,984

 

 

 

194,050

 

 

 

93,072

 

 

 

988,954

 

 

 

331,271

 

 

853,944

 

 

265,495

 

 

 

(19,773

)

 

 

5,454,997

 

Capital expenditures

 

$

3,025

 

 

 

122

 

 

 

53

 

 

 

357

 

 

 

579

 

 

3,554

 

 

701

 

 

 

 

 

 

8,391

 

Equity

 

$

1,985,265

 

 

 

73,066

 

 

 

32,632

 

 

 

342,233

 

 

 

148,293

 

 

218,198

 

 

121,040

 

 

 

(42,077

)

 

 

2,878,650

1Directly related cost of transportation and other expenses totals operating expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

2Salaries and other operating expenses totals salaries and related, rent and occupancy, depreciation and amortization, selling and promotion and other as shown in the Condensed Consolidated Statements of Earnings.

3Certain prior year amounts have been revised to correct for immaterial errors as previously disclosed in the Company’s second quarter results on Form 10-Q filed on August 5, 2021 and in the 2021 annual report on Form 10-K filed on March 15, 2022.

 

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.