Expeditors International of Washington Inc Reports Substantial Decline in Q3 2023 Earnings
Expeditors International of Washington Inc (NASDAQ:EXPD) reports a 54% decrease in EPS to $1.16 for Q3 2023.
Revenues fell by 50% to $2.2 billion compared to the same quarter in 2022.
Operating income and net earnings attributable to shareholders both declined by 59%.
Airfreight tonnage and ocean container volumes decreased by 14% and 15% respectively.
On November 7, 2023, Expeditors International of Washington Inc (NASDAQ:EXPD) released its financial results for the third quarter of 2023, revealing a significant downturn in performance compared to the same period last year. The company's diluted net earnings per share (EPS) plummeted by 54% to $1.16, while net earnings attributable to shareholders saw a 59% decline to $171 million. Operating income also fell sharply by 59% to $216 million, with revenues dropping by half to $2.2 billion.
Financial Performance Overview
The logistics giant faced a challenging quarter with airfreight tonnage volume and ocean container volume both decreasing by 14% and 15% respectively. President and CEO Jeffrey S. Musser attributed the downturn to a continued deceleration in demand and an environment where "rates generally remained soft while capacity exceeded demand in most lanes." Musser noted that the industry is unwinding from the pandemic-driven supply and demand mismatch, leading to more available capacity and rates that are significantly lower than during the pandemic peak.
Operational Adjustments and Cost Management
Senior Vice President and CFO Bradley S. Powell highlighted the company's efforts to align operations with the current market conditions, including an 8% reduction in headcount since December 31. Powell emphasized the importance of maintaining a strong cash position, with more than $2 billion returned to shareholders through stock repurchases and dividends over the past year.
Financial Statement Highlights
The financial statements reflect the company's challenges, with directly related costs of transportation and other expenses decreasing by 56% to $1.4 billion. Salaries and other operating expenses were down by 11% to $571.8 million. The balance sheet shows a decrease in cash and cash equivalents from $2.03 billion at the end of 2022 to $1.64 billion as of September 30, 2023. Total assets decreased from $5.59 billion to $4.58 billion over the same period.
Market Conditions and Future Outlook
Despite the current downturn, there are signs of a potential stabilization, with both tonnage and volumes showing the first sequential quarterly growth since Q3 2022. However, the company remains cautious due to the uncertain economic environment and has not observed signs of a widespread improvement in rates. Expeditors International of Washington Inc (NASDAQ:EXPD) continues to adjust to the current conditions while preparing for a future recovery.
Investors and interested parties can submit questions via e-mail to investor@expeditors.com by the end of business on November 10, 2023, which will be considered in management's 8-K Responses to Selected Questions.
For detailed financial figures and further information, readers are encouraged to view the full earnings release and financial statements available on the company's website and SEC filings.
Explore the complete 8-K earnings release (here) from Expeditors International of Washington Inc for further details.
This article first appeared on GuruFocus.
