CORRECTING and REPLACING Expeditors Reports First Quarter 2023 EPS of $1.45

Business Wire
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In this article:

SEATTLE, May 02, 2023--(BUSINESS WIRE)--This press release is to correct and replace the previously issued press release to reflect the following.

The following footnote should read as follows:

During the three months ended March 31, 2023, we repurchased 2.0 million shares of common stock at an average price of $108.98 per share, compared to the three months ended March 31, 2022 when we did not repurchase any shares of common stock.

The prior version had incorrectly stated the following:

During the three months ended March 31, 2023, we repurchased 1,959 million shares of common stock at an average price of $108.98 per share, compared to the three months ended March 31, 2022 when we did not repurchase any shares of common stock.

The updated release reads:

EXPEDITORS REPORTS FIRST QUARTER 2023 EPS OF $1.45

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first quarter 2023 financial results including the following comparisons to the same quarter of 2022:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 29% to $1.45

  • Net Earnings Attributable to Shareholders decreased 35% to $226 million

  • Operating Income decreased 40% to $276 million

  • Revenues decreased 44% to $2.6 billion

  • Airfreight tonnage volume decreased 6% and ocean container volume decreased 26%

"Operating conditions during the first quarter of 2023 were very similar to what we experienced in the fourth quarter of 2022, when shippers swiftly adapted to increased consumer caution and slowing demand for their products, while also battling inflation and tighter financing," said Jeffrey S. Musser, President and Chief Executive Officer. "Our business continued to be impacted by comparatively soft demand, along with significantly reduced buy and sell rates relative to what we experienced during the pandemic. We are adapting and working diligently to bring expenses in line with lower revenue by lowering headcount and payroll expenses without resorting to layoffs.

"Following the steep drop in volumes and rates in the fourth quarter, the economic challenges continued to impact all of our businesses during the first quarter. With supply chains largely normalized, average sell rates in air fell ahead of declining buy rates, and tonnage also declined. Ocean volumes were lower and sell rates also fell faster than buy rates, while carrier capacity is no longer constrained and schedules have become more regular. Revenues in Customs Brokerage and Other Services also declined and expenses were significantly lower compared to a year ago because supply-chain congestion largely cleared and there were fewer costs incurred related to the February 2022 cyber-attack.

"Throughout our long history, we have demonstrated an ability to adapt to change. Wherever we look, there is uncertainty with the global economy and our industry is now very far removed from the pandemic days when capacity was extremely constrained and the ports were gridlocked. For the time being, everyone from ocean and air carriers to shippers are highly focused on everything impacting their bottom line, including the cost of moving goods."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "We are adjusting well to the current operating environment of lower tonnage and volumes and unpredictable buy and sell rates, and we are working diligently to gain efficiencies and bring expenses in line with revenue. Compared to the year-ago period, which was significantly impacted by the February 2022 cyber-attack, salaries and related costs decreased 17% on lower commissions and bonuses as a result of lower revenues and operating income. Those cost decreases demonstrate the power behind our incentive-based compensation structure, which rewards our people when financial results are strong, and naturally incentivizes them to make adjustments based on volumes and improve efficiency when financial results are less robust. We continue to carefully monitor cash flow from operations, which exceeded $546 million in the first quarter of 2023, and we returned $213 million to shareholders via repurchases of common stock."

____________________

1Diluted earnings attributable to shareholders per share.

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

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.

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 our uncertain short-term outlook; a normalized supply chain; softening demand; pressure on buy and sell rates; an increasingly fragile global economy; rising inflation and financing costs; and signs of a slowing economy and drop in demand. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; our expectation that pressure on rates may continue; our ability to align expenses with revenues and to enhance our productivity; our ability to maintain our existing accounts and gain new business; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with the current uncertainty in the global economy, 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, 2022 and the Company’s most recent Form 10-Q. 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.

First Quarter 2023 Earnings Release, May 2, 2023

Financial Highlights for the three months ended March 31, 2023 and 2022 (Unaudited)

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

Three months ended March 31,

2023

2022

% Change

Revenues

$

2,592,589

$

4,664,298

(44)%

Directly related cost of transportation and other expenses 1

$

1,719,102

$

3,516,111

(51)%

Salaries and other operating expenses 2

$

597,518

$

686,427

(13)%

Operating income 3

$

275,969

$

461,760

(40)%

Net earnings attributable to shareholders

$

226,011

$

346,109

(35)%

Diluted earnings attributable to shareholders per share

$

1.45

$

2.05

(29)%

Basic earnings attributable to shareholders per share

$

1.47

$

2.07

(29)%

Diluted weighted average shares outstanding

155,472

169,216

Basic weighted average shares outstanding

154,164

167,499

____________________

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.

3Operating income in the first quarter 2022 includes $62 million in expenses incurred as a result of the Company's global systems downtime and investigation, recovery and remediation efforts caused by a targeted cyber-attack that occurred in that quarter.

During the three months ended March 31, 2023, we repurchased 2.0 million shares of common stock at an average price of $108.98 per share, compared to the three months ended March 31, 2022 when we did not repurchase any shares of common stock.

Employee Full-time Equivalents as of

March 31,
2023

December 31,
2022

March 31,
2022

North America

7,455

7,778

7,718

Europe

4,089

4,228

4,020

North Asia

2,385

2,448

2,511

South Asia

1,790

1,851

1,790

Middle East, Africa and India

1,502

1,540

1,527

Latin America

816

859

832

Information Systems

1,220

1,173

1,042

Corporate

424

425

427

Total

19,681

20,302

19,867

First quarter year-over-year percentage increase (decrease) in 1:

2023

Airfreight
kilos

Ocean freight
FEU

January

(27)%

(23)%

February

(10)%

(25)%

March

33%

(29)%

Quarter

(6)%

(26)%

____________________

1February and March 2022 air and ocean activity was significantly reduced due to the Company’s global systems downtime experienced as result of a cyber-attack that occurred in the first quarter 2022, affecting comparability with the first quarter 2023 results.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 5, 2023 will be considered in management's 8-K "Responses to Selected Questions."

____________________

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

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

March 31, 2023

December 31, 2022

Assets:

Current Assets:

Cash and cash equivalents

$

2,350,794

$

2,034,131

Accounts receivable, less allowance for credit loss of $8,358 at March 31, 2023 and $9,466 at December 31, 2022

1,604,467

2,107,645

Deferred contract costs

195,670

257,545

Other

106,080

118,696

Total current assets

4,257,011

4,518,017

Property and equipment, less accumulated depreciation and amortization $577,841 at March 31, 2023 and $567,757 at December 31, 2022

500,482

501,916

Operating lease right-of-use assets

509,019

507,503

Goodwill

7,927

7,927

Deferred federal and state income taxes, net

38,093

37,449

Other assets, net

20,045

17,622

Total assets

$

5,332,577

$

5,590,434

Liabilities:

Current Liabilities:

Accounts payable

$

950,907

$

1,108,996

Accrued expenses, primarily salaries and related costs

432,816

479,262

Contract liabilities

244,667

323,101

Current portion of operating lease liabilities

98,469

95,621

Federal, state and foreign income taxes

33,197

47,075

Total current liabilities

1,760,056

2,054,055

Noncurrent portion of operating lease liabilities

422,153

422,844

Commitments and contingencies

Shareholders’ Equity:

Preferred stock, none issued

—

—

Common stock, par value $0.01 per share. Issued and outstanding: 152,712 shares at March 31, 2023 and 154,313 shares at December 31, 2022

1,527

1,543

Additional paid-in capital

—

139

Retained earnings

3,336,140

3,310,892

Accumulated other comprehensive loss

(190,498

)

(202,553

)

Total shareholders’ equity

3,147,169

3,110,021

Noncontrolling interest

3,199

3,514

Total equity

3,150,368

3,113,535

Total liabilities and equity

$

5,332,577

$

5,590,434

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

Three months ended March 31,

2023

2022

Revenues:

Airfreight services

$

904,903

$

1,598,555

Ocean freight and ocean services

697,307

1,976,246

Customs brokerage and other services

990,379

1,089,497

Total revenues

2,592,589

4,664,298

Operating Expenses:

Airfreight services

666,022

1,142,546

Ocean freight and ocean services

483,682

1,600,243

Customs brokerage and other services

569,398

773,322

Salaries and related

449,848

538,940

Rent and occupancy

57,632

50,928

Depreciation and amortization

15,261

12,975

Selling and promotion

6,384

4,048

Other

68,393

79,536

Total operating expenses

2,316,620

4,202,538

Operating income

275,969

461,760

Other Income (Expense):

Interest income

18,775

1,892

Interest expense

(2,645

)

(503

)

Other, net

8,479

8,030

Other income (expense), net

24,609

9,419

Earnings before income taxes

300,578

471,179

Income tax expense

74,580

121,699

Net earnings

225,998

349,480

Less net (losses) earnings attributable to the noncontrolling interest

(13

)

3,371

Net earnings attributable to shareholders

$

226,011

$

346,109

Diluted earnings attributable to shareholders per share

$

1.45

$

2.05

Basic earnings attributable to shareholders per share

$

1.47

$

2.07

Weighted average diluted shares outstanding

155,472

169,216

Weighted average basic shares outstanding

154,164

167,499

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the three months ended March 31,

2023

2022

Operating Activities:

Net earnings

$

225,998

$

349,480

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

Provisions for losses (recoveries) on accounts receivable

1,072

(416

)

Deferred income tax expense (benefit)

2,036

(3,236

)

Stock compensation expense

12,488

11,603

Depreciation and amortization

15,261

12,975

Other, net

1,159

455

Changes in operating assets and liabilities:

Decrease (increase) in accounts receivable

508,606

(132,348

)

(Decrease) increase in accounts payable and accrued liabilities

(202,923

)

140,191

Decrease in deferred contract costs

67,621

173,930

Decrease in contract liabilities

(84,447

)

(193,357

)

Increase in income taxes payable, net

91

46,259

(Increase) decrease in other, net

(550

)

8,410

Net cash from operating activities

546,412

413,946

Investing Activities:

Purchase of property and equipment

(10,126

)

(14,412

)

Other, net

575

79

Net cash from investing activities

(9,551

)

(14,333

)

Financing Activities:

Payments on borrowings on lines of credit

(26,402

)

(3,102

)

Proceeds from borrowings on lines of credit

11,495

22,592

Proceeds from issuance of common stock

9,288

5,751

Repurchases of common stock

(213,502

)

—

Payments for taxes related to net share settlement of equity awards

(7,445

)

(7,482

)

Net cash from financing activities

(226,566

)

17,759

Effect of exchange rate changes on cash and cash equivalents

6,368

(6,438

)

Change in cash and cash equivalents

316,663

410,934

Cash and cash equivalents at beginning of period

2,034,131

1,728,692

Cash and cash equivalents at end of period

$

2,350,794

$

2,139,626

Taxes Paid:

Income taxes

$

70,786

$

77,960

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, 2023:

Revenues

$

945,494

109,850

54,695

582,421

224,127

534,464

142,703

(1,165

)

2,592,589

Directly related cost of transportation and other expenses1

$

539,957

69,205

32,302

452,342

157,623

372,260

95,949

(536

)

1,719,102

Salaries and other operating expenses2

$

267,683

35,824

19,502

71,140

46,798

127,372

29,832

(633

)

597,518

Operating income (loss)

$

137,854

4,821

2,891

58,939

19,706

34,832

16,922

4

275,969

Identifiable assets at period end

$

3,005,502

206,459

119,334

633,970

284,028

844,049

254,458

(15,223

)

5,332,577

Capital expenditures

$

5,444

469

230

590

167

2,983

243

—

10,126

Equity

$

2,284,489

35,977

57,026

317,325

153,321

191,116

154,143

(43,029

)

3,150,368

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

1 Directly 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.

2 Salaries 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230501005704/en/

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

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