Expeditors Reports Fourth Quarter 2023 EPS of $1.09

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SEATTLE, February 20, 2024--(BUSINESS WIRE)--Expeditors International of Washington, Inc. (NYSE:EXPD) today announced fourth quarter 2023 financial results including the following highlights compared to the same quarter of 2022:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 21% to $1.09

  • Net Earnings Attributable to Shareholders decreased 28% to $159 million

  • Operating Income decreased 40% to $199 million

  • Revenues decreased 34% to $2.3 billion

  • Airfreight tonnage volume decreased 3% and ocean container volume decreased 10%

"While ocean and air markets have been recovering from the massive disruptions brought on by the global Covid-19 pandemic, we continue to face further market uncertainty due to the current conflicts in the Middle East and on the Red Sea," said Jeffrey S. Musser, President and Chief Executive Officer. "Further, volumes and capacity have remained uncertain due to additional capacity recently brought into the marketplace, while shippers have cautiously sought to avoid overextending their inventory levels. These factors created an environment where rates, which had fallen fairly significantly from the pandemic period, stabilized in ocean and, in the case of air, increased in the fourth quarter of 2023. If I had to use one key word to describe the fourth quarter and all of 2023, it would be ‘uncertainty.’

"As a company we have continued to remain focused on bringing expenses in line with revenue, as shown by headcount reductions. Compensation remains our second largest expenditure behind freight costs and is the area where we know we can have the largest impact from the standpoint of controlling expenses. We also know that there is more work that we can and will do to control expenses moving forward.

"We should again caution that our business is service-based, and we rely on highly skilled individuals to support our customers. History tells us that global trade operates in cycles and that we have periods when global volumes decline, as well as periods when global volumes grow. We’ve seen a year of declines in 2023, but we need to work hard to ensure that we have the right level of staffing to handle market increases and our expected growth in market share as we move forward. Managing expenses is an important role of any leadership team, but cutting expenses is only one part of effective management. Equally important is the expectation that management will grow the business. We remain committed to both."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "Despite reducing headcount in each quarter of 2023 and bringing costs down both sequentially and year-over-year, expenses are still high when compared to our efficiency target and we are working to bring expenses down further. Even though compensation, our largest and most variable expense, is 20% lower than the same quarter a year ago, just about everything else is more expensive. We are not as efficient as we need to be for the current environment of excess capacity, weak demand, soft rates, and economic uncertainty. We continue to be focused on further aligning headcount and overhead expenses with lower levels of transactions and volumes. At the same time, we recognize the need to be prepared when tonnage and volumes eventually begin to trend upward in a rate environment that is less volatile."

Mr. Powell noted that the Company generated $1.1 billion in cash flow from operations in 2023 and returned $1.6 billion to shareholders in share repurchases and dividends.

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.

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 uncertainty in the ocean and air markets, including uncertainty due to conflicts in the Middle East and Red Sea; new capacity in the marketplace; cautious shipper demand and variable rate stability. Future financial performance could differ materially because of factors such as: our ability to reduce headcount and to control expenses and bring them in line with revenue; that volumes and tonnage will increase and that we will be able to grow in market share; that management is able to grow the business; that we are able to improve our efficiency; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; 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.

Fourth quarter 2023 Earnings Release, February 20, 2024

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

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

Three months ended December 31,

Twelve months ended December 31,

2023

2022

% Change

2023

2022

% Change

Revenues

$

2,277,768

$

3,441,528

(34)%

$

9,300,110

$

17,071,284

(46)%

Directly related cost of transportation and other expenses 1

$

1,513,604

$

2,425,565

(38)%

$

6,054,000

$

12,576,897

(52)%

Salaries and other operating expenses 2

$

564,766

$

686,257

(18)%

$

2,306,177

$

2,670,016

(14)%

Operating income

$

199,398

$

329,706

(40)%

$

939,933

$

1,824,371

(48)%

Net earnings attributable to shareholders

$

158,719

$

219,276

(28)%

$

752,883

$

1,357,399

(45)%

Diluted earnings attributable to shareholders per share

$

1.09

$

1.38

(21)%

$

5.01

$

8.26

(39)%

Basic earnings attributable to shareholders per share

$

1.09

$

1.39

(22)%

$

5.05

$

8.33

(39)%

Diluted weighted average shares outstanding

145,891

158,535

150,186

164,427

Basic weighted average shares outstanding

144,979

157,269

149,141

163,010

________________
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.

During the three and twelve months ended December 31, 2023, we repurchased 1.6 million and 12.1 million shares of common stock at an average price of $119.22 and $114.68 per share, respectively. During the three and twelve months ended December 31, 2022, we repurchased 5.0 million and 14.5 million shares of common stock at an average price of $112.76 and $108.88 per share, respectively. On February 19, 2024 the Board of Directors amended the Discretionary Stock Repurchase Plan to further authorize share repurchases down to 130 million shares of common stock. This authorization has no expiration date. In addition, during 2023 and 2022, we paid cash dividends of $1.38 and $1.34 per share, respectively.

Employee Full-time Equivalents as of
December 31,

2023

2022

North America

6,864

7,778

Europe

3,791

4,228

North Asia

2,260

2,448

South Asia

1,693

1,851

Middle East, Africa and India

1,428

1,540

Latin America

750

859

Information Systems

1,259

1,173

Corporate

407

425

Total

18,452

20,302

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

Airfreight
kilos

Ocean freight
FEU

2023

October

(6)%

(12)%

November

(6)%

(10)%

December

3%

(7)%

Quarter

(3)%

(10)%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 23, 2024 will be considered in management's 8-K "Responses to Selected Questions."

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

December 31,

2023

December 31,

2022

Assets:

Current Assets:

Cash and cash equivalents

$

1,512,883

$

2,034,131

Accounts receivable, less allowance for credit loss of $6,550 and $9,466 at December 31, 2023 and 2022, respectively

1,532,599

2,107,645

Deferred contract costs

218,807

257,545

Other

170,907

118,696

Total current assets

3,435,196

4,518,017

Property and equipment, net

479,225

501,916

Operating lease right-of-use assets

516,280

507,503

Goodwill

7,927

7,927

Deferred federal and state income taxes, net

63,690

37,449

Other assets, net

21,491

17,622

Total assets

$

4,523,809

$

5,590,434

Liabilities:

Current Liabilities:

Accounts payable

$

860,856

$

1,108,996

Accrued expenses, primarily salaries and related costs

447,336

479,262

Contract liabilities

280,909

323,101

Current portion of operating lease liabilities

99,749

95,621

Federal, state and foreign income taxes

15,562

47,075

Total current liabilities

1,704,412

2,054,055

Noncurrent portion of operating lease liabilities

427,984

422,844

Commitments and contingencies

Shareholders’ Equity:

Preferred stock, none issued

—

—

Common stock, par value $0.01 per share. Issued and outstanding: 143,866 shares and 154,313 shares at December 31, 2023 and 2022, respectively

1,439

1,543

Additional paid-in capital

—

139

Retained earnings

2,580,968

3,310,892

Accumulated other comprehensive loss

(192,057

)

(202,553

)

Total shareholders’ equity

2,390,350

3,110,021

Noncontrolling interest

1,063

3,514

Total equity

2,391,413

3,113,535

Total liabilities and equity

$

4,523,809

$

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

December 31,

Twelve months ended

December 31,

2023

2022

2023

2022

Revenues:

Airfreight services

$

866,122

$

1,204,810

$

3,246,527

$

5,886,886

Ocean freight and ocean services

511,854

1,124,088

2,363,243

6,544,559

Customs brokerage and other services

899,792

1,112,630

3,690,340

4,639,839

Total revenues

2,277,768

3,441,528

9,300,110

17,071,284

Operating Expenses:

Airfreight services

639,725

899,865

2,347,293

4,359,726

Ocean freight and ocean services

357,788

842,103

1,634,947

5,188,066

Customs brokerage and other services

516,091

683,597

2,071,760

3,029,105

Salaries and related

409,605

509,884

1,700,516

2,056,387

Rent and occupancy

58,134

54,291

232,358

209,532

Depreciation and amortization

21,386

14,922

67,760

57,338

Selling and promotion

9,066

8,119

27,913

24,293

Other

66,575

99,041

277,630

322,466

Total operating expenses

2,078,370

3,111,822

8,360,177

15,246,913

Operating income

199,398

329,706

939,933

1,824,371

Other Income (Expense):

Interest income

16,728

13,107

70,451

25,554

Interest expense

(159

)

(22,245

)

(4,800

)

(23,277

)

Other, net

409

480

9,444

9,243

Other income (expense), net

16,978

(8,658

)

75,095

11,520

Earnings before income taxes

216,376

321,048

1,015,028

1,835,891

Income tax expense

57,231

106,311

263,249

475,286

Net earnings

159,145

214,737

751,779

1,360,605

Less net earnings (losses) attributable to the noncontrolling interest

426

(4,539

)

(1,104

)

3,206

Net earnings attributable to shareholders

$

158,719

$

219,276

$

752,883

$

1,357,399

Diluted earnings attributable to shareholders per share

$

1.09

$

1.38

$

5.01

$

8.26

Basic earnings attributable to shareholders per share

$

1.09

$

1.39

$

5.05

$

8.33

Weighted average diluted shares outstanding

145,891

158,535

150,186

164,427

Weighted average basic shares outstanding

144,979

157,269

149,141

163,010

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three months ended

December 31,

Twelve months ended

December 31,

2023

2022

2023

2022

Operating Activities:

Net earnings

$

159,145

$

214,737

$

751,779

$

1,360,605

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

Provisions for losses on accounts receivable

1,627

1,133

3,943

11,050

Deferred income tax benefit

(14,974

)

(18,312

)

(22,916

)

(33,240

)

Stock compensation expense

11,437

13,101

58,399

64,397

Depreciation and amortization

21,386

14,922

67,760

57,338

Other, net

2,065

1,108

8,461

1,252

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(55,481

)

711,977

573,724

1,592,341

Increase (decrease) in accounts payable and accrued expenses

11,645

(454,221

)

(300,345

)

(798,123

)

Decrease in deferred contract costs

8,082

277,805

36,952

714,960

Decrease in contract liabilities

(6,527

)

(309,530

)

(40,076

)

(798,356

)

Increase (decrease) in income taxes payable, net

20,445

23,439

(77,298

)

(55,129

)

(Increase) decrease in other, net

(497

)

10,540

(7,192

)

12,580

Net cash from operating activities

158,353

486,699

1,053,191

2,129,675

Investing Activities:

Purchase of property and equipment

(10,714

)

(18,326

)

(39,314

)

(86,824

)

Other, net

90

(245

)

(119

)

(890

)

Net cash from investing activities

(10,624

)

(18,571

)

(39,433

)

(87,714

)

Financing Activities:

Payments on borrowing on lines of credit

(4,507

)

(688

)

(38,143

)

(30,289

)

Proceeds from borrowing on lines of credit

5,246

25,211

32,199

81,756

Proceeds from issuance of common stock

4,584

7,662

84,889

80,980

Repurchases of common stock

(193,592

)

(563,802

)

(1,392,886

)

(1,581,908

)

Dividends Paid

(99,766

)

(103,971

)

(202,029

)

(213,799

)

Payments for taxes related to net share settlement of equity awards

(5

)

(2

)

(19,506

)

(19,335

)

Distributions to noncontrolling interest

(1,089

)

(1,402

)

(1,089

)

(1,945

)

Net cash from financing activities

(289,129

)

(636,992

)

(1,536,565

)

(1,684,540

)

Effect of exchange rate changes on cash and cash equivalents

14,855

48,461

1,559

(51,982

)

Change in cash and cash equivalents

(126,545

)

(120,403

)

(521,248

)

305,439

Cash and cash equivalents at beginning of period

1,639,428

2,154,534

2,034,131

1,728,692

Cash and cash equivalents at end of period

$

1,512,883

$

2,034,131

$

1,512,883

$

2,034,131

Taxes Paid:

Income taxes

$

50,321

$

100,822

$

356,380

$

566,533

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 December 31, 2023:

Revenues

$

775,382

109,933

45,350

573,020

234,260

422,340

118,670

(1,187

)

2,277,768

Directly related cost of transportation and other expenses1

$

422,015

68,096

27,237

461,029

175,214

276,161

84,391

(539

)

1,513,604

Salaries and other operating expenses2

$

252,715

34,345

17,423

67,098

42,786

120,331

30,707

(639

)

564,766

Operating income (loss)

$

100,652

7,492

690

44,893

16,260

25,848

3,572

(9

)

199,398

Identifiable assets at period end

$

2,595,576

174,509

109,380

449,529

237,470

721,259

256,199

(20,113

)

4,523,809

Capital expenditures

$

8,016

315

82

424

227

1,142

508

—

10,714

Depreciation and amortization

$

15,401

475

281

1,106

460

2,876

787

—

21,386

Equity

$

1,774,874

19,222

54,581

158,329

103,573

167,141

154,038

(40,345

)

2,391,413

For the three months ended December 31, 2022:

Revenues

$

1,118,262

127,442

65,821

969,266

367,679

599,947

194,342

(1,231

)

3,441,528

Directly related cost of transportation and other expenses1

$

639,804

80,052

41,480

799,583

288,014

432,835

144,377

(580

)

2,425,565

Salaries and other operating expenses2

$

(18,767

)

101,864

29,523

178,038

117,024

239,627

39,588

(640

)

686,257

Operating income3

$

497,225

(54,474

)

(5,182

)

(8,355

)

(37,359

)

(72,515

)

10,377

(11

)

329,706

Identifiable assets at period end

$

3,070,697

209,516

123,003

675,022

316,777

938,660

283,872

(27,113

)

5,590,434

Capital expenditures

$

11,262

282

232

1,098

391

4,525

536

—

18,326

Depreciation and amortization

$

9,433

454

280

1,069

472

2,527

687

—

14,922

Equity

$

2,246,417

31,132

56,416

274,703

136,944

263,278

145,269

(40,624

)

3,113,535

UNITED
STATES

OTHER
NORTH
AMERICA

LATIN
AMERICA

NORTH
ASIA

SOUTH
ASIA

EUROPE

MIDDLE
EAST,
AFRICA
AND
INDIA

ELIMI-
NATIONS

CONSOLI-
DATED

For the twelve months ended December 31, 2023:

Revenues

$

3,311,327

436,331

197,344

2,180,808

865,261

1,808,624

505,194

(4,779

)

9,300,110

Directly related cost of transportation and other expenses1

$

1,809,526

270,080

117,376

1,700,025

612,606

1,200,753

345,873

(2,239

)

6,054,000

Salaries and other operating expenses2

$

1,037,997

143,237

69,595

273,074

175,770

493,335

115,710

(2,541

)

2,306,177

Operating income

$

463,804

23,014

10,373

207,709

76,885

114,536

43,611

1

939,933

Identifiable assets at period end

$

2,595,576

174,509

109,380

449,529

237,470

721,259

256,199

(20,113

)

4,523,809

Capital expenditures

$

23,845

1,247

442

1,534

971

7,830

3,445

—

39,314

Depreciation and amortization

$

44,039

1,879

1,123

4,597

1,940

11,313

2,869

—

67,760

Equity

$

1,774,874

19,222

54,581

158,329

103,573

167,141

154,038

(40,345

)

2,391,413

For the twelve months ended December 31, 2022:

Revenues

$

4,869,364

517,662

257,721

5,810,088

2,144,034

2,471,456

1,005,489

(4,530

)

17,071,284

Directly related cost of transportation and other expenses1

$

2,943,232

310,206

160,273

4,853,902

1,751,187

1,768,102

791,887

(1,892

)

12,576,897

Salaries and other operating expenses2

$

944,050

188,192

72,177

504,805

238,658

573,598

151,069

(2,533

)

2,670,016

Operating income

$

982,082

19,264

25,271

451,381

154,189

129,756

62,533

(105

)

1,824,371

Identifiable assets at period end

$

3,070,697

209,516

123,003

675,022

316,777

938,660

283,872

(27,113

)

5,590,434

Capital expenditures

$

56,411

2,954

937

2,976

1,543

17,868

4,135

—

86,824

Depreciation and amortization

$

35,461

1,892

1,123

4,682

1,966

9,640

2,574

—

57,338

Equity

$

2,246,417

31,132

56,416

274,703

136,944

263,278

145,269

(40,624

)

3,113,535

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.

3 In 2022, certain intercompany fees were billed to our subsidiaries in the 4th quarter covering the entirety of 2022. This resulted in fourth quarter operating losses or reduced operating income for some of our business segments when compared to the current year where these amounts were billed monthly.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240219324553/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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