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Expeditors Reports Second Quarter 2020 EPS of $1.09

·18 mins read

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2020 financial results including the following highlights compared to the same quarter of 2019:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 24% to $1.09

  • Net Earnings Attributable to Shareholders increased 20% to $184 million

  • Operating Income increased 29% to $248 million

  • Revenues increased 27% to $2.6 billion

  • Airfreight tonnage volume decreased 10% and ocean container volume decreased 14%

"Like so many companies, the COVID-19-related impacts to our business have been significant and widespread, as the retail, auto, aviation, energy and other sectors continued to be severely disrupted by shutdowns and supply chain dislocations," said Jeffrey S. Musser, President and Chief Executive Officer. "While volumes for all of our products were down, as we would have expected during such unprecedented conditions, our airfreight revenue was much greater than anticipated. The air market has been particularly unsettled, with the cancellation of so many passenger flights limiting access to passenger belly space and requiring the increased use of charters to meet customer needs. While air capacity has been tight, demand for shipping technology-related equipment, medical equipment and supplies and other priority goods has been intense, creating a supply and demand imbalance and a spike in buy and sell rates. Our employees’ ability to perform at an extremely high level during such turmoil attests to our strong relationships with our customers and carriers, as we were able to access capacity and execute well under such trying conditions. Airfreight buy and sell rates, which peaked in April and May and started to decline in June, remain highly volatile and continue to be unpredictable.

"Buy and sell rates were much less volatile across our other products, even as volumes were down due to COVID-19. Despite a decrease in ocean volumes throughout the marketplace, capacity remains tight as carriers have continued to take steps to manage their capacity and costs.

"Perhaps needless to say, these times have been very challenging for all of us and I appreciate how well our team has performed under such conditions. All of our offices around the world remain open and continue to serve our customers at the highest level, proving that our employees remain our most valuable assets. Our business is service-based and we believe that employee retention remains critical to our long-term success. To that end and true to our company culture, we did not lay off any employees, although headcount was down slightly due to normal employee attrition. We also increased paid sick leave to support those employees unfortunate to have either contracted COVID-19 or to have shown symptoms of the virus.

"We remain extremely appreciative to all of our dedicated employees, including those vital members who report to work each day to facilitate the essential movement of cargo around the world. We are also very thankful to the majority of our employees who have not yet been able to return to the in-person office environment and recognize the extra effort required to work under such conditions. To successfully manage our way through this pandemic, we relied on the strength of our highly connected information systems and have implemented our business continuity plans around the world in support of all of our employees to safeguard their health and safety."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "Compared to a year ago, the effects of COVID-19 led to lower volumes for all products. Air tonnage out of North Asia, however, increased 14%, driven by goods needed to support remote work and to combat COVID-19. We are unable to remember a time when the operating environment has been so uncertain. Given that unpredictability, we will keep costs in check and focus on increasing operational efficiencies and gaining profitable market share. We will also use our strong financial position to continue to make investments in our strategic initiatives. Not knowing how or when the global economy will recover, we remain a strong, healthy, and unified organization that has demonstrated resiliency under the most trying conditions and believe we are well-prepared for the post-COVID economy, no matter what that looks like."

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 on the following page of this release.

Expeditors International of Washington, Inc.

Second Quarter 2020 Earnings Release, August 4, 2020

Financial Highlights for the three and six months ended June 30, 2020 and 2019 (Unaudited)

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

Three months ended June 30,

Six months ended June 30,

2020

2019

% Change

2020

2019

% Change

Revenues

$

2,580,632

$

2,035,579

27%

$

4,482,496

$

4,055,630

11%

Directly related cost of transportation and other expenses1

$

1,831,041

$

1,373,884

33%

$

3,117,769

$

2,739,821

14%

Salaries and other operating expenses2

$

501,965

$

469,494

7%

$

958,046

$

936,007

2%

Operating income

$

247,626

$

192,201

29%

$

406,681

$

379,802

7%

Net earnings attributable to shareholders

$

183,869

$

153,149

20%

$

306,213

$

292,848

5%

Diluted earnings attributable to shareholders per share

$

1.09

$

0.88

24%

$

1.80

$

1.67

8%

Basic earnings attributable to shareholders per share

$

1.10

$

0.90

22%

$

1.83

$

1.71

7%

Diluted weighted average shares outstanding

169,290

174,466

170,382

174,953

Basic weighted average shares outstanding

166,767

171,003

167,751

171,425

_______________________

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 six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively. During the three and six months ended June 30, 2019, we repurchased 2.6 million and 3.2 million shares of common stock at an average price of $73.03 and $73.47 per share, respectively.

Employee Full-time Equivalents
June 30,

2020

2019

North America

6,749

6,893

Europe

3,419

3,439

North Asia

2,413

2,532

South Asia

1,654

1,661

Middle East, Africa and India

1,528

1,550

Latin America

823

873

Information Systems

971

922

Corporate

380

379

Total

17,937

18,249

Second quarter year-over-year
percentage decrease in:

Airfreight
kilos

Ocean freight
FEU

2020

April

(7)%

(10)%

May

(13)%

(17)%

June

(12)%

(15)%

Quarter

(10)%

(14)%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 7, 2020 will be considered in management's 8-K “Responses to Selected Questions.”

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 the impacts to our business as a result of the Novel Coronavirus (COVID-19); our employees’ ability to continue to perform at a high level; airfreight buy and sell rates; our access to carrier capacity; our ability to keep our global offices open and operating; employee retention; employee health and safety; our ability to execute our business continuity plans; the strength of our financial position and our ability to continue to make investments in our strategic initiatives; our ability to remain a strong, healthy, unified and resilient organization; the impact of the 2017 Tax Act and related interpretations on our effective tax rate. 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.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

June 30,

2020

December 31,

2019

Assets:

Current Assets:

Cash and cash equivalents

$

1,180,455

$

1,230,491

Accounts receivable, less allowance for credit loss of $5,347 at June 30, 2020 and $11,143 at December 31, 2019

1,460,324

1,315,091

Deferred contract costs

147,932

131,783

Other

69,560

92,558

Total current assets

2,858,271

2,769,923

Property and equipment, less accumulated depreciation and amortization of $494,773 at June 30, 2020 and $478,906 at December 31, 2019

497,762

499,344

Operating lease right-of-use assets

424,516

390,035

Goodwill

7,927

7,927

Deferred federal and state income taxes, net

5,300

8,034

Other assets, net

16,401

16,621

Total assets

$

3,810,177

$

3,691,884

Liabilities:

Current Liabilities:

Accounts payable

$

755,971

$

735,695

Accrued expenses, primarily salaries and related costs

257,923

189,446

Contract liabilities

172,148

154,183

Current portion of operating lease liabilities

69,740

65,367

Federal, state and foreign income taxes

32,287

23,627

Total current liabilities

1,288,069

1,168,318

Noncurrent portion of operating lease liabilities

360,510

326,347

Commitments and contingencies

Shareholders’ Equity:

Preferred stock, none issued

Common stock, par value $0.01 per share. Issued and outstanding: 166,816 shares at June 30, 2020 and 169,622 shares at December 31, 2019

1,668

1,696

Additional paid-in capital

12,221

3,203

Retained earnings

2,298,387

2,321,316

Accumulated other comprehensive loss

(153,158

)

(131,187

)

Total shareholders’ equity

2,159,118

2,195,028

Noncontrolling interest

2,480

2,191

Total equity

2,161,598

2,197,219

Total liabilities and equity

$

3,810,177

$

3,691,884

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Revenues:

Airfreight services

$

1,434,590

$

741,577

$

2,143,629

$

1,456,478

Ocean freight and ocean services

491,712

543,809

985,139

1,112,450

Customs brokerage and other services

654,330

750,193

1,353,728

1,486,702

Total revenues

2,580,632

2,035,579

4,482,496

4,055,630

Operating Expenses:

Airfreight services

1,097,073

542,639

1,617,242

1,051,849

Ocean freight and ocean services

363,599

390,299

730,082

810,630

Customs brokerage and other services

370,369

440,946

770,445

877,342

Salaries and related

395,107

356,351

737,147

713,261

Rent and occupancy

41,375

40,897

83,899

82,420

Depreciation and amortization

14,109

12,677

26,769

26,070

Selling and promotion

3,113

11,643

11,356

22,719

Other

48,261

47,926

98,875

91,537

Total operating expenses

2,333,006

1,843,378

4,075,815

3,675,828

Operating income

247,626

192,201

406,681

379,802

Other Income (Expense):

Interest income

2,559

6,516

7,366

12,622

Other, net

797

2,262

4,181

3,927

Other income, net

3,356

8,778

11,547

16,549

Earnings before income taxes

250,982

200,979

418,228

396,351

Income tax expense

66,794

47,449

111,258

102,710

Net earnings

184,188

153,530

306,970

293,641

Less net earnings attributable to the noncontrolling interest

319

381

757

793

Net earnings attributable to shareholders

$

183,869

$

153,149

$

306,213

$

292,848

Diluted earnings attributable to shareholders per share

$

1.09

$

0.88

$

1.80

$

1.67

Basic earnings attributable to shareholders per share

$

1.10

$

0.90

$

1.83

$

1.71

Weighted average diluted shares outstanding

169,290

174,466

170,382

174,953

Weighted average basic shares outstanding

166,767

171,003

167,751

171,425

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three months ended June 30,

Six months ended June 30,

2020

2019

2020

2019

Operating Activities:

Net earnings

$

184,188

$

153,530

$

306,970

$

293,641

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

Provisions for losses (recoveries) on accounts receivable

2,389

1,584

4,209

(304

)

Deferred income tax expense

9,287

3,697

4,148

5,805

Stock compensation expense

21,638

23,824

32,794

37,206

Depreciation and amortization

14,109

12,677

26,769

26,070

Other, net

118

(29

)

551

160

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(185,055

)

(28,187

)

(168,375

)

202,290

Increase (decrease) in accounts payable and accrued

expenses

106,760

39,900

107,677

(82,383

)

(Increase) decrease in deferred contract costs

(2,333

)

(13,010

)

(18,401

)

18,249

(Decrease) increase in contract liabilities

(595

)

13,003

20,606

(23,722

)

Increase (decrease) in income taxes payable, net

20,154

(49,606

)

30,642

(32,613

)

Decrease (increase) in other, net

16,061

(1,676

)

4,131

791

Net cash from operating activities

186,721

155,707

351,721

445,190

Investing Activities:

Purchase of property and equipment

(22,114

)

(12,987

)

(28,241

)

(22,422

)

Other, net

(68

)

1,038

(211

)

1,293

Net cash from investing activities

(22,182

)

(11,949

)

(28,452

)

(21,129

)

Financing Activities:

Proceeds from issuance of common stock

29,187

32,287

52,586

59,477

Repurchases of common stock

(30,985

)

(190,589

)

(314,225

)

(234,923

)

Dividends Paid

(86,815

)

(85,184

)

(86,815

)

(85,184

)

Payments for taxes related to net share settlement of equity awards

(9,170

)

(6,674

)

(10,566

)

(6,674

)

Net cash from financing activities

(97,783

)

(250,160

)

(359,020

)

(267,304

)

Effect of exchange rate changes on cash and cash equivalents

1,726

(377

)

(14,285

)

2,158

Change in cash and cash equivalents

68,482

(106,779

)

(50,036

)

158,915

Cash and cash equivalents at beginning of period

1,111,973

1,189,429

1,230,491

923,735

Cash and cash equivalents at end of period

$

1,180,455

$

1,082,650

$

1,180,455

$

1,082,650

Taxes Paid:

Income taxes

$

38,504

$

97,715

$

73,808

$

134,968

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 June 30, 2020:

Revenues1

$

639,231

74,314

37,553

1,117,058

224,313

387,430

101,611

(878

)

2,580,632

Directly related cost of transportation and other expenses2

$

354,624

41,449

22,701

907,915

160,355

271,540

72,908

(451

)

1,831,041

Salaries and other operating expenses3

$

207,703

25,283

12,112

97,171

39,184

95,757

25,188

(433

)

501,965

Operating income

$

76,904

7,582

2,740

111,972

24,774

20,133

3,515

6

247,626

Identifiable assets at period end

$

1,886,463

170,873

72,912

669,335

213,007

581,988

221,381

(5,782

)

3,810,177

Capital expenditures

$

19,076

1,148

216

385

182

993

114

22,114

Equity

$

1,399,124

71,165

29,758

306,022

108,777

168,060

116,279

(37,587

)

2,161,598

For the three months ended June 30, 2019:

Revenues1

$

681,076

85,537

38,757

621,951

181,380

319,331

108,311

(764

)

2,035,579

Directly related cost of transportation and other expenses2

$

386,093

50,336

22,043

487,554

132,487

220,676

75,089

(394

)

1,373,884

Salaries and other operating expenses3

$

207,060

26,343

14,368

69,944

33,380

89,340

29,423

(364

)

469,494

Operating income

$

87,923

8,858

2,346

64,453

15,513

9,315

3,799

(6

)

192,201

Identifiable assets at period end

$

1,819,718

176,151

73,197

580,311

193,771

581,518

229,692

(7,368

)

3,646,990

Capital expenditures

$

8,985

768

145

300

428

1,914

447

12,987

Equity

$

1,303,381

83,417

31,014

282,192

107,229

168,570

109,790

(33,199

)

2,052,394

UNITED

STATES

OTHER

NORTH

AMERICA

LATIN

AMERICA

NORTH

ASIA

SOUTH

ASIA

EUROPE

MIDDLE

EAST,

AFRICA

AND

INDIA

ELIMI-

NATIONS

CONSOLI-

DATED

For the six months ended June 30, 2020:

Revenues1

$

1,289,638

156,145

75,443

1,655,013

393,355

708,070

206,650

(1,818

)

4,482,496

Directly related cost of transportation and other expenses2

$

728,585

87,339

46,466

1,333,216

281,637

493,538

147,884

(896

)

3,117,769

Salaries and other operating expenses3

$

433,647

48,995

23,861

154,604

69,092

177,611

51,138

(902

)

958,046

Operating income

$

127,406

19,811

5,116

167,193

42,626

36,921

7,628

(20

)

406,681

Identifiable assets at period end

$

1,886,463

170,873

72,912

669,335

213,007

581,988

221,381

(5,782

)

3,810,177

Capital expenditures

$

23,573

1,209

318

710

370

1,638

423

28,241

Equity

$

1,399,124

71,165

29,758

306,022

108,777

168,060

116,279

(37,587

)

2,161,598

For the six months ended June 30, 2019:

Revenues1

$

1,340,859

176,947

72,936

1,254,804

358,559

632,021

220,986

(1,482

)

4,055,630

Directly related cost of transportation and other expenses2

$

753,448

106,576

41,158

986,200

262,298

436,571

154,592

(1,022

)

2,739,821

Salaries and other operating expenses3

$

425,475

50,553

26,796

138,371

64,841

172,183

58,234

(446

)

936,007

Operating income

$

161,936

19,818

4,982

130,233

31,420

23,267

8,160

(14

)

379,802

Identifiable assets at period end

$

1,819,718

176,151

73,197

580,311

193,771

581,518

229,692

(7,368

)

3,646,990

Capital expenditures

$

15,900

996

238

644

604

2,896

1,144

22,422

Equity

$

1,303,381

83,417

31,014

282,192

107,229

168,570

109,790

(33,199

)

2,052,394

1Beginning in the second quarter of 2019, the Company revised its process to record the transfer, between its geographic operating segments, of revenues and the directly related cost of transportation and other expenses for freight service transactions between Company origin and destination locations. This change better aligns revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company’s new accounting systems and processes. The change in presentation had no impact on consolidated or segment operating income. The impact of these changes on reported segment revenues was immaterial and in the six months ended June 30, 2019, segment revenues have not been revised.

2Directly 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.

3Salaries 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.

The Company’s consolidated financial results in the first and second quarter 2020 were significantly impacted by the effects of the global pandemic and are expected to be further impacted in the remainder of 2020. The impact is affecting the Company’s geographical segments unevenly.

In the second quarter of 2020, North Asia experienced significant increases in airfreight services revenues and related expenses as a result of demand for time-sensitive delivery of technology equipment and medical equipment and supplies from China, which combined with reductions in airfreight supply resulted in significantly higher rates. In the second quarter 2020 and 2019, the People's Republic of China, including Hong Kong, represented 37% and 26%, respectively, of the Company’s total revenues and 38% and 28%, respectively, of the Company’s total operating income.

This is in contrast with slower activity in North Asia in the first quarter of 2020 as the global pandemic resulted in temporary closures and limited operations from the Company’s China offices and shipments that were rerouted or delayed by customers and service providers taking their own precautionary measures. In the first half of 2020 and 2019, the People's Republic of China, including Hong Kong, represented 31% and 26%, respectively, of the Company’s total revenues and 33% and 28%, respectively, of the Company’s total operating income.

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

)

30,642

(32,613

)

Decrease (increase) in other, net

16,061

(1,676

)

4,131

791

Net cash from operating activities

186,721

155,707

351,721

445,190

Investing Activities:

Purchase of property and equipment

(22,114

)

(12,987

)

(28,241

)

(22,422

)

Other, net

(68

)

1,038

(211

)

1,293

Net cash from investing activities

(22,182

)

(11,949

)

(28,452

)

(21,129

)

Financing Activities:

Proceeds from issuance of common stock

29,187

32,287

52,586

59,477

Repurchases of common stock

(30,985

)

(190,589

)

(314,225

)

(234,923

)

Dividends Paid

(86,815

)

(85,184

)

(86,815

)

(85,184

)

Payments for taxes related to net share settlement of equity awards

(9,170

)

(6,674

)

(10,566

)

(6,674

)

Net cash from financing activities

(97,783

)

(250,160

)

(359,020

)

(267,304

)

Effect of exchange rate changes on cash and cash equivalents

1,726

(377

)

(14,285

)

2,158

Change in cash and cash equivalents

68,482

(106,779

)

(50,036

)

158,915

Cash and cash equivalents at beginning of period

1,111,973

1,189,429

1,230,491

923,735

Cash and cash equivalents at end of period

$

1,180,455

$

1,082,650

$

1,180,455

$

1,082,650

Taxes Paid:

Income taxes

$

38,504

$

97,715

$

73,808

$

134,968

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 June 30, 2020:

Revenues1

$

639,231

74,314

37,553

1,117,058

224,313

387,430

101,611

(878

)

2,580,632

Directly related cost of transportation and other expenses2

$

354,624

41,449

22,701

907,915

160,355

271,540

72,908

(451

)

1,831,041

Salaries and other operating expenses3

$

207,703

25,283

12,112

97,171

39,184

95,757

25,188

(433

)

501,965

Operating income

$

76,904

7,582

2,740

111,972

24,774

20,133

3,515

6

247,626

Identifiable assets at period end

$

1,886,463

170,873

72,912

669,335

213,007

581,988

221,381

(5,782

)

3,810,177

Capital expenditures

$

19,076

1,148

216

385

182

993

114

22,114

Equity

$

1,399,124

71,165

29,758

306,022

108,777

168,060

116,279

(37,587

)

2,161,598

For the three months ended June 30, 2019:

Revenues1

$

681,076

85,537

38,757

621,951

181,380

319,331

108,311

(764

)

2,035,579

Directly related cost of transportation and other expenses2

$

386,093

50,336

22,043

487,554

132,487

220,676

75,089

(394

)

1,373,884

Salaries and other operating expenses3

$

207,060

26,343

14,368

69,944

33,380

89,340

29,423

(364

)

469,494

Operating income

$

87,923

8,858

2,346

64,453

15,513

9,315

3,799

(6

)

192,201

Identifiable assets at period end

$

1,819,718

176,151

73,197

580,311

193,771

581,518

229,692

(7,368

)

3,646,990

Capital expenditures

$

8,985

768

145

300

428

1,914

447

12,987

Equity

$

1,303,381

83,417

31,014

282,192

107,229

168,570

109,790

(33,199

)

2,052,394

UNITED

STATES

OTHER

NORTH

AMERICA

LATIN

AMERICA

NORTH

ASIA

SOUTH

ASIA

EUROPE

MIDDLE

EAST,

AFRICA

AND

INDIA

ELIMI-

NATIONS

CONSOLI-

DATED

For the six months ended June 30, 2020:

Revenues1

$

1,289,638

156,145

75,443

1,655,013

393,355

708,070

206,650

(1,818

)

4,482,496

Directly related cost of transportation and other expenses2

$

728,585

87,339

46,466

1,333,216

281,637

493,538

147,884

(896

)

3,117,769

Salaries and other operating expenses3

$

433,647

48,995

23,861

154,604

69,092

177,611

51,138

(902

)

958,046

Operating income

$

127,406

19,811

5,116

167,193

42,626

36,921

7,628

(20

)

406,681

Identifiable assets at period end

$

1,886,463

170,873

72,912

669,335

213,007

581,988

221,381

(5,782

)

3,810,177

Capital expenditures

$

23,573

1,209

318

710

370

1,638

423

28,241

Equity

$

1,399,124

71,165

29,758

306,022

108,777

168,060

116,279

(37,587

)

2,161,598

For the six months ended June 30, 2019:

Revenues1

$

1,340,859

176,947

72,936

1,254,804

358,559

632,021

220,986

(1,482

)

4,055,630

Directly related cost of transportation and other expenses2

$

753,448

106,576

41,158

986,200

262,298

436,571

154,592

(1,022

)

2,739,821

Salaries and other operating expenses3

$

425,475

50,553

26,796

138,371

64,841

172,183

58,234

(446

)

936,007

Operating income

$

161,936

19,818

4,982

130,233

31,420

23,267

8,160

(14

)

379,802

Identifiable assets at period end

$

1,819,718

176,151

73,197

580,311

193,771

581,518

229,692

(7,368

)

3,646,990

Capital expenditures

$

15,900

996

238

644

604

2,896

1,144

22,422

Equity

$

1,303,381

83,417

31,014

282,192

107,229

168,570

109,790

(33,199

)

2,052,394

1Beginning in the second quarter of 2019, the Company revised its process to record the transfer, between its geographic operating segments, of revenues and the directly related cost of transportation and other expenses for freight service transactions between Company origin and destination locations. This change better aligns revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company’s new accounting systems and processes. The change in presentation had no impact on consolidated or segment operating income. The impact of these changes on reported segment revenues was immaterial and in the six months ended June 30, 2019, segment revenues have not been revised.

2Directly 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.

3Salaries 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.

The Company’s consolidated financial results in the first and second quarter 2020 were significantly impacted by the effects of the global pandemic and are expected to be further impacted in the remainder of 2020. The impact is affecting the Company’s geographical segments unevenly.

In the second quarter of 2020, North Asia experienced significant increases in airfreight services revenues and related expenses as a result of demand for time-sensitive delivery of technology equipment and medical equipment and supplies from China, which combined with reductions in airfreight supply resulted in significantly higher rates. In the second quarter 2020 and 2019, the People's Republic of China, including Hong Kong, represented 37% and 26%, respectively, of the Company’s total revenues and 38% and 28%, respectively, of the Company’s total operating income.

This is in contrast with slower activity in North Asia in the first quarter of 2020 as the global pandemic resulted in temporary closures and limited operations from the Company’s China offices and shipments that were rerouted or delayed by customers and service providers taking their own precautionary measures. In the first half of 2020 and 2019, the People's Republic of China, including Hong Kong, represented 31% and 26%, respectively, of the Company’s total revenues and 33% and 28%, respectively, of the Company’s total operating income.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200804005305/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