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Expeditors Reports Second Quarter 2020 EPS of $1.09

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