Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Expeditors Reports Third Quarter 2021 EPS of $2.09 By: Expeditors International of Washington, Inc. via Business Wire November 02, 2021 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2021 financial results including the following highlights compared to the same quarter of 2020: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 87% to $2.09 Net Earnings Attributable to Shareholders increased 88% to $359 million Operating Income increased 94% to $490 million Revenues increased 84% to $4.3 billion Airfreight tonnage volume and ocean container volume increased 28% and 15%, respectively “In a marketplace that remains severely impacted by labor and infrastructure constraints throughout the supply chain, our people continue to perform at their best by identifying, accessing, and securing available space,” said Jeffrey S. Musser, President and Chief Executive Officer. “There remains an overall deficiency of available air capacity due to a reduction of passenger belly space on international routes. Despite increased utilization of air charters, there is insufficient capacity to meet the current high demand. At the same time, unprecedented congestion at the ocean ports due to labor and equipment shortages is disrupting sailing schedules and causing significant delays. There is simply not enough equipment, warehouse and pier space, or people in the locations where they are needed to meaningfully reduce the significant backlogs of cargo. Handling record volumes under these conditions has not been easy, but we continue to set records for company performance by servicing our customers at the highest level. “The entire global infrastructure for the movement of cargo remains stretched beyond its limits. While certain ocean ports are particularly constrained, most notably on the U.S. west coast, many of the current bottlenecks stem from supply and infrastructure issues that were building well before the pandemic. The global reaction to COVID-19, including lockdowns, facility closures and spikes in demand for certain products, exposed and exacerbated those long-simmering issues. Unfortunately, there is no simple or immediate fix. As a result, we believe these current conditions are likely to last well into 2022. “We also believe, as we always have, that our company’s best strategy for achieving ongoing success in servicing our customers and growing our business depends on our strong culture of close collaboration. As many of the most restrictive pandemic precautionary measures are being lifted around the world, we are carefully bringing our people back to on-site work in a measured and cautious manner. Our view is that the stresses of so many of our people working at such an accelerated pace from so many remote, off-site locations would be unsustainable over the long term.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Our strong results continue to demonstrate our ability to adapt and perform exceptionally well on behalf of our customers under very trying conditions. Demand continues to far outstrip available capacity. Buy and sell rates for both air and ocean remain elevated and erratic. Despite those conditions, our operating efficiency is strong, even as each individual shipment requires more resources and greater attention, and conditions change rapidly. While we are performing exceptionally well under these trying circumstances, I continue to caution that we are unable to predict how long the current conditions will persist or the impact they will have on our future operations.” 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. Expeditors International of Washington, Inc. Third Quarter 2021 Earnings Release, November 2, 2021 Financial Highlights for the three and nine months ended September 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended September 30, Nine months ended September 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 4,319,261 $ 2,348,713 84% $ 11,127,174 $ 6,603,558 69% Directly related cost of transportation and other expenses1, 3 $ 3,185,490 $ 1,614,334 97% $ 8,031,407 $ 4,504,452 78% Salaries and other operating expenses2 $ 644,134 $ 482,434 34% $ 1,809,970 $ 1,440,480 26% Operating income $ 489,637 $ 251,945 94% $ 1,285,797 $ 658,626 95% Net earnings attributable to shareholders $ 359,068 $ 191,307 88% $ 962,660 $ 497,520 93% Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 87% $ 5.61 $ 2.92 92% Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 86% $ 5.68 $ 2.96 92% Diluted weighted average shares outstanding 171,565 170,735 171,549 170,539 Basic weighted average shares outstanding 169,633 168,310 169,398 167,942 _______________________ 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis. During the nine months ended September 30, 2021 and 2020, we repurchased 2.0 million and 4.4 million shares of common stock at an average price of $110.45 and $71.41 per share, respectively. Employee Full-time Equivalents as of September 30, 2021 2020 North America 7,315 6,666 Europe 3,860 3,361 North Asia 2,440 2,406 South Asia 1,740 1,643 Middle East, Africa and India 1,507 1,509 Latin America 801 800 Information Systems 976 975 Corporate 395 383 Total 19,034 17,743 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Third quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU July 36% 18% August 36% 21% September 15% 7% Quarter 28% 15% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 5, 2021 will be considered in management's 8-K “Responses to Selected Questions.” 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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue for the remainder of 2021 and likely well into 2022, and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; 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 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. 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, 2020. 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. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,820,106 $ 1,527,791 Accounts receivable, less allowance for credit loss of $7,285 at September 30, 2021 and $5,579 at December 31, 2020 3,330,398 1,998,055 Deferred contract costs 841,689 327,448 Other 119,346 110,250 Total current assets 6,111,539 3,963,544 Property and equipment, less accumulated depreciation and amortization of $533,450 at September 30, 2021 and $516,988 at December 31, 2020 491,577 506,425 Operating lease right-of-use assets 448,228 432,723 Goodwill 7,927 7,927 Other assets, net 17,112 16,884 Total assets $ 7,076,383 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,806,977 $ 1,136,859 Accrued liabilities, primarily salaries and related costs 342,151 257,021 Contract liabilities 977,660 379,722 Current portion of operating lease liabilities 81,362 74,004 Federal, state and foreign income taxes 67,332 45,437 Total current liabilities 3,275,482 1,893,043 Noncurrent portion of operating lease liabilities 374,658 364,185 Deferred federal and state income taxes, net 5,651 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,392 shares at September 30, 2021 and 169,294 shares at December 31, 2020 1,694 1,693 Additional paid-in capital 74,925 157,496 Retained earnings 3,463,539 2,600,201 Accumulated other comprehensive loss (122,800 ) (99,753 ) Total shareholders’ equity 3,417,358 2,659,637 Noncontrolling interest 3,234 3,590 Total equity 3,420,592 2,663,227 Total liabilities and equity $ 7,076,383 $ 4,927,503 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,628,115 $ 983,199 $ 4,477,599 $ 2,908,451 Ocean freight and ocean services 1,598,597 609,816 3,651,059 1,590,541 Customs brokerage and other services 1,092,549 755,698 2,998,516 2,104,566 Total revenues 4,319,261 2,348,713 11,127,174 6,603,558 Operating Expenses: Airfreight services 1,244,381 723,340 3,335,253 2,122,205 Ocean freight and ocean services 1,254,334 452,028 2,859,020 1,177,696 Customs brokerage and other services 686,775 438,966 1,837,134 1,204,551 Salaries and related 519,611 373,613 1,452,902 1,110,760 Rent and occupancy 46,730 42,484 137,376 126,383 Depreciation and amortization 12,753 15,851 38,415 42,620 Selling and promotion 4,237 2,945 10,479 14,301 Other 60,803 47,541 170,798 146,416 Total operating expenses 3,829,624 2,096,768 9,841,377 5,944,932 Operating income 489,637 251,945 1,285,797 658,626 Other Income (Expense): Interest income 2,462 1,504 6,596 8,870 Other, net 733 980 6,382 5,161 Other income, net 3,195 2,484 12,978 14,031 Earnings before income taxes 492,832 254,429 1,298,775 672,657 Income tax expense 132,922 62,710 333,941 173,968 Net earnings 359,910 191,719 964,834 498,689 Less net earnings attributable to the noncontrolling interest 842 412 2,174 1,169 Net earnings attributable to shareholders $ 359,068 $ 191,307 $ 962,660 $ 497,520 Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 $ 5.61 $ 2.92 Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 $ 5.68 $ 2.96 Weighted average diluted shares outstanding 171,565 170,735 171,549 170,539 Weighted average basic shares outstanding 169,633 168,310 169,398 167,942 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 359,910 $ 191,719 $ 964,834 $ 498,689 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 3,739 398 6,028 4,607 Deferred income tax (benefit) expense (7,658 ) (1,276 ) 2,343 2,872 Stock compensation expense 15,204 12,297 57,298 45,091 Depreciation and amortization 12,753 15,851 38,415 42,620 Other, net 626 2,919 1,523 3,470 Changes in operating assets and liabilities: Increase in accounts receivable (714,300 ) (106,065 ) (1,377,997 ) (274,440 ) Increase in accounts payable and accrued liabilities 436,343 94,232 769,525 201,929 Increase in deferred contract costs (328,932 ) (81,486 ) (550,572 ) (99,887 ) Increase in contract liabilities 381,192 91,638 635,286 112,244 Increase (decrease) in income taxes payable, net 33,378 (41,286 ) 32,022 (10,644 ) Increase in other, net (14,884 ) (17,373 ) (15,208 ) (13,242 ) Net cash from operating activities 177,371 161,568 563,497 513,309 Investing Activities: Purchase of property and equipment (9,870 ) (9,178 ) (24,800 ) (37,419 ) Other, net (157 ) 1,174 (53 ) 963 Net cash from investing activities (10,027 ) (8,004 ) (24,853 ) (36,456 ) Financing Activities: Proceeds from borrowing on lines of credit, net 7,479 31 7,568 11 Proceeds from issuance of common stock 56,965 121,430 99,433 174,016 Repurchases of common stock (76,595 ) — (225,064 ) (314,225 ) Dividends paid — — (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (4 ) — (15,172 ) (10,566 ) Distribution to noncontrolling interest (1,631 ) — (1,631 ) — Net cash from financing activities (13,786 ) 121,461 (233,253 ) (237,579 ) Effect of exchange rate changes on cash and cash equivalents (7,573 ) 10,030 (13,076 ) (4,255 ) Change in cash and cash equivalents 145,985 285,055 292,315 235,019 Cash and cash equivalents at beginning of period 1,674,121 1,180,455 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,820,106 $ 1,465,510 $ 1,820,106 $ 1,465,510 Taxes Paid: Income taxes $ 104,617 $ 106,434 $ 295,153 $ 180,242 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 September 30, 2021: Revenues $ 1,134,096 116,404 54,303 1,690,381 538,780 564,810 221,777 (1,290 ) 4,319,261 Directly related cost of transportation and other expenses1 $ 661,515 63,031 34,216 1,417,283 445,970 389,208 174,733 (466 ) 3,185,490 Salaries and other operating expenses2 $ 238,943 33,077 14,759 141,109 54,003 126,475 36,598 (830 ) 644,134 Operating income $ 233,638 20,296 5,328 131,989 38,807 49,127 10,446 6 489,637 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 6,001 248 175 435 351 2,254 406 — 9,870 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the three months ended September 30, 2020: Revenues3 $ 686,243 77,414 39,193 795,155 259,069 359,107 133,447 (915 ) 2,348,713 Directly related cost of transportation and other expenses1,3 $ 379,586 44,196 23,361 632,858 192,175 242,384 100,301 (527 ) 1,614,334 Salaries and other operating expenses2 $ 197,749 25,325 12,359 81,876 39,926 96,658 28,925 (384 ) 482,434 Operating income $ 108,908 7,893 3,473 80,421 26,968 20,065 4,221 (4 ) 251,945 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 4,703 483 180 1,075 665 1,780 292 — 9,178 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the nine months ended September 30, 2021: Revenues3 $ 3,007,053 311,986 146,148 4,208,811 1,306,264 1,576,092 574,469 (3,649 ) 11,127,174 Directly related cost of transportation and other expenses1,3 $ 1,731,032 175,392 86,868 3,471,453 1,051,133 1,072,973 444,132 (1,576 ) 8,031,407 Salaries and other operating expenses2 $ 718,762 90,114 41,871 354,841 146,214 359,338 100,899 (2,069 ) 1,809,970 Operating income $ 557,259 46,480 17,409 382,517 108,917 143,781 29,438 (4 ) 1,285,797 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 11,931 434 300 1,192 1,462 7,908 1,573 — 24,800 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the nine months ended September 30, 2020: Revenues3 $ 1,975,874 232,324 114,637 2,277,027 642,302 1,024,127 340,000 (2,733 ) 6,603,558 Directly related cost of transportation and other expenses1,3 $ 1,108,164 130,300 69,828 1,792,933 463,690 692,872 248,088 (1,423 ) 4,504,452 Salaries and other operating expenses2 $ 631,396 74,320 36,220 236,480 109,018 274,269 80,063 (1,286 ) 1,440,480 Operating income $ 236,314 27,704 8,589 247,614 69,594 56,986 11,849 (24 ) 658,626 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 28,276 1,692 498 1,785 1,035 3,418 715 — 37,419 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. Historical amounts for business segment information have been revised and are presented on a comparable basis. The Company’s consolidated financial results in the three and nine months ended September 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In all quarters of 2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020. This is in contrast with slower activity in North Asia in the first quarter of 2020 as the pandemic resulted in temporary closures and limited operations in the Company’s China offices. Shipments were also rerouted or delayed by customers and service providers as they were taking their own precautionary measures. This was followed by significant increases in airfreight services revenues and related expenses, in the second and third quarters of 2020, 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 average buy and sell rates. These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 32% and 27%, respectively, of the Company’s total revenues and 21% and 26%, respectively, of the total operating income. For the nine months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 30% and 28%, respectively, of the Company’s total revenues and 23% and 30%, respectively, of the total operating income. View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005337/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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Expeditors Reports Third Quarter 2021 EPS of $2.09 By: Expeditors International of Washington, Inc. via Business Wire November 02, 2021 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2021 financial results including the following highlights compared to the same quarter of 2020: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 87% to $2.09 Net Earnings Attributable to Shareholders increased 88% to $359 million Operating Income increased 94% to $490 million Revenues increased 84% to $4.3 billion Airfreight tonnage volume and ocean container volume increased 28% and 15%, respectively “In a marketplace that remains severely impacted by labor and infrastructure constraints throughout the supply chain, our people continue to perform at their best by identifying, accessing, and securing available space,” said Jeffrey S. Musser, President and Chief Executive Officer. “There remains an overall deficiency of available air capacity due to a reduction of passenger belly space on international routes. Despite increased utilization of air charters, there is insufficient capacity to meet the current high demand. At the same time, unprecedented congestion at the ocean ports due to labor and equipment shortages is disrupting sailing schedules and causing significant delays. There is simply not enough equipment, warehouse and pier space, or people in the locations where they are needed to meaningfully reduce the significant backlogs of cargo. Handling record volumes under these conditions has not been easy, but we continue to set records for company performance by servicing our customers at the highest level. “The entire global infrastructure for the movement of cargo remains stretched beyond its limits. While certain ocean ports are particularly constrained, most notably on the U.S. west coast, many of the current bottlenecks stem from supply and infrastructure issues that were building well before the pandemic. The global reaction to COVID-19, including lockdowns, facility closures and spikes in demand for certain products, exposed and exacerbated those long-simmering issues. Unfortunately, there is no simple or immediate fix. As a result, we believe these current conditions are likely to last well into 2022. “We also believe, as we always have, that our company’s best strategy for achieving ongoing success in servicing our customers and growing our business depends on our strong culture of close collaboration. As many of the most restrictive pandemic precautionary measures are being lifted around the world, we are carefully bringing our people back to on-site work in a measured and cautious manner. Our view is that the stresses of so many of our people working at such an accelerated pace from so many remote, off-site locations would be unsustainable over the long term.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Our strong results continue to demonstrate our ability to adapt and perform exceptionally well on behalf of our customers under very trying conditions. Demand continues to far outstrip available capacity. Buy and sell rates for both air and ocean remain elevated and erratic. Despite those conditions, our operating efficiency is strong, even as each individual shipment requires more resources and greater attention, and conditions change rapidly. While we are performing exceptionally well under these trying circumstances, I continue to caution that we are unable to predict how long the current conditions will persist or the impact they will have on our future operations.” 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. Expeditors International of Washington, Inc. Third Quarter 2021 Earnings Release, November 2, 2021 Financial Highlights for the three and nine months ended September 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended September 30, Nine months ended September 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 4,319,261 $ 2,348,713 84% $ 11,127,174 $ 6,603,558 69% Directly related cost of transportation and other expenses1, 3 $ 3,185,490 $ 1,614,334 97% $ 8,031,407 $ 4,504,452 78% Salaries and other operating expenses2 $ 644,134 $ 482,434 34% $ 1,809,970 $ 1,440,480 26% Operating income $ 489,637 $ 251,945 94% $ 1,285,797 $ 658,626 95% Net earnings attributable to shareholders $ 359,068 $ 191,307 88% $ 962,660 $ 497,520 93% Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 87% $ 5.61 $ 2.92 92% Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 86% $ 5.68 $ 2.96 92% Diluted weighted average shares outstanding 171,565 170,735 171,549 170,539 Basic weighted average shares outstanding 169,633 168,310 169,398 167,942 _______________________ 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis. During the nine months ended September 30, 2021 and 2020, we repurchased 2.0 million and 4.4 million shares of common stock at an average price of $110.45 and $71.41 per share, respectively. Employee Full-time Equivalents as of September 30, 2021 2020 North America 7,315 6,666 Europe 3,860 3,361 North Asia 2,440 2,406 South Asia 1,740 1,643 Middle East, Africa and India 1,507 1,509 Latin America 801 800 Information Systems 976 975 Corporate 395 383 Total 19,034 17,743 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Third quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU July 36% 18% August 36% 21% September 15% 7% Quarter 28% 15% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 5, 2021 will be considered in management's 8-K “Responses to Selected Questions.” 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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue for the remainder of 2021 and likely well into 2022, and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; 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 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. 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, 2020. 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. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,820,106 $ 1,527,791 Accounts receivable, less allowance for credit loss of $7,285 at September 30, 2021 and $5,579 at December 31, 2020 3,330,398 1,998,055 Deferred contract costs 841,689 327,448 Other 119,346 110,250 Total current assets 6,111,539 3,963,544 Property and equipment, less accumulated depreciation and amortization of $533,450 at September 30, 2021 and $516,988 at December 31, 2020 491,577 506,425 Operating lease right-of-use assets 448,228 432,723 Goodwill 7,927 7,927 Other assets, net 17,112 16,884 Total assets $ 7,076,383 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,806,977 $ 1,136,859 Accrued liabilities, primarily salaries and related costs 342,151 257,021 Contract liabilities 977,660 379,722 Current portion of operating lease liabilities 81,362 74,004 Federal, state and foreign income taxes 67,332 45,437 Total current liabilities 3,275,482 1,893,043 Noncurrent portion of operating lease liabilities 374,658 364,185 Deferred federal and state income taxes, net 5,651 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,392 shares at September 30, 2021 and 169,294 shares at December 31, 2020 1,694 1,693 Additional paid-in capital 74,925 157,496 Retained earnings 3,463,539 2,600,201 Accumulated other comprehensive loss (122,800 ) (99,753 ) Total shareholders’ equity 3,417,358 2,659,637 Noncontrolling interest 3,234 3,590 Total equity 3,420,592 2,663,227 Total liabilities and equity $ 7,076,383 $ 4,927,503 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,628,115 $ 983,199 $ 4,477,599 $ 2,908,451 Ocean freight and ocean services 1,598,597 609,816 3,651,059 1,590,541 Customs brokerage and other services 1,092,549 755,698 2,998,516 2,104,566 Total revenues 4,319,261 2,348,713 11,127,174 6,603,558 Operating Expenses: Airfreight services 1,244,381 723,340 3,335,253 2,122,205 Ocean freight and ocean services 1,254,334 452,028 2,859,020 1,177,696 Customs brokerage and other services 686,775 438,966 1,837,134 1,204,551 Salaries and related 519,611 373,613 1,452,902 1,110,760 Rent and occupancy 46,730 42,484 137,376 126,383 Depreciation and amortization 12,753 15,851 38,415 42,620 Selling and promotion 4,237 2,945 10,479 14,301 Other 60,803 47,541 170,798 146,416 Total operating expenses 3,829,624 2,096,768 9,841,377 5,944,932 Operating income 489,637 251,945 1,285,797 658,626 Other Income (Expense): Interest income 2,462 1,504 6,596 8,870 Other, net 733 980 6,382 5,161 Other income, net 3,195 2,484 12,978 14,031 Earnings before income taxes 492,832 254,429 1,298,775 672,657 Income tax expense 132,922 62,710 333,941 173,968 Net earnings 359,910 191,719 964,834 498,689 Less net earnings attributable to the noncontrolling interest 842 412 2,174 1,169 Net earnings attributable to shareholders $ 359,068 $ 191,307 $ 962,660 $ 497,520 Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 $ 5.61 $ 2.92 Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 $ 5.68 $ 2.96 Weighted average diluted shares outstanding 171,565 170,735 171,549 170,539 Weighted average basic shares outstanding 169,633 168,310 169,398 167,942 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 359,910 $ 191,719 $ 964,834 $ 498,689 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 3,739 398 6,028 4,607 Deferred income tax (benefit) expense (7,658 ) (1,276 ) 2,343 2,872 Stock compensation expense 15,204 12,297 57,298 45,091 Depreciation and amortization 12,753 15,851 38,415 42,620 Other, net 626 2,919 1,523 3,470 Changes in operating assets and liabilities: Increase in accounts receivable (714,300 ) (106,065 ) (1,377,997 ) (274,440 ) Increase in accounts payable and accrued liabilities 436,343 94,232 769,525 201,929 Increase in deferred contract costs (328,932 ) (81,486 ) (550,572 ) (99,887 ) Increase in contract liabilities 381,192 91,638 635,286 112,244 Increase (decrease) in income taxes payable, net 33,378 (41,286 ) 32,022 (10,644 ) Increase in other, net (14,884 ) (17,373 ) (15,208 ) (13,242 ) Net cash from operating activities 177,371 161,568 563,497 513,309 Investing Activities: Purchase of property and equipment (9,870 ) (9,178 ) (24,800 ) (37,419 ) Other, net (157 ) 1,174 (53 ) 963 Net cash from investing activities (10,027 ) (8,004 ) (24,853 ) (36,456 ) Financing Activities: Proceeds from borrowing on lines of credit, net 7,479 31 7,568 11 Proceeds from issuance of common stock 56,965 121,430 99,433 174,016 Repurchases of common stock (76,595 ) — (225,064 ) (314,225 ) Dividends paid — — (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (4 ) — (15,172 ) (10,566 ) Distribution to noncontrolling interest (1,631 ) — (1,631 ) — Net cash from financing activities (13,786 ) 121,461 (233,253 ) (237,579 ) Effect of exchange rate changes on cash and cash equivalents (7,573 ) 10,030 (13,076 ) (4,255 ) Change in cash and cash equivalents 145,985 285,055 292,315 235,019 Cash and cash equivalents at beginning of period 1,674,121 1,180,455 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,820,106 $ 1,465,510 $ 1,820,106 $ 1,465,510 Taxes Paid: Income taxes $ 104,617 $ 106,434 $ 295,153 $ 180,242 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 September 30, 2021: Revenues $ 1,134,096 116,404 54,303 1,690,381 538,780 564,810 221,777 (1,290 ) 4,319,261 Directly related cost of transportation and other expenses1 $ 661,515 63,031 34,216 1,417,283 445,970 389,208 174,733 (466 ) 3,185,490 Salaries and other operating expenses2 $ 238,943 33,077 14,759 141,109 54,003 126,475 36,598 (830 ) 644,134 Operating income $ 233,638 20,296 5,328 131,989 38,807 49,127 10,446 6 489,637 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 6,001 248 175 435 351 2,254 406 — 9,870 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the three months ended September 30, 2020: Revenues3 $ 686,243 77,414 39,193 795,155 259,069 359,107 133,447 (915 ) 2,348,713 Directly related cost of transportation and other expenses1,3 $ 379,586 44,196 23,361 632,858 192,175 242,384 100,301 (527 ) 1,614,334 Salaries and other operating expenses2 $ 197,749 25,325 12,359 81,876 39,926 96,658 28,925 (384 ) 482,434 Operating income $ 108,908 7,893 3,473 80,421 26,968 20,065 4,221 (4 ) 251,945 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 4,703 483 180 1,075 665 1,780 292 — 9,178 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the nine months ended September 30, 2021: Revenues3 $ 3,007,053 311,986 146,148 4,208,811 1,306,264 1,576,092 574,469 (3,649 ) 11,127,174 Directly related cost of transportation and other expenses1,3 $ 1,731,032 175,392 86,868 3,471,453 1,051,133 1,072,973 444,132 (1,576 ) 8,031,407 Salaries and other operating expenses2 $ 718,762 90,114 41,871 354,841 146,214 359,338 100,899 (2,069 ) 1,809,970 Operating income $ 557,259 46,480 17,409 382,517 108,917 143,781 29,438 (4 ) 1,285,797 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 11,931 434 300 1,192 1,462 7,908 1,573 — 24,800 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the nine months ended September 30, 2020: Revenues3 $ 1,975,874 232,324 114,637 2,277,027 642,302 1,024,127 340,000 (2,733 ) 6,603,558 Directly related cost of transportation and other expenses1,3 $ 1,108,164 130,300 69,828 1,792,933 463,690 692,872 248,088 (1,423 ) 4,504,452 Salaries and other operating expenses2 $ 631,396 74,320 36,220 236,480 109,018 274,269 80,063 (1,286 ) 1,440,480 Operating income $ 236,314 27,704 8,589 247,614 69,594 56,986 11,849 (24 ) 658,626 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 28,276 1,692 498 1,785 1,035 3,418 715 — 37,419 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. Historical amounts for business segment information have been revised and are presented on a comparable basis. The Company’s consolidated financial results in the three and nine months ended September 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In all quarters of 2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020. This is in contrast with slower activity in North Asia in the first quarter of 2020 as the pandemic resulted in temporary closures and limited operations in the Company’s China offices. Shipments were also rerouted or delayed by customers and service providers as they were taking their own precautionary measures. This was followed by significant increases in airfreight services revenues and related expenses, in the second and third quarters of 2020, 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 average buy and sell rates. These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 32% and 27%, respectively, of the Company’s total revenues and 21% and 26%, respectively, of the total operating income. For the nine months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 30% and 28%, respectively, of the Company’s total revenues and 23% and 30%, respectively, of the total operating income. View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005337/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
Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2021 financial results including the following highlights compared to the same quarter of 2020: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 87% to $2.09 Net Earnings Attributable to Shareholders increased 88% to $359 million Operating Income increased 94% to $490 million Revenues increased 84% to $4.3 billion Airfreight tonnage volume and ocean container volume increased 28% and 15%, respectively “In a marketplace that remains severely impacted by labor and infrastructure constraints throughout the supply chain, our people continue to perform at their best by identifying, accessing, and securing available space,” said Jeffrey S. Musser, President and Chief Executive Officer. “There remains an overall deficiency of available air capacity due to a reduction of passenger belly space on international routes. Despite increased utilization of air charters, there is insufficient capacity to meet the current high demand. At the same time, unprecedented congestion at the ocean ports due to labor and equipment shortages is disrupting sailing schedules and causing significant delays. There is simply not enough equipment, warehouse and pier space, or people in the locations where they are needed to meaningfully reduce the significant backlogs of cargo. Handling record volumes under these conditions has not been easy, but we continue to set records for company performance by servicing our customers at the highest level. “The entire global infrastructure for the movement of cargo remains stretched beyond its limits. While certain ocean ports are particularly constrained, most notably on the U.S. west coast, many of the current bottlenecks stem from supply and infrastructure issues that were building well before the pandemic. The global reaction to COVID-19, including lockdowns, facility closures and spikes in demand for certain products, exposed and exacerbated those long-simmering issues. Unfortunately, there is no simple or immediate fix. As a result, we believe these current conditions are likely to last well into 2022. “We also believe, as we always have, that our company’s best strategy for achieving ongoing success in servicing our customers and growing our business depends on our strong culture of close collaboration. As many of the most restrictive pandemic precautionary measures are being lifted around the world, we are carefully bringing our people back to on-site work in a measured and cautious manner. Our view is that the stresses of so many of our people working at such an accelerated pace from so many remote, off-site locations would be unsustainable over the long term.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Our strong results continue to demonstrate our ability to adapt and perform exceptionally well on behalf of our customers under very trying conditions. Demand continues to far outstrip available capacity. Buy and sell rates for both air and ocean remain elevated and erratic. Despite those conditions, our operating efficiency is strong, even as each individual shipment requires more resources and greater attention, and conditions change rapidly. While we are performing exceptionally well under these trying circumstances, I continue to caution that we are unable to predict how long the current conditions will persist or the impact they will have on our future operations.” 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. Expeditors International of Washington, Inc. Third Quarter 2021 Earnings Release, November 2, 2021 Financial Highlights for the three and nine months ended September 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended September 30, Nine months ended September 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 4,319,261 $ 2,348,713 84% $ 11,127,174 $ 6,603,558 69% Directly related cost of transportation and other expenses1, 3 $ 3,185,490 $ 1,614,334 97% $ 8,031,407 $ 4,504,452 78% Salaries and other operating expenses2 $ 644,134 $ 482,434 34% $ 1,809,970 $ 1,440,480 26% Operating income $ 489,637 $ 251,945 94% $ 1,285,797 $ 658,626 95% Net earnings attributable to shareholders $ 359,068 $ 191,307 88% $ 962,660 $ 497,520 93% Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 87% $ 5.61 $ 2.92 92% Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 86% $ 5.68 $ 2.96 92% Diluted weighted average shares outstanding 171,565 170,735 171,549 170,539 Basic weighted average shares outstanding 169,633 168,310 169,398 167,942 _______________________ 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis. During the nine months ended September 30, 2021 and 2020, we repurchased 2.0 million and 4.4 million shares of common stock at an average price of $110.45 and $71.41 per share, respectively. Employee Full-time Equivalents as of September 30, 2021 2020 North America 7,315 6,666 Europe 3,860 3,361 North Asia 2,440 2,406 South Asia 1,740 1,643 Middle East, Africa and India 1,507 1,509 Latin America 801 800 Information Systems 976 975 Corporate 395 383 Total 19,034 17,743 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Third quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU July 36% 18% August 36% 21% September 15% 7% Quarter 28% 15% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 5, 2021 will be considered in management's 8-K “Responses to Selected Questions.” 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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue for the remainder of 2021 and likely well into 2022, and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; 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 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. 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, 2020. 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. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,820,106 $ 1,527,791 Accounts receivable, less allowance for credit loss of $7,285 at September 30, 2021 and $5,579 at December 31, 2020 3,330,398 1,998,055 Deferred contract costs 841,689 327,448 Other 119,346 110,250 Total current assets 6,111,539 3,963,544 Property and equipment, less accumulated depreciation and amortization of $533,450 at September 30, 2021 and $516,988 at December 31, 2020 491,577 506,425 Operating lease right-of-use assets 448,228 432,723 Goodwill 7,927 7,927 Other assets, net 17,112 16,884 Total assets $ 7,076,383 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,806,977 $ 1,136,859 Accrued liabilities, primarily salaries and related costs 342,151 257,021 Contract liabilities 977,660 379,722 Current portion of operating lease liabilities 81,362 74,004 Federal, state and foreign income taxes 67,332 45,437 Total current liabilities 3,275,482 1,893,043 Noncurrent portion of operating lease liabilities 374,658 364,185 Deferred federal and state income taxes, net 5,651 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,392 shares at September 30, 2021 and 169,294 shares at December 31, 2020 1,694 1,693 Additional paid-in capital 74,925 157,496 Retained earnings 3,463,539 2,600,201 Accumulated other comprehensive loss (122,800 ) (99,753 ) Total shareholders’ equity 3,417,358 2,659,637 Noncontrolling interest 3,234 3,590 Total equity 3,420,592 2,663,227 Total liabilities and equity $ 7,076,383 $ 4,927,503 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,628,115 $ 983,199 $ 4,477,599 $ 2,908,451 Ocean freight and ocean services 1,598,597 609,816 3,651,059 1,590,541 Customs brokerage and other services 1,092,549 755,698 2,998,516 2,104,566 Total revenues 4,319,261 2,348,713 11,127,174 6,603,558 Operating Expenses: Airfreight services 1,244,381 723,340 3,335,253 2,122,205 Ocean freight and ocean services 1,254,334 452,028 2,859,020 1,177,696 Customs brokerage and other services 686,775 438,966 1,837,134 1,204,551 Salaries and related 519,611 373,613 1,452,902 1,110,760 Rent and occupancy 46,730 42,484 137,376 126,383 Depreciation and amortization 12,753 15,851 38,415 42,620 Selling and promotion 4,237 2,945 10,479 14,301 Other 60,803 47,541 170,798 146,416 Total operating expenses 3,829,624 2,096,768 9,841,377 5,944,932 Operating income 489,637 251,945 1,285,797 658,626 Other Income (Expense): Interest income 2,462 1,504 6,596 8,870 Other, net 733 980 6,382 5,161 Other income, net 3,195 2,484 12,978 14,031 Earnings before income taxes 492,832 254,429 1,298,775 672,657 Income tax expense 132,922 62,710 333,941 173,968 Net earnings 359,910 191,719 964,834 498,689 Less net earnings attributable to the noncontrolling interest 842 412 2,174 1,169 Net earnings attributable to shareholders $ 359,068 $ 191,307 $ 962,660 $ 497,520 Diluted earnings attributable to shareholders per share $ 2.09 $ 1.12 $ 5.61 $ 2.92 Basic earnings attributable to shareholders per share $ 2.12 $ 1.14 $ 5.68 $ 2.96 Weighted average diluted shares outstanding 171,565 170,735 171,549 170,539 Weighted average basic shares outstanding 169,633 168,310 169,398 167,942 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 359,910 $ 191,719 $ 964,834 $ 498,689 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 3,739 398 6,028 4,607 Deferred income tax (benefit) expense (7,658 ) (1,276 ) 2,343 2,872 Stock compensation expense 15,204 12,297 57,298 45,091 Depreciation and amortization 12,753 15,851 38,415 42,620 Other, net 626 2,919 1,523 3,470 Changes in operating assets and liabilities: Increase in accounts receivable (714,300 ) (106,065 ) (1,377,997 ) (274,440 ) Increase in accounts payable and accrued liabilities 436,343 94,232 769,525 201,929 Increase in deferred contract costs (328,932 ) (81,486 ) (550,572 ) (99,887 ) Increase in contract liabilities 381,192 91,638 635,286 112,244 Increase (decrease) in income taxes payable, net 33,378 (41,286 ) 32,022 (10,644 ) Increase in other, net (14,884 ) (17,373 ) (15,208 ) (13,242 ) Net cash from operating activities 177,371 161,568 563,497 513,309 Investing Activities: Purchase of property and equipment (9,870 ) (9,178 ) (24,800 ) (37,419 ) Other, net (157 ) 1,174 (53 ) 963 Net cash from investing activities (10,027 ) (8,004 ) (24,853 ) (36,456 ) Financing Activities: Proceeds from borrowing on lines of credit, net 7,479 31 7,568 11 Proceeds from issuance of common stock 56,965 121,430 99,433 174,016 Repurchases of common stock (76,595 ) — (225,064 ) (314,225 ) Dividends paid — — (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (4 ) — (15,172 ) (10,566 ) Distribution to noncontrolling interest (1,631 ) — (1,631 ) — Net cash from financing activities (13,786 ) 121,461 (233,253 ) (237,579 ) Effect of exchange rate changes on cash and cash equivalents (7,573 ) 10,030 (13,076 ) (4,255 ) Change in cash and cash equivalents 145,985 285,055 292,315 235,019 Cash and cash equivalents at beginning of period 1,674,121 1,180,455 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,820,106 $ 1,465,510 $ 1,820,106 $ 1,465,510 Taxes Paid: Income taxes $ 104,617 $ 106,434 $ 295,153 $ 180,242 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 September 30, 2021: Revenues $ 1,134,096 116,404 54,303 1,690,381 538,780 564,810 221,777 (1,290 ) 4,319,261 Directly related cost of transportation and other expenses1 $ 661,515 63,031 34,216 1,417,283 445,970 389,208 174,733 (466 ) 3,185,490 Salaries and other operating expenses2 $ 238,943 33,077 14,759 141,109 54,003 126,475 36,598 (830 ) 644,134 Operating income $ 233,638 20,296 5,328 131,989 38,807 49,127 10,446 6 489,637 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 6,001 248 175 435 351 2,254 406 — 9,870 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the three months ended September 30, 2020: Revenues3 $ 686,243 77,414 39,193 795,155 259,069 359,107 133,447 (915 ) 2,348,713 Directly related cost of transportation and other expenses1,3 $ 379,586 44,196 23,361 632,858 192,175 242,384 100,301 (527 ) 1,614,334 Salaries and other operating expenses2 $ 197,749 25,325 12,359 81,876 39,926 96,658 28,925 (384 ) 482,434 Operating income $ 108,908 7,893 3,473 80,421 26,968 20,065 4,221 (4 ) 251,945 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 4,703 483 180 1,075 665 1,780 292 — 9,178 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the nine months ended September 30, 2021: Revenues3 $ 3,007,053 311,986 146,148 4,208,811 1,306,264 1,576,092 574,469 (3,649 ) 11,127,174 Directly related cost of transportation and other expenses1,3 $ 1,731,032 175,392 86,868 3,471,453 1,051,133 1,072,973 444,132 (1,576 ) 8,031,407 Salaries and other operating expenses2 $ 718,762 90,114 41,871 354,841 146,214 359,338 100,899 (2,069 ) 1,809,970 Operating income $ 557,259 46,480 17,409 382,517 108,917 143,781 29,438 (4 ) 1,285,797 Identifiable assets at period end $ 3,417,496 256,638 110,406 1,558,109 457,615 990,123 328,671 (42,675 ) 7,076,383 Capital expenditures $ 11,931 434 300 1,192 1,462 7,908 1,573 — 24,800 Equity $ 2,451,584 93,084 37,087 368,535 129,941 258,805 123,304 (41,748 ) 3,420,592 For the nine months ended September 30, 2020: Revenues3 $ 1,975,874 232,324 114,637 2,277,027 642,302 1,024,127 340,000 (2,733 ) 6,603,558 Directly related cost of transportation and other expenses1,3 $ 1,108,164 130,300 69,828 1,792,933 463,690 692,872 248,088 (1,423 ) 4,504,452 Salaries and other operating expenses2 $ 631,396 74,320 36,220 236,480 109,018 274,269 80,063 (1,286 ) 1,440,480 Operating income $ 236,314 27,704 8,589 247,614 69,594 56,986 11,849 (24 ) 658,626 Identifiable assets at period end $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 Capital expenditures $ 28,276 1,692 498 1,785 1,035 3,418 715 — 37,419 Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473 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. 3Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. Historical amounts for business segment information have been revised and are presented on a comparable basis. The Company’s consolidated financial results in the three and nine months ended September 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In all quarters of 2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020. This is in contrast with slower activity in North Asia in the first quarter of 2020 as the pandemic resulted in temporary closures and limited operations in the Company’s China offices. Shipments were also rerouted or delayed by customers and service providers as they were taking their own precautionary measures. This was followed by significant increases in airfreight services revenues and related expenses, in the second and third quarters of 2020, 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 average buy and sell rates. These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 32% and 27%, respectively, of the Company’s total revenues and 21% and 26%, respectively, of the total operating income. For the nine months ended September 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 30% and 28%, respectively, of the Company’s total revenues and 23% and 30%, respectively, of the total operating income. View source version on businesswire.com: https://www.businesswire.com/news/home/20211102005337/en/
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
