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 2023 EPS of $1.16 By: Expeditors International of Washington, Inc. via Business Wire November 07, 2023 at 08:30 AM EST Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2023 financial results including the following comparisons to the same quarter of 2022: Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 54% to $1.16 Net Earnings Attributable to Shareholders decreased 59% to $171 million Operating Income decreased 59% to $216 million Revenues decreased 50% to $2.2 billion Airfreight tonnage volume decreased 14% and ocean container volume decreased 15% “As expected, the deceleration in demand that we have seen since the second half of 2022 continued in the comparable third quarter of 2023,” said Jeffrey S. Musser, President and Chief Executive Officer. “Additionally, rates generally remained soft while capacity exceeded demand in most lanes. The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic. As a result, air and ocean capacity is now mostly plentiful and at rates that remain well below the pandemic period. We have also experienced declines in the number of customs brokerage transactions we handled, even as we benefited from lower costs resulting from the gradual clearing of pandemic-related port congestion. In addition, shippers continue to pivot back to ocean freight to reduce costs in an uncertain economy. We have seen shippers generally move smaller volumes in a marketplace that is defined by inflation, high energy costs, an increasingly tentative consumer, and now significant and growing geopolitical uncertainty. “While we have been through many industry cycles of expansion and contraction before, the pace and extent of this unwinding has been as unpredictable and disruptive as the dislocations that drove our market to such unprecedented peaks in pricing and volumes. We are meeting these conditions head-on and have been re-balancing operations for an environment that is now more like the way things were prior to the COVID disruptions. We have made very deliberate efforts to control costs and to carefully manage our headcount; we do not know how long this cycle of cautious demand and soft rates will last in this uncertain economic environment. While not all markets are soft and rates have even increased in certain lanes, we have yet to see signs of a widespread improvement in rates. Nevertheless, we are encouraged by indications that tonnage and volumes are perhaps flattening or improving. While we continue to adjust for the current environment, we also need to be prepared for the longer term when pricing and capacity conditions stabilize and demand begins to consistently trend higher.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “As the market recalibrates, we are encouraged that both tonnage and volumes increased from the June quarter, marking the first sequential quarterly growth in both tons and volumes since the third quarter of 2022. So long as the economic environment remains uncertain, we will continue to focus on aligning headcount and overhead expenses commensurate with our transactions and volumes. We remain dedicated to improving efficiency, while also preparing for the time when demand shows signs of a sustained recovery. Since December 31, we have decreased headcount by 8%. We also continue to be very mindful of our strong cash position, having now returned more than $2 billion to shareholders in repurchased stock and dividends over the past 12 months.” Mr. Powell noted that other overhead expenses increased $18 million in the quarter, primarily a result of $14 million in expenses related to indirect tax and other contingencies, compared to a recovery of $11 million in the third quarter of 2022 of costs incurred earlier that year as a result of the February 2022 cyber-attack. Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions. _______________________ 1Diluted earnings attributable to shareholders per share. NOTE: See Disclaimer on Forward-Looking Statements in this release. Disclaimer on Forward-Looking Statements: Certain statements contained in this news release are “forward-looking statements,” based on management’s views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding indications that tonnage and volumes are perhaps flattening or improving; our uncertain short-term outlook; a normalized supply chain; shippers pivoting from air freight to ocean freight; falling rates that remain well below the pandemic period; declining volumes; plentiful and in some cases excess air and ocean capacity; shipper uncertainty given the current economic outlook; rising inflation, energy and financing costs; and signs of a slowing economy and drop in demand. Future financial performance could differ materially because of factors such as: our ability to thoughtfully control our headcount and exert other efforts to align our costs; our ability to re-balance operations for an environment that is now more like the way things were prior to the COVID disruptions; our ability to improve our efficiency; our ability to predict when operating conditions may eventually stabilize and demand and volumes begin to recover and grow; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; our ability to align expenses with revenues and to enhance our productivity; our ability to maintain our existing accounts and gain new business; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with the current uncertainty in the global economy, could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company’s regulatory filings with the Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the Company’s most recent Form 10-Q. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law. Expeditors International of Washington, Inc. Third Quarter 2023 Earnings Release, November 7, 2023 Financial Highlights for the three months ended September 30, 2023 and 2022 (Unaudited) (in 000's of US dollars except share data) Three months ended September 30, Nine months ended September 30, 2023 2022 % Change 2023 2022 % Change Revenues $ 2,190,001 $ 4,362,146 (50)% $ 7,022,342 $ 13,629,756 (48)% Directly related cost of transportation and other expenses 1 $ 1,402,111 $ 3,194,273 (56)% $ 4,540,396 $ 10,151,332 (55)% Salaries and other operating expenses 2 $ 571,821 $ 640,950 (11)% $ 1,741,411 $ 1,983,759 (12)% Operating income 3 $ 216,069 $ 526,923 (59)% $ 740,535 $ 1,494,665 (50)% Net earnings attributable to shareholders $ 171,353 $ 414,209 (59)% $ 594,164 $ 1,138,123 (48)% Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 (54)% $ 3.92 $ 6.84 (43)% Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 (55)% $ 3.95 $ 6.90 (43)% Diluted weighted average shares outstanding 148,001 163,250 151,619 166,398 Basic weighted average shares outstanding 147,099 162,029 150,543 164,944 _______________ 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. In the three months ended September 30, 2023, includes $14 million of expense related to indirect tax and other contingencies. 3Operating income in the three months ended September 30, 2022 includes recoveries of $18 million of expense related to the Company's global systems downtime and investigation, recovery and remediation efforts caused by a targeted cyber-attack that occurred in the first quarter of 2022. In the nine months ended September 30, 2022, operating income includes $70 million in expenses incurred as a result of the cyber-attack. In the three and nine months ended September 30, 2023, amounts related to the cyber-attack recorded in Operating Income were insignificant. During the three and nine months ended September 30, 2023, we repurchased 2.6 million and 10.5 million shares of common stock at an average price of $116.29 and $113.97 per share. During the three and nine months ended September 30, 2022 we repurchased 4.5 million and 9.5 million shares of common stock at an average price of $103.56 and $106.84 per share. Employee Full-time Equivalents as of September 30, 2023 December 31, 2022 September 30, 2022 North America 6,975 7,778 7,819 Europe 3,811 4,228 4,167 North Asia 2,290 2,448 2,485 South Asia 1,709 1,851 1,843 Middle East, Africa and India 1,440 1,540 1,538 Latin America 753 859 852 Information Systems 1,239 1,173 1,144 Corporate 408 425 421 Total 18,625 20,302 20,269 Third quarter year-over-year percentage decrease in: 2023 Airfreight kilos Ocean freight FEU July (15)% (14)% August (15)% (15)% September (12)% (17)% Quarter (14)% (15)% _______________ Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 10, 2023 will be considered in management's 8-K “Responses to Selected Questions.” _______________ NOTE: See Disclaimer on Forward-Looking Statements in this release. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2023 December 31, 2022 Assets: Current Assets: Cash and cash equivalents $ 1,639,428 $ 2,034,131 Accounts receivable, less allowance for credit loss of $5,724 at September 30, 2023 and $9,466 at December 31, 2022 1,458,983 2,107,645 Deferred contract costs 223,768 257,545 Other 189,737 118,696 Total current assets 3,511,916 4,518,017 Property and equipment, less accumulated depreciation and amortization $579,961 at September 30, 2023 and $567,758 at December 31, 2022 480,924 501,916 Operating lease right-of-use assets 506,981 507,503 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 50,796 37,449 Other assets, net 19,577 17,622 Total assets $ 4,578,121 $ 5,590,434 Liabilities: Current Liabilities: Accounts payable $ 846,461 $ 1,108,996 Accrued liabilities, primarily salaries and related costs 423,685 479,262 Contract liabilities 283,797 323,101 Current portion of operating lease liabilities 99,876 95,621 Federal, state and foreign income taxes 13,226 47,075 Total current liabilities 1,667,045 2,054,055 Noncurrent portion of operating lease liabilities 419,602 422,844 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 145,386 shares at September 30, 2023 and 154,313 shares at December 31, 2022 1,454 1,543 Additional paid-in capital — 139 Retained earnings 2,701,386 3,310,892 Accumulated other comprehensive loss (213,060 ) (202,553 ) Total shareholders’ equity 2,489,780 3,110,021 Noncontrolling interest 1,694 3,514 Total equity 2,491,474 3,113,535 Total liabilities and equity $ 4,578,121 $ 5,590,434 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Revenues: Airfreight services $ 724,331 $ 1,480,955 $ 2,380,405 $ 4,682,076 Ocean freight and ocean services 560,281 1,684,579 1,851,389 5,420,471 Customs brokerage and other services 905,389 1,196,612 2,790,548 3,527,209 Total revenues 2,190,001 4,362,146 7,022,342 13,629,756 Operating Expenses: Airfreight services 516,519 1,104,812 1,707,568 3,459,861 Ocean freight and ocean services 387,670 1,343,355 1,277,159 4,345,963 Customs brokerage and other services 497,922 746,106 1,555,669 2,345,508 Salaries and related 412,505 499,341 1,290,911 1,546,503 Rent and occupancy 58,387 52,715 174,224 155,241 Depreciation and amortization 15,607 15,187 46,374 42,416 Selling and promotion 6,149 6,239 18,847 16,174 Other 79,173 67,468 211,055 223,425 Total operating expenses 1,973,932 3,835,223 6,281,807 12,135,091 Operating income 216,069 526,923 740,535 1,494,665 Other Income (Expense): Interest income 17,156 7,835 53,723 12,447 Interest expense (1,601 ) (470 ) (4,641 ) (1,031 ) Other, net 267 568 9,035 8,762 Other income, net 15,822 7,933 58,117 20,178 Earnings before income taxes 231,891 534,856 798,652 1,514,843 Income tax expense 61,048 120,694 206,018 368,975 Net earnings 170,843 414,162 592,634 1,145,868 Less net (losses) earnings attributable to the noncontrolling interest (510 ) (47 ) (1,530 ) 7,745 Net earnings attributable to shareholders $ 171,353 $ 414,209 $ 594,164 $ 1,138,123 Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 $ 3.92 $ 6.84 Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 $ 3.95 $ 6.90 Weighted average diluted shares outstanding 148,001 163,250 151,619 166,398 Weighted average basic shares outstanding 147,099 162,029 150,543 164,944 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, 2023 2022 2023 2022 Operating Activities: Net earnings $ 170,843 $ 414,162 $ 592,634 $ 1,145,868 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,411 5,570 2,316 9,917 Deferred income tax benefit (6,418 ) (3,070 ) (7,942 ) (14,928 ) Stock compensation expense 15,879 14,175 46,962 51,296 Depreciation and amortization 15,607 15,187 46,374 42,416 Other, net 2,673 1,435 6,396 144 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (53,722 ) 634,421 629,205 880,364 Increase (decrease) in accounts payable and accrued liabilities 40,919 (350,922 ) (311,990 ) (343,902 ) (Increase) decrease in deferred contract costs (56,917 ) 226,087 28,870 437,155 Increase (decrease) in contract liabilities 74,701 (249,895 ) (33,549 ) (488,826 ) Decrease in income taxes payable, net (4,017 ) (31,397 ) (97,743 ) (78,568 ) (Increase) decrease in other, net (10,979 ) (5,369 ) (6,695 ) 2,040 Net cash from operating activities 189,980 670,384 894,838 1,642,976 Investing Activities: Purchase of property and equipment (7,993 ) (15,928 ) (28,600 ) (68,498 ) Other, net 10 (590 ) (209 ) (645 ) Net cash from investing activities (7,983 ) (16,518 ) (28,809 ) (69,143 ) Financing Activities: Payments on borrowings on lines of credit (1,491 ) (21,117 ) (33,636 ) (29,601 ) Proceeds from borrowings on lines of credit 8,404 — 26,953 56,545 Proceeds from issuance of common stock 61,841 61,885 80,305 73,318 Repurchases of common stock (298,103 ) (469,041 ) (1,199,294 ) (1,018,106 ) Dividends Paid — — (102,263 ) (109,828 ) Payments for taxes related to net share settlement of equity awards — — (19,501 ) (19,333 ) Distribution to noncontrolling interest — (543 ) — (543 ) Net cash from financing activities (229,349 ) (428,816 ) (1,247,436 ) (1,047,548 ) Effect of exchange rate changes on cash and cash equivalents (11,807 ) (47,487 ) (13,296 ) (100,443 ) Change in cash and cash equivalents (59,159 ) 177,563 (394,703 ) 425,842 Cash and cash equivalents at beginning of period 1,698,587 1,976,971 2,034,131 1,728,692 Cash and cash equivalents at end of period $ 1,639,428 $ 2,154,534 $ 1,639,428 $ 2,154,534 Taxes Paid: Income taxes $ 61,603 $ 150,960 $ 306,059 $ 465,711 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, 2023: Revenues $ 784,503 106,293 47,327 515,340 207,006 410,904 119,849 (1,221 ) 2,190,001 Directly related cost of transportation and other expenses1 $ 421,432 63,671 28,409 398,681 145,292 263,524 81,643 (541 ) 1,402,111 Salaries and other operating expenses2 $ 261,323 38,275 16,405 66,546 42,138 120,436 27,351 (653 ) 571,821 Operating income (loss) $ 101,748 4,347 2,513 50,113 19,576 26,944 10,855 (27 ) 216,069 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 3,762 302 84 168 409 1,369 1,899 — 7,993 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the three months ended September 30, 2022: Revenues $ 1,244,515 140,622 68,057 1,489,331 518,780 637,411 264,518 (1,088 ) 4,362,146 Directly related cost of transportation and other expenses1 $ 742,826 80,116 41,638 1,250,872 416,817 453,248 209,248 (492 ) 3,194,273 Salaries and other operating expenses2 $ 314,442 30,151 15,057 98,758 37,577 109,308 36,181 (524 ) 640,950 Operating income $ 187,247 30,355 11,362 139,701 64,386 74,855 19,089 (72 ) 526,923 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 9,278 556 419 581 426 3,619 1,049 — 15,928 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 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, 2023: Revenues $ 2,535,945 326,398 151,994 1,607,788 631,001 1,386,284 386,524 (3,592 ) 7,022,342 Directly related cost of transportation and other expenses1 $ 1,387,511 201,984 90,139 1,238,996 437,392 924,592 261,482 (1,700 ) 4,540,396 Salaries and other operating expenses2 $ 785,282 108,892 52,172 205,976 132,984 373,004 85,003 (1,902 ) 1,741,411 Operating income $ 363,152 15,522 9,683 162,816 60,625 88,688 40,039 10 740,535 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 15,829 932 360 1,110 744 6,688 2,937 — 28,600 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the nine months ended September 30, 2022: Revenues $ 3,751,102 390,220 191,900 4,840,822 1,776,355 1,871,509 811,147 (3,299 ) 13,629,756 Directly related cost of transportation and other expenses1 $ 2,303,428 230,154 118,793 4,054,319 1,463,173 1,335,267 647,510 (1,312 ) 10,151,332 Salaries and other operating expenses2 $ 962,817 86,328 42,654 326,767 121,634 333,971 111,481 (1,893 ) 1,983,759 Operating income $ 484,857 73,738 30,453 459,736 191,548 202,271 52,156 (94 ) 1,494,665 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 45,149 2,672 705 1,878 1,152 13,343 3,599 — 68,498 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 1 Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings. 2 Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings. View source version on businesswire.com: https://www.businesswire.com/news/home/20231106262562/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 2023 EPS of $1.16 By: Expeditors International of Washington, Inc. via Business Wire November 07, 2023 at 08:30 AM EST Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2023 financial results including the following comparisons to the same quarter of 2022: Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 54% to $1.16 Net Earnings Attributable to Shareholders decreased 59% to $171 million Operating Income decreased 59% to $216 million Revenues decreased 50% to $2.2 billion Airfreight tonnage volume decreased 14% and ocean container volume decreased 15% “As expected, the deceleration in demand that we have seen since the second half of 2022 continued in the comparable third quarter of 2023,” said Jeffrey S. Musser, President and Chief Executive Officer. “Additionally, rates generally remained soft while capacity exceeded demand in most lanes. The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic. As a result, air and ocean capacity is now mostly plentiful and at rates that remain well below the pandemic period. We have also experienced declines in the number of customs brokerage transactions we handled, even as we benefited from lower costs resulting from the gradual clearing of pandemic-related port congestion. In addition, shippers continue to pivot back to ocean freight to reduce costs in an uncertain economy. We have seen shippers generally move smaller volumes in a marketplace that is defined by inflation, high energy costs, an increasingly tentative consumer, and now significant and growing geopolitical uncertainty. “While we have been through many industry cycles of expansion and contraction before, the pace and extent of this unwinding has been as unpredictable and disruptive as the dislocations that drove our market to such unprecedented peaks in pricing and volumes. We are meeting these conditions head-on and have been re-balancing operations for an environment that is now more like the way things were prior to the COVID disruptions. We have made very deliberate efforts to control costs and to carefully manage our headcount; we do not know how long this cycle of cautious demand and soft rates will last in this uncertain economic environment. While not all markets are soft and rates have even increased in certain lanes, we have yet to see signs of a widespread improvement in rates. Nevertheless, we are encouraged by indications that tonnage and volumes are perhaps flattening or improving. While we continue to adjust for the current environment, we also need to be prepared for the longer term when pricing and capacity conditions stabilize and demand begins to consistently trend higher.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “As the market recalibrates, we are encouraged that both tonnage and volumes increased from the June quarter, marking the first sequential quarterly growth in both tons and volumes since the third quarter of 2022. So long as the economic environment remains uncertain, we will continue to focus on aligning headcount and overhead expenses commensurate with our transactions and volumes. We remain dedicated to improving efficiency, while also preparing for the time when demand shows signs of a sustained recovery. Since December 31, we have decreased headcount by 8%. We also continue to be very mindful of our strong cash position, having now returned more than $2 billion to shareholders in repurchased stock and dividends over the past 12 months.” Mr. Powell noted that other overhead expenses increased $18 million in the quarter, primarily a result of $14 million in expenses related to indirect tax and other contingencies, compared to a recovery of $11 million in the third quarter of 2022 of costs incurred earlier that year as a result of the February 2022 cyber-attack. Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions. _______________________ 1Diluted earnings attributable to shareholders per share. NOTE: See Disclaimer on Forward-Looking Statements in this release. Disclaimer on Forward-Looking Statements: Certain statements contained in this news release are “forward-looking statements,” based on management’s views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding indications that tonnage and volumes are perhaps flattening or improving; our uncertain short-term outlook; a normalized supply chain; shippers pivoting from air freight to ocean freight; falling rates that remain well below the pandemic period; declining volumes; plentiful and in some cases excess air and ocean capacity; shipper uncertainty given the current economic outlook; rising inflation, energy and financing costs; and signs of a slowing economy and drop in demand. Future financial performance could differ materially because of factors such as: our ability to thoughtfully control our headcount and exert other efforts to align our costs; our ability to re-balance operations for an environment that is now more like the way things were prior to the COVID disruptions; our ability to improve our efficiency; our ability to predict when operating conditions may eventually stabilize and demand and volumes begin to recover and grow; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; our ability to align expenses with revenues and to enhance our productivity; our ability to maintain our existing accounts and gain new business; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with the current uncertainty in the global economy, could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company’s regulatory filings with the Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the Company’s most recent Form 10-Q. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law. Expeditors International of Washington, Inc. Third Quarter 2023 Earnings Release, November 7, 2023 Financial Highlights for the three months ended September 30, 2023 and 2022 (Unaudited) (in 000's of US dollars except share data) Three months ended September 30, Nine months ended September 30, 2023 2022 % Change 2023 2022 % Change Revenues $ 2,190,001 $ 4,362,146 (50)% $ 7,022,342 $ 13,629,756 (48)% Directly related cost of transportation and other expenses 1 $ 1,402,111 $ 3,194,273 (56)% $ 4,540,396 $ 10,151,332 (55)% Salaries and other operating expenses 2 $ 571,821 $ 640,950 (11)% $ 1,741,411 $ 1,983,759 (12)% Operating income 3 $ 216,069 $ 526,923 (59)% $ 740,535 $ 1,494,665 (50)% Net earnings attributable to shareholders $ 171,353 $ 414,209 (59)% $ 594,164 $ 1,138,123 (48)% Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 (54)% $ 3.92 $ 6.84 (43)% Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 (55)% $ 3.95 $ 6.90 (43)% Diluted weighted average shares outstanding 148,001 163,250 151,619 166,398 Basic weighted average shares outstanding 147,099 162,029 150,543 164,944 _______________ 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. In the three months ended September 30, 2023, includes $14 million of expense related to indirect tax and other contingencies. 3Operating income in the three months ended September 30, 2022 includes recoveries of $18 million of expense related to the Company's global systems downtime and investigation, recovery and remediation efforts caused by a targeted cyber-attack that occurred in the first quarter of 2022. In the nine months ended September 30, 2022, operating income includes $70 million in expenses incurred as a result of the cyber-attack. In the three and nine months ended September 30, 2023, amounts related to the cyber-attack recorded in Operating Income were insignificant. During the three and nine months ended September 30, 2023, we repurchased 2.6 million and 10.5 million shares of common stock at an average price of $116.29 and $113.97 per share. During the three and nine months ended September 30, 2022 we repurchased 4.5 million and 9.5 million shares of common stock at an average price of $103.56 and $106.84 per share. Employee Full-time Equivalents as of September 30, 2023 December 31, 2022 September 30, 2022 North America 6,975 7,778 7,819 Europe 3,811 4,228 4,167 North Asia 2,290 2,448 2,485 South Asia 1,709 1,851 1,843 Middle East, Africa and India 1,440 1,540 1,538 Latin America 753 859 852 Information Systems 1,239 1,173 1,144 Corporate 408 425 421 Total 18,625 20,302 20,269 Third quarter year-over-year percentage decrease in: 2023 Airfreight kilos Ocean freight FEU July (15)% (14)% August (15)% (15)% September (12)% (17)% Quarter (14)% (15)% _______________ Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 10, 2023 will be considered in management's 8-K “Responses to Selected Questions.” _______________ NOTE: See Disclaimer on Forward-Looking Statements in this release. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2023 December 31, 2022 Assets: Current Assets: Cash and cash equivalents $ 1,639,428 $ 2,034,131 Accounts receivable, less allowance for credit loss of $5,724 at September 30, 2023 and $9,466 at December 31, 2022 1,458,983 2,107,645 Deferred contract costs 223,768 257,545 Other 189,737 118,696 Total current assets 3,511,916 4,518,017 Property and equipment, less accumulated depreciation and amortization $579,961 at September 30, 2023 and $567,758 at December 31, 2022 480,924 501,916 Operating lease right-of-use assets 506,981 507,503 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 50,796 37,449 Other assets, net 19,577 17,622 Total assets $ 4,578,121 $ 5,590,434 Liabilities: Current Liabilities: Accounts payable $ 846,461 $ 1,108,996 Accrued liabilities, primarily salaries and related costs 423,685 479,262 Contract liabilities 283,797 323,101 Current portion of operating lease liabilities 99,876 95,621 Federal, state and foreign income taxes 13,226 47,075 Total current liabilities 1,667,045 2,054,055 Noncurrent portion of operating lease liabilities 419,602 422,844 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 145,386 shares at September 30, 2023 and 154,313 shares at December 31, 2022 1,454 1,543 Additional paid-in capital — 139 Retained earnings 2,701,386 3,310,892 Accumulated other comprehensive loss (213,060 ) (202,553 ) Total shareholders’ equity 2,489,780 3,110,021 Noncontrolling interest 1,694 3,514 Total equity 2,491,474 3,113,535 Total liabilities and equity $ 4,578,121 $ 5,590,434 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Revenues: Airfreight services $ 724,331 $ 1,480,955 $ 2,380,405 $ 4,682,076 Ocean freight and ocean services 560,281 1,684,579 1,851,389 5,420,471 Customs brokerage and other services 905,389 1,196,612 2,790,548 3,527,209 Total revenues 2,190,001 4,362,146 7,022,342 13,629,756 Operating Expenses: Airfreight services 516,519 1,104,812 1,707,568 3,459,861 Ocean freight and ocean services 387,670 1,343,355 1,277,159 4,345,963 Customs brokerage and other services 497,922 746,106 1,555,669 2,345,508 Salaries and related 412,505 499,341 1,290,911 1,546,503 Rent and occupancy 58,387 52,715 174,224 155,241 Depreciation and amortization 15,607 15,187 46,374 42,416 Selling and promotion 6,149 6,239 18,847 16,174 Other 79,173 67,468 211,055 223,425 Total operating expenses 1,973,932 3,835,223 6,281,807 12,135,091 Operating income 216,069 526,923 740,535 1,494,665 Other Income (Expense): Interest income 17,156 7,835 53,723 12,447 Interest expense (1,601 ) (470 ) (4,641 ) (1,031 ) Other, net 267 568 9,035 8,762 Other income, net 15,822 7,933 58,117 20,178 Earnings before income taxes 231,891 534,856 798,652 1,514,843 Income tax expense 61,048 120,694 206,018 368,975 Net earnings 170,843 414,162 592,634 1,145,868 Less net (losses) earnings attributable to the noncontrolling interest (510 ) (47 ) (1,530 ) 7,745 Net earnings attributable to shareholders $ 171,353 $ 414,209 $ 594,164 $ 1,138,123 Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 $ 3.92 $ 6.84 Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 $ 3.95 $ 6.90 Weighted average diluted shares outstanding 148,001 163,250 151,619 166,398 Weighted average basic shares outstanding 147,099 162,029 150,543 164,944 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, 2023 2022 2023 2022 Operating Activities: Net earnings $ 170,843 $ 414,162 $ 592,634 $ 1,145,868 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,411 5,570 2,316 9,917 Deferred income tax benefit (6,418 ) (3,070 ) (7,942 ) (14,928 ) Stock compensation expense 15,879 14,175 46,962 51,296 Depreciation and amortization 15,607 15,187 46,374 42,416 Other, net 2,673 1,435 6,396 144 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (53,722 ) 634,421 629,205 880,364 Increase (decrease) in accounts payable and accrued liabilities 40,919 (350,922 ) (311,990 ) (343,902 ) (Increase) decrease in deferred contract costs (56,917 ) 226,087 28,870 437,155 Increase (decrease) in contract liabilities 74,701 (249,895 ) (33,549 ) (488,826 ) Decrease in income taxes payable, net (4,017 ) (31,397 ) (97,743 ) (78,568 ) (Increase) decrease in other, net (10,979 ) (5,369 ) (6,695 ) 2,040 Net cash from operating activities 189,980 670,384 894,838 1,642,976 Investing Activities: Purchase of property and equipment (7,993 ) (15,928 ) (28,600 ) (68,498 ) Other, net 10 (590 ) (209 ) (645 ) Net cash from investing activities (7,983 ) (16,518 ) (28,809 ) (69,143 ) Financing Activities: Payments on borrowings on lines of credit (1,491 ) (21,117 ) (33,636 ) (29,601 ) Proceeds from borrowings on lines of credit 8,404 — 26,953 56,545 Proceeds from issuance of common stock 61,841 61,885 80,305 73,318 Repurchases of common stock (298,103 ) (469,041 ) (1,199,294 ) (1,018,106 ) Dividends Paid — — (102,263 ) (109,828 ) Payments for taxes related to net share settlement of equity awards — — (19,501 ) (19,333 ) Distribution to noncontrolling interest — (543 ) — (543 ) Net cash from financing activities (229,349 ) (428,816 ) (1,247,436 ) (1,047,548 ) Effect of exchange rate changes on cash and cash equivalents (11,807 ) (47,487 ) (13,296 ) (100,443 ) Change in cash and cash equivalents (59,159 ) 177,563 (394,703 ) 425,842 Cash and cash equivalents at beginning of period 1,698,587 1,976,971 2,034,131 1,728,692 Cash and cash equivalents at end of period $ 1,639,428 $ 2,154,534 $ 1,639,428 $ 2,154,534 Taxes Paid: Income taxes $ 61,603 $ 150,960 $ 306,059 $ 465,711 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, 2023: Revenues $ 784,503 106,293 47,327 515,340 207,006 410,904 119,849 (1,221 ) 2,190,001 Directly related cost of transportation and other expenses1 $ 421,432 63,671 28,409 398,681 145,292 263,524 81,643 (541 ) 1,402,111 Salaries and other operating expenses2 $ 261,323 38,275 16,405 66,546 42,138 120,436 27,351 (653 ) 571,821 Operating income (loss) $ 101,748 4,347 2,513 50,113 19,576 26,944 10,855 (27 ) 216,069 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 3,762 302 84 168 409 1,369 1,899 — 7,993 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the three months ended September 30, 2022: Revenues $ 1,244,515 140,622 68,057 1,489,331 518,780 637,411 264,518 (1,088 ) 4,362,146 Directly related cost of transportation and other expenses1 $ 742,826 80,116 41,638 1,250,872 416,817 453,248 209,248 (492 ) 3,194,273 Salaries and other operating expenses2 $ 314,442 30,151 15,057 98,758 37,577 109,308 36,181 (524 ) 640,950 Operating income $ 187,247 30,355 11,362 139,701 64,386 74,855 19,089 (72 ) 526,923 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 9,278 556 419 581 426 3,619 1,049 — 15,928 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 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, 2023: Revenues $ 2,535,945 326,398 151,994 1,607,788 631,001 1,386,284 386,524 (3,592 ) 7,022,342 Directly related cost of transportation and other expenses1 $ 1,387,511 201,984 90,139 1,238,996 437,392 924,592 261,482 (1,700 ) 4,540,396 Salaries and other operating expenses2 $ 785,282 108,892 52,172 205,976 132,984 373,004 85,003 (1,902 ) 1,741,411 Operating income $ 363,152 15,522 9,683 162,816 60,625 88,688 40,039 10 740,535 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 15,829 932 360 1,110 744 6,688 2,937 — 28,600 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the nine months ended September 30, 2022: Revenues $ 3,751,102 390,220 191,900 4,840,822 1,776,355 1,871,509 811,147 (3,299 ) 13,629,756 Directly related cost of transportation and other expenses1 $ 2,303,428 230,154 118,793 4,054,319 1,463,173 1,335,267 647,510 (1,312 ) 10,151,332 Salaries and other operating expenses2 $ 962,817 86,328 42,654 326,767 121,634 333,971 111,481 (1,893 ) 1,983,759 Operating income $ 484,857 73,738 30,453 459,736 191,548 202,271 52,156 (94 ) 1,494,665 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 45,149 2,672 705 1,878 1,152 13,343 3,599 — 68,498 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 1 Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings. 2 Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings. View source version on businesswire.com: https://www.businesswire.com/news/home/20231106262562/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 2023 financial results including the following comparisons to the same quarter of 2022: Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 54% to $1.16 Net Earnings Attributable to Shareholders decreased 59% to $171 million Operating Income decreased 59% to $216 million Revenues decreased 50% to $2.2 billion Airfreight tonnage volume decreased 14% and ocean container volume decreased 15% “As expected, the deceleration in demand that we have seen since the second half of 2022 continued in the comparable third quarter of 2023,” said Jeffrey S. Musser, President and Chief Executive Officer. “Additionally, rates generally remained soft while capacity exceeded demand in most lanes. The shipping industry has been undergoing a great unwinding of so many of the drivers that led up to the massive mismatch of supply and demand that occurred during the pandemic. As a result, air and ocean capacity is now mostly plentiful and at rates that remain well below the pandemic period. We have also experienced declines in the number of customs brokerage transactions we handled, even as we benefited from lower costs resulting from the gradual clearing of pandemic-related port congestion. In addition, shippers continue to pivot back to ocean freight to reduce costs in an uncertain economy. We have seen shippers generally move smaller volumes in a marketplace that is defined by inflation, high energy costs, an increasingly tentative consumer, and now significant and growing geopolitical uncertainty. “While we have been through many industry cycles of expansion and contraction before, the pace and extent of this unwinding has been as unpredictable and disruptive as the dislocations that drove our market to such unprecedented peaks in pricing and volumes. We are meeting these conditions head-on and have been re-balancing operations for an environment that is now more like the way things were prior to the COVID disruptions. We have made very deliberate efforts to control costs and to carefully manage our headcount; we do not know how long this cycle of cautious demand and soft rates will last in this uncertain economic environment. While not all markets are soft and rates have even increased in certain lanes, we have yet to see signs of a widespread improvement in rates. Nevertheless, we are encouraged by indications that tonnage and volumes are perhaps flattening or improving. While we continue to adjust for the current environment, we also need to be prepared for the longer term when pricing and capacity conditions stabilize and demand begins to consistently trend higher.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “As the market recalibrates, we are encouraged that both tonnage and volumes increased from the June quarter, marking the first sequential quarterly growth in both tons and volumes since the third quarter of 2022. So long as the economic environment remains uncertain, we will continue to focus on aligning headcount and overhead expenses commensurate with our transactions and volumes. We remain dedicated to improving efficiency, while also preparing for the time when demand shows signs of a sustained recovery. Since December 31, we have decreased headcount by 8%. We also continue to be very mindful of our strong cash position, having now returned more than $2 billion to shareholders in repurchased stock and dividends over the past 12 months.” Mr. Powell noted that other overhead expenses increased $18 million in the quarter, primarily a result of $14 million in expenses related to indirect tax and other contingencies, compared to a recovery of $11 million in the third quarter of 2022 of costs incurred earlier that year as a result of the February 2022 cyber-attack. Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 district offices and numerous branch locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, time-definite transportation, order management, warehousing and distribution and customized logistics solutions. _______________________ 1Diluted earnings attributable to shareholders per share. NOTE: See Disclaimer on Forward-Looking Statements in this release. Disclaimer on Forward-Looking Statements: Certain statements contained in this news release are “forward-looking statements,” based on management’s views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding indications that tonnage and volumes are perhaps flattening or improving; our uncertain short-term outlook; a normalized supply chain; shippers pivoting from air freight to ocean freight; falling rates that remain well below the pandemic period; declining volumes; plentiful and in some cases excess air and ocean capacity; shipper uncertainty given the current economic outlook; rising inflation, energy and financing costs; and signs of a slowing economy and drop in demand. Future financial performance could differ materially because of factors such as: our ability to thoughtfully control our headcount and exert other efforts to align our costs; our ability to re-balance operations for an environment that is now more like the way things were prior to the COVID disruptions; our ability to improve our efficiency; our ability to predict when operating conditions may eventually stabilize and demand and volumes begin to recover and grow; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; our ability to align expenses with revenues and to enhance our productivity; our ability to maintain our existing accounts and gain new business; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with the current uncertainty in the global economy, could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company’s regulatory filings with the Securities and Exchange Commission, including those in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the Company’s most recent Form 10-Q. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law. Expeditors International of Washington, Inc. Third Quarter 2023 Earnings Release, November 7, 2023 Financial Highlights for the three months ended September 30, 2023 and 2022 (Unaudited) (in 000's of US dollars except share data) Three months ended September 30, Nine months ended September 30, 2023 2022 % Change 2023 2022 % Change Revenues $ 2,190,001 $ 4,362,146 (50)% $ 7,022,342 $ 13,629,756 (48)% Directly related cost of transportation and other expenses 1 $ 1,402,111 $ 3,194,273 (56)% $ 4,540,396 $ 10,151,332 (55)% Salaries and other operating expenses 2 $ 571,821 $ 640,950 (11)% $ 1,741,411 $ 1,983,759 (12)% Operating income 3 $ 216,069 $ 526,923 (59)% $ 740,535 $ 1,494,665 (50)% Net earnings attributable to shareholders $ 171,353 $ 414,209 (59)% $ 594,164 $ 1,138,123 (48)% Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 (54)% $ 3.92 $ 6.84 (43)% Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 (55)% $ 3.95 $ 6.90 (43)% Diluted weighted average shares outstanding 148,001 163,250 151,619 166,398 Basic weighted average shares outstanding 147,099 162,029 150,543 164,944 _______________ 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. In the three months ended September 30, 2023, includes $14 million of expense related to indirect tax and other contingencies. 3Operating income in the three months ended September 30, 2022 includes recoveries of $18 million of expense related to the Company's global systems downtime and investigation, recovery and remediation efforts caused by a targeted cyber-attack that occurred in the first quarter of 2022. In the nine months ended September 30, 2022, operating income includes $70 million in expenses incurred as a result of the cyber-attack. In the three and nine months ended September 30, 2023, amounts related to the cyber-attack recorded in Operating Income were insignificant. During the three and nine months ended September 30, 2023, we repurchased 2.6 million and 10.5 million shares of common stock at an average price of $116.29 and $113.97 per share. During the three and nine months ended September 30, 2022 we repurchased 4.5 million and 9.5 million shares of common stock at an average price of $103.56 and $106.84 per share. Employee Full-time Equivalents as of September 30, 2023 December 31, 2022 September 30, 2022 North America 6,975 7,778 7,819 Europe 3,811 4,228 4,167 North Asia 2,290 2,448 2,485 South Asia 1,709 1,851 1,843 Middle East, Africa and India 1,440 1,540 1,538 Latin America 753 859 852 Information Systems 1,239 1,173 1,144 Corporate 408 425 421 Total 18,625 20,302 20,269 Third quarter year-over-year percentage decrease in: 2023 Airfreight kilos Ocean freight FEU July (15)% (14)% August (15)% (15)% September (12)% (17)% Quarter (14)% (15)% _______________ Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 10, 2023 will be considered in management's 8-K “Responses to Selected Questions.” _______________ NOTE: See Disclaimer on Forward-Looking Statements in this release. EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) September 30, 2023 December 31, 2022 Assets: Current Assets: Cash and cash equivalents $ 1,639,428 $ 2,034,131 Accounts receivable, less allowance for credit loss of $5,724 at September 30, 2023 and $9,466 at December 31, 2022 1,458,983 2,107,645 Deferred contract costs 223,768 257,545 Other 189,737 118,696 Total current assets 3,511,916 4,518,017 Property and equipment, less accumulated depreciation and amortization $579,961 at September 30, 2023 and $567,758 at December 31, 2022 480,924 501,916 Operating lease right-of-use assets 506,981 507,503 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 50,796 37,449 Other assets, net 19,577 17,622 Total assets $ 4,578,121 $ 5,590,434 Liabilities: Current Liabilities: Accounts payable $ 846,461 $ 1,108,996 Accrued liabilities, primarily salaries and related costs 423,685 479,262 Contract liabilities 283,797 323,101 Current portion of operating lease liabilities 99,876 95,621 Federal, state and foreign income taxes 13,226 47,075 Total current liabilities 1,667,045 2,054,055 Noncurrent portion of operating lease liabilities 419,602 422,844 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 145,386 shares at September 30, 2023 and 154,313 shares at December 31, 2022 1,454 1,543 Additional paid-in capital — 139 Retained earnings 2,701,386 3,310,892 Accumulated other comprehensive loss (213,060 ) (202,553 ) Total shareholders’ equity 2,489,780 3,110,021 Noncontrolling interest 1,694 3,514 Total equity 2,491,474 3,113,535 Total liabilities and equity $ 4,578,121 $ 5,590,434 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Revenues: Airfreight services $ 724,331 $ 1,480,955 $ 2,380,405 $ 4,682,076 Ocean freight and ocean services 560,281 1,684,579 1,851,389 5,420,471 Customs brokerage and other services 905,389 1,196,612 2,790,548 3,527,209 Total revenues 2,190,001 4,362,146 7,022,342 13,629,756 Operating Expenses: Airfreight services 516,519 1,104,812 1,707,568 3,459,861 Ocean freight and ocean services 387,670 1,343,355 1,277,159 4,345,963 Customs brokerage and other services 497,922 746,106 1,555,669 2,345,508 Salaries and related 412,505 499,341 1,290,911 1,546,503 Rent and occupancy 58,387 52,715 174,224 155,241 Depreciation and amortization 15,607 15,187 46,374 42,416 Selling and promotion 6,149 6,239 18,847 16,174 Other 79,173 67,468 211,055 223,425 Total operating expenses 1,973,932 3,835,223 6,281,807 12,135,091 Operating income 216,069 526,923 740,535 1,494,665 Other Income (Expense): Interest income 17,156 7,835 53,723 12,447 Interest expense (1,601 ) (470 ) (4,641 ) (1,031 ) Other, net 267 568 9,035 8,762 Other income, net 15,822 7,933 58,117 20,178 Earnings before income taxes 231,891 534,856 798,652 1,514,843 Income tax expense 61,048 120,694 206,018 368,975 Net earnings 170,843 414,162 592,634 1,145,868 Less net (losses) earnings attributable to the noncontrolling interest (510 ) (47 ) (1,530 ) 7,745 Net earnings attributable to shareholders $ 171,353 $ 414,209 $ 594,164 $ 1,138,123 Diluted earnings attributable to shareholders per share $ 1.16 $ 2.54 $ 3.92 $ 6.84 Basic earnings attributable to shareholders per share $ 1.16 $ 2.56 $ 3.95 $ 6.90 Weighted average diluted shares outstanding 148,001 163,250 151,619 166,398 Weighted average basic shares outstanding 147,099 162,029 150,543 164,944 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, 2023 2022 2023 2022 Operating Activities: Net earnings $ 170,843 $ 414,162 $ 592,634 $ 1,145,868 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,411 5,570 2,316 9,917 Deferred income tax benefit (6,418 ) (3,070 ) (7,942 ) (14,928 ) Stock compensation expense 15,879 14,175 46,962 51,296 Depreciation and amortization 15,607 15,187 46,374 42,416 Other, net 2,673 1,435 6,396 144 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (53,722 ) 634,421 629,205 880,364 Increase (decrease) in accounts payable and accrued liabilities 40,919 (350,922 ) (311,990 ) (343,902 ) (Increase) decrease in deferred contract costs (56,917 ) 226,087 28,870 437,155 Increase (decrease) in contract liabilities 74,701 (249,895 ) (33,549 ) (488,826 ) Decrease in income taxes payable, net (4,017 ) (31,397 ) (97,743 ) (78,568 ) (Increase) decrease in other, net (10,979 ) (5,369 ) (6,695 ) 2,040 Net cash from operating activities 189,980 670,384 894,838 1,642,976 Investing Activities: Purchase of property and equipment (7,993 ) (15,928 ) (28,600 ) (68,498 ) Other, net 10 (590 ) (209 ) (645 ) Net cash from investing activities (7,983 ) (16,518 ) (28,809 ) (69,143 ) Financing Activities: Payments on borrowings on lines of credit (1,491 ) (21,117 ) (33,636 ) (29,601 ) Proceeds from borrowings on lines of credit 8,404 — 26,953 56,545 Proceeds from issuance of common stock 61,841 61,885 80,305 73,318 Repurchases of common stock (298,103 ) (469,041 ) (1,199,294 ) (1,018,106 ) Dividends Paid — — (102,263 ) (109,828 ) Payments for taxes related to net share settlement of equity awards — — (19,501 ) (19,333 ) Distribution to noncontrolling interest — (543 ) — (543 ) Net cash from financing activities (229,349 ) (428,816 ) (1,247,436 ) (1,047,548 ) Effect of exchange rate changes on cash and cash equivalents (11,807 ) (47,487 ) (13,296 ) (100,443 ) Change in cash and cash equivalents (59,159 ) 177,563 (394,703 ) 425,842 Cash and cash equivalents at beginning of period 1,698,587 1,976,971 2,034,131 1,728,692 Cash and cash equivalents at end of period $ 1,639,428 $ 2,154,534 $ 1,639,428 $ 2,154,534 Taxes Paid: Income taxes $ 61,603 $ 150,960 $ 306,059 $ 465,711 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, 2023: Revenues $ 784,503 106,293 47,327 515,340 207,006 410,904 119,849 (1,221 ) 2,190,001 Directly related cost of transportation and other expenses1 $ 421,432 63,671 28,409 398,681 145,292 263,524 81,643 (541 ) 1,402,111 Salaries and other operating expenses2 $ 261,323 38,275 16,405 66,546 42,138 120,436 27,351 (653 ) 571,821 Operating income (loss) $ 101,748 4,347 2,513 50,113 19,576 26,944 10,855 (27 ) 216,069 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 3,762 302 84 168 409 1,369 1,899 — 7,993 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the three months ended September 30, 2022: Revenues $ 1,244,515 140,622 68,057 1,489,331 518,780 637,411 264,518 (1,088 ) 4,362,146 Directly related cost of transportation and other expenses1 $ 742,826 80,116 41,638 1,250,872 416,817 453,248 209,248 (492 ) 3,194,273 Salaries and other operating expenses2 $ 314,442 30,151 15,057 98,758 37,577 109,308 36,181 (524 ) 640,950 Operating income $ 187,247 30,355 11,362 139,701 64,386 74,855 19,089 (72 ) 526,923 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 9,278 556 419 581 426 3,619 1,049 — 15,928 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 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, 2023: Revenues $ 2,535,945 326,398 151,994 1,607,788 631,001 1,386,284 386,524 (3,592 ) 7,022,342 Directly related cost of transportation and other expenses1 $ 1,387,511 201,984 90,139 1,238,996 437,392 924,592 261,482 (1,700 ) 4,540,396 Salaries and other operating expenses2 $ 785,282 108,892 52,172 205,976 132,984 373,004 85,003 (1,902 ) 1,741,411 Operating income $ 363,152 15,522 9,683 162,816 60,625 88,688 40,039 10 740,535 Identifiable assets at period end $ 2,572,404 200,711 110,708 512,746 217,018 726,729 260,619 (22,814 ) 4,578,121 Capital expenditures $ 15,829 932 360 1,110 744 6,688 2,937 — 28,600 Equity $ 1,797,123 46,264 54,096 225,229 91,712 154,617 161,882 (39,449 ) 2,491,474 For the nine months ended September 30, 2022: Revenues $ 3,751,102 390,220 191,900 4,840,822 1,776,355 1,871,509 811,147 (3,299 ) 13,629,756 Directly related cost of transportation and other expenses1 $ 2,303,428 230,154 118,793 4,054,319 1,463,173 1,335,267 647,510 (1,312 ) 10,151,332 Salaries and other operating expenses2 $ 962,817 86,328 42,654 326,767 121,634 333,971 111,481 (1,893 ) 1,983,759 Operating income $ 484,857 73,738 30,453 459,736 191,548 202,271 52,156 (94 ) 1,494,665 Identifiable assets at period end $ 3,553,279 272,527 137,472 915,895 421,148 1,020,756 322,160 (35,711 ) 6,607,526 Capital expenditures $ 45,149 2,672 705 1,878 1,152 13,343 3,599 — 68,498 Equity $ 2,430,632 129,346 59,494 304,496 180,855 289,595 140,147 (43,172 ) 3,491,393 1 Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings. 2 Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings. 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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