Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Expeditors Reports Second Quarter 2021 EPS of $1.84 By: Expeditors International of Washington, Inc. via Business Wire August 03, 2021 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second 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 69% to $1.84 Net Earnings Attributable to Shareholders increased 72% to $316 million Operating Income increased 66% to $411 million Revenues increased 50% to $3.6 billion Airfreight tonnage volume and ocean container volume increased 37% and 34%, respectively “We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our entire company continues to perform at its very best, with strong performance and growth across all of our products. Because of ongoing supply/demand imbalances, as well as labor and equipment shortages around the globe, shippers face extraordinarily complex challenges throughout their supply chains. Logistics is now top of mind at the highest levels in most organizations. Unfortunately, there is no quick or simple fix to any of these issues and every one of our transactions seems to require significantly more attention and dedication. Whether it’s an ocean container, a customs declaration, a fulfillment order in one of our warehouses, or a high-touch, white-glove delivery for one of our Transcon customers – just about everything we do requires us to be more innovative, flexible, and alert to change in the current operating environment. I want to express enormous gratitude to our employees, who have continued to take care of our customers throughout these challenges. “During the quarter, we achieved new records in airfreight tonnage and ocean container volumes, operating income and net earnings. Buy and sell rates remained significantly higher than pre-pandemic norms, as we worked with our carrier partners to secure precious space for our customers. It has not been easy. Many of the impediments to smoother trade flow, such as port congestion and equipment shortages, were not appreciably better in Q2 than they were in Q1. “Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit. Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March. “We will continue to do all that we can to help our customers during such difficult times. While we remain optimistic that conditions will improve over time, we are unable to predict when that might take place, or how even the recovery might be, and we believe that demand will likely continue to outstrip capacity in both air and ocean for the near term, keeping buy/sell rates unsettled for at least the duration of 2021.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “The quarter just ended provides the first meaningful comparisons to a strong year-ago quarter in 2020, when we first started to see the results of our improved performance during the unprecedented conditions brought on by the global COVID-19 pandemic. At that time, we were just starting to demonstrate our ability to quickly adapt to a radically different operating environment of high demand for very specific products in certain lanes at a time when the vast majority of air capacity had been removed and most of our people were settling in to working from home. A year later, as we are cautiously beginning to bring our people back on site, we are navigating a multitude of challenges and performing at levels we have never seen before across the company and in all of our products. We are busier than ever, generating growth in revenue, operating income, and earnings that is well ahead of expenses, as we continue to learn how to operate in this environment. While we believe the current environment is likely to remain at least through the end of 2021, I would again caution that we are unable to predict how long these ongoing conditions will persist or the impact they will have on our future operations. Regardless, we will continue to make important investments in people, processes, and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.” 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. Second Quarter 2021 Earnings Release, August 3, 2021 Financial Highlights for the three and six months ended June 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 3,609,093 $ 2,411,078 50% $ 6,807,913 $ 4,254,845 60% Directly related cost of transportation and other expenses1,3 $ 2,598,633 $ 1,661,487 56% $ 4,845,917 $ 2,890,118 68% Salaries and other operating expenses2 $ 599,815 $ 501,965 19% $ 1,165,836 $ 958,046 22% Operating income $ 410,645 $ 247,626 66% $ 796,160 $ 406,681 96% Net earnings attributable to shareholders $ 316,372 $ 183,869 72% $ 603,592 $ 306,213 97% Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 69% $ 3.52 $ 1.80 96% Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 70% $ 3.57 $ 1.83 95% Diluted weighted average shares outstanding 171,677 169,290 171,660 170,382 Basic weighted average shares outstanding 169,210 166,767 169,140 167,751 ____________________ 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 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 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 three and six months ended June 30, 2021, we repurchased 0.5 million and 1.4 million shares of common stock at an average price of $124.94 and $104.20 per share, respectively. During the three and six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively. Employee Full-time Equivalents as of June 30, 2021 2020 North America 6,949 6,749 Europe 3,700 3,419 North Asia 2,416 2,413 South Asia 1,671 1,654 Middle East, Africa and India 1,496 1,528 Latin America 781 823 Information Systems 968 971 Corporate 399 380 Total 18,380 17,937 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Second quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU April 29% 34% May 39% 36% June 46% 30% Quarter 37% 34% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 6, 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; 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 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) June 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,674,121 $ 1,527,791 Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020 2,647,516 1,998,055 Deferred contract costs 534,692 327,448 Other 128,933 110,250 Total current assets 4,985,262 3,963,544 Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020 499,282 506,425 Operating lease right-of-use assets 443,708 432,723 Goodwill 7,927 7,927 Other assets, net 16,992 16,884 Total assets $ 5,953,171 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,408,572 $ 1,136,859 Accrued expenses, primarily salaries and related costs 319,696 257,021 Contract liabilities 619,140 379,722 Current portion of operating lease liabilities 80,210 74,004 Federal, state and foreign income taxes 57,608 45,437 Total current liabilities 2,485,226 1,893,043 Noncurrent portion of operating lease liabilities 370,333 364,185 Deferred federal and state income taxes, net 13,961 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020 1,692 1,693 Additional paid-in capital 79,357 157,496 Retained earnings 3,104,471 2,600,201 Accumulated other comprehensive loss (106,066 ) (99,753 ) Total shareholders’ equity 3,079,454 2,659,637 Noncontrolling interest 4,197 3,590 Total equity 3,083,651 2,663,227 Total liabilities and equity $ 5,953,171 $ 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 June 30, Six months ended June 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,523,569 $ 1,269,654 $ 2,849,484 $ 1,925,252 Ocean freight and ocean services 1,098,550 489,385 2,052,462 980,725 Customs brokerage and other services 986,974 652,039 1,905,967 1,348,868 Total revenues 3,609,093 2,411,078 6,807,913 4,254,845 Operating Expenses: Airfreight services 1,136,328 932,137 2,090,872 1,398,865 Ocean freight and ocean services 862,251 361,272 1,604,686 725,668 Customs brokerage and other services 600,054 368,078 1,150,359 765,585 Salaries and related 481,186 395,107 933,291 737,147 Rent and occupancy 45,366 41,375 90,646 83,899 Depreciation and amortization 12,675 14,109 25,662 26,769 Selling and promotion 3,172 3,113 6,242 11,356 Other 57,416 48,261 109,995 98,875 Total operating expenses 3,198,448 2,163,452 6,011,753 3,848,164 Operating income 410,645 247,626 796,160 406,681 Other Income (Expense): Interest income 2,188 2,559 4,134 7,366 Other, net 2,649 797 5,649 4,181 Other income, net 4,837 3,356 9,783 11,547 Earnings before income taxes 415,482 250,982 805,943 418,228 Income tax expense 98,508 66,794 201,019 111,258 Net earnings 316,974 184,188 604,924 306,970 Less net earnings attributable to the noncontrolling interest 602 319 1,332 757 Net earnings attributable to shareholders $ 316,372 $ 183,869 $ 603,592 $ 306,213 Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 $ 3.52 $ 1.80 Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 $ 3.57 $ 1.83 Weighted average diluted shares outstanding 171,677 169,290 171,660 170,382 Weighted average basic shares outstanding 169,210 166,767 169,140 167,751 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 316,974 $ 184,188 $ 604,924 $ 306,970 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,090 2,389 2,289 4,209 Deferred income tax expense 1,850 9,287 10,001 4,148 Stock compensation expense 30,909 21,638 42,094 32,794 Depreciation and amortization 12,675 14,109 25,662 26,769 Other, net 346 118 897 551 Changes in operating assets and liabilities: Increase in accounts receivable (410,783 ) (185,055 ) (663,697 ) (168,375 ) Increase in accounts payable and accrued expenses 100,118 106,760 333,271 107,677 Increase in deferred contract costs (150,382 ) (2,333 ) (221,640 ) (18,401 ) Increase (decrease) in contract liabilities 174,504 (595 ) 254,094 20,606 (Decrease) increase in income taxes payable, net (47,994 ) 20,154 (1,356 ) 30,642 Decrease (increase) in other, net 1,164 16,061 (324 ) 4,131 Net cash from operating activities 30,471 186,721 386,215 351,721 Investing Activities: Purchase of property and equipment (6,539 ) (22,114 ) (14,930 ) (28,241 ) Other, net 138 (68 ) 104 (211 ) Net cash from investing activities (6,401 ) (22,182 ) (14,826 ) (28,452 ) Financing Activities: Proceeds from issuance of common stock 22,711 29,187 42,468 52,586 Repurchases of common stock (62,472 ) (30,985 ) (148,469 ) (314,225 ) Dividends paid (98,387 ) (86,815 ) (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (13,893 ) (9,170 ) (15,168 ) (10,566 ) Net cash from financing activities (152,041 ) (97,783 ) (219,556 ) (359,020 ) Effect of exchange rate changes on cash and cash equivalents 8,699 1,726 (5,503 ) (14,285 ) Change in cash and cash equivalents (119,272 ) 68,482 146,330 (50,036 ) Cash and cash equivalents at beginning of period 1,793,393 1,111,973 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,674,121 $ 1,180,455 $ 1,674,121 $ 1,180,455 Taxes Paid: Income taxes $ 143,959 $ 38,504 $ 190,536 $ 73,808 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the three months ended June 30, 2021: Revenues $ 997,567 101,465 46,981 1,309,382 417,718 544,949 192,186 (1,155 ) 3,609,093 Directly related cost of transportation and other expenses1 $ 566,882 59,311 25,952 1,086,641 335,219 376,856 148,290 (518 ) 2,598,633 Salaries and other operating expenses2 $ 241,121 31,300 14,735 106,812 49,046 123,408 34,026 (633 ) 599,815 Operating income $ 189,564 10,854 6,294 115,929 33,453 44,685 9,870 (4 ) 410,645 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 2,905 64 72 400 532 2,100 466 — 6,539 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the three months ended June 30, 2020: Revenues3 $ 639,226 73,679 37,553 984,715 217,152 358,060 101,571 (878 ) 2,411,078 Directly related cost of transportation and other expenses1, 3 $ 354,619 40,814 22,701 775,572 153,194 242,170 72,868 (451 ) 1,661,487 Salaries and other operating expenses2 $ 207,703 25,283 12,112 97,171 39,184 95,757 25,188 (433 ) 501,965 Operating income $ 76,904 7,582 2,740 111,972 24,774 20,133 3,515 6 247,626 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 19,076 1,148 216 385 182 993 114 — 22,114 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the six months ended June 30, 2021: Revenues3 $ 1,872,957 195,582 91,845 2,518,430 767,484 1,011,282 352,692 (2,359 ) 6,807,913 Directly related cost of transportation and other expenses1, 3 $ 1,069,517 112,361 52,652 2,054,170 605,163 683,765 269,399 (1,110 ) 4,845,917 Salaries and other operating expenses2 $ 479,819 57,037 27,112 213,732 92,211 232,863 64,301 (1,239 ) 1,165,836 Operating income $ 323,621 26,184 12,081 250,528 70,110 94,654 18,992 (10 ) 796,160 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 5,930 186 125 757 1,111 5,654 1,167 — 14,930 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the six months ended June 30, 2020: Revenues3 $ 1,289,631 154,910 75,444 1,481,872 383,233 665,020 206,553 (1,818 ) 4,254,845 Directly related cost of transportation and other expenses1, 3 $ 728,578 86,104 46,467 1,160,075 271,515 450,488 147,787 (896 ) 2,890,118 Salaries and other operating expenses2 $ 433,647 48,995 23,861 154,604 69,092 177,611 51,138 (902 ) 958,046 Operating income $ 127,406 19,811 5,116 167,193 42,626 36,921 7,628 (20 ) 406,681 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 23,573 1,209 318 710 370 1,638 423 — 28,241 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 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 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 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 six months ended June 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In the first and second quarter 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 quarter 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 June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% and 34%, respectively, of the Company’s total revenues and 22% and 38%, respectively, of the total operating income. For the six months ended June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% of the Company’s total revenues and 24% and 33%, respectively, of the total operating income. View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005285/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 Second Quarter 2021 EPS of $1.84 By: Expeditors International of Washington, Inc. via Business Wire August 03, 2021 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second 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 69% to $1.84 Net Earnings Attributable to Shareholders increased 72% to $316 million Operating Income increased 66% to $411 million Revenues increased 50% to $3.6 billion Airfreight tonnage volume and ocean container volume increased 37% and 34%, respectively “We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our entire company continues to perform at its very best, with strong performance and growth across all of our products. Because of ongoing supply/demand imbalances, as well as labor and equipment shortages around the globe, shippers face extraordinarily complex challenges throughout their supply chains. Logistics is now top of mind at the highest levels in most organizations. Unfortunately, there is no quick or simple fix to any of these issues and every one of our transactions seems to require significantly more attention and dedication. Whether it’s an ocean container, a customs declaration, a fulfillment order in one of our warehouses, or a high-touch, white-glove delivery for one of our Transcon customers – just about everything we do requires us to be more innovative, flexible, and alert to change in the current operating environment. I want to express enormous gratitude to our employees, who have continued to take care of our customers throughout these challenges. “During the quarter, we achieved new records in airfreight tonnage and ocean container volumes, operating income and net earnings. Buy and sell rates remained significantly higher than pre-pandemic norms, as we worked with our carrier partners to secure precious space for our customers. It has not been easy. Many of the impediments to smoother trade flow, such as port congestion and equipment shortages, were not appreciably better in Q2 than they were in Q1. “Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit. Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March. “We will continue to do all that we can to help our customers during such difficult times. While we remain optimistic that conditions will improve over time, we are unable to predict when that might take place, or how even the recovery might be, and we believe that demand will likely continue to outstrip capacity in both air and ocean for the near term, keeping buy/sell rates unsettled for at least the duration of 2021.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “The quarter just ended provides the first meaningful comparisons to a strong year-ago quarter in 2020, when we first started to see the results of our improved performance during the unprecedented conditions brought on by the global COVID-19 pandemic. At that time, we were just starting to demonstrate our ability to quickly adapt to a radically different operating environment of high demand for very specific products in certain lanes at a time when the vast majority of air capacity had been removed and most of our people were settling in to working from home. A year later, as we are cautiously beginning to bring our people back on site, we are navigating a multitude of challenges and performing at levels we have never seen before across the company and in all of our products. We are busier than ever, generating growth in revenue, operating income, and earnings that is well ahead of expenses, as we continue to learn how to operate in this environment. While we believe the current environment is likely to remain at least through the end of 2021, I would again caution that we are unable to predict how long these ongoing conditions will persist or the impact they will have on our future operations. Regardless, we will continue to make important investments in people, processes, and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.” 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. Second Quarter 2021 Earnings Release, August 3, 2021 Financial Highlights for the three and six months ended June 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 3,609,093 $ 2,411,078 50% $ 6,807,913 $ 4,254,845 60% Directly related cost of transportation and other expenses1,3 $ 2,598,633 $ 1,661,487 56% $ 4,845,917 $ 2,890,118 68% Salaries and other operating expenses2 $ 599,815 $ 501,965 19% $ 1,165,836 $ 958,046 22% Operating income $ 410,645 $ 247,626 66% $ 796,160 $ 406,681 96% Net earnings attributable to shareholders $ 316,372 $ 183,869 72% $ 603,592 $ 306,213 97% Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 69% $ 3.52 $ 1.80 96% Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 70% $ 3.57 $ 1.83 95% Diluted weighted average shares outstanding 171,677 169,290 171,660 170,382 Basic weighted average shares outstanding 169,210 166,767 169,140 167,751 ____________________ 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 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 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 three and six months ended June 30, 2021, we repurchased 0.5 million and 1.4 million shares of common stock at an average price of $124.94 and $104.20 per share, respectively. During the three and six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively. Employee Full-time Equivalents as of June 30, 2021 2020 North America 6,949 6,749 Europe 3,700 3,419 North Asia 2,416 2,413 South Asia 1,671 1,654 Middle East, Africa and India 1,496 1,528 Latin America 781 823 Information Systems 968 971 Corporate 399 380 Total 18,380 17,937 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Second quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU April 29% 34% May 39% 36% June 46% 30% Quarter 37% 34% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 6, 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; 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 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) June 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,674,121 $ 1,527,791 Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020 2,647,516 1,998,055 Deferred contract costs 534,692 327,448 Other 128,933 110,250 Total current assets 4,985,262 3,963,544 Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020 499,282 506,425 Operating lease right-of-use assets 443,708 432,723 Goodwill 7,927 7,927 Other assets, net 16,992 16,884 Total assets $ 5,953,171 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,408,572 $ 1,136,859 Accrued expenses, primarily salaries and related costs 319,696 257,021 Contract liabilities 619,140 379,722 Current portion of operating lease liabilities 80,210 74,004 Federal, state and foreign income taxes 57,608 45,437 Total current liabilities 2,485,226 1,893,043 Noncurrent portion of operating lease liabilities 370,333 364,185 Deferred federal and state income taxes, net 13,961 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020 1,692 1,693 Additional paid-in capital 79,357 157,496 Retained earnings 3,104,471 2,600,201 Accumulated other comprehensive loss (106,066 ) (99,753 ) Total shareholders’ equity 3,079,454 2,659,637 Noncontrolling interest 4,197 3,590 Total equity 3,083,651 2,663,227 Total liabilities and equity $ 5,953,171 $ 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 June 30, Six months ended June 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,523,569 $ 1,269,654 $ 2,849,484 $ 1,925,252 Ocean freight and ocean services 1,098,550 489,385 2,052,462 980,725 Customs brokerage and other services 986,974 652,039 1,905,967 1,348,868 Total revenues 3,609,093 2,411,078 6,807,913 4,254,845 Operating Expenses: Airfreight services 1,136,328 932,137 2,090,872 1,398,865 Ocean freight and ocean services 862,251 361,272 1,604,686 725,668 Customs brokerage and other services 600,054 368,078 1,150,359 765,585 Salaries and related 481,186 395,107 933,291 737,147 Rent and occupancy 45,366 41,375 90,646 83,899 Depreciation and amortization 12,675 14,109 25,662 26,769 Selling and promotion 3,172 3,113 6,242 11,356 Other 57,416 48,261 109,995 98,875 Total operating expenses 3,198,448 2,163,452 6,011,753 3,848,164 Operating income 410,645 247,626 796,160 406,681 Other Income (Expense): Interest income 2,188 2,559 4,134 7,366 Other, net 2,649 797 5,649 4,181 Other income, net 4,837 3,356 9,783 11,547 Earnings before income taxes 415,482 250,982 805,943 418,228 Income tax expense 98,508 66,794 201,019 111,258 Net earnings 316,974 184,188 604,924 306,970 Less net earnings attributable to the noncontrolling interest 602 319 1,332 757 Net earnings attributable to shareholders $ 316,372 $ 183,869 $ 603,592 $ 306,213 Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 $ 3.52 $ 1.80 Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 $ 3.57 $ 1.83 Weighted average diluted shares outstanding 171,677 169,290 171,660 170,382 Weighted average basic shares outstanding 169,210 166,767 169,140 167,751 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 316,974 $ 184,188 $ 604,924 $ 306,970 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,090 2,389 2,289 4,209 Deferred income tax expense 1,850 9,287 10,001 4,148 Stock compensation expense 30,909 21,638 42,094 32,794 Depreciation and amortization 12,675 14,109 25,662 26,769 Other, net 346 118 897 551 Changes in operating assets and liabilities: Increase in accounts receivable (410,783 ) (185,055 ) (663,697 ) (168,375 ) Increase in accounts payable and accrued expenses 100,118 106,760 333,271 107,677 Increase in deferred contract costs (150,382 ) (2,333 ) (221,640 ) (18,401 ) Increase (decrease) in contract liabilities 174,504 (595 ) 254,094 20,606 (Decrease) increase in income taxes payable, net (47,994 ) 20,154 (1,356 ) 30,642 Decrease (increase) in other, net 1,164 16,061 (324 ) 4,131 Net cash from operating activities 30,471 186,721 386,215 351,721 Investing Activities: Purchase of property and equipment (6,539 ) (22,114 ) (14,930 ) (28,241 ) Other, net 138 (68 ) 104 (211 ) Net cash from investing activities (6,401 ) (22,182 ) (14,826 ) (28,452 ) Financing Activities: Proceeds from issuance of common stock 22,711 29,187 42,468 52,586 Repurchases of common stock (62,472 ) (30,985 ) (148,469 ) (314,225 ) Dividends paid (98,387 ) (86,815 ) (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (13,893 ) (9,170 ) (15,168 ) (10,566 ) Net cash from financing activities (152,041 ) (97,783 ) (219,556 ) (359,020 ) Effect of exchange rate changes on cash and cash equivalents 8,699 1,726 (5,503 ) (14,285 ) Change in cash and cash equivalents (119,272 ) 68,482 146,330 (50,036 ) Cash and cash equivalents at beginning of period 1,793,393 1,111,973 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,674,121 $ 1,180,455 $ 1,674,121 $ 1,180,455 Taxes Paid: Income taxes $ 143,959 $ 38,504 $ 190,536 $ 73,808 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the three months ended June 30, 2021: Revenues $ 997,567 101,465 46,981 1,309,382 417,718 544,949 192,186 (1,155 ) 3,609,093 Directly related cost of transportation and other expenses1 $ 566,882 59,311 25,952 1,086,641 335,219 376,856 148,290 (518 ) 2,598,633 Salaries and other operating expenses2 $ 241,121 31,300 14,735 106,812 49,046 123,408 34,026 (633 ) 599,815 Operating income $ 189,564 10,854 6,294 115,929 33,453 44,685 9,870 (4 ) 410,645 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 2,905 64 72 400 532 2,100 466 — 6,539 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the three months ended June 30, 2020: Revenues3 $ 639,226 73,679 37,553 984,715 217,152 358,060 101,571 (878 ) 2,411,078 Directly related cost of transportation and other expenses1, 3 $ 354,619 40,814 22,701 775,572 153,194 242,170 72,868 (451 ) 1,661,487 Salaries and other operating expenses2 $ 207,703 25,283 12,112 97,171 39,184 95,757 25,188 (433 ) 501,965 Operating income $ 76,904 7,582 2,740 111,972 24,774 20,133 3,515 6 247,626 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 19,076 1,148 216 385 182 993 114 — 22,114 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the six months ended June 30, 2021: Revenues3 $ 1,872,957 195,582 91,845 2,518,430 767,484 1,011,282 352,692 (2,359 ) 6,807,913 Directly related cost of transportation and other expenses1, 3 $ 1,069,517 112,361 52,652 2,054,170 605,163 683,765 269,399 (1,110 ) 4,845,917 Salaries and other operating expenses2 $ 479,819 57,037 27,112 213,732 92,211 232,863 64,301 (1,239 ) 1,165,836 Operating income $ 323,621 26,184 12,081 250,528 70,110 94,654 18,992 (10 ) 796,160 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 5,930 186 125 757 1,111 5,654 1,167 — 14,930 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the six months ended June 30, 2020: Revenues3 $ 1,289,631 154,910 75,444 1,481,872 383,233 665,020 206,553 (1,818 ) 4,254,845 Directly related cost of transportation and other expenses1, 3 $ 728,578 86,104 46,467 1,160,075 271,515 450,488 147,787 (896 ) 2,890,118 Salaries and other operating expenses2 $ 433,647 48,995 23,861 154,604 69,092 177,611 51,138 (902 ) 958,046 Operating income $ 127,406 19,811 5,116 167,193 42,626 36,921 7,628 (20 ) 406,681 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 23,573 1,209 318 710 370 1,638 423 — 28,241 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 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 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 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 six months ended June 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In the first and second quarter 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 quarter 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 June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% and 34%, respectively, of the Company’s total revenues and 22% and 38%, respectively, of the total operating income. For the six months ended June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% of the Company’s total revenues and 24% and 33%, respectively, of the total operating income. View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005285/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 second 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 69% to $1.84 Net Earnings Attributable to Shareholders increased 72% to $316 million Operating Income increased 66% to $411 million Revenues increased 50% to $3.6 billion Airfreight tonnage volume and ocean container volume increased 37% and 34%, respectively “We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our entire company continues to perform at its very best, with strong performance and growth across all of our products. Because of ongoing supply/demand imbalances, as well as labor and equipment shortages around the globe, shippers face extraordinarily complex challenges throughout their supply chains. Logistics is now top of mind at the highest levels in most organizations. Unfortunately, there is no quick or simple fix to any of these issues and every one of our transactions seems to require significantly more attention and dedication. Whether it’s an ocean container, a customs declaration, a fulfillment order in one of our warehouses, or a high-touch, white-glove delivery for one of our Transcon customers – just about everything we do requires us to be more innovative, flexible, and alert to change in the current operating environment. I want to express enormous gratitude to our employees, who have continued to take care of our customers throughout these challenges. “During the quarter, we achieved new records in airfreight tonnage and ocean container volumes, operating income and net earnings. Buy and sell rates remained significantly higher than pre-pandemic norms, as we worked with our carrier partners to secure precious space for our customers. It has not been easy. Many of the impediments to smoother trade flow, such as port congestion and equipment shortages, were not appreciably better in Q2 than they were in Q1. “Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit. Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March. “We will continue to do all that we can to help our customers during such difficult times. While we remain optimistic that conditions will improve over time, we are unable to predict when that might take place, or how even the recovery might be, and we believe that demand will likely continue to outstrip capacity in both air and ocean for the near term, keeping buy/sell rates unsettled for at least the duration of 2021.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “The quarter just ended provides the first meaningful comparisons to a strong year-ago quarter in 2020, when we first started to see the results of our improved performance during the unprecedented conditions brought on by the global COVID-19 pandemic. At that time, we were just starting to demonstrate our ability to quickly adapt to a radically different operating environment of high demand for very specific products in certain lanes at a time when the vast majority of air capacity had been removed and most of our people were settling in to working from home. A year later, as we are cautiously beginning to bring our people back on site, we are navigating a multitude of challenges and performing at levels we have never seen before across the company and in all of our products. We are busier than ever, generating growth in revenue, operating income, and earnings that is well ahead of expenses, as we continue to learn how to operate in this environment. While we believe the current environment is likely to remain at least through the end of 2021, I would again caution that we are unable to predict how long these ongoing conditions will persist or the impact they will have on our future operations. Regardless, we will continue to make important investments in people, processes, and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth.” 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. Second Quarter 2021 Earnings Release, August 3, 2021 Financial Highlights for the three and six months ended June 30, 2021 and 2020 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2021 2020 % Change 2021 2020 % Change Revenues3 $ 3,609,093 $ 2,411,078 50% $ 6,807,913 $ 4,254,845 60% Directly related cost of transportation and other expenses1,3 $ 2,598,633 $ 1,661,487 56% $ 4,845,917 $ 2,890,118 68% Salaries and other operating expenses2 $ 599,815 $ 501,965 19% $ 1,165,836 $ 958,046 22% Operating income $ 410,645 $ 247,626 66% $ 796,160 $ 406,681 96% Net earnings attributable to shareholders $ 316,372 $ 183,869 72% $ 603,592 $ 306,213 97% Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 69% $ 3.52 $ 1.80 96% Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 70% $ 3.57 $ 1.83 95% Diluted weighted average shares outstanding 171,677 169,290 171,660 170,382 Basic weighted average shares outstanding 169,210 166,767 169,140 167,751 ____________________ 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 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 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 three and six months ended June 30, 2021, we repurchased 0.5 million and 1.4 million shares of common stock at an average price of $124.94 and $104.20 per share, respectively. During the three and six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively. Employee Full-time Equivalents as of June 30, 2021 2020 North America 6,949 6,749 Europe 3,700 3,419 North Asia 2,416 2,413 South Asia 1,671 1,654 Middle East, Africa and India 1,496 1,528 Latin America 781 823 Information Systems 968 971 Corporate 399 380 Total 18,380 17,937 Disclaimer on Forward-Looking Statements: NOTE: See Disclaimer on Forward-Looking Statements in this release. Second quarter year-over-year percentage increase in: 2021 Airfreight kilos Ocean freight FEU April 29% 34% May 39% 36% June 46% 30% Quarter 37% 34% Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 6, 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; 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 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) June 30, 2021 December 31, 2020 Assets: Current Assets: Cash and cash equivalents $ 1,674,121 $ 1,527,791 Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020 2,647,516 1,998,055 Deferred contract costs 534,692 327,448 Other 128,933 110,250 Total current assets 4,985,262 3,963,544 Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020 499,282 506,425 Operating lease right-of-use assets 443,708 432,723 Goodwill 7,927 7,927 Other assets, net 16,992 16,884 Total assets $ 5,953,171 $ 4,927,503 Liabilities: Current Liabilities: Accounts payable $ 1,408,572 $ 1,136,859 Accrued expenses, primarily salaries and related costs 319,696 257,021 Contract liabilities 619,140 379,722 Current portion of operating lease liabilities 80,210 74,004 Federal, state and foreign income taxes 57,608 45,437 Total current liabilities 2,485,226 1,893,043 Noncurrent portion of operating lease liabilities 370,333 364,185 Deferred federal and state income taxes, net 13,961 7,048 Commitments and contingencies Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020 1,692 1,693 Additional paid-in capital 79,357 157,496 Retained earnings 3,104,471 2,600,201 Accumulated other comprehensive loss (106,066 ) (99,753 ) Total shareholders’ equity 3,079,454 2,659,637 Noncontrolling interest 4,197 3,590 Total equity 3,083,651 2,663,227 Total liabilities and equity $ 5,953,171 $ 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 June 30, Six months ended June 30, 2021 2020 2021 2020 Revenues: Airfreight services $ 1,523,569 $ 1,269,654 $ 2,849,484 $ 1,925,252 Ocean freight and ocean services 1,098,550 489,385 2,052,462 980,725 Customs brokerage and other services 986,974 652,039 1,905,967 1,348,868 Total revenues 3,609,093 2,411,078 6,807,913 4,254,845 Operating Expenses: Airfreight services 1,136,328 932,137 2,090,872 1,398,865 Ocean freight and ocean services 862,251 361,272 1,604,686 725,668 Customs brokerage and other services 600,054 368,078 1,150,359 765,585 Salaries and related 481,186 395,107 933,291 737,147 Rent and occupancy 45,366 41,375 90,646 83,899 Depreciation and amortization 12,675 14,109 25,662 26,769 Selling and promotion 3,172 3,113 6,242 11,356 Other 57,416 48,261 109,995 98,875 Total operating expenses 3,198,448 2,163,452 6,011,753 3,848,164 Operating income 410,645 247,626 796,160 406,681 Other Income (Expense): Interest income 2,188 2,559 4,134 7,366 Other, net 2,649 797 5,649 4,181 Other income, net 4,837 3,356 9,783 11,547 Earnings before income taxes 415,482 250,982 805,943 418,228 Income tax expense 98,508 66,794 201,019 111,258 Net earnings 316,974 184,188 604,924 306,970 Less net earnings attributable to the noncontrolling interest 602 319 1,332 757 Net earnings attributable to shareholders $ 316,372 $ 183,869 $ 603,592 $ 306,213 Diluted earnings attributable to shareholders per share $ 1.84 $ 1.09 $ 3.52 $ 1.80 Basic earnings attributable to shareholders per share $ 1.87 $ 1.10 $ 3.57 $ 1.83 Weighted average diluted shares outstanding 171,677 169,290 171,660 170,382 Weighted average basic shares outstanding 169,210 166,767 169,140 167,751 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three months ended June 30, Six months ended June 30, 2021 2020 2021 2020 Operating Activities: Net earnings $ 316,974 $ 184,188 $ 604,924 $ 306,970 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 1,090 2,389 2,289 4,209 Deferred income tax expense 1,850 9,287 10,001 4,148 Stock compensation expense 30,909 21,638 42,094 32,794 Depreciation and amortization 12,675 14,109 25,662 26,769 Other, net 346 118 897 551 Changes in operating assets and liabilities: Increase in accounts receivable (410,783 ) (185,055 ) (663,697 ) (168,375 ) Increase in accounts payable and accrued expenses 100,118 106,760 333,271 107,677 Increase in deferred contract costs (150,382 ) (2,333 ) (221,640 ) (18,401 ) Increase (decrease) in contract liabilities 174,504 (595 ) 254,094 20,606 (Decrease) increase in income taxes payable, net (47,994 ) 20,154 (1,356 ) 30,642 Decrease (increase) in other, net 1,164 16,061 (324 ) 4,131 Net cash from operating activities 30,471 186,721 386,215 351,721 Investing Activities: Purchase of property and equipment (6,539 ) (22,114 ) (14,930 ) (28,241 ) Other, net 138 (68 ) 104 (211 ) Net cash from investing activities (6,401 ) (22,182 ) (14,826 ) (28,452 ) Financing Activities: Proceeds from issuance of common stock 22,711 29,187 42,468 52,586 Repurchases of common stock (62,472 ) (30,985 ) (148,469 ) (314,225 ) Dividends paid (98,387 ) (86,815 ) (98,387 ) (86,815 ) Payments for taxes related to net share settlement of equity awards (13,893 ) (9,170 ) (15,168 ) (10,566 ) Net cash from financing activities (152,041 ) (97,783 ) (219,556 ) (359,020 ) Effect of exchange rate changes on cash and cash equivalents 8,699 1,726 (5,503 ) (14,285 ) Change in cash and cash equivalents (119,272 ) 68,482 146,330 (50,036 ) Cash and cash equivalents at beginning of period 1,793,393 1,111,973 1,527,791 1,230,491 Cash and cash equivalents at end of period $ 1,674,121 $ 1,180,455 $ 1,674,121 $ 1,180,455 Taxes Paid: Income taxes $ 143,959 $ 38,504 $ 190,536 $ 73,808 EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Business Segment Information (In thousands) (Unaudited) UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the three months ended June 30, 2021: Revenues $ 997,567 101,465 46,981 1,309,382 417,718 544,949 192,186 (1,155 ) 3,609,093 Directly related cost of transportation and other expenses1 $ 566,882 59,311 25,952 1,086,641 335,219 376,856 148,290 (518 ) 2,598,633 Salaries and other operating expenses2 $ 241,121 31,300 14,735 106,812 49,046 123,408 34,026 (633 ) 599,815 Operating income $ 189,564 10,854 6,294 115,929 33,453 44,685 9,870 (4 ) 410,645 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 2,905 64 72 400 532 2,100 466 — 6,539 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the three months ended June 30, 2020: Revenues3 $ 639,226 73,679 37,553 984,715 217,152 358,060 101,571 (878 ) 2,411,078 Directly related cost of transportation and other expenses1, 3 $ 354,619 40,814 22,701 775,572 153,194 242,170 72,868 (451 ) 1,661,487 Salaries and other operating expenses2 $ 207,703 25,283 12,112 97,171 39,184 95,757 25,188 (433 ) 501,965 Operating income $ 76,904 7,582 2,740 111,972 24,774 20,133 3,515 6 247,626 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 19,076 1,148 216 385 182 993 114 — 22,114 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 UNITED STATES OTHER NORTH AMERICA LATIN AMERICA NORTH ASIA SOUTH ASIA EUROPE MIDDLE EAST, AFRICA AND INDIA ELIMI- NATIONS CONSOLI- DATED For the six months ended June 30, 2021: Revenues3 $ 1,872,957 195,582 91,845 2,518,430 767,484 1,011,282 352,692 (2,359 ) 6,807,913 Directly related cost of transportation and other expenses1, 3 $ 1,069,517 112,361 52,652 2,054,170 605,163 683,765 269,399 (1,110 ) 4,845,917 Salaries and other operating expenses2 $ 479,819 57,037 27,112 213,732 92,211 232,863 64,301 (1,239 ) 1,165,836 Operating income $ 323,621 26,184 12,081 250,528 70,110 94,654 18,992 (10 ) 796,160 Identifiable assets at period end $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 Capital expenditures $ 5,930 186 125 757 1,111 5,654 1,167 — 14,930 Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651 For the six months ended June 30, 2020: Revenues3 $ 1,289,631 154,910 75,444 1,481,872 383,233 665,020 206,553 (1,818 ) 4,254,845 Directly related cost of transportation and other expenses1, 3 $ 728,578 86,104 46,467 1,160,075 271,515 450,488 147,787 (896 ) 2,890,118 Salaries and other operating expenses2 $ 433,647 48,995 23,861 154,604 69,092 177,611 51,138 (902 ) 958,046 Operating income $ 127,406 19,811 5,116 167,193 42,626 36,921 7,628 (20 ) 406,681 Identifiable assets at period end $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 Capital expenditures $ 23,573 1,209 318 710 370 1,638 423 — 28,241 Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598 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 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 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 six months ended June 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In the first and second quarter 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 quarter 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 June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% and 34%, respectively, of the Company’s total revenues and 22% and 38%, respectively, of the total operating income. For the six months ended June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% of the Company’s total revenues and 24% and 33%, respectively, of the total operating income. 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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