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 2022 EPS Of $2.27 By: Expeditors International of Washington, Inc. via Business Wire August 02, 2022 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2022 financial results including the following highlights compared to the same quarter of 2021: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 23% to $2.27 Net Earnings Attributable to Shareholders increased 19% to $378 million Operating Income increased 23% to $506 million Revenues increased 28% to $4.6 billion Airfreight tonnage volume and ocean container volume decreased 17% and 11%, respectively “This was the strongest second quarter in our company’s history, even while our air and ocean volumes were soft compared to a year ago,” said Jeffrey S. Musser, President and Chief Executive Officer. “During the second quarter we continued the recovery from the February cyber-attack and re-established digital connections with many of our customers, which limited our ability to move cargo through our systems. We also experienced a significant drop in volumes in China due to the various lockdowns that resulted in factories not operating and cargo being unavailable to ship. We believe the volume changes are primarily related to timing of our recovery from the cyber-attack, our significant market presence in China, as well as a slowing economy and an overall drop in demand. We simply cannot say enough about the quality of our employees and their commitment to our customers over the last couple of years. Our experiences during the pandemic and recovery from the cyber-attack have tested the will of our staff, as well as the strength and commitment of our service providers and customers. “Looking at the current environment, our perspective is that there is a great deal of uncertainty in the marketplace. Buy and sell rates have come down from their peaks but remain elevated and out of balance by historical standards. We see signs that the global economy has started to slow and that capacity is no longer severely constrained relative to demand that has also come down from earlier peaks. Nevertheless, airline belly capacity in many markets has not bounced back and we continued to access additional capacity by using air charters to meet shipper demand. Ocean transit times continued to be stretched by port congestion and many ongoing shortages of equipment, labor, and warehousing space. Various onshore bottlenecks further impacted many of our ocean and air lanes, in addition to affecting our customs business due to record high drayage, storage, delivery, demurrage, and detention costs at destination. We do not see signs that these conditions are likely to improve significantly any time soon. The unpredictability of COVID restrictions and lockdowns in China, as well as route restrictions and sanctions from the Ukraine conflict, continue to make global shipping a highly challenging business right now. But the strength of our organization and culture is in bringing order to chaos to service the needs of our customers by accessing capacity and delivering solutions despite the many disruptions.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “All of our products performed well during the quarter and we returned $659 million to shareholders in repurchased stock and dividends. Given the current economic uncertainty and government actions aimed at taming inflation, along with the ongoing challenges throughout the global supply chain, we believe that rates will continue to be highly volatile at least through the end of the year, while generally continuing to trend downwards from their highs over the longer-term. We are no strangers to uncertainty and remain highly disciplined and focused on our customers’ need for capacity and solutions. We will continue to explore ways to further enhance our already strong efficiencies as we continue to adapt to the current operating environment.” 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. 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 financial and operational impact of the cyber-attack; the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to uncertain air and ocean capacity; volatile air and ocean pricing and uneven demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; the conflict in Ukraine; signs of a slowing economy and drop in demand; and the uneven lifting of the COVID-19 pandemic restrictions around the world. 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, rate volatility, and various on-shore bottlenecks are unlikely to improve any time soon; our ability to fully re-open our offices for return-to-work; our ability to continue to enhance our productivity; our ability to invest in our strategic efforts to explore new areas for profitable growth; our ability to avoid another material cyber-attack; and our ability to remain a strong, healthy, unified and resilient organization. The ongoing impact of 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, 2021 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. Second Quarter 2022 Earnings Release, August 2, 2022 Financial Highlights for the three and six months ended June 30, 2022 and 2021 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Revenues $ 4,603,312 $ 3,609,093 28% $ 9,267,610 $ 6,807,913 36% Directly related cost of transportation and other expenses1 $ 3,440,948 $ 2,598,633 32% $ 6,957,059 $ 4,845,917 44% Salaries and other operating expenses2 $ 656,382 $ 599,815 9% $ 1,342,809 $ 1,165,836 15% Operating income $ 505,982 $ 410,645 23% $ 967,742 $ 796,160 22% Net earnings attributable to shareholders $ 377,805 $ 316,372 19% $ 723,914 $ 603,592 20% Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 23% $ 4.31 $ 3.52 22% Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 22% $ 4.35 $ 3.57 22% Diluted weighted average shares outstanding 166,474 171,677 (3)% 167,980 171,660 (2)% Basic weighted average shares outstanding 165,092 169,210 (2)% 166,423 169,140 (2)% __________________________________ 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. Financial Impact of the Cyber-Attack In the three and six months ended June 30, 2022, the Company incurred, as a result of our inability to timely process and move shipments through ports, approximately $22 million and $62 million, respectively, in incremental demurrage charges, where the Company has direct liability for this obligation. These costs are recorded in customs brokerage and other services expenses. Additionally, principally in the first quarter, the Company incurred investigation, recovery, and remediation expenses, including costs to recover its operational and accounting systems and to enhance cybersecurity protections. These costs are primarily comprised of various consulting services including cybersecurity experts, outside legal advisors, and other IT professional expenses. The Company also recorded estimated liabilities for potential shipment-related claims. Total amounts recorded for the items above for the three and six months ended June 30, 2022 were approximately $6 million and $28 million, respectively, and are reported in other operating expenses. The Company does not expect to incur significant capital expenditures as a result of the cyber-attack. The Company may incur additional expenses which could include third-party expenses, incremental information services costs, legal fees, or indemnities to customers or business partners. When the Company’s operating systems were down, many customers worked with other providers to meet their logistics needs, resulting in lower shipment volumes in the first quarter and to a lesser extent in the second quarter for which the financial impact on revenues and operating income cannot be quantified. Such costs and the ongoing impacts from the down time caused by the cyber-attack could have a further material adverse impact on the Company’s business, revenues, expenses, results of operations, cash flows and reputation. The Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack. Employee Full-time Equivalents as of June 30, 2022 2021 North America 7,752 6,949 Europe 4,127 3,700 North Asia 2,490 2,416 South Asia 1,824 1,671 Middle East, Africa and India 1,543 1,496 Latin America 853 781 Information Systems 1,093 968 Corporate 414 399 Total 20,096 18,380 Second quarter year-over-year percentage decrease: 2022 Airfreight kilos Ocean freight FEU April (24)% (13)% May (13)% (11)% June (13)% (10)% Quarter (17)% (11)% During the three and six months ended June 30, 2022, we repurchased 5 million shares of common stock at $109.81 per share. 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. Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 5, 2022 will be considered in management's 8-K “Responses to Selected Questions.” EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) June 30, 2022 December 31, 2021 Assets: Current Assets: Cash and cash equivalents $ 1,976,971 $ 1,728,692 Accounts receivable, less allowance for credit loss of $7,636 at June 30, 2022 and $6,686 at December 31, 2021 3,469,833 3,810,286 Deferred contract costs 745,577 987,266 Other 137,768 108,801 Total current assets 6,330,149 6,635,045 Property and equipment, less accumulated depreciation and amortization of $554,252 at June 30, 2022 and $541,677 at December 31, 2021 495,328 487,870 Operating lease right-of-use assets 491,630 459,158 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 19,413 729 Other assets, net 16,695 19,200 Total assets $ 7,361,142 $ 7,609,929 Liabilities: Current Liabilities: Accounts payable 1,914,979 2,012,461 Accrued liabilities, primarily salaries and related costs 473,644 403,625 Contract liabilities 867,467 1,142,026 Current portion of operating lease liabilities 88,112 82,019 Federal, state and foreign income taxes 66,864 86,166 Total current liabilities 3,411,066 3,726,297 Noncurrent portion of operating lease liabilities 414,813 385,641 Commitments and contingencies — — Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 162,931 shares at June 30, 2022 and 167,210 shares at December 31, 2021 1,629 1,672 Additional paid-in capital 137 3,160 Retained earnings 3,717,316 3,620,008 Accumulated other comprehensive loss (193,834 ) (130,414 ) Total shareholders’ equity 3,525,248 3,494,426 Noncontrolling interest 10,015 3,565 Total equity 3,535,263 3,497,991 Total liabilities and equity $ 7,361,142 $ 7,609,929 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, 2022 2021 2022 2021 Revenues: Airfreight services $ 1,602,566 $ 1,523,569 $ 3,201,121 $ 2,849,484 Ocean freight and ocean services 1,759,646 1,098,550 3,735,892 2,052,462 Customs brokerage and other services 1,241,100 986,974 2,330,597 1,905,967 Total revenues 4,603,312 3,609,093 9,267,610 6,807,913 Operating Expenses: Airfreight services 1,212,503 1,136,328 2,355,049 2,090,872 Ocean freight and ocean services 1,402,365 862,251 3,002,608 1,604,686 Customs brokerage and other services 826,080 600,054 1,599,402 1,150,359 Salaries and related 508,222 481,186 1,047,162 933,291 Rent and occupancy 51,598 45,366 102,526 90,646 Depreciation and amortization 14,254 12,675 27,229 25,662 Selling and promotion 5,887 3,172 9,935 6,242 Other 76,421 57,416 155,957 109,995 Total operating expenses 4,097,330 3,198,448 8,299,868 6,011,753 Operating income 505,982 410,645 967,742 796,160 Other Income (Expense): Interest income 2,720 2,188 4,612 4,134 Other, net 106 2,649 7,633 5,649 Other income, net 2,826 4,837 12,245 9,783 Earnings before income taxes 508,808 415,482 979,987 805,943 Income tax expense 126,582 98,508 248,281 201,019 Net earnings 382,226 316,974 731,706 604,924 Less net earnings attributable to the noncontrolling interest 4,421 602 7,792 1,332 Net earnings attributable to shareholders $ 377,805 $ 316,372 $ 723,914 $ 603,592 Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 $ 4.31 $ 3.52 Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 $ 4.35 $ 3.57 Weighted average diluted shares outstanding 166,474 171,677 167,980 171,660 Weighted average basic shares outstanding 165,092 169,210 166,423 169,140 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, 2022 2021 2022 2021 Operating Activities: Net earnings $ 382,226 $ 316,974 $ 731,706 $ 604,924 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 4,763 1,090 4,347 2,289 Deferred income tax (benefit) expense (8,622 ) 1,850 (11,858 ) 10,001 Stock compensation expense 25,518 30,909 37,121 42,094 Depreciation and amortization 14,254 12,675 27,229 25,662 Other, net (1,746 ) 346 (1,291 ) 897 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 378,291 (410,783 ) 245,943 (663,697 ) (Decrease) increase in accounts payable and accrued expenses (133,171 ) 99,944 7,020 333,182 Decrease (increase) in deferred contract costs 37,138 (150,382 ) 211,068 (221,640 ) (Decrease) increase in contract liabilities (45,574 ) 174,504 (238,931 ) 254,094 Decrease in income taxes payable, net (93,430 ) (47,994 ) (47,171 ) (1,356 ) (Increase) decrease in other, net (1,001 ) 1,164 7,409 (324 ) Net cash from operating activities 558,646 30,297 972,592 386,126 Investing Activities: Purchase of property and equipment (38,158 ) (6,539 ) (52,570 ) (14,930 ) Other, net (134 ) 138 (55 ) 104 Net cash from investing activities (38,292 ) (6,401 ) (52,625 ) (14,826 ) Financing Activities: Proceeds from borrowing on lines of credit, net 28,571 174 48,061 89 Proceeds from issuance of common stock 5,682 22,711 11,433 42,468 Repurchases of common stock (549,065 ) (62,472 ) (549,065 ) (148,469 ) Dividends paid (109,828 ) (98,387 ) (109,828 ) (98,387 ) Payments for taxes related to net share settlement of equity awards (11,851 ) (13,893 ) (19,333 ) (15,168 ) Net cash from financing activities (636,491 ) (151,867 ) (618,732 ) (219,467 ) Effect of exchange rate changes on cash and cash equivalents (46,518 ) 8,699 (52,956 ) (5,503 ) Change in cash and cash equivalents (162,655 ) (119,272 ) 248,279 146,330 Cash and cash equivalents at beginning of period 2,139,626 1,793,393 1,728,692 1,527,791 Cash and cash equivalents at end of period $ 1,976,971 $ 1,674,121 $ 1,976,971 $ 1,674,121 Taxes Paid: Income taxes $ 236,791 $ 143,959 $ 314,751 $ 190,536 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, 2022: Revenues $ 1,265,363 144,988 66,136 1,582,475 611,246 658,307 275,948 (1,151 ) 4,603,312 Directly related cost of transportation and other expenses1 $ 797,179 85,806 43,298 1,323,354 507,473 464,399 220,162 (723 ) 3,440,948 Salaries and other operating expenses2 $ 314,726 31,308 14,496 104,896 38,728 115,394 37,258 (424 ) 656,382 Operating income $ 153,458 27,874 8,342 154,225 65,045 78,514 18,528 (4 ) 505,982 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 26,394 1,038 177 766 436 7,666 1,681 — 38,158 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 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 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, 2022: Revenues $ 2,506,587 249,598 123,843 3,351,491 1,257,575 1,234,098 546,629 (2,211 ) 9,267,610 Directly related cost of transportation and other expenses1 $ 1,560,602 150,038 77,155 2,803,447 1,046,356 882,019 438,262 (820 ) 6,957,059 Salaries and other operating expenses2 $ 648,375 56,177 27,597 228,009 84,057 224,663 75,300 (1,369 ) 1,342,809 Operating income $ 297,610 43,383 19,091 320,035 127,162 127,416 33,067 (22 ) 967,742 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 35,871 2,116 286 1,297 726 9,724 2,550 — 52,570 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 For the six months ended June 30, 2021: Revenues $ 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 $ 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 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005770/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 2022 EPS Of $2.27 By: Expeditors International of Washington, Inc. via Business Wire August 02, 2022 at 08:30 AM EDT Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2022 financial results including the following highlights compared to the same quarter of 2021: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 23% to $2.27 Net Earnings Attributable to Shareholders increased 19% to $378 million Operating Income increased 23% to $506 million Revenues increased 28% to $4.6 billion Airfreight tonnage volume and ocean container volume decreased 17% and 11%, respectively “This was the strongest second quarter in our company’s history, even while our air and ocean volumes were soft compared to a year ago,” said Jeffrey S. Musser, President and Chief Executive Officer. “During the second quarter we continued the recovery from the February cyber-attack and re-established digital connections with many of our customers, which limited our ability to move cargo through our systems. We also experienced a significant drop in volumes in China due to the various lockdowns that resulted in factories not operating and cargo being unavailable to ship. We believe the volume changes are primarily related to timing of our recovery from the cyber-attack, our significant market presence in China, as well as a slowing economy and an overall drop in demand. We simply cannot say enough about the quality of our employees and their commitment to our customers over the last couple of years. Our experiences during the pandemic and recovery from the cyber-attack have tested the will of our staff, as well as the strength and commitment of our service providers and customers. “Looking at the current environment, our perspective is that there is a great deal of uncertainty in the marketplace. Buy and sell rates have come down from their peaks but remain elevated and out of balance by historical standards. We see signs that the global economy has started to slow and that capacity is no longer severely constrained relative to demand that has also come down from earlier peaks. Nevertheless, airline belly capacity in many markets has not bounced back and we continued to access additional capacity by using air charters to meet shipper demand. Ocean transit times continued to be stretched by port congestion and many ongoing shortages of equipment, labor, and warehousing space. Various onshore bottlenecks further impacted many of our ocean and air lanes, in addition to affecting our customs business due to record high drayage, storage, delivery, demurrage, and detention costs at destination. We do not see signs that these conditions are likely to improve significantly any time soon. The unpredictability of COVID restrictions and lockdowns in China, as well as route restrictions and sanctions from the Ukraine conflict, continue to make global shipping a highly challenging business right now. But the strength of our organization and culture is in bringing order to chaos to service the needs of our customers by accessing capacity and delivering solutions despite the many disruptions.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “All of our products performed well during the quarter and we returned $659 million to shareholders in repurchased stock and dividends. Given the current economic uncertainty and government actions aimed at taming inflation, along with the ongoing challenges throughout the global supply chain, we believe that rates will continue to be highly volatile at least through the end of the year, while generally continuing to trend downwards from their highs over the longer-term. We are no strangers to uncertainty and remain highly disciplined and focused on our customers’ need for capacity and solutions. We will continue to explore ways to further enhance our already strong efficiencies as we continue to adapt to the current operating environment.” 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. 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 financial and operational impact of the cyber-attack; the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to uncertain air and ocean capacity; volatile air and ocean pricing and uneven demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; the conflict in Ukraine; signs of a slowing economy and drop in demand; and the uneven lifting of the COVID-19 pandemic restrictions around the world. 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, rate volatility, and various on-shore bottlenecks are unlikely to improve any time soon; our ability to fully re-open our offices for return-to-work; our ability to continue to enhance our productivity; our ability to invest in our strategic efforts to explore new areas for profitable growth; our ability to avoid another material cyber-attack; and our ability to remain a strong, healthy, unified and resilient organization. The ongoing impact of 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, 2021 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. Second Quarter 2022 Earnings Release, August 2, 2022 Financial Highlights for the three and six months ended June 30, 2022 and 2021 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Revenues $ 4,603,312 $ 3,609,093 28% $ 9,267,610 $ 6,807,913 36% Directly related cost of transportation and other expenses1 $ 3,440,948 $ 2,598,633 32% $ 6,957,059 $ 4,845,917 44% Salaries and other operating expenses2 $ 656,382 $ 599,815 9% $ 1,342,809 $ 1,165,836 15% Operating income $ 505,982 $ 410,645 23% $ 967,742 $ 796,160 22% Net earnings attributable to shareholders $ 377,805 $ 316,372 19% $ 723,914 $ 603,592 20% Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 23% $ 4.31 $ 3.52 22% Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 22% $ 4.35 $ 3.57 22% Diluted weighted average shares outstanding 166,474 171,677 (3)% 167,980 171,660 (2)% Basic weighted average shares outstanding 165,092 169,210 (2)% 166,423 169,140 (2)% __________________________________ 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. Financial Impact of the Cyber-Attack In the three and six months ended June 30, 2022, the Company incurred, as a result of our inability to timely process and move shipments through ports, approximately $22 million and $62 million, respectively, in incremental demurrage charges, where the Company has direct liability for this obligation. These costs are recorded in customs brokerage and other services expenses. Additionally, principally in the first quarter, the Company incurred investigation, recovery, and remediation expenses, including costs to recover its operational and accounting systems and to enhance cybersecurity protections. These costs are primarily comprised of various consulting services including cybersecurity experts, outside legal advisors, and other IT professional expenses. The Company also recorded estimated liabilities for potential shipment-related claims. Total amounts recorded for the items above for the three and six months ended June 30, 2022 were approximately $6 million and $28 million, respectively, and are reported in other operating expenses. The Company does not expect to incur significant capital expenditures as a result of the cyber-attack. The Company may incur additional expenses which could include third-party expenses, incremental information services costs, legal fees, or indemnities to customers or business partners. When the Company’s operating systems were down, many customers worked with other providers to meet their logistics needs, resulting in lower shipment volumes in the first quarter and to a lesser extent in the second quarter for which the financial impact on revenues and operating income cannot be quantified. Such costs and the ongoing impacts from the down time caused by the cyber-attack could have a further material adverse impact on the Company’s business, revenues, expenses, results of operations, cash flows and reputation. The Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack. Employee Full-time Equivalents as of June 30, 2022 2021 North America 7,752 6,949 Europe 4,127 3,700 North Asia 2,490 2,416 South Asia 1,824 1,671 Middle East, Africa and India 1,543 1,496 Latin America 853 781 Information Systems 1,093 968 Corporate 414 399 Total 20,096 18,380 Second quarter year-over-year percentage decrease: 2022 Airfreight kilos Ocean freight FEU April (24)% (13)% May (13)% (11)% June (13)% (10)% Quarter (17)% (11)% During the three and six months ended June 30, 2022, we repurchased 5 million shares of common stock at $109.81 per share. 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. Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 5, 2022 will be considered in management's 8-K “Responses to Selected Questions.” EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) June 30, 2022 December 31, 2021 Assets: Current Assets: Cash and cash equivalents $ 1,976,971 $ 1,728,692 Accounts receivable, less allowance for credit loss of $7,636 at June 30, 2022 and $6,686 at December 31, 2021 3,469,833 3,810,286 Deferred contract costs 745,577 987,266 Other 137,768 108,801 Total current assets 6,330,149 6,635,045 Property and equipment, less accumulated depreciation and amortization of $554,252 at June 30, 2022 and $541,677 at December 31, 2021 495,328 487,870 Operating lease right-of-use assets 491,630 459,158 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 19,413 729 Other assets, net 16,695 19,200 Total assets $ 7,361,142 $ 7,609,929 Liabilities: Current Liabilities: Accounts payable 1,914,979 2,012,461 Accrued liabilities, primarily salaries and related costs 473,644 403,625 Contract liabilities 867,467 1,142,026 Current portion of operating lease liabilities 88,112 82,019 Federal, state and foreign income taxes 66,864 86,166 Total current liabilities 3,411,066 3,726,297 Noncurrent portion of operating lease liabilities 414,813 385,641 Commitments and contingencies — — Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 162,931 shares at June 30, 2022 and 167,210 shares at December 31, 2021 1,629 1,672 Additional paid-in capital 137 3,160 Retained earnings 3,717,316 3,620,008 Accumulated other comprehensive loss (193,834 ) (130,414 ) Total shareholders’ equity 3,525,248 3,494,426 Noncontrolling interest 10,015 3,565 Total equity 3,535,263 3,497,991 Total liabilities and equity $ 7,361,142 $ 7,609,929 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, 2022 2021 2022 2021 Revenues: Airfreight services $ 1,602,566 $ 1,523,569 $ 3,201,121 $ 2,849,484 Ocean freight and ocean services 1,759,646 1,098,550 3,735,892 2,052,462 Customs brokerage and other services 1,241,100 986,974 2,330,597 1,905,967 Total revenues 4,603,312 3,609,093 9,267,610 6,807,913 Operating Expenses: Airfreight services 1,212,503 1,136,328 2,355,049 2,090,872 Ocean freight and ocean services 1,402,365 862,251 3,002,608 1,604,686 Customs brokerage and other services 826,080 600,054 1,599,402 1,150,359 Salaries and related 508,222 481,186 1,047,162 933,291 Rent and occupancy 51,598 45,366 102,526 90,646 Depreciation and amortization 14,254 12,675 27,229 25,662 Selling and promotion 5,887 3,172 9,935 6,242 Other 76,421 57,416 155,957 109,995 Total operating expenses 4,097,330 3,198,448 8,299,868 6,011,753 Operating income 505,982 410,645 967,742 796,160 Other Income (Expense): Interest income 2,720 2,188 4,612 4,134 Other, net 106 2,649 7,633 5,649 Other income, net 2,826 4,837 12,245 9,783 Earnings before income taxes 508,808 415,482 979,987 805,943 Income tax expense 126,582 98,508 248,281 201,019 Net earnings 382,226 316,974 731,706 604,924 Less net earnings attributable to the noncontrolling interest 4,421 602 7,792 1,332 Net earnings attributable to shareholders $ 377,805 $ 316,372 $ 723,914 $ 603,592 Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 $ 4.31 $ 3.52 Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 $ 4.35 $ 3.57 Weighted average diluted shares outstanding 166,474 171,677 167,980 171,660 Weighted average basic shares outstanding 165,092 169,210 166,423 169,140 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, 2022 2021 2022 2021 Operating Activities: Net earnings $ 382,226 $ 316,974 $ 731,706 $ 604,924 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 4,763 1,090 4,347 2,289 Deferred income tax (benefit) expense (8,622 ) 1,850 (11,858 ) 10,001 Stock compensation expense 25,518 30,909 37,121 42,094 Depreciation and amortization 14,254 12,675 27,229 25,662 Other, net (1,746 ) 346 (1,291 ) 897 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 378,291 (410,783 ) 245,943 (663,697 ) (Decrease) increase in accounts payable and accrued expenses (133,171 ) 99,944 7,020 333,182 Decrease (increase) in deferred contract costs 37,138 (150,382 ) 211,068 (221,640 ) (Decrease) increase in contract liabilities (45,574 ) 174,504 (238,931 ) 254,094 Decrease in income taxes payable, net (93,430 ) (47,994 ) (47,171 ) (1,356 ) (Increase) decrease in other, net (1,001 ) 1,164 7,409 (324 ) Net cash from operating activities 558,646 30,297 972,592 386,126 Investing Activities: Purchase of property and equipment (38,158 ) (6,539 ) (52,570 ) (14,930 ) Other, net (134 ) 138 (55 ) 104 Net cash from investing activities (38,292 ) (6,401 ) (52,625 ) (14,826 ) Financing Activities: Proceeds from borrowing on lines of credit, net 28,571 174 48,061 89 Proceeds from issuance of common stock 5,682 22,711 11,433 42,468 Repurchases of common stock (549,065 ) (62,472 ) (549,065 ) (148,469 ) Dividends paid (109,828 ) (98,387 ) (109,828 ) (98,387 ) Payments for taxes related to net share settlement of equity awards (11,851 ) (13,893 ) (19,333 ) (15,168 ) Net cash from financing activities (636,491 ) (151,867 ) (618,732 ) (219,467 ) Effect of exchange rate changes on cash and cash equivalents (46,518 ) 8,699 (52,956 ) (5,503 ) Change in cash and cash equivalents (162,655 ) (119,272 ) 248,279 146,330 Cash and cash equivalents at beginning of period 2,139,626 1,793,393 1,728,692 1,527,791 Cash and cash equivalents at end of period $ 1,976,971 $ 1,674,121 $ 1,976,971 $ 1,674,121 Taxes Paid: Income taxes $ 236,791 $ 143,959 $ 314,751 $ 190,536 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, 2022: Revenues $ 1,265,363 144,988 66,136 1,582,475 611,246 658,307 275,948 (1,151 ) 4,603,312 Directly related cost of transportation and other expenses1 $ 797,179 85,806 43,298 1,323,354 507,473 464,399 220,162 (723 ) 3,440,948 Salaries and other operating expenses2 $ 314,726 31,308 14,496 104,896 38,728 115,394 37,258 (424 ) 656,382 Operating income $ 153,458 27,874 8,342 154,225 65,045 78,514 18,528 (4 ) 505,982 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 26,394 1,038 177 766 436 7,666 1,681 — 38,158 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 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 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, 2022: Revenues $ 2,506,587 249,598 123,843 3,351,491 1,257,575 1,234,098 546,629 (2,211 ) 9,267,610 Directly related cost of transportation and other expenses1 $ 1,560,602 150,038 77,155 2,803,447 1,046,356 882,019 438,262 (820 ) 6,957,059 Salaries and other operating expenses2 $ 648,375 56,177 27,597 228,009 84,057 224,663 75,300 (1,369 ) 1,342,809 Operating income $ 297,610 43,383 19,091 320,035 127,162 127,416 33,067 (22 ) 967,742 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 35,871 2,116 286 1,297 726 9,724 2,550 — 52,570 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 For the six months ended June 30, 2021: Revenues $ 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 $ 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 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20220801005770/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 2022 financial results including the following highlights compared to the same quarter of 2021: Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 23% to $2.27 Net Earnings Attributable to Shareholders increased 19% to $378 million Operating Income increased 23% to $506 million Revenues increased 28% to $4.6 billion Airfreight tonnage volume and ocean container volume decreased 17% and 11%, respectively “This was the strongest second quarter in our company’s history, even while our air and ocean volumes were soft compared to a year ago,” said Jeffrey S. Musser, President and Chief Executive Officer. “During the second quarter we continued the recovery from the February cyber-attack and re-established digital connections with many of our customers, which limited our ability to move cargo through our systems. We also experienced a significant drop in volumes in China due to the various lockdowns that resulted in factories not operating and cargo being unavailable to ship. We believe the volume changes are primarily related to timing of our recovery from the cyber-attack, our significant market presence in China, as well as a slowing economy and an overall drop in demand. We simply cannot say enough about the quality of our employees and their commitment to our customers over the last couple of years. Our experiences during the pandemic and recovery from the cyber-attack have tested the will of our staff, as well as the strength and commitment of our service providers and customers. “Looking at the current environment, our perspective is that there is a great deal of uncertainty in the marketplace. Buy and sell rates have come down from their peaks but remain elevated and out of balance by historical standards. We see signs that the global economy has started to slow and that capacity is no longer severely constrained relative to demand that has also come down from earlier peaks. Nevertheless, airline belly capacity in many markets has not bounced back and we continued to access additional capacity by using air charters to meet shipper demand. Ocean transit times continued to be stretched by port congestion and many ongoing shortages of equipment, labor, and warehousing space. Various onshore bottlenecks further impacted many of our ocean and air lanes, in addition to affecting our customs business due to record high drayage, storage, delivery, demurrage, and detention costs at destination. We do not see signs that these conditions are likely to improve significantly any time soon. The unpredictability of COVID restrictions and lockdowns in China, as well as route restrictions and sanctions from the Ukraine conflict, continue to make global shipping a highly challenging business right now. But the strength of our organization and culture is in bringing order to chaos to service the needs of our customers by accessing capacity and delivering solutions despite the many disruptions.” Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “All of our products performed well during the quarter and we returned $659 million to shareholders in repurchased stock and dividends. Given the current economic uncertainty and government actions aimed at taming inflation, along with the ongoing challenges throughout the global supply chain, we believe that rates will continue to be highly volatile at least through the end of the year, while generally continuing to trend downwards from their highs over the longer-term. We are no strangers to uncertainty and remain highly disciplined and focused on our customers’ need for capacity and solutions. We will continue to explore ways to further enhance our already strong efficiencies as we continue to adapt to the current operating environment.” 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. 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 financial and operational impact of the cyber-attack; the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to uncertain air and ocean capacity; volatile air and ocean pricing and uneven demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; the conflict in Ukraine; signs of a slowing economy and drop in demand; and the uneven lifting of the COVID-19 pandemic restrictions around the world. 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, rate volatility, and various on-shore bottlenecks are unlikely to improve any time soon; our ability to fully re-open our offices for return-to-work; our ability to continue to enhance our productivity; our ability to invest in our strategic efforts to explore new areas for profitable growth; our ability to avoid another material cyber-attack; and our ability to remain a strong, healthy, unified and resilient organization. The ongoing impact of 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, 2021 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. Second Quarter 2022 Earnings Release, August 2, 2022 Financial Highlights for the three and six months ended June 30, 2022 and 2021 (Unaudited) (in 000's of US dollars except per share data) Three months ended June 30, Six months ended June 30, 2022 2021 % Change 2022 2021 % Change Revenues $ 4,603,312 $ 3,609,093 28% $ 9,267,610 $ 6,807,913 36% Directly related cost of transportation and other expenses1 $ 3,440,948 $ 2,598,633 32% $ 6,957,059 $ 4,845,917 44% Salaries and other operating expenses2 $ 656,382 $ 599,815 9% $ 1,342,809 $ 1,165,836 15% Operating income $ 505,982 $ 410,645 23% $ 967,742 $ 796,160 22% Net earnings attributable to shareholders $ 377,805 $ 316,372 19% $ 723,914 $ 603,592 20% Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 23% $ 4.31 $ 3.52 22% Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 22% $ 4.35 $ 3.57 22% Diluted weighted average shares outstanding 166,474 171,677 (3)% 167,980 171,660 (2)% Basic weighted average shares outstanding 165,092 169,210 (2)% 166,423 169,140 (2)% __________________________________ 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. Financial Impact of the Cyber-Attack In the three and six months ended June 30, 2022, the Company incurred, as a result of our inability to timely process and move shipments through ports, approximately $22 million and $62 million, respectively, in incremental demurrage charges, where the Company has direct liability for this obligation. These costs are recorded in customs brokerage and other services expenses. Additionally, principally in the first quarter, the Company incurred investigation, recovery, and remediation expenses, including costs to recover its operational and accounting systems and to enhance cybersecurity protections. These costs are primarily comprised of various consulting services including cybersecurity experts, outside legal advisors, and other IT professional expenses. The Company also recorded estimated liabilities for potential shipment-related claims. Total amounts recorded for the items above for the three and six months ended June 30, 2022 were approximately $6 million and $28 million, respectively, and are reported in other operating expenses. The Company does not expect to incur significant capital expenditures as a result of the cyber-attack. The Company may incur additional expenses which could include third-party expenses, incremental information services costs, legal fees, or indemnities to customers or business partners. When the Company’s operating systems were down, many customers worked with other providers to meet their logistics needs, resulting in lower shipment volumes in the first quarter and to a lesser extent in the second quarter for which the financial impact on revenues and operating income cannot be quantified. Such costs and the ongoing impacts from the down time caused by the cyber-attack could have a further material adverse impact on the Company’s business, revenues, expenses, results of operations, cash flows and reputation. The Company is unable to estimate the ultimate direct and indirect financial impacts of this cyber-attack. Employee Full-time Equivalents as of June 30, 2022 2021 North America 7,752 6,949 Europe 4,127 3,700 North Asia 2,490 2,416 South Asia 1,824 1,671 Middle East, Africa and India 1,543 1,496 Latin America 853 781 Information Systems 1,093 968 Corporate 414 399 Total 20,096 18,380 Second quarter year-over-year percentage decrease: 2022 Airfreight kilos Ocean freight FEU April (24)% (13)% May (13)% (11)% June (13)% (10)% Quarter (17)% (11)% During the three and six months ended June 30, 2022, we repurchased 5 million shares of common stock at $109.81 per share. 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. Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 5, 2022 will be considered in management's 8-K “Responses to Selected Questions.” EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited) June 30, 2022 December 31, 2021 Assets: Current Assets: Cash and cash equivalents $ 1,976,971 $ 1,728,692 Accounts receivable, less allowance for credit loss of $7,636 at June 30, 2022 and $6,686 at December 31, 2021 3,469,833 3,810,286 Deferred contract costs 745,577 987,266 Other 137,768 108,801 Total current assets 6,330,149 6,635,045 Property and equipment, less accumulated depreciation and amortization of $554,252 at June 30, 2022 and $541,677 at December 31, 2021 495,328 487,870 Operating lease right-of-use assets 491,630 459,158 Goodwill 7,927 7,927 Deferred federal and state income taxes, net 19,413 729 Other assets, net 16,695 19,200 Total assets $ 7,361,142 $ 7,609,929 Liabilities: Current Liabilities: Accounts payable 1,914,979 2,012,461 Accrued liabilities, primarily salaries and related costs 473,644 403,625 Contract liabilities 867,467 1,142,026 Current portion of operating lease liabilities 88,112 82,019 Federal, state and foreign income taxes 66,864 86,166 Total current liabilities 3,411,066 3,726,297 Noncurrent portion of operating lease liabilities 414,813 385,641 Commitments and contingencies — — Shareholders’ Equity: Preferred stock, none issued — — Common stock, par value $0.01 per share. Issued and outstanding: 162,931 shares at June 30, 2022 and 167,210 shares at December 31, 2021 1,629 1,672 Additional paid-in capital 137 3,160 Retained earnings 3,717,316 3,620,008 Accumulated other comprehensive loss (193,834 ) (130,414 ) Total shareholders’ equity 3,525,248 3,494,426 Noncontrolling interest 10,015 3,565 Total equity 3,535,263 3,497,991 Total liabilities and equity $ 7,361,142 $ 7,609,929 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, 2022 2021 2022 2021 Revenues: Airfreight services $ 1,602,566 $ 1,523,569 $ 3,201,121 $ 2,849,484 Ocean freight and ocean services 1,759,646 1,098,550 3,735,892 2,052,462 Customs brokerage and other services 1,241,100 986,974 2,330,597 1,905,967 Total revenues 4,603,312 3,609,093 9,267,610 6,807,913 Operating Expenses: Airfreight services 1,212,503 1,136,328 2,355,049 2,090,872 Ocean freight and ocean services 1,402,365 862,251 3,002,608 1,604,686 Customs brokerage and other services 826,080 600,054 1,599,402 1,150,359 Salaries and related 508,222 481,186 1,047,162 933,291 Rent and occupancy 51,598 45,366 102,526 90,646 Depreciation and amortization 14,254 12,675 27,229 25,662 Selling and promotion 5,887 3,172 9,935 6,242 Other 76,421 57,416 155,957 109,995 Total operating expenses 4,097,330 3,198,448 8,299,868 6,011,753 Operating income 505,982 410,645 967,742 796,160 Other Income (Expense): Interest income 2,720 2,188 4,612 4,134 Other, net 106 2,649 7,633 5,649 Other income, net 2,826 4,837 12,245 9,783 Earnings before income taxes 508,808 415,482 979,987 805,943 Income tax expense 126,582 98,508 248,281 201,019 Net earnings 382,226 316,974 731,706 604,924 Less net earnings attributable to the noncontrolling interest 4,421 602 7,792 1,332 Net earnings attributable to shareholders $ 377,805 $ 316,372 $ 723,914 $ 603,592 Diluted earnings attributable to shareholders per share $ 2.27 $ 1.84 $ 4.31 $ 3.52 Basic earnings attributable to shareholders per share $ 2.29 $ 1.87 $ 4.35 $ 3.57 Weighted average diluted shares outstanding 166,474 171,677 167,980 171,660 Weighted average basic shares outstanding 165,092 169,210 166,423 169,140 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, 2022 2021 2022 2021 Operating Activities: Net earnings $ 382,226 $ 316,974 $ 731,706 $ 604,924 Adjustments to reconcile net earnings to net cash from operating activities: Provisions for losses on accounts receivable 4,763 1,090 4,347 2,289 Deferred income tax (benefit) expense (8,622 ) 1,850 (11,858 ) 10,001 Stock compensation expense 25,518 30,909 37,121 42,094 Depreciation and amortization 14,254 12,675 27,229 25,662 Other, net (1,746 ) 346 (1,291 ) 897 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 378,291 (410,783 ) 245,943 (663,697 ) (Decrease) increase in accounts payable and accrued expenses (133,171 ) 99,944 7,020 333,182 Decrease (increase) in deferred contract costs 37,138 (150,382 ) 211,068 (221,640 ) (Decrease) increase in contract liabilities (45,574 ) 174,504 (238,931 ) 254,094 Decrease in income taxes payable, net (93,430 ) (47,994 ) (47,171 ) (1,356 ) (Increase) decrease in other, net (1,001 ) 1,164 7,409 (324 ) Net cash from operating activities 558,646 30,297 972,592 386,126 Investing Activities: Purchase of property and equipment (38,158 ) (6,539 ) (52,570 ) (14,930 ) Other, net (134 ) 138 (55 ) 104 Net cash from investing activities (38,292 ) (6,401 ) (52,625 ) (14,826 ) Financing Activities: Proceeds from borrowing on lines of credit, net 28,571 174 48,061 89 Proceeds from issuance of common stock 5,682 22,711 11,433 42,468 Repurchases of common stock (549,065 ) (62,472 ) (549,065 ) (148,469 ) Dividends paid (109,828 ) (98,387 ) (109,828 ) (98,387 ) Payments for taxes related to net share settlement of equity awards (11,851 ) (13,893 ) (19,333 ) (15,168 ) Net cash from financing activities (636,491 ) (151,867 ) (618,732 ) (219,467 ) Effect of exchange rate changes on cash and cash equivalents (46,518 ) 8,699 (52,956 ) (5,503 ) Change in cash and cash equivalents (162,655 ) (119,272 ) 248,279 146,330 Cash and cash equivalents at beginning of period 2,139,626 1,793,393 1,728,692 1,527,791 Cash and cash equivalents at end of period $ 1,976,971 $ 1,674,121 $ 1,976,971 $ 1,674,121 Taxes Paid: Income taxes $ 236,791 $ 143,959 $ 314,751 $ 190,536 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, 2022: Revenues $ 1,265,363 144,988 66,136 1,582,475 611,246 658,307 275,948 (1,151 ) 4,603,312 Directly related cost of transportation and other expenses1 $ 797,179 85,806 43,298 1,323,354 507,473 464,399 220,162 (723 ) 3,440,948 Salaries and other operating expenses2 $ 314,726 31,308 14,496 104,896 38,728 115,394 37,258 (424 ) 656,382 Operating income $ 153,458 27,874 8,342 154,225 65,045 78,514 18,528 (4 ) 505,982 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 26,394 1,038 177 766 436 7,666 1,681 — 38,158 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 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 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, 2022: Revenues $ 2,506,587 249,598 123,843 3,351,491 1,257,575 1,234,098 546,629 (2,211 ) 9,267,610 Directly related cost of transportation and other expenses1 $ 1,560,602 150,038 77,155 2,803,447 1,046,356 882,019 438,262 (820 ) 6,957,059 Salaries and other operating expenses2 $ 648,375 56,177 27,597 228,009 84,057 224,663 75,300 (1,369 ) 1,342,809 Operating income $ 297,610 43,383 19,091 320,035 127,162 127,416 33,067 (22 ) 967,742 Identifiable assets at period end $ 3,681,137 304,799 144,303 1,275,808 554,166 1,081,246 365,532 (45,849 ) 7,361,142 Capital expenditures $ 35,871 2,116 286 1,297 726 9,724 2,550 — 52,570 Equity $ 2,435,088 127,428 54,762 307,453 217,437 297,572 134,388 (38,865 ) 3,535,263 For the six months ended June 30, 2021: Revenues $ 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 $ 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 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. 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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