Expeditors Reports First Quarter 2021 EPS of $1.67

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first 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 135% to $1.67
  • Net Earnings Attributable to Shareholders increased 135% to $287 million
  • Operating Income increased 142% to $386 million
  • Revenues increased 77% to $3.4 billion
  • Airfreight tonnage volume and ocean container volume both increased 29%

“Never before in our experience has capacity been so scarce in both air and ocean at the same time,” said Jeffrey S. Musser, President and Chief Executive Officer. “As a result, shippers face unprecedented challenges with their supply chains and we are doing everything we can to leverage the strength of our carrier relationships in order to secure space for our customers. During these times, the strength of our flexible, non-asset-based operating model is on display. All products performed very well and we set all-time highs in revenues, operating income and net earnings. We experienced strong growth in airfreight tonnage and ocean containers shipped during the quarter, serviced established customers and on-boarded new business when possible.

“The severity of the ongoing supply/demand imbalance has kept buy and sell rates elevated and volatile, in both the air and ocean markets. Ongoing shortages in international air capacity led to elevated pricing, port congestion, and lack of equipment, which, coupled with a rapid spike in demand, created ocean trade disruptions and significant backlogs. These conditions leave shippers with limited options for getting their products to market. This is one example of the power of our long history of support for our carrier partners during both good times and bad. Amidst persistent disruptions and supply chain realignments, we have remained highly focused and aware of marketplace shifts, while working our strong relationships and executing as efficiently as we ever have to secure precious capacity on behalf of our customers.

“We expect the operating environment to remain unsettled as long as constrained capacity and other disruptions, such as port congestion, the uneven lifting of pandemic-restrictions, and rising fuel costs continue to impact the movement of freight. History tells us that the supply/demand imbalance and rate volatility will stabilize over time. However, if the global response to COVID-19 has taught us anything, it is that conditions can change rapidly in today’s interconnected marketplace. A year ago, it was nearly impossible to imagine the impact of what then lay before us, as economies around the world were shutting down and people were going into isolation to protect themselves from a deadly new virus. As we implemented our business continuity plans around the globe, we also made the decision to invest in our people and not lay off any of our employees. A year later, we are proud of and grateful to our entire workforce for their extraordinary dedication and determined effort to stay safe while delivering the highest level of customer service.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Despite comparisons to a relatively soft first quarter a year ago, when the initial disruptions from COVID-19 led to lower volumes in all products, performance during this latest quarter was strong all across the Company, including Air, Ocean, Customs Brokerage, Order Management, Transcon and Distribution. The majority of our workforce continues to work from remote locations, even as we slowly and cautiously explore re-opening our offices for return-to-work in certain countries and locations. While staying safe remains our top priority, we have continued to enhance our productivity and generated the best operating efficiency in the Company’s history. I would continue to caution that we are unable to predict how ongoing disruptions will affect our future operations or financial results going forward, and that we do not expect the current unprecedented operating conditions to persist long-term. 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.

Expeditors International of Washington, Inc.

First Quarter 2021 Earnings Release, May 4, 2021

Financial Highlights for the three months ended March 31, 2021 and 2020 (Unaudited)

(in 000's of US dollars except per share data)

 

Three months ended March 31,

2021

2020

% Change

Revenues

$

3,357,540

$

1,901,864

77

%

Directly related cost of transportation and

other expenses1

$

2,406,004

$

1,286,728

87

%

Salaries and other operating expenses2

$

566,021

$

456,081

24

%

Operating income

$

385,515

$

159,055

142

%

Net earnings attributable to shareholders

$

287,220

$

122,344

135

%

Diluted earnings attributable to

shareholders per share

$

1.67

$

0.71

135

%

Basic earnings attributable to shareholders

per share

$

1.70

$

0.73

133

%

Diluted weighted average shares

outstanding

171,551

171,450

Basic weighted average shares outstanding

169,214

168,735

1Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.
2Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings

During the three months ended March 31, 2021, we repurchased 0.9 million shares of common stock at an average price of $92.98 per share. During the three months ended March 31, 2020, we repurchased 4.0 million shares of common stock at an average price of $70.81 per share.

Employee Full-time Equivalents as of March 31,

2021

2020

North America

6,819

6,848

Europe

3,595

3,430

North Asia

2,379

2,429

South Asia

1,640

1,677

Middle East, Africa and India

1,477

1,536

Latin America

773

848

Information Systems

973

955

Corporate

399

379

Total

18,055

18,102

First quarter year-over-year

percentage increase in:

2021

Airfreight

kilos

Ocean freight

FEU

January

23

%

15

%

February

32

%

22

%

March

32

%

54

%

Quarter

29

%

29

%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 7, 2021 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)

 

March 31,

2021

December 31,

2020

Assets:

Current Assets:

Cash and cash equivalents

$

1,793,393

$

1,527,791

Accounts receivable, less allowance for credit loss of

$5,941 at March 31, 2021 and $5,579 at December 31, 2020

2,227,039

1,998,055

Deferred contract costs

387,845

327,448

Other

85,918

110,250

Total current assets

4,494,195

3,963,544

Property and equipment, less accumulated depreciation and

amortization of $523,829 at March 31, 2021 and $516,988 at

December 31, 2020

497,376

506,425

Operating lease right-of-use assets

438,667

432,723

Goodwill

7,927

7,927

Other assets, net

16,832

16,884

Total assets

$

5,454,997

$

4,927,503

Liabilities:

Current Liabilities:

Accounts payable

$

1,295,178

$

1,136,859

Accrued expenses, primarily salaries and related costs

311,767

257,021

Contract liabilities

447,779

379,722

Current portion of operating lease liabilities

76,128

74,004

Federal, state and foreign income taxes

64,170

45,437

Total current liabilities

2,195,022

1,893,043

Noncurrent portion of operating lease liabilities

369,286

364,185

Deferred federal and state income taxes, net

12,039

7,048

Commitments and contingencies

Shareholders’ Equity:

Preferred stock, none issued

Common stock, par value $0.01 per share. Issued and

outstanding: 168,808 shares at March 31, 2021 and 169,294

shares at December 31, 2020

1,688

1,693

Additional paid-in capital

101,269

157,496

Retained earnings

2,887,323

2,600,201

Accumulated other comprehensive loss

(115,486

)

(99,753

)

Total shareholders’ equity

2,874,794

2,659,637

Noncontrolling interest

3,856

3,590

Total equity

2,878,650

2,663,227

Total liabilities and equity

$

5,454,997

$

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 March 31,

2021

2020

Revenues:

Airfreight services

$

1,476,961

$

709,039

Ocean freight and ocean services

958,178

493,427

Customs brokerage and other services

922,401

699,398

Total revenues

3,357,540

1,901,864

Operating Expenses:

Airfreight services

1,105,590

520,169

Ocean freight and ocean services

746,701

366,483

Customs brokerage and other services

553,713

400,076

Salaries and related

452,105

342,040

Rent and occupancy

45,280

42,524

Depreciation and amortization

12,987

12,660

Selling and promotion

3,070

8,243

Other

52,579

50,614

Total operating expenses

2,972,025

1,742,809

Operating income

385,515

159,055

Other Income (Expense):

Interest income

1,946

4,807

Other, net

3,000

3,384

Other income, net

4,946

8,191

Earnings before income taxes

390,461

167,246

Income tax expense

102,511

44,464

Net earnings

287,950

122,782

Less net earnings attributable to the noncontrolling

interest

730

438

Net earnings attributable to shareholders

$

287,220

$

122,344

Diluted earnings attributable to shareholders per share

$

1.67

$

0.71

Basic earnings attributable to shareholders per share

$

1.70

$

0.73

Weighted average diluted shares outstanding

171,551

171,450

Weighted average basic shares outstanding

169,214

168,735

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three months ended March 31,

2021

2020

Operating Activities:

Net earnings

$

287,950

$

122,782

Adjustments to reconcile net earnings to net cash from

operating activities:

Provisions for losses on accounts receivable

1,199

1,820

Deferred income tax expense (benefit)

8,151

(5,139

)

Stock compensation expense

11,185

11,156

Depreciation and amortization

12,987

12,660

Other, net

551

433

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(252,914

)

16,680

Increase in accounts payable and accrued

expenses

233,153

917

Increase in deferred contract costs

(71,258

)

(16,068

)

Increase in contract liabilities

79,590

21,201

Increase in income taxes payable, net

46,638

10,488

Increase in other, net

(1,488

)

(11,930

)

Net cash from operating activities

355,744

165,000

Investing Activities:

Purchase of property and equipment

(8,391

)

(6,127

)

Other, net

(34

)

(143

)

Net cash from investing activities

(8,425

)

(6,270

)

Financing Activities:

Proceeds from issuance of common stock

19,757

23,399

Repurchases of common stock

(85,997

)

(283,240

)

Payments for taxes related to net share settlement of equity

awards

(1,275

)

(1,396

)

Net cash from financing activities

(67,515

)

(261,237

)

Effect of exchange rate changes on cash and cash equivalents

(14,202

)

(16,011

)

Change in cash and cash equivalents

265,602

(118,518

)

Cash and cash equivalents at beginning of period

1,527,791

1,230,491

Cash and cash equivalents at end of period

$

1,793,393

$

1,111,973

Taxes Paid:

Income taxes

$

46,607

$

35,304

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 March 31, 2021:

Revenues

$

875,392

94,858

44,864

1,325,621

363,682

493,718

160,609

(1,204

)

3,357,540

Directly related cost of transportation and

other expenses1

$

502,637

53,791

26,700

1,084,102

283,860

334,294

121,212

(592

)

2,406,004

Salaries and other operating expenses2

$

238,698

25,737

12,377

106,920

43,165

109,455

30,275

(606

)

566,021

Operating income

$

134,057

15,330

5,787

134,599

36,657

49,969

9,122

(6

)

385,515

Identifiable assets at period end

$

2,747,984

194,050

93,072

988,954

331,271

853,944

265,495

(19,773

)

5,454,997

Capital expenditures

$

3,025

122

53

357

579

3,554

701

8,391

Equity

$

1,985,265

73,066

32,632

342,233

148,293

218,198

121,040

(42,077

)

2,878,650

For the three months ended March 31, 2020:

Revenues

$

650,407

81,831

37,890

537,955

169,042

320,640

105,039

(940

)

1,901,864

Directly related cost of transportation and

other expenses1

$

373,961

45,890

23,765

425,301

121,282

221,998

74,976

(445

)

1,286,728

Salaries and other operating expenses2

$

225,944

23,712

11,749

57,433

29,908

81,854

25,950

(469

)

456,081

Operating income

$

50,502

12,229

2,376

55,221

17,852

16,788

4,113

(26

)

159,055

Identifiable assets at period end

$

1,858,250

135,810

68,402

512,808

179,508

554,831

200,382

(24

)

3,509,967

Capital expenditures

$

4,497

61

102

325

188

645

309

6,127

Equity

$

1,369,580

63,378

28,020

237,255

102,001

159,222

113,349

(35,660

)

2,037,145

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.

The Company’s consolidated financial results in the three months ended March 31, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In the first quarter of 2021, the Company experienced strong volumes and high 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. These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. In the first quarter of 2021, the People's Republic of China, including Hong Kong, represented 32% and 27%, respectively, of the Company’s total revenues and total operating income, whereas in the first quarter of 2020 it represented 23% and 25%, respectively.

Contacts:

Jeffrey S. Musser
President and Chief Executive Officer
(206) 674-3433

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