Expeditors Reports Fourth Quarter 2012 EPS Of $.40 Per Share 1

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $84,208,000 for the fourth quarter of 2012, as compared with $92,843,000 for the same quarter of 2011, a decrease of (9)%. Net revenues for the fourth quarter of 2012 decreased (4)% to $458,738,000 as compared with $476,155,000 reported for the fourth quarter of 2011. Total revenues and operating income were $1,532,957,000 and $128,025,000 in 2012, as compared with $1,501,914,000 and $155,064,000 for the same quarter of 2011, an increase of 2% and a decrease of (17)%, respectively. Diluted net earnings attributable to shareholders per share for the fourth quarter were $.40, as compared with $.43 for the same quarter in 2011, a decrease of (7)%.

For the year ended December 31, 2012, net earnings attributable to shareholders was $333,360,000, as compared with $385,679,000 in 2011, a decrease of (14)%. Net revenues for the year decreased to $1,824,098,000 from $1,896,477,000 for 2011, down (4)%. Total revenues and operating income for the year were $5,980,943,000 and $530,798,000 in 2012, as compared with $6,150,498,000 and $618,327,000 for the same period in 2011, decreases of (3)% and (14)%, respectively. Diluted net earnings attributable to shareholders per share for the year ended December 31, 2012 were $1.57, as compared with $1.79 for the same period of 2011, a decrease of (12)%.

“We obviously would have liked better results for the annual 2012 and fourth quarter, not withstanding 2012 was our third most profitable year on record," said Peter J. Rose, Chairman and Chief Executive Officer. "The market has been challenged throughout the year by air carriers reducing capacity to optimize their pricing and load factors as market volumes declined, primarily in the hi-tech and computer industry, traditionally among the prime users of airfreight space. As airfreight tonnage spiked during the latter part of the fourth quarter, carriers imposed rate increases so quickly that we were unable to commercially adjust our corresponding sell rates to avoid temporary yield declines. That all said, we still have much to be proud of this year. We remain highly efficient and profitable with strong cash flow and an operating margin just under 30% 2. We have a balance sheet as solid as the Rock of Gibraltar, abundant cash and the wherewithal to make strategic investments to increase growth and continue technological enhancements. And finally, we successfully concluded our part of the five year DOJ investigation into our industry. As we reflect back on the goals and aspirations we held at the start of 2012, we executed to protect the long-term value of Expeditors, particularly given global economic uncertainties. We made the safe-guarding of our people a priority; we continued to make essential investments in systems and new services, such as Transcon, our time definite transportation service; and we continued to provide consistently high-quality service to our customers. We also made record stock buybacks of $302 million and paid out record dividends of $117 million," Rose continued.

"Early in 2012, while eschewing layoffs, we asked our managers to focus on being more efficient with current staff, to be cautious with hiring decisions and to only add headcount in instances where attrition or new business required it, so as to not compromise our customer service standards. We concentrated our efforts on managing and developing the investments in our most valuable assets, our people. Our final 2012 headcount is only 0.2% above 2011 levels, but even that slight increase reflects targeted investments in new offices, strategic business initiatives and information systems which will allow us to drive future productivity and on-board new customers more efficiently. As we move into 2013, we have taken several steps to enhance our ability to retain existing customers while attracting new business. We have refined our pricing regimen to ensure that we are focusing on market share expansion through more timely and efficient rate quotation; we are in the process of rolling out our internally-developed customer relationship management system; we have increased our emphasis on our customer-facing network engineering offerings which have been very successful in assisting customer supply-chain optimization initiatives; and, of course, we will continue to train, measure and emphasize our foundational commitment to customer service. We think those are winning combinations to help our people manage whatever 2013 will bring," Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 188 full-service offices and numerous satellite 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, domestic time definite transportation services, purchase order management and customized logistics solutions.

1 Diluted earnings attributable to shareholders per share.

2 Operating margin is calculated as operating income divided by net revenues.

NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.
Expeditors International of Washington, Inc.
4th Quarter 2012 Earnings Release, February 26, 2013
 
Financial Highlights for the Three months and Years ended December 31, 2012 and 2011 (Unaudited)

(in 000's of US dollars except share data)
                 
Three months ended December
31, Years ended December 31,
    % Increase     %
2012 2011 (Decrease) 2012 2011 Decrease
Revenues $ 1,532,957 $ 1,501,914 2 % $ 5,980,943 $ 6,150,498 (3 )%
Net revenues $ 458,738 $ 476,155 (4 )% $ 1,824,098 $ 1,896,477 (4 )%
Operating income $ 128,025 $ 155,064 (17 )% $ 530,798 $ 618,327 (14 )%
Net earnings attributable to shareholders $ 84,208 $ 92,843 (9 )% $ 333,360 $ 385,679 (14 )%
Diluted earnings attributable to shareholders $ .40 $ .43 (7 )% $ 1.57 $ 1.79 (12 )%
Basic earnings attributable to shareholders $ .41 $ .44 (7 )% $ 1.58 $ 1.82 (13 )%
Diluted weighted average shares outstanding 208,963,216 214,159,723 211,935,171 215,033,580
Basic weighted average shares outstanding 207,766,619 211,988,482 210,422,945 212,117,511
 
      Employee headcount as of December 31,
2012     2011
North America 4,726 4,666
Asia Pacific 3,914 4,083
Europe and Africa 2,332 2,262
Middle East 1,236 1,250
South America 672 645
Information Systems 600 569
Corporate 248 228
Total 13,728 13,703
 
      Year-over-year percentage increase
(decrease) in:
Airfreight kilos     Ocean freight FEU
2012
October 3 % (9 )%
November 8 % (4 )%
December 2 % (4 )%
Quarter 5 % (6 )%
 

Disclaimer on Forward-Looking Statements:

Certain portions of this release contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on global economic uncertainties; challenges in the airfreight industry and reducing capacity to optimize their pricing and loan factors; ability to maintain or improve profitability, cash flow, operating margins and efficiencies; ability to make strategic investments that increase growth and enhance our technology, systems and new services; ability to safeguard, manage and develop our people; ability to maintain and improve high quality services to customers; ability to continue stock buy-backs and dividends; ability to retain existing customers or attract new business; ability to operate new offices profitably; ability to drive future productivity, or on-board new customers; ability to refine our pricing regimen to ensure we are focusing on market-share expansion or timing and efficient rate quotation; success of internally developed systems; success of network engineering offerings; and success in optimizing customer supply chain initiatives. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, our ability to maintain consistent and stable operating results, future success of our business model, ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, customers’ inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political changes, regulatory actions or changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
         
December 31, December 31,
2012 2011

Assets
Current Assets:
Cash and cash equivalents $ 1,260,842 $ 1,294,356
Accounts receivable, net 1,031,376 934,752
Deferred Federal and state income taxes 12,102 10,415
Other current assets 53,279 47,360  
Total current assets 2,357,599 2,286,883  
Property and equipment, net 556,204 538,806
Goodwill 7,927 7,927
Other assets, net 32,395 33,211  
$ 2,954,125 $ 2,866,827  

Liabilities and Equity
Current Liabilities:
Accounts payable 641,593 606,628
Accrued expenses, primarily salaries and related costs 178,995 169,445
Federal, state and foreign income taxes 21,970 20,072  
Total current liabilities 842,558 796,145  
Deferred Federal and state income taxes 78,997 60,613
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued
Common stock, par value $.01 per share; issued and outstanding 206,392,013 shares at December 31, 2012 and 212,003,662 shares at December 31, 2011 2,064 2,120
Additional paid-in capital 1,283 13,260
Retained earnings 2,018,618 1,991,222
Accumulated other comprehensive income (loss) 5,734 (2,964 )
Total shareholders’ equity 2,027,699 2,003,638  
Noncontrolling interest 4,871 6,431  
Total equity 2,032,570 2,010,069  
$ 2,954,125 $ 2,866,827  
 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
         
Three months ended Twelve months ended
December 31, December 31,
2012     2011 2012     2011
Revenues:
Airfreight services $ 700,785 $ 705,744 $ 2,600,916 $ 2,893,474
Ocean freight and ocean services 472,307 441,102 1,974,891 1,878,595
Customs brokerage and other services 359,865   355,068   1,405,136   1,378,429  
Total revenues 1,532,957   1,501,914   5,980,943   6,150,498  
Operating Expenses:
Airfreight consolidation 546,395 534,159 1,983,696 2,193,122
Ocean freight consolidation 364,251 333,567 1,542,170 1,443,170
Customs brokerage and other services 163,573 158,033 630,979 617,729
Salaries and related costs 246,096 247,917 995,052 993,358
Rent and occupancy costs 24,711 20,578 88,044 84,665
Depreciation and amortization 10,695 9,146 39,940 36,776
Selling and promotion 8,814 10,447 34,184 38,974
Other 40,397   33,003   136,080   124,377  
Total operating expenses 1,404,932   1,346,850   5,450,145   5,532,171  
Operating income 128,025   155,064   530,798   618,327  
 
Interest income 3,522 2,715 12,763 10,235
Interest expense (227 ) (248 ) (1,251 ) (970 )
Other, net 2,072   (2,330 ) 8,083   10,436  
Other income, net 5,367   137   19,595   19,701  
Earnings before income taxes 133,392 155,201 550,393 638,028
Income tax expense 49,893   62,061   217,424   251,785  
Net earnings 83,499   93,140   332,969   386,243  
Less net (losses) earnings attributable to the noncontrolling interest (709 ) 297   (391 ) 564  
Net earnings attributable to shareholders $ 84,208   $ 92,843   $ 333,360   $ 385,679  
Diluted earnings attributable to shareholders per share $ .40   $ .43   $ 1.57   $ 1.79  
Basic earnings attributable to shareholders per share $ .41   $ .44   $ 1.58   $ 1.82  
Dividends declared and paid per common share $ .28   $ .25   $ .56   $ .50  
Weighted average diluted shares outstanding 208,963,216   214,159,723   211,935,171   215,033,580  
Weighted average basic shares outstanding 207,766,619   211,988,482   210,422,945   212,117,511  
 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
      Three months ended   Twelve months ended
December 31, December 31,
2012   2011 2012   2011
Operating Activities:
Net earnings $ 83,499 $ 93,140 $ 332,969 $ 386,243
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses (recoveries) on accounts receivable 302 166 (90 ) 1,327
Deferred income tax expense (benefit) 7,309 5,598 11,639 (4,065 )
Excess tax benefits from stock plans (1,110 ) (232 ) (5,401 ) (5,300 )
Stock compensation expense 11,212 10,832 44,058 44,278
Depreciation and amortization 10,695 9,146 39,940 36,776
Other 3,181 722 4,864 2,496
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (16,044 ) 58,717 (89,856 ) 46,915
Decrease (increase) in other current assets 3,566 (1,620 ) (63 ) (7,483 )
(Decrease) increase in accounts payable and accrued expenses (30,341 ) (54,879 ) 30,625 (40,819 )
(Decrease) increase in income taxes payable, net (11,520 ) (13,654 ) 1,441   (3,237 )
Net cash from operating activities 60,749   107,936   370,126   457,131  
Investing Activities:
Purchase of property and equipment (10,554 ) (19,261 ) (47,626 ) (78,115 )
Prepayment on long-term leases, net (936 )
Other 146   343   632   (1,288 )
Net cash from investing activities (10,408 ) (18,918 ) (46,994 ) (80,339 )
Financing Activities:
Proceeds from issuance of common stock 7,510 2,055 52,511 56,646
Repurchases of common stock (108,921 ) (3,499 ) (302,414 ) (112,071 )
Excess tax benefits from stock plans 1,110 232 5,401 5,300
Dividends paid (57,905 ) (52,997 ) (117,263 ) (106,011 )
Distribution to noncontrolling interest (105 ) (133 ) (1,282 ) (955 )
Net cash from financing activities (158,311 ) (54,342 ) (363,047 ) (157,091 )
Effect of exchange rate changes on cash and cash equivalents 1,170   (1,134 ) 6,401   (9,810 )
(Decrease) increase in cash and cash equivalents (106,800 ) 33,542 (33,514 ) 209,891
Cash and cash equivalents at beginning of period 1,367,642   1,260,814   1,294,356   1,084,465  
Cash and cash equivalents at end of period $ 1,260,842   $ 1,294,356   $ 1,260,842   $ 1,294,356  
Interest and taxes paid:
Interest $ 68 $ 231 $ 515 $ 296
Income taxes 52,168 83,454 207,174 266,621
 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Business Segment Information
(In thousands) (Unaudited)
 
          OTHER             EUROPE     MIDDLE        
UNITED NORTH LATIN ASIA and EAST and ELIMI- CONSOLI-
STATES AMERICA AMERICA PACIFIC AFRICA INDIA NATIONS DATED
Three months ended December 31, 2012:
Revenues from unaffiliated customers $ 379,018 51,557 20,887 800,804 210,231 70,460 1,532,957
Transfers between geographic areas 25,386 2,868 4,770 11,035 10,097 4,300 (58,456 )
Total revenues $ 404,404 54,425 25,657 811,839 220,328 74,760 (58,456 ) 1,532,957
Net revenues $ 186,176 25,029 14,258 136,497 73,393 23,385 458,738
Operating income $ 28,201 11,045 4,237 57,933 18,804 7,805 128,025
Identifiable assets $ 1,459,425 92,075 48,995 776,902 428,053 147,871 804 2,954,125
Capital expenditures $ 7,412 281 241 1,452 794 374 10,554
Depreciation and amortization $ 6,358 200 229 1,850 1,605 453 10,695
Equity $ 1,197,239 58,071 29,504 538,710 167,752 74,950 (33,656 ) 2,032,570
Three months ended December 31, 2011:
Revenues from unaffiliated customers $ 383,830 48,839 19,490 761,092 218,074 70,589 1,501,914
Transfers between geographic areas 24,639 2,641 5,356 10,159 10,570 4,592 (57,957 )
Total revenues $ 408,469 51,480 24,846 771,251 228,644 75,181 (57,957 ) 1,501,914
Net revenues $ 183,381 24,367 14,673 150,262 76,950 26,522 476,155
Operating income $ 41,652 10,314 5,056 68,971 19,048 10,023 155,064
Identifiable assets $ 1,521,657 86,020 48,221 667,171 401,518 141,379 861 2,866,827
Capital expenditures $ 8,404 199 166 8,760 1,288 444 19,261
Depreciation and amortization $ 5,222 208 226 1,605 1,400 485 9,146
Equity $ 1,285,812 49,571 27,346 448,613 145,998 85,605 (32,876 ) 2,010,069
 
Twelve months ended December 31, 2012:
Revenues from unaffiliated customers $ 1,519,276 201,521 82,337 3,074,587 816,927 286,295 5,980,943
Transfers between geographic areas 94,521 10,476 18,780 43,721 38,791 18,128 (224,417 )
Total revenues $ 1,613,797 211,997 101,117 3,118,308 855,718 304,423 (224,417 ) 5,980,943
Net revenues $ 737,679 95,798 57,795 551,211 286,264 95,351 1,824,098
Operating income $ 179,015 32,385 17,356 216,559 59,314 26,169 530,798
Identifiable assets $ 1,459,425 92,075 48,995 776,902 428,053 147,871 804 2,954,125
Capital expenditures $ 28,088 832 1,301 11,275 4,323 1,807 47,626
Depreciation and amortization $ 23,678 756 873 6,810 5,994 1,829 39,940
Equity $ 1,197,239 58,071 29,504 538,710 167,752 74,950 (33,656 ) 2,032,570
Twelve months ended December 31, 2011:
Revenues from unaffiliated customers $ 1,540,477 189,843 82,312 3,144,641 891,185 302,040 6,150,498
Transfers between geographic areas 101,738 11,095 21,222 40,012 43,359 17,897 (235,323 )
Total revenues $ 1,642,215 200,938 103,534 3,184,653 934,544 319,937 (235,323 ) 6,150,498
Net revenues $ 732,299 90,432 59,968 605,151 307,471 101,156 1,896,477
Operating income $ 210,702 29,209 19,151 258,952 72,248 28,065 618,327
Identifiable assets $ 1,521,657 86,020 48,221 667,171 401,518 141,379 861 2,866,827
Capital expenditures $ 23,219 1,122 628 25,295 25,856 1,995 78,115
Depreciation and amortization $ 20,037 1,038 999 7,243 5,414 2,045 36,776
Equity $ 1,285,812 49,571 27,346 448,613 145,998 85,605 (32,876 ) 2,010,069

Copyright Business Wire 2010

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