Expeditors Reports Second Quarter 2013 EPS Of $.45 Per Share 1

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $92,315,000 for the second quarter of 2013, as compared with $83,955,000 for the same quarter of 2012, an increase of 10%. Net revenues 2 for the second quarter of 2013 increased 3% to $469,101,000 as compared with $453,651,000 for the same quarter in 2012. Total revenues and operating income were $1,500,453,000 and $143,579,000 in the second quarter of 2013, as compared with $1,504,952,000 and $132,403,000 for the same quarter of 2012, a marginal decrease and an increase of 8%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $.45, as compared with $.39 for the same quarter in 2012, an increase of 15%.

For the six months ended June 30, 2013, net earnings attributable to shareholders was $172,630,000, as compared with $160,662,000 in 2012, an increase of 7%. Net revenues for the six months increased to $914,385,000 from $900,222,000 for 2012, up 2%. Total revenues and operating income for the six months were $2,910,938,000 and $272,097,000 in 2013, as compared with $2,916,322,000 and $257,674,000 for the same period in 2012, a marginal decrease and an increase of 6%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2013 were $.83, as compared with $.75 for the same period of 2012, an increase of 11%.

“These results are very significant to us and we continue to be encouraged by our progress. The beginning signs of improvement we noticed during our 2013 first quarter, picked up during the second quarter,” said Peter J. Rose, Chairman and Chief Executive Officer. “While the global economy is still slowly emerging from the fundamental problems that have held it in thrall over the last five years, and slowly is the operative word, we've selectively grown market share this quarter. Our airfreight volumes were up again, for the third straight quarter, by 5%. Ocean FEU count on a yearly quarter-over-quarter basis was up 2%, as was our order management activity. The volatility of the pricing environment continues to require focused attention to both the buy and sell elements of the air and ocean marketplace. We think these results prove we did a good job of that during the second quarter,” Rose went on to say.

“Moving successfully through difficult times without having those difficult times move through us requires commitment to and confidence in the power of our culture and faith in our people and their knowledge and ability to execute in the markets we deal in,” Rose continued. "It takes discipline and integrity to win short-term market share battles without losing the long-term profitability wars that successful companies are built upon and which creates long-term shareholder value. Many businesses struggle with executing that strategic trade-off. Fortunately for us, our people, who are the core and cause of our success, have admirably demonstrated that they have ample amounts of both. We're grateful for their efforts and we're grateful to our customers, and our shareholders, who both benefit from the aligned efforts of our people,” 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 Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.

NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.
 
Expeditors International of Washington, Inc.
Second Quarter 2013 Earnings Release, August 6, 2013
 
Financial Highlights for the Three and Six months ended June 30, 2013 and 2012 (Unaudited)

(in 000's of US dollars except share data)
 
      Three months ended June 30,       Six months ended June 30,    
    %     %
2013 2012 Change 2013 2012 Change
Revenues $ 1,500,453 $ 1,504,952

%

$

2,910,938
$ 2,916,322 %
Net revenues1 $ 469,101 $ 453,651 3 % $ 914,385 $ 900,222 2 %
Operating income $ 143,579 $ 132,403 8 % $ 272,097 $ 257,674 6 %
Net earnings attributable to shareholders $ 92,315 $ 83,955 10 % $ 172,630 $ 160,662 7 %
Diluted earnings attributable to shareholders $ .45 $ .39 15 % $ .83 $ .75 11 %
Basic earnings attributable to shareholders $ .45 $ .40 13 % $ .84 $ .76 11 %
Diluted weighted average shares outstanding 207,192,534 213,212,912 207,421,805 213,683,587
Basic weighted average shares outstanding 206,444,464 211,724,082 206,459,701 211,910,872
 

1 Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.
 
     
Employee headcount as of June 30,
2013     2012
North America 4,761 4,764
Asia Pacific 3,881 3,979
Europe and Africa 2,323 2,308
Middle East and India 1,213 1,249
Latin America 679 660
Information Systems 628 587
Corporate 270 243
Total 13,755 13,790
 
     
Year-over-year percentage increase in:
Airfreight kilos     Ocean freight FEU
2013
April 9% 2%
May 7% —%
June 1% 3%
Quarter 5% 2%
 

Investors may submit written questions via e-mail to: investor@expeditors.com . Questions received by the end of business on August 9, 2013 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 23, 2013.

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 recovery of global economy; ability to grow market share; ability to successfully manage volatile buy and sell rates; ability to execute and create long-term shareholder value. 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, foreign exchange rates, 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)
 
      June 30, 2013     December 31, 2012

Assets
Current Assets:
Cash and cash equivalents $ 1,286,109 $ 1,260,842
Short-term investments 89,902 139
Accounts receivable, net 1,018,337 1,031,376
Deferred Federal and state income taxes 11,999 12,102
Other current assets 69,431   53,140
Total current assets 2,475,778   2,357,599
Property and equipment, net 549,583 556,204
Goodwill 7,927 7,927
Other assets, net 30,377   32,395
$ 3,063,665   $ 2,954,125

Liabilities and Equity
Current Liabilities:
Accounts payable 645,196 641,593
Accrued expenses, primarily salaries and related costs 196,789 178,995
Federal, state and foreign income taxes 18,228   21,970
Total current liabilities 860,213   842,558
Deferred Federal and state income taxes 81,510 78,997
 
Commitments and contingencies
 
Shareholders’ Equity:
Preferred stock; none issued
Common stock, par value $.01 per share; issued and outstanding 206,321,425 shares at June 30, 2013 and 206,392,013 shares at December 31, 2012 2,063 2,064
Additional paid-in capital 3,534 1,283
Retained earnings 2,129,349 2,018,618
Accumulated other comprehensive (loss) income (15,105 ) 5,734
Total shareholders’ equity 2,119,841   2,027,699
Noncontrolling interest 2,101   4,871
Total equity 2,121,942   2,032,570
$ 3,063,665   $ 2,954,125
 
 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
 
(Unaudited)
 
      Three months ended     Six months ended
June 30, June 30,
2013     2012 2013     2012
Revenues:  
Airfreight services $ 642,969 $ 638,541 $ 1,263,343 $ 1,277,453
Ocean freight and ocean services 492,007 518,998 937,486 953,334
Customs brokerage and other services 365,477 347,413 710,109 685,535
Total revenues 1,500,453 1,504,952 2,910,938 2,916,322
Operating Expenses:
Airfreight services 483,016 484,311 947,935 965,354
Ocean freight and ocean services 380,727 413,447 725,650 745,401
Customs brokerage and other services 167,609 153,543 322,968 305,345
Salaries and related costs 255,569 249,925 503,986 496,057
Rent and occupancy costs 22,132 20,853 43,789 42,029
Depreciation and amortization 11,674 9,670 22,952 19,215
Selling and promotion 8,328 8,860 15,585 17,523
Other 27,819 31,940 55,976 67,724
Total operating expenses 1,356,874 1,372,549 2,638,841 2,658,648
Operating income 143,579 132,403 272,097 257,674
 
Interest income 3,070 3,050 6,313 6,410
Other, net 4,325 3,460 5,856 3,937
Other income, net 7,395 6,510 12,169 10,347
Earnings before income taxes 150,974 138,913 284,266 268,021
Income tax expense 58,311 54,892 110,993 107,278
Net earnings 92,663 84,021 173,273 160,743
Less net earnings attributable to the noncontrolling interest 348 66 643 81
Net earnings attributable to shareholders $ 92,315 $ 83,955 $ 172,630 $ 160,662
Diluted earnings attributable to shareholders per share $ .45 $ .39 $ .83 $ .75
Basic earnings attributable to shareholders per share $ .45 $ .40 $ .84 $ .76
Dividends declared and paid per common share $ .30 $ .28 $ .30 $ .28
Weighted average diluted shares outstanding 207,192,534 213,212,912 207,421,805 213,683,587
Weighted average basic shares outstanding 206,444,464 211,724,082 206,459,701 211,910,872
 
 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
      Three months ended     Six months ended
June 30, June 30,
2013     2012 2013     2012
Operating Activities:
Net earnings $ 92,663 $ 84,021 $ 173,273 $ 160,743
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses (recoveries) on accounts receivable 100 (388 ) 1,041 (855 )
Deferred income tax expense (benefit) 5,818 (5,739 ) 12,940 (258 )
Excess tax benefits from stock plans (584 ) (806 ) (1,683 ) (4,232 )
Stock compensation expense 11,040 10,926 22,045 21,526
Depreciation and amortization 11,674 9,670 22,952 19,215
Other 241 206 449 423
Changes in operating assets and liabilities:
Increase in accounts receivable (48,223 ) (63,260 ) (9,367 ) (50,292 )
(Increase) decrease in other current assets (91 ) 1,642 (576 ) 3,566
Increase in accounts payable and accrued expenses 45,080 70,674 43,690 84,233
(Decrease) increase in income taxes payable, net   (33,692 )   (14,132 )   (15,474 )   6,142  
Net cash from operating activities   84,026     92,814     249,290     240,211  
Investing Activities:
(Increase) decrease in short-term investments, net (89,803 ) 15,878 (89,765 ) 98
Purchase of property and equipment (17,141 ) (9,814 ) (27,209 ) (26,902 )
Other, net   1,264     (91 )   820     379  
Net cash from investing activities   (105,680 )   5,973     (116,154 )   (26,425 )
Financing Activities:
Proceeds from issuance of common stock 7,548 7,482 18,477 20,402
Repurchases of common stock (21,600 ) (84,401 ) (39,281 ) (106,266 )
Excess tax benefits from stock plans 584 806 1,683 4,232
Dividends paid (61,899 ) (59,358 ) (61,899 ) (59,358 )
Purchase of noncontrolling interest           (7,730 )    
Net cash from financing activities   (75,367 )   (135,471 )   (88,750 )   (140,990 )
Effect of exchange rate changes on cash and cash equivalents   (11,557 )   (11,984 )   (19,119 )   (2,905 )
(Decrease) increase in cash and cash equivalents (108,578 ) (48,668 ) 25,267 69,891
Cash and cash equivalents at beginning of period   1,394,687     1,412,915     1,260,842     1,294,356  
Cash and cash equivalents at end of period $ 1,286,109   $ 1,364,247   $ 1,286,109   $ 1,364,247  
Taxes paid:
Income taxes $ 85,195 $ 77,583 $ 112,146 $ 104,095
 
 
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 June 30, 2013:

 
Revenues from unaffiliated customers $ 392,804 56,626 21,421 749,227 205,995 74,380 1,500,453
Transfers between geographic areas   23,217 2,516 5,614 11,605 9,189 4,559 (56,700 )
Total revenues $ 416,021 59,142 27,035 760,832 215,184 78,939 (56,700 ) 1,500,453
Net revenues $ 190,818 25,440 15,522 141,385 71,042 24,894 469,101
Operating income $ 58,310 7,887 4,601 54,781 11,613 6,387 143,579
Identifiable assets $ 1,531,739 101,721 53,795 809,827 418,077 155,058 (6,552 ) 3,063,665
Capital expenditures $ 4,354 708 145 11,056 563 315 17,141
Depreciation and amortization $ 7,276 197 229 1,983 1,550 439 11,674
Equity $ 1,209,762 65,897 33,272 606,793 166,891 75,418 (36,091 ) 2,121,942
Three months ended June 30, 2012:
Revenues from unaffiliated customers $ 379,126 49,802 21,366 780,858 202,301 71,499 1,504,952
Transfers between geographic areas   22,504 2,466 4,791 11,038 9,603 4,670 (55,072 )
Total revenues $ 401,630 52,268 26,157 791,896 211,904 76,169 (55,072 ) 1,504,952
Net revenues $ 182,291 25,115 14,724 135,908 71,497 24,116 453,651
Operating income $ 49,193 8,085 4,118 51,768 12,951 6,288 132,403
Identifiable assets $ 1,597,543 93,374 52,019 687,586 412,752 152,754 (3,656 ) 2,992,372
Capital expenditures $ 5,236 153 400 2,602 1,111 312 9,814
Depreciation and amortization $ 5,756 181 207 1,645 1,430 451 9,670
Equity $ 1,295,963 51,248 31,903 462,123 144,659 94,892 (30,731 ) 2,050,057
 
Six months ended June 30, 2013:
Revenues from unaffiliated customers $ 764,523 108,355 41,285 1,443,322 408,482 144,971 2,910,938
Transfers between geographic areas   43,243 5,060 10,490 22,235 18,069 8,886 (107,983 )
Total revenues $ 807,766 113,415 51,775 1,465,557 426,551 153,857 (107,983 ) 2,910,938
Net revenues $ 368,506 49,221 29,933 276,892 141,631 48,202 914,385
Operating income $ 105,663 14,499 8,690 107,665 23,539 12,041 272,097
Identifiable assets $ 1,531,739 101,721 53,795 809,827 418,077 155,058 (6,552 ) 3,063,665
Capital expenditures $ 9,733 895 404 13,608 1,761 808 27,209
Depreciation and amortization $ 14,033 404 470 3,971 3,179 895 22,952
Equity $ 1,209,762 65,897 33,272 606,793 166,891 75,418 (36,091 ) 2,121,942
Six months ended June 30, 2012:
Revenues from unaffiliated customers $ 756,428 99,756 40,635 1,468,928 408,572 142,003 2,916,322
Transfers between geographic areas   44,712 4,931 9,870 22,010 19,070 9,321 (109,914 )
Total revenues $ 801,140 104,687 50,505 1,490,938 427,642 151,324 (109,914 ) 2,916,322
Net revenues $ 363,766 47,357 29,559 267,722 143,030 48,788 900,222
Operating income $ 94,718 14,454 8,880 99,006 27,198 13,418 257,674
Identifiable assets $ 1,597,543 93,374 52,019 687,586 412,752 152,754 (3,656 ) 2,992,372
Capital expenditures $ 14,995 329 655 7,889 2,053 981 26,902
Depreciation and amortization $ 11,378 368 424 3,269 2,834 942 19,215
Equity $ 1,295,963 51,248 31,903 462,123 144,659 94,892 (30,731 ) 2,050,057
 

Net Revenues (Non-GAAP measure)

We commonly refer to the term “net revenues” when commenting about our Company and the results of its operations. Net revenues are a Non-GAAP measure calculated as revenues less directly related operations expenses attributable to the Company's principal services. We believe that net revenues are a better measure than are total revenues when analyzing and discussing our effectiveness in managing our principal services since total revenues earned as a freight consolidator must consider the carriers' charges to us for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by us. Net revenue is one of our primary operational and financial measures and demonstrates our ability concentrate and leverage purchasing power (buy rates) through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings. Using net revenues also provides a commonality for comparison among various services. The following table presents the calculation of net revenues.
         
Three months ended Six months ended
June 30, June 30,
(in thousands) 2013     2012 2013     2012
Total revenues $ 1,500,453 $ 1,504,952 $ 2,910,938 $ 2,916,322
Expenses:
Airfreight services 483,016 484,311 947,935 965,354
Ocean freight and ocean services 380,727 413,447 725,650 745,401
Customs brokerage and other services 167,609 153,543 322,968 305,345
Net revenues $ 469,101 $ 453,651 $ 914,385 $ 900,222

Copyright Business Wire 2010

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