SEATTLE, Feb. 20, 2018 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced fourth quarter 2017 financial results including the following highlights compared to the same quarter of 2016:
  • Diluted Net Earnings Attributable to Shareholders per share (EPS 1) increased 51% to $0.92 (includes a net income tax benefit from U.S. tax reform of $0.21)
  • Net Earnings Attributable to Shareholders increased 51% to $167 million (includes a net income tax benefit from U.S. tax reform of $39 million)
  • Operating Income increased 16% to $199 million
  • Revenues increased 16% to $1.90 billion
  • Net Revenues 2 increased 15% to $629 million
  • Airfreight tonnage volumes increased 6% and ocean container volumes increased 1%

"We executed well across all of our businesses in the fourth quarter, with improved performance throughout the second half of 2017," said Jeffrey S. Musser, President and Chief Executive Officer. "The global freight industry is stronger than it was a year ago, particularly in certain key lanes and especially for shipments by air. In response to that continued robust demand, and combined with tight capacity and unpredictable rates, we continued to grow profitably by delivering outstanding services and solutions to our customers.

"I credit our strong results to the hard work and discipline of everyone throughout our talented organization, as we continue to move higher volumes in all services with greater efficiency per-shipment. The vast majority of our dedicated employees work in the field at one of our many District operations, where they are close to our customers and greatly attuned to their individual supply chain needs. Because each District is responsible for its own P&L, we are all highly motivated to drive efficiency and growth in support of profitable business."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "We continued to improve operational performance on many levels, pushing operating efficiency (operating income as a percentage of net revenue) to nearly 32% in Q4 and above 30% for the full year. We are managing our pricing well in a volatile rate environment, and we are controlling expenses by making the best of our investments in people, processes, and core technologies. We will continue to invest in people and systems to support profitable growth, while working to further hone our performance at the District level to move more freight and to move it more efficiently."

Mr. Powell also noted, "We were positively impacted by the implementation of U.S. tax law changes in Q4, which resulted in recognizing a $39 million net income tax benefit. The impact on our effective tax rate in future periods will largely depend on the mix of pretax earnings that we generate in our U.S. and foreign operations, as well as further interpretation of and guidance to be issued on the new tax law. At this time, we expect our effective tax rate in 2018 will be between 31% and 34% of pretax earnings."

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 177 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 services, order management, warehousing and distribution and customized logistics solutions.

________________________ 1Diluted 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.
4th Quarter 2017 Earnings Release, February 20, 2018
 
Financial Highlights for the Three months and Years ended 
December 31, 2017 and 2016 (Unaudited) 
(in 000's of US dollars except per share data)
 
  Three months endedDecember 31,       Years ended December 31,    
  2017   2016   % Change   2017   2016   % Change
Revenues $ 1,901,371     $ 1,642,007     16%   $ 6,920,948     $ 6,098,037     13%
Net revenues 3 $ 628,809     $ 548,591     15%   $ 2,319,189     $ 2,164,036     7%
Operating income 4 $ 199,011     $ 172,210     16%   $ 700,260     $ 670,163     4%
Net earnings attributable to shareholders 5 $ 166,967     $ 110,590     51%   $ 489,345     $ 430,807     14%
Diluted earnings attributable to shareholders $ 0.92     $ 0.61     51%   $ 2.69     $ 2.36     14%
Basic earnings attributable to shareholders $ 0.94     $ 0.61     54%   $ 2.73     $ 2.38     15%
Diluted weighted average shares outstanding 180,635     181,887         181,666     182,704      
Basic weighted average shares outstanding 177,523     180,201         179,247     181,282      
                               

 _______________________ 3 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. 4 Operating Income in the fourth quarter of 2016 includes a $6 million foreign exchange gain recorded in customs brokerage and other services expenses that resulted from the devaluation of the Egyptian pound. 5Net earnings in the fourth quarter of 2017 include a $39 million net income tax benefit that resulted from the effect of the 2017 Tax Cut and Jobs Act. This amount is composed of the remeasurement of net deferred tax liabilities and assets, based on the new lower U.S. corporate tax rate, the recording of a provisional estimate of the one-time mandatory tax on the undistributed earnings of the Company's non-U.S. subsidiaries, and the effects of the transition to a territorial tax system in the U.S.

During the three and twelve-month periods ended December 31, 2017, the Company repurchased 2.1 million and 8.2 million shares of common stock at an average price of $64.52 and $58.16 per share, respectively. During the three and twelve-month periods ended December 31, 2016, the Company repurchased 1.3 million and 6.7 million shares of common stock at an average price of $54.31 and $50.53 per share, respectively.
  Employee Full-time Equivalentsas of December 31,
  2017   2016
North America 6,091     5,835  
Europe 3,050     2,887  
North Asia 2,593     2,597  
South Asia 1,623     1,506  
Middle East, Africa and India 1,503     1,562  
Latin America 814     778  
Information Systems 884     877  
Corporate 386     376  
Total 16,944     16,418  
           

    Year-over-year percentageincrease/(decrease) in:
    Airfreight kilos   Ocean freight FEU
2017        
October   8%     (1)%  
November   7%     1%  
December   2%     2%  
Quarter   6%     1%  
             

_______________________

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 23, 2018 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about March 5, 2018.

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 the strength of the global freight industry and continued robust demand, tight capacity and unpredictable rates. 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 move increased volumes with greater efficiency, employee motivation to drive efficiency and growth in support of profitability, our ability to manage pricing in a volatile environment, our ability to control expenses and optimize our investments to support profitable growth, and our ability to predict our effective tax rate in 2018; volatility in equity markets; energy and fuel prices; political changes; foreign exchange rates; regulatory actions or changes or the unpredictable acts of competitors and other risks; and 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 per share data)
(Unaudited)
 
  December 31,  2017   December 31,2016
Assets      
Current Assets:      
Cash and cash equivalents $ 1,051,099     $ 974,435  
Accounts receivable, net 1,414,741     1,190,130  
Other current assets 75,612     54,014  
Total current assets 2,541,452     2,218,579  
Property and equipment, net 525,203     536,572  
Goodwill 7,927     7,927  
Deferred Federal and state taxes, net 13,207      
Other assets, net 29,219     27,793  
  $ 3,117,008     $ 2,790,871  
Liabilities and Equity      
Current Liabilities:      
Accounts payable $ 866,305     $ 726,571  
Accrued expenses, primarily salaries and related costs 206,320     185,502  
Federal, state and foreign income taxes 20,494     17,858  
Total current liabilities 1,093,119     929,931  
Noncurrent Federal income tax payable 29,516      
Deferred Federal and state income taxes     13,727  
Commitments and contingencies      
Shareholders' Equity:      
Preferred stock; none issued      
Common stock, par value $0.01 per share; issued and outstanding 176,374 shares at December 31, 2017 and 179,857 shares at December 31, 2016 1,764     1,799  
Additional paid-in capital 546     2,642  
Retained earnings 2,063,512     1,944,789  
Accumulated other comprehensive loss (73,964 )   (104,592 )
Total shareholders' equity 1,991,858     1,844,638  
Noncontrolling interest 2,515     2,575  
Total equity 1,994,373     1,847,213  
  $ 3,117,008     $ 2,790,871  
               

 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
 
(Unaudited)
 
  Three months ended   Twelve months ended
  December 31,   December 31,
  2017   2016   2017   2016
Revenues:              
Airfreight services $ 854,455     $ 688,835     $ 2,877,032     $ 2,453,347  
Ocean freight and ocean services 521,315     503,150     2,107,045     1,917,494  
Customs brokerage and other services 525,601     450,022     1,936,871     1,727,196  
Total revenues 1,901,371     1,642,007     6,920,948     6,098,037  
Operating Expenses:              
Airfreight services 636,344     515,612     2,126,761     1,752,167  
Ocean freight and ocean services 380,689     371,989     1,543,740     1,378,699  
Customs brokerage and other services 255,529     205,815     931,258     803,135  
Salaries and related costs 336,961     289,544     1,267,120     1,157,635  
Rent and occupancy costs 31,906     27,783     119,732     108,812  
Depreciation and amortization 13,069     11,943     49,310     46,796  
Selling and promotion 11,814     11,946     44,290     41,763  
Other 36,048     35,165     138,477     138,867  
Total operating expenses 1,702,360     1,469,797     6,220,688     5,427,874  
Operating income 199,011     172,210     700,260     670,163  
               
Interest income 3,639     2,987     13,204     11,580  
Other, net 2,547     1,706     5,131     5,113  
Other income, net 6,186     4,693     18,335     16,693  
Earnings before income taxes 205,197     176,903     718,595     686,856  
Income tax expense 37,742     65,805     228,212     254,323  
Net earnings 167,455     111,098     490,383     432,533  
Less net earnings attributable to the noncontrolling interest 488     508     1,038     1,726  
Net earnings attributable to shareholders $ 166,967     $ 110,590     $ 489,345     $ 430,807  
Diluted earnings attributable to shareholders per share $ 0.92     $ 0.61     $ 2.69     $ 2.36  
Basic earnings attributable to shareholders per share $ 0.94     $ 0.61     $ 2.73     $ 2.38  
Dividends declared and paid per common share $ 0.42     $ 0.40     $ 0.84     $ 0.80  
Weighted average diluted shares outstanding 180,635     181,887     181,666     182,704  
Weighted average basic shares outstanding 177,523     180,201     179,247     181,282  
                       

 
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,
  2017   2016   2017   2016
Operating Activities:              
Net earnings $ 167,455     $ 111,098     $ 490,383     $ 432,533  
Adjustments to reconcile net earnings to net cash from operating activities:              
Provision for losses on accounts receivable 2,169     146     5,356     2,607  
Deferred income tax (benefit) expense (27,695 )   13,493     (43,695 )   15,835  
Stock compensation expense 11,872     10,953     50,908     45,217  
Depreciation and amortization 13,069     11,943     49,310     46,796  
Other (4,234 )   (3,581 )   (4,382 )   (3,540 )
Changes in operating assets and liabilities:              
Increase in accounts receivable (60,981 )   (108,384 )   (184,771 )   (102,297 )
Increase in accounts payable and accrued expenses 18,499     28,568     114,631     102,716  
Increase (decrease) in income taxes payable, net 5,450     4,242     16,264     (12,370 )
Decrease (increase) in other current assets 782     4,077     (5,365 )   1,988  
Net cash from operating activities 126,386     72,555     488,639     529,485  
Investing Activities:              
Purchase of property and equipment (27,413 )   (19,343 )   (95,016 )   (59,316 )
Proceeds from sale of property and equipment 84,062     37     84,405     229  
Other, net 161     611     (1,074 )   5,891  
Net cash from investing activities 56,810     (18,695 )   (11,685 )   (53,196 )
Financing Activities:              
Proceeds from issuance of common stock 42,311     37,668     205,092     185,313  
Repurchases of common stock (137,522 )   (69,561 )   (478,258 )   (337,658 )
Dividends paid (74,769 )   (72,123 )   (150,495 )   (145,123 )
Distribution to noncontrolling interest (904 )   (1,335 )   (904 )   (1,335 )
Net cash from financing activities (170,884 )   (105,351 )   (424,565 )   (298,803 )
Effect of exchange rate changes on cash and cash equivalents 5,343     (16,774 )   24,275     (10,847 )
Increase (decrease) in cash and cash equivalents 17,655     (68,265 )   76,664     166,639  
Cash and cash equivalents at beginning of period 1,033,444     1,042,700     974,435     807,796  
Cash and cash equivalents at end of period $ 1,051,099     $ 974,435     $ 1,051,099     $ 974,435  
Supplemental Cash Flow Information:              
Cash paid for income taxes $ 58,793     $ 49,263     $ 249,704     $ 254,312  
                               

 
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands) (Unaudited)
 
  UNITED STATES   OTHER NORTH AMERICA   LATIN AMERICA   NORTHASIA   SOUTHASIA   EUROPE   MIDDLE EAST,AFRICA and INDIA   ELIMI- NATIONS   CONSOLI- DATED
Three months ended December 31, 2017:                                  
Revenues from unaffiliated customers $ 496,584     68,362     27,349     703,578     186,715     307,432     111,351         1,901,371  
Transfers between geographic areas 31,807     3,581     3,693     6,266     6,479     14,008     5,532     (71,366 )    
Total revenues $ 528,391     71,943     31,042     709,844     193,194     321,440     116,883     (71,366 )   1,901,371  
Net revenues $ 270,999     34,441     14,565     137,776     45,816     93,458     31,294     460     628,809  
Operating income $ 86,565     11,548     1,615     64,907     15,623     12,302     6,437     14     199,011  
Identifiable assets $ 1,595,140     151,181     55,431     458,152     137,279     501,711     215,495     2,619     3,117,008  
Capital expenditures $ 8,720     497     964     1,264     516     15,237     215         27,413  
Depreciation and amortization $ 8,628     383     347     1,331     559     1,361     460         13,069  
Equity $ 1,337,568     60,705     26,546     240,721     94,516     142,971     123,600     (32,254 )   1,994,373  
Three months ended December 31, 2016:                                  
Revenues from unaffiliated customers $ 434,083     61,034     21,840     637,327     161,516     238,526     87,681         1,642,007  
Transfers between geographic areas 26,459     2,637     3,525     5,363     5,913     10,706     5,424     (60,027 )    
Total revenues $ 460,542     63,671     25,365     642,690     167,429     249,232     93,105     (60,027 )   1,642,007  
Net revenues $ 234,779     31,088     13,802     114,116     42,547     77,361     34,590     308     548,591  
Operating income $ 65,839     9,439     2,305     54,156     16,877     11,086     12,510     (2 )   172,210  
Identifiable assets $ 1,455,722     104,804     49,231     511,851     120,300     351,960     190,902     6,101     2,790,871  
Capital expenditures $ 14,297     251     97     1,387     1,713     1,168     430         19,343  
Depreciation and amortization $ 7,675     366     318     1,344     528     1,174     538         11,943  
Equity $ 1,166,582     46,448     27,164     327,672     91,983     108,430     112,633     (33,699 )   1,847,213  
                                                       

  UNITED STATES   OTHER NORTH AMERICA   LATIN AMERICA   NORTHASIA   SOUTHASIA   EUROPE   MIDDLE EAST,AFRICA and INDIA   ELIMI- NATIONS   CONSOLI- DATED
Twelve months ended December 31, 2017:                                  
Revenues from unaffiliated customers $ 1,851,395     256,359     97,096     2,576,971     661,878     1,072,028     405,221         6,920,948  
Transfers between geographic areas 111,163     11,827     14,766     21,405     22,999     43,296     20,848     (246,304 )    
Total revenues $ 1,962,558     268,186     111,862     2,598,376     684,877     1,115,324     426,069     (246,304 )   6,920,948  
Net revenues $ 1,008,841     119,071     58,199     509,235     163,450     335,702     121,267     3,424     2,319,189  
Operating income $ 277,821     38,131     9,964     248,422     53,057     48,491     24,365     9     700,260  
Identifiable assets $ 1,595,140     151,181     55,431     458,152     137,279     501,711     215,495     2,619     3,117,008  
Capital expenditures $ 28,212     1,563     4,612     3,756     1,688     53,954     1,231         95,016  
Depreciation and amortization $ 32,017     1,546     1,277     5,326     2,215     5,068     1,861         49,310  
Equity $ 1,337,568     60,705     26,546     240,721     94,516     142,971     123,600     (32,254 )   1,994,373  
Twelve months ended December 31, 2016:                                  
Revenues from unaffiliated customers $ 1,683,006     226,561     84,665     2,242,670     603,980     918,561     338,594         6,098,037  
Transfers between geographic areas 106,076     10,778     15,037     21,212     24,251     41,102     21,876     (240,332 )    
Total revenues $ 1,789,082     237,339     99,702     2,263,882     628,231     959,663     360,470     (240,332 )   6,098,037  
Net revenues $ 918,110     119,492     56,066     471,275     171,033     304,429     123,335     296     2,164,036  
Operating income $ 250,715     32,530     13,321     230,777     64,967     42,195     35,672     (14 )   670,163  
Identifiable assets $ 1,455,722     104,804     49,231     511,851     120,300     351,960     190,902     6,101     2,790,871  
Capital expenditures $ 39,531     1,727     1,038     3,889     3,038     7,554     2,539         59,316  
Depreciation and amortization $ 29,939     1,479     1,187     5,455     2,177     4,576     1,983         46,796  
Equity $ 1,166,582     46,448     27,164     327,672     91,983     108,430     112,633     (33,699 )   1,847,213  
                                                       

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 operating 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 include 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 to concentrate and leverage purchasing power 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   Twelve months ended
  December 31,   December 31,
(in thousands) 2017   2016   2017   2016
Total revenues $ 1,901,371     $ 1,642,007     $ 6,920,948     $ 6,098,037  
Expenses:              
Airfreight services 636,344     515,612     2,126,761     1,752,167  
Ocean freight and ocean services 380,689     371,989     1,543,740     1,378,699  
Customs brokerage and other services 255,529     205,815     931,258     803,135  
Net revenues $ 628,809     $ 548,591     $ 2,319,189     $ 2,164,036  
                               

CONTACTS:
Jeffrey S. Musser Bradley S. Powell Geoffrey Buscher
President and Chief Executive Officer Senior Vice President and Chief Financial Officer Director - Investor Relations
(206) 674-3433 (206) 674-3412 (206) 892-4510

By:  Expeditors International of Washington, Inc.1015 Third Avenue, Suite 1200Seattle, Washington 98104

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