Expeditors Reports First Quarter 2024 EPS of $1.17

Expeditors International of Washington, Inc. (NYSE:EXPD) today announced first quarter 2024 financial results including the following comparisons to the same quarter of 2023:

• Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 19% to $1.17
• Net Earnings Attributable to Shareholders decreased 25% to $169 million
• Operating Income decreased 22% to $215 million
• Revenues decreased 15% to $2.2 billion
• Airfreight tonnage volume increased 4% and ocean container volume increased 2%

“Air tonnage and ocean volumes increased when compared to a sluggish first quarter a year ago and breaking from a general downward slide of more than a year,” said Jeffrey S. Musser, President and Chief Executive Officer. “Since late 2022, we have been adjusting operations to align with a broad marketplace reset. While we are no longer experiencing anything like the widespread supply chain chaos of the pandemic, our industry remains volatile due to global conflicts, stubborn inflation, fragile economies, and uncertain demand. At the same time and despite those conditions, both air and ocean carrier capacity continue to grow, further pressuring rates that have already come down significantly from their peaks. We have adapted to this current environment by keeping headcount and other costs in check, while continuing to drive efficiency back towards our historical expectations.

“The ocean market, in particular, remains muted and difficult to predict. Volumes increased year-over-year and sequentially and profit-per-container in the first quarter improved, compared to the fourth quarter 2023, due to increases in average buy and sell rates. Ocean capacity continues to grow, with an increase in the number of vessels coming on-line and out of sync with demand. The air market, too, continues to add capacity, as profit-minded carriers carefully grow capacity to meet strong passenger demand, particularly for international travel, which has negatively impacted air cargo rates and our profit-per-kilo. Nevertheless, air tonnage increased year-over-year from Q1’23 and profit-per-kilo increased sequentially, as buy rates fell faster than sell rates in certain markets. Our customs brokerage and other services business declined year-over-year, but improved sequentially from Q4’23, despite fewer shipments, reflecting the ongoing softness in many of the markets we serve.

“To be sure, our ability to see much beyond our day-to-day levels of activity remains very difficult. As capacity is growing and rates are falling, events such as the Red Sea circumvention, the Baltimore bridge collapse, and low water levels in the Panama Canal continue to make the global freight market highly unpredictable. If current conditions represent something like a new normal for our industry, then I would say we are adapting very well. I am grateful to our dedicated workforce for re-doubling its efforts during these recent periods of seesawing volumes and rates, as we all work diligently to adjust our cost structure lower. We remain highly attuned to whatever marketplace incidents occur and are dedicated to serving our customers at the highest level.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “We continue to adjust to an environment of soft rates and volatile demand. Salaries and related costs fell by 8%, primarily through decreased commissions and bonuses on lower revenues and operating income, again demonstrating how our variable compensation structure aligns with performance. We reduced headcount by 7%, largely through attrition, as we remain focused on aligning headcount with tonnage and volumes shipped. The only area of increased headcount during the quarter was in information systems, as we continue to enhance and bolster our network security. While managing overall headcount, 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.”

Mr. Powell reported that the Company generated $257 million in cash flow from operations in the first quarter of 2024 and returned $361 million to shareholders via repurchases of common stock.

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.

_______________________ 1Diluted earnings attributable to shareholders per share.

NOTE: See Disclaimer on Forward-Looking Statements in this release.

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 inflation; fragile economies; continued growth in air and ocean carrier capacity and the impact on rates; unpredictability in the ocean and air markets, including uncertainty due to conflicts in the Middle East and Red Sea, the Baltimore bridge collapse, and low waters levels in the Panama canal; new capacity in the marketplace; cautious shipper demand and variable rate stability. Future financial performance could differ materially because of factors such as: our ability to keep headcount and other costs in check while continuing to drive efficiency back towards our historical expectations; the alignment of our variable compensation structure with performance; our ability to enhance and bolster our network security; that management is able to grow the business and explore new areas for profitable growth; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with the current uncertainty in the global economy, 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 and contingencies, including risks associated with tax audits, 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, 2023, 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.

First Quarter 2024 Earnings Release, May 7, 2024

Financial Highlights for the three months ended March 31, 2024 and 2023 (Unaudited)

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

 

 

Three months ended March 31,

 

 

2024

 

 

2023

 

 

% Change

Revenues

 

$

2,206,678

 

 

$

2,592,589

 

 

(15)%

Directly related cost of transportation and other expenses 1

 

$

1,433,280

 

 

$

1,719,102

 

 

(17)%

Salaries and other operating expenses 2

 

$

558,622

 

 

$

597,518

 

 

(7)%

Operating income

 

$

214,776

 

 

$

275,969

 

 

(22)%

Net earnings attributable to shareholders

 

$

169,152

 

 

$

226,011

 

 

(25)%

Diluted earnings attributable to shareholders per share

 

$

1.17

 

 

$

1.45

 

 

(19)%

Basic earnings attributable to shareholders per share

 

$

1.18

 

 

$

1.47

 

 

(20)%

Diluted weighted average shares outstanding

 

 

144,125

 

 

 

155,472

 

 

 

Basic weighted average shares outstanding

 

 

143,194

 

 

 

154,164

 

 

 

_______________________ 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.

During the three months ended March 31, 2024, we repurchased 3.0 million shares of common stock at an average price of $120.17 per share compared to the three months ended March 31, 2023, where we repurchased 2.0 million shares of common stock at an average price of $108.98 per share.

 

 

Employee Full-time Equivalents as of

 

 

 

March 31, 2024

 

 

March 31, 2023

 

North America

 

 

6,839

 

 

 

7,455

 

Europe

 

 

3,771

 

 

 

4,089

 

North Asia

 

 

2,246

 

 

 

2,385

 

South Asia

 

 

1,688

 

 

 

1,790

 

Middle East, Africa and India

 

 

1,406

 

 

 

1,502

 

Latin America

 

 

760

 

 

 

816

 

Information Systems

 

 

1,286

 

 

 

1,225

 

Corporate

 

 

407

 

 

 

419

 

Total

 

 

18,403

 

 

 

19,681

 

 

 

First quarter year-over-year percentage increase (decrease) in:

2024

 

Airfreight kilos

 

Ocean freight FEU

January

 

6%

 

(6)%

February

 

6%

 

6%

March

 

1%

 

8%

Quarter

 

4%

 

2%

_________________

Investors may submit written questions via e-mail to: [e-mail]. Questions received by the end of business on May 10, 2024 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, 2024

 

 

December 31, 2023

 

Assets:

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,370,456

 

 

$

1,512,883

 

Accounts receivable, less allowance for credit loss of $6,382 at March 31, 2024 and $6,550 at December 31, 2023

 

 

1,572,356

 

 

 

1,532,599

 

Deferred contract costs

 

 

277,771

 

 

 

218,807

 

Other

 

 

153,111

 

 

 

170,907

 

Total current assets

 

 

3,373,694

 

 

 

3,435,196

 

Property and equipment, less accumulated depreciation and amortization $604,458 at March 31, 2024 and $597,473 at December 31, 2023

 

 

470,055

 

 

 

479,225

 

Operating lease right-of-use assets

 

 

551,682

 

 

 

516,280

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Deferred federal and state income taxes, net

 

 

64,408

 

 

 

63,690

 

Other assets, net

 

 

20,502

 

 

 

21,491

 

Total assets

 

$

4,488,268

 

 

$

4,523,809

 

Liabilities:

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

927,129

 

 

$

860,856

 

Accrued liabilities, primarily salaries and related costs

 

 

433,599

 

 

 

447,336

 

Contract liabilities

 

 

344,552

 

 

 

280,909

 

Current portion of operating lease liabilities

 

 

100,673

 

 

 

99,749

 

Federal, state and foreign income taxes

 

 

20,388

 

 

 

15,562

 

Total current liabilities

 

 

1,826,341

 

 

 

1,704,412

 

Noncurrent portion of operating lease liabilities

 

 

464,262

 

 

 

427,984

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

Preferred stock, none issued

 

 

—

 

 

 

—

 

Common stock, par value $0.01 per share. Issued and outstanding: 141,119 shares at March 31, 2024 and 143,866 shares at December 31, 2023

 

 

1,411

 

 

 

1,439

 

Additional paid-in capital

 

 

—

 

 

 

—

 

Retained earnings

 

 

2,401,525

 

 

 

2,580,968

 

Accumulated other comprehensive loss

 

 

(207,474

)

 

 

(192,057

)

Total shareholders’ equity

 

 

2,195,462

 

 

 

2,390,350

 

Noncontrolling interest

 

 

2,203

 

 

 

1,063

 

Total equity

 

 

2,197,665

 

 

 

2,391,413

 

Total liabilities and equity

 

$

4,488,268

 

 

$

4,523,809

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Revenues:

 

 

 

 

 

 

Airfreight services

 

$

759,374

 

 

$

904,903

 

Ocean freight and ocean services

 

 

570,786

 

 

 

697,307

 

Customs brokerage and other services

 

 

876,518

 

 

 

990,379

 

Total revenues

 

 

2,206,678

 

 

 

2,592,589

 

Operating Expenses:

 

 

 

 

 

 

Airfreight services

 

 

537,591

 

 

 

666,022

 

Ocean freight and ocean services

 

 

413,983

 

 

 

483,682

 

Customs brokerage and other services

 

 

481,706

 

 

 

569,398

 

Salaries and related

 

 

413,162

 

 

 

449,848

 

Rent and occupancy

 

 

61,252

 

 

 

57,632

 

Depreciation and amortization

 

 

15,161

 

 

 

15,261

 

Selling and promotion

 

 

6,779

 

 

 

6,384

 

Other

 

 

62,268

 

 

 

68,393

 

Total operating expenses

 

 

1,991,902

 

 

 

2,316,620

 

Operating income

 

 

214,776

 

 

 

275,969

 

Other Income (Expense):

 

 

 

 

 

 

Interest income

 

 

14,878

 

 

 

18,775

 

Other, net

 

 

3,528

 

 

 

5,834

 

Other income, net

 

 

18,406

 

 

 

24,609

 

Earnings before income taxes

 

 

233,182

 

 

 

300,578

 

Income tax expense

 

 

62,782

 

 

 

74,580

 

Net earnings

 

 

170,400

 

 

 

225,998

 

Less net earnings (losses) attributable to the noncontrolling interest

 

 

1,248

 

 

 

(13

)

Net earnings attributable to shareholders

 

$

169,152

 

 

$

226,011

 

Diluted earnings attributable to shareholders per share

 

$

1.17

 

 

$

1.45

 

Basic earnings attributable to shareholders per share

 

$

1.18

 

 

$

1.47

 

Weighted average diluted shares outstanding

 

 

144,125

 

 

 

155,472

 

Weighted average basic shares outstanding

 

 

143,194

 

 

 

154,164

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three months ended March 31,

 

 

 

2024

 

 

2023

 

Operating Activities:

 

 

 

 

 

 

Net earnings

 

$

170,400

 

 

$

225,998

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

 

 

 

Provisions for losses on accounts receivable

 

 

394

 

 

 

1,072

 

Deferred income tax expense

 

 

2,294

 

 

 

2,036

 

Stock compensation expense

 

 

12,372

 

 

 

12,488

 

Depreciation and amortization

 

 

15,161

 

 

 

15,261

 

Other, net

 

 

1,985

 

 

 

1,159

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

(Increase) decrease in accounts receivable

 

 

(60,542

)

 

 

508,606

 

Increase (decrease) in accounts payable and accrued liabilities

 

 

83,591

 

 

 

(202,923

)

(Decrease) increase in deferred contract costs

 

 

(64,062

)

 

 

67,621

 

Increase (decrease) in contract liabilities

 

 

69,308

 

 

 

(84,447

)

Decrease in income taxes payable, net

 

 

22,686

 

 

 

91

 

Increase (decrease) in other, net

 

 

3,317

 

 

 

(550

)

Net cash from operating activities

 

 

256,904

 

 

 

546,412

 

Investing Activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(10,181

)

 

 

(10,126

)

Other, net

 

 

97

 

 

 

575

 

Net cash from investing activities

 

 

(10,084

)

 

 

(9,551

)

Financing Activities:

 

 

 

 

 

 

Payments on borrowings on lines of credit, net

 

 

(17,242

)

 

 

(14,907

)

Proceeds from issuance of common stock

 

 

8,029

 

 

 

9,288

 

Repurchases of common stock

 

 

(360,524

)

 

 

(213,502

)

Payments for taxes related to net share settlement of equity awards

 

 

(5,185

)

 

 

(7,445

)

Net cash from financing activities

 

 

(374,922

)

 

 

(226,566

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(14,325

)

 

 

6,368

 

Change in cash and cash equivalents

 

 

(142,427

)

 

 

316,663

 

Cash and cash equivalents at beginning of period

 

 

1,512,883

 

 

 

2,034,131

 

Cash and cash equivalents at end of period

 

$

1,370,456

 

 

$

2,350,794

 

Taxes Paid:

 

 

 

 

 

 

Income taxes

 

$

36,864

 

 

$

70,786

 

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, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

751,543

 

 

 

106,850

 

 

 

44,492

 

 

 

544,941

 

 

 

227,719

 

 

 

398,317

 

 

 

134,106

 

 

 

(1,290

)

 

 

2,206,678

 

Directly related cost of transportation and other expenses1

 

$

403,949

 

 

 

66,710

 

 

 

24,464

 

 

 

426,474

 

 

 

164,024

 

 

 

254,519

 

 

 

93,792

 

 

 

(652

)

 

 

1,433,280

 

Salaries and other operating expenses2

 

$

255,708

 

 

 

33,084

 

 

 

16,764

 

 

 

67,260

 

 

 

40,912

 

 

 

117,088

 

 

 

28,464

 

 

 

(658

)

 

 

558,622

 

Operating income (loss)

 

$

91,886

 

 

 

7,056

 

 

 

3,264

 

 

 

51,207

 

 

 

22,783

 

 

 

26,710

 

 

 

11,850

 

 

 

20

 

 

 

214,776

 

Identifiable assets at period end

 

$

2,424,540

 

 

 

177,571

 

 

 

105,151

 

 

 

504,704

 

 

 

265,621

 

 

 

755,569

 

 

 

284,325

 

 

 

(29,213

)

 

 

4,488,268

 

Capital expenditures

 

$

5,528

 

 

 

1,399

 

 

 

153

 

 

 

282

 

 

 

144

 

 

 

2,218

 

 

 

457

 

 

 

—

 

 

 

10,181

 

Equity

 

$

1,531,497

 

 

 

26,143

 

 

 

55,173

 

 

 

185,824

 

 

 

118,194

 

 

 

162,346

 

 

 

160,237

 

 

 

(41,749

)

 

 

2,197,665

 

For the three months ended March 31, 2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

945,494

 

 

 

109,850

 

 

 

54,695

 

 

 

582,421

 

 

 

224,127

 

 

 

534,464

 

 

 

142,703

 

 

 

(1,165

)

 

 

2,592,589

 

Directly related cost of transportation and other expenses1

 

$

539,957

 

 

 

69,205

 

 

 

32,302

 

 

 

452,342

 

 

 

157,623

 

 

 

372,260

 

 

 

95,949

 

 

 

(536

)

 

 

1,719,102

 

Salaries and other operating expenses2

 

$

267,683

 

 

 

35,824

 

 

 

19,502

 

 

 

71,140

 

 

 

46,798

 

 

 

127,372

 

 

 

29,832

 

 

 

(633

)

 

 

597,518

 

Operating income

 

$

137,854

 

 

 

4,821

 

 

 

2,891

 

 

 

58,939

 

 

 

19,706

 

 

 

34,832

 

 

 

16,922

 

 

 

4

 

 

 

275,969

 

Identifiable assets at period end

 

$

3,005,502

 

 

 

206,459

 

 

 

119,334

 

 

 

633,970

 

 

 

284,028

 

 

 

844,049

 

 

 

254,458

 

 

 

(15,223

)

 

 

5,332,577

 

Capital expenditures

 

$

5,444

 

 

 

469

 

 

 

230

 

 

 

590

 

 

 

167

 

 

 

2,983

 

 

 

243

 

 

 

—

 

 

 

10,126

 

Equity

 

$

2,284,489

 

 

 

35,977

 

 

 

57,026

 

 

 

317,325

 

 

 

153,321

 

 

 

191,116

 

 

 

154,143

 

 

 

(43,029

)

 

 

3,150,368

 

______________________________ 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240506208748/en/

Jeffrey S. Musser President and Chief Executive Officer [phone]

Bradley S. Powell Senior Vice President and Chief Financial Officer [phone]

Geoffrey Buscher Director - Investor Relations [phone]