EXPD Expeditors International of Washington Inc

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 07, 2024

 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Washington			001-41871	91-1069248
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1015 Third Avenue
Seattle, Washington				98104
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 206 674-3400

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		EXPD		New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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Item 2.02 Results of Operations and Financial Condition.

On May 7, 2024, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing first quarter 2024 financial results. A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) The following items are filed as exhibits to this report:

99.1		Press release, dated May 7, 2024 issued by Expeditors International of Washington, Inc.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
Date:	May 7, 2024	By:	/S/ Bradley S. Powell
			Bradley S. Powell, Senior Vice President and Chief Financial Officer

 

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Exhibit 99.1

 

EARNINGS RELEASE

 

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

 

FOR IMMEDIATE RELEASE

 

EXPEDITORS REPORTS FIRST QUARTER 2024 EPS OF $1.17

SEATTLE, WASHINGTON - May 7, 2024, Expeditors International of Washington, Inc. (NYSE:EXPD) today announced first quarter 2024 financial results including the following comparisons to the same quarter of 2023:

 

“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.”

 

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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.

 

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.

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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

 

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, 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: investor@expeditors.com. Questions received by the end of business on May 10, 2024 will be considered in management's 8-K “Responses to Selected Questions.”

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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

 

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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

 

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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

 

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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.

 

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v3.24.1.u1

Document And Entity Information	May 07, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 07, 2024
Entity Registrant Name	EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
Entity Central Index Key	0000746515
Entity Emerging Growth Company	false
Entity File Number	001-41871
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	91-1069248
Entity Address, Address Line One	1015 Third Avenue
Entity Address, City or Town	Seattle
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98104
City Area Code	206
Local Phone Number	674-3400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	EXPD
Security Exchange Name	NYSE

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