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Expeditors Reports First Quarter 2024 EPS of $1.17
Diluted Net Earnings Attributable to Shareholders per share (EPS(1)) 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.
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.
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
-------------------- ------- -------------------- -------------------- ------- --------------------
First quarter year-over-year percentage increase (decrease) in:
---------------------------------------------------------------
2024 Airfreight Ocean freight
kilos FEU
-------------------- --------------------- ---------------------
January 6% (6)%
February 6% 6%
March 1% 8%
_________________
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."
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
-------------------- -------------- -------------------- -------------------- -------------- --------------------
3,373,694 3,435,196
Total current assets
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
-------------------- -------------- -------------------- -------------------- -------------- --------------------
$ 4,488,268 $ 4,523,809
Total assets
==================== ============== ==================== ==================== ============== ====================
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
-------------------- -------------- -------------------- -------------------- -------------- --------------------
1,826,341 1,704,412
Total current liabilities
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 )
-------------------- -------------- -------------------- -------------------- -------------- --------------------
2,195,462 2,390,350
Total shareholders' equity
Noncontrolling interest 2,203 1,063
-------------------- -------------- -------------------- -------------------- -------------- --------------------
2,197,665 2,391,413
Total equity
-------------------- -------------- -------------------- -------------------- -------------- --------------------
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
-------------------- ---------- -------------------- -------------------- ---------- --------------------
2,206,678 2,592,589
Total revenues
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
-------------------- ---------- -------------------- -------------------- ---------- --------------------
1,991,902 2,316,620
Total operating expenses
-------------------- ---------- -------------------- -------------------- ---------- --------------------
214,776 275,969
Operating income
Other Income (Expense):
Interest income 14,878 18,775
Other, net 3,528 5,834
-------------------- ---------- -------------------- -------------------- ---------- --------------------
18,406 24,609
Other income, net
-------------------- ---------- -------------------- -------------------- ---------- --------------------
Earnings before income taxes 233,182 300,578
Income tax expense 62,782 74,580
-------------------- ---------- -------------------- -------------------- ---------- --------------------
170,400 225,998
Net earnings
Less net earnings (losses) attributable to the noncontrolling interest 1,248 (13 )
-------------------- ---------- -------------------- -------------------- ---------- --------------------
$ 169,152 $ 226,011
Net earnings attributable to shareholders
==================== ========== ==================== ==================== ========== ====================
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
==================== ========== ==================== ==================== ========== ====================
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:
394 1,072
Provisions for losses on accounts receivable
2,294 2,036
Deferred income tax expense
12,372 12,488
Stock compensation expense
15,161 15,261
Depreciation and amortization
1,985 1,159
Other, net
Changes in operating assets and liabilities:
(60,542 ) 508,606
(Increase) decrease in accounts receivable
83,591 (202,923 )
Increase (decrease) in accounts payable and accrued liabilities
(64,062 ) 67,621
(Decrease) increase in deferred contract costs
69,308 (84,447 )
Increase (decrease) in contract liabilities
22,686 91
Decrease in income taxes payable, net
3,317 (550 )
Increase (decrease) in other, net
-------------------- ---------- -------------------- -------------------- ---------- --------------------
256,904 546,412
Net cash from operating activities
Investing Activities:
(10,181 ) (10,126 )
Purchase of property and equipment
97 575
Other, net
-------------------- ---------- -------------------- -------------------- ---------- --------------------
(10,084 ) (9,551 )
Net cash from investing activities
Financing Activities:
(17,242 ) (14,907 )
Payments on borrowings on lines of credit, net
8,029 9,288
Proceeds from issuance of common stock
(360,524 ) (213,502 )
Repurchases of common stock
(5,185 ) (7,445 )
Payments for taxes related to net share settlement of equity awards
-------------------- ---------- -------------------- -------------------- ---------- --------------------
(374,922 ) (226,566 )
Net cash from financing activities
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:
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Business Segment Information
(In thousands)
(Unaudited)
UNITED OTHER LATIN NORTH SOUTH EUROPE MIDDLE ELIMI- CONSOLI-
STATES NORTH AMERICA ASIA ASIA EAST, NATIONS DATED
AMERICA AFRICA
AND
INDIA
-------------------- -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ------------------------------ -------------------- ---------------------------------- -------------------- ------------------------------ --------------------
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 expenses(1) $ 403,949 66,710 24,464 426,474 164,024 254,519 93,792 (652 ) 1,433,280
Salaries and other operating expenses(2) $ 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 expenses(1) $ 539,957 69,205 32,302 452,342 157,623 372,260 95,949 (536 ) 1,719,102
Salaries and other operating expenses(2) $ 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240506208748/en/
SOURCE: Expeditors International of Washington, Inc.
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Jeffrey S. Musser President and Chief Executive Officer (206) 674-3433 Bradley S. Powell Senior Vice President and Chief Financial Officer (206) 674-3412 Geoffrey Buscher Director - Investor Relations (206) 892-4510
COMTEX_452007904/1006/2024-05-07T08:30:10