Expeditors Reports First Quarter 2024 EPS of $1.17

Rhea-AI Summary

Expeditors International of Washington, Inc. (NYSE: EXPD) reported a decrease in first-quarter 2024 financial results compared to the same period in 2023. Diluted Net Earnings per Share (EPS) dropped by 19% to $1.17, Net Earnings decreased by 25% to $169 million, Operating Income fell by 22% to $215 million, and Revenues declined by 15% to $2.2 billion. Despite challenges like global conflicts, inflation, and uncertain demand, the company saw an increase in airfreight tonnage volume by 4% and ocean container volume by 2%. Expeditors remains focused on efficiency and cost management to navigate the volatile industry landscape.

Positive

• None.

Negative

• Decrease in Diluted Net Earnings per Share (EPS) by 19% to $1.17.

• Net Earnings dropped by 25% to $169 million.

• Operating Income fell by 22% to $215 million.

• Revenues declined by 15% to $2.2 billion.

• Challenges like global conflicts, inflation, and uncertain demand impacting industry stability.

• Ocean market remains muted and difficult to predict.

Insights

Financial Analyst

The report indicates a decline in EPS by 19% and net earnings by 25%, reflecting a considerable contraction in profitability. A 22% decrease in operating income alongside a 15% revenue reduction suggests margin pressures, possibly from the persistent inflation and increased carrier capacities outpacing demand. Notably, the company’s operational adaptation, including cost containment measures and a 7% reduction in headcount, primarily through attrition, showcases a responsive adjustment to the softer market conditions. The positive side is evident in the logistics sector with an increase in airfreight tonnage by 4% and ocean container volume by 2%, hinting at a volume recovery that could be beneficial if sustained. The strategic investments in information systems for network security and potential areas for growth could position the company favorably for future resilience, despite current market challenges. These factors collectively suggest a mixed outlook, with immediate challenges counterbalanced by tactical adjustments and longer-term strategic positioning. From a cash flow standpoint, the generation of $257 million from operations and the share repurchase of $361 million could be seen as signs of strong liquidity and shareholder value focus.

Market Research Analyst

The logistics industry is undergoing a significant shift post-pandemic, as indicated by Expeditors' performance. The reported increase in air and ocean capacities is indicative of a sector trying to realign with current market demands. Despite the optimistic increase in tonnage and volumes, the falling rates and profit margins suggest a highly competitive environment with potential overcapacity issues. The company's sequential improvement in profit-per-container and profit-per-kilo is encouraging, but it must be viewed cautiously within the volatile global context influenced by geopolitical events and infrastructural challenges such as the Red Sea circumvention and the Panama Canal’s water level concerns. The softness in customs brokerage and other services further highlights the uneven recovery across different segments of the logistics industry. Investors should consider the possibility of a new industry norm characterized by heightened unpredictability and assess the company's agility in adapting to these complex market dynamics.

SEATTLE--(BUSINESS WIRE)-- 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: 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
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

(206) 674-3433

Bradley S. Powell

Senior Vice President and Chief Financial Officer

(206) 674-3412

Geoffrey Buscher

Director - Investor Relations

(206) 892-4510

Source: Expeditors International of Washington, Inc.

FAQ

What was the first quarter 2024 EPS for Expeditors International of Washington, Inc. (EXPD)?

Expeditors International of Washington, Inc. (EXPD) reported a first-quarter 2024 EPS of $1.17.

How did the Net Earnings Attributable to Shareholders change in the first quarter of 2024 for EXPD?

Net Earnings Attributable to Shareholders decreased by 25% in the first quarter of 2024 for EXPD.

What was the change in Operating Income in the first quarter of 2024 for EXPD?

Operating Income decreased by 22% in the first quarter of 2024 for EXPD.

What was the percentage change in Revenues for EXPD in the first quarter of 2024?

Revenues decreased by 15% for EXPD in the first quarter of 2024.

How did airfreight tonnage volume change in the first quarter of 2024 for EXPD?

Airfreight tonnage volume increased by 4% in the first quarter of 2024 for EXPD.