Expeditors Reports Fourth Quarter 2021 EPS Of $2.66

Rhea-AI Summary

Expeditors International of Washington (NASDAQ: EXTD) reported Q4 2021 results with diluted EPS up 129% to $2.66, net earnings rising 128% to $453 million, and operating income increasing 121% to $624 million. Revenues reached $5.4 billion, an 81% increase. Airfreight volume rose 13%, while ocean container volume fell 4%. CEO Jeffrey Musser highlighted ongoing challenges in global supply chains due to congestion and worker shortages. The company is also addressing a cyberattack, which could adversely affect operations and reputation.

Positive

• EPS increased 129% to $2.66.
• Net earnings rose 128% to $453 million.
• Operating income increased 121% to $624 million.
• Revenues grew 81% to $5.4 billion.
• Record-high airfreight volume, utilizing more air charters than ever.

Negative

• Ocean container volume decreased by 4%.
• Cyberattack could materially impact operations and reputation.

Company Continues to Assess Impact of Cyberattack

SEATTLE--(BUSINESS WIRE)-- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced fourth quarter 2021 financial results, including the following highlights compared to the same quarter of 2020:

• Diluted Net Earnings Attributable to Shareholders per share (EPS¹) increased 129% to $2.66
• Net Earnings Attributable to Shareholders increased 128% to $453 million
• Operating Income increased 121% to $624 million
• Revenues increased 81% to $5.4 billion
• Airfreight tonnage volume increased 13% and ocean container volume decreased 4%

“While the global supply chain remains stretched beyond recognizable limits, we continue to do all we can to secure carrier space for our customers and move their freight through and around the many bottlenecks in the air, over the ocean, and on land,” said Jeffrey S. Musser, President and Chief Executive Officer. “Roughly two years of pandemic-induced disruption have led to unprecedented conditions throughout our industry, with little relief in sight. There is still too little international air capacity, as travellers have been kept from flying abroad; the ocean ports are too congested to accommodate many of the ships that need to load and unload their containers; and worker shortages are severely limiting overland capacity to support the freight that is able to arrive in port.

“We have worked our strong carrier relationships to secure as much capacity as we could get on behalf of all of the shippers looking for space during the quarter, but the severe imbalance between capacity and demand continues to heavily impact our industry. There is simply not enough carrier capacity in the air or on the oceans to accommodate the heavy demand for cargo space, particularly from China to the U.S., where historically high average buy and sell rates have been the most elevated.

“Despite the lack of space, we experienced record-high air tonnage in the fourth quarter, as we used more air charters than at any other time in our company’s history, even with extremely elevated rates. Ocean container volumes, by contrast, declined during the quarter, as we were somewhat limited in our ability to secure necessary capacity from ocean carriers, and hampered by the time and resources required to process shipments and meet sharply growing customer demand.

“Once again, I offer my sincere gratitude to our highly motivated and dedicated employees and thank them for their significant extra efforts all throughout 2021. While many companies are experiencing a decline in headcount during the so-called Great Resignation, we were able to grow our valuable employee base. That serves as testament to the culture at Expeditors: that we are a company where people are proud to work and one where unusually stressful times have inspired our very best execution aimed at outstanding customer service.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “In addition to our air and ocean products, we also experienced strong financial results in Customs Brokerage, Order Management, Transcon and Distribution. All of these areas saw growing business from both current customers and new ones as well. Our strong operating efficiency is a credit to the strength and resilience of our workforce, as our employees have been successfully able to secure the capacity needed to service our customers in these difficult conditions. While this has helped us produce strong financial results, we caution that should demand and rates return to pre-pandemic levels – whenever that may be – our revenues, expenses, and operating income are likely to decline from the all-time highs that we experienced in 2021.”

COMPANY CONTINUES TO ASSESS IMPACT OF CYBERATTACK

In a separate announcement on February 20, 2022, Expeditors determined that our company was the subject of a targeted cyberattack. Upon discovering the incident, we shut down most of our operating systems globally to manage the safety of our overall global systems environment. The situation is evolving, and we are working with global cybersecurity experts to manage the situation. Further communications will be shared as we manage through this significant event. Depending on the length of the shutdown of our operations, the impact of this cyberattack could have a material adverse impact on our business, revenues, results of operations and reputation.

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.

Expeditors International of Washington, Inc. Fourth quarter 2021 Earnings Release, February 22, 2022 Financial Highlights for the three and twelve months ended December 31, 2021 and 2020 (Unaudited) (in 000's of US dollars except share data)
		Three months ended December 31,													Twelve months ended December 31,
		2021				2020				% Change					2021				2020				% Change
Revenues3		$	5,396,343			$	2,980,835			81		%			$	16,523,517			$	9,584,393			72		%
Directly related cost of transportation and other expenses 1, 3		$	4,026,748			$	2,152,249			87		%			$	12,058,155			$	6,656,702			81		%
Salaries and other operating expenses 2		$	746,066			$	546,775			36		%			$	2,556,036			$	1,987,254			29		%
Operating income		$	623,529			$	281,811			121		%			$	1,909,326			$	940,437			103		%
Net earnings attributable to shareholders		$	452,832			$	198,620			128		%			$	1,415,492			$	696,140			103		%
Diluted earnings attributable to shareholders per share		$	2.66			$	1.16			129		%			$	8.27			$	4.07			103		%
Basic earnings attributable to shareholders per share		$	2.69			$	1.17			130		%			$	8.37			$	4.14			102		%
Diluted weighted average shares outstanding			170,293				171,692									171,250				170,896
Basic weighted average shares outstanding			168,393				169,473									169,145				168,333

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.
3		Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis.

During the years ended December 31, 2021 and 2020, we repurchased 4.4 million and 4.6 million shares of common stock at an average price of $117.54 and $72.26 per share, respectively. In addition, during 2021 and 2020, we paid cash dividends of $1.16 and $1.04 per share, respectively.

		Employee Full-time Equivalents as of December 31,
		2021				2020
North America			7,587				6,724
Europe			3,984				3,492
North Asia			2,487				2,398
South Asia			1,785				1,631
Middle East, Africa and India			1,511				1,497
Latin America			832				784
Information Systems			994				983
Corporate			408				399
Total			19,588				17,908

Disclaimer on Forward-Looking Statements:

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

		Fourth quarter year-over-year percentage increase (decrease) in:
		Airfreight kilos				Ocean freight FEU
2021
October		13%				2%
November		13%				(7)%
December		12%				(7)%
Quarter		13%				(4)%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 25,2022 will be considered in management's 8-K “Responses to Selected Questions.”

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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; labor shortages; insufficient warehouse and pier space; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our belief that a decline in demand to pre-pandemic levels could lead to a decline in operating results; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization where people want to work. These risks and uncertainties also include but are not limited to our ongoing investigation of the cyberattack, the length of time that our global operations are not fully functional, and the adverse material impact that this cyberattack may have on our business, revenues, results of operations and reputation. The COVID-19 pandemic 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, and the ability of third-party providers to perform and potential litigation. 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, 2021. 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. AND SUBSIDIARIES   Condensed Consolidated Balance Sheets (In thousands, except per share data) (Unaudited)
		December 31, 2021				December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents		$	1,728,692			$	1,527,791
Accounts receivable, less allowance for credit loss of $6,686 and $5,579 at December 31, 2021 and 2020, respectively			3,810,286				1,998,055
Deferred contract costs			987,266				327,448
Other			108,801				110,250
Total current assets			6,635,045				3,963,544
Property and equipment, net			487,870				506,425
Operating lease right-of-use assets			459,158				432,723
Goodwill			7,927				7,927
Deferred federal and state income taxes, net			729				—
Other assets, net			19,200				16,884
Total assets		$	7,609,929			$	4,927,503
Liabilities:
Current Liabilities:
Accounts payable		$	2,012,461			$	1,136,859
Accrued expenses, primarily salaries and related costs			403,625				257,021
Contract liabilities			1,142,026				379,722
Current portion of operating lease liabilities			82,019				74,004
Federal, state and foreign income taxes			86,166				45,437
Total current liabilities			3,726,297				1,893,043
Noncurrent portion of operating lease liabilities			385,641				364,185
Deferred federal and state income taxes, net			—				7,048
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued			—				—
Common stock, par value $0.01 per share. Issued and outstanding: 167,210 shares and 169,294 shares at December 31, 2021 and 2020, respectively			1,672				1,693
Additional paid-in capital			3,160				157,496
Retained earnings			3,620,008				2,600,201
Accumulated other comprehensive loss			(130,414	)			(99,753	)
Total shareholders’ equity			3,494,426				2,659,637
Noncontrolling interest			3,565				3,590
Total equity			3,497,991				2,663,227
Total liabilities and equity		$	7,609,929			$	4,927,503

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited)
		Three months ended December 31,								Twelve months ended December 31,
		2021				2020				2021				2020
Revenues:
Airfreight services		$	2,293,803			$	1,365,575			$	6,771,402			$	4,274,026
Ocean freight and ocean services			1,894,759				751,803				5,545,818				2,342,344
Customs brokerage and other services			1,207,781				863,457				4,206,297				2,968,023
Total revenues			5,396,343				2,980,835				16,523,517				9,584,393
Operating Expenses:
Airfreight services			1,732,127				1,046,603				5,067,380				3,168,808
Ocean freight and ocean services			1,505,140				574,154				4,364,160				1,751,850
Customs brokerage and other services			789,481				531,492				2,626,615				1,736,044
Salaries and related			609,449				427,344				2,062,351				1,538,104
Rent and occupancy			48,911				43,480				186,287				169,863
Depreciation and amortization			12,897				14,339				51,312				56,959
Selling and promotion			5,547				4,135				16,026				18,436
Other			69,262				57,477				240,060				203,892
Total operating expenses			4,772,814				2,699,024				14,614,191				8,643,956
Operating income			623,529				281,811				1,909,326				940,437
Other Income (Expense):
Interest income			2,211				1,545				8,807				10,415
Other, net			101				551				6,483				5,712
Other income, net			2,312				2,096				15,290				16,127
Earnings before income taxes			625,841				283,907				1,924,616				956,564
Income tax expense			171,830				84,382				505,771				258,350
Net earnings			454,011				199,525				1,418,845				698,214
Less net earnings attributable to the noncontrolling interest			1,179				905				3,353				2,074
Net earnings attributable to shareholders		$	452,832			$	198,620			$	1,415,492			$	696,140
Diluted earnings attributable to shareholders per share		$	2.66			$	1.16			$	8.27			$	4.07
Basic earnings attributable to shareholders per share		$	2.69			$	1.17			$	8.37			$	4.14
Weighted average diluted shares outstanding			170,293				171,692				171,250				170,896
Weighted average basic shares outstanding			168,393				169,473				169,145				168,333

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Three months ended December 31,								Twelve months ended December 31,
		2021				2020				2021				2020
Operating Activities:
Net earnings		$	454,011			$	199,525			$	1,418,845			$	698,214
Adjustments to reconcile net earnings to net cash from operating activities:
Provisions for losses on accounts receivable			1,512				977				7,540				5,584
Deferred income tax (benefit) expense			(6,033	)			5,499				(3,690	)			8,371
Stock compensation expense			12,087				17,407				69,385				62,498
Depreciation and amortization			12,897				14,339				51,312				56,959
Other, net			2,267				490				3,790				3,960
Changes in operating assets and liabilities:
Increase in accounts receivable			(491,830	)			(372,753	)			(1,869,827	)			(647,193	)
Increase in accounts payable and accrued expenses			272,280				228,523				1,041,805				430,452
Increase in deferred contract costs			(149,701	)			(89,560	)			(700,273	)			(189,447	)
Increase in contract liabilities			168,551				105,455				803,837				217,699
Increase (decrease) in income taxes payable, net			25,845				19,146				57,867				8,502
Decrease (increase) in other, net			3,111				12,612				(12,097	)			(630	)
Net cash from operating activities			304,997				141,660				868,494				654,969
Investing Activities:
Purchase of property and equipment			(11,447	)			(10,124	)			(36,247	)			(47,543	)
Other, net			(345	)			553				(398	)			1,516
Net cash from investing activities			(11,792	)			(9,571	)			(36,645	)			(46,027	)
Financing Activities:
Proceeds from borrowing on lines of credit, net			(56	)			32				7,512				43
Proceeds from issuance of common stock			6,672				12,329				106,105				186,345
Repurchases of common stock			(289,530	)			(18,162	)			(514,594	)			(332,387	)
Dividends Paid			(97,379	)			(88,114	)			(195,766	)			(174,929	)
Payments for taxes related to net share settlement of equity awards			—				—				(15,172	)			(10,566	)
Distributions to noncontrolling interest			—				—				(1,631	)			—
Net cash from financing activities			(380,293	)			(93,915	)			(613,546	)			(331,494	)
Effect of exchange rate changes on cash and cash equivalents			(4,326	)			24,107				(17,402	)			19,852
Change in cash and cash equivalents			(91,414	)			62,281				200,901				297,300
Cash and cash equivalents at beginning of period			1,820,106				1,465,510				1,527,791				1,230,491
Cash and cash equivalents at end of period		$	1,728,692			$	1,527,791			$	1,728,692			$	1,527,791
Taxes Paid:
Income taxes		$	147,396			$	59,607			$	442,549			$	239,849

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 December 31, 2021:
Revenues		$	1,337,772				128,240				63,013				2,154,243				740,305				682,819				291,040				(1,089	)			5,396,343
Directly related cost of transportation and other expenses1		$	760,915				70,450				39,072				1,824,159				615,659				485,732				231,171				(410	)			4,026,748
Salaries and other operating expenses2		$	300,474				33,033				15,908				160,862				58,360				135,422				42,682				(675	)			746,066
Operating income		$	276,383				24,757				8,033				169,222				66,286				61,665				17,187				(4	)			623,529
Identifiable assets at period end		$	3,699,748				265,872				122,327				1,587,659				572,980				1,089,963				350,843				(79,463	)			7,609,929
Capital expenditures		$	7,596				549				171				594				595				1,599				343				—				11,447
Depreciation and amortization		$	7,476				439				270				1,269				508				2,333				602				—				12,897
Equity		$	2,599,804				111,952				41,743				224,765				140,129				294,348				123,598				(38,348	)			3,497,991
For the three months ended December 31, 2020:
Revenues3		$	800,663				93,554				41,526				1,148,483				319,687				431,619				146,331				(1,028	)			2,980,835
Directly related cost of transportation and other expenses1,3		$	460,287				60,026				23,421				951,331				247,314				299,485				110,914				(529	)			2,152,249
Salaries and other operating expenses2		$	245,722				26,367				11,894				96,498				40,251				101,631				24,905				(493	)			546,775
Operating income		$	94,654				7,161				6,211				100,654				32,122				30,503				10,512				(6	)			281,811
Identifiable assets at period end		$	2,532,324				186,204				85,085				876,856				272,106				752,589				240,984				(18,645	)			4,927,503
Capital expenditures		$	3,328				194				66				417				1,229				2,976				1,914				—				10,124
Depreciation and amortization		$	9,235				498				284				1,283				493				2,091				455				—				14,339
Equity		$	1,928,945				67,243				32,273				241,155				121,411				196,637				114,369				(38,806	)			2,663,227

		UNITED STATES				OTHER NORTH AMERICA				LATIN AMERICA				NORTH ASIA				SOUTH ASIA				EUROPE				MIDDLE EAST, AFRICA AND INDIA				ELIMI- NATIONS				CONSOLI- DATED
For the twelve months ended December 31, 2021:
Revenues3		$	4,344,825				440,226				209,161				6,363,054				2,046,569				2,258,911				865,509				(4,738	)			16,523,517
Directly related cost of transportation and other expenses1,3		$	2,491,947				245,842				125,940				5,295,612				1,666,792				1,558,705				675,303				(1,986	)			12,058,155
Salaries and other operating expenses2		$	1,019,236				123,147				57,779				515,703				204,574				494,760				143,581				(2,744	)			2,556,036
Operating income		$	833,642				71,237				25,442				551,739				175,203				205,446				46,625				(8	)			1,909,326
Identifiable assets at period end		$	3,699,748				265,872				122,327				1,587,659				572,980				1,089,963				350,843				(79,463	)			7,609,929
Capital expenditures		$	19,527				983				471				1,786				2,057				9,507				1,916				—				36,247
Depreciation and amortization		$	29,826				1,780				1,079				5,047				1,965				9,228				2,387				—				51,312
Equity		$	2,599,804				111,952				41,743				224,765				140,129				294,348				123,598				(38,348	)			3,497,991
For the twelve months ended December 31, 2020:
Revenues3		$	2,776,537				325,878				156,163				3,425,510				961,989				1,455,746				486,331				(3,761	)			9,584,393
Directly related cost of transportation and other expenses1,3		$	1,568,452				190,326				93,249				2,744,264				711,004				992,357				359,002				(1,952	)			6,656,702
Salaries and other operating expenses2		$	877,117				100,687				48,114				332,978				149,269				375,900				104,968				(1,779	)			1,987,254
Operating income		$	330,968				34,865				14,800				348,268				101,716				87,489				22,361				(30	)			940,437
Identifiable assets at period end		$	2,532,324				186,204				85,085				876,856				272,106				752,589				240,984				(18,645	)			4,927,503
Capital expenditures		$	31,604				1,886				564				2,202				2,264				6,394				2,629				—				47,543
Depreciation and amortization		$	37,081				1,946				1,194				4,961				1,876				8,029				1,872				—				56,959
Equity		$	1,928,945				67,243				32,273				241,155				121,411				196,637				114,369				(38,806	)			2,663,227

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.
3		Beginning in the first quarter of 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter of 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. Historical amounts for business segment information have been revised and are presented on a comparable basis.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220221005445/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 were Expeditors International's Q4 2021 earnings results?

In Q4 2021, Expeditors reported diluted EPS of $2.66, net earnings of $453 million, and operating income of $624 million.

How did revenues change for Expeditors in Q4 2021?

Revenues increased by 81% to $5.4 billion in Q4 2021 compared to the prior year.

What impact did the cyberattack have on Expeditors?

Expeditors experienced a cyberattack that led to a shutdown of most operating systems, potentially affecting business and revenues.

How did airfreight and ocean volumes perform in Q4 2021 for Expeditors?

Airfreight tonnage volume increased by 13%, while ocean container volume decreased by 4%.