Expeditors Reports Third Quarter 2022 EPS of $2.54

Rhea-AI Summary

Expeditors International of Washington (NASDAQ:EXPD) reported a strong third quarter of 2022, with diluted EPS up 22% to $2.54 and net earnings rising 15% to $414 million. Despite operating income increasing 8% to $527 million, revenues gained only 1% to $4.4 billion. The company faced declines in airfreight tonnage (13%) and ocean container volume (10%), attributed to economic uncertainties and demand fluctuations. Management acknowledged higher inflation and energy costs impacting supply chains but remained optimistic about long-term adjustments and investments.

Positive

• Diluted EPS increased 22% to $2.54.
• Net earnings rose 15% to $414 million.
• Operating income grew 8% to $527 million.
• Returned over $1 billion to shareholders via stock repurchase.

Negative

• Revenues increased only 1% to $4.4 billion.
• Airfreight tonnage volume decreased 13%.
• Ocean container volume dropped 10%.
• Expected further declines in demand and rates into 2023.

SEATTLE--(BUSINESS WIRE)-- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2022 financial results including the following highlights compared to the same quarter of 2021:

• Diluted Net Earnings Attributable to Shareholders per share (EPS¹) increased 22% to $2.54
• Net Earnings Attributable to Shareholders increased 15% to $414 million
• Operating Income increased 8% to $527 million
• Revenues increased 1% to $4.4 billion
• Airfreight tonnage volume and ocean container volume decreased 13% and 10%, respectively

“We continued to perform at a very high level, generating another strong quarter of financial performance and cash flow,” said Jeffrey S. Musser, President and Chief Executive Officer. “We accomplished this despite uncertain economic conditions that resulted in declines in tonnage and volumes, reductions in both buy and sell rates, and an overall rebalancing of capacity in the logistics freight markets. These conditions have continued in recent weeks and we believe that inflation, high energy costs, and government fiscal and monetary measures will continue to exert pressure on global supply chains. Additionally, many shippers are now looking to shrink retail inventories that were overstocked earlier in the year in reaction to COVID-related supply chain disruptions.

“All of our people and products performed well during the quarter, as buy and sell rates remained volatile while declining from their pandemic peaks. Once again, we were able to adjust quickly to rapidly evolving operating conditions in which pandemic-induced demand and supply chain constraints gave way to falling demand, and while not completely eliminated, an easing of many of the labor and equipment shortages and the bottlenecks that had so severely constrained capacity and impeded throughput at the ports over the past two years. We are also seeing air capacity return to higher levels, with Hong Kong and other origins in Asia reopening. In addition, the largely land- and port-based constraints that had so severely impacted the ocean market have significantly improved to where carriers are once again starting to manage capacity in certain trade lanes in an effort to address declining demand while sustaining falling rates.

“Based on what we currently see, these changing conditions that involve decelerating demand and an overall decline in rates are likely to continue for the remainder of 2022 and into 2023. Just as we quickly adapted to unprecedented operating conditions spurred by the pandemic, we are adjusting for this new operating environment and continue to make focused efforts to control costs. Most critically, we remain fully engaged with our customers to accommodate their needs for capacity and services, while looking forward to when the economy eventually reverses course and demand starts to increase again.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “As we have commented previously, we did not expect the unprecedented COVID-related operating conditions to persist long-term. We believe we are now seeing a changing environment. While many concurrent disruptions continue to plague our industry, including the quarantines in China, the conflict in Ukraine, and the shortage of labor and certain equipment, conditions are starting to ease. We now believe we are seeing a shift towards slowing volumes and falling rates. We have been here before and know which levers to pull to enhance our efficiencies and control costs. We are ready to further align ourselves with a post-COVID environment of higher inflation and tapered demand. We do not know how long these new conditions will last. We will continue to invest appropriately for the long-term in our people, processes, and technology, and we believe we will be fully capable of meeting the eventual upturn in demand.” Mr. Powell noted that the Company benefitted from a favorable tax rate during the quarter and returned over $1 billion to shareholders via repurchased stock so far this year.

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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to uncertain air and ocean capacity; volatile air and ocean pricing and uneven demand for such services; port congestion; equipment imbalances; labor shortages; uncertain availability of warehouse and pier space; trade disruptions; rising fuels costs; the conflict in Ukraine; inflation, high energy costs, government fiscal and monetary measures, and signs of a slowing economy and drop in demand; and the uneven lifting of the COVID-19 pandemic restrictions around the world. 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 expectation that the supply/demand imbalance, rate volatility, and various on-shore bottlenecks may continue; our ability to control costs and continue to enhance our productivity; 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. The ongoing impact of 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, the ability of third-party providers to perform and potential litigation 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, 2021 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. Third Quarter 2022 Earnings Release, November 8, 2022 Financial Highlights for the three and nine months ended September 30, 2022 and 2021 (Unaudited) (in 000's of US dollars except per share data)
		Three months ended September 30,										Nine months ended September 30,
		2022				2021				% Change		2022				2021				% Change
Revenues		$	4,362,146			$	4,319,261			1%		$	13,629,756			$	11,127,174			22%
Directly related cost of transportation and other expenses1		$	3,194,273			$	3,185,490			-		$	10,151,332			$	8,031,407			26%
Salaries and other operating expenses2		$	640,950			$	644,134			-		$	1,983,759			$	1,809,970			10%
Operating income		$	526,923			$	489,637			8%		$	1,494,665			$	1,285,797			16%
Net earnings attributable to shareholders		$	414,209			$	359,068			15%		$	1,138,123			$	962,660			18%
Diluted earnings attributable to shareholders per share		$	2.54			$	2.09			22%		$	6.84			$	5.61			22%
Basic earnings attributable to shareholders per share		$	2.56			$	2.12			21%		$	6.90			$	5.68			21%
Diluted weighted average shares outstanding			163,250				171,565			(5)%			166,398				171,549			(3)%
Basic weighted average shares outstanding			162,029				169,633			(4)%			164,944				169,398			(3)%

_______________________
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.

		Employee Full-time Equivalents as of September 30,
		2022				2021
North America			7,799				7,315
Europe			4,194				3,860
North Asia			2,488				2,440
South Asia			1,845				1,740
Middle East, Africa and India			1,549				1,507
Latin America			851				801
Information Systems			1,144				976
Corporate			399				395
Total			20,269				19,034

		Third quarter year-over-year percentage decrease in:
2022		Airfreight kilos		Ocean freight FEU
July		(11)%		(9)%
August		(14)%		(11)%
September		(15)%		(10)%
Quarter		(13)%		(10)%

During the three and nine months ended September 30, 2022, we repurchased 4.5 million and 9.5 million shares of common stock at $103.56 and $106.84 per share, respectively. During the three and nine months ended September 30, 2021, we repurchased 0.6 million and 2.0 million shares of common stock at an average price of $124.95 and $110.45 per share, respectively.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 11, 2022 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)
		September 30, 2022				December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents		$	2,154,534			$	1,728,692
Accounts receivable, less allowance for credit loss of $9,760 at September 30, 2022 and $6,686 at December 31, 2021			2,748,322				3,810,286
Deferred contract costs			499,935				987,266
Other			184,765				108,801
Total current assets			5,587,556				6,635,045
Property and equipment, less accumulated depreciation and amortization of $548,585 at September 30, 2022 and $541,677 at December 31, 2021			480,941				487,870
Operating lease right-of-use assets			486,980				459,158
Goodwill			7,927				7,927
Deferred federal and state income taxes, net			27,295				729
Other assets, net			16,827				19,200
Total assets		$	6,607,526			$	7,609,929
Liabilities:
Current Liabilities:
Accounts payable			1,544,757				2,012,461
Accrued liabilities, primarily salaries and related costs			404,207				403,625
Contract liabilities			594,244				1,142,026
Current portion of operating lease liabilities			88,535				82,019
Federal, state and foreign income taxes			74,507				86,166
Total current liabilities			2,706,250				3,726,297
Noncurrent portion of operating lease liabilities			409,883				385,641
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued			—				—
Common stock, par value $0.01 per share. Issued and outstanding: 159,128 shares at September 30, 2022 and 167,210 shares at December 31, 2021			1,591				1,672
Additional paid-in capital			118				3,160
Retained earnings			3,738,600				3,620,008
Accumulated other comprehensive loss			(258,129	)			(130,414	)
Total shareholders’ equity			3,482,180				3,494,426
Noncontrolling interest			9,213				3,565
Total equity			3,491,393				3,497,991
Total liabilities and equity		$	6,607,526			$	7,609,929

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Earnings (In thousands, except per share data) (Unaudited)
		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Revenues:
Airfreight services		$	1,480,955			$	1,628,115			$	4,682,076			$	4,477,599
Ocean freight and ocean services			1,684,579				1,598,597				5,420,471				3,651,059
Customs brokerage and other services			1,196,612				1,092,549				3,527,209				2,998,516
Total revenues			4,362,146				4,319,261				13,629,756				11,127,174
Operating Expenses:
Airfreight services			1,104,812				1,244,381				3,459,861				3,335,253
Ocean freight and ocean services			1,343,355				1,254,334				4,345,963				2,859,020
Customs brokerage and other services			746,106				686,775				2,345,508				1,837,134
Salaries and related			499,341				519,611				1,546,503				1,452,902
Rent and occupancy			52,715				46,730				155,241				137,376
Depreciation and amortization			15,187				12,753				42,416				38,415
Selling and promotion			6,239				4,237				16,174				10,479
Other			67,468				60,803				223,425				170,798
Total operating expenses			3,835,223				3,829,624				12,135,091				9,841,377
Operating income			526,923				489,637				1,494,665				1,285,797
Other Income (Expense):
Interest income			7,835				2,462				12,447				6,596
Other, net			98				733				7,731				6,382
Other income, net			7,933				3,195				20,178				12,978
Earnings before income taxes			534,856				492,832				1,514,843				1,298,775
Income tax expense			120,694				132,922				368,975				333,941
Net earnings			414,162				359,910				1,145,868				964,834
Less net (losses) earnings attributable to the noncontrolling interest			(47	)			842				7,745				2,174
Net earnings attributable to shareholders		$	414,209			$	359,068			$	1,138,123			$	962,660
Diluted earnings attributable to shareholders per share		$	2.54			$	2.09			$	6.84			$	5.61
Basic earnings attributable to shareholders per share		$	2.56			$	2.12			$	6.90			$	5.68
Weighted average diluted shares outstanding			163,250				171,565				166,398				171,549
Weighted average basic shares outstanding			162,029				169,633				164,944				169,398

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES   Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Three months ended September 30,								Nine months ended September 30,
		2022				2021				2022				2021
Operating Activities:
Net earnings		$	414,162			$	359,910			$	1,145,868			$	964,834
Adjustments to reconcile net earnings to net cash from operating activities:
Provisions for losses on accounts receivable			5,570				3,739				9,917				6,028
Deferred income tax (benefit) expense			(3,070	)			(7,658	)			(14,928	)			2,343
Stock compensation expense			14,175				15,204				51,296				57,298
Depreciation and amortization			15,187				12,753				42,416				38,415
Other, net			1,435				626				144				1,523
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable			634,421				(714,300	)			880,364				(1,377,997	)
(Decrease) increase in accounts payable and accrued expenses			(350,922	)			436,343				(343,902	)			769,525
Decrease (increase) in deferred contract costs			226,087				(328,932	)			437,155				(550,572	)
(Decrease) increase in contract liabilities			(249,895	)			381,192				(488,826	)			635,286
(Decrease) increase in income taxes payable, net			(31,397	)			33,378				(78,568	)			32,022
(Increase) decrease in other, net			(5,369	)			(14,884	)			2,040				(15,208	)
Net cash from operating activities			670,384				177,371				1,642,976				563,497
Investing Activities:
Purchase of property and equipment			(15,928	)			(9,870	)			(68,498	)			(24,800	)
Other, net			(590	)			(157	)			(645	)			(53	)
Net cash from investing activities			(16,518	)			(10,027	)			(69,143	)			(24,853	)
Financing Activities:
Payments from borrowing on lines of credit			(21,117	)			(1,045	)			(29,601	)			(2,570	)
Proceeds from borrowing on lines of credit			—				8,524				56,545				10,138
Proceeds from issuance of common stock			61,885				56,965				73,318				99,433
Repurchases of common stock			(469,041	)			(76,595	)			(1,018,106	)			(225,064	)
Dividends paid			—				—				(109,828	)			(98,387	)
Payments for taxes related to net share settlement of equity awards			—				(4	)			(19,333	)			(15,172	)
Distribution to noncontrolling interest			(543	)			(1,631	)			(543	)			(1,631	)
Net cash from financing activities			(428,816	)			(13,786	)			(1,047,548	)			(233,253	)
Effect of exchange rate changes on cash and cash equivalents			(47,487	)			(7,573	)			(100,443	)			(13,076	)
Change in cash and cash equivalents			177,563				145,985				425,842				292,315
Cash and cash equivalents at beginning of period			1,976,971				1,674,121				1,728,692				1,527,791
Cash and cash equivalents at end of period		$	2,154,534			$	1,820,106			$	2,154,534			$	1,820,106
Taxes Paid:
Income taxes		$	150,960			$	104,617			$	465,711			$	295,153

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 September 30, 2022:
Revenues		$	1,244,515				140,622				68,057				1,489,331				518,780				637,411				264,518				(1,088	)			4,362,146
Directly related cost of transportation and other expenses1		$	742,826				80,116				41,638				1,250,872				416,817				453,248				209,248				(492	)			3,194,273
Salaries and other operating expenses2		$	314,442				30,151				15,057				98,758				37,577				109,308				36,181				(524	)			640,950
Operating income		$	187,247				30,355				11,362				139,701				64,386				74,855				19,089				(72	)			526,923
Identifiable assets at period end		$	3,553,279				272,527				137,472				915,895				421,148				1,020,756				322,160				(35,711	)			6,607,526
Capital expenditures		$	9,278				556				419				581				426				3,619				1,049				—				15,928
Equity		$	2,430,632				129,346				59,494				304,496				180,855				289,595				140,147				(43,172	)			3,491,393
For the three months ended September 30, 2021:
Revenues		$	1,134,096				116,404				54,303				1,690,381				538,780				564,810				221,777				(1,290	)			4,319,261
Directly related cost of transportation and other expenses1		$	661,515				63,031				34,216				1,417,283				445,970				389,208				174,733				(466	)			3,185,490
Salaries and other operating expenses2		$	238,943				33,077				14,759				141,109				54,003				126,475				36,598				(830	)			644,134
Operating income		$	233,638				20,296				5,328				131,989				38,807				49,127				10,446				6				489,637
Identifiable assets at period end		$	3,417,496				256,638				110,406				1,558,109				457,615				990,123				328,671				(42,675	)			7,076,383
Capital expenditures		$	6,001				248				175				435				351				2,254				406				—				9,870
Equity		$	2,451,584				93,084				37,087				368,535				129,941				258,805				123,304				(41,748	)			3,420,592
		UNITED STATES				OTHER NORTH AMERICA				LATIN AMERICA				NORTH ASIA				SOUTH ASIA				EUROPE				MIDDLE EAST, AFRICA AND INDIA				ELIMI- NATIONS				CONSOLI- DATED
For the nine months ended September 30, 2022:
Revenues		$	3,751,102				390,220				191,900				4,840,822				1,776,355				1,871,509				811,147				(3,299	)			13,629,756
Directly related cost of transportation and other expenses1		$	2,303,428				230,154				118,793				4,054,319				1,463,173				1,335,267				647,510				(1,312	)			10,151,332
Salaries and other operating expenses2		$	962,817				86,328				42,654				326,767				121,634				333,971				111,481				(1,893	)			1,983,759
Operating income		$	484,857				73,738				30,453				459,736				191,548				202,271				52,156				(94	)			1,494,665
Identifiable assets at period end		$	3,553,279				272,527				137,472				915,895				421,148				1,020,756				322,160				(35,711	)			6,607,526
Capital expenditures		$	45,149				2,672				705				1,878				1,152				13,343				3,599				—				68,498
Equity		$	2,430,632				129,346				59,494				304,496				180,855				289,595				140,147				(43,172	)			3,491,393
For the nine months ended September 30, 2021:
Revenues		$	3,007,053				311,986				146,148				4,208,811				1,306,264				1,576,092				574,469				(3,649	)			11,127,174
Directly related cost of transportation and other expenses1		$	1,731,032				175,392				86,868				3,471,453				1,051,133				1,072,973				444,132				(1,576	)			8,031,407
Salaries and other operating expenses2		$	718,762				90,114				41,871				354,841				146,214				359,338				100,899				(2,069	)			1,809,970
Operating income		$	557,259				46,480				17,409				382,517				108,917				143,781				29,438				(4	)			1,285,797
Identifiable assets at period end		$	3,417,496				256,638				110,406				1,558,109				457,615				990,123				328,671				(42,675	)			7,076,383
Capital expenditures		$	11,931				434				300				1,192				1,462				7,908				1,573				—				24,800
Equity		$	2,451,584				93,084				37,087				368,535				129,941				258,805				123,304				(41,748	)			3,420,592

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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221107006017/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 Q3 2022 earnings per share?

Expeditors International reported a diluted EPS of $2.54 for Q3 2022.

How did Expeditors International's net earnings perform in Q3 2022?

Net earnings for Expeditors International increased by 15% to $414 million in Q3 2022.

What notable changes occurred in Expeditors International's volume metrics?

In Q3 2022, airfreight tonnage volume decreased by 13% and ocean container volume decreased by 10%.

What is the forecast for Expeditors International's business conditions?

Expeditors International anticipates continued declines in demand and rates through the remainder of 2022 and into 2023.