Expeditors International of Washington, Inc. (NASDAQ:EXPD) today
announced fourth quarter 2022 financial results including the
following highlights compared to the same quarter of 2021:
- Diluted Net Earnings Attributable to Shareholders per share
(EPS1) decreased 48% to $1.38
- Net Earnings Attributable to Shareholders decreased 52% to $219
million
- Operating Income decreased 47% to $330 million
- Revenues decreased 36% to $3.4 billion
- Airfreight tonnage volume decreased 20% and ocean container
volume decreased 15%
“As pandemic-related bottlenecks eased and air and ocean
supply/demand imbalances began to dissipate in the first half of
the year, average buy and sell rates progressively declined to
varying degrees, as they typically do – until they suddenly began
to plummet simultaneously and faster than we would have expected in
the fourth quarter,” said Jeffrey S. Musser, President and Chief
Executive Officer. “The rapid turnaround in Q4 was stunning and
unparalleled.”
“Fourth quarter demand also was softer than we would have
expected, particularly in retail and high tech,” Musser continued.
“Many shippers had stockpiled inventory and pulled orders forward
early in 2022, in a concerted effort to avoid the worst of the
supply chain bottlenecks that materialized during the pandemic,
when abrupt shutdowns and stay-at-home orders transformed how we
live and do business. Those conditions, which were already starting
to ease throughout the first three quarters of 2022, quickly
reversed course as we entered the fourth quarter and shippers
swiftly adapted to increased consumer caution and slowing demand
for their products, while also battling inflation and tighter
financing. We were especially impacted in North Asia, our second
largest geography, as the lingering effects of the lockdowns
contributed to the largest declines in our air tonnage and ocean
volumes in at least a decade.
“I am extremely grateful to our people, who continued to perform
at their very best as they have throughout the many significant
challenges we have faced over the past couple of years. We
recognize that the pandemic tailwind is gone and we are now in a
marketplace in which the supply chain appears to have largely
normalized. Nevertheless, a level of uncertainty remains and
shippers are prioritizing cost controls as they scramble to adapt
to an increasingly fragile global economy.
“While we remain very optimistic about the future, our
short-term outlook is somewhat uncertain due to a difficult
economic environment and the resetting of supply and demand, which
has a direct impact on available capacity and pricing. We plan to
move forward with a sharp eye on aligning expenses with revenues,
particularly over the next one or two quarters. Our focus will be
on maintaining our existing accounts and gaining new business,
while reducing overall expenses. Just as we quickly configured our
operations to accommodate unprecedented chaos and complexity during
the pandemic, we now need to address our operations for a
post-pandemic environment of soft demand and pressured
pricing.”
Bradley S. Powell, Senior Vice President and Chief Financial
Officer, added, “This quarter was heavily impacted by a rapid
reversal from the most robust operating environment we have ever
seen. Economic uncertainty, government actions directed at trying
to tame inflation, and severe challenges to the global supply chain
gave way to sharply decelerating volumes along with a swift and
simultaneous falloff in buy/sell rates. Such quickly evolving
operating conditions impacted our results for the quarter, as did
year-over-year comparisons to strong results in 2021. In addition,
earnings before income taxes were impacted by an increase in
discretionary field and branch bonuses that were awarded at
year-end within our district incentive compensation program, as
well as the recording of a non-income tax contingency, which on a
combined basis totaled approximately $81 million. Our teams around
the world worked well managing through significant challenges in
2022 always with careful attention to cash flow. Our cash flow from
operations exceeded $2.1 billion in 2022 and we returned $1.8
billion to shareholders via repurchases of common stock and
dividends.”
Mr. Powell noted that the Company’s annual effective tax rate
for 2022 was 25.9%, compared to 26.3% in 2021. The fourth quarter
of 2022 effective tax rate was 33.1%, compared to 27.5% in the
year-ago quarter. The increase is primarily due to a change in the
amount of foreign taxes incurred net of available foreign tax
credits.
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 our optimism regarding the future and our
uncertain short-term outlook; a normalized supply chain; softening
demand; pressure on buy and sell rates; the continued unsettled
operating environment due to uncertain air and ocean capacity; an
increasingly fragile global economy; 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 align
expenses with revenues and to enhance our productivity; our ability
to maintain our existing accounts and gain new business; 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.
Fourth quarter 2022 Earnings Release,
February 21, 2023
Financial Highlights for the three and
twelve months ended December 31, 2022 and 2021 (Unaudited)
(in 000's of US dollars except share
data)
Three months ended December
31,
Twelve months ended December
31,
2022
2021
% Change
2022
2021
% Change
Revenues
$
3,441,528
$
5,396,343
(36)%
$
17,071,284
$
16,523,517
3%
Directly related cost of transportation
and other expenses 1
$
2,425,565
$
4,026,748
(40)%
$
12,576,897
$
12,058,155
4%
Salaries and other operating
expenses 2
$
686,257
$
746,066
(8)%
$
2,670,016
$
2,556,036
4%
Operating income
$
329,706
$
623,529
(47)%
$
1,824,371
$
1,909,326
(4)%
Net earnings attributable to
shareholders
$
219,276
$
452,832
(52)%
$
1,357,399
$
1,415,492
(4)%
Diluted earnings attributable to
shareholders per share
$
1.38
$
2.66
(48)%
$
8.26
$
8.27
—
Basic earnings attributable to
shareholders per share
$
1.39
$
2.69
(48)%
$
8.33
$
8.37
—
Diluted weighted average shares
outstanding
158,535
170,293
164,427
171,250
Basic weighted average shares
outstanding
157,269
168,393
163,010
169,145
1Directly related cost of transportation and other expenses
totals Operating Expenses from Airfreight services, Ocean freight
and ocean services and Customs brokerage and other services as
shown in the Condensed Consolidated Statements of Earnings.
2Salaries and other operating expenses totals Salaries and
related, Rent and occupancy, Depreciation and amortization, Selling
and promotion and Other as shown in the Condensed Consolidated
Statements of Earnings.
During the three and twelve months ended December 31, 2022, we
repurchased 5.0 million and 14.5 million shares of common stock at
an average price of $112.76 and $108.88 per share, respectively.
During the three and twelve months ended December 31, 2021, we
repurchased 2.3 million and 4.4 million shares of common stock at
an average price of $123.71 and $117.54 per share, respectively. In
addition, during 2022 and 2021, we paid cash dividends of $1.34 and
$1.16 per share, respectively.
Employee Full-time Equivalents
as of December 31,
2022
2021
North America
7,778
7,613
Europe
4,228
3,961
North Asia
2,448
2,485
South Asia
1,851
1,783
Middle East, Africa and India
1,540
1,504
Latin America
859
833
Information Systems
1,173
994
Corporate
425
415
Total
20,302
19,588
Fourth quarter year-over-year
percentage decrease in:
Airfreight kilos
Ocean freight FEU
2022
October
(16)%
(11)%
November
(20)%
(15)%
December
(24)%
(19)%
Quarter
(20)%
(15)%
Investors may submit written questions via e-mail to:
investor@expeditors.com. Questions received by the end of business
on February 24, 2023 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)
December 31, 2022
December 31, 2021
Assets:
Current Assets:
Cash and cash equivalents
$
2,034,131
$
1,728,692
Accounts receivable, less allowance for
credit loss of $9,466 and $6,686 at December 31, 2022 and 2021,
respectively
2,107,645
3,810,286
Deferred contract costs
257,545
987,266
Other
118,696
108,801
Total current assets
4,518,017
6,635,045
Property and equipment, net
501,916
487,870
Operating lease right-of-use assets
507,503
459,158
Goodwill
7,927
7,927
Deferred federal and state income taxes,
net
37,449
729
Other assets, net
17,622
19,200
Total assets
$
5,590,434
$
7,609,929
Liabilities:
Current Liabilities:
Accounts payable
$
1,108,996
$
2,012,461
Accrued expenses, primarily salaries and
related costs
479,262
403,625
Contract liabilities
323,101
1,142,026
Current portion of operating lease
liabilities
95,621
82,019
Federal, state and foreign income
taxes
47,075
86,166
Total current liabilities
2,054,055
3,726,297
Noncurrent portion of operating lease
liabilities
422,844
385,641
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued
—
—
Common stock, par value $0.01 per share.
Issued and outstanding: 154,313 shares and 167,210 shares at
December 31, 2022 and 2021, respectively
1,543
1,672
Additional paid-in capital
139
3,160
Retained earnings
3,310,892
3,620,008
Accumulated other comprehensive loss
(202,553
)
(130,414
)
Total shareholders’ equity
3,110,021
3,494,426
Noncontrolling interest
3,514
3,565
Total equity
3,113,535
3,497,991
Total liabilities and equity
$
5,590,434
$
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 December
31,
Twelve months ended December
31,
2022
2021
2022
2021
Revenues:
Airfreight services
$
1,204,810
$
2,293,803
$
5,886,886
$
6,771,402
Ocean freight and ocean services
1,124,088
1,894,759
6,544,559
5,545,818
Customs brokerage and other services
1,112,630
1,207,781
4,639,839
4,206,297
Total revenues
3,441,528
5,396,343
17,071,284
16,523,517
Operating Expenses:
Airfreight services
899,865
1,732,127
4,359,726
5,067,380
Ocean freight and ocean services
842,103
1,505,140
5,188,066
4,364,160
Customs brokerage and other services
683,597
789,481
3,029,105
2,626,615
Salaries and related
509,884
609,449
2,056,387
2,062,351
Rent and occupancy
54,291
48,911
209,532
186,287
Depreciation and amortization
14,922
12,897
57,338
51,312
Selling and promotion
8,119
5,547
24,293
16,026
Other
99,041
69,262
322,466
240,060
Total operating expenses
3,111,822
4,772,814
15,246,913
14,614,191
Operating income
329,706
623,529
1,824,371
1,909,326
Other Income (Expense):
Interest income
13,107
2,211
25,554
8,807
Interest expense
(22,245
)
(312
)
(23,277
)
(411
)
Other, net
480
413
9,243
6,894
Other income (expense), net
(8,658
)
2,312
11,520
15,290
Earnings before income taxes
321,048
625,841
1,835,891
1,924,616
Income tax expense
106,311
171,830
475,286
505,771
Net earnings
214,737
454,011
1,360,605
1,418,845
Less net (losses) earnings attributable to
the noncontrolling interest
(4,539
)
1,179
3,206
3,353
Net earnings attributable to
shareholders
$
219,276
$
452,832
$
1,357,399
$
1,415,492
Diluted earnings attributable to
shareholders per share
$
1.38
$
2.66
$
8.26
$
8.27
Basic earnings attributable to
shareholders per share
$
1.39
$
2.69
$
8.33
$
8.37
Weighted average diluted shares
outstanding
158,535
170,293
164,427
171,250
Weighted average basic shares
outstanding
157,269
168,393
163,010
169,145
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,
2022
2021
2022
2021
Operating Activities:
Net earnings
$
214,737
$
454,011
$
1,360,605
$
1,418,845
Adjustments to reconcile net earnings to
net cash from operating activities:
Provisions for losses on accounts
receivable
1,133
1,512
11,050
7,540
Deferred income tax benefit
(18,312
)
(6,033
)
(33,240
)
(3,690
)
Stock compensation expense
13,101
12,087
64,397
69,385
Depreciation and amortization
14,922
12,897
57,338
51,312
Other, net
1,108
2,267
1,252
3,790
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable
711,977
(491,830
)
1,592,341
(1,869,827
)
(Decrease) increase in accounts payable
and accrued expenses
(454,221
)
272,280
(798,123
)
1,041,805
Decrease (increase) in deferred contract
costs
277,805
(149,701
)
714,960
(700,273
)
(Decrease) increase in contract
liabilities
(309,530
)
168,551
(798,356
)
803,837
Increase (decrease) in income taxes
payable, net
23,439
25,845
(55,129
)
57,867
Decrease (increase) in other, net
10,540
3,111
12,580
(12,097
)
Net cash from operating activities
486,699
304,997
2,129,675
868,494
Investing Activities:
Purchase of property and equipment
(18,326
)
(11,447
)
(86,824
)
(36,247
)
Other, net
(245
)
(345
)
(890
)
(398
)
Net cash from investing activities
(18,571
)
(11,792
)
(87,714
)
(36,645
)
Financing Activities:
Payments from borrowing on lines of
credit
(688
)
19
(30,289
)
(2,551
)
Proceeds from borrowing on lines of
credit
25,211
(75
)
81,756
10,063
Proceeds from issuance of common stock
7,662
6,672
80,980
106,105
Repurchases of common stock
(563,802
)
(289,530
)
(1,581,908
)
(514,594
)
Dividends Paid
(103,971
)
(97,379
)
(213,799
)
(195,766
)
Payments for taxes related to net share
settlement of equity awards
(2
)
—
(19,335
)
(15,172
)
Distributions to noncontrolling
interest
(1,402
)
—
(1,945
)
(1,631
)
Net cash from financing activities
(636,992
)
(380,293
)
(1,684,540
)
(613,546
)
Effect of exchange rate changes on cash
and cash equivalents
48,461
(4,326
)
(51,982
)
(17,402
)
Change in cash and cash equivalents
(120,403
)
(91,414
)
305,439
200,901
Cash and cash equivalents at beginning of
period
2,154,534
1,820,106
1,728,692
1,527,791
Cash and cash equivalents at end of
period
$
2,034,131
$
1,728,692
$
2,034,131
$
1,728,692
Taxes Paid:
Income taxes
$
100,822
$
147,396
$
566,533
$
442,549
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,
2022:
Revenues
$
1,118,262
127,442
65,821
969,266
367,679
599,947
194,342
(1,231
)
3,441,528
Directly related cost of transportation
and other expenses1
$
639,804
80,052
41,480
799,583
288,014
432,835
144,377
(580
)
2,425,565
Salaries and other operating expenses2
$
(18,767
)
101,864
29,523
178,038
117,024
239,627
39,588
(640
)
686,257
Operating income (loss)
$
497,225
(54,474
)
(5,182
)
(8,355
)
(37,359
)
(72,515
)
10,377
(11
)
329,706
Identifiable assets at period end
$
3,070,697
209,516
123,003
675,022
316,777
938,660
283,872
(27,113
)
5,590,434
Capital expenditures
$
11,262
282
232
1,098
391
4,525
536
—
18,326
Depreciation and amortization
$
9,433
454
280
1,069
472
2,527
687
—
14,922
Equity
$
2,246,417
31,132
56,416
274,703
136,944
263,278
145,269
(40,624
)
3,113,535
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
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, 2022:
Revenues
$
4,869,364
517,662
257,721
5,810,088
2,144,034
2,471,456
1,005,489
(4,530
)
17,071,284
Directly related cost of transportation
and other expenses1
$
2,943,232
310,206
160,273
4,853,902
1,751,187
1,768,102
791,887
(1,892
)
12,576,897
Salaries and other operating expenses2
$
944,050
188,192
72,177
504,805
238,658
573,598
151,069
(2,533
)
2,670,016
Operating income
$
982,082
19,264
25,271
451,381
154,189
129,756
62,533
(105
)
1,824,371
Identifiable assets at period end
$
3,070,697
209,516
123,003
675,022
316,777
938,660
283,872
(27,113
)
5,590,434
Capital expenditures
$
56,411
2,954
937
2,976
1,543
17,868
4,135
—
86,824
Depreciation and amortization
$
35,461
1,892
1,123
4,682
1,966
9,640
2,574
—
57,338
Equity
$
2,246,417
31,132
56,416
274,703
136,944
263,278
145,269
(40,624
)
3,113,535
For the twelve months ended December
31, 2021:
Revenues
$
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
$
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
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.
In 2022, certain intercompany fees were billed to our
subsidiaries in the 4th quarter covering the entirety of 2022. This
resulted in fourth quarter operating losses or reduced operating
income for some of our business segments when compared to the prior
year as in 2021 these amounts were billed monthly.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230220005285/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
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