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8-K - FORM 8-K - EXPEDITORS INTERNATIONAL OF WASHINGTON INCd8k.htm

Exhibit 99.1

EARNINGS RELEASE

 

By:   

Expeditors International of Washington, Inc.

1015 Third Avenue, Suite 1200

Seattle, Washington 98104

   LOGO

 

  CONTACTS:   

R. Jordan Gates

President and Chief Operating Officer

(206) 674-3427

  

Bradley S. Powell

Chief Financial Officer

(206) 674-3412

FOR IMMEDIATE RELEASE

 

EXPEDITORS ANNOUNCES 46% FIRST QUARTER OPERATING INCOME INCREASE

SEATTLE, WASHINGTON – May 4, 2011, Expeditors International of Washington, Inc. (NASDAQ: EXPD) today announced net earnings attributable to shareholders of $91,232,000 for the first quarter of 2011, as compared with $61,247,000 for the same quarter of 2010, an increase of 49%. Net revenues for the first quarter increased 25% to $453,915,000 as compared with $361,823,000 reported for the first quarter of 2010. Total revenues and operating income were $1,460,848,000 and $147,230,000 for the first quarter of 2011, as compared with $1,201,109,000 and $100,541,000 for the same quarter of 2010, increases of 22% and 46%, respectively. Diluted net earnings attributable to shareholders per share for the first quarter were $.42 as compared with $.28 for the same quarter in 2010, an increase of 50%. The Company also reported that same store net revenues and operating income increased 25% and 46%, respectively, during the first quarter of 2011, as compared with the same period in 2010.

“We should start off by acknowledging that this was an outstanding quarter by every measure. We always like to point out that it is our people, working in concert with our service providers, who really make this happen, and it is our customers who have given us the opportunities. We’re grateful to all of them. The most remarkable thing to us about this 2011 first quarter was the strong across the board operating income growth. All of our geographic operating segments made outstanding contributions. We think this means that we must be doing something right, not just in a few offices, but throughout our global network,” said Peter J. Rose, Chairman and Chief Executive Officer. “We were also impressed with the extent that productivity initiatives continue to benefit our operating income growth. A focus on strong market share growth and efficient operations has been the solid foundation upon which we continue to build our company,” Rose went on to say.

“Whenever we report above-consensus results, there follows a great deal of curiosity by some about what that means for our future expectations. Often a ‘mechanical upward adjustment’ by the amount we exceeded that quarter’s consensus is added onto to what were already challenging future expectations. Those who know us well know that we always decline to make projections and forecasts. What we do try to offer, however, are things that we think about internally that we wish everyone externally would consider. We think about rising fuel costs, rising costs in general, as inflation (which is now globally topical after not having been mentioned for years) and global political unrest. Volatile currency exchange rates and the current status of the US dollar should also be factored in. Does this mean we’re pessimistic? No, not at all. We think we do our best work helping our customers navigate through chaos and unexpected events, and in that sense, opportunity abounds. But we do think that future expectations need to be founded on realistic assessments of current conditions. They should not simply become a mechanical extrapolation exercise that slingshots a number out there from a base created by one single, albeit outstanding, quarter,” concluded Rose.

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 184 full-service offices, 65 satellite locations and 2 international service centers located on six continents linked into a seamless worldwide network through an integrated information management system. Services include air and ocean freight forwarding, vendor consolidation, customs clearance, marine insurance, distribution and other value added international logistics services.

 

 

NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.


Expeditors International of Washington, Inc.

1st Quarter 2011 Earnings Release, May 4, 2011

Financial highlights for the three months ended March 31, 2011 (Unaudited)

(in 000’s of US dollars except share data)

 

     Three Months Ended      % Increase  
     2011      2010     

Revenues

   $ 1,460,848       $ 1,201,109         22

Net revenues

   $ 453,915       $ 361,823         25

Operating income

   $ 147,230       $ 100,541         46

Net earnings attributable to shareholders

   $ 91,232       $ 61,247         49

Diluted earnings attributable to shareholders per share

   $ .42       $ .28         50

Basic earnings attributable to shareholders per share

   $ .43       $ .29         48

Diluted weighted average shares outstanding

     215,863,386         216,630,436      

Basic weighted average shares outstanding

     212,088,860         212,192,710      

 

     Employee headcount as of March 31,  
     2011      2010  

North America

     4,443         4,131   

Asia Pacific

     3,898         3,591   

Europe and Africa

     2,142         1,948   

Middle East

     1,187         1,109   

South America

     626         561   

Information Systems

     551         565   

Corporate

     205         186   
                 
     13,052         12,091   

 

     Year-over-year percentage growth in:  
     Airfreight kilos     Ocean freight FEUs  

2011

    

January

     13     16

February

     12     (9 )% 

March

     21     11

Quarter

     16     7

During the first quarter of 2011, the Company opened one satellite office in Kristiansand, Norway and closed one satellite office in Malmoe, Sweden.

Investors may submit written questions via e-mail to: investor@expeditors.com. Or by fax to: (206) 674-3459. Questions received by the end of business on May 6, 2011 will be considered in management’s 8-K “Responses to Selected Questions” expected to be filed on or about May 18, 2011.

Disclaimer on Forward-Looking Statements:

Certain portions of this release contain forward-looking statements which are based on certain assumptions and expectations of future events that are subject to risks and uncertainties, including comments on future ability to improve productivity and operating income, rising fuel costs, rising costs in general, global political unrest, volatile currency exchange rates, status of the US Dollar and our ability to help customers navigate through chaos and unexpected events. Actual future results and trends may differ materially from historical results or those projected in any forward-looking statements depending on a variety of factors including, but not limited to, our ability to maintain consistent and stable operating results, future success of our business model, ability to perpetuate profits, changes in customer demand for Expeditors’ services caused by a general economic slow-down, customers’ inventory build-up, decreased consumer confidence, volatility in equity markets, energy prices, political changes, regulatory changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report filed with the Securities and Exchange Commission.


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

 

     March 31,
2011
     December 31,
2010
 
Assets      

Current assets:

     

Cash and cash equivalents

   $ 1,238,471       $ 1,084,465   

Short-term investments

     612         524   

Accounts receivable, net

     1,006,980         1,003,884   

Deferred Federal and state income taxes

     9,382         8,706   

Other current assets

     25,380         42,776   
                 

Total current assets

     2,280,825         2,140,355   
                 

Property and equipment, net

     514,429         498,648   

Goodwill, net

     7,927         7,927   

Other intangibles, net

     3,402         3,716   

Other assets, net

     30,149         28,533   
                 
   $ 2,836,732       $ 2,679,179   
                 
Liabilities and Equity      

Current liabilities:

     

Accounts payable

     687,988         652,161   

Accrued expenses, primarily salaries and related costs

     182,391         177,869   

Federal, state and foreign income taxes

     44,606         31,948   
                 

Total current liabilities

     914,985         861,978   
                 

Deferred Federal and state income taxes

     72,627         69,047   

Commitments and contingencies

     

Shareholders’ equity:

     

Preferred stock; none issued

     —           —     

Common stock, par value $.01 per share; issued and outstanding 212,034,197 shares at March 31, 2011 and 212,047,774 shares at December 31, 2010

     2,120         2,120   

Additional paid-in capital

     14,350         13,412   

Retained earnings

     1,808,481         1,717,249   

Accumulated other comprehensive income

     16,958         8,125   
                 

Total shareholders’ equity

     1,841,909         1,740,906   
                 

Noncontrolling interest

     7,211         7,248   
                 

Total equity

     1,849,120         1,748,154   
                 
   $ 2,836,732       $ 2,679,179   
                 


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except share data)

(Unaudited)

 

    

Three months ended

March 31,

 
     2011     2010  

Revenues:

    

Airfreight services

   $ 700,923      $ 559,383   

Ocean freight and ocean services

     440,141        381,244   

Customs brokerage and other services

     319,784        260,482   
                

Total revenues

     1,460,848        1,201,109   
                

Operating expenses:

    

Airfreight consolidation

     524,636        427,342   

Ocean freight consolidation

     339,549        301,090   

Customs brokerage and other services

     142,748        110,854   

Salaries and related costs

     237,815        199,848   

Rent and occupancy costs

     21,381        19,227   

Depreciation and amortization

     9,174        9,395   

Selling and promotion

     9,163        7,035   

Other

     29,152        25,777   
                

Total operating expenses

     1,313,618        1,100,568   
                

Operating income

     147,230        100,541   
                

Interest income

     2,320        1,775   

Interest expense

     (214     (87

Other, net

     1,117        609   
                

Other income, net

     3,223        2,297   
                

Earnings before income taxes

     150,453        102,838   

Income tax expense

     59,246        41,528   
                

Net earnings

     91,207        61,310   
                

Less: net (losses) earnings attributable to noncontrolling interest

     (25     63   
                

Net earnings attributable to shareholders

   $ 91,232      $ 61,247   
                

Diluted earnings attributable to shareholders per share

   $ 0.42      $ 0.28   
                

Basic earnings attributable to shareholders per share

   $ 0.43      $ 0.29   
                

Weighted average diluted shares outstanding

     215,863,386        216,630,436   
                

Weighted average basic shares outstanding

     212,088,860        212,192,710   
                


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

    

Three months ended

March 31,

 
     2011     2010  

Operating Activities:

    

Net earnings

   $ 91,207      $ 61,310   

Adjustments to reconcile net earnings to net cash provided by operating activities:

    

Provision for losses on accounts receivable

     1,853        2,443   

Deferred income tax benefit

     (1,936     (7,728

Excess tax benefits from stock plans

     (2,246     (4,012

Stock compensation expense

     10,472        11,198   

Depreciation and amortization

     9,174        9,395   

Gain on sale of assets

     (30     (295

Other

     307        478   

Changes in operating assets and liabilities:

    

Decrease (increase) in accounts receivable

     6,683        (12,965

Increase in other current assets

     (1,415     (1,811

Increase in accounts payable and accrued expenses

     30,187        43,169   

Increase in income taxes payable, net

     33,577        25,941   
                

Net cash provided by operating activities

     177,833        127,123   
                

Investing Activities:

    

Increase in short-term investments

     (89     (36

Purchase of property and equipment

     (21,125     (7,582

Proceeds from sale of property and equipment

     43        59   

Other

     (1,442     (188
                

Net cash used in investing activities

     (22,613     (7,747
                

Financing Activities:

    

Proceeds from issuance of common stock

     7,804        12,220   

Repurchases of common stock

     (19,584     (18,019

Excess tax benefits from stock plans

     2,246        4,012   
                

Net cash used in financing activities

     (9,534     (1,787
                

Effect of exchange rate changes on cash and cash equivalents

     8,320        (1,870
                

Increase in cash and cash equivalents

     154,006        115,719   

Cash and cash equivalents at beginning of period

     1,084,465        925,929   
                

Cash and cash equivalents at end of period

   $ 1,238,471      $ 1,041,648   
                

Interest and taxes paid:

    

Interest

   $ 4        87   

Income taxes

     26,276        19,996   


EXPEDITORS INTERNATIONAL OF WASHINGTON, INC. AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

 

     United
States
     Other
North
America
     Latin
America
     Asia
Pacific
     Europe
and
Africa
     Middle East
and India
     Elimi-
nations
    Consoli-
dated
 

Three months ended March 31, 2011

                      

Revenues from unaffiliated customers

   $ 377,106         43,846         20,332         728,130         213,612         77,822           1,460,848   

Transfers between geographic areas

     23,965         2,682         5,621         9,183         10,707         4,209         (56,367     —     
                                                                      

Total revenues

   $ 401,071         46,528         25,953         737,313         224,319         82,031         (56,367     1,460,848   
                                                                      

Net revenues

   $ 177,934         20,701         15,103         141,487         73,926         24,764           453,915   

Operating income

   $ 53,734         5,789         4,763         59,438         17,707         5,799           147,230   

Identifiable assets

   $ 1,427,414         86,371         57,960         659,352         452,675         153,236         (276     2,836,732   

Capital expenditures

   $ 4,030         160         156         4,712         11,706         361           21,125   

Depreciation and amortization

   $ 4,985         303         269         1,969         1,110         538           9,174   

Equity

   $ 1,124,913         47,793         30,981         407,053         181,245         89,422         (32,287     1,849,120   

Three months ended March 31, 2010

                      

Revenues from unaffiliated customers

   $ 286,936         35,612         16,296         637,188         161,845         63,232           1,201,109   

Transfers between geographic areas

     18,743         1,809         3,661         7,110         7,933         3,576         (42,832     —     
                                                                      

Total revenues

   $ 305,679         37,421         19,957         644,298         169,778         66,808         (42,832     1,201,109   
                                                                      

Net revenues

   $ 146,905         16,422         11,518         107,109         59,923         19,946           361,823   

Operating income

   $ 38,174         3,899         3,531         38,758         11,854         4,325           100,541   

Identifiable assets

   $ 1,249,106         75,890         44,236         529,571         392,163         128,524         2,589        2,422,079   

Capital expenditures

   $ 4,474         176         277         690         1,221         744           7,582   

Depreciation and amortization

   $ 5,022         353         205         1,896         1,312         607           9,395   

Equity

   $ 1,006,340         43,773         20,618         366,460         148,484         74,499         (31,238     1,628,936