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| 8-K - 8-K - EXPEDITORS INTERNATIONAL OF WASHINGTON INC | a20142qer8-k.htm |
Exhibit 99.1
EARNINGS RELEASE
By: Expeditors International of Washington, Inc.
1015 Third Avenue, Suite 1200
Seattle, Washington 98104
CONTACTS: | R. Jordan Gates Bradley S. Powell |
President and Chief Operating Officer Senior Vice President and Chief Financial Officer
(206) 674-3427 (206) 674-3412
FOR IMMEDIATE RELEASE
__________________________________________________________________________________________________________________________________________________________________________
EXPEDITORS REPORTS SECOND QUARTER 2014 EPS OF $0.46 PER SHARE 1
SEATTLE, WASHINGTON - August 5, 2014, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $91,302,000 for the second quarter of 2014, as compared with $92,315,000 for the same quarter of 2013, a decrease of (1)%. Net revenues2 for the second quarter of 2014 increased 3% to $484,714,000 as compared with $471,872,000 for the same quarter in 2013. Total revenues and operating income were $1,599,141,000 and $142,443,000 in the second quarter of 2014, as compared with $1,503,224,000 and $143,579,000 for the same quarter of 2013, an increase of 6% and decrease of (1)%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $0.46, as compared with $0.45 for the same quarter in 2013, an increase of 2%.
For the six months ended June 30, 2014, net earnings attributable to shareholders was $175,126,000, as compared with $172,630,000 in 2013, an increase of 1%. Net revenues for the six months increased to $949,300,000 from $919,879,000 for 2013, up 3%. Total revenues and operating income for the six months were $3,090,786,000 and $277,646,000 in 2014, as compared with $2,916,432,000 and $272,097,000 for the same period in 2013, increases of 6% and 2%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2014 were $0.88, as compared with $0.83 for the same period of 2013, an increase of 6%.
“Our second quarter ocean and airfreight volume increases of 12% and 6%, respectively, provided encouraging revenue growth. We also saw strong revenue growth in our customs brokerage and other services product. While pricing volatility still presents challenges, we feel very good about expanding our ocean freight and airfreight market share in key markets,” said Jeffrey S. Musser, President and CEO. “From a geographic perspective, our efforts during the last year to expand our European-based business showed up in European operating income growth. These European results compensated for weaker Americas’ growth and an actual decline in Asia Pacific results. We did benefit from a favorable experience in our health insurance program which resulted in a $5.4 million reduction in salaries and related costs. Our other expense line item saw an increase of $6.0 million, none of which were individually significant. This also included the benefit of the transition to a value added tax system in certain jurisdictions in the second quarter of 2013; consulting fees and costs associated with the Company's current strategic assessment and recent organizational changes; and the accrual of claims, all which, in the aggregate, total approximately $3.5 million. Operating income as a percentage of net revenue was 29.4%, slightly below our target of 30%. We will be actively addressing the factors that contributed to this shortfall during the next several quarters,” Musser went on to say.
“Looking forward to the remainder of 2014, our priority will be to refine and implement the tactical plans supporting the outcome of our strategic assessment. We will also continue to focus on customer service, market share expansion and opportunities to leverage operating efficiencies,” Musser continued. “The assessment process will necessitate a reallocation of resources. This will require us to focus very carefully on optimizing existing resources to internally fund our strategic objectives without requiring excessive additions to overall headcount. We’re grateful for the enthusiasm with which our employees have embraced the organizational changes we’ve made thus far. We look forward to their further involvement and participation as we complete and implement the outcome of our strategic assessment. We understand that only through engaging with and effectively supporting our employees can we meet the requirements of our customers and the expectations of our shareholders. Our employees in turn understand that they become the primary beneficiaries of increased opportunities which result from satisfied customers and gratified shareholders. We're grateful for their continued loyalty and commitment,” Musser concluded.
Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 185 full-service offices and numerous satellite 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 distribution and customized logistics solutions.
_______________________
1Diluted earnings attributable to shareholders per share.
2Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.
3Operating margin is calculated as operating income divided by net revenues.
NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.
Expeditors International of Washington, Inc.
Second Quarter 2014 Earnings Release, August 5, 2014
Financial Highlights for the Three and Six months ended June 30, 2014 and 2013 (Unaudited)
(in 000's of US dollars except share data)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||
Revenues | $ | 1,599,141 | $ | 1,503,224 | 6% | $ | 3,090,786 | $ | 2,916,432 | 6% | |||||||||
Net revenues1 | $ | 484,714 | $ | 471,872 | 3% | $ | 949,300 | $ | 919,879 | 3% | |||||||||
Operating income | $ | 142,443 | $ | 143,579 | (1)% | $ | 277,646 | $ | 272,097 | 2% | |||||||||
Net earnings attributable to shareholders | $ | 91,302 | $ | 92,315 | (1)% | $ | 175,126 | $ | 172,630 | 1% | |||||||||
Diluted earnings attributable to shareholders | $ | 0.46 | $ | 0.45 | 2% | $ | 0.88 | $ | 0.83 | 6% | |||||||||
Basic earnings attributable to shareholders | $ | 0.46 | $ | 0.45 | 2% | $ | 0.88 | $ | 0.84 | 5% | |||||||||
Diluted weighted average shares outstanding | 197,126,243 | 207,192,534 | 199,482,932 | 207,421,805 | |||||||||||||||
Basic weighted average shares outstanding | 196,451,912 | 206,444,464 | 198,772,260 | 206,459,701 | |||||||||||||||
_______________________
1Non-GAAP measure calculated as revenues less directly related operating expenses attributable to the Company's principal services. See reconciliation on the last page of this release.
During the six month period ended June 30, 2014, the Company repurchased 7,516,397 shares of common stock, net of issuances.
Employee headcount as of June 30 | |||||
2014 | 2013 | ||||
North America | 5,032 | 4,761 | |||
Asia Pacific | 3,826 | 3,881 | |||
Europe and Africa | 2,325 | 2,349 | |||
Middle East and India | 1,229 | 1,213 | |||
Latin America | 725 | 679 | |||
Information Systems | 638 | 628 | |||
Corporate | 307 | 270 | |||
Total | 14,082 | 13,781 | |||
Year-over-year percentage increase in: | ||||||
Airfreight kilos | Ocean freight FEU | |||||
2014 | ||||||
April 2 | 10 | % | 12 | % | ||
May | 5 | % | 10 | % | ||
June | 2 | % | 12 | % | ||
Quarter | 6 | % | 12 | % | ||
_______________________
2Reported on an interim basis on June 10, 2014, Item 7.01 Regulation FD Disclosure on Form 8-K as 8% and subsequently revised to 10% as part of quarter-end review process.
Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 8, 2014 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 18, 2014.
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 ability to grow revenues, maintain margins during periods of pricing volatility, maintain or grow market share in key markets, expand European-based business, maintain or improve operating income as a percentage of net revenue, improve operational processes, leverage operating efficiencies or optimize existing resources, successfully reallocate resources, control costs and headcount, and successfully complete and implement comprehensive strategic reassessment to improve alignment and operations. 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 control costs and 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, foreign exchange rates, regulatory actions or changes or the unpredictable acts of competitors and other risks, risk factors and uncertainties detailed in our Annual Report as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
June 30, 2014 | December 31, 2013 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 970,561 | $ | 1,247,652 | |||
Short-term investments | 86,149 | 26,337 | |||||
Accounts receivable, net | 1,150,531 | 1,073,500 | |||||
Deferred Federal and state income taxes | 19,148 | 18,396 | |||||
Other current assets | 84,081 | 49,384 | |||||
Total current assets | 2,310,470 | 2,415,269 | |||||
Property and equipment, net | 556,228 | 563,064 | |||||
Goodwill | 7,927 | 7,927 | |||||
Other assets, net | 55,315 | 28,552 | |||||
$ | 2,929,940 | $ | 3,014,812 | ||||
Liabilities and Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | 717,141 | 648,156 | |||||
Accrued expenses, primarily salaries and related costs | 220,753 | 200,301 | |||||
Federal, state and foreign income taxes | 24,337 | 21,743 | |||||
Total current liabilities | 962,231 | 870,200 | |||||
Deferred Federal and state income taxes | 70,572 | 58,281 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock; none issued | — | — | |||||
Common stock, par value $0.01 per share. Issued and outstanding 195,036,823 shares at June 30, 2014 and 202,553,220 shares at December 31, 2013 | 1,951 | 2,025 | |||||
Additional paid-in capital | 2,701 | 1,647 | |||||
Retained earnings | 1,893,771 | 2,087,376 | |||||
Accumulated other comprehensive loss | (3,609 | ) | (6,265 | ) | |||
Total shareholders’ equity | 1,894,814 | 2,084,783 | |||||
Noncontrolling interest | 2,323 | 1,548 | |||||
Total equity | 1,897,137 | 2,086,331 | |||||
$ | 2,929,940 | $ | 3,014,812 | ||||
05-August-2014 | Expeditors International of Washington, Inc. | Page 3 of 7 |
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues: | |||||||||||||||
Airfreight services | $ | 667,257 | $ | 642,969 | $ | 1,314,395 | $ | 1,263,343 | |||||||
Ocean freight and ocean services | 536,438 | 492,007 | 1,005,662 | 937,486 | |||||||||||
Customs brokerage and other services | 395,446 | 368,248 | 770,729 | 715,603 | |||||||||||
Total revenues | 1,599,141 | 1,503,224 | 3,090,786 | 2,916,432 | |||||||||||
Operating Expenses: | |||||||||||||||
Airfreight services | 503,213 | 483,016 | 986,095 | 947,935 | |||||||||||
Ocean freight and ocean services | 423,716 | 380,727 | 791,091 | 725,650 | |||||||||||
Customs brokerage and other services | 187,498 | 167,609 | 364,300 | 322,968 | |||||||||||
Salaries and related costs | 260,767 | 255,569 | 516,709 | 503,986 | |||||||||||
Rent and occupancy costs | 25,401 | 24,712 | 50,563 | 48,905 | |||||||||||
Depreciation and amortization | 12,417 | 11,674 | 24,799 | 22,952 | |||||||||||
Selling and promotion | 9,291 | 8,328 | 17,464 | 15,585 | |||||||||||
Other | 34,395 | 28,010 | 62,119 | 56,354 | |||||||||||
Total operating expenses | 1,456,698 | 1,359,645 | 2,813,140 | 2,644,335 | |||||||||||
Operating income | 142,443 | 143,579 | 277,646 | 272,097 | |||||||||||
Other Income (Expense): | |||||||||||||||
Interest income | 2,764 | 3,070 | 5,461 | 6,313 | |||||||||||
Other, net | 3,190 | 4,325 | 2,909 | 5,856 | |||||||||||
Other income, net | 5,954 | 7,395 | 8,370 | 12,169 | |||||||||||
Earnings before income taxes | 148,397 | 150,974 | 286,016 | 284,266 | |||||||||||
Income tax expense | 56,669 | 58,311 | 110,093 | 110,993 | |||||||||||
Net earnings | 91,728 | 92,663 | 175,923 | 173,273 | |||||||||||
Less net earnings attributable to the noncontrolling interest | 426 | 348 | 797 | 643 | |||||||||||
Net earnings attributable to shareholders | $ | 91,302 | $ | 92,315 | $ | 175,126 | $ | 172,630 | |||||||
Diluted earnings attributable to shareholders per share | $ | 0.46 | $ | 0.45 | $ | 0.88 | $ | 0.83 | |||||||
Basic earnings attributable to shareholders per share | $ | 0.46 | $ | 0.45 | $ | 0.88 | $ | 0.84 | |||||||
Dividends declared and paid per common share | $ | 0.32 | $ | 0.30 | $ | 0.32 | $ | 0.30 | |||||||
Weighted average diluted shares outstanding | 197,126,243 | 207,192,534 | 199,482,932 | 207,421,805 | |||||||||||
Weighted average basic shares outstanding | 196,451,912 | 206,444,464 | 198,772,260 | 206,459,701 | |||||||||||
05-August-2014 | Expeditors International of Washington, Inc. | Page 4 of 7 |
EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Activities: | |||||||||||||||
Net earnings | $ | 91,728 | $ | 92,663 | $ | 175,923 | $ | 173,273 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||||||
Provision for losses (recoveries) on accounts receivable | 496 | 100 | (619 | ) | 1,041 | ||||||||||
Deferred income tax expense | 2,891 | 5,818 | 10,085 | 12,940 | |||||||||||
Excess tax benefits from stock plans | (495 | ) | (584 | ) | (984 | ) | (1,683 | ) | |||||||
Stock compensation expense | 11,877 | 11,040 | 22,171 | 22,045 | |||||||||||
Depreciation and amortization | 12,417 | 11,674 | 24,799 | 22,952 | |||||||||||
Other | 68 | 241 | 206 | 449 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Increase in accounts receivable | (84,618 | ) | (48,223 | ) | (72,390 | ) | (9,367 | ) | |||||||
Increase in accounts payable and accrued expenses | 61,377 | 45,080 | 90,923 | 43,690 | |||||||||||
Increase in income taxes payable, net | (47,370 | ) | (33,692 | ) | (29,165 | ) | (15,474 | ) | |||||||
Increase in other current assets | (3,485 | ) | (91 | ) | (2,206 | ) | (576 | ) | |||||||
Net cash from operating activities | 44,886 | 84,026 | 218,743 | 249,290 | |||||||||||
Investing Activities: | |||||||||||||||
Decrease (increase) in short-term investments, net | 342 | (89,803 | ) | (59,812 | ) | (89,765 | ) | ||||||||
Purchase of property and equipment | (9,635 | ) | (17,141 | ) | (18,395 | ) | (27,209 | ) | |||||||
Escrow deposit for land acquisition | (27,101 | ) | — | (27,101 | ) | — | |||||||||
Other, net | (1,536 | ) | 1,264 | 134 | 820 | ||||||||||
Net cash from investing activities | (37,930 | ) | (105,680 | ) | (105,174 | ) | (116,154 | ) | |||||||
Financing Activities: | |||||||||||||||
Proceeds from issuance of common stock | 22,125 | 7,548 | 30,017 | 18,477 | |||||||||||
Repurchases of common stock | (131,391 | ) | (21,600 | ) | (358,116 | ) | (39,281 | ) | |||||||
Excess tax benefits from stock plans | 495 | 584 | 984 | 1,683 | |||||||||||
Dividends paid | (62,807 | ) | (61,899 | ) | (62,807 | ) | (61,899 | ) | |||||||
Purchase of noncontrolling interest | — | — | — | (7,730 | ) | ||||||||||
Distribution to noncontrolling interest | — | — | (85 | ) | — | ||||||||||
Net cash from financing activities | (171,578 | ) | (75,367 | ) | (390,007 | ) | (88,750 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 4,137 | (11,557 | ) | (653 | ) | (19,119 | ) | ||||||||
(Decrease) increase in cash and cash equivalents | (160,485 | ) | (108,578 | ) | (277,091 | ) | 25,267 | ||||||||
Cash and cash equivalents at beginning of period | 1,131,046 | 1,394,687 | 1,247,652 | 1,260,842 | |||||||||||
Cash and cash equivalents at end of period | $ | 970,561 | $ | 1,286,109 | $ | 970,561 | $ | 1,286,109 | |||||||
Taxes paid: | |||||||||||||||
Income taxes | $ | 105,963 | $ | 85,195 | $ | 133,459 | $ | 112,146 | |||||||
05-August-2014 | Expeditors International of Washington, Inc. | Page 5 of 7 |
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 June 30, 2014: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 416,454 | 55,343 | 22,003 | 780,834 | 244,642 | 79,865 | — | 1,599,141 | |||||||||||||||
Transfers between geographic areas | 22,408 | 2,587 | 5,567 | 12,393 | 9,468 | 5,238 | (57,661 | ) | — | |||||||||||||||
Total revenues | $ | 438,862 | 57,930 | 27,570 | 793,227 | 254,110 | 85,103 | (57,661 | ) | 1,599,141 | ||||||||||||||
Net revenues | $ | 200,106 | 25,533 | 16,648 | 138,445 | 78,638 | 25,344 | — | 484,714 | |||||||||||||||
Operating income | $ | 59,780 | 7,001 | 4,676 | 51,436 | 14,219 | 5,331 | — | 142,443 | |||||||||||||||
Identifiable assets | $ | 1,328,312 | 110,498 | 57,588 | 743,190 | 511,149 | 173,425 | 5,778 | 2,929,940 | |||||||||||||||
Capital expenditures | $ | 5,547 | 422 | 171 | 1,907 | 1,262 | 326 | — | 9,635 | |||||||||||||||
Depreciation and amortization | $ | 7,879 | 296 | 227 | 2,108 | 1,471 | 436 | — | 12,417 | |||||||||||||||
Equity | $ | 1,044,386 | 72,681 | 35,578 | 481,899 | 204,952 | 94,390 | (36,749 | ) | 1,897,137 | ||||||||||||||
Three months ended June 30, 2013: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 395,495 | 56,626 | 21,421 | 749,282 | 206,020 | 74,380 | — | 1,503,224 | |||||||||||||||
Transfers between geographic areas | 23,217 | 2,516 | 5,614 | 11,605 | 9,189 | 4,559 | (56,700 | ) | — | |||||||||||||||
Total revenues | $ | 418,712 | 59,142 | 27,035 | 760,887 | 215,209 | 78,939 | (56,700 | ) | 1,503,224 | ||||||||||||||
Net revenues | $ | 193,509 | 25,440 | 15,522 | 141,439 | 71,068 | 24,894 | — | 471,872 | |||||||||||||||
Operating income | $ | 58,310 | 7,887 | 4,601 | 54,781 | 11,613 | 6,387 | — | 143,579 | |||||||||||||||
Identifiable assets | $ | 1,531,739 | 101,721 | 53,795 | 809,827 | 418,077 | 155,058 | (6,552 | ) | 3,063,665 | ||||||||||||||
Capital expenditures | $ | 4,354 | 708 | 145 | 11,056 | 563 | 315 | — | 17,141 | |||||||||||||||
Depreciation and amortization | $ | 7,276 | 197 | 229 | 1,983 | 1,550 | 439 | — | 11,674 | |||||||||||||||
Equity | $ | 1,209,762 | 65,897 | 33,272 | 606,793 | 166,891 | 75,418 | (36,091 | ) | 2,121,942 | ||||||||||||||
Six months ended June 30, 2014: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 817,193 | 106,927 | 42,632 | 1,495,218 | 472,150 | 156,666 | — | 3,090,786 | |||||||||||||||
Transfers between geographic areas | 42,419 | 4,962 | 10,771 | 24,402 | 18,425 | 10,100 | (111,079 | ) | — | |||||||||||||||
Total revenues | $ | 859,612 | 111,889 | 53,403 | 1,519,620 | 490,575 | 166,766 | (111,079 | ) | 3,090,786 | ||||||||||||||
Net revenues | $ | 392,188 | 51,694 | 32,005 | 271,719 | 151,695 | 49,999 | — | 949,300 | |||||||||||||||
Operating income | $ | 111,678 | 15,376 | 9,535 | 104,277 | 25,285 | 11,495 | — | 277,646 | |||||||||||||||
Identifiable assets | $ | 1,328,312 | 110,498 | 57,588 | 743,190 | 511,149 | 173,425 | 5,778 | 2,929,940 | |||||||||||||||
Capital expenditures | $ | 9,475 | 686 | 472 | 5,033 | 2,114 | 615 | — | 18,395 | |||||||||||||||
Depreciation and amortization | $ | 15,731 | 576 | 439 | 4,216 | 2,963 | 874 | — | 24,799 | |||||||||||||||
Equity | $ | 1,044,386 | 72,681 | 35,578 | 481,899 | 204,952 | 94,390 | (36,749 | ) | 1,897,137 | ||||||||||||||
Six months ended June 30, 2013: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 769,869 | 108,355 | 41,285 | 1,443,419 | 408,533 | 144,971 | — | 2,916,432 | |||||||||||||||
Transfers between geographic areas | 43,243 | 5,060 | 10,490 | 22,235 | 18,069 | 8,886 | (107,983 | ) | — | |||||||||||||||
Total revenues | $ | 813,112 | 113,415 | 51,775 | 1,465,654 | 426,602 | 153,857 | (107,983 | ) | 2,916,432 | ||||||||||||||
Net revenues | $ | 373,852 | 49,221 | 29,933 | 276,989 | 141,682 | 48,202 | — | 919,879 | |||||||||||||||
Operating income | $ | 105,663 | 14,499 | 8,690 | 107,665 | 23,539 | 12,041 | — | 272,097 | |||||||||||||||
Identifiable assets | $ | 1,531,739 | 101,721 | 53,795 | 809,827 | 418,077 | 155,058 | (6,552 | ) | 3,063,665 | ||||||||||||||
Capital expenditures | $ | 9,733 | 895 | 404 | 13,608 | 1,761 | 808 | — | 27,209 | |||||||||||||||
Depreciation and amortization | $ | 14,033 | 404 | 470 | 3,971 | 3,179 | 895 | — | 22,952 | |||||||||||||||
Equity | $ | 1,209,762 | 65,897 | 33,272 | 606,793 | 166,891 | 75,418 | (36,091 | ) | 2,121,942 | ||||||||||||||
05-August-2014 | Expeditors International of Washington, Inc. | Page 6 of 7 |
Net Revenues (Non-GAAP measure)
We commonly refer to the term “net revenues” when commenting about our Company and the results of its operations. Net revenues are a Non-GAAP measure calculated as revenues less directly related operations expenses attributable to the Company's principal services. We believe that net revenues are a better measure than are total revenues when analyzing and discussing our effectiveness in managing our principal services since total revenues earned as a freight consolidator must consider the carriers' charges to us for carrying the shipment, whereas revenues earned in other capacities include primarily the commissions and fees earned by us. Net revenue is one of our primary operational and financial measures and demonstrates our ability to concentrate and leverage purchasing power through effective consolidation of shipments from customers utilizing a variety of transportation carriers and optimal routings. Using net revenues also provides a commonality for comparison among various services. The following table presents the calculation of net revenues.
Three months ended | Six months ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(in thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Total revenues | $ | 1,599,141 | $ | 1,503,224 | $ | 3,090,786 | $ | 2,916,432 | |||||||
Expenses: | |||||||||||||||
Airfreight services | 503,213 | 483,016 | 986,095 | 947,935 | |||||||||||
Ocean freight and ocean services | 423,716 | 380,727 | 791,091 | 725,650 | |||||||||||
Customs brokerage and other services | 187,498 | 167,609 | 364,300 | 322,968 | |||||||||||
Net revenues | $ | 484,714 | $ | 471,872 | $ | 949,300 | $ | 919,879 | |||||||
05-August-2014 | Expeditors International of Washington, Inc. | Page 7 of 7 |