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| 8-K - FORM 8-K - EXPEDITORS INTERNATIONAL OF WASHINGTON INC | a2q2011er8-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 Chief Financial Officer
(206) 674-3427 (206) 674-3412
FOR IMMEDIATE RELEASE
_____________________________________________________________________________________________
EXPEDITORS REPORTS RECORD SECOND QUARTER 2011 EPS OF $.44 PER SHARE 1
SEATTLE, WASHINGTON - August 2, 2011, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced record net earnings attributable to shareholders of $95,000,000 for the second quarter of 2011, as compared with $90,318,000 for the same quarter of 2010, an increase of 5%. Net revenues for the second quarter of 2011 increased 13% to $472,561,000 as compared with $418,858,000 reported for the second quarter of 2010. Total revenues and operating income were $1,581,368,000 and $152,275,000 in 2011, as compared with $1,516,770,000 and $138,496,000 for the same quarter of 2010, increases of 4% and 10%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $.44, as compared with $.42 for the same quarter in 2010, an increase of 5%.
For the six months ended June 30, 2011, net earnings attributable to shareholders was $186,232,000, as compared with $151,565,000 in 2010, an increase of 23%. Net revenues for the six months increased to $926,476,000 from $780,681,000 for 2010, up 19%. Total revenues and operating income for the six months were $3,042,216,000 and $299,505,000 in 2011, as compared with $2,717,879,000 and $239,037,000 for the same period in 2010, increases of 12% and 25%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2011 were $.86, as compared with $.70 for the same period of 2010, an increase of 23%.
“We knew that the 2011 second quarter would be challenging, at least from a 'last year's triumph is this year's hurdle' perspective. Despite this 'hurdle', our 2011 second quarter operating income growth shows that we executed well, particularly given all the factors currently in play,” said Peter J. Rose, Chairman and Chief Executive Officer. “We didn't have some of the non-operating windfalls that benefited the 2010 second quarter, but these sound operating results reflect the solid execution in very dynamic ocean and airfreight markets and even in the more staid customs brokerage arena that has become our hallmark. Significantly, operating income as a percentage of net revenue remained above 32% for the fifth consecutive quarter. We may not be able to control the direction of the wind in the overall market, but we think we've demonstrated over time that our ability to safely navigate the churning oceans is all in how we set our sails,” Rose went on to say.
“Even with the global economic and political storms swirling around us, we must ultimately accept that we are 'the captains of our own destiny.' Being Resolute is one of our key cultural attributes and it has served us well in the past 30 years as we've endured a myriad of challenges. Being Resolute means we choose the path that adds long-term value to Expeditors, in tough times or in good times," Rose continued. "We will focus on attracting and retaining the best and brightest people, without whose dedicated efforts we wouldn't be where we are. We're grateful for their contributions and express that gratitude by investing in them and in their careers. The efficiencies gained from investments in our information technology systems and productivity initiatives continues to pay off for us, and we'll continue those as well. Putting our people and their productivity first allows us to better serve our customers' needs. The exciting thing about our business model is that we can't add value to Expeditors without adding value to our customers' supply chain. That's the way we create satisfied customers and that's the way we grow market share,” Rose concluded.
Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 185 full-service offices, 64 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.
________________________
1 Diluted earnings attributable to shareholders per share.
NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.
Expeditors International of Washington, Inc.
2nd Quarter 2011 Earnings Release, August 2, 2011
Financial Highlights for the Three and Six months ended June 30, 2011 and 2010 (Unaudited)
(in 000's of US dollars except share data)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2011 | 2010 | % Increase | 2011 | 2010 | % Increase | ||||||||||||||
Revenues | $ | 1,581,368 | $ | 1,516,770 | 4% | $ | 3,042,216 | $ | 2,717,879 | 12% | |||||||||
Net revenues | $ | 472,561 | $ | 418,858 | 13% | $ | 926,476 | $ | 780,681 | 19% | |||||||||
Operating income | $ | 152,275 | $ | 138,496 | 10% | $ | 299,505 | $ | 239,037 | 25% | |||||||||
Net earnings attributable to shareholders | $ | 95,000 | $ | 90,318 | 5% | $ | 186,232 | $ | 151,565 | 23% | |||||||||
Diluted earnings attributable to shareholders | $ | .44 | $ | .42 | 5% | $ | .86 | $ | .70 | 23% | |||||||||
Basic earnings attributable to shareholders | $ | .45 | $ | .43 | 5% | $ | .88 | $ | .71 | 24% | |||||||||
Diluted weighted average shares outstanding | 215,659,043 | 216,460,977 | 215,780,230 | 216,576,596 | |||||||||||||||
Basic weighted average shares outstanding | 212,136,164 | 212,332,375 | 212,112,643 | 212,262,928 | |||||||||||||||
Employee headcount as of June 30, | |||||
2011 | 2010 | ||||
North America | 4,528 | 4,227 | |||
Asia Pacific | 4,053 | 3,753 | |||
Europe and Africa | 2,168 | 1,975 | |||
Middle East | 1,222 | 1,109 | |||
South America | 625 | 583 | |||
Information Systems | 551 | 569 | |||
Corporate | 212 | 190 | |||
Total | 13,359 | 12,406 | |||
Year-over-year percentage increase (decrease) in: | ||||||
Airfreight kilos | Ocean freight FEU | |||||
2011 | ||||||
April | 8 | % | 6 | % | ||
May | (6 | )% | 1 | % | ||
June | (5 | )% | (7 | )% | ||
Quarter | (1 | )% | — | % | ||
During the second quarter of 2011, the Company opened one full-service office in Chengdu, People's Republic of China (formerly a satellite of Chongqing, People's Republic of China).
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 August 5, 2011 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about August 19, 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, ability to grow market share, global economic and political uncertainty, ability to attract and retain the best and brightest people, ability to gain efficiencies from investments in information technology, and our ability to help customers navigate through dynamic ocean and airfreight markets. 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 actions or 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)
June 30, 2011 | December 31, 2010 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,225,830 | $ | 1,084,465 | |||
Short-term investments | 1,071 | 524 | |||||
Accounts receivable, net | 1,028,015 | 1,003,884 | |||||
Deferred Federal and state income taxes | 9,469 | 8,706 | |||||
Other current assets | 48,657 | 42,776 | |||||
Total current assets | 2,313,042 | 2,140,355 | |||||
Property and equipment, net | 523,400 | 498,648 | |||||
Goodwill, net | 7,927 | 7,927 | |||||
Other intangibles, net | 3,159 | 3,716 | |||||
Other assets, net | 30,476 | 28,533 | |||||
$ | 2,878,004 | $ | 2,679,179 | ||||
Liabilities and Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | 688,854 | 652,161 | |||||
Accrued expenses, primarily salaries and related costs | 196,813 | 177,869 | |||||
Federal, state and foreign income taxes | 35,858 | 31,948 | |||||
Total current liabilities | 921,525 | 861,978 | |||||
Deferred Federal and state income taxes | 77,329 | 69,047 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock; none issued | — | — | |||||
Common stock, par value $.01 per share. Issued and outstanding 211,992,082 shares at June 30, 2011 and 212,047,774 shares at December 31, 2010 | 2,120 | 2,120 | |||||
Additional paid-in capital | 2,698 | 13,412 | |||||
Retained earnings | 1,844,771 | 1,717,249 | |||||
Accumulated other comprehensive income | 22,459 | 8,125 | |||||
Total shareholders’ equity | 1,872,048 | 1,740,906 | |||||
Noncontrolling interest | 7,102 | 7,248 | |||||
Total equity | 1,879,150 | 1,748,154 | |||||
$ | 2,878,004 | $ | 2,679,179 | ||||
2-August-2011 Expeditors International of Washington, Inc. Page 3 of 6
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, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Revenues: | |||||||||||||||
Airfreight services | $ | 749,861 | $ | 732,881 | $ | 1,450,784 | $ | 1,292,264 | |||||||
Ocean freight and ocean services | 486,831 | 493,613 | 926,972 | 874,857 | |||||||||||
Customs brokerage and other services | 344,676 | 290,276 | 664,460 | 550,758 | |||||||||||
Total revenues | 1,581,368 | 1,516,770 | 3,042,216 | 2,717,879 | |||||||||||
Operating Expenses: | |||||||||||||||
Airfreight consolidation | 576,280 | 571,023 | 1,100,916 | 998,365 | |||||||||||
Ocean freight consolidation | 377,805 | 400,729 | 717,354 | 701,819 | |||||||||||
Customs brokerage and other services | 154,722 | 126,160 | 297,470 | 237,014 | |||||||||||
Salaries and related costs | 249,114 | 221,105 | 486,929 | 420,953 | |||||||||||
Rent and occupancy costs | 21,354 | 18,699 | 42,735 | 37,926 | |||||||||||
Depreciation and amortization | 9,257 | 9,110 | 18,431 | 18,505 | |||||||||||
Selling and promotion | 10,022 | 7,550 | 19,185 | 14,585 | |||||||||||
Other | 30,539 | 23,898 | 59,691 | 49,675 | |||||||||||
Total operating expenses | 1,429,093 | 1,378,274 | 2,742,711 | 2,478,842 | |||||||||||
Operating income | 152,275 | 138,496 | 299,505 | 239,037 | |||||||||||
Interest income | 2,312 | 1,484 | 4,632 | 3,259 | |||||||||||
Interest expense | (229 | ) | (151 | ) | (443 | ) | (238 | ) | |||||||
Other, net | 857 | 10,288 | 1,974 | 10,897 | |||||||||||
Other income, net | 2,940 | 11,621 | 6,163 | 13,918 | |||||||||||
Earnings before income taxes | 155,215 | 150,117 | 305,668 | 252,955 | |||||||||||
Income tax expense | 60,195 | 59,708 | 119,441 | 101,236 | |||||||||||
Net earnings | 95,020 | 90,409 | 186,227 | 151,719 | |||||||||||
Less: net earnings (losses) attributable to the noncontrolling interest | 20 | 91 | (5 | ) | 154 | ||||||||||
Net earnings attributable to shareholders | $ | 95,000 | $ | 90,318 | $ | 186,232 | $ | 151,565 | |||||||
Diluted earnings attributable to shareholders per share | $ | .44 | $ | .42 | $ | .86 | $ | .70 | |||||||
Basic earnings attributable to shareholders per share | $ | .45 | $ | .43 | $ | .88 | $ | .71 | |||||||
Dividends declared and paid per common share | $ | .25 | $ | .20 | $ | .25 | $ | .20 | |||||||
Weighted average diluted shares outstanding | 215,659,043 | 216,460,977 | 215,780,230 | 216,576,596 | |||||||||||
Weighted average basic shares outstanding | 212,136,164 | 212,332,375 | 212,112,643 | 212,262,928 | |||||||||||
2-August-2011 Expeditors International of Washington, Inc. Page 4 of 6
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, | ||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating Activities: | |||||||||||||||
Net earnings | $ | 95,020 | $ | 90,409 | $ | 186,227 | $ | 151,719 | |||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||
Provision for losses on accounts receivable | (63 | ) | (618 | ) | 1,790 | 1,825 | |||||||||
Deferred income tax expense (benefit) | 1,601 | 10,814 | (335 | ) | 3,086 | ||||||||||
Excess tax benefits from stock plans | (2,285 | ) | (4,107 | ) | (4,531 | ) | (8,119 | ) | |||||||
Stock compensation expense | 10,236 | 11,003 | 20,708 | 22,201 | |||||||||||
Depreciation and amortization | 9,257 | 9,110 | 18,431 | 18,505 | |||||||||||
Gain on sale of assets | (21 | ) | (109 | ) | (51 | ) | (404 | ) | |||||||
Other | 311 | 367 | 618 | 845 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Increase in accounts receivable | (14,173 | ) | (219,602 | ) | (7,490 | ) | (232,567 | ) | |||||||
Decrease in other current assets | 3,896 | 2,947 | 2,481 | 1,136 | |||||||||||
Increase in accounts payable and accrued expenses | 7,943 | 121,941 | 38,130 | 165,110 | |||||||||||
(Decrease) increase in income taxes payable, net | (33,665 | ) | (1,609 | ) | (88 | ) | 24,332 | ||||||||
Net cash provided by operating activities | 78,057 | 20,546 | 255,890 | 147,669 | |||||||||||
Investing Activities: | |||||||||||||||
(Increase) decrease in short-term investments | (449 | ) | 6 | (538 | ) | (30 | ) | ||||||||
Purchase of property and equipment | (17,110 | ) | (8,118 | ) | (38,235 | ) | (15,700 | ) | |||||||
Proceeds from sale of property and equipment | 42 | 111 | 85 | 170 | |||||||||||
Other | (64 | ) | (707 | ) | (1,506 | ) | (895 | ) | |||||||
Net cash used in investing activities | (17,581 | ) | (8,708 | ) | (40,194 | ) | (16,455 | ) | |||||||
Financing Activities: | |||||||||||||||
Proceeds from issuance of common stock | 15,821 | 11,020 | 23,625 | 23,240 | |||||||||||
Repurchases of common stock | (45,690 | ) | (53,649 | ) | (65,274 | ) | (71,668 | ) | |||||||
Excess tax benefits from stock plans | 2,285 | 4,107 | 4,531 | 8,119 | |||||||||||
Dividends paid | (53,014 | ) | (42,397 | ) | (53,014 | ) | (42,397 | ) | |||||||
Net cash used in financing activities | (80,598 | ) | (80,919 | ) | (90,132 | ) | (82,706 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 7,481 | (12,267 | ) | 15,801 | (14,137 | ) | |||||||||
(Decrease) increase in cash and cash equivalents | (12,641 | ) | (81,348 | ) | 141,365 | 34,371 | |||||||||
Cash and cash equivalents at beginning of period | 1,238,471 | 1,041,648 | 1,084,465 | 925,929 | |||||||||||
Cash and cash equivalents at end of period | $ | 1,225,830 | $ | 960,300 | $ | 1,225,830 | $ | 960,300 | |||||||
Interest and taxes paid: | |||||||||||||||
Interest | $ | 13 | $ | 35 | $ | 17 | $ | 44 | |||||||
Income taxes | 91,035 | 56,846 | 117,311 | 76,842 | |||||||||||
2-August-2011 Expeditors International of Washington, Inc. Page 5 of 6
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, 2011: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 390,806 | 47,816 | 21,136 | 816,350 | 229,724 | 75,536 | — | 1,581,368 | |||||||||||||||
Transfers between geographic areas | 25,973 | 2,783 | 5,220 | 10,170 | 11,355 | 4,500 | (60,001 | ) | — | |||||||||||||||
Total revenues | $ | 416,779 | 50,599 | 26,356 | 826,520 | 241,079 | 80,036 | (60,001 | ) | 1,581,368 | ||||||||||||||
Net revenues | $ | 181,603 | 21,581 | 15,157 | 150,616 | 78,828 | 24,776 | — | 472,561 | |||||||||||||||
Operating income | $ | 57,752 | 5,761 | 4,486 | 61,542 | 16,877 | 5,857 | — | 152,275 | |||||||||||||||
Identifiable assets | $ | 1,411,881 | 91,678 | 58,396 | 678,668 | 479,852 | 155,503 | 2,026 | 2,878,004 | |||||||||||||||
Capital expenditures | $ | 3,350 | 448 | 144 | 4,622 | 7,881 | 665 | — | 17,110 | |||||||||||||||
Depreciation and amortization | $ | 4,926 | 277 | 264 | 1,847 | 1,416 | 527 | — | 9,257 | |||||||||||||||
Equity | $ | 1,123,482 | 52,814 | 33,784 | 420,962 | 184,252 | 94,447 | (30,591 | ) | 1,879,150 | ||||||||||||||
Three months ended June 30, 2010: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 331,619 | 41,675 | 18,621 | 876,070 | 172,869 | 75,916 | — | 1,516,770 | |||||||||||||||
Transfers between geographic areas | 25,429 | 2,346 | 4,231 | 8,158 | 10,429 | 3,894 | (54,487 | ) | — | |||||||||||||||
Total revenues | $ | 357,048 | 44,021 | 22,852 | 884,228 | 183,298 | 79,810 | (54,487 | ) | 1,516,770 | ||||||||||||||
Net revenues | $ | 163,036 | 19,424 | 12,729 | 137,328 | 64,054 | 22,287 | — | 418,858 | |||||||||||||||
Operating income | $ | 52,516 | 5,572 | 3,787 | 56,134 | 14,888 | 5,599 | — | 138,496 | |||||||||||||||
Identifiable assets | $ | 1,324,522 | 85,645 | 46,951 | 553,173 | 394,430 | 134,715 | 7,106 | 2,546,542 | |||||||||||||||
Capital expenditures | $ | 3,366 | 149 | 357 | 1,424 | 2,231 | 591 | — | 8,118 | |||||||||||||||
Depreciation and amortization | $ | 4,848 | 353 | 211 | 1,861 | 1,225 | 612 | — | 9,110 | |||||||||||||||
Equity | $ | 1,047,968 | 46,978 | 22,232 | 338,102 | 134,216 | 77,541 | (32,229 | ) | 1,634,808 | ||||||||||||||
UNITED STATES | OTHER NORTH AMERICA | LATIN AMERICA | ASIA PACIFIC | EUROPE and AFRICA | MIDDLE EAST and INDIA | ELIMI- NATIONS | CONSOLI- DATED | |||||||||||||||||
Six months ended June 30, 2011: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 767,911 | 91,663 | 41,469 | 1,544,480 | 443,335 | 153,358 | — | 3,042,216 | |||||||||||||||
Transfers between geographic areas | 49,938 | 5,465 | 10,841 | 19,353 | 22,062 | 8,709 | (116,368 | ) | — | |||||||||||||||
Total revenues | $ | 817,849 | 97,128 | 52,310 | 1,563,833 | 465,397 | 162,067 | (116,368 | ) | 3,042,216 | ||||||||||||||
Net revenues | $ | 359,537 | 42,282 | 30,260 | 292,104 | 152,753 | 49,540 | — | 926,476 | |||||||||||||||
Operating income | $ | 111,486 | 11,550 | 9,249 | 120,980 | 34,584 | 11,656 | — | 299,505 | |||||||||||||||
Identifiable assets | $ | 1,411,881 | 91,678 | 58,396 | 678,668 | 479,852 | 155,503 | 2,026 | 2,878,004 | |||||||||||||||
Capital expenditures | $ | 7,380 | 608 | 300 | 9,334 | 19,587 | 1,026 | — | 38,235 | |||||||||||||||
Depreciation and amortization | $ | 9,911 | 580 | 533 | 3,816 | 2,526 | 1,065 | — | 18,431 | |||||||||||||||
Equity | $ | 1,123,482 | 52,814 | 33,784 | 420,962 | 184,252 | 94,447 | (30,591 | ) | 1,879,150 | ||||||||||||||
Six months ended June 30, 2010: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 618,555 | 77,287 | 34,917 | 1,513,258 | 334,714 | 139,148 | — | 2,717,879 | |||||||||||||||
Transfers between geographic areas | 44,172 | 4,155 | 7,892 | 15,268 | 18,362 | 7,470 | (97,319 | ) | — | |||||||||||||||
Total revenues | $ | 662,727 | 81,442 | 42,809 | 1,528,526 | 353,076 | 146,618 | (97,319 | ) | 2,717,879 | ||||||||||||||
Net revenues | $ | 309,941 | 35,846 | 24,247 | 244,437 | 123,977 | 42,233 | — | 780,681 | |||||||||||||||
Operating income | $ | 90,690 | 9,471 | 7,318 | 94,892 | 26,742 | 9,924 | — | 239,037 | |||||||||||||||
Identifiable assets | $ | 1,324,522 | 85,645 | 46,951 | 553,173 | 394,430 | 134,715 | 7,106 | 2,546,542 | |||||||||||||||
Capital expenditures | $ | 7,840 | 325 | 634 | 2,114 | 3,452 | 1,335 | — | 15,700 | |||||||||||||||
Depreciation and amortization | $ | 9,870 | 706 | 416 | 3,757 | 2,537 | 1,219 | — | 18,505 | |||||||||||||||
Equity | $ | 1,047,968 | 46,978 | 22,232 | 338,102 | 134,216 | 77,541 | (32,229 | ) | 1,634,808 | ||||||||||||||
2-August-2011 Expeditors International of Washington, Inc. Page 6 of 6