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| 8-K - EXPEDITORS INTERNATIONAL OF WASHINGTON INC | a20122qer8-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 2012 EPS OF $.39 PER SHARE 1
SEATTLE, WASHINGTON - August 7, 2012, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $83,955,000 for the second quarter of 2012, as compared with $95,000,000 for the same quarter of 2011, a decrease of (12)%. Net revenues for the second quarter of 2012 decreased (4)% to $453,651,000 as compared with $472,561,000 reported for the second quarter of 2011. Total revenues and operating income were $1,504,952,000 and $132,403,000 in the second quarter of 2012, as compared with $1,581,368,000 and $152,275,000 for the same quarter of 2011, decreases of (5)% and (13)%, respectively. Diluted net earnings attributable to shareholders per share for the second quarter were $.39, as compared with $.44 for the same quarter in 2011, a decrease of (11)%.
For the six months ended June 30, 2012, net earnings attributable to shareholders was $160,662,000, as compared with $186,232,000 in 2011, a decrease of (14)%. Net revenues for the six months decreased to $900,222,000 from $926,476,000 for 2011, down (3)%. Total revenues and operating income for the six months were $2,916,322,000 and $257,674,000 in 2012, as compared with $3,042,216,000 and $299,505,000 for the same period in 2011, decreases of (4)% and (14)%, respectively. Diluted net earnings attributable to shareholders per share for the first two quarters of 2012 were $0.75, as compared with $0.86 for the same period of 2011, a decrease of (13)%.
“The same market trends we experienced during our 2012 first quarter, as we suggested at the time, continued into the second quarter. That said, we saw volume growth in all areas of our business with the exception of airfreight, despite navigating in what people are finally acknowledging is a very challenging and uncertain global economy,” said Peter J. Rose, Chairman and Chief Executive Officer. “Ocean freight yields dipped, sequentially, as is typical of the second quarter, due to the time lag between when carrier rate increases during annual May contract negotiations are commercially implemented and on a year-over-year basis, reflecting the magnitude of this years' buy rate increases, as carriers moved aggressively to stabilize their precarious financial situation. This was mitigated somewhat by 7% net revenue growth in our direct ocean forwarding product. In spite of flat shipment counts, we continued to experience similar year-over-year trends with respect to airfreight tonnage (smaller shipments, diminished global airfreight demand, lower levels of customer specific infrastructure and projects) that we highlighted in our 2012 first quarter release. Customs brokerage and other services, posted positive growth in net revenue, primarily due to the contributions from our continued international roll out of our domestic time definite product, Transcon services,” Rose continued.
“We remain focused on controlling the parts of our business which have the greatest immediate impact to our stakeholders: our customers; our shareholders; and ultimately our people. That includes focusing on customer retention and profitable market share expansion. While our operating margin (29.2% based on net revenue) hovers below the mark we've enjoyed the last two years (average of 32%), it still remains very healthy from both a competitive and a historical perspective,” Rose went on to say. “Very importantly, our cash position and strong operating cash flow have allowed us to continue to pursue our strategic investments, particularly in customer service proficiency and in productivity enhancements via both information system and process engineering solutions. We also bought back just over 2 million shares of stock during the quarter. Expeditors was founded in tough times and we've been through plenty of them since our founding. Being able to get through tough times without letting tough times get through us is deeply embedded in our DNA. Until there is more certainty in the global economy, these trends could continue for the short to medium term. Regardless of what happens, it won't change who we are and what we do for our stakeholders. We continue to be grateful for the resilience of our people, their dedication to our customers and our culture which recognizes, reinforces and rewards the key to our long-term success being tied to servicing our customers. These tough times too will pass and it should go without saying, at the end of the day, we'd rather be us, than anyone else inside or outside this industry,” Rose concluded.
Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 185 full-service offices and 65 satellite locations 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, domestic time definite services 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.
Second Quarter 2012 Earnings Release, August 7, 2012
Financial Highlights for the Three and Six months ended June 30, 2012 and 2011 (Unaudited)
(in 000's of US dollars except share data)
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2012 | 2011 | % Decrease | 2012 | 2011 | % Increase | ||||||||||||||
Revenues | $ | 1,504,952 | $ | 1,581,368 | (5)% | $ | 2,916,322 | $ | 3,042,216 | (4)% | |||||||||
Net revenues | $ | 453,651 | $ | 472,561 | (4)% | $ | 900,222 | $ | 926,476 | (3)% | |||||||||
Operating income | $ | 132,403 | $ | 152,275 | (13)% | $ | 257,674 | $ | 299,505 | (14)% | |||||||||
Net earnings attributable to shareholders | $ | 83,955 | $ | 95,000 | (12)% | $ | 160,662 | $ | 186,232 | (14)% | |||||||||
Diluted earnings attributable to shareholders | $ | .39 | $ | .44 | (11)% | $ | .75 | $ | .86 | (13)% | |||||||||
Basic earnings attributable to shareholders | $ | .40 | $ | .45 | (11)% | $ | .76 | $ | .88 | (14)% | |||||||||
Diluted weighted average shares outstanding | 213,212,912 | 215,659,043 | 213,683,587 | 215,780,230 | |||||||||||||||
Basic weighted average shares outstanding | 211,724,082 | 212,136,164 | 211,910,872 | 212,112,643 | |||||||||||||||
Employee headcount as of June 30, | |||||
2012 | 2011 | ||||
North America | 4,764 | 4,528 | |||
Asia Pacific | 3,979 | 4,053 | |||
Europe and Africa | 2,308 | 2,168 | |||
Middle East | 1,249 | 1,222 | |||
South America | 660 | 625 | |||
Information Systems | 577 | 551 | |||
Corporate | 243 | 212 | |||
Total | 13,780 | 13,359 | |||
Year-over-year percentage increase (decrease) in: | ||||||
Airfreight kilos | Ocean freight FEU | |||||
2012 | ||||||
April | (17 | )% | (1 | )% | ||
May | (7 | )% | 1 | % | ||
June | (6 | )% | 3 | % | ||
Quarter | (10 | )% | 1 | % | ||
During the second quarter of 2012, the Company opened one full service office in Montevideo, Uruguay, opened one satellite office in Xuzhou, China and closed one full service office in Colombo, Sri Lanka. The Company also transitioned its Tampa, Florida office from a full service office to a satellite office of its full-service office in Orlando, Florida and merged its satellite office in Adana, Turkey with its nearby full-service office in Mersin, Turkey.
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 trends in the global economy and duration of these trends, future air and ocean volume levels; ability to retain customers, expand profitable market share, maintain operating margins and cash flows, achieve productivity enhancements in information systems and process engineering and expansion of domestic time definite product Transcon services. 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 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, 2012 | December 31, 2011 | ||||||
Assets | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 1,364,247 | $ | 1,294,356 | |||
Short-term investments | 376 | 472 | |||||
Accounts receivable, net | 983,131 | 934,752 | |||||
Deferred Federal and state income taxes | 10,234 | 10,415 | |||||
Other current assets | 47,409 | 46,888 | |||||
Total current assets | 2,405,397 | 2,286,883 | |||||
Property and equipment, net | 546,754 | 538,806 | |||||
Goodwill and other intangibles, net | 10,003 | 10,557 | |||||
Other assets, net | 30,218 | 30,581 | |||||
$ | 2,992,372 | $ | 2,866,827 | ||||
Liabilities and Equity | |||||||
Current Liabilities: | |||||||
Accounts payable | 672,836 | 606,628 | |||||
Accrued expenses, primarily salaries and related costs | 184,114 | 169,445 | |||||
Federal, state and foreign income taxes | 25,948 | 20,072 | |||||
Total current liabilities | 882,898 | 796,145 | |||||
Deferred Federal and state income taxes | 59,417 | 60,613 | |||||
Commitments and contingencies | |||||||
Shareholders’ Equity: | |||||||
Preferred stock; none issued | — | — | |||||
Common stock, par value $.01 per share; issued and outstanding 210,503,675 shares at June 30, 2012 and 212,003,662 shares at December 31, 2011 | 2,105 | 2,120 | |||||
Additional paid-in capital | 1,013 | 13,260 | |||||
Retained earnings | 2,044,682 | 1,991,222 | |||||
Accumulated other comprehensive loss | (4,345 | ) | (2,964 | ) | |||
Total shareholders’ equity | 2,043,455 | 2,003,638 | |||||
Noncontrolling interest | 6,602 | 6,431 | |||||
Total equity | 2,050,057 | 2,010,069 | |||||
$ | 2,992,372 | $ | 2,866,827 | ||||
07-August-2012 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, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Airfreight services | $ | 638,541 | $ | 749,861 | $ | 1,277,453 | $ | 1,450,784 | |||||||
Ocean freight and ocean services | 518,998 | 486,831 | 953,334 | 926,972 | |||||||||||
Customs brokerage and other services | 347,413 | 344,676 | 685,535 | 664,460 | |||||||||||
Total revenues | 1,504,952 | 1,581,368 | 2,916,322 | 3,042,216 | |||||||||||
Operating Expenses: | |||||||||||||||
Airfreight consolidation | 484,311 | 576,280 | 965,354 | 1,100,916 | |||||||||||
Ocean freight consolidation | 413,447 | 377,805 | 745,401 | 717,354 | |||||||||||
Customs brokerage and other services | 153,543 | 154,722 | 305,345 | 297,470 | |||||||||||
Salaries and related costs | 249,925 | 249,114 | 496,057 | 486,929 | |||||||||||
Rent and occupancy costs | 20,853 | 21,354 | 42,029 | 42,735 | |||||||||||
Depreciation and amortization | 9,670 | 9,257 | 19,215 | 18,431 | |||||||||||
Selling and promotion | 8,860 | 10,022 | 17,523 | 19,185 | |||||||||||
Other | 31,940 | 30,539 | 67,724 | 59,691 | |||||||||||
Total operating expenses | 1,372,549 | 1,429,093 | 2,658,648 | 2,742,711 | |||||||||||
Operating income | 132,403 | 152,275 | 257,674 | 299,505 | |||||||||||
Interest income | 3,050 | 2,312 | 6,410 | 4,632 | |||||||||||
Interest expense | (222 | ) | (229 | ) | (842 | ) | (443 | ) | |||||||
Other, net | 3,682 | 857 | 4,779 | 1,974 | |||||||||||
Other income, net | 6,510 | 2,940 | 10,347 | 6,163 | |||||||||||
Earnings before income taxes | 138,913 | 155,215 | 268,021 | 305,668 | |||||||||||
Income tax expense | 54,892 | 60,195 | 107,278 | 119,441 | |||||||||||
Net earnings | 84,021 | 95,020 | 160,743 | 186,227 | |||||||||||
Less net earnings (losses) attributable to the noncontrolling interest | 66 | 20 | 81 | (5 | ) | ||||||||||
Net earnings attributable to shareholders | $ | 83,955 | $ | 95,000 | $ | 160,662 | $ | 186,232 | |||||||
Diluted earnings attributable to shareholders per share | $ | .39 | $ | .44 | $ | .75 | $ | .86 | |||||||
Basic earnings attributable to shareholders per share | $ | .40 | $ | .45 | $ | .76 | $ | .88 | |||||||
Dividends declared and paid per common share | $ | .28 | $ | .25 | $ | .28 | $ | .25 | |||||||
Weighted average diluted shares outstanding | 213,212,912 | 215,659,043 | 213,683,587 | 215,780,230 | |||||||||||
Weighted average basic shares outstanding | 211,724,082 | 212,136,164 | 211,910,872 | 212,112,643 | |||||||||||
07-August-2012 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, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Operating Activities: | |||||||||||||||
Net earnings | $ | 84,021 | $ | 95,020 | $ | 160,743 | $ | 186,227 | |||||||
Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||||||
Provision for losses on accounts receivable | (388 | ) | (63 | ) | (855 | ) | 1,790 | ||||||||
Deferred income tax (benefit) expense | (5,739 | ) | 1,601 | (258 | ) | (335 | ) | ||||||||
Excess tax benefits from stock plans | (806 | ) | (2,285 | ) | (4,232 | ) | (4,531 | ) | |||||||
Stock compensation expense | 10,926 | 10,236 | 21,526 | 20,708 | |||||||||||
Depreciation and amortization | 9,670 | 9,257 | 19,215 | 18,431 | |||||||||||
Gain on sale of assets | (65 | ) | (21 | ) | (130 | ) | (51 | ) | |||||||
Other | 271 | 311 | 553 | 618 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Increase in accounts receivable | (63,260 | ) | (14,173 | ) | (50,292 | ) | (7,490 | ) | |||||||
Decrease in other current assets | 1,642 | 3,896 | 3,566 | 2,481 | |||||||||||
Increase in accounts payable and accrued expenses | 70,674 | 7,943 | 84,233 | 38,130 | |||||||||||
(Decrease) increase in income taxes payable, net | (14,132 | ) | (33,665 | ) | 6,142 | (88 | ) | ||||||||
Net cash from operating activities | 92,814 | 78,057 | 240,211 | 255,890 | |||||||||||
Investing Activities: | |||||||||||||||
Decrease (increase) in short-term investments, net | 15,878 | (449 | ) | 98 | (538 | ) | |||||||||
Purchase of property and equipment | (9,814 | ) | (17,110 | ) | (26,902 | ) | (38,235 | ) | |||||||
Proceeds from sale of property and equipment | 141 | 42 | 253 | 85 | |||||||||||
Other | (232 | ) | (64 | ) | 126 | (1,506 | ) | ||||||||
Net cash from investing activities | 5,973 | (17,581 | ) | (26,425 | ) | (40,194 | ) | ||||||||
Financing Activities: | |||||||||||||||
Proceeds from issuance of common stock | 7,482 | 15,821 | 20,402 | 23,625 | |||||||||||
Repurchases of common stock | (84,401 | ) | (45,690 | ) | (106,266 | ) | (65,274 | ) | |||||||
Excess tax benefits from stock plans | 806 | 2,285 | 4,232 | 4,531 | |||||||||||
Dividends paid | (59,358 | ) | (53,014 | ) | (59,358 | ) | (53,014 | ) | |||||||
Net cash from financing activities | (135,471 | ) | (80,598 | ) | (140,990 | ) | (90,132 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (11,984 | ) | 7,481 | (2,905 | ) | 15,801 | |||||||||
(Decrease) increase in cash and cash equivalents | (48,668 | ) | (12,641 | ) | 69,891 | 141,365 | |||||||||
Cash and cash equivalents at beginning of period | 1,412,915 | 1,238,471 | 1,294,356 | 1,084,465 | |||||||||||
Cash and cash equivalents at end of period | $ | 1,364,247 | $ | 1,225,830 | $ | 1,364,247 | $ | 1,225,830 | |||||||
Interest and taxes paid: | |||||||||||||||
Interest | $ | 233 | $ | 13 | $ | 420 | $ | 17 | |||||||
Income taxes | 77,583 | 91,035 | 104,095 | 117,311 | |||||||||||
07-August-2012 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, 2012: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 379,126 | 49,802 | 21,366 | 780,858 | 202,301 | 71,499 | — | 1,504,952 | |||||||||||||||
Transfers between geographic areas | 22,504 | 2,466 | 4,791 | 11,038 | 9,603 | 4,670 | (55,072 | ) | — | |||||||||||||||
Total revenues | $ | 401,630 | 52,268 | 26,157 | 791,896 | 211,904 | 76,169 | (55,072 | ) | 1,504,952 | ||||||||||||||
Net revenues | $ | 182,291 | 25,115 | 14,724 | 135,908 | 71,497 | 24,116 | — | 453,651 | |||||||||||||||
Operating income | $ | 49,193 | 8,085 | 4,118 | 51,768 | 12,951 | 6,288 | — | 132,403 | |||||||||||||||
Identifiable assets | $ | 1,597,543 | 93,374 | 52,019 | 687,586 | 412,752 | 152,754 | (3,656 | ) | 2,992,372 | ||||||||||||||
Capital expenditures | $ | 5,236 | 153 | 400 | 2,602 | 1,111 | 312 | — | 9,814 | |||||||||||||||
Depreciation and amortization | $ | 5,756 | 181 | 207 | 1,645 | 1,430 | 451 | — | 9,670 | |||||||||||||||
Equity | $ | 1,295,963 | 51,248 | 31,903 | 462,123 | 144,659 | 94,892 | (30,731 | ) | 2,050,057 | ||||||||||||||
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 | ||||||||||||||
Six months ended June 30, 2012: | ||||||||||||||||||||||||
Revenues from unaffiliated customers | $ | 756,428 | 99,756 | 40,635 | 1,468,928 | 408,572 | 142,003 | — | 2,916,322 | |||||||||||||||
Transfers between geographic areas | 44,712 | 4,931 | 9,870 | 22,010 | 19,070 | 9,321 | (109,914 | ) | — | |||||||||||||||
Total revenues | $ | 801,140 | 104,687 | 50,505 | 1,490,938 | 427,642 | 151,324 | (109,914 | ) | 2,916,322 | ||||||||||||||
Net revenues | $ | 363,766 | 47,357 | 29,559 | 267,722 | 143,030 | 48,788 | — | 900,222 | |||||||||||||||
Operating income | $ | 94,718 | 14,454 | 8,880 | 99,006 | 27,198 | 13,418 | — | 257,674 | |||||||||||||||
Identifiable assets | $ | 1,597,543 | 93,374 | 52,019 | 687,586 | 412,752 | 152,754 | (3,656 | ) | 2,992,372 | ||||||||||||||
Capital expenditures | $ | 14,995 | 329 | 655 | 7,889 | 2,053 | 981 | — | 26,902 | |||||||||||||||
Depreciation and amortization | $ | 11,378 | 368 | 424 | 3,269 | 2,834 | 942 | — | 19,215 | |||||||||||||||
Equity | $ | 1,295,963 | 51,248 | 31,903 | 462,123 | 144,659 | 94,892 | (30,731 | ) | 2,050,057 | ||||||||||||||
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 | ||||||||||||||
07-August-2012 Expeditors International of Washington, Inc. Page 6 of 6