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Expeditors Reports Fourth Quarter 2012 EPS of $.40 Per Share 1



  Expeditors Reports Fourth Quarter 2012 EPS of $.40 Per Share 1

Business Wire

SEATTLE -- February 26, 2013

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net
earnings attributable to shareholders of $84,208,000 for the fourth quarter of
2012, as compared with $92,843,000 for the same quarter of 2011, a decrease of
(9)%. Net revenues for the fourth quarter of 2012 decreased (4)% to
$458,738,000 ^  as compared with $476,155,000 reported for the fourth quarter
of 2011. Total revenues and operating income were $1,532,957,000 ^  and
$128,025,000 ^  in 2012, as compared with $1,501,914,000 and $155,064,000 for
the same quarter of 2011, an increase of 2% and a decrease of (17)%,
respectively. Diluted net earnings attributable to shareholders per share for
the fourth quarter were $.40, as compared with $.43 for the same quarter in
2011, a decrease of (7)%.

For the year ended December 31, 2012, net earnings attributable to
shareholders was $333,360,000, as compared with $385,679,000 in 2011, a
decrease of (14)%. Net revenues for the year decreased to $1,824,098,000 from
$1,896,477,000 for 2011, down (4)%. Total revenues and operating income for
the year were $5,980,943,000 and $530,798,000 in 2012, as compared with
$6,150,498,000 and $618,327,000 for the same period in 2011, decreases of (3)%
and (14)%, respectively. Diluted net earnings attributable to shareholders per
share for the year ended December 31, 2012 were $1.57, as compared with $1.79
for the same period of 2011, a decrease of (12)%.

“We obviously would have liked better results for the annual 2012 and fourth
quarter, not withstanding 2012 was our third most profitable year on record,"
said Peter J. Rose, Chairman and Chief Executive Officer. "The market has been
challenged throughout the year by air carriers reducing capacity to optimize
their pricing and load factors as market volumes declined, primarily in the
hi-tech and computer industry, traditionally among the prime users of
airfreight space. As airfreight tonnage spiked during the latter part of the
fourth quarter, carriers imposed rate increases so quickly that we were unable
to commercially adjust our corresponding sell rates to avoid temporary yield
declines. That all said, we still have much to be proud of this year. We
remain highly efficient and profitable with strong cash flow and an operating
margin just under 30%^2. We have a balance sheet as solid as the Rock of
Gibraltar, abundant cash and the wherewithal to make strategic investments to
increase growth and continue technological enhancements. And finally, we
successfully concluded our part of the five year DOJ investigation into our
industry. As we reflect back on the goals and aspirations we held at the start
of 2012, we executed to protect the long-term value of Expeditors,
particularly given global economic uncertainties. We made the safe-guarding of
our people a priority; we continued to make essential investments in systems
and new services, such as Transcon, our time definite transportation service;
and we continued to provide consistently high-quality service to our
customers. We also made record stock buybacks of $302 million and paid out
record dividends of $117 million," Rose continued.

"Early in 2012, while eschewing layoffs, we asked our managers to focus on
being more efficient with current staff, to be cautious with hiring decisions
and to only add headcount in instances where attrition or new business
required it, so as to not compromise our customer service standards. We
concentrated our efforts on managing and developing the investments in our
most valuable assets, our people. Our final 2012 headcount is only 0.2% above
2011 levels, but even that slight increase reflects targeted investments in
new offices, strategic business initiatives and information systems which will
allow us to drive future productivity and on-board new customers more
efficiently. As we move into 2013, we have taken several steps to enhance our
ability to retain existing customers while attracting new business. We have
refined our pricing regimen to ensure that we are focusing on market share
expansion through more timely and efficient rate quotation; we are in the
process of rolling out our internally-developed customer relationship
management system; we have increased our emphasis on our customer-facing
network engineering offerings which have been very successful in assisting
customer supply-chain optimization initiatives; and, of course, we will
continue to train, measure and emphasize our foundational commitment to
customer service. We think those are winning combinations to help our people
manage whatever 2013 will bring," Rose concluded.

Expeditors is a global logistics company headquartered in Seattle, Washington.
The company employs trained professionals in 188 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, domestic time
definite transportation services, purchase order management and customized
logistics solutions.

^1 Diluted earnings attributable to shareholders per share.

^2 Operating 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.
4th Quarter 2012 Earnings Release, February 26, 2013
 
Financial Highlights for the Three months and Years ended December 31, 2012 and 2011 (Unaudited)
(in 000's of US dollars except share data)
                                                                                                 
                   Three months ended December
                   31,                                            Years ended December 31,
                                                   % Increase                                     %
                   2012            2011            (Decrease)     2012            2011            Decrease
Revenues           $ 1,532,957     $ 1,501,914     2     %        $ 5,980,943     $ 6,150,498     (3   )%
Net revenues       $ 458,738       $ 476,155       (4    )%       $ 1,824,098     $ 1,896,477     (4   )%
Operating          $ 128,025       $ 155,064       (17   )%       $ 530,798       $ 618,327       (14  )%
income
Net earnings
attributable       $ 84,208        $ 92,843        (9    )%       $ 333,360       $ 385,679       (14  )%
to
shareholders
Diluted
earnings
attributable       $ .40           $ .43           (7    )%       $ 1.57          $ 1.79          (12  )%
to
shareholders
Basic
earnings
attributable       $ .41           $ .44           (7    )%       $ 1.58          $ 1.82          (13  )%
to
shareholders
Diluted
weighted
average            208,963,216     214,159,723                    211,935,171     215,033,580
shares
outstanding
Basic
weighted
average            207,766,619     211,988,482                    210,422,945     212,117,511
shares
outstanding
                                                                                                   

                          Employee headcount as of December 31,
                          2012                      2011
North America             4,726                     4,666
Asia Pacific              3,914                     4,083
Europe and Africa         2,332                     2,262
Middle East               1,236                     1,250
South America             672                       645
Information Systems       600                       569
Corporate                 248                       228
Total                     13,728                    13,703
                                                     

               Year-over-year percentage increase
               (decrease) in:
               Airfreight kilos     Ocean freight FEU
2012
October        3        %           (9       )%
November       8        %           (4       )%
December       2        %           (4       )%
Quarter        5        %           (6       )%
                                              

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 global economic
uncertainties; challenges in the airfreight industry and reducing capacity to
optimize their pricing and loan factors; ability to maintain or improve
profitability, cash flow, operating margins and efficiencies; ability to make
strategic investments that increase growth and enhance our technology, systems
and new services; ability to safeguard, manage and develop our people; ability
to maintain and improve high quality services to customers; ability to
continue stock buy-backs and dividends; ability to retain existing customers
or attract new business; ability to operate new offices profitably; ability to
drive future productivity, or on-board new customers; ability to refine our
pricing regimen to ensure we are focusing on market-share expansion or timing
and efficient rate quotation; success of internally developed systems; success
of network engineering offerings; and success in optimizing customer supply
chain initiatives. 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)
                                                                
                                                December 31,     December 31,
                                                2012             2011
Assets
Current Assets:
Cash and cash equivalents                       $  1,260,842     $ 1,294,356
Accounts receivable, net                        1,031,376        934,752
Deferred Federal and state income taxes         12,102           10,415
Other current assets                            53,279           47,360       
Total current assets                            2,357,599        2,286,883    
Property and equipment, net                     556,204          538,806
Goodwill                                        7,927            7,927
Other assets, net                               32,395           33,211       
                                                $  2,954,125     $ 2,866,827  
Liabilities and Equity
Current Liabilities:
Accounts payable                                641,593          606,628
Accrued expenses, primarily salaries and        178,995          169,445
related costs
Federal, state and foreign income taxes         21,970           20,072       
Total current liabilities                       842,558          796,145      
Deferred Federal and state income taxes         78,997           60,613
Commitments and contingencies
Shareholders’ Equity:
Preferred stock; none issued                    —                —
Common stock, par value $.01 per share;
issued and outstanding 206,392,013 shares       2,064            2,120
at December 31, 2012 and 212,003,662
shares at December 31, 2011
Additional paid-in capital                      1,283            13,260
Retained earnings                               2,018,618        1,991,222
Accumulated other comprehensive income          5,734            (2,964      )
(loss)
Total shareholders’ equity                      2,027,699        2,003,638    
Noncontrolling interest                         4,871            6,431        
Total equity                                    2,032,570        2,010,069    
                                                $  2,954,125     $ 2,866,827  
                                                                              

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
                                                        
                     Three months ended                  Twelve months ended
                     December 31,                        December 31,
                     2012              2011              2012              2011
Revenues:
Airfreight           $  700,785        $  705,744        $ 2,600,916       $ 2,893,474
services
Ocean freight
and ocean            472,307           441,102           1,974,891         1,878,595
services
Customs
brokerage and        359,865           355,068           1,405,136         1,378,429    
other services
Total revenues       1,532,957         1,501,914         5,980,943         6,150,498    
Operating
Expenses:
Airfreight           546,395           534,159           1,983,696         2,193,122
consolidation
Ocean freight        364,251           333,567           1,542,170         1,443,170
consolidation
Customs
brokerage and        163,573           158,033           630,979           617,729
other services
Salaries and         246,096           247,917           995,052           993,358
related costs
Rent and
occupancy            24,711            20,578            88,044            84,665
costs
Depreciation
and                  10,695            9,146             39,940            36,776
amortization
Selling and          8,814             10,447            34,184            38,974
promotion
Other                40,397            33,003            136,080           124,377      
Total
operating            1,404,932         1,346,850         5,450,145         5,532,171    
expenses
Operating            128,025           155,064           530,798           618,327      
income
                                                                            
Interest             3,522             2,715             12,763            10,235
income
Interest             (227        )     (248        )     (1,251      )     (970        )
expense
Other, net           2,072             (2,330      )     8,083             10,436       
Other income,        5,367             137               19,595            19,701       
net
Earnings
before income        133,392           155,201           550,393           638,028
taxes
Income tax           49,893            62,061            217,424           251,785      
expense
Net earnings         83,499            93,140            332,969           386,243      
Less net
(losses)
earnings
attributable         (709        )     297               (391        )     564          
to the
noncontrolling
interest
Net earnings
attributable         $  84,208         $  92,843         $ 333,360         $ 385,679    
to
shareholders
Diluted
earnings
attributable         $  .40            $  .43            $ 1.57            $ 1.79       
to
shareholders
per share
Basic earnings
attributable
to                   $  .41            $  .44            $ 1.58            $ 1.82       
shareholders
per share
Dividends
declared and         $  .28            $  .25            $ .56             $ .50        
paid per
common share
Weighted
average              208,963,216       214,159,723       211,935,171       215,033,580  
diluted shares
outstanding
Weighted
average basic        207,766,619       211,988,482       210,422,945       212,117,511  
shares
outstanding
                                                                                        

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
                     Three months ended              Twelve months ended
                     December 31,                    December 31,
                     2012            2011            2012            2011
Operating
Activities:
Net earnings         $ 83,499        $ 93,140        $ 332,969       $ 386,243
Adjustments to
reconcile net
earnings to
net cash
provided by
operating
activities:
Provision for
losses
(recoveries)         302             166             (90         )   1,327
on accounts
receivable
Deferred
income tax           7,309           5,598           11,639          (4,065      )
expense
(benefit)
Excess tax
benefits from        (1,110      )   (232        )   (5,401      )   (5,300      )
stock plans
Stock
compensation         11,212          10,832          44,058          44,278
expense
Depreciation
and                  10,695          9,146           39,940          36,776
amortization
Other                3,181           722             4,864           2,496
Changes in
operating
assets and
liabilities:
(Increase)
decrease in          (16,044     )   58,717          (89,856     )   46,915
accounts
receivable
Decrease
(increase) in        3,566           (1,620      )   (63         )   (7,483      )
other current
assets
(Decrease)
increase in
accounts             (30,341     )   (54,879     )   30,625          (40,819     )
payable and
accrued
expenses
(Decrease)
increase in          (11,520     )   (13,654     )   1,441           (3,237      )
income taxes
payable, net
Net cash from
operating            60,749          107,936         370,126         457,131      
activities
Investing
Activities:
Purchase of
property and         (10,554     )   (19,261     )   (47,626     )   (78,115     )
equipment
Prepayment on
long-term            —               —               —               (936        )
leases, net
Other                146             343             632             (1,288      )
Net cash from
investing            (10,408     )   (18,918     )   (46,994     )   (80,339     )
activities
Financing
Activities:
Proceeds from
issuance of          7,510           2,055           52,511          56,646
common stock
Repurchases of       (108,921    )   (3,499      )   (302,414    )   (112,071    )
common stock
Excess tax
benefits from        1,110           232             5,401           5,300
stock plans
Dividends paid       (57,905     )   (52,997     )   (117,263    )   (106,011    )
Distribution
to                   (105        )   (133        )   (1,282      )   (955        )
noncontrolling
interest
Net cash from
financing            (158,311    )   (54,342     )   (363,047    )   (157,091    )
activities
Effect of
exchange rate
changes on           1,170           (1,134      )   6,401           (9,810      )
cash and cash
equivalents
(Decrease)
increase in          (106,800    )   33,542          (33,514     )   209,891
cash and cash
equivalents
Cash and cash
equivalents at       1,367,642       1,260,814       1,294,356       1,084,465    
beginning of
period
Cash and cash
equivalents at       $ 1,260,842     $ 1,294,356     $ 1,260,842     $ 1,294,356  
end of period
Interest and
taxes paid:
Interest             $ 68            $ 231           $ 515           $ 296
Income taxes         52,168          83,454          207,174         266,621
                                                                                  

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Business Segment Information
(In thousands) (Unaudited)
 
                                   OTHER                                 EUROPE      MIDDLE                    
                   UNITED          NORTH       LATIN       ASIA          and         EAST        ELIMI-         CONSOLI-
                                                                                     and
                   STATES          AMERICA     AMERICA     PACIFIC       AFRICA      INDIA       NATIONS        DATED
Three months
ended
December 31,
2012:
Revenues
from               $ 379,018       51,557      20,887      800,804       210,231     70,460      —              1,532,957
unaffiliated
customers
Transfers
between            25,386          2,868       4,770       11,035        10,097      4,300       (58,456  )     —
geographic
areas
Total              $ 404,404       54,425      25,657      811,839       220,328     74,760      (58,456  )     1,532,957
revenues
Net revenues       $ 186,176       25,029      14,258      136,497       73,393      23,385      —              458,738
Operating          $ 28,201        11,045      4,237       57,933        18,804      7,805       —              128,025
income
Identifiable       $ 1,459,425     92,075      48,995      776,902       428,053     147,871     804            2,954,125
assets
Capital            $ 7,412         281         241         1,452         794         374         —              10,554
expenditures
Depreciation
and                $ 6,358         200         229         1,850         1,605       453         —              10,695
amortization
Equity             $ 1,197,239     58,071      29,504      538,710       167,752     74,950      (33,656  )     2,032,570
Three months
ended
December 31,
2011:
Revenues
from               $ 383,830       48,839      19,490      761,092       218,074     70,589      —              1,501,914
unaffiliated
customers
Transfers
between            24,639          2,641       5,356       10,159        10,570      4,592       (57,957  )     —
geographic
areas
Total              $ 408,469       51,480      24,846      771,251       228,644     75,181      (57,957  )     1,501,914
revenues
Net revenues       $ 183,381       24,367      14,673      150,262       76,950      26,522      —              476,155
Operating          $ 41,652        10,314      5,056       68,971        19,048      10,023      —              155,064
income
Identifiable       $ 1,521,657     86,020      48,221      667,171       401,518     141,379     861            2,866,827
assets
Capital            $ 8,404         199         166         8,760         1,288       444         —              19,261
expenditures
Depreciation
and                $ 5,222         208         226         1,605         1,400       485         —              9,146
amortization
Equity             $ 1,285,812     49,571      27,346      448,613       145,998     85,605      (32,876  )     2,010,069
                                                                                                                 
Twelve
months ended
December 31,
2012:
Revenues
from               $ 1,519,276     201,521     82,337      3,074,587     816,927     286,295     —              5,980,943
unaffiliated
customers
Transfers
between            94,521          10,476      18,780      43,721        38,791      18,128      (224,417 )     —
geographic
areas
Total              $ 1,613,797     211,997     101,117     3,118,308     855,718     304,423     (224,417 )     5,980,943
revenues
Net revenues       $ 737,679       95,798      57,795      551,211       286,264     95,351      —              1,824,098
Operating          $ 179,015       32,385      17,356      216,559       59,314      26,169      —              530,798
income
Identifiable       $ 1,459,425     92,075      48,995      776,902       428,053     147,871     804            2,954,125
assets
Capital            $ 28,088        832         1,301       11,275        4,323       1,807       —              47,626
expenditures
Depreciation
and                $ 23,678        756         873         6,810         5,994       1,829       —              39,940
amortization
Equity             $ 1,197,239     58,071      29,504      538,710       167,752     74,950      (33,656  )     2,032,570
Twelve
months ended
December 31,
2011:
Revenues
from               $ 1,540,477     189,843     82,312      3,144,641     891,185     302,040     —              6,150,498
unaffiliated
customers
Transfers
between            101,738         11,095      21,222      40,012        43,359      17,897      (235,323 )     —
geographic
areas
Total              $ 1,642,215     200,938     103,534     3,184,653     934,544     319,937     (235,323 )     6,150,498
revenues
Net revenues       $ 732,299       90,432      59,968      605,151       307,471     101,156     —              1,896,477
Operating          $ 210,702       29,209      19,151      258,952       72,248      28,065      —              618,327
income
Identifiable       $ 1,521,657     86,020      48,221      667,171       401,518     141,379     861            2,866,827
assets
Capital            $ 23,219        1,122       628         25,295        25,856      1,995       —              78,115
expenditures
Depreciation
and                $ 20,037        1,038       999         7,243         5,414       2,045       —              36,776
amortization
Equity             $ 1,285,812     49,571      27,346      448,613       145,998     85,605      (32,876  )     2,010,069

Contact:

Expeditors International of Washington, Inc.
R. Jordan Gates, 206-674-3427
President and Chief Operating Officer
or
Bradley S. Powell, 206-674-3412
Senior Vice President and Chief Financial Officer
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