EX-99.1 2 a20151qerexhibit991.htm EXHIBIT 99.1 2015 1Q ER Exhibit 99.1

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 FIRST QUARTER 2015 EPS OF $0.55 PER SHARE 1 
SEATTLE, WASHINGTON - May 6, 2015, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced net earnings attributable to shareholders of $106,704,000 for the first quarter of 2015, as compared with $83,824,000 for the same quarter of 2014, an increase of 27%. Net revenues2 for the first quarter of 2015 increased 14% to $529,486,000 as compared with $464,586,000 for the same quarter in 2014. Total revenues and operating income were $1,677,526,000 and $168,883,000 in the first quarter of 2015, as compared with $1,491,645,000 and $135,203,000 for the same quarter of 2014, increases of 12% and 25%, respectively. Diluted net earnings attributable to shareholders per share for the first quarter were $0.55, as compared with $0.42 for the same quarter in 2014, an increase of 31%.
“The 2015 first quarter saw ocean and airfreight volume increases of 12% and 13%, respectively, with total net revenues increasing 14%. While there was some degree of unquantifiable benefit to airfreight volumes that we attribute to a combination of last year's West Coast labor dispute backlogs and the timing of Chinese New Year, we thought it noteworthy that ocean volumes still showed strong, double digit growth,” commented Bradley S. Powell, Senior Vice President and Chief Financial Officer. “We also benefited from our ability to leverage our operating expenses. Our efficiency and productivity this quarter, as measured by our operating income as a percentage of net revenue ratio, grew to 32%. Being able to absorb this growth without a corresponding increase in overhead costs resulted in a 25% increase in our operating income, the highest year-over-year quarterly increase in nearly four years,” Powell went on to say.

“We were both encouraged and, quite frankly, more than pleasantly surprised by the strength of these results. It’s always great to have ‘one of those quarters’ where everything seems to be firing on all cylinders and it’s particularly good when that occurs during the first quarter. This has created a solid foundation for us to move forward into 2015,” said Jeffrey S. Musser, President and Chief Executive Officer. “March was the most profitable month in the history of the company. We do understand that we will have stiffer comparables the last half of the year than we experienced in the 2015 first quarter. We are also aware of the continuing, and we believe warranted, concerns about the global economy. Despite these factors, we remain committed to our objective of returning the company to sustainable double digit growth. To that end, we remain focused on implementing our strategic initiatives. Technically speaking, these programs weren’t fully in effect during the first quarter as we were still completing our roll-out. We believe, however, that the increased focus and collaboration that were a by-product of developing and rolling out our strategic initiatives created synergies that showed up in our results. Our people executed impeccably during the first quarter and we’re grateful to them for their outstanding efforts. They have always been our most valuable assets and are the ones who truly differentiate Expeditors. Finally, we would also point out that the cumulative effect of returning capital to our shareholders through stock re-purchases contributed to a very healthy year-over-year growth in earnings per share of 31%,” 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.
NOTE: See Disclaimer on Forward-Looking Statements on the following page of this release.

Expeditors International of Washington, Inc.
First Quarter 2015 Earnings Release, May 6, 2015
Financial Highlights for the Three months ended March 31, 2015 and 2014 (Unaudited)
(in 000's of US dollars except share data)
 
Three months ended March 31,
 
 
 
2015
 
2014
 
% Change
Revenues
$
1,677,526

 
$
1,491,645

 
12%
Net revenues1
$
529,486

 
$
464,586

 
14%
Operating income
$
168,883

 
$
135,203

 
25%
Net earnings attributable to shareholders
$
106,704

 
$
83,824

 
27%
Diluted earnings attributable to shareholders per share
$
0.55

 
$
0.42

 
31%
Basic earnings attributable to shareholders per share
$
0.56

 
$
0.42

 
33%
Diluted weighted average shares outstanding
192,707,093

 
201,843,858

 
 
Basic weighted average shares outstanding
191,627,750

 
201,118,390

 
 
_______________________
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 three-month period ended March 31, 2015, the Company repurchased 535,476 shares of common stock, net of issuances.
 
Employee headcount as of March 31,
 
2015
 
2014
North America
5,399

 
4,926

Europe
2,552

 
2,273

North Asia
2,476

 
2,540

Middle East, Africa and India
1,369

 
1,353

South Asia
1,289

 
1,287

Latin America
784

 
713

Information Systems
705

 
645

Corporate
308

 
280

Total
14,882

 
14,017

 
 
Year-over-year percentage increase (decrease) in:
 
 
Airfreight kilos
 
Ocean freight FEU
2015
 
 
 
 
January
 
13
%
 
8
 %
February
 
18
%
 
42
 %
March
 
9
%
 
(6
)%
Quarter
 
13
%
 
12
 %
_______________________
Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 8, 2015 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about May 15, 2015.

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 benefits to airfreight volumes that we attribute to a combination of the recent West Coast labor dispute backlogs, condition of the global economy, ability to achieve sustainable double digit growth, ability to achieve benefits from new strategies and organization structure and ability to achieve strategic goals. 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 and fuel 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)
 
 
March 31,
2015
 
December 31, 2014
Assets
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
1,033,144

 
$
927,107

Short-term investments
61

 
40,336

Accounts receivable, net
1,253,639

 
1,236,042

Deferred Federal and state income taxes
20,402

 
20,279

Other current assets
44,914

 
65,486

Total current assets
2,352,160

 
2,289,250

Property and equipment, net
528,988

 
538,415

Goodwill
7,927

 
7,927

Other assets, net
54,703

 
55,313

 
$
2,943,778

 
$
2,890,905

Liabilities and Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable
749,246

 
770,238

Accrued expenses, primarily salaries and related costs
203,810

 
192,468

Federal, state and foreign income taxes
26,163

 
21,077

Total current liabilities
979,219

 
983,783

Deferred Federal and state income taxes
37,028

 
35,514

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Shareholders’ Equity:
 
 
 
Preferred stock; none issued
—

 
—

Common stock, par value $0.01 per share. Issued and outstanding 191,120,214 shares at March 31, 2015 and 191,655,690 shares at December 31, 2014
1,911

 
1,916

Additional paid-in capital
5,241

 
1,113

Retained earnings
1,974,830

 
1,903,196

Accumulated other comprehensive loss
(57,091
)
 
(37,817
)
Total shareholders’ equity
1,924,891

 
1,868,408

Noncontrolling interest
2,640

 
3,200

Total equity
1,927,531

 
1,871,608

 
$
2,943,778

 
$
2,890,905



06-May-2015
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
 
March 31,
 
2015
 
2014
Revenues:
 
 
 
Airfreight services
$
707,444

 
$
647,138

Ocean freight and ocean services
565,717

 
469,224

Customs brokerage and other services
404,365

 
375,283

Total revenues
1,677,526

 
1,491,645

Operating Expenses:
 
 
 
Airfreight services
513,001

 
482,882

Ocean freight and ocean services
445,456

 
367,375

Customs brokerage and other services
189,583

 
176,802

Salaries and related costs
278,878

 
255,942

Rent and occupancy costs
25,388

 
25,162

Depreciation and amortization
11,529

 
12,382

Selling and promotion
9,247

 
8,173

Other
35,561

 
27,724

Total operating expenses
1,508,643

 
1,356,442

Operating income
168,883

 
135,203

Other Income (Expense):
 
 
 
Interest income
2,732

 
2,697

Other, net
34

 
(281
)
Other income, net
2,766

 
2,416

Earnings before income taxes
171,649

 
137,619

Income tax expense
64,317

 
53,424

Net earnings
107,332

 
84,195

Less net earnings attributable to the noncontrolling interest
628

 
371

Net earnings attributable to shareholders
$
106,704

 
$
83,824

Diluted earnings attributable to shareholders per share
$
0.55

 
$
0.42

Basic earnings attributable to shareholders per share
$
0.56

 
$
0.42

Weighted average diluted shares outstanding
192,707,093

 
201,843,858

Weighted average basic shares outstanding
191,627,750

 
201,118,390



06-May-2015
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
 
March 31,
 
2015
 
2014
Operating Activities:
 
 
 
Net earnings
$
107,332

 
$
84,195

Adjustments to reconcile net earnings to net cash from operating activities:
 
 
 
Provision for losses (recoveries) on accounts receivable
277

 
(1,115
)
Deferred income tax expense
11,937

 
7,194

Excess tax benefits from stock plans
(1,480
)
 
(489
)
Stock compensation expense
9,907

 
10,294

Depreciation and amortization
11,529

 
12,382

Other
86

 
138

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in accounts receivable
(46,790
)
 
12,228

Increase in accounts payable and accrued expenses
14,895

 
29,546

Increase in income taxes payable, net
23,132

 
18,205

Decrease in other current assets
3,569

 
1,279

Net cash from operating activities
134,394

 
173,857

Investing Activities:
 
 
 
Decrease (increase) in short-term investments, net
40,274

 
(60,154
)
Purchase of property and equipment
(9,445
)
 
(8,760
)
Other, net
198

 
1,670

Net cash from investing activities
31,027

 
(67,244
)
Financing Activities:
 
 
 
Proceeds from issuance of common stock
35,048

 
7,892

Repurchases of common stock
(77,368
)
 
(226,725
)
Excess tax benefits from stock plans
1,480

 
489

Distribution to noncontrolling interest
(857
)
 
(85
)
Net cash from financing activities
(41,697
)
 
(218,429
)
Effect of exchange rate changes on cash and cash equivalents
(17,687
)
 
(4,790
)
Increase (decrease) in cash and cash equivalents
106,037

 
(116,606
)
Cash and cash equivalents at beginning of period
927,107

 
1,247,652

Cash and cash equivalents at end of period
$
1,033,144

 
$
1,131,046

Taxes paid:
 
 
 
Income taxes
$
28,261

 
$
27,496



06-May-2015
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
 
NORTH ASIA
 
SOUTH ASIA
 
EUROPE
 
MIDDLE
EAST, AFRICA 
and
INDIA
 
ELIMI-
NATIONS
 
CONSOLI-
DATED
Three months ended March 31, 2015:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
444,181

 
54,794

 
24,081

 
645,444

 
181,381

 
242,086

 
85,559

 
—

 
1,677,526

Transfers between geographic areas
27,675

 
2,814

 
4,777

 
5,697

 
5,915

 
9,637

 
5,067

 
(61,582
)
 
—

Total revenues
$
471,856

 
57,608

 
28,858

 
651,141

 
187,296

 
251,723

 
90,626

 
(61,582
)
 
1,677,526

Net revenues
$
219,603

 
30,678

 
16,559

 
117,405

 
42,200

 
75,888

 
27,153

 
—

 
529,486

Operating income
$
59,181

 
11,091

 
5,356

 
57,056

 
13,880

 
15,071

 
7,248

 
—

 
168,883

Identifiable assets
$
1,451,103

 
109,180

 
57,232

 
541,983

 
143,910

 
430,338

 
198,954

 
11,078

 
2,943,778

Capital expenditures
$
6,325

 
288

 
617

 
290

 
319

 
1,148

 
458

 
—

 
9,445

Depreciation and amortization
$
7,393

 
292

 
268

 
1,399

 
530

 
1,246

 
401

 
—

 
11,529

Equity
$
1,182,808

 
58,998

 
34,604

 
306,775

 
106,139

 
154,343

 
120,086

 
(36,222
)
 
1,927,531

Three months ended March 31, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues from unaffiliated customers
$
400,739

 
51,584

 
20,629

 
568,689

 
140,743

 
233,683

 
75,578

 
—

 
1,491,645

Transfers between geographic areas
20,011

 
2,375

 
5,204

 
5,417

 
6,550

 
9,319

 
4,542

 
(53,418
)
 
—

Total revenues
$
420,750

 
53,959

 
25,833

 
574,106

 
147,293


243,002

 
80,120

 
(53,418
)
 
1,491,645

Net revenues
$
192,082

 
26,161

 
15,357

 
93,394

 
39,093

 
74,331

 
24,168

 
—

 
464,586

Operating income
$
51,898

 
8,375

 
4,859

 
40,054

 
12,470

 
11,642

 
5,905

 
—

 
135,203

Identifiable assets
$
1,437,768

 
105,070

 
61,503

 
545,148

 
151,184

 
437,857

 
183,288

 
3,686

 
2,925,504

Capital expenditures
$
3,928

 
264

 
301

 
2,660

 
456

 
866

 
285

 
—

 
8,760

Depreciation and amortization
$
7,852

 
280

 
212

 
1,502

 
596

 
1,507

 
433

 
—

 
12,382

Equity
$
1,151,455

 
69,702

 
32,017

 
333,871

 
112,090

 
188,354

 
108,009

 
(35,484
)
 
1,960,014

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


06-May-2015
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
 
March 31,
(in thousands)
2015
 
2014
Total revenues
$
1,677,526

 
$
1,491,645

Expenses:
 
 
 
Airfreight services
513,001

 
482,882

Ocean freight and ocean services
445,456

 
367,375

Customs brokerage and other services
189,583

 
176,802

Net revenues
$
529,486

 
$
464,586



06-May-2015
Expeditors International of Washington, Inc.
Page 7 of 7