Expeditors Reports Fourth Quarter 2016 EPS of $0.61

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| Source: Expeditors International of Washington, Inc.

SEATTLE, Feb. 21, 2017 (GLOBE NEWSWIRE) -- Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced fourth quarter 2016 financial results including the following highlights compared to the same quarter of 2015:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) remained constant at $0.61
  • Net Earnings Attributable to Shareholders decreased 3% to $111 million
  • Operating Income decreased 3% to $172 million
  • Revenues increased 3% to $1.64 billion
  • Net Revenues2 increased 2% to $549 million
  • Airfreight tonnage and ocean container volumes both increased 12% to record levels

“Through the hard work and dedication of our people, we shipped the most freight in our Company’s history and gained market share in the fourth quarter, as we did throughout 2016,” said Jeffrey S. Musser, President and Chief Executive Officer. “We are especially pleased with the growth in our customs brokerage and other services, particularly in the U.S. through our Transcon business. Rates remained highly unpredictable in the quarter, as they were throughout much of 2016, again putting unusual pressure on our margins. While experience has shown us that margin pressure is cyclical, in light of such truly unprecedented rate volatility, we are improving processes to better address the rapid changes in buy and sell rates, which we expect to continue.

“We continue to execute our strategic initiatives and remain focused on expanding our business and exploring opportunities for growth. At the same time, given the uncertainties for global trade, we are also working hard to expand our presence in markets that are less uncertain. In addition, we recently appointed one of our most senior executives, Phil Coughlin, to the new position of Chief Strategy Officer to form a team that will explore additional opportunities for growth. As a market leader, we recognize that in order to maintain our leadership position and remain at the forefront of innovation, we must continuously invest in people, processes and technology. We believe the additional investments we’re making will enhance our market position.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “We shipped record volumes and again maintained operating income as a percentage of net revenues - a key measure of operating efficiency - above 30%. We believe the additional investments we have made in people and technology are delivering enhanced growth and market share. In 2017, we will continue to make additional important investments in technology and in our strategic efforts to explore new areas for profitable growth.”

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 177 district offices and numerous branch 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, warehousing and distribution and customized logistics solutions.

________________________
1Diluted earnings attributable to shareholders per share.

2 Non-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.
4th Quarter 2016 Earnings Release, February 21, 2017

Financial Highlights for the Three months and Years ended 
December 31, 2016 and 2015 (Unaudited)

(in 000's of US dollars except per share data)

 Three months ended
December 31,
   Years ended
December 31,
  
 2016 2015 % Change 2016 2015 % Change
Revenues$1,642,007  $1,596,221  3% $6,098,037  $6,616,632  (8)%
Net revenues3$548,591  $536,169  2% $2,164,036  $2,187,777  (1)%
Operating income4$172,210  $177,992  (3)% $670,163  $721,484  (7)%
Net earnings attributable to shareholders$110,590  $114,449  (3)% $430,807  $457,223  (6)%
Diluted earnings attributable to shareholders$0.61  $0.61  % $2.36  $2.40  (2)%
Basic earnings attributable to shareholders$0.61  $0.62  (2)% $2.38  $2.42  (2)%
Diluted weighted average shares outstanding181,887  186,519    182,704  190,223   
Basic weighted average shares outstanding180,201  185,111    181,282  188,941   

_______________________
3 Non-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.
4 Operating Income in the fourth quarter of 2016 includes a $6 million foreign exchange gain recorded in customs brokerage and other services expenses that resulted from the devaluation of the Egyptian pound. Operating Income in the fourth quarter of 2015 includes a $6 million recovery of legal and related fees.

During the three and twelve-month periods ended December 31, 2016, the Company repurchased 1.3 million and 6.7 million shares of common stock at an average price of $54.31 and $50.53 per share, respectively. During the three and twelve-month periods ended December 31, 2015, the Company repurchased 4.5 million and 13.1 million shares of common stock at an average price of $47.66 and $47.95 per share, respectively.

 Employee headcount as of December 31,
 2016 2015
North America5,868  5,655 
Europe2,904  2,685 
North Asia2,509  2,464 
South Asia1,370  1,323 
Middle East, Africa and India1,510  1,417 
Latin America765  796 
Information Systems825  741 
Corporate338  316 
Total16,089  15,397 


  Year-over-year percentage increase in:
  Airfreight kilos Ocean freight FEU
2016    
October 3%  13% 
November 14%  13% 
December 18%  9% 
Quarter 12%  12% 

_______________________

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 24, 2017 will be considered in management's 8-K “Responses to Selected Questions” expected to be filed on or about March 3, 2017.

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 uncertainties and challenges with the global economy and global trade, ability to adapt to a rapidly changing environment, availability of ocean and air carrier capacity, favorable spot market buying opportunities, rate volatility, benefits from our strategic and innovation plans, and ability to improve efficiency, expand margins and gain market share. 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 better address the rapid changes in buy and sell rates, expand our business and explore opportunities for growth, maintain our leadership position and remain at the forefront of innovation, enhance our market position, deliver enhanced growth and market share, and make successful investments in technology and strategies that result in new areas for profitable growth; 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; and 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 per share data)
(Unaudited)
 
 December 31,
 2016
 December 31,
2015
Assets   
Current Assets:   
Cash and cash equivalents$974,435  $807,796 
Accounts receivable, net1,190,130  1,112,260 
Other current assets54,014  56,453 
Total current assets2,218,579  1,976,509 
Property and equipment, net536,572  524,724 
Goodwill7,927  7,927 
Other assets, net27,793  56,417 
 $2,790,871  $2,565,577 
Liabilities and Equity   
Current Liabilities:   
Accounts payable$726,571  $645,304 
Accrued expenses, primarily salaries and related costs185,502  186,571 
Federal, state and foreign income taxes17,858  29,498 
Total current liabilities929,931  861,373 
Deferred Federal and state income taxes13,727  9,528 
Commitments and contingencies   
Shareholders’ Equity:   
Preferred stock; none issued   
Common stock, par value $0.01 per share; issued and outstanding 179,857 shares at December 31, 2016 and 182,067 shares at December 31, 20151,799  1,821 
Additional paid-in capital2,642  31 
Retained earnings1,944,789  1,771,379 
Accumulated other comprehensive loss(104,592) (81,238)
Total shareholders’ equity1,844,638  1,691,993 
Noncontrolling interest2,575  2,683 
Total equity1,847,213  1,694,676 
 $2,790,871  $2,565,577 



EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
 
Condensed Consolidated Statements of Earnings
(In thousands, except per share data)
 
(Unaudited)
 
 Three months ended Twelve months ended
 December 31, December 31,
 2016 2015 2016 2015
Revenues:       
Airfreight services$688,835  $679,720  $2,453,347  $2,740,583 
Ocean freight and ocean services503,150  491,539  1,917,494  2,194,004 
Customs brokerage and other services450,022  424,962  1,727,196  1,682,045 
Total revenues1,642,007  1,596,221  6,098,037  6,616,632 
Operating Expenses:       
Airfreight services515,612  503,540  1,752,167  1,987,690 
Ocean freight and ocean services371,989  354,106  1,378,699  1,648,993 
Customs brokerage and other services205,815  202,406  803,135  792,172 
Salaries and related costs289,544  282,002  1,157,635  1,143,511 
Rent and occupancy costs27,783  26,364  108,812  102,470 
Depreciation and amortization11,943  11,588  46,796  46,012 
Selling and promotion11,946  11,844  41,763  41,990 
Other35,165  26,379  138,867  132,310 
Total operating expenses1,469,797  1,418,229  5,427,874  5,895,148 
Operating income172,210  177,992  670,163  721,484 
        
Interest income2,987  2,387  11,580  10,421 
Other, net1,706  4,031  5,113  4,784 
Other income, net4,693  6,418  16,693  15,205 
Earnings before income taxes176,903  184,410  686,856  736,689 
Income tax expense65,805  69,310  254,323  277,192 
Net earnings111,098  115,100  432,533  459,497 
Less net earnings attributable to the noncontrolling interest508  651  1,726  2,274 
Net earnings attributable to shareholders$110,590  $114,449  $430,807  $457,223 
Diluted earnings attributable to shareholders per share$0.61  $0.61  $2.36  $2.40 
Basic earnings attributable to shareholders per share$0.61  $0.62  $2.38  $2.42 
Dividends declared and paid per common share$0.40  $0.36  $0.80  $0.72 
Weighted average diluted shares outstanding181,887  186,519  182,704  190,223 
Weighted average basic shares outstanding180,201  185,111  181,282  188,941 


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,
 2016 2015 2016 2015
Operating Activities:       
Net earnings$111,098  $115,100  $432,533  $459,497 
Adjustments to reconcile net earnings to net cash from operating activities:       
Provision for losses on accounts receivable146  1,178  2,607  2,173 
Deferred income tax expense13,493  4,687  15,835  17,999 
Excess tax benefits from stock plans(147) (4) (386) (1,850)
Stock compensation expense10,953  10,926  45,217  43,415 
Depreciation and amortization11,943  11,588  46,796  46,012 
Other(3,581) (139) (3,540) (24)
Changes in operating assets and liabilities:       
(Increase) decrease in accounts receivable(108,384) 43,709  (102,297) 62,619 
Increase (decrease) in accounts payable and accrued expenses28,568  (87,475) 102,716  (84,164)
Increase (decrease) in income taxes payable, net4,242  14,272  (12,370) 18,382 
Decrease in other current assets4,077  2,072  1,988  653 
Net cash from operating activities72,408  115,914  529,099  564,712 
Investing Activities:       
Decrease (increase) in short-term investments, net  8,218  (37) 40,294 
Purchase of property and equipment(19,343) (12,480) (59,316) (44,383)
Other, net648  (855) 6,157  (3,337)
Net cash from investing activities(18,695) (5,117) (53,196) (7,426)
Financing Activities:       
Proceeds from issuance of common stock37,668  16,263  185,313  130,964 
Repurchases of common stock(69,561) (214,516) (337,658) (629,991)
Excess tax benefits from stock plans147  4  386  1,850 
Dividends paid(72,123) (66,892) (145,123) (135,673)
Distribution to noncontrolling interest(1,335) (1,265) (1,335) (2,122)
Net cash from financing activities(105,204) (266,406) (298,417) (634,972)
Effect of exchange rate changes on cash and cash equivalents(16,774) (5,278) (10,847) (41,625)
(Decrease) increase in cash and cash equivalents(68,265) (160,887) 166,639  (119,311)
Cash and cash equivalents at beginning of period1,042,700  968,683  807,796  927,107 
Cash and cash equivalents at end of period$974,435  $807,796  $974,435  $807,796 
Taxes paid:       
Income taxes$49,263  $49,343  $254,312  $239,367 



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 December 31, 2016:                 
Revenues from unaffiliated customers$434,083  61,034  21,840  637,327  161,516  238,526  87,681    1,642,007 
Transfers between geographic areas26,459  2,637  3,525  5,363  5,913  10,706  5,424  (60,027)  
Total revenues$460,542  63,671  25,365  642,690  167,429  249,232  93,105  (60,027) 1,642,007 
Net revenues$234,779  31,088  13,802  114,116  42,547  77,361  34,590  308  548,591 
Operating income$65,839  9,439  2,305  54,156  16,877  11,086  12,510  (2) 172,210 
Identifiable assets$1,455,722  104,804  49,231  511,851  120,300  351,960  190,902  6,101  2,790,871 
Capital expenditures$14,297  251  97  1,387  1,713  1,168  430    19,343 
Depreciation and amortization$7,675  366  318  1,344  528  1,174  538    11,943 
Equity$1,166,582  46,448  27,164  327,672  91,983  108,430  112,633  (33,699) 1,847,213 
Three months ended December 31, 2015:                 
Revenues from unaffiliated customers$428,461  55,933  21,153  613,957  153,374  242,454  80,889    1,596,221 
Transfers between geographic areas29,555  3,392  3,987  5,392  6,341  11,309  5,684  (65,660)  
Total revenues$458,016  59,325  25,140  619,349  159,715  253,763  86,573  (65,660) 1,596,221 
Net revenues$224,912  30,414  13,858  115,851  43,996  78,556  28,582    536,169 
Operating income$52,140  13,413  3,852  58,511  21,049  20,178  8,849    177,992 
Identifiable assets$1,185,671  111,549  48,678  446,914  127,014  421,590  221,835  2,326  2,565,577 
Capital expenditures$6,575  1,313  348  727  784  1,930  803    12,480 
Depreciation and amortization$7,361  366  257  1,311  501  1,389  403    11,588 
Equity$986,330  70,932  33,161  253,097  99,220  154,174  130,105  (32,343) 1,694,676 


 UNITED
STATES
 OTHER
NORTH
AMERICA
 LATIN
AMERICA
 NORTH
ASIA
 SOUTH
ASIA
 EUROPE MIDDLE
EAST,
AFRICA

and
INDIA
 ELIMI-
NATIONS
 CONSOLI-
DATED
Twelve months ended December 31, 2016:                 
Revenues from unaffiliated customers$1,683,006  226,561  84,665  2,242,670  603,980  918,561  338,594    6,098,037 
Transfers between geographic areas106,076  10,778  15,037  21,212  24,251  41,102  21,876  (240,332)  
Total revenues$1,789,082  237,339  99,702  2,263,882  628,231  959,663  360,470  (240,332) 6,098,037 
Net revenues$918,110  119,492  56,066  471,275  171,033  304,429  123,335  296  2,164,036 
Operating income$250,715  32,530  13,321  230,777  64,967  42,195  35,672  (14) 670,163 
Identifiable assets$1,455,722  104,804  49,231  511,851  120,300  351,960  190,902  6,101  2,790,871 
Capital expenditures$39,531  1,727  1,038  3,889  3,038  7,554  2,539    59,316 
Depreciation and amortization$29,939  1,479  1,187  5,455  2,177  4,576  1,983    46,796 
Equity$1,166,582  46,448  27,164  327,672  91,983  108,430  112,633  (33,699) 1,847,213 
Twelve months ended December 31, 2015:                 
Revenues from unaffiliated customers$1,763,361  226,284  94,229  2,557,398  677,628  958,827  338,905    6,616,632 
Transfers between geographic areas118,884  13,383  19,158  21,722  25,018  42,787  21,322  (262,274)  
Total revenues$1,882,245  239,667  113,387  2,579,120  702,646  1,001,614  360,227  (262,274) 6,616,632 
Net revenues$906,780  124,381  65,017  493,235  179,110  308,301  110,953    2,187,777 
Operating income$245,257  46,846  19,656  245,854  69,643  65,024  29,204    721,484 
Identifiable assets$1,185,671  111,549  48,678  446,914  127,014  421,590  221,835  2,326  2,565,577 
Capital expenditures$26,807  3,915  1,756  2,203  2,383  5,222  2,097    44,383 
Depreciation and amortization$29,532  1,331  1,041  5,425  2,110  4,931  1,642    46,012 
Equity$986,330  70,932  33,161  253,097  99,220  154,174  130,105  (32,343) 1,694,676 
                            

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 operating 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 include 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 Twelve months ended
 December 31, December 31,
(in thousands)2016 2015 2016 2015
Total revenues$1,642,007  $1,596,221  $6,098,037  $6,616,632 
Expenses:       
Airfreight services515,612  503,540  1,752,167  1,987,690 
Ocean freight and ocean services371,989  354,106  1,378,699  1,648,993 
Customs brokerage and other services205,815  202,406  803,135  792,172 
Net revenues$548,591  $536,169  $2,164,036  $2,187,777 

 

CONTACTS:

Jeffrey S. Musser			
President and Chief Executive Officer	
(206) 674-3433                                       

Bradley S. Powell				
Senior Vice President and Chief Financial Officer	
(206) 674-3412				

Geoffrey Buscher
Director - Investor Relations
(206) 892-4510