Expeditors Reports Third Quarter 2015 EPS of $0.62 Per Share1

SEATTLE--(BUSINESS WIRE)--

Expeditors International of Washington, Inc. EXPD today announced third quarter 2015 financial results including the following highlights:

• Revenues decreased 3% to $1.7 billion
• Airfreight tonnage volume increased 3% and ocean container volume remained flat.
• Net Revenues² increased 11% to a record $570 million and yields expanded 442 basis points to 34.5%
• Operating Income increased 21% to a record $192 million
• Net Earnings Attributable to Shareholders increased 16% to a record $118 million
• Diluted Net Earnings Attributable to Shareholders per share increased 17% to a record $0.62

"In a market where we continue to hear more and more about the overall slowdown in global trade and saw it in our volumes, it is quite pleasing to report another quarter of outstanding financial results and continued achievement of our long-term double-digit growth targets in net revenues, operating income and earnings. We think these results speak clearly to the level of planning that went into the creation of our strategic initiatives and, more importantly, to the level of focus and execution that is taking place in our branches on a day-to-day basis," said Jeffrey S. Musser, President and Chief Executive Officer. "At a time when it seems that more of our competitors are focused on acquisitions, we remain focused on the organic growth of our people, systems and business. We continue to believe that this model provides the highest long-term value to our employees, customers and shareholders," Mr. Musser went on to say. "By focusing on organic growth, we can continue to provide superior customer service and reward our highly skilled and motivated employees, for whom we are very grateful, with new opportunities."

"Our people continued to perform at a high level during the third quarter as demonstrated by expanding yields from improved purchasing in a favorable spot market and strong cost control," commented Bradley S. Powell, Senior Vice President and Chief Financial Officer. "Air and ocean volume growth slowed and revenues declined 3% year-over-year as both air and ocean overall average sell rates were lower in response to soft market conditions. With these improved margins and continued execution of our strategic initiatives, our primary efficiency measure, operating income as a percentage of net revenue, increased to 33.7%, the highest level in the past five years. We continue to expect pricing volatility going forward as customers and carriers adjust to current market conditions."

Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 186 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.
Third Quarter 2015 Earnings Release, November 3, 2015
Financial Highlights for the Three and Nine months ended September 30, 2015 and 2014 (Unaudited)
(in 000's of US dollars except share data)
		Three months ended September 30,											Nine months ended September 30,
		2015				2014				% Change			2015				2014				% Change
Revenues		$	1,651,332			$	1,705,105			(3	)%		$	5,020,411			$	4,795,891			5	%
Net revenues1		$	569,981			$	513,256			11	%		$	1,651,608			$	1,462,556			13	%
Operating income		$	191,893			$	159,131			21	%		$	543,492			$	436,777			24	%
Net earnings attributable to shareholders		$	118,310			$	102,381			16	%		$	342,774			$	277,507			24	%
Diluted earnings attributable to shareholders per share		$	0.62			$	0.53			17	%		$	1.79			$	1.40			28	%
Basic earnings attributable to shareholders per share		$	0.63			$	0.53			19	%		$	1.80			$	1.41			28	%
Diluted weighted average shares outstanding		189,641,774				195,001,267							191,447,796				197,953,810
Basic weighted average shares outstanding		188,424,400				194,419,071							190,231,986				197,305,251

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 and nine-month periods ended September 30, 2015, the Company repurchased 4.3 million and 8.6 million shares of common stock at an average price of $48.58 and $48.10 per share, respectively. During the three and nine-month periods ended September 30, 2014, the Company repurchased 2.8 million and 11.4 million shares of common stock at an average price of $41.46 and $41.60 per share, respectively.

Other, net declined in the three and nine-month periods ended September 30, 2015 when compared with the same periods of 2014 due primarily to foreign exchange losses incurred in the third quarter of 2015.

		Employee headcount as of September 30,
		2015			2014
North America		5,573			5,152
Europe		2,664			2,392
North Asia		2,465			2,502
Middle East, Africa and India		1,388			1,322
South Asia		1,311			1,278
Latin America		797			737
Information Systems		722			687
Corporate		318			302
Total		15,238			14,372

		Year-over-year percentage increase (decrease) in:
		Airfreight kilos				Ocean freight FEU
2015
July		4	%			1	%
August		—	%			—	%
September		5	%			(2	)%
Quarter		3	%			—	%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 6, 2015 will be considered in management's 8-K "Responses to Selected Questions" expected to be filed on or about November 13, 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 future pricing volatility and impacts on margins, ability to maintain current margin levels, condition of the global economy and global trade, ability to achieve sustainable double digit growth, ability to achieve benefits from strategies, initiatives, ability to achieve strategic goals and benefits of organic growth model. 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)
		September 30, 2015				December 31, 2014
Assets
Current Assets:
Cash and cash equivalents		$	968,683			$	927,107
Short-term investments		8,260				40,336
Accounts receivable, net		1,166,300				1,236,042
Deferred Federal and state income taxes		20,862				20,279
Other current assets		71,355				65,486
Total current assets		2,235,460				2,289,250
Property and equipment, net		527,893				538,415
Goodwill		7,927				7,927
Other assets, net		55,738				55,313
		$	2,827,018			$	2,890,905
Liabilities and Equity
Current Liabilities:
Accounts payable		718,555				770,238
Accrued expenses, primarily salaries and related costs		208,771				192,468
Federal, state and foreign income taxes		27,876				21,077
Total current liabilities		955,202				983,783
Deferred Federal and state income taxes		29,624				35,514
Commitments and contingencies
Shareholders' Equity:
Preferred stock; none issued		—				—
Common stock, par value $0.01 per share. Issued and outstanding 186,183,201 shares at September 30, 2015 and 191,655,690 shares at December 31, 2014		1,862				1,916
Additional paid-in capital		874				1,113
Retained earnings		1,910,388				1,903,196
Accumulated other comprehensive loss		(74,079		)		(37,817		)
Total shareholders' equity		1,839,045				1,868,408
Noncontrolling interest		3,147				3,200
Total equity		1,842,192				1,871,608
		$	2,827,018			$	2,890,905

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(In thousands, except share data)
(Unaudited)
		Three months ended								Nine months ended
		September 30,								September 30,
		2015				2014				2015				2014
Revenues:
Airfreight services		$	659,607			$	686,434			$	2,060,863			$	2,000,829
Ocean freight and ocean services		559,976				600,483				1,702,465				1,606,145
Customs brokerage and other services		431,749				418,188				1,257,083				1,188,917
Total revenues		1,651,332				1,705,105				5,020,411				4,795,891
Operating Expenses:
Airfreight services		464,161				516,969				1,484,150				1,503,064
Ocean freight and ocean services		416,075				475,460				1,294,887				1,266,551
Customs brokerage and other services		201,115				199,420				589,766				563,720
Salaries and related costs		295,566				272,548				861,509				789,257
Rent and occupancy costs		25,747				26,396				76,106				76,959
Depreciation and amortization		11,475				12,741				34,424				37,540
Selling and promotion		10,370				9,240				30,146				26,704
Other		34,930				33,200				105,931				95,319
Total operating expenses		1,459,439				1,545,974				4,476,919				4,359,114
Operating income		191,893				159,131				543,492				436,777
Other Income (Expense):
Interest income		2,666				2,793				8,034				8,254
Other, net		(3,085		)		2,336				753				5,245
Other (expense) income, net		(419		)		5,129				8,787				13,499
Earnings before income taxes		191,474				164,260				552,279				450,276
Income tax expense		72,738				61,463				207,882				171,556
Net earnings		118,736				102,797				344,397				278,720
Less net earnings attributable to the noncontrolling interest		426				416				1,623				1,213
Net earnings attributable to shareholders		$	118,310			$	102,381			$	342,774			$	277,507
Diluted earnings attributable to shareholders per share		$	0.62			$	0.53			$	1.79			$	1.40
Basic earnings attributable to shareholders per share		$	0.63			$	0.53			$	1.80			$	1.41
Weighted average diluted shares outstanding		189,641,774				195,001,267				191,447,796				197,953,810
Weighted average basic shares outstanding		188,424,400				194,419,071				190,231,986				197,305,251

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
		Three months ended								Nine months ended
		September 30,								September 30,
		2015				2014				2015				2014
Operating Activities:
Net earnings		$	118,736			$	102,797			$	344,397			$	278,720
Adjustments to reconcile net earnings to net cash from operating activities:
Provision for losses (recoveries) on accounts receivable		134				564				995				(55		)
Deferred income tax (benefit) expense		(7,611		)		(2,085		)		13,312				8,000
Excess tax benefits from stock plans		—				(47		)		(1,846		)		(1,031		)
Stock compensation expense		10,919				10,049				32,489				32,220
Depreciation and amortization		11,475				12,741				34,424				37,540
Other		2				139				115				345
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable		2,466				(58,984		)		18,910				(131,374		)
(Decrease) increase in accounts payable and accrued expenses		(19,622		)		23,113				3,311				114,036
Increase (decrease) in income taxes payable, net		19,978				2,050				4,110				(27,115		)
Increase in other current assets		(3,801		)		(3,646		)		(1,419		)		(5,852		)
Net cash from operating activities		132,676				86,691				448,798				305,434
Investing Activities:
Decrease (increase) in short-term investments, net		38,788				45,832				32,076				(13,980		)
Purchase of property and equipment		(9,546		)		(8,255		)		(31,903		)		(26,650		)
Escrow deposit for land acquisition		—				—				—				(27,101		)
Other, net		(2,666		)		370				(2,482		)		504
Net cash from investing activities		26,576				37,947				(2,309		)		(67,227		)
Financing Activities:
Proceeds from issuance of common stock		54,606				28,452				114,701				58,469
Repurchases of common stock		(209,970		)		(117,044		)		(415,475		)		(475,160		)
Excess tax benefits from stock plans		—				47				1,846				1,031
Dividends paid		—				—				(68,781		)		(62,807		)
Distribution to noncontrolling interest		—				—				(857		)		(85		)
Net cash from financing activities		(155,364		)		(88,545		)		(368,566		)		(478,552		)
Effect of exchange rate changes on cash and cash equivalents		(20,932		)		(16,174		)		(36,347		)		(16,827		)
(Decrease) increase in cash and cash equivalents		(17,044		)		19,919				41,576				(257,172		)
Cash and cash equivalents at beginning of period		985,727				970,561				927,107				1,247,652
Cash and cash equivalents at end of period		$	968,683			$	990,480			$	968,683			$	990,480
Taxes paid:
Income taxes		$	60,374			$	61,899			$	190,024			$	195,358

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 September 30, 2015:
Revenues from unaffiliated customers		$	441,097			56,818			24,681			648,096			158,011			234,334			88,295			—			1,651,332
Transfers between geographic areas		29,168				3,492			4,991			5,206			6,289			11,125			5,459			(65,730	)		—
Total revenues		$	470,265			60,310			29,672			653,302			164,300			245,459			93,754			(65,730	)		1,651,332
Net revenues1		$	232,912			32,713			17,115			135,488			45,970			77,250			28,533			—			569,981
Operating income		$	65,389			11,905			5,007			69,690			18,574			14,188			7,140			—			191,893
Identifiable assets		$	1,385,157			108,644			56,987			472,189			140,206			427,053			229,670			7,112			2,827,018
Capital expenditures		$	6,196			658			222			711			291			1,223			245			—			9,546
Depreciation and amortization		$	7,439			363			268			1,336			531			1,120			418			—			11,475
Equity		$	1,144,466			64,384			35,890			250,362			103,457			148,287			126,321			(30,975	)		1,842,192
Three months ended September 30, 2014:
Revenues from unaffiliated customers		$	438,882			55,209			22,962			670,763			174,839			259,960			82,490			—			1,705,105
Transfers between geographic areas		24,847				2,867			5,194			6,116			6,814			9,783			5,171			(60,792	)		—
Total revenues		$	463,729			58,076			28,156			676,879			181,653			269,743			87,661			(60,792	)		1,705,105
Net revenues1		$	215,320			27,323			16,792			106,225			42,023			80,024			25,549			—			513,256
Operating income		$	68,972			7,779			4,890			45,153			12,073			14,921			5,343			—			159,131
Identifiable assets		$	1,333,124			113,621			53,939			580,260			152,236			476,799			204,378			11,696			2,926,053
Capital expenditures		$	3,171			361			369			1,648			1,247			1,016			443			—			8,255
Depreciation and amortization		$	8,369			303			226			1,493			523			1,391			436			—			12,741
Equity		$	1,074,837			75,848			34,218			341,092			111,556			185,332			114,229			(33,182	)		1,903,930

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.

		UNITED STATES				OTHER NORTH AMERICA			LATIN AMERICA			NORTH ASIA			SOUTH ASIA			EUROPE			MIDDLE EAST, AFRICA and INDIA			ELIMI- NATIONS			CONSOLI- DATED
Nine months ended September 30, 2015:
Revenues from unaffiliated customers		$	1,334,900			170,351			73,076			1,943,441			524,254			716,373			258,016			—			5,020,411
Transfers between geographic areas		89,329				9,991			15,171			16,330			18,677			31,478			15,638			(196,614	)		—
Total revenues		$	1,424,229			180,342			88,247			1,959,771			542,931			747,851			273,654			(196,614	)		5,020,411
Net revenues1		$	681,868			93,967			51,159			377,384			135,114			229,745			82,371			—			1,651,608
Operating income		$	193,117			33,433			15,804			187,343			48,594			44,846			20,355			—			543,492
Identifiable assets		$	1,385,157			108,644			56,987			472,189			140,206			427,053			229,670			7,112			2,827,018
Capital expenditures		$	20,232			2,602			1,408			1,476			1,599			3,292			1,294			—			31,903
Depreciation and amortization		$	22,171			965			784			4,114			1,609			3,542			1,239			—			34,424
Equity		$	1,144,466			64,384			35,890			250,362			103,457			148,287			126,321			(30,975	)		1,842,192
Nine months ended September 30, 2014:
Revenues from unaffiliated customers		$	1,256,075			162,136			65,594			1,863,077			468,152			744,466			236,391			—			4,795,891
Transfers between geographic areas		67,266				7,829			15,965			17,170			20,072			28,931			14,638			(171,871	)		—
Total revenues		$	1,323,341			169,965			81,559			1,880,247			488,224			773,397			251,029			(171,871	)		4,795,891
Net revenues1		$	607,508			79,017			48,797			297,117			121,261			234,313			74,543			—			1,462,556
Operating income		$	180,650			23,155			14,425			124,528			36,371			41,515			16,133			—			436,777
Identifiable assets		$	1,333,124			113,621			53,939			580,260			152,236			476,799			204,378			11,696			2,926,053
Capital expenditures		$	12,646			1,047			841			5,691			2,221			3,116			1,088			—			26,650
Depreciation and amortization		$	24,100			879			665			4,471			1,739			4,376			1,310			—			37,540
Equity		$	1,074,837			75,848			34,218			341,092			111,556			185,332			114,229			(33,182	)		1,903,930

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.

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								Nine months ended
		September 30,								September 30,
(in thousands)		2015				2014				2015				2014
Total revenues		$	1,651,332			$	1,705,105			$	5,020,411			$	4,795,891
Expenses:
Airfreight services		464,161				516,969				1,484,150				1,503,064
Ocean freight and ocean services		416,075				475,460				1,294,887				1,266,551
Customs brokerage and other services		201,115				199,420				589,766				563,720
Net revenues		$	569,981			$	513,256			$	1,651,608			$	1,462,556

View source version on businesswire.com: http://www.businesswire.com/news/home/20151103005215/en/