Expeditors International of Washington, Inc. (NASDAQ: EXPD) today
announced fourth quarter 2015 financial results including the following
highlights compared to the same quarter of 2014:
Diluted Net Earnings Attributable to Shareholders per share increased
20% to $0.61
Net Earnings Attributable to Shareholders increased 15% to $114 million
Operating Income increased 13% to $178 million
Net Revenues2 increased 3% to $536 million and yields
expanded 426 basis points to 33.6%
"As the strength of our results show, we have adapted well to a rapidly
changing environment to produce net revenue yields that are among the
best in our history," commented Bradley S. Powell, Senior Vice President
and Chief Financial Officer. "We generated these strong results even
though both air and ocean volume growth softened in the latter part of
the year, and average sell rates came under pressure. Despite those
dynamics, our people proved adept at taking advantage of opportunistic
buy rates to increase operating profit and produce a fourth quarter
operating income to net revenue margin in excess of 33%. In the fourth
quarter, we continued to benefit from available ocean and air carrier
capacity and favorable spot market buying opportunities, even as our
revenues declined on lower average sell rates and volumes, as a result
of slower market conditions. It's no surprise that global uncertainty
has made an increasingly interconnected marketplace more unpredictable,
and we expect rate volatility to continue for some time. Looking
forward, we are aware of the uncertainties and challenges with the
global economy and global trade, and how they may impact the comparisons
to our 2015 financial results."
Jeffrey S. Musser, President and Chief Executive Officer, added, "The
best year in the Company's history doesn't happen by accident.
Throughout 2015, we further implemented our strategic plan to align more
closely with opportunities and focus on growing our businesses. While we
believe we benefited in the first half of the year from some
unquantifiable increase in airfreight because of the West Coast labor
dispute, we were adversely impacted by a softening in rates and volumes
in the second half of the year. These shifting dynamics required our
people to do what they do best, which is drive efficiency while
providing the highest level of customer service. Through their efforts,
we demonstrated how we are able to expand our margins by going after
profitable business and gaining market share. I couldn't be more proud
of the energy and the entrepreneurial spirit at Expeditors. That culture
has enabled us to grow and achieve a new Company best. We've grown
deliberately and organically, investing in our people and our systems to
make us more efficient and profitable than ever before in our history. I
thank all of our employees for their dedication to making this our best
year ever."
"This was also a year of record returns to shareholders," Mr. Musser
continued. "In 2015, we paid out more than $135 million in dividends and
repurchased nearly $630 million in stock. Our disciplined business
model, combined with the strength of our balance sheet, has given us the
flexibility to invest in profitable growth while also returning capital
to investors. While our first priority will always be investing for
growth in our business, we are dedicated to accomplishing both."
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, 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 2015 Earnings Release, February 23, 2016
Financial Highlights for the Three months and Years ended
December 31, 2015 and 2014 (Unaudited)
(in 000's of US dollars except per share data)
Three months ended
Years ended
December 31,
December 31,
2015
2014
% Change
2015
2014
% Change
Revenues
$
1,596,221
$
1,768,830
(10
)%
$
6,616,632
$
6,564,721
1
%
Net revenues3
$
536,169
$
518,871
3
%
$
2,187,777
$
1,981,427
10
%
Operating income4
$
177,992
$
157,871
13
%
$
721,484
$
594,648
21
%
Net earnings attributable to shareholders
$
114,449
$
99,381
15
%
$
457,223
$
376,888
21
%
Diluted earnings attributable to shareholders
$
0.61
$
0.51
20
%
$
2.40
$
1.92
25
%
Basic earnings attributable to shareholders
$
0.62
$
0.52
19
%
$
2.42
$
1.92
26
%
Diluted weighted average shares outstanding
186,519
193,307
190,223
196,768
Basic weighted average shares outstanding
185,111
192,709
188,941
196,147
_______________________
3Non-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.
4Includes a $6 million recovery of legal and related fees in
the fourth quarter of 2015.
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. During
the three- and twelve-month periods ended December 31, 2014, the Company
repurchased 1.7 million and 13.1 million shares of common stock at an
average price of $45.13 and $42.05 per share, respectively.
Employee headcount as of December 31,
2015
2014
North America
5,655
5,279
Europe
2,685
2,472
North Asia
2,464
2,539
South Asia
1,323
1,285
Middle East, Africa and India
1,417
1,344
Latin America
796
748
Information Systems
741
702
Corporate
316
290
Total
15,397
14,659
Year-over-year percentage increase (decrease) in:
Airfreight kilos
Ocean freight FEU
2015
October
6
%
(5
)%
November
(6
)%
(3
)%
December
(2
)%
1
%
Quarter
(1
)%
(2
)%
_______________________
Investors may submit written questions via e-mail to: [email protected].
Questions received by the end of business on February 26, 2016, will be
considered in management's 8-K "Responses to Selected Questions"
expected to be filed on or about March 11, 2016.
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 plan, 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
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 per share data)
(Unaudited)
December 31, 2015
December 31, 2014
Assets
Current Assets:
Cash and cash equivalents
$
807,796
$
927,107
Short-term investments
40
40,336
Accounts receivable, net
1,112,260
1,236,042
Deferred Federal and state income taxes
16,861
20,279
Other current assets
56,413
65,486
Total current assets
1,993,370
2,289,250
Property and equipment, net
524,724
538,415
Goodwill
7,927
7,927
Other assets, net
56,417
55,313
$
2,582,438
$
2,890,905
Liabilities and Equity
Current Liabilities:
Accounts payable
$
645,304
$
770,238
Accrued expenses, primarily salaries and related costs
186,571
192,468
Federal, state and foreign income taxes
29,498
21,077
Total current liabilities
861,373
983,783
Deferred Federal and state income taxes
26,389
35,514
Commitments and contingencies
Shareholders' Equity:
Preferred stock; none issued
—
—
Common stock, par value $0.01 per share; issued and outstanding
182,067 shares at December 31, 2015, and 191,656 shares at
December 31, 2014
1,821
1,916
Additional paid-in capital
31
1,113
Retained earnings
1,771,379
1,903,196
Accumulated other comprehensive loss
(81,238
)
(37,817
)
Total shareholders' equity
1,691,993
1,868,408
Noncontrolling interest
2,683
3,200
Total equity
1,694,676
1,871,608
$
2,582,438
$
2,890,905
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,
2015
2014
2015
2014
Revenues:
Airfreight services
$
679,720
$
780,011
$
2,740,583
$
2,780,840
Ocean freight and ocean services
491,539
568,249
2,194,004
2,174,394
Customs brokerage and other services
424,962
420,570
1,682,045
1,609,487
Total revenues
1,596,221
1,768,830
6,616,632
6,564,721
Operating Expenses:
Airfreight services
503,540
600,713
1,987,690
2,103,777
Ocean freight and ocean services
354,106
446,244
1,648,993
1,712,795
Customs brokerage and other services
202,406
203,002
792,172
766,722
Salaries and related costs
282,002
276,072
1,143,511
1,065,329
Rent and occupancy costs
26,364
25,851
102,470
102,810
Depreciation and amortization
11,588
11,752
46,012
49,292
Selling and promotion
11,844
11,421
41,990
38,125
Other
26,379
35,904
132,310
131,223
Total operating expenses
1,418,229
1,610,959
5,895,148
5,970,073
Operating income
177,992
157,871
721,484
594,648
Interest income
2,387
2,519
10,421
10,773
Other, net
4,031
223
4,784
5,468
Other income, net
6,418
2,742
15,205
16,241
Earnings before income taxes
184,410
160,613
736,689
610,889
Income tax expense
69,310
59,873
277,192
231,429
Net earnings
115,100
100,740
459,497
379,460
Less net earnings attributable to the noncontrolling interest
651
1,359
2,274
2,572
Net earnings attributable to shareholders
$
114,449
$
99,381
$
457,223
$
376,888
Diluted earnings attributable to shareholders per share
$
0.61
$
0.51
$
2.40
$
1.92
Basic earnings attributable to shareholders per share
$
0.62
$
0.52
$
2.42
$
1.92
Dividends declared and paid per common share
$
0.36
$
0.32
$
0.72
$
0.64
Weighted average diluted shares outstanding
186,519
193,307
190,223
196,768
Weighted average basic shares outstanding
185,111
192,709
188,941
196,147
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,
2015
2014
2015
2014
Operating Activities:
Net earnings
$
115,100
$
100,740
$
459,497
$
379,460
Adjustments to reconcile net earnings to net cash from operating
activities:
Provision for losses on accounts receivable
1,178
818
2,173
763
Deferred income tax expense (benefit)
4,687
(14,576
)
17,999
(6,576
)
Excess tax benefits from stock plans
(4
)
(84
)
(1,850
)
(1,115
)
Stock compensation expense
10,926
10,313
43,415
42,533
Depreciation and amortization
11,588
11,752
46,012
49,292
Other
(139
)
(5
)
(24
)
340
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable
43,709
(75,513
)
62,619
(206,887
)
(Decrease) increase in accounts payable and accrued expenses
(87,475
)
39,388
(84,164
)
153,424
Increase (decrease) in income taxes payable, net
14,272
14,117
18,382
(12,998
)
Decrease (increase) in other current assets
2,072
2,582
653
(3,270
)
Net cash from operating activities
115,914
89,532
564,712
394,966
Investing Activities:
Decrease (increase) in short-term investments, net
8,218
(20
)
40,294
(14,000
)
Purchase of property and equipment
(12,480
)
(10,822
)
(44,383
)
(37,472
)
Escrow deposit on land acquisition
—
—
—
(27,101
)
Other, net
(855
)
(842
)
(3,337
)
(338
)
Net cash from investing activities
(5,117
)
(11,684
)
(7,426
)
(78,911
)
Financing Activities:
Proceeds from issuance of common stock
16,263
10,800
130,964
69,269
Repurchases of common stock
(214,516
)
(75,621
)
(629,991
)
(550,781
)
Excess tax benefits from stock plans
4
84
1,850
1,115
Dividends paid
(66,892
)
(61,827
)
(135,673
)
(124,634
)
Distribution to noncontrolling interest
(1,265
)
(418
)
(2,122
)
(503
)
Net cash from financing activities
(266,406
)
(126,982
)
(634,972
)
(605,534
)
Effect of exchange rate changes on cash and cash equivalents
(5,278
)
(14,239
)
(41,625
)
(31,066
)
Decrease in cash and cash equivalents
(160,887
)
(63,373
)
(119,311
)
(320,545
)
Cash and cash equivalents at beginning of period
968,683
990,480
927,107
1,247,652
Cash and cash equivalents at end of period
$
807,796
$
927,107
$
807,796
$
927,107
Taxes paid:
Income taxes
$
49,343
$
59,081
$
239,367
$
254,439
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, 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 areas
29,555
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
$
1,202,532
111,549
48,678
446,914
127,014
421,590
221,835
2,326
2,582,438
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
Three months ended December 31, 2014:
Revenues from unaffiliated customers
$
438,744
56,599
23,464
713,273
189,037
267,923
79,790
—
1,768,830
Transfers between geographic areas
29,762
3,062
4,669
5,850
6,507
10,610
5,016
(65,476
)
—
Total revenues
$
468,506
59,661
28,133
719,123
195,544
278,533
84,806
(65,476
)
1,768,830
Net revenues
$
215,603
29,614
16,219
110,293
42,122
79,012
26,008
—
518,871
Operating income
$
40,516
13,320
5,430
52,968
16,225
20,586
8,826
—
157,871
Identifiable assets
$
1,408,598
111,324
53,815
513,649
141,499
447,349
208,684
5,987
2,890,905
Capital expenditures
$
6,964
392
733
264
897
1,130
442
—
10,822
Depreciation and amortization
$
7,453
291
246
1,467
556
1,314
425
—
11,752
Equity
$
1,165,488
54,338
34,386
262,295
99,234
169,117
121,520
(34,770
)
1,871,608
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, 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 areas
118,884
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
$
1,202,532
111,549
48,678
446,914
127,014
421,590
221,835
2,326
2,582,438
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
Twelve months ended December 31, 2014:
Revenues from unaffiliated customers
$
1,694,819
218,735
89,058
2,576,350
657,189
1,012,389
316,181
—
6,564,721
Transfers between geographic areas
97,028
10,891
20,634
23,020
26,579
39,541
19,654
(237,347
)
—
Total revenues
$
1,791,847
229,626
109,692
2,599,370
683,768
1,051,930
335,835
(237,347
)
6,564,721
Net revenues
$
823,111
108,631
65,016
407,410
163,383
313,325
100,551
—
1,981,427
Operating income
$
221,166
36,475
19,855
177,496
52,596
62,101
24,959
—
594,648
Identifiable assets
$
1,408,598
111,324
53,815
513,649
141,499
447,349
208,684
5,987
2,890,905
Capital expenditures
$
19,610
1,439
1,574
5,955
3,118
4,246
1,530
—
37,472
Depreciation and amortization
$
31,553
1,170
911
5,938
2,295
5,690
1,735
—
49,292
Equity
$
1,165,488
54,338
34,386
262,295
99,234
169,117
121,520
(34,770
)
1,871,608
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 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.
Expeditors International of Washington, Inc. Jeffrey S. Musser,
206-674-3433 President and Chief Executive Officer or Bradley
S. Powell, 206-674-3412 Senior Vice President and Chief Financial
Officer or Geoffrey Buscher, 206-892-4510 Director -
Investor Relations
