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 |
