Expeditors Reports Second Quarter 2024 EPS of $1.24

Business Wire 6-Aug-2024 8:30 AM

Expeditors International of Washington, Inc. (NYSE:EXPD) today announced second quarter 2024 financial results including the following comparisons to the same quarter of 2023:

• Diluted Net Earnings Attributable to Shareholders per share (EPS¹) decreased 5% to $1.24
• Net Earnings Attributable to Shareholders decreased 11% to $175 million
• Operating Income decreased 10% to $224 million
• Revenues increased 9% to $2.4 billion
• Airfreight tonnage volume increased 15% and ocean container volume decreased 3%

"We continued to adapt well to another erratic quarter for our industry, which has been impacted by the rapid changes and imbalances in buy versus sell rates, particularly on exports out of Asia," said Jeffrey S. Musser, President and Chief Executive Officer. "Air market capacity has been constrained by e-commerce demand, and ocean routing has been significantly disrupted by geopolitical events in the Red Sea, causing less frequent services due to blank sailings, longer transit times as well as port congestion. We have continued to adjust to the disruptions and uneven demand, keeping costs in check while we work to bring efficiency back in line with historical expectations.

"Air tonnage improved 15% year-over-year and 10% sequentially against Q1 2024, but buy rates outpaced increased sell rates, as international direct e-commerce demand from North Asia outweighed increased carrier capacity to accommodate this growth in demand. The air markets have further been impacted by manufacturing relocations. With respect to the ocean market, longer sailings due to insecurity on the Red Sea have largely lessened the benefits of any increased ocean capacity brought on this quarter. Even though ocean volumes increased for a second sequential quarter, buy rate increases outpaced higher sell rates.

"As we noted in the first quarter, our ability to see much beyond our day-to-day levels of activity remains challenging. While there are some signs of improving market conditions, there is much uncertainty with regard to demand, capacity, and pricing, not to mention unpredictable events with the potential to impact global shipping for days, weeks, or even longer. I am grateful for the customer-focused dedication of our workforce, particularly during these unpredictable times. We remain focused on keeping costs in check and are ready to pivot for whatever new challenges arise."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "Expenses are still high compared to our 30% efficiency target (operating income as a percentage of revenue less directly related cost of transportation and other expenses), with compensation being our largest and most variable operating expense. We continue to focus on alignment of shipment activity with headcount. Once again, our primary area of increased headcount during the quarter compared to the same quarter last year was in information systems, as we add critical enhancements to further bolster our technology solutions, network and security. As we drive to achieve our efficiency target, we will continue to make important investments in people, processes and technology, as well as to invest in our strategic efforts to explore new areas for profitable growth."

Mr. Powell also noted that the Company returned $205 million to shareholders in common stock repurchases and dividends during the second quarter of 2024.

Expeditors is a global logistics company headquartered in Seattle, Washington. The Company employs trained professionals in 176 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, time-definite transportation, order management, warehousing and distribution and customized logistics solutions.

_______________________ ¹Diluted earnings attributable to shareholders per share. NOTE: See Disclaimer on Forward-Looking Statements in this release.

Disclaimer on Forward-Looking Statements:

Certain statements contained in this news release are "forward-looking statements," based on management's views with respect to future events and underlying assumptions that involve risks and uncertainties. These forward-looking statements include statements regarding inflation; fragile economies; continued growth in air and ocean carrier capacity and the impact on rates; unpredictability in the ocean and air markets, including uncertainty due to conflicts in the Middle East and Red Sea; new capacity in the marketplace; longer ocean transit times; strong e-commerce demand in the air market; and cautious shipper demand and variable rate stability. Future financial performance could differ materially because of factors such as: our ability to keep headcount and other costs in check while continuing to drive efficiency back towards our historical expectations; the alignment of our variable compensation structure with performance; our ability to enhance and bolster our network security; that management is able to grow the business and explore new areas for profitable growth; our ability to leverage the strength of our carrier relationships; the strength of our non-asset-based operating model; and our ability to remain a strong, healthy, unified and resilient organization. The normalizing of the supply chain at the end of the pandemic, along with geo-political risks and the current uncertainty in the global economy, could have the effect of heightening many of the other risks described in Item 1A of our Annual Report on Form 10-K, including, without limitation, those related to the success of our strategy and desire to maintain historical unitary profitability, our ability to attract and retain customers, our ability to manage costs, interruptions to our information technology systems, the ability of third-party providers to perform and potential litigation and contingencies, including risks associated with tax audits, as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission. These and other factors are discussed in the Company's regulatory filings with the Securities and Exchange Commission, including those in "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the Company's most recent Form 10-Q. The forward-looking statements contained in this news release speak only as of this date and the Company does not assume any obligation to update them except as required by law.

¹Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

²Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

During the three and six months ended June 30, 2024, we repurchased 0.9 million and 3.9 million shares of common stock at an average price of $116.88 and $119.43 per share. During the three and six months ended June 30, 2023 we repurchased 6.0 million and 8.0 million shares of common stock at an average price of $114.61 and $113.23 per share.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 9, 2024 will be considered in management's 8-K "Responses to Selected Questions."

¹Directly related cost of transportation and other expenses totals Operating Expenses from Airfreight services, Ocean freight and ocean services and Customs brokerage and other services as shown in the Condensed Consolidated Statements of Earnings.

²Salaries and other operating expenses totals Salaries and related, Rent and occupancy, Depreciation and amortization, Selling and promotion and Other as shown in the Condensed Consolidated Statements of Earnings.

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