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Expeditors Reports Second Quarter 2021 EPS of $1.84

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2021 financial results including the following highlights compared to the same quarter of 2020:

  • Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 69% to $1.84
  • Net Earnings Attributable to Shareholders increased 72% to $316 million
  • Operating Income increased 66% to $411 million
  • Revenues increased 50% to $3.6 billion
  • Airfreight tonnage volume and ocean container volume increased 37% and 34%, respectively

“We continued to move unprecedented volumes during the quarter, as ocean and air buy/sell rates remained elevated and volatile, capacity was extremely tight, and supply chain disruptions showed no signs of abatement,” said Jeffrey S. Musser, President and Chief Executive Officer. “Our entire company continues to perform at its very best, with strong performance and growth across all of our products. Because of ongoing supply/demand imbalances, as well as labor and equipment shortages around the globe, shippers face extraordinarily complex challenges throughout their supply chains. Logistics is now top of mind at the highest levels in most organizations. Unfortunately, there is no quick or simple fix to any of these issues and every one of our transactions seems to require significantly more attention and dedication. Whether it’s an ocean container, a customs declaration, a fulfillment order in one of our warehouses, or a high-touch, white-glove delivery for one of our Transcon customers – just about everything we do requires us to be more innovative, flexible, and alert to change in the current operating environment. I want to express enormous gratitude to our employees, who have continued to take care of our customers throughout these challenges.

“During the quarter, we achieved new records in airfreight tonnage and ocean container volumes, operating income and net earnings. Buy and sell rates remained significantly higher than pre-pandemic norms, as we worked with our carrier partners to secure precious space for our customers. It has not been easy. Many of the impediments to smoother trade flow, such as port congestion and equipment shortages, were not appreciably better in Q2 than they were in Q1.

“Currently, we do not foresee any meaningful improvements to the operating environment over at least the remainder of the year, as the global infrastructure for moving freight seems nearly stretched to its limit. Robust demand is bumping up against capacity constraints in the air and ocean markets, all of which is made more challenging by limited warehouse space, staffing constraints, port congestion, equipment dislocations, and driver shortages, not to mention additional disturbances such as the closure of the Yantian port due to a COVID-19 outbreak in May or the blockage of the Suez Canal back in March.

“We will continue to do all that we can to help our customers during such difficult times. While we remain optimistic that conditions will improve over time, we are unable to predict when that might take place, or how even the recovery might be, and we believe that demand will likely continue to outstrip capacity in both air and ocean for the near term, keeping buy/sell rates unsettled for at least the duration of 2021.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “The quarter just ended provides the first meaningful comparisons to a strong year-ago quarter in 2020, when we first started to see the results of our improved performance during the unprecedented conditions brought on by the global COVID-19 pandemic. At that time, we were just starting to demonstrate our ability to quickly adapt to a radically different operating environment of high demand for very specific products in certain lanes at a time when the vast majority of air capacity had been removed and most of our people were settling in to working from home. A year later, as we are cautiously beginning to bring our people back on site, we are navigating a multitude of challenges and performing at levels we have never seen before across the company and in all of our products. We are busier than ever, generating growth in revenue, operating income, and earnings that is well ahead of expenses, as we continue to learn how to operate in this environment. While we believe the current environment is likely to remain at least through the end of 2021, I would again caution that we are unable to predict how long these ongoing conditions will persist or the impact they will have on our future operations. Regardless, 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.”

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.

Expeditors International of Washington, Inc.

Second Quarter 2021 Earnings Release, August 3, 2021

Financial Highlights for the three and six months ended June 30, 2021 and 2020 (Unaudited)

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

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Revenues3

 

$

3,609,093

 

 

$

2,411,078

 

 

50%

 

$

6,807,913

 

 

$

4,254,845

 

 

60%

Directly related cost of transportation and other expenses1,3

 

$

2,598,633

 

 

$

1,661,487

 

 

56%

 

$

4,845,917

 

 

$

2,890,118

 

 

68%

Salaries and other operating expenses2

 

$

599,815

 

 

$

501,965

 

 

19%

 

$

1,165,836

 

 

$

958,046

 

 

22%

Operating income

 

$

410,645

 

 

$

247,626

 

 

66%

 

$

796,160

 

 

$

406,681

 

 

96%

Net earnings attributable to shareholders

 

$

316,372

 

 

$

183,869

 

 

72%

 

$

603,592

 

 

$

306,213

 

 

97%

Diluted earnings attributable to shareholders per share

 

$

1.84

 

 

$

1.09

 

 

69%

 

$

3.52

 

 

$

1.80

 

 

96%

Basic earnings attributable to shareholders per share

 

$

1.87

 

 

$

1.10

 

 

70%

 

$

3.57

 

 

$

1.83

 

 

95%

Diluted weighted average shares outstanding

 

 

171,677

 

 

 

169,290

 

 

 

 

 

171,660

 

 

 

170,382

 

 

 

Basic weighted average shares outstanding

 

 

169,210

 

 

 

166,767

 

 

 

 

 

169,140

 

 

 

167,751

 

 

 

____________________

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.

3Beginning in the first quarter 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. These errors do not affect any of the metrics used to calculate or evaluate management’s compensation and had no impact on bonuses, commissions, share-based compensation or any other employee remuneration. Historical amounts have been revised and are presented on a comparable basis.

During the three and six months ended June 30, 2021, we repurchased 0.5 million and 1.4 million shares of common stock at an average price of $124.94 and $104.20 per share, respectively. During the three and six months ended June 30, 2020, we repurchased 0.4 million and 4.4 million shares of common stock at an average price of $77.46 and $71.41 per share, respectively.

 

 

Employee Full-time Equivalents as of

June 30,

 

 

2021

 

2020

North America

 

 

6,949

 

 

 

6,749

 

Europe

 

 

3,700

 

 

 

3,419

 

North Asia

 

 

2,416

 

 

 

2,413

 

South Asia

 

 

1,671

 

 

 

1,654

 

Middle East, Africa and India

 

 

1,496

 

 

 

1,528

 

Latin America

 

 

781

 

 

 

823

 

Information Systems

 

 

968

 

 

 

971

 

Corporate

 

 

399

 

 

 

380

 

Total

18,380

 

 

 

17,937

Disclaimer on Forward-Looking Statements:

NOTE: See Disclaimer on Forward-Looking Statements in this release.

 

Second quarter year-over-year

percentage increase in:

2021

 

Airfreight

kilos

 

Ocean freight

FEU

April

 

29%

 

34%

May

 

39%

 

36%

June

 

46%

 

30%

Quarter

 

37%

 

34%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on August 6, 2021 will be considered in management's 8-K “Responses to Selected Questions.”

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 the future stabilization of supply/demand imbalance and rate volatility; the continued unsettled operating environment due to continued scarce air and ocean capacity; elevated air and ocean pricing and an increase in demand for such services; port congestion; equipment imbalances; trade disruptions; rising fuels costs; and the uneven lifting of the COVID-19 pandemic restrictions. Future financial performance could differ materially because of factors such as: our ability to leverage the strength of our carrier relationships to secure space; the strength of our non-asset-based operating model; our expectation that the supply/demand imbalance and rate volatility will continue for the remainder of 2021 and will stabilize over time; our ability to re-open our offices for return-to-work; our ability to continue to enhance our productivity; our expectation that the current unprecedented operating conditions will not persist long-term; our ability to invest in our strategic efforts to explore new areas for profitable growth; and our ability to remain a strong, healthy, unified and resilient organization. The COVID-19 pandemic 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 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, 2020. 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.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

June 30,

2021

 

December 31,

2020

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,674,121

 

 

$

1,527,791

 

Accounts receivable, less allowance for credit loss of $6,104 at June 30, 2021 and $5,579 at December 31, 2020

 

 

2,647,516

 

 

 

1,998,055

 

Deferred contract costs

 

 

534,692

 

 

 

327,448

 

Other

 

 

128,933

 

 

 

110,250

 

Total current assets

 

 

4,985,262

 

 

 

3,963,544

 

Property and equipment, less accumulated depreciation and amortization of $534,790 at June 30, 2021 and $516,988 at December 31, 2020

 

 

499,282

 

 

 

506,425

 

Operating lease right-of-use assets

 

 

443,708

 

 

 

432,723

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Other assets, net

 

 

16,992

 

 

 

16,884

 

Total assets

 

$

5,953,171

 

 

$

4,927,503

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,408,572

 

 

$

1,136,859

 

Accrued expenses, primarily salaries and related costs

 

 

319,696

 

 

 

257,021

 

Contract liabilities

 

 

619,140

 

 

 

379,722

 

Current portion of operating lease liabilities

 

 

80,210

 

 

 

74,004

 

Federal, state and foreign income taxes

 

 

57,608

 

 

 

45,437

 

Total current liabilities

 

 

2,485,226

 

 

 

1,893,043

 

Noncurrent portion of operating lease liabilities

 

 

370,333

 

 

 

364,185

 

Deferred federal and state income taxes, net

 

 

13,961

 

 

 

7,048

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

Common stock, par value $0.01 per share. Issued and outstanding: 169,169 shares at June 30, 2021 and 169,294 shares at December 31, 2020

 

 

1,692

 

 

 

1,693

 

Additional paid-in capital

 

 

79,357

 

 

 

157,496

 

Retained earnings

 

 

3,104,471

 

 

 

2,600,201

 

Accumulated other comprehensive loss

 

 

(106,066

)

 

 

(99,753

)

Total shareholders’ equity

 

 

3,079,454

 

 

 

2,659,637

 

Noncontrolling interest

 

 

4,197

 

 

 

3,590

 

Total equity

 

 

3,083,651

 

 

 

2,663,227

 

Total liabilities and equity

 

$

5,953,171

 

 

$

4,927,503

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,523,569

 

 

$

1,269,654

 

 

$

2,849,484

 

 

$

1,925,252

 

Ocean freight and ocean services

 

 

1,098,550

 

 

 

489,385

 

 

 

2,052,462

 

 

 

980,725

 

Customs brokerage and other services

 

 

986,974

 

 

 

652,039

 

 

 

1,905,967

 

 

 

1,348,868

 

Total revenues

 

 

3,609,093

 

 

 

2,411,078

 

 

 

6,807,913

 

 

 

4,254,845

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,136,328

 

 

 

932,137

 

 

 

2,090,872

 

 

 

1,398,865

 

Ocean freight and ocean services

 

 

862,251

 

 

 

361,272

 

 

 

1,604,686

 

 

 

725,668

 

Customs brokerage and other services

 

 

600,054

 

 

 

368,078

 

 

 

1,150,359

 

 

 

765,585

 

Salaries and related

 

 

481,186

 

 

 

395,107

 

 

 

933,291

 

 

 

737,147

 

Rent and occupancy

 

 

45,366

 

 

 

41,375

 

 

 

90,646

 

 

 

83,899

 

Depreciation and amortization

 

 

12,675

 

 

 

14,109

 

 

 

25,662

 

 

 

26,769

 

Selling and promotion

 

 

3,172

 

 

 

3,113

 

 

 

6,242

 

 

 

11,356

 

Other

 

 

57,416

 

 

 

48,261

 

 

 

109,995

 

 

 

98,875

 

Total operating expenses

 

 

3,198,448

 

 

 

2,163,452

 

 

 

6,011,753

 

 

 

3,848,164

 

Operating income

 

 

410,645

 

 

 

247,626

 

 

 

796,160

 

 

 

406,681

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,188

 

 

 

2,559

 

 

 

4,134

 

 

 

7,366

 

Other, net

 

 

2,649

 

 

 

797

 

 

 

5,649

 

 

 

4,181

 

Other income, net

 

 

4,837

 

 

 

3,356

 

 

 

9,783

 

 

 

11,547

 

Earnings before income taxes

 

 

415,482

 

 

 

250,982

 

 

 

805,943

 

 

 

418,228

 

Income tax expense

 

 

98,508

 

 

 

66,794

 

 

 

201,019

 

 

 

111,258

 

Net earnings

 

 

316,974

 

 

 

184,188

 

 

 

604,924

 

 

 

306,970

 

Less net earnings attributable to the noncontrolling interest

 

 

602

 

 

 

319

 

 

 

1,332

 

 

 

757

 

Net earnings attributable to shareholders

 

$

316,372

 

 

$

183,869

 

 

$

603,592

 

 

$

306,213

 

Diluted earnings attributable to shareholders per share

 

$

1.84

 

 

$

1.09

 

 

$

3.52

 

 

$

1.80

 

Basic earnings attributable to shareholders per share

 

$

1.87

 

 

$

1.10

 

 

$

3.57

 

 

$

1.83

 

Weighted average diluted shares outstanding

 

 

171,677

 

 

 

169,290

 

 

 

171,660

 

 

 

170,382

 

Weighted average basic shares outstanding

 

 

169,210

 

 

 

166,767

 

 

 

169,140

 

 

 

167,751

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three months ended June 30,

 

Six months ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

316,974

 

 

$

184,188

 

 

$

604,924

 

 

$

306,970

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions for losses on accounts receivable

 

 

1,090

 

 

 

2,389

 

 

 

2,289

 

 

 

4,209

 

Deferred income tax expense

 

 

1,850

 

 

 

9,287

 

 

 

10,001

 

 

 

4,148

 

Stock compensation expense

 

 

30,909

 

 

 

21,638

 

 

 

42,094

 

 

 

32,794

 

Depreciation and amortization

 

 

12,675

 

 

 

14,109

 

 

 

25,662

 

 

 

26,769

 

Other, net

 

 

346

 

 

 

118

 

 

 

897

 

 

 

551

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(410,783

)

 

 

(185,055

)

 

 

(663,697

)

 

 

(168,375

)

Increase in accounts payable and accrued expenses

 

 

100,118

 

 

 

106,760

 

 

 

333,271

 

 

 

107,677

 

Increase in deferred contract costs

 

 

(150,382

)

 

 

(2,333

)

 

 

(221,640

)

 

 

(18,401

)

Increase (decrease) in contract liabilities

 

 

174,504

 

 

 

(595

)

 

 

254,094

 

 

 

20,606

 

(Decrease) increase in income taxes payable, net

 

 

(47,994

)

 

 

20,154

 

 

 

(1,356

)

 

 

30,642

 

Decrease (increase) in other, net

 

 

1,164

 

 

 

16,061

 

 

 

(324

)

 

 

4,131

 

Net cash from operating activities

 

 

30,471

 

 

 

186,721

 

 

 

386,215

 

 

 

351,721

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(6,539

)

 

 

(22,114

)

 

 

(14,930

)

 

 

(28,241

)

Other, net

 

 

138

 

 

 

(68

)

 

 

104

 

 

 

(211

)

Net cash from investing activities

 

 

(6,401

)

 

 

(22,182

)

 

 

(14,826

)

 

 

(28,452

)

Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

22,711

 

 

 

29,187

 

 

 

42,468

 

 

 

52,586

 

Repurchases of common stock

 

 

(62,472

)

 

 

(30,985

)

 

 

(148,469

)

 

 

(314,225

)

Dividends paid

 

 

(98,387

)

 

 

(86,815

)

 

 

(98,387

)

 

 

(86,815

)

Payments for taxes related to net share settlement of equity awards

 

 

(13,893

)

 

 

(9,170

)

 

 

(15,168

)

 

 

(10,566

)

Net cash from financing activities

 

 

(152,041

)

 

 

(97,783

)

 

 

(219,556

)

 

 

(359,020

)

Effect of exchange rate changes on cash and cash equivalents

 

 

8,699

 

 

 

1,726

 

 

 

(5,503

)

 

 

(14,285

)

Change in cash and cash equivalents

 

 

(119,272

)

 

 

68,482

 

 

 

146,330

 

 

 

(50,036

)

Cash and cash equivalents at beginning of period

 

 

1,793,393

 

 

 

1,111,973

 

 

 

1,527,791

 

 

 

1,230,491

 

Cash and cash equivalents at end of period

 

$

1,674,121

 

 

$

1,180,455

 

 

$

1,674,121

 

 

$

1,180,455

 

Taxes Paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

143,959

 

 

$

38,504

 

 

$

190,536

 

 

$

73,808

 

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

For the three months ended June 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

997,567

 

 

 

101,465

 

 

 

46,981

 

 

 

1,309,382

 

 

 

417,718

 

 

 

544,949

 

 

 

192,186

 

 

 

(1,155

)

 

 

3,609,093

 

Directly related cost of transportation and other expenses1

 

$

566,882

 

 

 

59,311

 

 

 

25,952

 

 

 

1,086,641

 

 

 

335,219

 

 

 

376,856

 

 

 

148,290

 

 

 

(518

)

 

 

2,598,633

 

Salaries and other operating expenses2

 

$

241,121

 

 

 

31,300

 

 

 

14,735

 

 

 

106,812

 

 

 

49,046

 

 

 

123,408

 

 

 

34,026

 

 

 

(633

)

 

 

599,815

 

Operating income

 

$

189,564

 

 

 

10,854

 

 

 

6,294

 

 

 

115,929

 

 

 

33,453

 

 

 

44,685

 

 

 

9,870

 

 

 

(4

)

 

 

410,645

 

Identifiable assets at period end

 

$

2,972,363

 

 

 

196,558

 

 

 

102,296

 

 

 

1,114,475

 

 

 

377,370

 

 

 

929,706

 

 

 

291,406

 

 

 

(31,003

)

 

 

5,953,171

 

Capital expenditures

 

$

2,905

 

 

 

64

 

 

 

72

 

 

 

400

 

 

 

532

 

 

 

2,100

 

 

 

466

 

 

 

 

 

 

6,539

 

Equity

 

$

2,163,114

 

 

 

80,802

 

 

 

36,316

 

 

 

318,111

 

 

 

146,583

 

 

 

255,006

 

 

 

128,148

 

 

 

(44,429

)

 

 

3,083,651

 

For the three months ended June 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

639,226

 

 

 

73,679

 

 

 

37,553

 

 

 

984,715

 

 

 

217,152

 

 

 

358,060

 

 

 

101,571

 

 

 

(878

)

 

 

2,411,078

 

Directly related cost of transportation and other expenses1, 3

 

$

354,619

 

 

 

40,814

 

 

 

22,701

 

 

 

775,572

 

 

 

153,194

 

 

 

242,170

 

 

 

72,868

 

 

 

(451

)

 

 

1,661,487

 

Salaries and other operating expenses2

 

$

207,703

 

 

 

25,283

 

 

 

12,112

 

 

 

97,171

 

 

 

39,184

 

 

 

95,757

 

 

 

25,188

 

 

 

(433

)

 

 

501,965

 

Operating income

 

$

76,904

 

 

 

7,582

 

 

 

2,740

 

 

 

111,972

 

 

 

24,774

 

 

 

20,133

 

 

 

3,515

 

 

 

6

 

 

 

247,626

 

Identifiable assets at period end

 

$

1,886,463

 

 

 

170,873

 

 

 

72,912

 

 

 

669,335

 

 

 

213,007

 

 

 

581,988

 

 

 

221,381

 

 

 

(5,782

)

 

 

3,810,177

 

Capital expenditures

 

$

19,076

 

 

 

1,148

 

 

 

216

 

 

 

385

 

 

 

182

 

 

 

993

 

 

 

114

 

 

 

 

 

 

22,114

 

Equity

 

$

1,399,124

 

 

 

71,165

 

 

 

29,758

 

 

 

306,022

 

 

 

108,777

 

 

 

168,060

 

 

 

116,279

 

 

 

(37,587

)

 

 

2,161,598

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNITED

STATES

 

OTHER

NORTH

AMERICA

 

LATIN

AMERICA

 

NORTH

ASIA

 

SOUTH

ASIA

 

EUROPE

 

MIDDLE

EAST,

AFRICA

AND

INDIA

 

ELIMI-

NATIONS

 

CONSOLI-

DATED

For the six months ended June 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

1,872,957

 

 

 

195,582

 

 

 

91,845

 

 

 

2,518,430

 

 

 

767,484

 

 

 

1,011,282

 

 

 

352,692

 

 

 

(2,359

)

 

 

6,807,913

 

Directly related cost of transportation and other expenses1, 3

 

$

1,069,517

 

 

 

112,361

 

 

 

52,652

 

 

 

2,054,170

 

 

 

605,163

 

 

 

683,765

 

 

 

269,399

 

 

 

(1,110

)

 

 

4,845,917

 

Salaries and other operating expenses2

 

$

479,819

 

 

 

57,037

 

 

 

27,112

 

 

 

213,732

 

 

 

92,211

 

 

 

232,863

 

 

 

64,301

 

 

 

(1,239

)

 

 

1,165,836

 

Operating income

 

$

323,621

 

 

 

26,184

 

 

 

12,081

 

 

 

250,528

 

 

 

70,110

 

 

 

94,654

 

 

 

18,992

 

 

 

(10

)

 

 

796,160

 

Identifiable assets at period end

 

$

2,972,363

 

 

 

196,558

 

 

 

102,296

 

 

 

1,114,475

 

 

 

377,370

 

 

 

929,706

 

 

 

291,406

 

 

 

(31,003

)

 

 

5,953,171

 

Capital expenditures

 

$

5,930

 

 

 

186

 

 

 

125

 

 

 

757

 

 

 

1,111

 

 

 

5,654

 

 

 

1,167

 

 

 

 

 

 

14,930

 

Equity

 

$

2,163,114

 

 

 

80,802

 

 

 

36,316

 

 

 

318,111

 

 

 

146,583

 

 

 

255,006

 

 

 

128,148

 

 

 

(44,429

)

 

 

3,083,651

 

For the six months ended June 30, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues3

 

$

1,289,631

 

 

 

154,910

 

 

 

75,444

 

 

 

1,481,872

 

 

 

383,233

 

 

 

665,020

 

 

 

206,553

 

 

 

(1,818

)

 

 

4,254,845

 

Directly related cost of transportation and other expenses1, 3

 

$

728,578

 

 

 

86,104

 

 

 

46,467

 

 

 

1,160,075

 

 

 

271,515

 

 

 

450,488

 

 

 

147,787

 

 

 

(896

)

 

 

2,890,118

 

Salaries and other operating expenses2

 

$

433,647

 

 

 

48,995

 

 

 

23,861

 

 

 

154,604

 

 

 

69,092

 

 

 

177,611

 

 

 

51,138

 

 

 

(902

)

 

 

958,046

 

Operating income

 

$

127,406

 

 

 

19,811

 

 

 

5,116

 

 

 

167,193

 

 

 

42,626

 

 

 

36,921

 

 

 

7,628

 

 

 

(20

)

 

 

406,681

 

Identifiable assets at period end

 

$

1,886,463

 

 

 

170,873

 

 

 

72,912

 

 

 

669,335

 

 

 

213,007

 

 

 

581,988

 

 

 

221,381

 

 

 

(5,782

)

 

 

3,810,177

 

Capital expenditures

 

$

23,573

 

 

 

1,209

 

 

 

318

 

 

 

710

 

 

 

370

 

 

 

1,638

 

 

 

423

 

 

 

 

 

 

28,241

 

Equity

 

$

1,399,124

 

 

 

71,165

 

 

 

29,758

 

 

 

306,022

 

 

 

108,777

 

 

 

168,060

 

 

 

116,279

 

 

 

(37,587

)

 

 

2,161,598

 

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.

3Beginning in the first quarter 2019, the Company made changes to its process and presentation of freight services revenue and directly related transportation operating expenses with the objective that at each reporting level (reporting entity, segment and consolidated level) the gross revenue and associated directly related operating expenses be representative of the location where the services were performed, the operating expenses were incurred and where the revenues were earned. During the second quarter 2021, management identified and corrected certain immaterial errors in the Company’s historical financial statements primarily related to this process that was utilized through the first quarter of 2021. The process missed an intercompany elimination of revenues and an equal and offsetting amount of directly related transportation expenses, principally impacting airfreight services in North Asia. The errors overstated revenues and directly related transportation operating expenses by equal amounts in the consolidated statements of earnings. The errors had no impact on operating income, net earnings, and earnings per share nor any other financial statement amount. Further, the errors had no impact on the balance sheets, statements of shareholders’ equity, other comprehensive income and cash flows. Historical amounts for business segment information have been revised and are presented on a comparable basis.

The Company’s consolidated financial results in the three and six months ended June 30, 2021 and 2020 were each significantly impacted by the effects of the global pandemic in divergent ways. In the first and second quarter of 2021, the Company experienced strong volumes and high average sell and buy rates as a result of imbalances between demand and carrier capacity and continuing effects of disruptions in supply chains originating in measures to combat the pandemic in 2020.

 

This is in contrast with slower activity in North Asia in the first quarter of 2020 as the pandemic resulted in temporary closures and limited operations in the Company’s China offices. Shipments were also rerouted or delayed by customers and service providers as they were taking their own precautionary measures. This was followed by significant increases in airfreight services revenues and related expenses, in the second quarter of 2020, as a result of demand for time-sensitive delivery of technology equipment and medical equipment and supplies from China, which combined with reductions in airfreight supply resulted in significantly higher average buy and sell rates.

 

These impacts are affecting all of the Company’s geographical segments and most notably the year-over-year comparability of the North Asia segment. For the three months ended June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% and 34%, respectively, of the Company’s total revenues and 22% and 38%, respectively, of the total operating income. For the six months ended June 30, 2021 and 2020, the People's Republic of China, including Hong Kong, represented 29% of the Company’s total revenues and 24% and 33%, respectively, of the total operating income.

 

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

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