Expeditors International of Washington : Description Current report filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: August 6, 2019 (Date of earliest event reported)

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

Washington	000-13468	91-1069248
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation or organization)	File No.)	Identification Number)
1015 Third Avenue, Seattle, Washington	[phone]	98104
(Address of principal executive offices)	(Registrant's telephone number, including area code)	(Zip Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencementcommunications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencementcommunications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value		EXPD	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Item 2.02 Results of Operations and Financial Condition.

The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition."

On August 6, 2019, Expeditors International of Washington, Inc., a Washington corporation, issued a press release announcing second quarter 2019 financial results. A copy of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

1. The following items are filed as exhibits to this report:

99.1 Press release, dated August 6, 2019 issued by Expeditors International of Washington, Inc.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.
August 6, 2019	/S/ Bradley S. Powell
	Bradley S. Powell, Senior Vice President and Chief Financial Officer

Exhibit 99.1

EARNINGS RELEASE

By:	Expeditors International of Washington, Inc.
	1015 Third Avenue, Suite 1200
	Seattle, Washington 98104
	CONTACTS :
	Jeffrey S. Musser	Bradley S. Powell	Geoffrey Buscher
	President and Chief Executive Officer	Senior Vice President and Chief Financial Officer	Director - Investor Relations
	[phone]	[phone]	[phone]

FOR IMMEDIATE RELEASE

EXPEDITORS REPORTS SECOND QUARTER 2019 EPS OF $0.88

SEATTLE, WASHINGTON - August 6, 2019, Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced second quarter 2019 financial results including the following highlights compared to the same quarter of 2018:

• Diluted Net Earnings Attributable to Shareholders per share (EPS 1 ) increased 11% to $0.88
• Net Earnings Attributable to Shareholders increased 9% to $153 million
• Operating Income increased 5% to $192 million
• Revenues increased 4% to $2 billion
• Net Revenues 2 increased 3% to $662 million
• Airfreight tonnage volume decreased 5% and ocean container volume increased 2%

"During the quarter and throughout the first half of the year, we have shown our ability to manage uncertainty and deliver profitable growth," said Jeffrey S. Musser, President and Chief Executive Officer. "While our air freight business was challenged as a result of a slowdown in export volumes out of North Asia and the United States, we continued to enhance our efforts on growing these two important markets as a focus of our key strategic initiatives. Additionally, the current climate of geopolitical volatility has created uncertainty, but our organization continues to show that the strength of our global presence and customer focus has never been more important in our relentless drive to grow while maintaining our profitability.

"In addition, we continued to grow our customs brokerage and import services, Transcon, and warehouse and distribution services by winning business with new customers as well as from existing accounts. For a second consecutive quarter, we increased the volume of ocean freight containers that we handled and boosted net revenue per container. Except for comparatively soft demand in certain air markets, this was a strong quarter and our people performed at their highest level."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "We grew net revenues ahead of overhead expenses, even as we continue to make important investments in people and systems, such as our integrated order management, quoting, booking, visibility, security, reporting and analytics platform. While we boosted operating efficiency (operating income as a percentage of net revenue) compared to the first quarter, it remained below our target 30%, due again to lower air freight net revenues. Our effective tax rate declined from 25.8% in the second quarter of 2018 to 23.6% in 2019, largely due to the benefit from Foreign-derived intangible income deductions and a state tax refund."

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.

_______________________

1. Diluted earnings attributable to shareholders per share.
2. Non-GAAPmeasure 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.
Second Quarter 2019 Earnings Release, August 6, 2019
Financial Highlights for the three and six months ended June 30, 2019 and 2018 (Unaudited)
(in 000's of US dollars except per share data)
		Three months ended June 30,		Six months ended June 30,
Revenues		2019		2018	% Change		2019		2018	% Change
$	2,035,579	$	1,957,559	4%	$	4,055,630	$	3,811,821	6%
Net revenues 1	$	661,695	$	642,546	3%	$	1,315,809	$	1,278,384	3%
Operating income	$	192,201	$	183,584	5%	$	379,802	$	376,402	1%
Net earnings attributable to shareholders	$	153,149	$	140,605	9%	$	292,848	$	276,297	6%
Diluted earnings attributable to
shareholders per share	$	0.88	$	0.79	11%	$	1.67	$	1.54	8%
Basic earnings attributable to shareholders
per share	$	0.90	$	0.80	13%	$	1.71	$	1.58	8%
Diluted weighted average shares
outstanding		174,466		178,603			174,953		179,120
Basic weighted average shares outstanding		171,003		174,754			171,425		175,324

1 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.

The three and six months ended June 30, 2019 include the effect of changing our presentation of certain import services from a net to a gross basis and our revised presentation of destination services, which increased revenues and directly related operating expenses in customs brokerage and other services but did not change net revenues.

During the three and six months ended June 30, 2019, we repurchased 2.6 million and 3.2 million shares of common stock at an average price of $73.03 and $73.47 per share, respectively. During the three and six months ended June 30, 2018, we repurchased 3.1 million and 5.8 million shares of common stock at an average price of $76.22 and $70.92 per share, respectively.

Employee Full-time Equivalents

June 30, 2019

		2019	2018
North America		6,893			6,414
Europe		3,439			3,205
North Asia		2,532			2,616
South Asia		1,661			1,604
Middle East, Africa and India		1,550			1,466
Latin America		873			801
Information Systems		922			892
Corporate		379			351
Total		18,249			17,349

			Second quarter
			year-over-year percentage
			increase (decrease) in:
			Airfreight			Ocean freight
	2019		kilos			FEU
April			(4)%			5%
May			(2)%			-%
June			(7)%			-%
Quarter			(5)%			2%

Investors may submit written questions via e-mail to: [e-mail]. Questions received by the end of business on August 9, 2019 will be considered in management's 8-K "Responses to Selected Questions."

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 our ability to extract value from investment in key systems; the impact of the 2017 Tax Act and related interpretations on our effective tax rate; and 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)

Assets:

Current Assets:

Cash and cash equivalents

Accounts receivable, less allowance for doubtful accounts of $13,391 at June 30, 2019 and $15,345 at December 31, 2018

Deferred contract costs

Other

Total current assets

	June 30,		December 31,
	2019		2018
$	1,082,650	$	923,735

1,382,070 1,581,530

143,651 159,510

103,089 70,041

2,711,460 2,734,816

Property and equipment, less accumulated depreciation and amortization of $465,983 at June 30, 2019 and $446,977 at December 31, 2018

Operating lease right-of-use assets

Goodwill

Deferred federal and state income taxes, net

Other assets, net

Total assets

Liabilities:

Current Liabilities:

Accounts payable

Accrued expenses, primarily salaries and related costs

Contract liabilities

Current portion of operating lease liabilities

Federal, state and foreign income taxes

Total current liabilities

Noncurrent portion of operating lease liabilities

Commitments and contingencies

Shareholders' Equity:

Preferred stock, none issued

		499,233
		377,423
		7,927
		33,617
		17,330
	$	3,646,990
	$	811,144
		217,463
		169,055
		61,267
		19,891

1,278,820

315,776

-

	504,105
	-
	7,927
	40,465
	27,246
$	3,314,559
$	902,259
	215,813
	190,343
	-
	18,424

1,326,839

-

-

Common stock, par value $0.01 per share. Issued and outstanding: 170,040 shares at June 30, 2019 and 171,582 shares at December 31, 2018

Additional paid-in capital

Retained earnings

Accumulated other comprehensive loss

Total shareholders' equity

Noncontrolling interest

Total equity

Total liabilities and equity

		1,701				1,716
		12,433				1,896
		2,140,935				2,088,707
		(104,096	)			(105,481	)
		2,050,973				1,986,838
		1,421				882
		2,052,394				1,987,720
	$	3,646,990			$	3,314,559

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