10-Q 1 expd-10q_20220930.htm 10-Q expd-10q_20220930.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to

Commission File Number: 0-13468

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

 

 

Washington

 

91-1069248

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification Number)

 

 

 

1015 Third Avenue, Seattle, Washington

 

98104

(Address of principal executive offices)

 

(Zip Code)

 

(Registrant’s telephone number, including area code): (206) 674-3400

 

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, par value $0.01 per share

 

EXPD

 

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

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. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

At November 4, 2022, the number of shares outstanding of the issuer’s common stock was 159,136,384.

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,154,534

 

 

$

1,728,692

 

Accounts receivable, less allowance for credit loss of

   $9,760 at September 30, 2022 and $6,686 at December 31, 2021

 

 

2,748,322

 

 

 

3,810,286

 

Deferred contract costs

 

 

499,935

 

 

 

987,266

 

Other

 

 

184,765

 

 

 

108,801

 

Total current assets

 

 

5,587,556

 

 

 

6,635,045

 

Property and equipment, less accumulated depreciation and

   amortization of $548,585 at September 30, 2022 and $541,677 at

   December 31, 2021

 

 

480,941

 

 

 

487,870

 

Operating lease right-of-use assets

 

 

486,980

 

 

 

459,158

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Deferred federal and state income taxes, net

 

 

27,295

 

 

 

729

 

Other assets, net

 

 

16,827

 

 

 

19,200

 

Total assets

 

$

6,607,526

 

 

$

7,609,929

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

1,544,757

 

 

 

2,012,461

 

Accrued liabilities, primarily salaries and related costs

 

 

404,207

 

 

 

403,625

 

Contract liabilities

 

 

594,244

 

 

 

1,142,026

 

Current portion of operating lease liabilities

 

 

88,535

 

 

 

82,019

 

Federal, state and foreign income taxes

 

 

74,507

 

 

 

86,166

 

Total current liabilities

 

 

2,706,250

 

 

 

3,726,297

 

Noncurrent portion of operating lease liabilities

 

 

409,883

 

 

 

385,641

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

 

Common stock, par value $0.01 per share. Issued and

   outstanding: 159,128 shares at September 30, 2022 and 167,210

   shares at December 31, 2021

 

 

1,591

 

 

 

1,672

 

Additional paid-in capital

 

 

118

 

 

 

3,160

 

Retained earnings

 

 

3,738,600

 

 

 

3,620,008

 

Accumulated other comprehensive loss

 

 

(258,129

)

 

 

(130,414

)

Total shareholders’ equity

 

 

3,482,180

 

 

 

3,494,426

 

Noncontrolling interest

 

 

9,213

 

 

 

3,565

 

Total equity

 

 

3,491,393

 

 

 

3,497,991

 

Total liabilities and equity

 

$

6,607,526

 

 

$

7,609,929

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

2


 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,480,955

 

 

$

1,628,115

 

 

$

4,682,076

 

 

$

4,477,599

 

Ocean freight and ocean services

 

 

1,684,579

 

 

 

1,598,597

 

 

 

5,420,471

 

 

 

3,651,059

 

Customs brokerage and other services

 

 

1,196,612

 

 

 

1,092,549

 

 

 

3,527,209

 

 

 

2,998,516

 

Total revenues

 

 

4,362,146

 

 

 

4,319,261

 

 

 

13,629,756

 

 

 

11,127,174

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,104,812

 

 

 

1,244,381

 

 

 

3,459,861

 

 

 

3,335,253

 

Ocean freight and ocean services

 

 

1,343,355

 

 

 

1,254,334

 

 

 

4,345,963

 

 

 

2,859,020

 

Customs brokerage and other services

 

 

746,106

 

 

 

686,775

 

 

 

2,345,508

 

 

 

1,837,134

 

Salaries and related

 

 

499,341

 

 

 

519,611

 

 

 

1,546,503

 

 

 

1,452,902

 

Rent and occupancy

 

 

52,715

 

 

 

46,730

 

 

 

155,241

 

 

 

137,376

 

Depreciation and amortization

 

 

15,187

 

 

 

12,753

 

 

 

42,416

 

 

 

38,415

 

Selling and promotion

 

 

6,239

 

 

 

4,237

 

 

 

16,174

 

 

 

10,479

 

Other

 

 

67,468

 

 

 

60,803

 

 

 

223,425

 

 

 

170,798

 

Total operating expenses

 

 

3,835,223

 

 

 

3,829,624

 

 

 

12,135,091

 

 

 

9,841,377

 

Operating income

 

 

526,923

 

 

 

489,637

 

 

 

1,494,665

 

 

 

1,285,797

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

7,835

 

 

 

2,462

 

 

 

12,447

 

 

 

6,596

 

Other, net

 

 

98

 

 

 

733

 

 

 

7,731

 

 

 

6,382

 

Other income, net

 

 

7,933

 

 

 

3,195

 

 

 

20,178

 

 

 

12,978

 

Earnings before income taxes

 

 

534,856

 

 

 

492,832

 

 

 

1,514,843

 

 

 

1,298,775

 

Income tax expense

 

 

120,694

 

 

 

132,922

 

 

 

368,975

 

 

 

333,941

 

Net earnings

 

 

414,162

 

 

 

359,910

 

 

 

1,145,868

 

 

 

964,834

 

Less net (losses) earnings attributable to the noncontrolling interest

 

 

(47

)

 

 

842

 

 

 

7,745

 

 

 

2,174

 

Net earnings attributable to shareholders

 

$

414,209

 

 

$

359,068

 

 

$

1,138,123

 

 

$

962,660

 

Diluted earnings attributable to shareholders per share

 

$

2.54

 

 

$

2.09

 

 

$

6.84

 

 

$

5.61

 

Basic earnings attributable to shareholders per share

 

$

2.56

 

 

$

2.12

 

 

$

6.90

 

 

$

5.68

 

Weighted average diluted shares outstanding

 

 

163,250

 

 

 

171,565

 

 

 

166,398

 

 

 

171,549

 

Weighted average basic shares outstanding

 

 

162,029

 

 

 

169,633

 

 

 

164,944

 

 

 

169,398

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

3


 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net earnings

 

$

414,162

 

 

$

359,910

 

 

$

1,145,868

 

 

$

964,834

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of income tax benefit of $5,648 and $1,592 for the three months ended September 30, 2022 and 2021 and $13,429 and $4,764 for the nine months ended September 30, 2022 and 2021

 

 

(64,507

)

 

 

(16,908

)

 

 

(129,269

)

 

 

(23,946

)

Other comprehensive loss

 

 

(64,507

)

 

 

(16,908

)

 

 

(129,269

)

 

 

(23,946

)

Comprehensive income

 

 

349,655

 

 

 

343,002

 

 

 

1,016,599

 

 

 

940,888

 

Less comprehensive (loss) income attributable to the

   noncontrolling interest

 

 

(259

)

 

 

668

 

 

 

6,191

 

 

 

1,275

 

Comprehensive income attributable to shareholders

 

$

349,914

 

 

$

342,334

 

 

$

1,010,408

 

 

$

939,613

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

4


 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

414,162

 

 

$

359,910

 

 

$

1,145,868

 

 

$

964,834

 

Adjustments to reconcile net earnings to net cash from

   operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions for losses on accounts receivable

 

 

5,570

 

 

 

3,739

 

 

 

9,917

 

 

 

6,028

 

Deferred income tax (benefit) expense

 

 

(3,070

)

 

 

(7,658

)

 

 

(14,928

)

 

 

2,343

 

Stock compensation expense

 

 

14,175

 

 

 

15,204

 

 

 

51,296

 

 

 

57,298

 

Depreciation and amortization

 

 

15,187

 

 

 

12,753

 

 

 

42,416

 

 

 

38,415

 

Other, net

 

 

1,435

 

 

 

626

 

 

 

144

 

 

 

1,523

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in accounts receivable

 

 

634,421

 

 

 

(714,300

)

 

 

880,364

 

 

 

(1,377,997

)

(Decrease) increase in accounts payable and accrued expenses

 

 

(350,922

)

 

 

436,343

 

 

 

(343,902

)

 

 

769,525

 

Decrease (increase) in deferred contract costs

 

 

226,087

 

 

 

(328,932

)

 

 

437,155

 

 

 

(550,572

)

(Decrease) increase in contract liabilities

 

 

(249,895

)

 

 

381,192

 

 

 

(488,826

)

 

 

635,286

 

(Decrease) increase in income taxes payable, net

 

 

(31,397

)

 

 

33,378

 

 

 

(78,568

)

 

 

32,022

 

(Increase) decrease in other, net

 

 

(5,369

)

 

 

(14,884

)

 

 

2,040

 

 

 

(15,208

)

Net cash from operating activities

 

 

670,384

 

 

 

177,371

 

 

 

1,642,976

 

 

 

563,497

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(15,928

)

 

 

(9,870

)

 

 

(68,498

)

 

 

(24,800

)

Other, net

 

 

(590

)

 

 

(157

)

 

 

(645

)

 

 

(53

)

Net cash from investing activities

 

 

(16,518

)

 

 

(10,027

)

 

 

(69,143

)

 

 

(24,853

)

Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payments from borrowing on lines of credit

 

 

(21,117

)

 

 

(1,045

)

 

 

(29,601

)

 

 

(2,570

)

Proceeds from borrowing on lines of credit

 

 

 

 

 

8,524

 

 

 

56,545

 

 

 

10,138

 

Proceeds from issuance of common stock

 

 

61,885

 

 

 

56,965

 

 

 

73,318

 

 

 

99,433

 

Repurchases of common stock

 

 

(469,041

)

 

 

(76,595

)

 

 

(1,018,106

)

 

 

(225,064

)

Dividends paid

 

 

 

 

 

 

 

 

(109,828

)

 

 

(98,387

)

Payments for taxes related to net share settlement of equity

   awards

 

 

 

 

 

(4

)

 

 

(19,333

)

 

 

(15,172

)

Distribution to noncontrolling interest

 

 

(543

)

 

 

(1,631

)

 

 

(543

)

 

 

(1,631

)

Net cash from financing activities

 

 

(428,816

)

 

 

(13,786

)

 

 

(1,047,548

)

 

 

(233,253

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(47,487

)

 

 

(7,573

)

 

 

(100,443

)

 

 

(13,076

)

Change in cash and cash equivalents

 

 

177,563

 

 

 

145,985

 

 

 

425,842

 

 

 

292,315

 

Cash and cash equivalents at beginning of period

 

 

1,976,971

 

 

 

1,674,121

 

 

 

1,728,692

 

 

 

1,527,791

 

Cash and cash equivalents at end of period

 

$

2,154,534

 

 

$

1,820,106

 

 

$

2,154,534

 

 

$

1,820,106

 

Taxes Paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

150,960

 

 

$

104,617

 

 

$

465,711

 

 

$

295,153

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

5


 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended September 30, 2022

   and 2021

 

Shares

 

 

Par

value

 

 

Additional

paid-in

capital

 

 

Retained

earnings

 

 

Accumulated

other

comprehensive

loss

 

 

Total

shareholders’

equity

 

 

Noncontrolling

interest

 

 

Total

equity

 

Balance at June 30, 2022

 

 

162,931

 

 

$

1,629

 

 

$

137

 

 

$

3,717,316

 

 

$

(193,834

)

 

$

3,525,248

 

 

$

10,015

 

 

$

3,535,263

 

Shares issued under employee stock plans, net

   of tax withholding for net settlement

 

 

726

 

 

 

7

 

 

 

61,877

 

 

 

 

 

 

 

 

 

61,884

 

 

 

 

 

 

61,884

 

Shares repurchased under provisions of

   stock repurchase plan

 

 

(4,529

)

 

 

(45

)

 

 

(76,071

)

 

 

(392,925

)

 

 

 

 

 

(469,041

)

 

 

 

 

 

(469,041

)

Stock compensation expense

 

 

 

 

 

 

 

 

14,175

 

 

 

 

 

 

 

 

 

14,175

 

 

 

 

 

 

14,175

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

414,209

 

 

 

 

 

 

414,209

 

 

 

(47

)

 

 

414,162

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(64,295

)

 

 

(64,295

)

 

 

(212

)

 

 

(64,507

)

Dividends and dividend equivalents paid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(543

)

 

 

(543

)

Balance at September 30, 2022

 

 

159,128

 

 

$

1,591

 

 

$

118

 

 

$

3,738,600

 

 

$

(258,129

)

 

$

3,482,180

 

 

$

9,213

 

 

$

3,491,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

169,169

 

 

$

1,692

 

 

$

79,357

 

 

$

3,104,471

 

 

$

(106,066

)

 

$

3,079,454

 

 

$

4,197

 

 

$

3,083,651

 

Shares issued under employee stock plans, net

   of tax withholding for net settlement

 

 

836