10-Q 1 expd-10q_20210930.htm 10-Q expd-10q_20210930.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, 2021

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 1, 2021, the number of shares outstanding of the issuer’s common stock was 169,403,822.

 

 

 

 


 

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,

2021

 

 

December 31,

2020

 

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,820,106

 

 

$

1,527,791

 

Accounts receivable, less allowance for credit loss of

   $7,285 at September 30, 2021 and $5,579 at December 31, 2020

 

 

3,330,398

 

 

 

1,998,055

 

Deferred contract costs

 

 

841,689

 

 

 

327,448

 

Other

 

 

119,346

 

 

 

110,250

 

Total current assets

 

 

6,111,539

 

 

 

3,963,544

 

Property and equipment, less accumulated depreciation and

   amortization of $533,450 at September 30, 2021 and $516,988 at

   December 31, 2020

 

 

491,577

 

 

 

506,425

 

Operating lease right-of-use assets

 

 

448,228

 

 

 

432,723

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Other assets, net

 

 

17,112

 

 

 

16,884

 

Total assets

 

$

7,076,383

 

 

$

4,927,503

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,806,977

 

 

$

1,136,859

 

Accrued liabilities, primarily salaries and related costs

 

 

342,151

 

 

 

257,021

 

Contract liabilities

 

 

977,660

 

 

 

379,722

 

Current portion of operating lease liabilities

 

 

81,362

 

 

 

74,004

 

Federal, state and foreign income taxes

 

 

67,332

 

 

 

45,437

 

Total current liabilities

 

 

3,275,482

 

 

 

1,893,043

 

Noncurrent portion of operating lease liabilities

 

 

374,658

 

 

 

364,185

 

Deferred federal and state income taxes, net

 

 

5,651

 

 

 

7,048

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

 

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

   outstanding: 169,392 shares at September 30, 2021 and 169,294

   shares at December 31, 2020

 

 

1,694

 

 

 

1,693

 

Additional paid-in capital

 

 

74,925

 

 

 

157,496

 

Retained earnings

 

 

3,463,539

 

 

 

2,600,201

 

Accumulated other comprehensive loss

 

 

(122,800

)

 

 

(99,753

)

Total shareholders’ equity

 

 

3,417,358

 

 

 

2,659,637

 

Noncontrolling interest

 

 

3,234

 

 

 

3,590

 

Total equity

 

 

3,420,592

 

 

 

2,663,227

 

Total liabilities and equity

 

$

7,076,383

 

 

$

4,927,503

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,628,115

 

 

$

983,199

 

 

$

4,477,599

 

 

$

2,908,451

 

Ocean freight and ocean services

 

 

1,598,597

 

 

 

609,816

 

 

 

3,651,059

 

 

 

1,590,541

 

Customs brokerage and other services

 

 

1,092,549

 

 

 

755,698

 

 

 

2,998,516

 

 

 

2,104,566

 

Total revenues

 

 

4,319,261

 

 

 

2,348,713

 

 

 

11,127,174

 

 

 

6,603,558

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,244,381

 

 

 

723,340

 

 

 

3,335,253

 

 

 

2,122,205

 

Ocean freight and ocean services

 

 

1,254,334

 

 

 

452,028

 

 

 

2,859,020

 

 

 

1,177,696

 

Customs brokerage and other services

 

 

686,775

 

 

 

438,966

 

 

 

1,837,134

 

 

 

1,204,551

 

Salaries and related

 

 

519,611

 

 

 

373,613

 

 

 

1,452,902

 

 

 

1,110,760

 

Rent and occupancy

 

 

46,730

 

 

 

42,484

 

 

 

137,376

 

 

 

126,383

 

Depreciation and amortization

 

 

12,753

 

 

 

15,851

 

 

 

38,415

 

 

 

42,620

 

Selling and promotion

 

 

4,237

 

 

 

2,945

 

 

 

10,479

 

 

 

14,301

 

Other

 

 

60,803

 

 

 

47,541

 

 

 

170,798

 

 

 

146,416

 

Total operating expenses

 

 

3,829,624

 

 

 

2,096,768

 

 

 

9,841,377

 

 

 

5,944,932

 

Operating income

 

 

489,637

 

 

 

251,945

 

 

 

1,285,797

 

 

 

658,626

 

Other Income (Expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

2,462

 

 

 

1,504

 

 

 

6,596

 

 

 

8,870

 

Other, net

 

 

733

 

 

 

980

 

 

 

6,382

 

 

 

5,161

 

Other income, net

 

 

3,195

 

 

 

2,484

 

 

 

12,978

 

 

 

14,031

 

Earnings before income taxes

 

 

492,832

 

 

 

254,429

 

 

 

1,298,775

 

 

 

672,657

 

Income tax expense

 

 

132,922

 

 

 

62,710

 

 

 

333,941

 

 

 

173,968

 

Net earnings

 

 

359,910

 

 

 

191,719

 

 

 

964,834

 

 

 

498,689

 

Less net earnings attributable to the noncontrolling

   interest

 

 

842

 

 

 

412

 

 

 

2,174

 

 

 

1,169

 

Net earnings attributable to shareholders

 

$

359,068

 

 

$

191,307

 

 

$

962,660

 

 

$

497,520

 

Diluted earnings attributable to shareholders per share

 

$

2.09

 

 

$

1.12

 

 

$

5.61

 

 

$

2.92

 

Basic earnings attributable to shareholders per share

 

$

2.12

 

 

$

1.14

 

 

$

5.68

 

 

$

2.96

 

Weighted average diluted shares outstanding

 

 

171,565

 

 

 

170,735

 

 

 

171,549

 

 

 

170,539

 

Weighted average basic shares outstanding

 

 

169,633

 

 

 

168,310

 

 

 

169,398

 

 

 

167,942

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net earnings

 

$

359,910

 

 

$

191,719

 

 

$

964,834

 

 

$

498,689

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of income tax (benefit) expense of ($1,592) and $4,200 for the three months ended September 30, 2021 and 2020 and ($4,764) and $226 for the nine months ended September 30, 2021 and 2020

 

 

(16,908

)

 

 

17,429

 

 

 

(23,946

)

 

 

(5,010

)

Other comprehensive (loss) income

 

 

(16,908

)

 

 

17,429

 

 

 

(23,946

)

 

 

(5,010

)

Comprehensive income

 

 

343,002

 

 

 

209,148

 

 

 

940,888

 

 

 

493,679

 

Less comprehensive income (loss) attributable to the

   noncontrolling interest

 

 

668

 

 

 

(36

)

 

 

1,275

 

 

 

253

 

Comprehensive income attributable to shareholders

 

$

342,334

 

 

$

209,184

 

 

$

939,613

 

 

$

493,426

 

 

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,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

$

359,910

 

 

$

191,719

 

 

$

964,834

 

 

$

498,689

 

Adjustments to reconcile net earnings to net cash from

   operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provisions for losses on accounts receivable

 

 

3,739

 

 

 

398

 

 

 

6,028

 

 

 

4,607

 

Deferred income tax (benefit) expense

 

 

(7,658

)

 

 

(1,276

)

 

 

2,343

 

 

 

2,872

 

Stock compensation expense

 

 

15,204

 

 

 

12,297

 

 

 

57,298

 

 

 

45,091

 

Depreciation and amortization

 

 

12,753

 

 

 

15,851

 

 

 

38,415

 

 

 

42,620

 

Other, net

 

 

626

 

 

 

2,919

 

 

 

1,523

 

 

 

3,470

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(714,300

)

 

 

(106,065

)

 

 

(1,377,997

)

 

 

(274,440

)

Increase in accounts payable and accrued

   liabilities

 

 

436,343

 

 

 

94,232

 

 

 

769,525

 

 

 

201,929

 

Increase in deferred contract costs

 

 

(328,932

)

 

 

(81,486

)

 

 

(550,572

)

 

 

(99,887

)

Increase in contract liabilities

 

 

381,192

 

 

 

91,638

 

 

 

635,286

 

 

 

112,244

 

Increase (decrease) in income taxes payable, net

 

 

33,378

 

 

 

(41,286

)

 

 

32,022

 

 

 

(10,644

)

Increase in other, net

 

 

(14,884

)

 

 

(17,373

)

 

 

(15,208

)

 

 

(13,242

)

Net cash from operating activities

 

 

177,371

 

 

 

161,568

 

 

 

563,497

 

 

 

513,309

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(9,870

)

 

 

(9,178

)

 

 

(24,800

)

 

 

(37,419

)

Other, net

 

 

(157

)

 

 

1,174

 

 

 

(53

)

 

 

963

 

Net cash from investing activities

 

 

(10,027

)

 

 

(8,004

)

 

 

(24,853

)

 

 

(36,456

)

Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from borrowing on lines of credit, net

 

 

7,479

 

 

 

31

 

 

 

7,568

 

 

 

11

 

Proceeds from issuance of common stock

 

 

56,965

 

 

 

121,430

 

 

 

99,433

 

 

 

174,016

 

Repurchases of common stock

 

 

(76,595

)

 

 

 

 

 

(225,064

)

 

 

(314,225

)

Dividends paid

 

 

 

 

 

 

 

 

(98,387

)

 

 

(86,815

)

Payments for taxes related to net share settlement of equity

   awards

 

 

(4

)

 

 

 

 

 

(15,172

)

 

 

(10,566

)

Distribution to noncontrolling interest

 

 

(1,631

)

 

 

 

 

 

(1,631

)

 

 

 

Net cash from financing activities

 

 

(13,786

)

 

 

121,461

 

 

 

(233,253

)

 

 

(237,579

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(7,573

)

 

 

10,030

 

 

 

(13,076

)

 

 

(4,255

)

Change in cash and cash equivalents

 

 

145,985

 

 

 

285,055

 

 

 

292,315

 

 

 

235,019

 

Cash and cash equivalents at beginning of period

 

 

1,674,121

 

 

 

1,180,455

 

 

 

1,527,791

 

 

 

1,230,491

 

Cash and cash equivalents at end of period

 

$

1,820,106

 

 

$

1,465,510

 

 

$

1,820,106

 

 

$

1,465,510

 

Taxes Paid:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

$

104,617

 

 

$

106,434

 

 

$

295,153

 

 

$

180,242

 

 

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, 2021

   and 2020

 

Shares

 

 

Par

value

 

 

Additional

paid-in

capital

 

 

Retained

earnings

 

 

Accumulated

other

comprehensive

loss

 

 

Total

shareholders’

equity

 

 

Noncontrolling

interest

 

 

Total

equity

 

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

 

 

836

 

 

 

8

 

 

 

56,953

 

 

 

 

 

 

 

 

 

56,961

 

 

 

 

 

 

56,961

 

Shares repurchased under provisions of

   stock repurchase plan

 

 

(613

)

 

 

(6

)

 

 

(76,589

)

 

 

 

 

 

 

 

 

(76,595

)

 

 

 

 

 

(76,595

)

Stock compensation expense

 

 

 

 

 

 

 

 

15,204

 

 

 

 

 

 

 

 

 

15,204

 

 

 

 

 

 

15,204

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

359,068

 

 

 

 

 

 

359,068

 

 

 

842

 

 

 

359,910

 

Other comprehensive income loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,734

)

 

 

(16,734

)

 

 

(174

)

 

 

(16,908

)

Distribution to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,631

)

 

 

(1,631

)

Balance at September 30, 2021

 

 

169,392

 

 

$

1,694

 

 

$

74,925

 

 

$

3,463,539

 

 

$

(122,800

)

 

$

3,417,358

 

 

$

3,234

 

 

$

3,420,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2020

 

 

166,816

 

 

$

1,668

 

 

$

12,221

 

 

$

2,298,387

 

 

$

(153,158

)

 

$

2,159,118

 

 

$

2,480

 

 

$

2,161,598

 

Shares issued under employee

   stock plans

 

 

2,415

 

 

 

24

 

 

 

121,406