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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 March 31, 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 May 5, 2022, the number of shares outstanding of the issuer’s common stock was 167,753,884.

 

 

 

 


 

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)

 

 

 

March 31,

2022

 

 

December 31,

2021

 

Assets:

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,139,626

 

 

$

1,728,692

 

Accounts receivable, less allowance for credit loss of

   $5,677 at March 31, 2022 and $6,686 at December 31, 2021

 

 

3,934,856

 

 

 

3,810,286

 

Deferred contract costs

 

 

817,435

 

 

 

987,266

 

Other

 

 

70,812

 

 

 

108,801

 

Total current assets

 

 

6,962,729

 

 

 

6,635,045

 

Property and equipment, less accumulated depreciation and

   amortization of $553,048 at March 31, 2022 and $541,677 at

   December 31, 2021

 

 

504,125

 

 

 

487,870

 

Operating lease right-of-use assets

 

 

458,637

 

 

 

459,158

 

Goodwill

 

 

7,927

 

 

 

7,927

 

Deferred federal and state income taxes, net

 

 

5,573

 

 

 

729

 

Other assets, net

 

 

17,002

 

 

 

19,200

 

Total assets

 

$

7,955,993

 

 

$

7,609,929

 

Liabilities:

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,980,439

 

 

$

2,012,461

 

Accrued liabilities, primarily salaries and related costs

 

 

607,882

 

 

 

403,625

 

Contract liabilities

 

 

952,370

 

 

 

1,142,026

 

Current portion of operating lease liabilities

 

 

85,076

 

 

 

82,019

 

Federal, state and foreign income taxes

 

 

96,205

 

 

 

86,166

 

Total current liabilities

 

 

3,721,972

 

 

 

3,726,297

 

Noncurrent portion of operating lease liabilities

 

 

384,690

 

 

 

385,641

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Shareholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, none issued

 

 

 

 

 

 

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

   outstanding: 167,477 shares at March 31, 2022 and 167,210

   shares at December 31, 2021

 

 

1,675

 

 

 

1,672

 

Additional paid-in capital

 

 

13,343

 

 

 

3,160

 

Retained earnings

 

 

3,965,803

 

 

 

3,620,008

 

Accumulated other comprehensive loss

 

 

(137,429

)

 

 

(130,414

)

Total shareholders’ equity

 

 

3,843,392

 

 

 

3,494,426

 

Noncontrolling interest

 

 

5,939

 

 

 

3,565

 

Total equity

 

 

3,849,331

 

 

 

3,497,991

 

Total liabilities and equity

 

$

7,955,993

 

 

$

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 March 31,

 

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

 

Airfreight services

 

$

1,598,555

 

 

$

1,325,915

 

Ocean freight and ocean services

 

 

1,976,246

 

 

 

953,912

 

Customs brokerage and other services

 

 

1,089,497

 

 

 

918,993

 

Total revenues

 

 

4,664,298

 

 

 

3,198,820

 

Operating Expenses:

 

 

 

 

 

 

 

 

Airfreight services

 

 

1,142,546

 

 

 

954,544

 

Ocean freight and ocean services

 

 

1,600,243

 

 

 

742,435

 

Customs brokerage and other services

 

 

773,322

 

 

 

550,305

 

Salaries and related

 

 

538,940

 

 

 

452,105

 

Rent and occupancy

 

 

50,928

 

 

 

45,280

 

Depreciation and amortization

 

 

12,975

 

 

 

12,987

 

Selling and promotion

 

 

4,048

 

 

 

3,070

 

Other

 

 

79,536

 

 

 

52,579

 

Total operating expenses

 

 

4,202,538

 

 

 

2,813,305

 

Operating income

 

 

461,760

 

 

 

385,515

 

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest income

 

 

1,892

 

 

 

1,946

 

Other, net

 

 

7,527

 

 

 

3,000

 

Other income, net

 

 

9,419

 

 

 

4,946

 

Earnings before income taxes

 

 

471,179

 

 

 

390,461

 

Income tax expense

 

 

121,699

 

 

 

102,511

 

Net earnings

 

 

349,480

 

 

 

287,950

 

Less net earnings attributable to the noncontrolling

   interest

 

 

3,371

 

 

 

730

 

Net earnings attributable to shareholders

 

$

346,109

 

 

$

287,220

 

Diluted earnings attributable to shareholders per share

 

$

2.05

 

 

$

1.67

 

Basic earnings attributable to shareholders per share

 

$

2.07

 

 

$

1.70

 

Weighted average diluted shares outstanding

 

 

169,216

 

 

 

171,551

 

Weighted average basic shares outstanding

 

 

167,499

 

 

 

169,214

 

 

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 March 31,

 

 

 

2022

 

 

2021

 

Net earnings

 

$

349,480

 

 

$

287,950

 

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of income tax benefit of $1,500 and $3,393 for the three months ended March 31, 2022 and 2021

 

 

(8,012

)

 

 

(16,197

)

Other comprehensive loss

 

 

(8,012

)

 

 

(16,197

)

Comprehensive income

 

 

341,468

 

 

 

271,753

 

Less comprehensive income attributable to the

   noncontrolling interest

 

 

2,374

 

 

 

266

 

Comprehensive income attributable to shareholders

 

$

339,094

 

 

$

271,487

 

 

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 March 31,

 

 

 

2022

 

 

2021

 

Operating Activities:

 

 

 

 

 

 

 

 

Net earnings

 

$

349,480

 

 

$

287,950

 

Adjustments to reconcile net earnings to net cash from

   operating activities:

 

 

 

 

 

 

 

 

(Recoveries) provisions for losses on accounts receivable

 

 

(416

)

 

 

1,199

 

Deferred income tax (benefit) expense

 

 

(3,236

)

 

 

8,151

 

Stock compensation expense

 

 

11,603

 

 

 

11,185

 

Depreciation and amortization

 

 

12,975

 

 

 

12,987

 

Other, net

 

 

455

 

 

 

551

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(132,348

)

 

 

(252,914

)

Increase in accounts payable and accrued

   liabilities

 

 

140,191

 

 

 

233,238

 

Decrease (increase) in deferred contract costs

 

 

173,930

 

 

 

(71,258

)

(Decrease) increase in contract liabilities

 

 

(193,357

)

 

 

79,590

 

Increase in income taxes payable, net

 

 

46,259

 

 

 

46,638

 

Decrease (increase) in other, net

 

 

8,410

 

 

 

(1,488

)

Net cash from operating activities

 

 

413,946

 

 

 

355,829

 

Investing Activities:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(14,412

)

 

 

(8,391

)

Other, net

 

 

79

 

 

 

(34

)

Net cash from investing activities

 

 

(14,333

)

 

 

(8,425

)

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from borrowing on lines of credit, net

 

 

19,490

 

 

 

(85

)

Proceeds from issuance of common stock

 

 

5,751

 

 

 

19,757

 

Repurchases of common stock

 

 

 

 

 

(85,997

)

Payments for taxes related to net share settlement of equity

   awards

 

 

(7,482

)

 

 

(1,275

)

Net cash from financing activities

 

 

17,759

 

 

 

(67,600

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(6,438

)

 

 

(14,202

)

Change in cash and cash equivalents

 

 

410,934

 

 

 

265,602

 

Cash and cash equivalents at beginning of period

 

 

1,728,692

 

 

 

1,527,791

 

Cash and cash equivalents at end of period

 

$

2,139,626

 

 

$

1,793,393

 

Taxes Paid:

 

 

 

 

 

 

 

 

Income taxes

 

$

77,960

 

 

$

46,607

 

 

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 March 31, 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 December 31, 2021

 

 

167,210

 

 

$

1,672

 

 

$

3,160

 

 

$

3,620,008

 

 

$

(130,414

)

 

$

3,494,426

 

 

$

3,565

 

 

$

3,497,991

 

Shares issued under employee

   stock plans

 

 

267

 

 

 

3

 

 

 

(1,734

)

 

 

 

 

 

 

 

 

(1,731

)

 

 

 

 

 

(1,731

)

Stock compensation expense

 

 

 

 

 

 

 

 

11,603

 

 

 

 

 

 

 

 

 

11,603

 

 

 

 

 

 

11,603

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

346,109

 

 

 

 

 

 

346,109

 

 

 

3,371

 

 

 

349,480

 

Other comprehensive income loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,015

)

 

 

(7,015

)

 

 

(997

)

 

 

(8,012

)

Dividends paid

 

 

 

 

 

 

 

 

314

 

 

 

(314

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

167,477

 

 

$

1,675

 

 

$

13,343

 

 

$

3,965,803

 

 

$

(137,429

)

 

$

3,843,392

 

 

$

5,939

 

 

$

3,849,331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

169,294

 

 

$

1,693

 

 

$

157,496

 

 

$

2,600,201

 

 

$

(99,753

)

 

$

2,659,637

 

 

$

3,590

 

 

$

2,663,227

 

Shares issued under employee

   stock plans

 

 

439

 

 

 

4

 

 

 

18,478

 

 

 

 

 

 

 

 

 

18,482

 

 

 

 

 

 

18,482

 

Shares repurchased under provisions of

   stock repurchase plan

 

 

(925

)

 

 

(9

)

 

 

(85,988

)

 

 

 

 

 

 

 

 

(85,997

)

 

 

 

 

 

(85,997

)

Stock compensation expense

 

 

 

 

 

 

 

 

11,185

 

 

 

 

 

 

 

 

 

11,185

 

 

 

 

 

 

11,185

 

Net earnings

 

 

 

 

 

 

 

 

 

 

 

287,220

 

 

 

 

 

 

287,220

 

 

 

730

 

 

 

287,950

 

Other comprehensive income loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,733

)

 

 

(15,733

)

 

 

(464

)

 

 

(16,197

)

Dividends paid

 

 

 

 

 

 

 

 

98

 

 

 

(98

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

168,808

 

 

$

1,688

 

 

$

101,269

 

 

$

2,887,323

 

 

$

(115,486

)

 

$

2,874,794

 

 

$

3,856

 

 

$

2,878,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

6


 

 

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

(Unaudited)

Note 1. Summary of Significant Accounting Policies

 

A.

Basis of Presentation

Expeditors International of Washington, Inc. (the Company) is a non-asset based provider of global logistics services operating through a worldwide network of offices and exclusive or non-exclusive agents. The Company’s customers include retailing and wholesaling, electronics, high technology, industrial and manufacturing companies around the world.

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been condensed or omitted. The Company believes that the disclosures made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect all adjustments, consisting of normal recurring items, which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Form 10-K as filed with the Securities and Exchange Commission on March 15, 2022.

All significant intercompany accounts and transactions have been eliminated in consolidation. All dollar amounts in the notes are presented in thousands except for per share data or unless otherwise specified. Certain prior year amounts have been reclassified to conform to the current year presentation, including revisions to correct for immaterial errors as previously disclosed in the Company’s second quarter results on Form 10-Q filed on August 5, 2021 and in the 2021 Form 10-K.

 

B.

Revenue Recognition

The Company derives its revenues by entering into agreements that are generally comprised of a single performance obligation, which is that freight is shipped for and received by the customer. The Company's three principal services are the revenue categories presented in the condensed consolidated statements of earnings: 1) airfreight services, 2) ocean freight and ocean services, and 3) customs brokerage and other services.

The Company typically satisfies its performance obligations as services are rendered over time. A typical shipment would include services rendered at origin, such as pick-up and delivery to port, freight services from origin to destination port and destination services, such as customs clearance and final delivery. The Company measures the performance of its obligations as services are completed over the life of a shipment, including services at origin, freight and destination. The Company fulfills nearly all of its performance obligations within a one to two month-period and contracts with customers have an original expected duration of less than one year. The Company satisfied nearly all performance obligations for the contract liabilities recorded as of December 31, 2021.

The Company evaluates whether amounts billed to customers should be reported as gross or net basis. Generally, revenue is recorded on a gross basis when the Company is primarily responsible for fulfilling the promise to provide the services, when it assumes the risk of loss, when it has discretion in setting the prices for the services to the customers, and when the Company has the ability to direct the use of the services provided by the third party. When revenue is recorded on a net basis, the amounts earned are determined using a fixed fee, a per unit of activity fee or a combination thereof. For revenues earned in other capacities, for instance, when we do not issue a HAWB, a HOBL or a House Seaway Bill or otherwise act solely as an agent for the shipper, only the commissions and fees earned for such services are included in revenues. In these transactions, the Company is not a principal and report only commissions and fees earned in revenue.

 

C.

Leases

The Company determines if an arrangement is a lease at inception. Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. All ROU assets and lease liabilities are recognized at the commencement date at the present value of lease payments over the lease term. ROU assets are adjusted for lease incentives and initial direct costs. The lease term includes renewal options exercisable at the Company's sole discretion when the Company is

7


 

reasonably certain to exercise that option. As the Company's leases generally do not have an implicit rate, the Company uses an estimated incremental borrowing rate based on market information available at the commencement date to determine the present value. Certain of our leases include variable payments, which may vary based upon changes in facts or circumstances after the start of the lease. The Company excludes variable payments from ROU assets and lease liabilities to the extent not considered fixed, and instead expenses variable payments as incurred. Lease expense is recognized on a straight-line basis over the lease term and is included in rent and occupancy expenses in the condensed consolidated statement of earnings.

 

D.

Accounts Receivable

The Company’s trade accounts receivable present similar credit risk characteristics and the allowance for credit loss is estimated on a collective basis, using a credit loss-rate method leveraging historical credit loss information and including considerations of the current economic environment. Additional allowances may be necessary in the future if changes in economic conditions are significant enough to affect expected credit losses. The Company has recorded an allowance for credit loss in the amounts of $5,677 as of March 31, 2022 and $6,686 as of December 31, 2021. Additions and write-offs have not been significant in the periods presented.

 

E.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. The Company uses estimates primarily in the following areas: accounts receivable valuation, accrual of costs related to ancillary services the Company performs, typically at the destination location, self-insured liabilities, accrual of various tax liabilities including estimates associated with the U.S. enacted Tax Cuts and Jobs Act (the 2017 Tax Act), accrual of loss contingencies, including estimates for potential claims as a result of the downtime caused by the cyber-attack, calculation of share-based compensation expense and estimates related to determining the lease term and discount rate when measuring ROU assets and lease liabilities. In the first quarter of 2022, ancillary services include additional estimated costs for demurrage charges incurred as a result of downtime caused by the cyber-attack. See Note 8 for further information on estimates related to the cyber-attack. Actual results could be materially different from the estimated provisions and accruals recorded.

 

F.

Share-Based Compensation

The Company has historically granted the majority of its share-based awards during the second quarter of each fiscal year. The grant of employee stock purchase rights and the issuance of shares under the employee stock purchase plan are historically made in the third quarter of each fiscal year. The Company recognizes stock compensation expense based on the fair value of awards granted to employees and directors under the Company’s Amended and Restated 2017 Omnibus Plan and employee stock purchase rights plans. This expense, adjusted for expected performance and forfeitures, is recognized in net earnings on a straight-line basis over the service periods as salaries and related costs on the condensed consolidated statements of earnings. Restricted stock units (RSUs) and performance share units (PSUs) awarded to certain employees meeting specific retirement eligibility criteria at the time of grant are expensed immediately as there is no substantive service period associated with those awards.

Note 2. Income Taxes

During 2020 and 2021, the Internal Revenue Service (IRS) and the U.S. Department of Treasury (Treasury) issued additional guidelines and clarifying regulations related to the implementation of the 2017 Tax Act. It is possible that additional guidance could be issued in future periods. As this guidance is issued, the Company will evaluate the information to determine whether any additional adjustments to its tax provisions are required.

The 2017 Tax Act included provisions for Global Intangible Low-Taxed Income (GILTI) under which taxes on foreign income are imposed on the excess of a deemed return on tangible assets of certain foreign subsidiaries and for Base Erosion and Anti-Abuse Tax (BEAT) under which taxes are imposed on certain base eroding payments to affiliated foreign companies. The Company treats BEAT and GILTI as components of current income tax expense. For the three months ended March 31, 2022, and 2021, there was no BEAT expense and GILTI expense was insignificant. The Company’s consolidated effective income tax rate was 25.8%, for the three months ended March 31, 2022, as compared to 26.3% for the comparable period in 2021. Both periods benefited from U.S. income tax deductions for Foreign-derived intangible income (FDII).

8


 

Note 3. Basic and Diluted Earnings per Share

Diluted earnings attributable to shareholders per share is computed using the weighted average number of common shares and dilutive potential common shares outstanding. Dilutive potential shares represent outstanding stock options, including purchase options under the Company's employee stock purchase plan, and unvested restricted stock units. Basic earnings attributable to shareholders per share is calculated using the weighted average number of common shares outstanding without taking into consideration dilutive potential common shares outstanding.

The following table reconciles the numerator and the denominator of the basic and diluted per share computations for earnings attributable to shareholders:

 

 

 

Three months ended March 31,

 

 

 

Net earnings

attributable to

shareholders

 

 

Weighted

average

shares

 

 

Earnings per

share

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings attributable to shareholders

 

$

346,109

 

 

 

167,499

 

 

$

2.07

 

Effect of dilutive potential common shares

 

 

 

 

 

1,717

 

 

 

 

Diluted earnings attributable to shareholders

 

$

346,109

 

 

 

169,216

 

 

$

2.05

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings attributable to shareholders

 

$

287,220

 

 

 

169,214

 

 

$

1.70

 

Effect of dilutive potential common shares

 

 

 

 

 

2,337

 

 

 

 

Diluted earnings attributable to shareholders

 

$

287,220

 

 

 

171,551

 

 

$

1.67

 

 

Substantially all outstanding potential common shares as of March 31, 2022 and 2021 were dilutive.

Note 4. Shareholders' Equity

The Company has a Discretionary Stock Repurchase Plan approved by the Board of Directors that authorizes management to reduce issued and outstanding common stock down to 160,000 shares. On May 2, 2022, the Board of Directors amended the plan to further authorize repurchases down to 150,000 shares. This authorization has no expiration date. During the three months ended March 31, 2022, there were no shares repurchased, compared to 925 shares at an average price of $92.98 per share during the same period in 2021.   

Accumulated other comprehensive loss consisted entirely of foreign currency translation adjustments, net of related income tax effects, for all the periods presented.

Subsequent to the end of the first quarter of 2022, on May 2, 2022, the Board of Directors declared a semi-annual dividend of $0.67 per share payable on June 15, 2022 to shareholders of record as of June 1, 2022.

Note 5. Fair Value of Financial Instruments

The Company’s financial instruments, other than cash, consist primarily of cash equivalents, accounts receivable, accounts payable and accrued expenses. The carrying value of these financial instruments approximates their fair value. All highly liquid investments with a maturity of three months or less at date of purchase are considered to be cash equivalents.

Cash and cash equivalents consist of the following:

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

Cost

 

 

Fair Value

 

 

Cost

 

 

Fair Value

 

Cash and Cash Equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and overnight deposits

 

$

2,080,077

 

 

$

2,080,077

 

 

$

1,241,565

 

 

$

1,241,565

 

Corporate commercial paper

 

 

 

 

 

 

 

 

423,261

 

 

 

423,279

 

Time deposits

 

 

59,548

 

 

 

59,548

 

 

 

63,866

 

 

 

63,866

 

Total cash and cash equivalents

 

$

2,139,626

 

 

$

2,139,626

 

 

$

1,728,692

 

 

$

1,728,710

 

 

The fair value of corporate commercial paper and time deposits is based on the use of market interest rates for identical or similar assets (Level 2 fair value measurement).

9


 

Note 6. Contingencies

The Company is involved in claims, lawsuits, government investigations and other legal matters that arise in the ordinary course of business and are subject to inherent uncertainties. Currently, in management's opinion and based upon advice from legal advisors, none of these matters are expected to have a significant effect on the Company's operations, cash flows or financial position. As of March 31, 2022, the amounts accrued for these claims, lawsuits, government investigations and other legal matters are not significant to the Company's operations, cash flows or financial position. At this time, the Company is unable to estimate any additional loss or range of reasonably possible losses, if any, beyond the amounts recorded, that might result from the resolution of these matters, including potential claims resulting from the downtime caused by the cyber-attack, see further information in Note 8.

Note 7. Business Segment Information

The Company is organized functionally in geographic operating segments. Accordingly, management focuses its attention on revenues, directly related cost of transportation and other expenses for each of the Company’s three primary sources of revenue, salaries and other operating expenses, operating income, identifiable assets, capital expenditures and equity generated in each of these geographical areas when evaluating the effectiveness of geographic management. Transactions among the Company’s various offices are conducted using the same arms-length pricing methodologies the Company uses when its offices transact business with independent agents. Certain costs are allocated among the segments based on the relative value of the underlying services, which can include allocation based on actual costs incurred or estimated cost plus a profit margin.

Financial information regarding the Company’s operations by geographic area is as follows:

 

 

 

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 March 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

1,241,224

 

 

 

104,610

 

 

 

57,707

 

 

 

1,769,016

 

 

 

646,329

 

 

575,791

 

 

270,681

 

 

 

(1,060

)

 

 

4,664,298

 

Directly related cost of transportation

   and other expenses1

 

$

763,423

 

 

 

64,232

 

 

 

33,857

 

 

 

1,480,093

 

 

 

538,883

 

 

417,620

 

 

218,100

 

 

 

(97

)

 

 

3,516,111

 

Salaries and other operating expenses2

 

$

333,649

 

 

 

24,869

 

 

 

13,101

 

 

 

123,113

 

 

 

45,329

 

 

109,269

 

 

38,042

 

 

 

(945

)

 

 

686,427

 

Operating income

 

$

144,152

 

 

 

15,509

 

 

 

10,749

 

 

 

165,810

 

 

 

62,117

 

 

48,902

 

 

14,539

 

 

 

(18