Business Wire | Aug 3, 2021 08:30AM EDT

Expeditors Reports Second Quarter 2021 EPS of $1.84

Aug. 03, 2021

SEATTLE--(BUSINESS WIRE)--Aug. 03, 2021--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

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 % 2021 2020 % Change Change

Revenues^3 $ 3,609,093 $ 2,411,078 50% $ 6,807,913 $ 4,254,845 60%

Directlyrelated costof $ 2,598,633 $ 1,661,487 56% $ 4,845,917 $ 2,890,118 68%transportationand otherexpenses^1,3

Salaries andother $ 599,815 $ 501,965 19% $ 1,165,836 $ 958,046 22%operatingexpenses^2

Operating $ 410,645 $ 247,626 66% $ 796,160 $ 406,681 96%income

Net earningsattributable $ 316,372 $ 183,869 72% $ 603,592 $ 306,213 97%toshareholders

Dilutedearningsattributable $ 1.84 $ 1.09 69% $ 3.52 $ 1.80 96%toshareholdersper share

Basic earningsattributableto $ 1.87 $ 1.10 70% $ 3.57 $ 1.83 95%shareholdersper share

Dilutedweighted 171,677 169,290 171,660 170,382 average sharesoutstanding

Basic weightedaverage shares 169,210 166,767 169,140 167,751 outstanding

____________________

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.

____________________

^1Directly related cost of transportation and other expenses totals OperatingExpenses from Airfreight services, Ocean freight and ocean services and Customsbrokerage and other services as shown in the Condensed Consolidated Statementsof Earnings.

^2Salaries and other operating expenses totals Salaries and related, Rent andoccupancy, Depreciation and amortization, Selling and promotion and Other asshown in the Condensed Consolidated Statements of Earnings.

^3Beginning in the first quarter 2019, the Company made changes to its processand presentation of freight services revenue and directly relatedtransportation operating expenses with the objective that at each reportinglevel (reporting entity, segment and consolidated level) the gross revenue andassociated directly related operating expenses be representative of thelocation where the services were performed, the operating expenses wereincurred and where the revenues were earned. During the second quarter 2021,management identified and corrected certain immaterial errors in the Company'shistorical financial statements primarily related to this process that wasutilized through the first quarter of 2021. The process missed an intercompanyelimination of revenues and an equal and offsetting amount of directly relatedtransportation expenses, principally impacting airfreight services in NorthAsia. The errors overstated revenues and directly related transportationoperating expenses by equal amounts in the consolidated statements of earnings.The errors had no impact on operating income, net earnings, and earnings pershare nor any other financial statement amount. Further, the errors had noimpact on the balance sheets, statements of shareholders' equity, othercomprehensive income and cash flows. These errors do not affect any of themetrics used to calculate or evaluate management's compensation and had noimpact on bonuses, commissions, share-based compensation or any other employeeremuneration. Historical amounts have been revised and are presented on acomparable 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.

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.

Second quarter year-over-year percentage increase in:

2021 Airfreight Ocean freight kilos 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, December 31, 2021 2020

Assets:

Current Assets:

Cash and cash equivalents $ 1,674,121 $ 1,527,791

Accounts receivable, less allowance for creditloss of $6,104 at June 30, 2021 and $5,579 at 2,647,516 1,998,055 December 31, 2020

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 accumulateddepreciation and amortization of $534,790 at 499,282 506,425 June 30, 2021 and $516,988 at December 31, 2020

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 319,696 257,021 related costs

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 370,333 364,185 liabilities

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. Issuedand outstanding: 169,169 shares at June 30, 1,692 1,693 2021 and 169,294 shares at December 31, 2020

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 Earnings

(In thousands, except per share data)

(Unaudited)

Three months ended June 30, Six months ended June 30,

2021 2020 2021 2020

Revenues:

Airfreight $ 1,523,569 $ 1,269,654 $ 2,849,484 $ 1,925,252 services

Ocean freightand ocean 1,098,550 489,385 2,052,462 980,725 services

Customsbrokerage and 986,974 652,039 1,905,967 1,348,868 other services

Total revenues 3,609,093 2,411,078 6,807,913 4,254,845

Operating Expenses:

Airfreight 1,136,328 932,137 2,090,872 1,398,865 services

Ocean freightand ocean 862,251 361,272 1,604,686 725,668 services

Customsbrokerage and 600,054 368,078 1,150,359 765,585 other services

Salaries and 481,186 395,107 933,291 737,147 related

Rent and 45,366 41,375 90,646 83,899 occupancy

Depreciationand 12,675 14,109 25,662 26,769 amortization

Selling and 3,172 3,113 6,242 11,356 promotion

Other 57,416 48,261 109,995 98,875

Total operating 3,198,448 2,163,452 6,011,753 3,848,164 expenses

Operating 410,645 247,626 796,160 406,681 income

Other Income (Expense):

Interest income 2,188 2,559 4,134 7,366

Other, net 2,649 797 5,649 4,181

Other income, 4,837 3,356 9,783 11,547 net

Earnings before 415,482 250,982 805,943 418,228 income taxes

Income tax 98,508 66,794 201,019 111,258 expense

Net earnings 316,974 184,188 604,924 306,970

Less netearningsattributable to 602 319 1,332 757 thenoncontrollinginterest

Net earningsattributable to $ 316,372 $ 183,869 $ 603,592 $ 306,213 shareholders

Dilutedearningsattributable to $ 1.84 $ 1.09 $ 3.52 $ 1.80 shareholdersper share

Basic earningsattributable to $ 1.87 $ 1.10 $ 3.57 $ 1.83 shareholdersper share

Weightedaverage diluted 171,677 169,290 171,660 170,382 sharesoutstanding

Weightedaverage basic 169,210 166,767 169,140 167,751 sharesoutstanding

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

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 toreconcile netearnings to net cash fromoperatingactivities:

Provisions forlosses on 1,090 2,389 2,289 4,209 accountsreceivable

Deferred income 1,850 9,287 10,001 4,148 tax expense

Stockcompensation 30,909 21,638 42,094 32,794 expense

Depreciationand 12,675 14,109 25,662 26,769 amortization

Other, net 346 118 897 551

Changes inoperating assets andliabilities:

Increase inaccounts (410,783 ) (185,055 ) (663,697 ) (168,375 )receivable

Increase inaccountspayable and 100,118 106,760 333,271 107,677 accruedexpenses

Increase indeferred (150,382 ) (2,333 ) (221,640 ) (18,401 )contract costs

Increase(decrease) in 174,504 (595 ) 254,094 20,606 contractliabilities

(Decrease)increase in (47,994 ) 20,154 (1,356 ) 30,642 income taxespayable, net

Decrease(increase) in 1,164 16,061 (324 ) 4,131 other, net

Net cash fromoperating 30,471 186,721 386,215 351,721 activities

Investing Activities:

Purchase ofproperty and (6,539 ) (22,114 ) (14,930 ) (28,241 )equipment

Other, net 138 (68 ) 104 (211 )

Net cash frominvesting (6,401 ) (22,182 ) (14,826 ) (28,452 )activities

Financing Activities:

Proceeds fromissuance of 22,711 29,187 42,468 52,586 common stock

Repurchases of (62,472 ) (30,985 ) (148,469 ) (314,225 )common stock

Dividends paid (98,387 ) (86,815 ) (98,387 ) (86,815 )

Payments fortaxes relatedto net share (13,893 ) (9,170 ) (15,168 ) (10,566 )settlement ofequity awards

Net cash fromfinancing (152,041 ) (97,783 ) (219,556 ) (359,020 )activities

Effect ofexchange ratechanges on cash 8,699 1,726 (5,503 ) (14,285 )and cashequivalents

Change in cashand cash (119,272 ) 68,482 146,330 (50,036 )equivalents

Cash and cashequivalents at 1,793,393 1,111,973 1,527,791 1,230,491 beginning ofperiod

Cash and cashequivalents at $ 1,674,121 $ 1,180,455 $ 1,674,121 $ 1,180,455 end of period

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

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Business Segment Information

(In thousands)

(Unaudited)

OTHER MIDDLE UNITED LATIN NORTH SOUTH EAST, ELIMI- CONSOLI- STATES NORTH AMERICA ASIA ASIA EUROPE AFRICA NATIONS DATED AMERICA AND INDIA

For the threemonths 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

Directlyrelated costof $ 566,882 59,311 25,952 1,086,641 335,219 376,856 148,290 (518 ) 2,598,633 transportationand otherexpenses^1

Salaries andother $ 241,121 31,300 14,735 106,812 49,046 123,408 34,026 (633 ) 599,815 operatingexpenses^2

Operating $ 189,564 10,854 6,294 115,929 33,453 44,685 9,870 (4 ) 410,645 income

Identifiableassets at $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 period end

Capital $ 2,905 64 72 400 532 2,100 466 - 6,539 expenditures

Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651

For the threemonths ended June 30, 2020:

Revenues^3 $ 639,226 73,679 37,553 984,715 217,152 358,060 101,571 (878 ) 2,411,078

Directlyrelated costof $ 354,619 40,814 22,701 775,572 153,194 242,170 72,868 (451 ) 1,661,487 transportationand otherexpenses^1, 3

Salaries andother $ 207,703 25,283 12,112 97,171 39,184 95,757 25,188 (433 ) 501,965 operatingexpenses^2

Operating $ 76,904 7,582 2,740 111,972 24,774 20,133 3,515 6 247,626 income

Identifiableassets at $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 period end

Capital $ 19,076 1,148 216 385 182 993 114 - 22,114 expenditures

Equity $ 1,399,124 71,165 29,758 306,022 108,777 168,060 116,279 (37,587 ) 2,161,598





MIDDLE UNITED OTHER LATIN NORTH SOUTH EAST, ELIMI- CONSOLI- STATES NORTH AMERICA ASIA ASIA EUROPE AFRICA NATIONS DATED AMERICA AND INDIA

For the sixmonths ended June 30, 2021:

Revenues^3 $ 1,872,957 195,582 91,845 2,518,430 767,484 1,011,282 352,692 (2,359 ) 6,807,913

Directlyrelated costof $ 1,069,517 112,361 52,652 2,054,170 605,163 683,765 269,399 (1,110 ) 4,845,917 transportationand otherexpenses^1, 3

Salaries andother $ 479,819 57,037 27,112 213,732 92,211 232,863 64,301 (1,239 ) 1,165,836 operatingexpenses^2

Operating $ 323,621 26,184 12,081 250,528 70,110 94,654 18,992 (10 ) 796,160 income

Identifiableassets at $ 2,972,363 196,558 102,296 1,114,475 377,370 929,706 291,406 (31,003 ) 5,953,171 period end

Capital $ 5,930 186 125 757 1,111 5,654 1,167 - 14,930 expenditures

Equity $ 2,163,114 80,802 36,316 318,111 146,583 255,006 128,148 (44,429 ) 3,083,651

For the sixmonths ended June 30, 2020:

Revenues^3 $ 1,289,631 154,910 75,444 1,481,872 383,233 665,020 206,553 (1,818 ) 4,254,845

Directlyrelated costof $ 728,578 86,104 46,467 1,160,075 271,515 450,488 147,787 (896 ) 2,890,118 transportationand otherexpenses^1, 3

Salaries andother $ 433,647 48,995 23,861 154,604 69,092 177,611 51,138 (902 ) 958,046 operatingexpenses^2

Operating $ 127,406 19,811 5,116 167,193 42,626 36,921 7,628 (20 ) 406,681 income

Identifiableassets at $ 1,886,463 170,873 72,912 669,335 213,007 581,988 221,381 (5,782 ) 3,810,177 period end

Capital $ 23,573 1,209 318 710 370 1,638 423 - 28,241 expenditures

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210803005285/en/

CONTACT: Jeffrey S. Musser President and Chief Executive Officer (206) 674-3433

CONTACT: Bradley S. Powell Senior Vice President and Chief Financial Officer (206) 674-3412

CONTACT: Geoffrey Buscher Director - Investor Relations (206) 892-4510