Business Wire | Nov 3, 2020 08:30AM EST

Expeditors Reports Third Quarter 2020 EPS Of $1.12

Nov. 03, 2020

SEATTLE--(BUSINESS WIRE)--Nov. 03, 2020--Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced third quarter 2020 financial results including the following highlights compared to the same quarter of 2019:

* Diluted Net Earnings Attributable to Shareholders per share (EPS1) increased 22% to $1.12 * Net Earnings Attributable to Shareholders increased 19% to $191 million * Operating Income increased 22% to $252 million * Revenues increased 19% to $2.5 billion * Airfreight tonnage volume and ocean container volume both decreased 5%

"Volumes started to recover across most of our products during the quarter, even as the global effects of COVID-19 continued to impact our business worldwide," said Jeffrey S. Musser, President and Chief Executive Officer. "Similar to Q2, the pandemic caused an increase in demand for certain goods at the same time that air capacity remained tight due to travel restrictions and the limited schedule of domestic and international passenger flights. This caused continued imbalances between carrier capacity and demand, principally on exports out of North Asia, which was the only market in which air volumes increased during the third quarter. To meet the urgent transportation needs that could not be fulfilled with scheduled capacity, we utilized charter capacity for certain customers, resulting in higher average buy and sell rates. While airfreight buy and sell rates were generally lower in our third quarter than the extremes we experienced in the second quarter, they remained historically elevated and highly unpredictable due to ongoing supply/demand imbalances. We would expect air pricing to remain volatile until passenger traffic starts to return in a meaningful way.

"While our ocean freight business has not been nearly as impacted by supply constraints, carriers remain disciplined and are carefully managing capacity even as volumes have increased from the lows we saw earlier in this pandemic. Across most of our products in the third quarter, we experienced a steady recovery in demand as shippers adjusted to an altered marketplace and disrupted supply chains.

"Despite the challenges, we continue to serve our customers at the highest level throughout our organization, whether working from remote locations or on-site at one of our many warehouses, where we are following very strict safety protocols. Thanks to the ongoing implementation of our business continuity plans and the adaptability of our people, all of our offices remain open, connected, and are functioning extremely well. Our network is strong, and our people remain steadfast and highly flexible."

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, "The effects of COVID-19 continued to impact volumes for all products, although not as significantly as in the prior sequential quarter. While we have experienced increased demand in many of our markets for a mix of products, capacity constraints in air, and to a lesser extent in ocean, have led to a continued buy/sell rate imbalance. While we remain uncertain about the pace, strength, or evenness of an economic recovery, we will continue to use our strong financial position to make important strategic investments that are necessary for our future growth, while continuing our focus on controlling costs and improving operational efficiencies. We appreciate the hard work of our District Managers and their leadership teams as they continue to execute at a high level, control operational expenses and limit the addition of headcount."

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 on the following page ofthis release.

Expeditors International of Washington, Inc.

Third Quarter 2020 Earnings Release, November 3, 2020

Financial Highlights for the three and nine months ended September 30, 2020 and 2019 (Unaudited)

(in 000's of US dollars except per share data)

Three months ended September 30,

Nine months ended September 30,

2020

2019

% Change

2020

2019

% Change

Revenues

$

2,464,797

$

2,074,855

19

%

$

6,947,293

$

6,130,485

13

%

Directly related cost of transportation and other expenses1

$

1,730,418

$

1,400,499

24

%

$

4,848,187

$

4,140,320

17

%

Salaries and other operating expenses2

$

482,434

$

467,806

3

%

$

1,440,480

$

1,403,813

3

%

Operating income

$

251,945

$

206,550

22

%

$

658,626

$

586,352

12

%

Net earnings attributable to shareholders

$

191,307

$

160,221

19

%

$

497,520

$

453,069

10

%

Diluted earnings attributable to shareholders per share

$

1.12

$

0.92

22

%

$

2.92

$

2.60

12

%

Basic earnings attributable to shareholders per share

$

1.14

$

0.94

21

%

$

2.96

$

2.65

12

%

Diluted weighted average shares outstanding

170,735

173,483

170,539

174,463

Basic weighted average shares outstanding

168,310

170,415

167,942

171,084

Expeditors International of Washington, Inc.

Third Quarter 2020 Earnings Release, November 3, 2020

Financial Highlights for the three and nine months ended September 30, 2020 and2019 (Unaudited)

(in 000's of US dollars except per share data)

Three months ended September 30, Nine months ended September 30,

2020 2019 % 2020 2019 % Change Change

Revenues $ 2,464,797 $ 2,074,855 19 % $ 6,947,293 $ 6,130,485 13 %

Directlyrelated costof $ 1,730,418 $ 1,400,499 24 % $ 4,848,187 $ 4,140,320 17 % transportationand otherexpenses^1

Salaries andother $ 482,434 $ 467,806 3 % $ 1,440,480 $ 1,403,813 3 % operatingexpenses^2

Operating $ 251,945 $ 206,550 22 % $ 658,626 $ 586,352 12 % income

Net earningsattributable $ 191,307 $ 160,221 19 % $ 497,520 $ 453,069 10 % toshareholders

Dilutedearningsattributable $ 1.12 $ 0.92 22 % $ 2.92 $ 2.60 12 % toshareholdersper share

Basic earningsattributableto $ 1.14 $ 0.94 21 % $ 2.96 $ 2.65 12 % shareholdersper share

Dilutedweighted 170,735 173,483 170,539 174,463 average sharesoutstanding

Basic weightedaverage shares 168,310 170,415 167,942 171,084 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.

During the three months ended September 30, 2020, we did not repurchase any shares of common stock and during the nine months ended September 30, 2020, we repurchased 4.4 million shares of common stock at an average price of $71.41 per share. During the three and nine months ended September 30, 2019, we repurchased 0.9 million and 4.1 million shares of common stock at an average price of $69.51 and $72.60 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.

During the three months ended September 30, 2020, we did not repurchase any shares of common stock and during the nine months ended September 30, 2020, we repurchased 4.4 million shares of common stock at an average price of $71.41 per share. During the three and nine months ended September 30, 2019, we repurchased 0.9 million and 4.1 million shares of common stock at an average price of $69.51 and $72.60 per share, respectively.

Employee Full-time Equivalents as of September 30,

2020 2019

North America 6,666 6,861

Europe 3,361 3,427

North Asia 2,406 2,483

South Asia 1,643 1,674

Middle East, Africa and 1,509 1,565 India

Latin America 800 860

Information Systems 975 939

Corporate 383 383

Total 17,743 18,192

Third quarter year-over-year

percentage (decrease) increase in:

2020

Airfreight

kilos

Ocean freight

FEU

July

(12

)%

(13

)%

August

(5

)%

(5

)%

September

2

%

5

%

Quarter

(5

)%

(5

)%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 6, 2020 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" that involve risks and uncertainties, including statements such as our expectations of continued volatility in air pricing. Actual results could differ materially because of factors such as: the timing until passenger traffic starts to return in a meaningful way; the impact on our ocean volumes; the pace, strength, or evenness of the of an economic recovery; our employees' ability to continue to perform at a high level; airfreight buy and sell rates; our access to carrier capacity; our ability to keep our global offices open and operating; employee retention; employee health and safety; our ability to execute our business continuity plans; the strength of our financial position and our ability to continue to make investments in our strategic initiatives; our ability to remain a strong, healthy, unified and resilient organization; our ability to control costs and improve operational efficiencies; our ability to control operational expenses and limit the addition of headcount. 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, 2019 and in "Item 1A. Risk Factors" of the Company's most recent Quarterly Report on Form 10-Q. 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.

Third quarter year-over-year percentage (decrease) increase in:

Airfreight Ocean freight2020 kilos FEU

July (12 )% (13 )%

August (5 )% (5 )%

September 2 % 5 %

Quarter (5 )% (5 )%

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on November 6, 2020 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" that involve risks and uncertainties, including statements such as our expectations of continued volatility in air pricing. Actual results could differ materially because of factors such as: the timing until passenger traffic starts to return in a meaningful way; the impact on our ocean volumes; the pace, strength, or evenness of the of an economic recovery; our employees' ability to continue to perform at a high level; airfreight buy and sell rates; our access to carrier capacity; our ability to keep our global offices open and operating; employee retention; employee health and safety; our ability to execute our business continuity plans; the strength of our financial position and our ability to continue to make investments in our strategic initiatives; our ability to remain a strong, healthy, unified and resilient organization; our ability to control costs and improve operational efficiencies; our ability to control operational expenses and limit the addition of headcount. 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, 2019 and in "Item 1A. Risk Factors" of the Company's most recent Quarterly Report on Form 10-Q. 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)

September December 30, 31,

2020 2019

Assets:

Current Assets:

Cash and cash equivalents $ 1,465,510 $ 1,230,491

Accounts receivable, less allowance for creditloss of $5,171 at September 30, 2020 and 1,582,424 1,315,091 $11,143 at December 31, 2019

Deferred contract costs 232,351 131,783

Other 129,617 92,558

Total current assets 3,409,902 2,769,923

Property and equipment, less accumulateddepreciation and amortization of $510,103 at 499,189 499,344 September 30, 2020 and $478,906 at December 31,2019

Operating lease right-of-use assets 422,002 390,035

Goodwill 7,927 7,927

Deferred federal and state income taxes, net 3,130 8,034

Other assets, net 16,404 16,621

Total assets $ 4,358,554 $ 3,691,884

Liabilities:

Current Liabilities:

Accounts payable $ 888,761 $ 735,695

Accrued expenses, primarily salaries and 236,826 189,446 related costs

Contract liabilities 267,266 154,183

Current portion of operating lease liabilities 70,755 65,367

Federal, state and foreign income taxes 33,100 23,627

Total current liabilities 1,496,708 1,168,318

Noncurrent portion of operating lease 357,373 326,347 liabilities

Commitments and contingencies

Shareholders' Equity:

Preferred stock, none issued - -

Common stock, par value $0.01 per share. Issuedand outstanding: 169,231 shares at September 1,692 1,696 30, 2020 and 169,622 shares at December 31,2019

Additional paid-in capital 145,924 3,203

Retained earnings 2,489,694 2,321,316

Accumulated other comprehensive loss (135,281 ) (131,187 )

Total shareholders' equity 2,502,029 2,195,028

Noncontrolling interest 2,444 2,191

Total equity 2,504,473 2,197,219

Total liabilities and equity $ 4,358,554 $ 3,691,884

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,

2020

2019

2020

2019

Revenues:

Airfreight services

$

1,093,550

$

715,450

$

3,237,179

$

2,171,928

Ocean freight and ocean services

612,858

585,374

1,597,997

1,697,824

Customs brokerage and other services

758,389

774,031

2,112,117

2,260,733

Total revenues

2,464,797

2,074,855

6,947,293

6,130,485

Operating Expenses:

Airfreight services

833,689

522,868

2,450,931

1,574,717

Ocean freight and ocean services

455,072

424,215

1,185,154

1,234,845

Customs brokerage and other services

441,657

453,416

1,212,102

1,330,758

Salaries and related

373,613

356,331

1,110,760

1,069,592

Rent and occupancy

42,484

41,987

126,383

124,407

Depreciation and amortization

15,851

12,386

42,620

38,456

Selling and promotion

2,945

10,133

14,301

32,852

Other

47,541

46,969

146,416

138,506

Total operating expenses

2,212,852

1,868,305

6,288,667

5,544,133

Operating income

251,945

206,550

658,626

586,352

Other Income (Expense):

Interest income

1,504

5,501

8,870

18,123

Other, net

980

1,895

5,161

5,822

Other income, net

2,484

7,396

14,031

23,945

Earnings before income taxes

254,429

213,946

672,657

610,297

Income tax expense

62,710

53,319

173,968

156,029

Net earnings

191,719

160,627

498,689

454,268

Less net earnings attributable to the noncontrolling interest

412

406

1,169

1,199

Net earnings attributable to shareholders

$

191,307

$

160,221

$

497,520

$

453,069

Diluted earnings attributable to shareholders per share

$

1.12

$

0.92

$

2.92

$

2.60

Basic earnings attributable to shareholders per share

$

1.14

$

0.94

$

2.96

$

2.65

Weighted average diluted shares outstanding

170,735

173,483

170,539

174,463

Weighted average basic shares outstanding

168,310

170,415

167,942

171,084

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES



Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

Revenues:

Airfreight $ 1,093,550 $ 715,450 $ 3,237,179 $ 2,171,928 services

Ocean freightand ocean 612,858 585,374 1,597,997 1,697,824 services

Customsbrokerage and 758,389 774,031 2,112,117 2,260,733 other services

Total revenues 2,464,797 2,074,855 6,947,293 6,130,485

Operating Expenses:

Airfreight 833,689 522,868 2,450,931 1,574,717 services

Ocean freightand ocean 455,072 424,215 1,185,154 1,234,845 services

Customsbrokerage and 441,657 453,416 1,212,102 1,330,758 other services

Salaries and 373,613 356,331 1,110,760 1,069,592 related

Rent and 42,484 41,987 126,383 124,407 occupancy

Depreciationand 15,851 12,386 42,620 38,456 amortization

Selling and 2,945 10,133 14,301 32,852 promotion

Other 47,541 46,969 146,416 138,506

Total operating 2,212,852 1,868,305 6,288,667 5,544,133 expenses

Operating 251,945 206,550 658,626 586,352 income

Other Income (Expense):

Interest income 1,504 5,501 8,870 18,123

Other, net 980 1,895 5,161 5,822

Other income, 2,484 7,396 14,031 23,945 net

Earnings before 254,429 213,946 672,657 610,297 income taxes

Income tax 62,710 53,319 173,968 156,029 expense

Net earnings 191,719 160,627 498,689 454,268

Less netearningsattributable to 412 406 1,169 1,199 thenoncontrollinginterest

Net earningsattributable to $ 191,307 $ 160,221 $ 497,520 $ 453,069 shareholders

Dilutedearningsattributable to $ 1.12 $ 0.92 $ 2.92 $ 2.60 shareholdersper share

Basic earningsattributable to $ 1.14 $ 0.94 $ 2.96 $ 2.65 shareholdersper share

Weightedaverage diluted 170,735 173,483 170,539 174,463 sharesoutstanding

Weighted average basic 168,310 170,415 167,942 171,084shares outstanding

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,

2020

2019

2020

2019

Operating Activities:

Net earnings

$

191,719

$

160,627

$

498,689

$

454,268

Adjustments to reconcile net earnings to net cash from operating activities:

Provisions for losses on accounts receivable

398

757

4,607

453

Deferred income tax (benefit) expense

(1,276

)

(5,822

)

2,872

(17

)

Stock compensation expense

12,297

12,155

45,091

49,361

Depreciation and amortization

15,851

12,386

42,620

38,456

Other, net

2,919

652

3,470

812

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable

(106,065

)

43,885

(274,440

)

246,175

Increase (decrease) in accounts payable and accrued expenses

94,263

(58,816

)

201,940

(141,199

)

(Increase) decrease in deferred contract costs

(81,486

)

10,301

(99,887

)

28,550

Increase (decrease) in contract liabilities

91,638

(13,211

)

112,244

(36,933

)

(Decrease) in income taxes payable, net

(41,286

)

(671

)

(10,644

)

(33,284

)

(Increase) decrease in other, net

(17,373

)

(744

)

(13,242

)

47

Net cash from operating activities

161,599

161,499

513,320

606,689

Investing Activities:

Purchase of property and equipment

(9,178

)

(15,521

)

(37,419

)

(37,943

)

Other, net

1,174

232

963

1,525

Net cash from investing activities

(8,004

)

(15,289

)

(36,456

)

(36,418

)

Financing Activities:

Proceeds from issuance of common stock

121,430

60,713

174,016

120,190

Repurchases of common stock

-

(61,999

)

(314,225

)

(296,922

)

Dividends paid

-

-

(86,815

)

(85,184

)

Payments for taxes related to net share settlement of equity awards

-

-

(10,566

)

(6,674

)

Net cash from financing activities

121,430

(1,286

)

(237,590

)

(268,590

)

Effect of exchange rate changes on cash and cash equivalents

10,030

(11,604

)

(4,255

)

(9,446

)

Change in cash and cash equivalents

285,055

133,320

235,019

292,235

Cash and cash equivalents at beginning of period

1,180,455

1,082,650

1,230,491

923,735

Cash and cash equivalents at end of period

$

1,465,510

$

1,215,970

$

1,465,510

$

1,215,970

Taxes Paid:

Income taxes

$

106,434

$

61,201

$

180,242

$

196,169

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES



Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

Operating Activities:

Net earnings $ 191,719 $ 160,627 $ 498,689 $ 454,268

Adjustments toreconcile netearnings to net cash fromoperatingactivities:

Provisions forlosses on 398 757 4,607 453 accountsreceivable

Deferred incometax (benefit) (1,276 ) (5,822 ) 2,872 (17 )expense

Stockcompensation 12,297 12,155 45,091 49,361 expense

Depreciationand 15,851 12,386 42,620 38,456 amortization

Other, net 2,919 652 3,470 812

Changes inoperating assets andliabilities:

(Increase)decrease in (106,065 ) 43,885 (274,440 ) 246,175 accountsreceivable

Increase(decrease) inaccounts 94,263 (58,816 ) 201,940 (141,199 )payable andaccruedexpenses

(Increase)decrease in (81,486 ) 10,301 (99,887 ) 28,550 deferredcontract costs

Increase(decrease) in 91,638 (13,211 ) 112,244 (36,933 )contractliabilities

(Decrease) inincome taxes (41,286 ) (671 ) (10,644 ) (33,284 )payable, net

(Increase)decrease in (17,373 ) (744 ) (13,242 ) 47 other, net

Net cash fromoperating 161,599 161,499 513,320 606,689 activities

Investing Activities:

Purchase ofproperty and (9,178 ) (15,521 ) (37,419 ) (37,943 )equipment

Other, net 1,174 232 963 1,525

Net cash frominvesting (8,004 ) (15,289 ) (36,456 ) (36,418 )activities

Financing Activities:

Proceeds fromissuance of 121,430 60,713 174,016 120,190 common stock

Repurchases of - (61,999 ) (314,225 ) (296,922 )common stock

Dividends paid - - (86,815 ) (85,184 )

Payments fortaxes relatedto net share - - (10,566 ) (6,674 )settlement ofequity awards

Net cash fromfinancing 121,430 (1,286 ) (237,590 ) (268,590 )activities

Effect ofexchange ratechanges on cash 10,030 (11,604 ) (4,255 ) (9,446 )and cashequivalents

Change in cashand cash 285,055 133,320 235,019 292,235 equivalents

Cash and cashequivalents at 1,180,455 1,082,650 1,230,491 923,735 beginning ofperiod

Cash and cashequivalents at $ 1,465,510 $ 1,215,970 $ 1,465,510 $ 1,215,970 end of period

Taxes Paid:

Income taxes $ 106,434 $ 61,201 $ 180,242 $ 196,169

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 September 30, 2020:

Revenues1

$

686,245

78,129

39,193

883,104

267,228

378,048

133,765

(915

)

2,464,797

Directly related cost of transportation and other expenses2

$

379,588

44,911

23,361

720,807

200,334

261,325

100,619

(527

)

1,730,418

Salaries and other operating expenses3

$

197,749

25,325

12,359

81,876

39,926

96,658

28,925

(384

)

482,434

Operating income

$

108,908

7,893

3,473

80,421

26,968

20,065

4,221

(4

)

251,945

Identifiable assets at period end

$

2,336,071

163,943

76,173

689,525

231,771

642,124

228,423

(9,476

)

4,358,554

Capital expenditures

$

4,703

483

180

1,075

665

1,780

292

-

9,178

Equity

$

1,791,658

77,915

31,324

246,557

97,564

185,352

110,714

(36,611

)

2,504,473

For the three months ended September 30, 2019:

Revenues1

$

692,229

88,088

38,341

624,351

196,569

320,769

115,397

(889

)

2,074,855

Directly related cost of transportation and other expenses2

$

389,254

51,420

22,990

489,195

145,345

221,149

81,592

(446

)

1,400,499

Salaries and other operating expenses3

$

210,767

25,731

14,547

70,410

32,482

86,156

28,151

(438

)

467,806

Operating income

$

92,208

10,937

804

64,746

18,742

13,464

5,654

(5

)

206,550

Identifiable assets at period end

$

2,059,345

128,336

72,029

489,322

164,976

563,289

226,657

2,499

3,706,453

Capital expenditures

$

7,644

513

833

523

631

5,119

258

-

15,521

Equity$

1,578,682

60,526

27,217

216,061

77,733

169,450

111,355

(31,737

)

2,209,287

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES



Business Segment Information

(In thousands)

(Unaudited)

MIDDLE

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

INDIA

For the threemonths ended September 30,2020:

Revenues^1 $ 686,245 78,129 39,193 883,104 267,228 378,048 133,765 (915 ) 2,464,797

Directlyrelated costof $ 379,588 44,911 23,361 720,807 200,334 261,325 100,619 (527 ) 1,730,418 transportationand otherexpenses^2

Salaries andother $ 197,749 25,325 12,359 81,876 39,926 96,658 28,925 (384 ) 482,434 operatingexpenses^3

Operating $ 108,908 7,893 3,473 80,421 26,968 20,065 4,221 (4 ) 251,945 income

Identifiableassets at $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 period end

Capital $ 4,703 483 180 1,075 665 1,780 292 - 9,178 expenditures

Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473

For the threemonths ended September 30,2019:

Revenues^1 $ 692,229 88,088 38,341 624,351 196,569 320,769 115,397 (889 ) 2,074,855

Directlyrelated costof $ 389,254 51,420 22,990 489,195 145,345 221,149 81,592 (446 ) 1,400,499 transportationand otherexpenses^2

Salaries andother $ 210,767 25,731 14,547 70,410 32,482 86,156 28,151 (438 ) 467,806 operatingexpenses^3

Operating $ 92,208 10,937 804 64,746 18,742 13,464 5,654 (5 ) 206,550 income

Identifiableassets at $ 2,059,345 128,336 72,029 489,322 164,976 563,289 226,657 2,499 3,706,453 period end

Capital $ 7,644 513 833 523 631 5,119 258 - 15,521 expenditures

Equity $ 1,578,682 60,526 27,217 216,061 77,733 169,450 111,355 (31,737 ) 2,209,287

UNITED

STATES

OTHER

NORTH

AMERICA

LATIN

AMERICA

NORTH

ASIA

SOUTH

ASIA

EUROPE

MIDDLE

EAST,

AFRICA

AND

INDIA

ELIMI-

NATIONS

CONSOLI-

DATED

For the nine months ended September 30, 2020:

Revenues1

$

1,975,883

234,274

114,636

2,538,117

660,583

1,086,118

340,415

(2,733

)

6,947,293

Directly related cost of transportation and other expenses2

$

1,108,173

132,250

69,827

2,054,023

481,971

754,863

248,503

(1,423

)

4,848,187

Salaries and other operating expenses3

$

631,396

74,320

36,220

236,480

109,018

274,269

80,063

(1,286

)

1,440,480

Operating income

$

236,314

27,704

8,589

247,614

69,594

56,986

11,849

(24

)

658,626

Identifiable assets at period end

$

2,336,071

163,943

76,173

689,525

231,771

642,124

228,423

(9,476

)

4,358,554

Capital expenditures

$

28,276

1,692

498

1,785

1,035

3,418

715

-

37,419

Equity

$

1,791,658

77,915

31,324

246,557

97,564

185,352

110,714

(36,611

)

2,504,473

For the nine months ended September 30, 2019:

Revenues1

$

2,033,088

265,035

111,277

1,879,155

555,128

952,790

336,383

(2,371

)

6,130,485

Directly related cost of transportation and other expenses2

$

1,142,701

157,997

64,149

1,475,395

407,642

657,720

236,184

(1,468

)

4,140,320

Salaries and other operating expenses3

$

636,243

76,283

41,342

208,781

97,324

258,339

86,385

(884

)

1,403,813

Operating income

$

254,144

30,755

5,786

194,979

50,162

36,731

13,814

(19

)

586,352

Identifiable assets at period end

$

2,059,345

128,336

72,029

489,322

164,976

563,289

226,657

2,499

3,706,453

Capital expenditures

$

23,544

1,509

1,071

1,167

1,235

8,015

1,402

-

37,943

Equity$

1,578,682

60,526

27,217

216,061

77,733

169,450

111,355

(31,737

)

2,209,287

MIDDLE

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

INDIA

For the ninemonths ended September 30,2020:

Revenues^1 $ 1,975,883 234,274 114,636 2,538,117 660,583 1,086,118 340,415 (2,733 ) 6,947,293

Directlyrelated costof $ 1,108,173 132,250 69,827 2,054,023 481,971 754,863 248,503 (1,423 ) 4,848,187 transportationand otherexpenses^2

Salaries andother $ 631,396 74,320 36,220 236,480 109,018 274,269 80,063 (1,286 ) 1,440,480 operatingexpenses^3

Operating $ 236,314 27,704 8,589 247,614 69,594 56,986 11,849 (24 ) 658,626 income

Identifiableassets at $ 2,336,071 163,943 76,173 689,525 231,771 642,124 228,423 (9,476 ) 4,358,554 period end

Capital $ 28,276 1,692 498 1,785 1,035 3,418 715 - 37,419 expenditures

Equity $ 1,791,658 77,915 31,324 246,557 97,564 185,352 110,714 (36,611 ) 2,504,473

For the ninemonths ended September 30,2019:

Revenues^1 $ 2,033,088 265,035 111,277 1,879,155 555,128 952,790 336,383 (2,371 ) 6,130,485

Directlyrelated costof $ 1,142,701 157,997 64,149 1,475,395 407,642 657,720 236,184 (1,468 ) 4,140,320 transportationand otherexpenses^2

Salaries andother $ 636,243 76,283 41,342 208,781 97,324 258,339 86,385 (884 ) 1,403,813 operatingexpenses^3

Operating $ 254,144 30,755 5,786 194,979 50,162 36,731 13,814 (19 ) 586,352 income

Identifiableassets at $ 2,059,345 128,336 72,029 489,322 164,976 563,289 226,657 2,499 3,706,453 period end

Capital $ 23,544 1,509 1,071 1,167 1,235 8,015 1,402 - 37,943expenditures

Equity $ 1,578,682 60,526 27,217 216,061 77,733 169,450 111,355 (31,737 ) 2,209,287

1Beginning in the second quarter of 2019, the Company revised its process to record the transfer, between its geographic operating segments, of revenues and the directly related cost of transportation and other expenses for freight service transactions between Company origin and destination locations. This change better aligns revenue reporting with the location where the services are performed, as well as the transactional reporting being developed as part of the Company's new accounting systems and processes. The change in presentation had nine months ended September 30, 2019, segment revenues have not been revised.

2Directly 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.

3Salaries 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.

The Company's consolidated financial results in the nine months ended September 30, 2020 was significantly impacted by the effects of the global pandemic and are expected to be further impacted in the remainder of 2020. The impact is affecting the Company's geographical segments unevenly.

In the second and third quarter of 2020, North Asia experienced significant increases in airfreight services revenues and directly related expenses primarily 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 rates. In the third quarter 2020 and 2019, the People's Republic of China, including Hong Kong, represented 30% and 26%, respectively, of the Company's total revenues and 26% of the Company's total operating income in both periods.

This is in contrast with slower activity in North Asia in the first quarter of 2020 as the global pandemic resulted in temporary closures and limited operations from the Company's China offices and shipments that were rerouted or delayed by customers and service providers taking their own precautionary measures. In the nine months ended September 30, 2020 and 2019, the People's Republic of China, including Hong Kong, represented 31% and 26%, respectively, of the Company's total revenues and 30% and 27%, respectively, of the Company's total operating income.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201103005080/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