Expeditors Reports First Quarter 2020 EPS of $0.71

Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced first quarter 2020 financial results including the following highlights compared to the same quarter of 2019:

• Diluted Net Earnings Attributable to Shareholders per share (EPS1) decreased 11% to $0.71
• Net Earnings Attributable to Shareholders decreased 12% to $122 million
• Operating Income decreased 15% to $159 million
• Revenues decreased 6% to $1.9 billion
• Airfreight tonnage volume decreased 7% and ocean container volume decreased 10%

“I offer my heartfelt appreciation to everyone throughout our organization for their tremendous efforts during the challenging conditions brought about as a result of the COVID-19 pandemic,” said Jeffrey S. Musser, President and Chief Executive Officer. “As befits our legacy and the culture of our organization, we put the health, safety, and welfare of our employees and their families ahead of all other concerns. In doing so, we were able to shift much of our staff to a virtual environment while still providing essential supply chain services to our customers. Achieving this during a time of such unparalleled crisis is impressive and I offer my sincerest thank you to our entire staff.”

Mr. Musser continued, “Our Q1 performance was better than we might have expected, given the contraction in demand across geographies, as well as the severity and suddenness of the collapse in air carrier belly space and reduction in containership sailings. While there is talk of various markets starting to come back on line, the impact of COVID-19 continues to have an enormous impact on the global economic environment, to both supply and demand, as well as to buy/sell rates. While we remain fully staffed and ready for when economies across the world start to regain their post-crisis footing, we do not know when, how quickly, or how uniformly that will take place. Until then, we remain steadfast in our commitment to our valued customers, our carrier partners, and to all of our dedicated employees around the world.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “Operating income was negatively impacted by the disruption caused by COVID-19, which led to many factory shutdowns, commercial flight cancellations, and reduced ocean sailings as economies around the world diverted activities to fight the pandemic. As a result, we experienced a shift in the goods we handle with increased shipments of medical equipment and supplies to help combat COVID-19 and technology products to support social distancing and working remotely. Conversely, we saw a significant decline in shipments from our customers in retail, aerospace, automotive and the oil and energy sectors. Salaries and related expenses declined 4% compared to a year ago, primarily as a result of lower bonuses and commissions under our variable compensation plans. Importantly, we honored our commitment to not furlough or lay off our valuable employees around the world during this crisis. We expect disruptions from COVID-19 to continue for the remainder of 2020. Our balance sheet and cash flow are strong and we expect to continue to make investments in our people, processes and technology.”

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.

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1Diluted earnings attributable to shareholders per share.
NOTE:  See Disclaimer on Forward-Looking Statements on the following page of this release.

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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 March 31, 2020, we repurchased 4.0 million shares of common stock at an average price of $70.81 per share. During the three months ended March 31, 2019, we repurchased 0.6 million shares of common stock at an average price of $75.40 per share.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on May 8, 2020 will be considered in management's 8-K “Responses to Selected Questions.”

Disclaimer on Forward-Looking Statements:

Certain portions of this release contain forward-looking statements, including the impact on freight volumes in the second quarter as a result of containment measures related to the Novel Coronavirus (COVID-19); uncertainty over if and when various markets may come back on line; the impact on the global economic environment, to both supply and demand, as well as to buy/sell rates; the duration of the COVID-19 pandemic; our continuing ability to make investments in people, process and technology throughout this period; and the impact of the 2017 Tax Act and related interpretations on our effective tax rate. Forward-looking statements involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the length and severity of the Novel Coronavirus (COVID-19); our ability to contain costs; our ability to retain existing and attract new customers; our ability to use our broad market footprint to respond to and take advantage of a sudden shift in manufacturing capacity and associated trade; and risk factors and uncertainties detailed in our Annual Report on Form 10-K for the year ended December 31, 2019 and as updated by our reports on Form 10-Q, filed with the Securities and Exchange Commission.

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 no impact on consolidated or segment operating income. The impact of these changes on reported segment revenues was immaterial and first quarter 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 first quarter 2020 were significantly impacted by the effects of the Novel Coronavirus (COVID-19) pandemic and are expected to be further impacted in the remainder of 2020. In the first quarter of 2020, North Asia and United States experienced the most significant declines in results due to the disruptions of trade to and from China, which impacted overall freight movement around the globe. Factories in China experienced extended closures and many airlines cancelled flights to and from China. Additionally, ocean carriers have reduced their capacity by anchoring vessels and skipping ports due to the decline in demand. As a result, starting in January certain of the Company’s central China offices experienced temporary closures and limited operations and shipments were rerouted or delayed by customers and service providers taking their own precautionary measures. Also, available airfreight capacity was reduced affecting the ability to efficiently route customers’ freight. In the first quarter 2020 and 2019, the People's Republic of China, including Hong Kong, represented 23% and 27%, respectively, of the Company’s total revenues and 25% and 29%, respectively, of the Company’s total operating income

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