Expeditors International of Washington, Inc. (NASDAQ:EXPD) today announced fourth quarter 2022 financial results including the following highlights compared to the same quarter of 2021:

• Diluted Net Earnings Attributable to Shareholders per share (EPS¹) decreased 48% to $1.38
• Net Earnings Attributable to Shareholders decreased 52% to $219 million
• Operating Income decreased 47% to $330 million
• Revenues decreased 36% to $3.4 billion
• Airfreight tonnage volume decreased 20% and ocean container volume decreased 15%

“As pandemic-related bottlenecks eased and air and ocean supply/demand imbalances began to dissipate in the first half of the year, average buy and sell rates progressively declined to varying degrees, as they typically do – until they suddenly began to plummet simultaneously and faster than we would have expected in the fourth quarter,” said Jeffrey S. Musser, President and Chief Executive Officer. “The rapid turnaround in Q4 was stunning and unparalleled.”

“Fourth quarter demand also was softer than we would have expected, particularly in retail and high tech,” Musser continued. “Many shippers had stockpiled inventory and pulled orders forward early in 2022, in a concerted effort to avoid the worst of the supply chain bottlenecks that materialized during the pandemic, when abrupt shutdowns and stay-at-home orders transformed how we live and do business. Those conditions, which were already starting to ease throughout the first three quarters of 2022, quickly reversed course as we entered the fourth quarter and shippers swiftly adapted to increased consumer caution and slowing demand for their products, while also battling inflation and tighter financing. We were especially impacted in North Asia, our second largest geography, as the lingering effects of the lockdowns contributed to the largest declines in our air tonnage and ocean volumes in at least a decade.

“I am extremely grateful to our people, who continued to perform at their very best as they have throughout the many significant challenges we have faced over the past couple of years. We recognize that the pandemic tailwind is gone and we are now in a marketplace in which the supply chain appears to have largely normalized. Nevertheless, a level of uncertainty remains and shippers are prioritizing cost controls as they scramble to adapt to an increasingly fragile global economy.

“While we remain very optimistic about the future, our short-term outlook is somewhat uncertain due to a difficult economic environment and the resetting of supply and demand, which has a direct impact on available capacity and pricing. We plan to move forward with a sharp eye on aligning expenses with revenues, particularly over the next one or two quarters. Our focus will be on maintaining our existing accounts and gaining new business, while reducing overall expenses. Just as we quickly configured our operations to accommodate unprecedented chaos and complexity during the pandemic, we now need to address our operations for a post-pandemic environment of soft demand and pressured pricing.”

Bradley S. Powell, Senior Vice President and Chief Financial Officer, added, “This quarter was heavily impacted by a rapid reversal from the most robust operating environment we have ever seen. Economic uncertainty, government actions directed at trying to tame inflation, and severe challenges to the global supply chain gave way to sharply decelerating volumes along with a swift and simultaneous falloff in buy/sell rates. Such quickly evolving operating conditions impacted our results for the quarter, as did year-over-year comparisons to strong results in 2021. In addition, earnings before income taxes were impacted by an increase in discretionary field and branch bonuses that were awarded at year-end within our district incentive compensation program, as well as the recording of a non-income tax contingency, which on a combined basis totaled approximately $81 million. Our teams around the world worked well managing through significant challenges in 2022 always with careful attention to cash flow. Our cash flow from operations exceeded $2.1 billion in 2022 and we returned $1.8 billion to shareholders via repurchases of common stock and dividends.”

Mr. Powell noted that the Company’s annual effective tax rate for 2022 was 25.9%, compared to 26.3% in 2021. The fourth quarter of 2022 effective tax rate was 33.1%, compared to 27.5% in the year-ago quarter. The increase is primarily due to a change in the amount of foreign taxes incurred net of available foreign tax credits.

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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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 our optimism regarding the future and our uncertain short-term outlook; a normalized supply chain; softening demand; pressure on buy and sell rates; the continued unsettled operating environment due to uncertain air and ocean capacity; an increasingly fragile global economy; trade disruptions; rising fuels costs; the conflict in Ukraine; inflation, high energy costs, government fiscal and monetary measures, and signs of a slowing economy and drop in demand; and the uneven lifting of the COVID-19 pandemic restrictions around the world. 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, rate volatility, and various on-shore bottlenecks may continue; our ability to align expenses with revenues and to enhance our productivity; our ability to maintain our existing accounts and gain new business; 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 ongoing impact of 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, 2021 and the Company’s most recent 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.

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 and twelve months ended December 31, 2022, we repurchased 5.0 million and 14.5 million shares of common stock at an average price of $112.76 and $108.88 per share, respectively. During the three and twelve months ended December 31, 2021, we repurchased 2.3 million and 4.4 million shares of common stock at an average price of $123.71 and $117.54 per share, respectively. In addition, during 2022 and 2021, we paid cash dividends of $1.34 and $1.16 per share, respectively.

Investors may submit written questions via e-mail to: investor@expeditors.com. Questions received by the end of business on February 24, 2023 will be considered in management's 8-K “Responses to Selected Questions.”