Summary
Expeditors International of Washington, Inc. (EXPD) reported a strong first quarter in 2022, demonstrating significant revenue growth driven by elevated freight rates, despite a considerable impact from a cybersecurity attack in late February. Total revenues surged by 46% year-over-year to $4.66 billion, propelled by substantial increases in both average buy and sell rates across airfreight and ocean freight services. While volumes were negatively impacted by the cyber-attack, which caused a three-week disruption in operations, the company managed to increase net earnings attributable to shareholders by 21% to $346.1 million. The company also highlighted substantial investments in personnel and technology, alongside a focus on navigating ongoing supply chain disruptions and inflationary pressures.
Financial Highlights
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Financial Statements
Beta
| Revenue | $4.66B |
| Operating Expenses | $4.20B |
| Operating Income | $461.76M |
| Interest Expense | $503K |
| Net Income | $346.11M |
| EPS (Basic) | $2.07 |
| EPS (Diluted) | $2.05 |
| Shares Outstanding (Basic) | 167.50M |
| Shares Outstanding (Diluted) | 169.22M |
Key Highlights
- 1Total revenues increased by 46% to $4.66 billion in Q1 2022 compared to Q1 2021, driven primarily by high average buy and sell rates.
- 2Net earnings attributable to shareholders grew by 21% to $346.1 million, or $2.05 per diluted share ($2.07 basic).
- 3A significant cyber-attack on February 20, 2022, caused a three-week operational disruption, negatively impacting shipment volumes and incurring approximately $60 million in estimated expenses (including $40 million in demurrage charges).
- 4Despite volume declines due to the cyber-attack, operating income increased by 20% year-over-year to $461.8 million.
- 5Ocean freight and ocean services revenue saw a substantial increase of 107%, largely due to a 145% rise in average sell rates.
- 6Cash provided by operating activities increased by 16% to $413.9 million, supporting a healthy cash position of $2.14 billion at quarter-end.
- 7The company continues to manage significant industry-wide challenges including port congestion, equipment and labor shortages, and ongoing COVID-19 related disruptions.
Frequently Asked Questions
Expeditors experienced a significant cyber-attack starting February 20, 2022, which led to a three-week disruption in operations. This resulted in an estimated $60 million in expenses, including $40 million in incremental demurrage charges due to the inability to timely process shipments. While the company incurred these direct costs and experienced lower shipment volumes, the full financial impact, including potential loss of customers and future revenue, is still uncertain and could be material.
Expeditors reported strong revenue growth of 46% year-over-year, largely driven by elevated average buy and sell rates in airfreight and ocean freight services. These high rates are a consequence of severe imbalances between carrier capacity and customer demand, compounded by port congestion, equipment and labor shortages, and ongoing COVID-19 related disruptions. Despite these challenges, the company maintained profitability, with net earnings attributable to shareholders increasing by 21%.
The company anticipates that the challenging operating conditions, including high average rates, port congestion, and supply chain disruptions, are likely to persist through the end of 2022. While these conditions have fueled recent revenue growth, Expeditors acknowledges that a decrease in customer demand or a return to pre-pandemic rates would significantly impact revenues, expenses, and operating income. The company is also continuing to manage the residual effects of the cyber-attack and other global uncertainties.
Expeditors maintains a strong liquidity position, with cash and cash equivalents totaling $2.14 billion at March 31, 2022. Net cash provided by operating activities increased by 16% year-over-year to $413.9 million, indicating robust operational cash generation. The company has no long-term debt other than lease liabilities and believes its current cash position and operating cash flows are sufficient to meet its liquidity requirements for at least the next 12 months and the foreseeable future.