Expeditors International of Washington Inc.
) quarterly performance lacked luster yet again. The company
reported third quarter 2012 adjusted earnings of 42 cents per
share that narrowly missed the Zacks Consensus Estimate of 43
cents and deteriorated 16% from 50 cents earned in the year-ago
quarter. Weak revenues from air and ocean freight segments were
primarily responsible for the underperformance.
Net income attributable to shareholders declined 17% year over
year to $88.5 million in the reported quarter.
Total revenue decreased 5% year over year to $1.5 billion, and
missed the Zacks Consensus Estimate of $1.6 billion. The decline
in revenue was primarily due to lower shipments from air freight
given poor global demand and lack of projects.
On a year-over-year basis, third quarter revenues from Other
North America inched up 1%. Revenues from the United States,
Latin America, Asia Pacific, Europe and Africa, as well as the
Middle East and India declined 1.8%, 5.4%, 4.0%, 13.6% and 5.3%,
Quarterly gross profit (net revenue) dropped 6% year over year
to $465.1 million, resulting in gross margin (yield) of 30.4%,
down from 30.7% in the year-ago quarter.
Operating income declined 11% year over year to $145.1 million
and operating expenses also fell 3.4% year over year to $1.39
billion in the reported quarter.
revenue fell 15.5% year over year to $622.7 million in the third
Ocean Freight and Ocean Services
revenue dropped 7.6% year over year to $549.3 million.
Customs Brokerage and Other Services
revenues inched up 0.23% year over year to $359.7 million.
Expeditors' exited the third quarter with operating cash flows
of $69.2 million compared with $93.3 million at the end of the
We are concerned about the uncertainty over the ocean freight
businesses that are likely to restrict volume growth and affect
near-term profitability for Expeditors. Further, we also expect a
negative impact on the company's margins due to freight rate
increases by third party carriers. Additionally, competitive
threats from peers like
CH Robinson Worldwide Inc.
) as well as dependence on asset-based transportation providers
contribute to our negative stance on the company.
We are currently maintaining our long-term Neutral
recommendation on Expeditors International. For the short-term
(1-3 months) the company retains a Zacks #3 Rank (Hold).
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EXPEDITORS INTL (EXPD): Free Stock Analysis
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