Expeditors International of Washington Inc.
) quarterly performance lacked luster yet again. The company
reported first quarter 2012 adjusted earnings of 36 cents per share
that missed the Zacks Consensus Estimate by a penny and
deteriorated 14% from 42 cents earned in the year-ago quarter. A
lackluster revenue performance in air and ocean freight segments
was primarily responsible for the underperformance.
Despite not being able to match up to the Zacks Consensus
Estimate and the year-ago profit level, earnings came within the
company's projected first quarter estimates of 35-37 cents per
Net income attributable to shareholders declined 16% year over
year to $76.7 million in the reported quarter.
Total revenue decreased 3% year over year to $1.4 billion, in
the process missing the Zacks Consensus Estimate of $1.5 billion,
owing to lower-than-expected peak seasonal demand throughout the
On a year-over-year basis, first quarter revenues from Other
North America increased 12.7%. Revenues from the United States,
Latin America, Asia Pacific, Europe and Africa, as well as Middle
East and India declined 0.4%, 6.2%, 5.2%, 3.8% and 8.4%,
Quarterly gross profit (net revenues) dropped 2% year over year
to $446.6 million, resulting in gross margin (yield) of 31.6%, up
from 31.1% in the year-ago quarter.
Operating income declined 15% year over year to $125.3 million
and operating expenses also lowered 2.1% year over year to $1.3
billion in the reported quarter.
revenue fell 8.8% year over year to $638.9 million in the first
Ocean Freight and Ocean Services
revenue dropped 1.3% year over year to $434.3 million.
Customs Brokerage and Other Services
revenues climbed 5.7% year over year to $338.1 million.
Expeditors' exited the first quarter with operating cash flows
of $147.4 million compared with $177.8 million at the end of the
year-ago quarter. Cash and cash equivalents as on March 31, 2012
was $1.4 billion, up from $1.3 billion in the same period a year
Despite continued decline, we believe Expeditors International
is poised to benefit from recovery in its freight business, market
share gains, productivity improvement and growing international
trade. The company remains focused on increasing its customer base
and plans to further enhance its business. The company is investing
in new opportunities and services, including those in the
aerospace, pharmaceutical/healthcare, aviation, and energy
verticals. Thus, we believe Expeditors International is well
positioned to grow its top line over the long term. Additionally,
the ongoing operating efficiencies and Expeditors' ability to pass
on the higher rates to customers will aid profitability going
However, we remain concerned about the uncertain macroeconomic
environment that continues to affect the global demand trend,
thereby hurting Expeditors' performance. Further, intense
competition from major rivals likes
United Parcel Service Inc.
) and dependence on asset-based transportation providers may hinder
We are currently maintaining our long-term Neutral
recommendation on Expeditors International. However, for the
short-term (1-3 months) the company retains a Zacks #4 Rank
EXPEDITORS INTL (EXPD): Free Stock Analysis
UTD PARCEL SRVC (UPS): Free Stock Analysis
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