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EI

EXPEDITORS INTERNATIONAL OF WASHINGTON INC (EXPD)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 EPS was $1.17 (down 19% YoY) on $2.21B revenue (down 15% YoY); operating income fell 22% to $214.8M, while air tonnage rose 4% and ocean FEU rose 2% YoY .
  • Sequentially, management cited improved profit-per-container in ocean and higher profit-per-kilo in air as buy rates fell faster than sell rates in certain markets; both air and ocean volumes increased vs Q4’23 despite continued rate pressure from expanding carrier capacity .
  • Cash from operations was $256.9M and the company repurchased $360.5M of stock in Q1 (CFO also referenced ~$257M CFO and ~$361M buybacks) .
  • No formal quantitative guidance was provided; management emphasized cost control (salaries down 8%, headcount down 7% largely via attrition) and targeted tech/security investments amid volatile demand and geopolitical disruptions (Red Sea, Baltimore bridge, Panama Canal) .

What Went Well and What Went Wrong

What Went Well

  • Air and ocean volumes improved YoY and sequentially; CEO: “air tonnage increased year-over-year… profit-per-kilo increased sequentially, as buy rates fell faster than sell rates in certain markets” .
  • Ocean profit-per-container improved sequentially versus Q4’23 on increases in average buy and sell rates; volumes rose YoY and sequentially .
  • Variable compensation and cost actions: salaries/related costs fell 8%; headcount reduced 7% via attrition; CFO: “again demonstrating how our variable compensation structure aligns with performance” .

What Went Wrong

  • Top-line and profitability pressure persisted: revenues -15% YoY to $2.2067B, operating income -22% to $214.8M, EPS -19% to $1.17 as normalized supply chains and rising capacity continue to weigh on rates .
  • Customs brokerage and other services declined YoY amidst “ongoing softness” in many markets, despite sequential improvement from Q4’23 and fewer shipments .
  • Rate environment remains challenging: “air cargo rates… negatively impacted…; ocean capacity continues to grow… out of sync with demand,” constraining profit-per-kilo and rate stability .

Financial Results

MetricQ1 2023Q4 2023Q1 2024
Revenue ($USD Billions)$2.593 $2.278 $2.207
Operating Income ($USD Millions)$276 $199 $215
Net Income Attributable to Shareholders ($USD Millions)$226.0 $158.7 $169.2
Diluted EPS ($)$1.45 $1.09 $1.17
EBIT Margin (%)10.6% 8.8% 9.7%
Net Income Margin (%)8.7% 7.0% 7.7%

Segment/Product Revenue Breakdown

Segment Revenue ($USD Millions)Q1 2023Q4 2023Q1 2024
Airfreight services$904.9 $866.1 $759.4
Ocean freight and ocean services$697.3 $511.9 $570.8
Customs brokerage and other services$990.4 $899.8 $876.5
Total Revenues$2,592.6 $2,277.8 $2,206.7

KPIs

KPIQ1 2023Q4 2023Q1 2024
Airfreight kilos YoY change—(3%) 4%
Ocean FEU YoY change—(10%) 2%
Weighted Avg Diluted Shares (Millions)155.5 145.9 144.1
Cash from Operations ($USD Millions)—$486.7 $256.9
Share Repurchases ($USD Millions, quarter)—$193.6 $360.5
Total Employees (FTE)19,681 18,452 18,403

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q1 2024None providedNone providedMaintained (no formal guidance)
MarginsFY/Q1 2024None providedNone providedMaintained (no formal guidance)
Operating Expenses (incl. salaries)FY/Q1 2024N/A“Salaries and related costs fell 8%… we remain focused on aligning headcount” Cost discipline reiterated
HeadcountFY/Q1 2024N/AHeadcount down ~7% (IS headcount up for security) Cost alignment
Tax rate / OI&EFY/Q1 2024N/ANot providedN/A
Capital returnsFY/Q1 2024N/A$360.5M buybacks in Q1 Ongoing repurchases

Earnings Call Themes & Trends

Note: EXPD does not host a traditional earnings call; the company invites written questions and later files “Responses to Selected Questions” via 8-K. The press release and management commentary are used to track themes .

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
Supply/demand & ratesExcess capacity; soft rates; shippers pivot to ocean Ocean/air uncertainty; rates stabilized in ocean, increased in air 4Q; “uncertainty” dominated 2023 Capacity still growing; rates falling; air cargo rates pressured; profit-per-kilo up sequentially as buy fell faster than sell in some markets Rates remain soft; modest sequential profitability lifts
Volume trajectoryTonnage/volumes first sequential uptick since Q3’22 Volumes/capacity uncertain; cautious inventory stances Air tonnage +4% YoY; ocean +2% YoY; sequential volume increases vs Q4’23 Stabilizing to improving volumes
Cost managementAligning headcount; efficiency focus; strong cash returns Compensation -20% YoY; expenses still high vs efficiency target Salaries -8%; headcount -7% via attrition; continued investments in IS/security; $256.9M CFO; $360.5M buybacks Ongoing cost discipline; targeted tech spend
Geopolitics/logistics disruptions—Middle East/Red Sea uncertainty flagged Red Sea circumvention, Baltimore bridge collapse, Panama Canal levels drive unpredictability Elevated disruption risk persists
Modal economicsShippers pivot to ocean; air rates below pandemic period Air rates increased in 4Q23; ocean rate stabilization Ocean profit-per-container improved sequentially; air profit-per-kilo improved sequentially Sequential margin improvement, rates still pressured

Management Commentary

  • CEO Jeffrey S. Musser: “Air tonnage and ocean volumes increased… breaking from a general downward slide… [yet] both air and ocean carrier capacity continue to grow, further pressuring rates… We have adapted… by keeping headcount and other costs in check” .
  • On ocean: “Volumes increased year-over-year and sequentially and profit-per-container… improved… Ocean capacity continues to grow… out of sync with demand” .
  • On air: “Profit-per-kilo increased sequentially, as buy rates fell faster than sell rates in certain markets” .
  • CFO Bradley S. Powell: “Salaries and related costs fell by 8%… We reduced headcount by 7%… The only area of increased headcount… was in information systems, as we continue to enhance… network security” .
  • Cash and returns: “generated $257 million in cash flow from operations… returned $361 million to shareholders via repurchases” ; cash flow statement shows $256.9M CFO and $360.5M repurchases .

Q&A Highlights

  • Format: Investors invited to submit written questions by May 10 for an 8-K “Responses to Selected Questions”; no live earnings call .
  • Clarifications typically focus on rate dynamics, capacity, cost structure, and geopolitical impacts (based on release themes) .

Estimates Context

  • S&P Global consensus EPS and revenue for Q1 2024 were unavailable at the time of retrieval due to system limit (Daily Request Limit exceeded). As a result, we cannot formally assess beat/miss versus consensus for Q1 2024 [GetEstimates error: “Daily Request Limit of 250000 Exceeded”].
  • Given management’s commentary on sequential profit-per-container and profit-per-kilo improvements amid persistent rate pressure, estimates may need to balance improving volumes with continued pricing headwinds and cost controls .

Key Takeaways for Investors

  • Volume stabilization with sequential improvements is a constructive signal, but expanding carrier capacity keeps rates soft; near-term catalysts include further sequential gains in profit-per-container and profit-per-kilo .
  • Cost discipline is tangible (salaries -8%, headcount -7%); variable compensation and attrition-based reductions are cushioning margin compression while IS/security spend continues .
  • Ocean and air profitability showed sequential improvement despite rate pressure—watch modal mix and buy/sell rate spreads as drivers of margin recovery .
  • Geopolitical/logistics events (Red Sea, Baltimore bridge, Panama Canal) sustain operational volatility; risk management and customer service responsiveness remain differentiators .
  • Strong cash generation ($256.9M CFO) and sizable buybacks ($360.5M) support capital return narratives; monitor sustainability if rate pressure persists .
  • No formal guidance increases uncertainty; focus on trajectory (volumes, unit economics, cost efficiency) rather than point estimates for near-term positioning .
  • For traders: stock narrative likely hinges on signs of sustained sequential margin improvement and additional cost actions vs rate dynamics; headline risk from geopolitical events remains elevated .