UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-13468

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

(Exact name of registrant as specified in its charter)

Washington	91-1069248
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
1015 Third Avenue, Seattle, Washington	98104
(Address of principal executive offices)	(Zip Code)

(Registrant’s telephone number, including area code): (206) 674-3400

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	EXPD	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At August 3, 2023, the number of shares outstanding of the issuer’s common stock was 147,897,176.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

	June 30, 2023			December 31, 2022
Assets:
Current Assets:
Cash and cash equivalents	$	1,698,587		$	2,034,131
Accounts Receivable, less allowance for credit loss of     $5,802 at June 30, 2023 and $9,466 at December 31, 2022		1,423,622			2,107,645
Deferred contract costs		175,723			257,545
Other		184,614			118,696
Total current assets		3,482,546			4,518,017
Property and equipment, less accumulated depreciation and amortization      of $590,490 at June 30, 2023 and $567,758 at December 31, 2022		494,539			501,916
Operating lease right-of-use assets		514,958			507,503
Goodwill		7,927			7,927
Deferred federal and state income taxes, net		43,550			37,449
Other assets, net		20,520			17,622
Total assets	$	4,564,040		$	5,590,434
Liabilities:
Current Liabilities:
Accounts payable		815,514			1,108,996
Accrued liabilities, primarily salaries and related costs		422,134			479,262
Contract liabilities		218,561			323,101
Current portion of operating lease liabilities		99,962			95,621
Federal, state and foreign income taxes		22,936			47,075
Total current liabilities		1,579,107			2,054,055
Noncurrent portion of operating lease liabilities		426,829			422,844
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued		—			—
Common stock, par value $0.01 per share. Issued and outstanding: 147,222       shares at June 30, 2023 and 154,313 shares at December 31, 2022		1,472			1,543
Additional paid-in capital		—			139
Retained earnings		2,752,461			3,310,892
Accumulated other comprehensive loss		(198,001	)		(202,553	)
Total shareholders’ equity		2,555,932			3,110,021
Noncontrolling interest		2,172			3,514
Total equity		2,558,104			3,113,535
Total liabilities and equity	$	4,564,040		$	5,590,434

See accompanying notes to condensed consolidated financial statements.

2

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Revenues:
Airfreight services	$	751,171		$	1,602,566		$	1,656,074		$	3,201,121
Ocean freight and ocean services		593,801			1,759,646			1,291,108			3,735,892
Customs brokerage and other services		894,780			1,241,100			1,885,159			2,330,597
Total revenues		2,239,752			4,603,312			4,832,341			9,267,610
Operating Expenses:
Airfreight services		525,027			1,212,503			1,191,049			2,355,049
Ocean freight and ocean services		405,807			1,402,365			889,489			3,002,608
Customs brokerage and other services		488,349			826,080			1,057,747			1,599,402
Salaries and related		428,558			508,222			878,406			1,047,162
Rent and occupancy		58,205			51,598			115,837			102,526
Depreciation and amortization		15,506			14,254			30,767			27,229
Selling and promotion		6,314			5,887			12,698			9,935
Other		63,489			76,421			131,882			155,957
Total operating expenses		1,991,255			4,097,330			4,307,875			8,299,868
Operating income		248,497			505,982			524,466			967,742
Other Income (Expense):
Interest income		17,792			2,720			36,567			4,612
Interest expense		(395	)		(58	)		(3,040	)		(561	)
Other, net		289			164			8,768			8,194
Other income, net		17,686			2,826			42,295			12,245
Earnings before income taxes		266,183			508,808			566,761			979,987
Income tax expense		70,390			126,582			144,970			248,281
Net earnings		195,793			382,226			421,791			731,706
Less net (losses) earnings attributable to the noncontrolling interest		(1,007	)		4,421			(1,020	)		7,792
Net earnings attributable to shareholders	$	196,800		$	377,805		$	422,811		$	723,914
Diluted earnings attributable to shareholders per share	$	1.30		$	2.27		$	2.75		$	4.31
Basic earnings attributable to shareholders per share	$	1.31		$	2.29		$	2.78		$	4.35
Weighted average diluted shares outstanding		151,563			166,474			153,516			167,980
Weighted average basic shares outstanding		150,435			165,092			152,291			166,423

See accompanying notes to condensed consolidated financial statements.

3

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Net earnings	$	195,793		$	382,226		$	421,791		$	731,706
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net of income tax benefits of $1,828 and $6,281 for the three months ended June 30, 2023 and 2022 and $6,096 and $7,781 for the six months ended June 30, 2023 and 2022		(7,523	)		(56,750	)		4,230			(64,762	)
Other comprehensive (loss) income		(7,523	)		(56,750	)		4,230			(64,762	)
Comprehensive income		188,270			325,476			426,021			666,944
Less comprehensive (loss) income attributable to the noncontrolling interest		(1,027	)		4,076			(1,342	)		6,450
Comprehensive income attributable to shareholders	$	189,297		$	321,400		$	427,363		$	660,494

See accompanying notes to condensed consolidated financial statements.

4

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2023			2022			2023			2022
Operating Activities:
Net earnings	$	195,793		$	382,226		$	421,791		$	731,706
Adjustments to reconcile net earnings to net cash from    operating activities:
Provisions for (recoveries) losses on accounts receivable		(167	)		4,763			905			4,347
Deferred income tax benefit		(3,560	)		(8,622	)		(1,524	)		(11,858	)
Stock compensation expense		18,595			25,518			31,083			37,121
Depreciation and amortization		15,506			14,254			30,767			27,229
Other, net		2,564			(1,746	)		3,723			(1,291	)
Changes in operating assets and liabilities:
Decrease in accounts receivable		174,321			378,291			682,927			245,943
(Decrease) increase in accounts payable and accrued liabilities		(149,986	)		(133,171	)		(352,909	)		7,020
Decrease in deferred contract costs		18,166			37,138			85,787			211,068
Decrease in contract liabilities		(23,803	)		(45,574	)		(108,250	)		(238,931	)
Decrease in income taxes payable, net		(93,817	)		(93,430	)		(93,726	)		(47,171	)
Decrease (increase) in other, net		4,834			(1,001	)		4,284			7,409
Net cash from operating activities		158,446			558,646			704,858			972,592
Investing Activities:
Purchase of property and equipment		(10,481	)		(38,158	)		(20,607	)		(52,570	)
Other, net		(794	)		(134	)		(219	)		(55	)
Net cash from investing activities		(11,275	)		(38,292	)		(20,826	)		(52,625	)
Financing Activities:
Payments on borrowings on lines of credit		(5,743	)		(5,382	)		(32,145	)		(8,484	)
Proceeds from borrowings on lines of credit		7,054			33,953			18,549			56,545
Proceeds from issuance of common stock		9,176			5,682			18,464			11,433
Repurchases of common stock		(687,689	)		(549,065	)		(901,191	)		(549,065	)
Dividends paid		(102,263	)		(109,828	)		(102,263	)		(109,828	)
Payments for taxes related to net share settlement of equity    awards		(12,056	)		(11,851	)		(19,501	)		(19,333	)
Net cash from financing activities		(791,521	)		(636,491	)		(1,018,087	)		(618,732	)
Effect of exchange rate changes on cash and cash equivalents		(7,857	)		(46,518	)		(1,489	)		(52,956	)
Change in cash and cash equivalents		(652,207	)		(162,655	)		(335,544	)		248,279
Cash and cash equivalents at beginning of period		2,350,794			2,139,626			2,034,131			1,728,692
Cash and cash equivalents at end of period	$	1,698,587		$	1,976,971		$	1,698,587		$	1,976,971
Taxes Paid:
Income taxes	$	173,670		$	236,791		$	244,456		$	314,751

See accompanying notes to condensed consolidated financial statements.

5

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Equity

(In thousands)

(Unaudited)

	Common Stock
For the three months ended June 30, 2023    and 2022	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at March 31, 2023		152,712		$	1,527		$	-		$	3,336,140		$	(190,498	)	$	3,147,169		$	3,199		$	3,150,368
Shares issued under employee stock plans, net    of tax withholding for net settlement		510			5			(2,886	)		—			—			(2,881	)		—			(2,881	)
Shares repurchased under provisions of    stock repurchase plan		(6,000	)		(60	)		(16,615	)		(677,310	)		—			(693,985	)		—			(693,985	)
Stock compensation expense		—			—			18,595			—			—			18,595			—			18,595
Net earnings		—			—			—			196,800			—			196,800			(1,007	)		195,793
Other comprehensive loss		—			—			—			—			(7,503	)		(7,503	)		(20	)		(7,523	)
Dividends and dividend equivalents paid		—			—			906			(103,169	)