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, 2021

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 2, 2021, the number of shares outstanding of the issuer’s common stock was 169,891,158.

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, 2021			December 31, 2020
Assets:
Current Assets:
Cash and cash equivalents	$	1,674,121		$	1,527,791
Accounts receivable, less allowance for credit loss of    $6,104 at June 30, 2021 and $5,579 at December 31, 2020		2,647,516			1,998,055
Deferred contract costs		534,692			327,448
Other		128,933			110,250
Total current assets		4,985,262			3,963,544
Property and equipment, less accumulated depreciation and    amortization of $534,790 at June 30, 2021 and $516,988 at    December 31, 2020		499,282			506,425
Operating lease right-of-use assets		443,708			432,723
Goodwill		7,927			7,927
Other assets, net		16,992			16,884
Total assets	$	5,953,171		$	4,927,503
Liabilities:
Current Liabilities:
Accounts payable	$	1,408,572		$	1,136,859
Accrued expenses, primarily salaries and related costs		319,696			257,021
Contract liabilities		619,140			379,722
Current portion of operating lease liabilities		80,210			74,004
Federal, state and foreign income taxes		57,608			45,437
Total current liabilities		2,485,226			1,893,043
Noncurrent portion of operating lease liabilities		370,333			364,185
Deferred federal and state income taxes, net		13,961			7,048
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, none issued		—			—
Common stock, par value $0.01 per share. Issued and    outstanding: 169,169 shares at June 30, 2021 and 169,294    shares at December 31, 2020		1,692			1,693
Additional paid-in capital		79,357			157,496
Retained earnings		3,104,471			2,600,201
Accumulated other comprehensive loss		(106,066	)		(99,753	)
Total shareholders’ equity		3,079,454			2,659,637
Noncontrolling interest		4,197			3,590
Total equity		3,083,651			2,663,227
Total liabilities and equity	$	5,953,171		$	4,927,503

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,
	2021		2020		2021		2020
Revenues:
Airfreight services	$	1,523,569	$	1,269,654	$	2,849,484	$	1,925,252
Ocean freight and ocean services		1,098,550		489,385		2,052,462		980,725
Customs brokerage and other services		986,974		652,039		1,905,967		1,348,868
Total revenues		3,609,093		2,411,078		6,807,913		4,254,845
Operating Expenses:
Airfreight services		1,136,328		932,137		2,090,872		1,398,865
Ocean freight and ocean services		862,251		361,272		1,604,686		725,668
Customs brokerage and other services		600,054		368,078		1,150,359		765,585
Salaries and related		481,186		395,107		933,291		737,147
Rent and occupancy		45,366		41,375		90,646		83,899
Depreciation and amortization		12,675		14,109		25,662		26,769
Selling and promotion		3,172		3,113		6,242		11,356
Other		57,416		48,261		109,995		98,875
Total operating expenses		3,198,448		2,163,452		6,011,753		3,848,164
Operating income		410,645		247,626		796,160		406,681
Other Income (Expense):
Interest income		2,188		2,559		4,134		7,366
Other, net		2,649		797		5,649		4,181
Other income, net		4,837		3,356		9,783		11,547
Earnings before income taxes		415,482		250,982		805,943		418,228
Income tax expense		98,508		66,794		201,019		111,258
Net earnings		316,974		184,188		604,924		306,970
Less net earnings attributable to the noncontrolling    interest		602		319		1,332		757
Net earnings attributable to shareholders	$	316,372	$	183,869	$	603,592	$	306,213
Diluted earnings attributable to shareholders per share	$	1.84	$	1.09	$	3.52	$	1.80
Basic earnings attributable to shareholders per share	$	1.87	$	1.10	$	3.57	$	1.83
Weighted average diluted shares outstanding		171,677		169,290		171,660		170,382
Weighted average basic shares outstanding		169,210		166,767		169,140		167,751

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,
	2021		2020		2021			2020
Net earnings	$	316,974	$	184,188	$	604,924		$	306,970
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of income taxes expense (benefit) of $221 and $(5,148) for the three months ended June 30, 2021 and 2020 and $(3,172) and $(3,974) for the six months ended June 30, 2021 and 2020.		9,159		16,410		(7,038	)		(22,439	)
Other comprehensive income (loss)		9,159		16,410		(7,038	)		(22,439	)
Comprehensive income		326,133		200,598		597,886			284,531
Less comprehensive income attributable to the    noncontrolling interest		341		141		607			289
Comprehensive income attributable to shareholders	$	325,792	$	200,457	$	597,279		$	284,242

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,
	2021			2020			2021			2020
Operating Activities:
Net earnings	$	316,974		$	184,188		$	604,924		$	306,970
Adjustments to reconcile net earnings to net cash from    operating activities:
Provisions for losses on accounts receivable		1,090			2,389			2,289			4,209
Deferred income tax expense		1,850			9,287			10,001			4,148
Stock compensation expense		30,909			21,638			42,094			32,794
Depreciation and amortization		12,675			14,109			25,662			26,769
Other, net		346			118			897			551
Changes in operating assets and liabilities:
Increase in accounts receivable		(410,783	)		(185,055	)		(663,697	)		(168,375	)
Increase in accounts payable and accrued    expenses		100,118			106,760			333,271			107,677
Increase in deferred contract costs		(150,382	)		(2,333	)		(221,640	)		(18,401	)
Increase (decrease) in contract liabilities		174,504			(595	)		254,094			20,606
(Decrease) increase in income taxes payable, net		(47,994	)		20,154			(1,356	)		30,642
Decrease (increase) in other, net		1,164			16,061			(324	)		4,131
Net cash from operating activities		30,471			186,721			386,215			351,721
Investing Activities:
Purchase of property and equipment		(6,539	)		(22,114	)		(14,930	)		(28,241	)
Other, net		138			(68	)		104			(211	)
Net cash from investing activities		(6,401	)		(22,182	)		(14,826	)		(28,452	)
Financing Activities:
Proceeds from issuance of common stock		22,711			29,187			42,468			52,586
Repurchases of common stock		(62,472	)		(30,985	)		(148,469	)		(314,225	)
Dividends paid		(98,387	)		(86,815	)		(98,387	)		(86,815	)
Payments for taxes related to net share settlement of equity    awards		(13,893	)		(9,170	)		(15,168	)		(10,566	)
Net cash from financing activities		(152,041	)		(97,783	)		(219,556	)		(359,020	)
Effect of exchange rate changes on cash and cash equivalents		8,699			1,726			(5,503	)		(14,285	)
Change in cash and cash equivalents		(119,272	)		68,482			146,330			(50,036	)
Cash and cash equivalents at beginning of period		1,793,393			1,111,973			1,527,791			1,230,491
Cash and cash equivalents at end of period	$	1,674,121		$	1,180,455		$	1,674,121		$	1,180,455
Taxes Paid:
Income taxes	$	143,959		$	38,504		$	190,536		$	73,808

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, 2021    and 2020	Shares			Par value			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total shareholders’ equity			Noncontrolling interest			Total equity
Balance at March 31, 2021		168,808		$	1,688		$	101,269		$	2,887,323		$	(115,486	)	$	2,874,794		$	3,856		$	2,878,650
Shares issued under employee    stock plans		861			9			8,809			—			—			8,818			—			8,818
Shares repurchased under provisions of    stock repurchase plan		(500	)		(5	)		(62,467	)		—			—			(62,472	)		—			(62,472	)
Stock compensation expense		—			—			30,909			—			—			30,909			—			30,909
Net earnings		—			—			—			316,372			—			316,372			602			316,974
Other comprehensive income (loss)		—			—			—			—			9,420			9,420			(261	)		9,159
Dividends paid ($0.58)		—			—			837			(99,224	)		—			(98,387	)		—			(98,387	)
Balance at June 30, 2021		169,169		$	1,692		$	79,357		$	3,104,471		$	(106,066	)	$	3,079,454		$	4,197		$	3,083,651
Balance at March 31, 2020		166,193		$	1,662		$	682		$	2,202,208		$	(169,746	)	$	2,034,806		$	2,339		$	2,037,145
Shares issued under employee    stock plans		1,023			10			20,007			—			—			20,017			—			20,017
Shares repurchased under provisions of    stock repurchase plan		(400	)		(4	)		(30,981	)		—			—			(30,985	)