SEATTLE - Expeditors International (NYSE:EXPD) of Washington, Inc. (NASDAQ:EXPD) today disclosed its financial results for the fourth quarter of 2023, revealing a downturn in key performance metrics. The logistics company's diluted net earnings per share (EPS) dropped by 21% to $1.09, falling short of the analyst consensus of $1.22.
Revenue also saw a significant decrease of 34% to $2.3 billion, narrowly missing the $2.29 billion market estimate.
The company's performance reflects a challenging period marked by decreased airfreight tonnage and ocean container volume, which fell by 3% and 10%, respectively.
President and CEO Jeffrey S. Musser attributed the downturn to market uncertainty fueled by conflicts in the Middle East and on the Red Sea (NYSE:SE), as well as the introduction of new capacity and cautious shipper demand. Despite the rate stabilization in ocean freight and an increase in air freight in the fourth quarter, the year 2023 was characterized by 'uncertainty.'
To align expenses with revenue, Expeditors International undertook headcount reductions, with compensation remaining their second-largest expenditure after freight costs. Senior Vice President and CFO Bradley S. Powell highlighted the company's efforts to reduce costs, noting a 20% decrease in compensation compared to the same quarter last year, and emphasized the need for further efficiency improvements in the face of excess capacity and weak demand.
The company generated $1.1 billion in cash flow from operations in 2023 and returned $1.6 billion to shareholders through share repurchases and dividends. Despite the soft results, which left the stock flat following the earnings release, management remains focused on controlling expenses and preparing for a potential uptick in tonnage and volumes.
Musser expressed a commitment to both managing expenses and growing the business, stating, "We've seen a year of declines in 2023, but we need to work hard to ensure that we have the right level of staffing to handle market increases and our expected growth in market share as we move forward."
InvestingPro Insights
Expeditors International of Washington, Inc. (NASDAQ:EXPD) has faced a challenging economic landscape, as indicated by their latest financial results. Amidst this backdrop, InvestingPro data paints a detailed picture of the company's financial health. EXPD's Market Cap stands at $18.05 billion, reflecting its size and market presence. The P/E Ratio, a measure of the company's current share price relative to its per-share earnings, is 23.42, with a slightly more favorable adjusted P/E Ratio of 22.29 for the last twelve months as of Q3 2023. Notably, the company's Price to Book ratio of 7.25 suggests a premium valuation compared to the book value of its assets.
InvestingPro Tips highlight several strategic moves by the management that could be pivotal for investors. The company's proactive share buyback initiative indicates confidence in its intrinsic value, which is an important consideration for shareholders. Moreover, the financial stability of EXPD is underscored by its robust cash position, having more cash than debt on its balance sheet, and its ability to maintain dividend payments for 31 consecutive years, an impressive feat that showcases its commitment to returning value to shareholders.
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