Expeditors International’s quarterly income statement is clear about the compression of the supply chain and the fact that it is not ending anytime soon.
“Currently, we do not anticipate any significant improvement in the operating environment for at least the remainder of the year, as the global freight infrastructure appears to be near exhaustion,” Jeffrey Musser, President and CEO of Expeditors (NASDAQ: EXPD), said in the statement announcing the company’s second quarter results. “Strong demand is hampered by capacity constraints in the air and sea markets, all of which are made more difficult by limited warehouse space, staff constraints, port congestion, equipment movements and shortages of drivers, not to mention additional disruptions such as the closure of the Yantian [China] port due to a COVID-19 outbreak in May or the blockade of the Suez Canal in March. “
Buy / sell rates will remain “volatile” for the remainder of the year, Musser said.
The capacity squeeze led to a strong quarter for the company. Net income attributable to shareholders increased 72% to $ 316.3 million from $ 183.9 million in the second quarter of 2020. Revenue increased 50% to $ 3.6 billion, but the company saw its own capacity acquisition costs rise further, up 56% to $ 2.6. billion. For the six months, the cost of transportation exceeded the increase in revenue, with costs rising 68% as revenue increased 60% from the second quarter of last year.
But with operating profit up 66% for the quarter, the company outperformed its increased capacity costs. Expeditors kept its own labor costs under control, rising only 19%.
According to SeekingAlpha, non-GAAP earnings per share for the quarter of $ 1.84 broke the consensus by 21 cents. It was also the “beat” for GAAP EPS of $ 1.87. Revenue of $ 3.6 billion exceeded the consensus of $ 110 million, according to SeekingAlpha.
Expeditors became busier in its air freight business as the quarter progressed. Its year-over-year increase in air freight measured in kilograms was 29% for April, 39% for May and 46% in June. This is particularly noticeable given that April 2020 is widely regarded as the low point of the decline in pandemic-related freight traffic, with business resuming from May. However, the percentage increase in air cargo tonnage for the company was higher in May and June than in April.
On the water, the increase in tonnage over one year is 34% in April, 36% in May and 30% in June.
“We continued to move unprecedented volumes during the quarter as ocean and air buy / sell rates remained high and volatile, capacity was extremely limited and supply chain disruptions did not show. no sign of reduction, ”Musser said. He said there was no “quick and easy solution” to supply chain problems, “and each of our transactions seems to require a lot more attention and dedication.”
Expeditors does not hold earnings calls with analysts. Its title reacted little to the announcement of the results, up 0.02% on the day. But he’s been on a roll over the past year. Shippers had already hit a 52-week high on July 26, when it hit $ 130.76. The company’s shares have risen about 47.3% in the past 52 weeks.
In May, Expeditors announced a semi-annual dividend payment of 58 cents, down from 52 cents. This strengthened its position as a “dividend aristocrat,” a company that has increased its dividend for 25 years or more. It is the only logistics company on the list of over 65 companies that meet this criterion.
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