Expeditors International had the type of quarter one might expect from a company that moves freight for its clients mostly through a combination of oceangoing ships and by air.
The company’s revenue climbed 84% to $4.31 billion compared to the third-quarter 2020 figure of $2.34 billion. But the cost of transportation climbed even more, up 97%, to $3.18 billion from $1.61 billion in the third quarter of last year.
However, on an outright basis, Expeditors’ (NASDAQ: EXPD) total revenues rose $1.97 billion while its operating expenses rose $1.73 billion. The end result was earnings before income taxes, after additional income was taken into account, that rose $238.4 million for the quarter, with diluted earnings per share rising to $2.09 per share from $1.12 in the third quarter of 2020.
The performance outpaced Wall Street consensus. The company’s GAAP earnings per share of $2.09 was 28 cents better than consensus. Revenue was ahead of that consensus by $590 million.
Despite that, Expeditors stock fell Tuesday. At approximately 2:10 p.m. EDT, it was down 3.2% , or $4.03, to $121.81 on a day when stock indices overall rose slightly. Expeditors stock is up a little more than 38% over the last 52 weeks, outpacing the S&P 500, which is up about 31% in the last year.
Expeditors did see a slowdown in the amount of freight moved as the third quarter went on. For airfreight, the year-over-year gains were 36% in July, 36% in August but just 15% in September. On the ocean freight side, the gains were 18%, 21% and 7%, respectively, for the quarter.
Overall, airfreight volumes for the quarter rose 28% while ocean freight went up 15% compared to the third quarter of 2020.
Expeditors does not hold a conference call with analysts. In comments released with the earnings, Expeditors President and CEO Jeffrey Musser painted a stark picture of the state of the supply chain.
“There remains an overall deficiency of available air capacity due to a reduction of passenger belly space on international routes,” Musser said in his statement. “Despite increased utilization of air charters, there is insufficient capacity to meet the current high demand. At the same time, unprecedented congestion at the ocean ports due to labor and equipment shortages is disrupting sailing schedules and causing significant delays. There is simply not enough equipment, warehouse and pier space or people in the locations where they are needed to meaningfully reduce the significant backlogs of cargo.”
Expeditors is the sole logistics and transportation company that is a “dividend aristocrat,” defined as a company that has raised its dividend each year for 25 years. There are 65 companies currently on that list. Expeditors announced in May it was increasing its dividend to 58 cents from 52 cents.
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