JHVEPhoto/iStock Editorial via Getty Images
Expeditors International of Washington (NASDAQ:EXPD) stock slipped after the company reported a “rapid reversal” in shipping demand.
For the fourth quarter, the transportation company reported $1.38 in earnings per share, missing consensus estimates by a wide margin, while a 36.2% drop in revenue year over year came up $500M short of the $3.44B analyst expectation.
“As pandemic-related bottlenecks eased and air and ocean supply/demand imbalances began to dissipate in the first half of the year, average buy and sell rates progressively declined to varying degrees, as they typically do – until they suddenly began to plummet simultaneously and faster than we would have expected in the fourth quarter,” CEO Jeffrey S. Musser explained “The rapid turnaround in Q4 was stunning and unparalleled.”
He added that fourth quarter demand was “softer than expected” in retail and high tech sectors. Musser said that many shippers “stockpiled inventory and pulled orders forward early in 2022” to avoid bottlenecks. As such, late 2022 demand trends shifted sharply. CFO Bradley Powell called the shift “a rapid reversal from the most robust operating environment [the company has] ever seen” as economic uncertainty and government action to control inflation impacted results.
“We were especially impacted in North Asia, our second largest geography, as the lingering effects of the lockdowns contributed to the largest declines in our air tonnage and ocean volumes in at least a decade,” Musser added. “We recognize that the pandemic tailwind is gone and we are now in a marketplace in which the supply chain appears to have largely normalized. Nevertheless, a level of uncertainty remains and shippers are prioritizing cost controls as they scramble to adapt to an increasingly fragile global economy.”
He noted that this environment leaves the short-term outlook “uncertain” and has shifted the company’s focus to cutting costs. Detailed, forward-looking guidance was not provided.
Shares of the Seattle-based logistics company fell 3.05% prior to Tuesday’s opening bell.
Dig into the details of the quarter.