10-KPeriod: FY2004

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2004

Filed March 16, 2005For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) is a global logistics services provider that focuses on international freight forwarding and customs brokerage. The company operates a non-asset based model, meaning it does not own aircraft or steamships, but rather leverages its network to purchase transportation services from carriers and resell them to customers, earning a margin on the difference. For the fiscal year ending December 31, 2004, EXPD demonstrated strong revenue growth and profitability, with net revenues increasing significantly across all major service lines: airfreight, ocean freight, and customs brokerage. Key to the company's success is its strategy of focusing on superior customer service, aggressive marketing, and employee development through robust incentive programs. EXPD continues to expand its global network organically, emphasizing strategic acquisitions where beneficial. The company's financial position appears robust, with strong operating cash flow, ample working capital, and no long-term debt. Investors should note the company's business is subject to seasonal trends and global economic conditions, and it faces intense competition, but its emphasis on technology and customized solutions positions it well in the evolving logistics landscape.

Key Highlights

  • 1Expeditors International reported strong revenue growth in 2004 across its core services: airfreight (39% of net revenue), customs brokerage (38%), and ocean freight (23%).
  • 2Net earnings grew to $156.1 million in 2004, a significant increase from $121.9 million in 2003, with diluted EPS rising to $1.41 from $1.12.
  • 3The company operates a non-asset-based model, purchasing transportation services from carriers and reselling them, which allows for flexibility and avoids the capital intensity of owning physical assets.
  • 4Expeditors emphasizes a strong corporate culture focused on customer service, employee incentives, and continuous development of technological solutions to meet customer needs.
  • 5The company has no long-term debt and a strong working capital position of $521.5 million as of December 31, 2004, indicating financial stability.
  • 6Expeditors maintains a disciplined approach to growth, prioritizing organic expansion supplemented by strategic acquisitions.
  • 7The company's stock repurchase program demonstrates a commitment to returning value to shareholders, with ongoing repurchases under authorized plans.

Frequently Asked Questions

Expeditors International generates revenue from three principal sources: airfreight services, ocean freight and ocean services, and customs brokerage and other services. In 2004, these represented approximately 39%, 23%, and 38% of the company's net revenues, respectively.

No, Expeditors operates as a non-asset-based provider of global logistics services. The company does not own aircraft or steamships. Instead, it purchases transportation services from asset-based carriers and resells them to its customers.

Expeditors deals with multiple currencies due to its global operations. The company attempts to manage foreign exchange risk by accelerating international currency settlements among its offices and agents, rather than primarily relying on derivative financial instruments, which were used insignificantly in 2004.

Expeditors has historically focused on organic growth, opening new offices and expanding its service offerings. While open to strategic acquisitions, the company emphasizes growth where the future economic benefit significantly exceeds the goodwill recorded, differing from competitors that may rely more heavily on acquisitions.