10-KPeriod: FY2010

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2010

Filed February 28, 2011For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) operates as a global logistics provider, specializing in international freight forwarding (air and ocean) and customs brokerage. The company's business model is non-asset based, meaning it does not own aircraft or vessels, but rather leverages its network and expertise to purchase transportation services from third-party carriers and resell them to customers. Their service offerings are comprehensive, encompassing air and ocean freight consolidation, customs clearance, purchase order management, and distribution services, aiming to provide a seamless international supply chain solution. Financially, the company demonstrated a strong recovery in 2010, with significant increases in net revenues across all major service segments (airfreight, ocean freight, and customs brokerage) compared to the downturn experienced in 2009. This rebound was driven by an improving global economy and increased freight volumes. EXPD's operational efficiency is supported by its integrated global network and a compensation philosophy that aligns employee incentives with profitability, fostering a culture of customer service and operational excellence. However, the company faces ongoing challenges, including intense competition, price pressures from carriers, and significant legal risks associated with antitrust investigations in the US, Europe, and Brazil.

Financial Highlights

48 data points
Beta

Revenue

$5.97B

28.4% Gross Margin

Net Income

$344.17M

5.8% Net Margin

EPS (Diluted)

$1.59

Total Assets

$2.68B

Cash & Equivalents

$1.08B

Free Cash Flow

$395.52M

Financial Statements
Beta
Revenue$5.97B
Gross Profit$1.69B
Operating Expenses$5.42B
Operating Income$547.23M
Interest Expense$576K
Net Income$344.17M
EPS (Basic)$1.62
EPS (Diluted)$1.59
Shares Outstanding (Basic)212.28M
Shares Outstanding (Diluted)216.45M

Key Highlights

  • 1Expeditors International of Washington, Inc. (EXPD) is a global logistics provider focused on air and ocean freight forwarding and customs brokerage.
  • 2The company's non-asset-based model allows for flexibility and avoids significant capital expenditures on transportation assets.
  • 3Net revenues saw a significant rebound in 2010, increasing by 22% compared to 2009, driven by improvements in airfreight and ocean freight volumes.
  • 4Airfreight services contributed 38% to net revenues in 2010, followed by customs brokerage (39%) and ocean freight (23%).
  • 5EXPD emphasizes organic growth supplemented by strategic acquisitions and operates a globally integrated network of offices.
  • 6The company is subject to significant ongoing legal proceedings related to alleged anti-competitive behavior in air cargo freight forwarding, which could result in substantial fines and penalties.
  • 7Despite competitive pressures, EXPD's management believes its integrated technology systems, global network, and employee incentive programs provide a competitive advantage.

Frequently Asked Questions

Expeditors International operates as a non-asset-based global logistics provider. This means they do not own their own aircraft or ships. Instead, they act as intermediaries, purchasing transportation services from carriers (like airlines and shipping lines) and reselling them to customers, often consolidating shipments to achieve better rates. They also provide value-added services such as customs brokerage and supply chain management.

The filing covers the year ended December 31, 2010. Expeditors experienced a strong recovery in 2010, with net revenues increasing by 22% to $1.69 billion compared to $1.38 billion in 2009. This growth was driven by increased freight volumes across air, ocean, and customs brokerage services, reflecting an improving global economy. Net earnings also saw a substantial increase to $344 million in 2010 from $240 million in 2009.

Key risks include intense competition in the global logistics industry, price pressures from customers and carriers, reliance on third-party asset-based carriers whose financial stability can impact service, foreign exchange rate fluctuations due to international operations, and significant legal risks from ongoing antitrust investigations in the US, Europe, and Brazil, which could lead to substantial fines and penalties. Additionally, global economic conditions and geopolitical events can significantly impact international trade volumes.

The company manages its business through three geographic segments: Americas, Asia Pacific, and Europe, Africa, Near/Middle East, and Indian Subcontinent (EMAIR). A key element of their strategy is a strong emphasis on employee development and retention, supported by a unique compensation philosophy. This philosophy offers modest base salaries but significant performance-based bonuses tied to the profitability of the business unit controlled by employees, creating a direct alignment with shareholder interests and encouraging prudent risk-taking.