10-KPeriod: FY2012

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2012

Filed February 27, 2013For 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 acts as a non-asset based provider, meaning it does not own aircraft or steamships, but rather leverages its network and expertise to consolidate shipments and negotiate favorable rates with direct carriers. For the fiscal year ending December 31, 2012, EXPD experienced a slight decrease in net revenues compared to 2011, largely driven by a decline in airfreight tonnage and a reduction in net revenue per kilo. Ocean freight and customs brokerage services showed modest growth. The company's business model is highly dependent on global trade conditions, carrier relationships, and its ability to manage complex international regulations and supply chains efficiently. Despite some headwinds in freight volumes, EXPD maintains a strong liquidity position with substantial cash reserves and no long-term debt, underscoring its financial stability.

Financial Highlights

46 data points
Beta

Revenue

$5.99B

30.4% Gross Margin

Net Income

$333.36M

5.6% Net Margin

EPS (Diluted)

$1.57

Total Assets

$2.95B

Cash & Equivalents

$1.26B

Free Cash Flow

$370.13M

Financial Statements
Beta
Revenue$5.99B
Gross Profit$1.82B
Operating Expenses$5.46B
Operating Income$530.80M
Interest Expense$1.25M
Net Income$333.36M
EPS (Basic)$1.58
EPS (Diluted)$1.57
Shares Outstanding (Basic)210.42M
Shares Outstanding (Diluted)211.94M

Key Highlights

  • 1Expeditors operates a non-asset based global logistics model, focusing on air and ocean freight forwarding and customs brokerage.
  • 2Net revenues saw a slight decrease in 2012 compared to 2011, primarily due to lower airfreight tonnage and reduced revenue per kilo.
  • 3Customs brokerage and other services demonstrated growth, indicating resilience in this segment.
  • 4The company maintains a strong financial position with significant cash and equivalents and no long-term debt as of December 31, 2012.
  • 5EXPD relies heavily on its relationships with third-party carriers (airlines and ocean lines) and is susceptible to their financial stability and capacity changes.
  • 6The business is subject to seasonal trends, with Q1 typically being the weakest and Q3/Q4 being the strongest.
  • 7The company prioritizes organic growth supplemented by strategic acquisitions and places strong emphasis on employee retention and customer service.

Frequently Asked Questions

Expeditors operates as a non-asset based global logistics provider. This means they do not own physical assets like aircraft or ships. Instead, they leverage their network and expertise to consolidate shipments from multiple clients, negotiate favorable rates with asset-based carriers (airlines, ocean lines), and provide comprehensive logistics services including freight forwarding and customs brokerage.

In 2012, Expeditors saw a decrease in airfreight services revenue due to lower tonnage and reduced revenue per kilo, attributed to shifts towards deferred freight and efficiency gains by customers. Ocean freight and customs brokerage services provided some offset with modest growth. Key challenges included managing carrier rate increases that couldn't always be passed on immediately to customers, and the general volatility of global trade conditions.

Expeditors maintains a strong liquidity position with substantial cash and equivalents and no long-term debt as of December 31, 2012. They manage foreign exchange risk primarily by accelerating international currency settlements rather than through extensive hedging. The company's business model, which involves purchasing wholesale transportation and reselling it retail, allows them to negotiate favorable rates by consolidating shipments. Their financial health is further supported by robust internal controls and a focus on cash flow management.

Expeditors primarily focuses on organic growth, emphasizing recruiting, training, and retaining superior personnel to foster a strong corporate culture centered on customer service. They supplement this with certain strategic acquisitions. The company also actively repurchases its own stock, both to offset dilution from stock option exercises and to reduce the total number of outstanding shares.