10-KPeriod: FY2014

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2014

Filed February 26, 2015For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) operates as a global logistics provider, specializing in air and ocean freight transportation and customs brokerage. The company’s business model relies on purchasing cargo space from carriers and reselling it to customers, offering integrated information systems and a global network of personnel. For the fiscal year ending December 31, 2014, EXPD reported total revenues of $6.56 billion and net revenues of $1.98 billion, with net earnings attributable to shareholders of $376.89 million. Key operational strengths include a diversified customer base across various industries and a strategic focus on organic growth complemented by selective acquisitions. The company emphasizes a strong corporate culture centered on superior customer service, employee development, and innovative system solutions. Despite a competitive industry landscape, EXPD maintained its non-asset based model, mitigating risks associated with direct ownership of transportation assets. The company's financial health appears robust, with significant operating cash flows and no reported debt at the end of the fiscal year.

Financial Highlights

43 data points
Beta

Revenue

$6.56B

Net Income

$376.89M

5.7% Net Margin

EPS (Diluted)

$1.92

Total Assets

$2.87B

Cash & Equivalents

$927.11M

Free Cash Flow

$394.97M

Financial Statements
Beta
Revenue$6.56B
Operating Expenses$5.97B
Operating Income$594.65M
Net Income$376.89M
EPS (Basic)$1.92
EPS (Diluted)$1.92
Shares Outstanding (Basic)196.15M
Shares Outstanding (Diluted)196.77M

Key Highlights

  • 1Expeditors International of Washington, Inc. (EXPD) generated $6.56 billion in total revenues and $1.98 billion in net revenues for the fiscal year ending December 31, 2014.
  • 2The company reported net earnings attributable to shareholders of $376.89 million, or $1.92 per diluted share.
  • 3EXPD's core services include airfreight (34% of net revenue), ocean freight (23% of net revenue), and customs brokerage & other services (43% of net revenue).
  • 4The company operates a non-asset based logistics model, meaning it does not own aircraft or steamships, relying instead on third-party carriers.
  • 5Strategic initiatives for growth include aligning European-Asian Pacific interests, leveraging its presence in Asian export markets for import growth, and enhancing capabilities in key trade lanes, particularly involving China and Southeast Asia.
  • 6Expeditors maintains a strong emphasis on its corporate culture, focusing on customer service, employee development, and integrated IT solutions to maintain a competitive advantage.
  • 7The company reported no debt and strong operating cash flow, indicating a healthy financial position for the period.

Frequently Asked Questions

Expeditors generates revenue from three main service areas: airfreight services (approximately 34% of net revenue), ocean freight and ocean services (approximately 23% of net revenue), and customs brokerage and other services (approximately 43% of net revenue). Profitability, or net revenue (revenue less directly related operating expenses), is generated by the margin between the rates charged to customers and the costs paid to carriers, as well as fees for ancillary services. Customs brokerage and other services represent a significant portion of net revenue, highlighting the importance of customs clearance and related value-added services.

As a non-asset based provider, Expeditors relies on third-party carriers like airlines and ocean shipping lines. This model avoids the capital expenditure and operational risks of owning transportation assets. The company mitigates risks by carefully selecting and managing these third-party providers. However, it remains exposed to risks such as changes in carrier financial stability, capacity, pricing policies, and potential disruptions in their services, which could impact the company's ability to maintain historical profitability.

Expeditors' strategic priorities include defending and growing its base-line market share in air, ocean, and customs services in line with market growth rates. Key initiatives involve better aligning and integrating European and Asia Pacific interests with North American operations to drive additional growth. The company also aims to leverage its strong presence in Asian export markets to build a more robust import business and enhance its export capabilities in strategic lanes, particularly those involving China and Southeast Asia. Additionally, they focus on expanding market share in North America.

Expeditors is managed across four geographic areas: Americas, Asia Pacific, Europe, and Middle East, Africa, and India (MAIR). The company operates in 63 countries. Its business is highly interconnected across these regions, making it challenging to analyze individual segment contributions in isolation. While international operations contribute significantly to revenue and income, they also expose the company to currency fluctuations, varying regulatory environments, and geopolitical risks. The company actively works to structure its operations to comply with local regulations, sometimes through joint ventures or exclusive agency relationships.