10-KPeriod: FY2015

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2015

Filed February 25, 2016For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported strong financial performance for the fiscal year ended December 31, 2015. The company's core business revolves around providing comprehensive global logistics services, including air and ocean freight consolidation and forwarding, customs brokerage, and warehousing. Despite facing intense competition and a volatile global economic landscape, Expeditors demonstrated resilience and growth. Net revenues increased by 10% year-over-year, reaching $2.19 billion, driven by improved net revenue per unit across its service lines, particularly in ocean freight consolidation and airfreight services. Net earnings attributable to shareholders saw a significant rise of 21%, totaling $457.2 million. The company's strategic focus on profitable growth, operational efficiency, and leveraging its global network has evidently paid off. Expeditors also maintained a robust balance sheet with ample liquidity and no long-term debt, allowing for continued investment in technology and strategic initiatives. Investor considerations include the company's consistent focus on organic growth, its distinctive corporate culture emphasizing customer service and employee development, and its non-asset-based business model which provides flexibility. While competitive pressures and fluctuating global trade conditions remain key risks, Expeditors' proactive management and strategic initiatives position it for continued success in the dynamic logistics industry.

Financial Highlights

43 data points
Beta

Revenue

$6.62B

Net Income

$457.22M

6.9% Net Margin

EPS (Diluted)

$2.40

Total Assets

$2.57B

Cash & Equivalents

$807.80M

Free Cash Flow

$566.56M

Financial Statements
Beta
Revenue$6.62B
Operating Expenses$5.90B
Operating Income$721.48M
Net Income$457.22M
EPS (Basic)$2.42
EPS (Diluted)$2.40
Shares Outstanding (Basic)188.94M
Shares Outstanding (Diluted)190.22M

Key Highlights

  • 1Net revenues grew by 10% to $2.19 billion in 2015.
  • 2Net earnings attributable to shareholders increased by 21% to $457.2 million.
  • 3The company experienced strong net revenue growth in Ocean Freight (18%) and Airfreight services (11%) due to improved net revenue per unit and tonnage/volume growth.
  • 4Expeditors maintained a strong financial position with $1.13 billion in working capital and no long-term debt.
  • 5The company repurchased approximately 14.8 million shares of common stock in 2015 under its repurchase plans.
  • 6Expeditors continued to invest in technology and operational enhancements to support its global strategy and customer service.
  • 7The company operates a non-asset-based model, providing flexibility and avoiding significant capital outlays for owned transportation assets.

Frequently Asked Questions

Expeditors operates as a non-asset-based third-party logistics provider. Its primary business model involves purchasing cargo space from carriers (airlines, ocean shipping lines) on a volume basis and reselling it to customers. Revenue is generated from airfreight services, ocean freight and ocean services, and customs brokerage and other services. Net revenues, a key performance indicator, are calculated as total revenues less directly related operating expenses, representing the 'yield' or margin earned.

In 2015, Expeditors demonstrated strong financial performance. Net revenues increased by 10% to $2.19 billion, and net earnings attributable to shareholders rose by 21% to $457.2 million. This growth was driven by improvements in airfreight and ocean freight services, with net revenues per unit increasing and, in many cases, tonnage or volume also growing.

Key risks include: the impact of international trade dynamics (currency fluctuations, trade barriers, geopolitical events), reliance on service providers (airlines, ocean carriers) whose financial stability can affect Expeditors, the unpredictability of short-term customer requirements impacting staffing and operational costs, the competitive nature of the global logistics industry, and cybersecurity threats to its global IT systems. The company also notes risks associated with foreign operations and compliance with international regulations.

Expeditors primarily focuses on organic growth, expanding its network by opening new offices and forming joint ventures. Its strategic initiatives for 2015 focused on growing business in priority markets and with specific customers for profitable growth. Key initiatives included ensuring baseline growth rates for core services match market growth, integrating operations across regions, leveraging its Asian presence for import growth, and expanding market share in North America. The company also implemented 'enabling' initiatives focused on IT, risk management, procurement, and acquisition strategy.