10-KPeriod: FY2016

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2016

Filed February 23, 2017For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) operates as a non-asset-based global logistics provider, offering a comprehensive suite of services including air and ocean freight, customs brokerage, and warehousing. In 2016, the company generated $6.1 billion in revenue, with net revenues of $2.16 billion, and reported net earnings attributable to shareholders of $430.8 million, or $2.36 per diluted share. While overall revenues saw a decrease from the previous year, net revenues remained relatively stable, indicating effective cost management and a focus on profitable service offerings. The company's strategy continues to emphasize organic growth, leveraging its integrated global network and proprietary technology platform to deliver tailored logistics solutions. Expeditors navigates a competitive landscape by focusing on quality service, reliability, and technological innovation. The company's financial health appears robust, with significant cash generation and no long-term debt, providing flexibility for future investments and shareholder returns through dividends and share repurchases. Key risks include international trade fluctuations, service provider stability, and the ever-evolving regulatory environment, which the company actively manages through strong operational controls and strategic partnerships.

Financial Highlights

42 data points
Beta

Revenue

$6.10B

Net Income

$430.81M

7.1% Net Margin

EPS (Diluted)

$2.36

Total Assets

$2.79B

Cash & Equivalents

$974.43M

Free Cash Flow

$529.49M

Financial Statements
Beta
Revenue$6.10B
Operating Expenses$5.43B
Operating Income$670.16M
Net Income$430.81M
EPS (Basic)$2.38
EPS (Diluted)$2.36
Shares Outstanding (Basic)181.28M
Shares Outstanding (Diluted)182.70M

Key Highlights

  • 1Expeditors reported total revenues of $6.1 billion and net revenues of $2.16 billion for 2016.
  • 2Net earnings attributable to shareholders were $430.8 million, or $2.36 per diluted share.
  • 3The company maintains a strong financial position with no long-term debt and robust operating cash flow.
  • 4Expeditors continues to prioritize organic growth and invests in its proprietary technology platform.
  • 5Key revenue drivers are airfreight services (32% of net revenues), customs brokerage and other services (43% of net revenues), and ocean freight and ocean services (25% of net revenues).
  • 6The company actively engages in share repurchases and has consistently paid dividends, demonstrating a commitment to shareholder returns.
  • 7Expeditors operates a global network with 177 district offices across various geographic regions.

Frequently Asked Questions

Expeditors generates revenue from three main service categories: airfreight services, ocean freight and ocean services, and customs brokerage and other services. For 2016, customs brokerage and other services represented the largest portion of net revenues (43%), followed by airfreight services (32%) and ocean freight and ocean services (25%).

Expeditors focuses on managing net revenues, which are calculated as gross revenues less directly related operating expenses. By consolidating shipments and leveraging purchasing power, they negotiate favorable rates with carriers (buy rates) and resell these services to customers at competitive rates (sell rates). The difference, or 'yield,' is a key performance indicator. The company also emphasizes organic growth, technological innovation, and strong customer relationships to maintain its competitive edge.

Expeditors faces several risks, including fluctuations in international trade due to economic and political factors, potential instability of service providers (airlines and ocean carriers), cybersecurity threats, and the impact of evolving global regulations. Additionally, competition is intense, with pressure on pricing and service quality from both niche players and larger entities.

Expeditors' primary strategy is organic growth, focusing on expanding market share in key markets and enhancing its integrated global network and proprietary technology platform. They aim to align and integrate their international operations, leverage their Asian market presence, and strengthen their position in North America. While historically favoring organic growth, they remain open to strategic acquisitions that offer technological advantages, geographic coverage, or specialized expertise.