10-KPeriod: FY2018

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2018

Filed February 22, 2019For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported solid performance in its 2018 10-K filing, demonstrating robust revenue growth driven by increases in both freight volumes and service rates. The company's diversified logistics services, including airfreight, ocean freight, and customs brokerage, collectively contributed to a significant uplift in net revenues. This growth was supported by Expeditors' strategic focus on key markets and customers, as well as its commitment to organic growth and leveraging its proprietary technology platform. Financially, Expeditors showed strong net earnings and improved operating income, reflecting effective management of its service offerings and overhead expenses. The company maintains a strong liquidity position with substantial cash reserves and no long-term debt, enabling continued investment in its operations and a commitment to shareholder returns through dividends and share repurchases. Despite facing a competitive and dynamic global logistics landscape, Expeditors' agile, non-asset-based model positions it well to adapt to evolving trade conditions and customer demands.

Financial Highlights

43 data points
Beta

Revenue

$8.14B

Net Income

$618.20M

7.6% Net Margin

EPS (Diluted)

$3.48

Total Assets

$3.31B

Cash & Equivalents

$923.74M

Free Cash Flow

$572.80M

Financial Statements
Beta
Revenue$8.14B
Operating Expenses$7.34B
Operating Income$796.56M
Net Income$618.20M
EPS (Basic)$3.55
EPS (Diluted)$3.48
Shares Outstanding (Basic)174.13M
Shares Outstanding (Diluted)177.83M

Key Highlights

  • 1Expeditors International reported a 14% increase in airfreight revenues and a 7% increase in ocean freight revenues for 2018 compared to 2017, driven by higher volumes and rates.
  • 2Customs brokerage and other services saw a significant 35% revenue increase, highlighting the growing demand for compliance and integrated logistics solutions.
  • 3Net earnings attributable to shareholders grew by approximately 26% to $618.2 million in 2018, demonstrating improved profitability.
  • 4The company maintained a strong financial position with $924 million in cash and cash equivalents and no long-term debt as of December 31, 2018.
  • 5Expeditors returned $647.9 million to shareholders through share repurchases and $156.8 million through dividends in 2018, signaling confidence in its financial health.
  • 6Salaries and related costs as a percentage of net revenues decreased from 55% to 53% in 2018, indicating improved operational efficiency relative to revenue growth.
  • 7The company continues to invest in its proprietary technology platform, which it believes is a key competitive advantage for providing consistent and efficient global logistics services.

Frequently Asked Questions

Expeditors experienced revenue growth primarily driven by an increase in freight volumes across its airfreight, ocean freight, and customs brokerage services. Higher sell rates, in response to increased buy rates from carriers due to market demand and capacity constraints, also significantly contributed to revenue growth, particularly in airfreight.

As a non-asset-based logistics provider, Expeditors relies on a network of asset-based carriers (airlines, ocean shipping lines, ground transportation providers). The company manages this dependence by carefully selecting and managing its service providers based on defined value elements, relationship and performance management, and by awarding additional business to consistently high-performing partners. They also maintain satisfactory working relationships with these entities.

Expeditors' strategy focuses on growing business by concentrating on the 'right markets' and 'right customers' that lead to profitable growth. Key initiatives include ensuring baseline growth aligns with market growth rates for its core services (air, ocean, customs), integrating European-Asian Pacific and European-North American interests, and leveraging its strong presence in China to build import business through enhanced customs systems and local delivery capabilities. The company also emphasizes organic growth supplemented by strategic acquisitions.

Expeditors conducts business in many countries and currencies, exposing it to foreign exchange risk. The company's primary method of managing this risk is by accelerating international currency settlements among its offices and agents. They do not currently use derivative financial instruments for hedging and only engage in hedging in limited circumstances where regulatory or commercial limitations exist.