10-KPeriod: FY2019

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report, Year Ended Dec 31, 2019

Filed February 21, 2020For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) is a global logistics and freight forwarding company that provides a comprehensive suite of services including air and ocean freight, customs brokerage, and warehousing. The company's business model is non-asset based, meaning it doesn't own ships or planes, but rather purchases cargo space on a volume basis and resells it to customers, offering expertise in routing, documentation, and customs clearance. For the fiscal year ending December 31, 2019, Expeditors reported revenues of $8.18 billion, a slight increase from the previous year, with operating income of $767 million and net earnings attributable to shareholders of $590 million. While airfreight revenue saw a decrease of 10% due to softer demand and lower sell rates, customs brokerage and other services revenue increased by 16%, demonstrating resilience and growth in key areas. The company maintains a strong balance sheet with substantial working capital and no long-term debt, indicating financial stability.

Financial Highlights

43 data points
Beta

Revenue

$7.94B

Net Income

$590.39M

7.4% Net Margin

EPS (Diluted)

$3.39

Total Assets

$3.69B

Cash & Equivalents

$1.23B

Free Cash Flow

$771.69M

Financial Statements
Beta
Revenue$7.94B
Operating Expenses$7.18B
Operating Income$766.69M
Net Income$590.39M
EPS (Basic)$3.45
EPS (Diluted)$3.39
Shares Outstanding (Basic)170.90M
Shares Outstanding (Diluted)174.21M

Key Highlights

  • 1Expeditors operates a global logistics network with 176 district offices across five geographic regions, supported by approximately 18,000 employees.
  • 2The company's revenue is diversified across three main service categories: Airfreight Services (36% in 2019), Ocean Freight and Ocean Services (27% in 2019), and Customs Brokerage and Other Services (37% in 2019).
  • 3In 2019, Expeditors generated $8.18 billion in revenue, with operating income of $767 million and net earnings of $590 million.
  • 4The company emphasizes organic growth and maintains a non-asset based business model for flexibility and reduced capital expenditure risk.
  • 5Expeditors' strategy focuses on key growth initiatives, including aligning and integrating its global operations, leveraging its presence in China, and focusing on specific markets and customers for profitable growth.
  • 6Financial health is strong, with significant working capital ($1.6 billion) and no long-term debt as of December 31, 2019.
  • 7The company returned value to shareholders through $1.00 per share in dividends and significant share repurchases totaling $389 million in 2019.

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. This model provides flexibility and avoids the capital expenditures and risks associated with owning transportation assets. Key competitive advantages include its extensive global network, integrated information systems, expertise in customs brokerage and complex logistics, and a strong focus on customer service and tailored solutions.

In 2019, Expeditors reported revenues of $8.18 billion. While airfreight services revenue declined by 10% due to softening global demand and trade disputes affecting sell rates, customs brokerage and other services saw significant growth of 16%, driven by increased demand for brokerage services and time-definite ground freight. Ocean freight services experienced a slight decrease of 2%. The overall revenue growth was modest, reflecting broader economic conditions and trade uncertainties.

Expeditors faces several key risks, including significant exposure to international trade fluctuations influenced by currency exchange rates, governmental policies, tariffs, trade barriers, and geopolitical events. Dependence on service providers (air, ocean, ground carriers) is another major risk, as their financial stability, capacity, and pricing can unpredictably impact Expeditors. Additionally, the company is exposed to cybersecurity threats, regulatory changes, competition, and potential disruptions from global events like pandemics.

Expeditors maintains a strong liquidity position, with substantial cash and cash equivalents and no long-term debt as of December 31, 2019. The company generated significant cash flow from operations, which it uses to fund its capital expenditures (primarily in technology and facilities) and to return capital to shareholders. In 2019, this included $1.00 per share in dividends and $389 million in share repurchases, reflecting a commitment to shareholder value.