10-QPeriod: Q3 FY2000

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 14, 2000For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported strong performance for the nine months ended September 30, 2000, demonstrating significant year-over-year growth across key financial metrics. Total revenues increased to $1.23 billion, with net earnings reaching $57.1 million, up from $40.6 million in the prior year period. This growth was driven by robust performance in airfreight, ocean freight, and customs brokerage services, reflecting an expanding global network and increasing market share. The company also showcased improved operational efficiency, with operating income rising to $88.3 million. Despite increased operating expenses, largely due to hiring to accommodate business growth and higher compensation levels, operating income as a percentage of net revenues improved. EXPD's liquidity remains strong, with a healthy working capital position and significant cash generated from operations, indicating a solid financial footing to support future expansion and operational needs.

Key Highlights

  • 1Total revenues for the first nine months of 2000 increased by 20.3% to $1.23 billion compared to the same period in 1999.
  • 2Net earnings grew significantly by 40.6% to $57.1 million for the nine months ended September 30, 2000, up from $40.6 million in the prior year.
  • 3Operating income showed strong growth, increasing by 38.4% to $88.3 million for the nine-month period.
  • 4Airfreight net revenues increased by 21% and ocean freight net revenues by 32% for the nine-month period, indicating strong demand and market share gains.
  • 5Customs brokerage and import services saw an 18% increase in net revenues for the three-month period and 23% for the nine-month period.
  • 6Net cash provided by operating activities for the nine months ended September 30, 2000, was $112.1 million, a substantial increase from $31.0 million in the prior year.
  • 7The company maintained a strong balance sheet with $143 million in cash and short-term investments and no long-term debt as of September 30, 2000.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance in airfreight and ocean freight, with net revenues increasing by 21% and 32% respectively for the nine months ended September 30, 2000. This growth is attributed to an expanding global network, increased tonnage handled, and successful marketing of competitive ocean freight rates and services like ECMS (Expeditors Cargo Management Systems).

While salaries and related costs increased due to hiring and compensation adjustments, they decreased as a percentage of net revenues. This indicates improved operational efficiency, with the company handling increased volumes without a commensurate rise in staff. The compensation philosophy, which links bonuses to operating profit, is believed to incentivize cost management and profitable growth.

Expeditors International demonstrated strong financial health and liquidity. Net cash provided by operating activities saw a significant increase to $112.1 million for the nine months ended September 30, 2000. The company had $143 million in cash and short-term investments and no long-term debt as of September 30, 2000, indicating ample resources to meet its capital and liquidity requirements.

The report notes that the international logistics industry is highly competitive, influenced by economic and political conditions, currency exchange rates, and government policies. The company also manages foreign exchange risk, though hedging activities are limited due to regulatory constraints. While the Euro conversion was mentioned, the company did not expect material conversion costs and was evaluating its impact on pricing.