10-QPeriod: Q1 FY2001

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 15, 2001For Securities:EXPD

Summary

Expeditors International of Washington, Inc. reported strong first-quarter 2001 financial results, demonstrating robust growth across its core business segments. Total revenues surged by 16% year-over-year to $405.3 million, driven by significant increases in airfreight and ocean freight net revenues, up 35% and 28% respectively. This top-line growth translated into a substantial increase in net earnings, which grew by 58% to $21.2 million, with diluted EPS rising to $0.38 from $0.25 in the prior year period. The company's operational efficiency is highlighted by the slight decrease in total operating expenses as a percentage of net revenues. Management attributes much of this success to a strategic compensation model that aligns employee incentives with company profitability, fostering strong organic growth. The balance sheet remains strong, with ample liquidity and no long-term debt. The company also provided insights into its ongoing preparations for the Euro conversion and indicated its expectation for continued growth fueled by industry consolidation and its expanding global network.

Key Highlights

  • 1Revenue increased 16% to $405.3 million for the three months ended March 31, 2001, compared to $349.0 million for the same period in 2000.
  • 2Net earnings grew significantly by 58% to $21.2 million, up from $13.4 million in the prior year.
  • 3Diluted earnings per share (EPS) improved to $0.38 from $0.25, representing a 52% increase.
  • 4Airfreight net revenues saw a substantial 35% increase, and ocean freight net revenues grew by 28%, indicating strong performance in key segments.
  • 5Operating income increased by 48% to $31.0 million, reflecting improved operational leverage.
  • 6The company maintained a strong liquidity position with cash and cash equivalents of $220.9 million and no long-term debt at March 31, 2001.
  • 7Organic growth remains a key driver, with 'same store' net revenue and operating income increasing by 22% and 46% respectively in Q1 2001.

Frequently Asked Questions

Expeditors International demonstrated robust financial performance in the first quarter of 2001. Revenues increased by 16% year-over-year to $405.3 million, and net earnings saw a significant surge of 58% to $21.2 million. Diluted earnings per share improved to $0.38, up from $0.25 in the same period of the prior year. This growth was driven by strong performances in airfreight and ocean freight services, alongside effective cost management.

The company experienced strong growth across its main service lines. Airfreight net revenues increased by 35% and ocean freight net revenues by 28%, indicating strong demand and successful market penetration. Customs brokerage and import services also grew by 16%. Management attributes this growth to expanding global networks, improving economic conditions in certain regions, strategic marketing of competitive rates, and a growing reputation for high-quality service and sophisticated computerized capabilities.

Expeditors International maintains a strong liquidity position. As of March 31, 2001, the company held $220.9 million in cash and cash equivalents and had no long-term debt. Working capital was approximately $251 million. The company expects to finance its planned capital expenditures of $60 million for 2001 through existing cash flows, indicating a stable financial foundation.

The primary market risks highlighted are foreign exchange fluctuations and interest rate changes. The company operates globally and is exposed to currency volatility; a 10% weakening of the U.S. Dollar could raise operating income by approximately $2.3 million. While the company does not heavily rely on derivative instruments, it manages currency risk through accelerating international currency settlements. Interest rate risk is noted as immaterial given the company's cash holdings and minimal short-term borrowings.