10-QPeriod: Q2 FY2001

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q2 Ended Jun 30, 2001

Filed August 14, 2001For Securities:EXPD

Summary

Expeditors International of Washington, Inc. reported strong financial performance for the quarter ended June 30, 2001, demonstrating growth across its key service lines. Total revenues reached $390.7 million, a slight decrease from the prior year period, but net revenues saw a significant increase to $147.8 million, up 15% year-over-year, driven by improved margins in airfreight and ocean freight. The company's operating income grew by 16% to $32.2 million, with net earnings rising 19% to $21.6 million. This growth was fueled by effective cost management, particularly in salaries and related costs, which remained a stable percentage of net revenues. The company also saw robust cash flow from operations, increasing by $23.5 million to $55.2 million for the quarter, indicating strong operational efficiency and effective working capital management. Expeditors appears well-positioned to continue its growth trajectory, leveraging its expanding global network and sophisticated logistics solutions.

Key Highlights

  • 1Net revenues increased by 15% to $147.8 million for the quarter ended June 30, 2001, compared to $128.1 million in the prior year period.
  • 2Operating income grew by 16% to $32.2 million, reflecting improved operational efficiency and cost management.
  • 3Net earnings increased by 19% to $21.6 million ($0.41 per basic share and $0.39 per diluted share) for the quarter.
  • 4Airfreight net revenues increased by 24% and ocean freight net revenues increased by 21% year-over-year, driven by improved margins and market share gains.
  • 5Cash provided by operating activities significantly increased by $31.6 million to $55.2 million for the quarter.
  • 6The company reported no long-term debt and a strong working capital position of $261 million, including $252 million in cash and short-term investments.
  • 7"Same store" net revenue growth was 12% and operating income growth was 14% for the quarter, indicating solid organic growth from established operations.

Frequently Asked Questions

Airfreight and ocean freight services showed strong growth. Airfreight net revenues increased by 24% and ocean freight net revenues increased by 21% year-over-year. Customs brokerage and import services also saw a 4% increase. These gains were attributed to improved margins, aggressive marketing, and increasing market share.

Expeditors maintains a strong financial position with no long-term debt and a healthy working capital of $261 million, bolstered by $252 million in cash and short-term investments. Cash flow from operations was robust, increasing significantly to $55.2 million for the quarter, indicating the company's ability to fund its operations and growth initiatives internally.

The growth is driven by several factors including expanded air freight margins in key markets due to 'disconnects' between customer sell rates and carrier buy rates, aggressive marketing of competitive ocean freight rates, and an increasing reputation for high-quality customs brokerage services. Effective cost management, particularly keeping salaries and related costs as a stable percentage of net revenues, also contributed to earnings growth.

Expeditors operates globally and is exposed to foreign exchange risk. The company primarily manages this risk by accelerating international currency settlements to manage foreign exchange risk relative to intercompany billings, rather than through derivative financial instruments. Material hedging activity was not reported for the period, and foreign currency gains/losses were insignificant.