10-QPeriod: Q1 FY2002

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q1 Ended Mar 31, 2002

Filed May 15, 2002For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported its first quarter results for the period ended March 31, 2002. The company demonstrated resilience despite a slowing global economy, with net earnings increasing to $22.2 million from $21.2 million in the prior year's first quarter, and diluted earnings per share rising to $0.41 from $0.38. Total revenues saw a slight decrease, primarily driven by a decline in airfreight tonnage, but this was partially offset by a strong performance in ocean freight and ocean services, which saw net revenue growth of 17%. The company maintained its operational efficiency, with salaries and related costs as a percentage of net revenues remaining stable. Management highlighted strong cost containment measures contributing to a decrease in other operating expenses. The company ended the quarter with a healthy working capital position, including significant cash and cash equivalents, and no long-term debt, indicating a sound liquidity and capital resources outlook.

Key Highlights

  • 1Net earnings increased to $22.2 million from $21.2 million in the same period last year, representing a 5% increase.
  • 2Diluted earnings per share grew to $0.41 from $0.38, a 7.9% increase.
  • 3Ocean freight and ocean services net revenues increased by 17%, driven by competitive rates and market share expansion strategies.
  • 4Airfreight net revenues decreased by 5% due to a 12% decline in tonnage handled, attributed to a general slowdown in the global economy.
  • 5Salaries and related costs remained stable as a percentage of net revenues (55%), reflecting disciplined cost management.
  • 6Other operating expenses decreased by 5%, largely due to cost containment initiatives and improved working capital management.
  • 7The company ended the quarter with $262.9 million in cash and cash equivalents and no long-term debt, demonstrating strong liquidity.

Frequently Asked Questions

The decrease in airfreight revenues was primarily driven by a 12% decline in airfreight tonnage handled by the company during the first quarter of 2002 compared to the same period in 2001. Management attributes this decline to the general slowing of the world economy.

The ocean freight and ocean services segment showed strong performance, with net revenues increasing by 17% year-over-year. This growth was supported by aggressive marketing of competitive rates, particularly on eastbound freight from the Far East, and strategic efforts to improve market share on other trade lanes. The Expeditors Cargo Management Systems (ECMS) also played a key role.

Expeditors International maintains a strong liquidity position. As of March 31, 2002, the company had working capital of $268.1 million, including $263.0 million in cash and short-term investments, and no long-term debt. Management believes its current cash position, financing arrangements, and operating cash flows are sufficient to meet future capital and liquidity requirements.

No, the company did not open any new offices during the first quarter of 2002. Their growth strategy continues to emphasize organic growth supplemented by strategic acquisitions where future economic benefits significantly outweigh the recorded goodwill.