10-QPeriod: Q3 FY2005

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2005

Filed November 8, 2005For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported a strong third quarter for 2005, demonstrating significant growth in revenues and net earnings compared to the prior year. Total revenues increased by 16.6% to $1,046.4 million for the three months ended September 30, 2005, driven by robust performance across all its service segments: airfreight, ocean freight, and customs brokerage. Net earnings saw a substantial rise of 29.3% to $55.8 million, translating to diluted earnings per share of $0.50, up from $0.39 in the same period last year. The company's operational efficiency is highlighted by its stable operating expense ratio as a percentage of net revenues, despite increased hiring and compensation to support business growth. For the nine-month period ended September 30, 2005, EXPD also posted impressive gains, with total revenues up 17.5% to $2,799.6 million and net earnings increasing by 22.7% to $138.2 million. The company's balance sheet remains strong, with total assets growing to $1,541.9 million and shareholders' equity at $881.7 million. Liquidity is also robust, with $461.4 million in cash and cash equivalents and no long-term debt. Management remains focused on organic growth, employee development, and operational excellence, positioning the company for continued success in the competitive global logistics market.

Key Highlights

  • 1Net earnings increased by 29.3% to $55.8 million for the third quarter of 2005, compared to $43.1 million in the same period of 2004.
  • 2Diluted earnings per share rose to $0.50 for the quarter, up from $0.39 in Q3 2004, reflecting improved profitability.
  • 3Total revenues grew by 16.6% year-over-year to $1,046.4 million in the third quarter, indicating strong demand for services.
  • 4Ocean freight and ocean services net revenues saw a significant increase of 28% for the quarter, driven by volume growth and yield improvement.
  • 5The company's balance sheet remains strong with $461.4 million in cash and cash equivalents and no long-term debt as of September 30, 2005.
  • 6Operating income for the nine months ended September 30, 2005, increased by 21.3% to $211.7 million.
  • 7Management highlighted a focus on organic growth and operational excellence, with expansion of 4 full-service and 2 satellite offices during the quarter.

Frequently Asked Questions

Expeditors International reported strong financial results for the third quarter of 2005. Net earnings increased by 29.3% to $55.8 million, and diluted earnings per share rose to $0.50 from $0.39 in the same period last year. Total revenues grew by 16.6% to $1,046.4 million, driven by solid performance across airfreight, ocean freight, and customs brokerage services.

All three major service segments showed growth. Airfreight net revenues increased by 10%, ocean freight and ocean services net revenues surged by 28% due to volume and yield increases, and customs brokerage and other services net revenues grew by 17%. This diversified growth contributed to the overall strong performance.

Expeditors maintains a strong financial position. As of September 30, 2005, the company had $461.4 million in cash and cash equivalents, and notably, no long-term debt. This indicates significant liquidity and financial flexibility.

Management highlighted the competitive nature of the global logistics industry, potential impacts from international trade policies, and the importance of maintaining strong customer service and employee culture. They also noted that the upcoming adoption of SFAS No. 123R (Share-Based Payment) is expected to materially impact financial results starting in 2006 due to the expensing of stock options.