10-QPeriod: Q2 FY2010

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported a strong recovery in its second quarter and first half of 2010, driven by a significant increase in airfreight and ocean freight volumes, reflecting an improving global economy. Net earnings attributable to shareholders surged by approximately 67% for the quarter and 34% for the six-month period compared to 2009. Revenue growth was particularly robust in airfreight services, with a 54% increase in tonnage during the quarter. While net revenue per unit (kilo/container) saw a decrease, this was largely a return to historical norms after a period of favorable buying opportunities in 2009. The company maintained a strong balance sheet with substantial cash and cash equivalents and no long-term debt, positioning it well to navigate ongoing economic uncertainties and potential legal challenges.

Financial Highlights

48 data points
Beta

Revenue

$1.52B

27.6% Gross Margin

Net Income

$90.32M

6.0% Net Margin

EPS (Diluted)

$0.42

Total Assets

$2.55B

Cash & Equivalents

$960.30M

Free Cash Flow

$20.55M

Financial Statements
Beta
Revenue$1.52B
Gross Profit$418.86M
Operating Expenses$1.38B
Operating Income$138.50M
Interest Expense$151K
Net Income$90.32M
EPS (Basic)$0.43
EPS (Diluted)$0.42
Shares Outstanding (Basic)212.33M
Shares Outstanding (Diluted)216.46M

Key Highlights

  • 1Significant year-over-year growth in net earnings for both the quarter and six-month period, indicating a strong business recovery.
  • 2Substantial increase in airfreight and ocean freight volumes, demonstrating a rebound in global trade and economic activity.
  • 3Improved operating income margin, reflecting efficient cost management and increased operational leverage.
  • 4Solid liquidity position with a significant cash balance and no long-term debt.
  • 5Active share repurchase program, demonstrating a commitment to returning value to shareholders.
  • 6The company is managing a robust increase in accounts receivable, which is a direct consequence of higher shipment volumes.

Frequently Asked Questions

The primary driver of the significant revenue and earnings growth is the substantial increase in global airfreight and ocean freight volumes, reflecting a recovery in international trade and the broader global economy. Airfreight tonnage, in particular, saw a 54% increase in the second quarter compared to the prior year.

Expeditors maintains a very strong financial position with no long-term debt as of June 30, 2010. The company held $960.3 million in cash and cash equivalents and $705,000 in short-term investments, providing substantial liquidity.

Yes, Expeditors is involved in ongoing investigations by the U.S. Department of Justice and the European Commission regarding alleged anti-competitive behavior in the air cargo freight forwarding industry. The company is also a defendant in a federal antitrust class action lawsuit. While the company believes these allegations are without merit and is vigorously defending itself, these matters could result in significant costs, fines, or penalties that could materially impact financial results.

The increase in accounts receivable is a direct result of higher shipment volumes, which is a positive sign of business growth. The company employs established credit control procedures and historically has experienced relatively insignificant collection problems. While accounts receivable increased, the overall working capital remains strong.