10-QPeriod: Q3 FY2010

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 8, 2010For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported strong financial performance for the nine months ended September 30, 2010, with total revenues reaching $4.39 billion, a significant increase from $2.85 billion in the prior year period. This growth was driven by a rebound in global economic conditions, leading to substantial increases in both airfreight and ocean freight volumes. Net earnings attributable to shareholders more than doubled to $247.7 million for the nine-month period, up from $171.1 million in 2009. Diluted earnings per share also saw a considerable rise to $1.14 from $0.79. The company's operating income increased by 45% year-over-year, reflecting improved operational efficiency and stronger demand for its logistics services. Despite facing ongoing legal proceedings related to alleged anti-competitive behavior in various jurisdictions, the company's financial position remains robust, with substantial cash reserves and no long-term debt.

Financial Highlights

48 data points
Beta

Revenue

$1.67B

27.5% Gross Margin

Net Income

$96.11M

5.8% Net Margin

EPS (Diluted)

$0.44

Total Assets

$2.72B

Cash & Equivalents

$1.06B

Free Cash Flow

$113.02M

Financial Statements
Beta
Revenue$1.67B
Gross Profit$458.74M
Operating Expenses$1.51B
Operating Income$159.62M
Interest Expense$140K
Net Income$96.11M
EPS (Basic)$0.45
EPS (Diluted)$0.44
Shares Outstanding (Basic)212.39M
Shares Outstanding (Diluted)216.34M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2010, increased to $4.39 billion, up from $2.85 billion in the same period of 2009, reflecting a strong recovery in global trade volumes.
  • 2Net earnings attributable to shareholders grew significantly to $247.7 million for the nine-month period, compared to $171.1 million in the prior year.
  • 3Diluted earnings per share rose to $1.14 for the nine-month period, up from $0.79 in the same period of 2009.
  • 4Operating income saw a substantial increase of 45% to $398.7 million for the nine months ended September 30, 2010.
  • 5The company maintained a strong liquidity position with $1.06 billion in cash and cash equivalents and no long-term debt as of September 30, 2010.
  • 6Airfreight services net revenues increased by 31% and ocean freight services net revenues by 16% for the nine-month period, driven by higher tonnage and container volumes.
  • 7The company is actively managing ongoing legal proceedings, incurring costs but maintaining its defense, with no quantifiable estimate of potential loss at this time.

Frequently Asked Questions

The significant increase in revenue was primarily driven by the recovery of global economic conditions, which led to substantial improvements in airfreight tonnage (up 42%) and ocean freight volume as measured by container equivalents (up 23%). This indicates a strong rebound in international trade activity, benefiting Expeditors' core logistics services.

Expeditors International maintains a very strong financial position. As of September 30, 2010, the company had no long-term debt and held $1.06 billion in cash and cash equivalents. This robust liquidity provides significant financial flexibility and resilience.

Expeditors is involved in several ongoing government investigations and class-action lawsuits concerning alleged anti-competitive behavior in the air cargo freight forwarding industry in the U.S., Europe, and Brazil. While the company is incurring legal costs and vigorously defending itself, it is currently unable to estimate the range of potential loss or damages. The company acknowledges that unfavorable rulings could materially harm its financial position and results of operations.

Total operating expenses increased in line with the revenue growth, but operating income grew at a faster pace (45% for the nine months). While salaries and related costs increased due to higher bonuses and employee numbers, they decreased as a percentage of net revenue. Other overhead expenses also increased but declined as a percentage of net revenue. This indicates improved operational leverage and profitability as volumes recovered.