10-QPeriod: Q2 FY2013

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 8, 2013For Securities:EXPD

Summary

Expeditors International of Washington Inc. (EXPD) reported solid financial results for the six months ended June 30, 2013. Total revenues remained stable year-over-year, while net earnings attributable to shareholders saw a notable increase of 7.4% to $172.6 million from $160.7 million in the prior year period. This improved profitability was driven by a combination of increased operating income, effective cost management, and a slightly lower effective tax rate. The company demonstrated strong operational performance, particularly in its Airfreight and Ocean freight services, which benefited from improved net revenue margins. Despite some revenue pressures in ocean freight due to excess carrier capacity and pricing competition, Expeditors effectively leveraged its purchasing power to enhance profitability. The company maintained a healthy liquidity position with substantial cash and cash equivalents, and notably, no long-term debt, underscoring its financial stability. Management expressed confidence in the company's ability to meet its liquidity and capital requirements for the foreseeable future.

Financial Highlights

44 data points
Beta

Revenue

$1.50B

Net Income

$92.31M

6.1% Net Margin

EPS (Diluted)

$0.45

Total Assets

$3.06B

Cash & Equivalents

$1.29B

Free Cash Flow

$84.03M

Financial Statements
Beta
Revenue$1.50B
Operating Expenses$1.36B
Operating Income$143.58M
Net Income$92.31M
EPS (Basic)$0.45
EPS (Diluted)$0.45
Shares Outstanding (Basic)206.44M
Shares Outstanding (Diluted)207.19M

Key Highlights

  • 1Net earnings attributable to shareholders increased by 7.4% to $172.6 million for the six months ended June 30, 2013.
  • 2Total revenues remained stable year-over-year at approximately $2.92 billion for the six months ended June 30, 2013.
  • 3Operating income grew by 5.6% to $272.1 million for the six months ended June 30, 2013.
  • 4The company maintained a strong liquidity position with $1.38 billion in cash, cash equivalents, and short-term investments as of June 30, 2013.
  • 5Expeditors has no long-term debt, indicating a strong balance sheet and financial flexibility.
  • 6Net revenues for Airfreight services increased 4% in the second quarter and 1% year-to-date, driven by tonnage growth.
  • 7Ocean freight net revenues saw a 5% increase in the second quarter and 2% year-to-date, benefiting from favorable buying opportunities and volume increases.

Frequently Asked Questions

Total revenues for the six months ended June 30, 2013, were $2,910,938,000, which was slightly down from $2,916,322,000 in the same period of 2012. While overall revenue was relatively flat, the company focused on improving net revenue (a non-GAAP measure representing revenues less directly related operational expenses), which increased to $914.4 million from $900.2 million, indicating better margin management.

Expeditors exhibits strong financial health. As of June 30, 2013, the company had no long-term debt. Its liquidity remains robust with $1.38 billion in cash, cash equivalents, and short-term investments. Net cash provided by operating activities for the six months was $249.3 million, indicating strong operational cash generation.

Airfreight services net revenues increased 4% in the second quarter and 1% year-to-date, primarily due to higher tonnage. Ocean freight services net revenues increased 5% in the second quarter and 2% year-to-date, driven by favorable buying opportunities and volume increases, despite revenue pressure from excess carrier capacity. Customs brokerage and other services net revenues increased 2% for both periods, mainly due to higher volumes from existing and new customers.

Expeditors operates globally and is exposed to foreign exchange risk. For the six months ended June 30, 2013, a hypothetical 10% weakening of the U.S. dollar would have increased operating income by approximately $19 million, while a 10% strengthening would have reduced it by approximately $15 million. The company does not extensively use derivative financial instruments for hedging and primarily manages this risk by accelerating international currency settlements.