10-QPeriod: Q3 FY2014

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed November 6, 2014For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported solid revenue growth in the third quarter and first nine months of 2014, driven by increases in airfreight, ocean freight, and customs brokerage services. Net earnings attributable to shareholders saw a healthy increase, reflecting improved operational efficiency and effective cost management. The company demonstrated strong operating income growth, particularly in its airfreight and ocean freight segments, despite some margin pressure due to competitive market conditions and fluctuating buy/sell rates. The balance sheet indicates robust liquidity, with substantial cash and cash equivalents and short-term investments. While accounts receivable increased, the company's proactive management of working capital and lack of long-term debt suggest a stable financial position. Expeditious continued its commitment to shareholder returns through significant share repurchases and semi-annual dividends, underscoring a focus on enhancing shareholder value.

Financial Highlights

44 data points
Beta

Revenue

$1.71B

Net Income

$102.38M

6.0% Net Margin

EPS (Diluted)

$0.53

Total Assets

$2.93B

Cash & Equivalents

$990.48M

Free Cash Flow

$86.69M

Financial Statements
Beta
Revenue$1.71B
Operating Expenses$1.55B
Operating Income$159.13M
Net Income$102.38M
EPS (Basic)$0.53
EPS (Diluted)$0.53
Shares Outstanding (Basic)194.42M
Shares Outstanding (Diluted)195.00M

Key Highlights

  • 1Total revenues increased by 11% to $1.71 billion for Q3 2014 and by 7.6% to $4.80 billion for the nine months ended September 30, 2014, compared to the prior year periods.
  • 2Net earnings attributable to shareholders grew by 11% to $102.4 million in Q3 2014 and by 4.7% to $277.5 million for the nine months ended September 30, 2014.
  • 3Operating income increased by 8.8% to $159.1 million for Q3 2014 and by 4.4% to $436.8 million for the nine months ended September 30, 2014.
  • 4Airfreight services revenue grew 9% in Q3 and 6% year-to-date, driven by increased tonnage, while ocean freight and ocean services revenue increased 14% in Q3 and 10% year-to-date.
  • 5The company repurchased a significant number of shares, totaling 2.8 million in Q3 2014, and paid a semi-annual dividend of $0.32 per share.
  • 6The company maintained a strong liquidity position with $1.03 billion in cash, cash equivalents, and short-term investments as of September 30, 2014, and no long-term debt.

Frequently Asked Questions

Expeditors' revenue growth is primarily driven by increased volumes across its core services: airfreight, ocean freight and ocean services, and customs brokerage and other services. The company benefits from strong demand in international trade and its ability to consolidate shipments and negotiate favorable rates with carriers.

Expeditors is managing its expenses through a combination of efficient operations and strategic cost control. While some overhead expenses increased due to investments in systems and organizational changes, the company has maintained a consistent relationship between salaries and net revenues due to its performance-based compensation philosophy. The net revenue margin has been impacted by competitive pressures and fluctuating buy/sell rates, but overall profitability remains strong.

Expeditors exhibits a strong financial health with no long-term debt and a substantial amount of cash and cash equivalents ($990.5 million) and short-term investments ($40.3 million) as of September 30, 2014. Operating cash flows are robust, indicating the company's ability to meet its liquidity requirements.

Expeditors enhances shareholder value through a combination of share repurchases and dividend payments. The company actively repurchases its stock to reduce outstanding shares and has a consistent policy of paying semi-annual dividends, demonstrating a commitment to returning capital to its shareholders.