10-QPeriod: Q1 FY2015

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q1 Ended Mar 31, 2015

Filed May 7, 2015For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported a strong first quarter for 2015, demonstrating robust growth across its key service lines. Total revenues increased by 12.5% to $1.68 billion, driven by significant gains in airfreight and ocean freight services. Net earnings attributable to shareholders rose by 27.6% to $106.7 million, translating to diluted earnings per share of $0.55, a notable increase from $0.42 in the prior year's quarter. This performance was fueled by volume increases, particularly in airfreight tonnage and ocean container volumes, along with improved net revenue per unit in certain segments. The company's financial health remains solid, with total assets growing to $2.94 billion and shareholders' equity increasing to $1.92 billion. Notably, the company maintained a strong liquidity position with over $1 billion in cash and cash equivalents and no long-term debt, indicating financial flexibility. Management expressed confidence in the company's ability to meet its liquidity and capital requirements, supported by consistent operating cash flows. The strategic focus on organic growth, superior customer service, and a robust corporate culture appears to be driving positive financial outcomes.

Financial Highlights

41 data points
Beta

Revenue

$1.68B

Net Income

$106.70M

6.4% Net Margin

EPS (Diluted)

$0.55

Total Assets

$2.94B

Cash & Equivalents

$1.03B

Free Cash Flow

$134.39M

Financial Statements
Beta
Revenue$1.68B
Operating Expenses$1.51B
Operating Income$168.88M
Net Income$106.70M
EPS (Basic)$0.56
EPS (Diluted)$0.55
Shares Outstanding (Basic)191.63M
Shares Outstanding (Diluted)192.71M

Key Highlights

  • 1Total revenues increased by 12.5% to $1.68 billion in Q1 2015 compared to Q1 2014.
  • 2Net earnings attributable to shareholders grew by 27.6% to $106.7 million.
  • 3Diluted earnings per share (EPS) increased to $0.55 from $0.42 year-over-year.
  • 4Airfreight services revenues increased by 9% and net revenues by 18%, driven by a 13% increase in tonnage.
  • 5Ocean freight and ocean services revenues rose by 21% and net revenues by 18%, supported by a 12% increase in container volume.
  • 6The company maintained a strong liquidity position with $1.03 billion in cash and cash equivalents and no long-term debt.
  • 7Operating income increased by 24.9% to $168.9 million.

Frequently Asked Questions

Revenue growth was primarily driven by increased volumes in both airfreight services (13% increase in tonnage) and ocean freight services (12% increase in container volume). Additionally, the company saw improved net revenue per unit in airfreight and an increase in average sell rates for ocean freight due to market conditions and pricing strategy adjustments.

Salaries and related costs increased by 9% year-over-year, largely due to an increase in the number of employees in North America and Europe. However, as a percentage of net revenues, these costs decreased by 2%, reflecting the company's compensation philosophy which aligns employee incentives with operating profit. Bonuses increased by 24% reflecting the 25% rise in operating income.

Expeditors maintains a very strong financial position. As of March 31, 2015, the company had $1.03 billion in cash and cash equivalents and short-term investments, with no long-term debt. Net cash provided by operating activities was $134 million for the quarter. Management believes its current cash position and operating cash flows are sufficient to meet its liquidity requirements for at least the next 12 months and beyond.

The company is involved in routine legal matters that arise in the ordinary course of business. Management believes, based on legal advice, that none of these matters are expected to have a significant effect on the company's operations, cash flows, or financial position. Accrued amounts for these matters are not significant.