10-QPeriod: Q3 FY2015

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2015

Filed November 5, 2015For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported solid financial results for the nine months ended September 30, 2015, demonstrating year-over-year growth in both revenues and net earnings. Total revenues increased by 4.7% to $5.02 billion, driven by an increase in airfreight and ocean freight services, while net earnings attributable to shareholders rose by 23.3% to $342.8 million. This performance reflects the company's ability to navigate competitive market conditions by effectively managing both sell rates and buy rates, particularly in its net revenue generation, which serves as a key operational metric. The company maintained a strong liquidity position with a significant amount of cash and cash equivalents and no long-term debt. Expeditors also continued its commitment to returning value to shareholders through share repurchases and dividend payments. Despite a challenging global economic environment and intense competition in the logistics industry, Expeditors' focus on organic growth, superior customer service, and a unique corporate culture appears to be driving positive financial outcomes.

Financial Highlights

43 data points
Beta

Revenue

$1.65B

Net Income

$118.31M

7.2% Net Margin

EPS (Diluted)

$0.62

Total Assets

$2.83B

Cash & Equivalents

$968.68M

Free Cash Flow

$132.68M

Financial Statements
Beta
Revenue$1.65B
Operating Expenses$1.46B
Operating Income$191.89M
Net Income$118.31M
EPS (Basic)$0.63
EPS (Diluted)$0.62
Shares Outstanding (Basic)188.42M
Shares Outstanding (Diluted)189.64M

Key Highlights

  • 1Net earnings attributable to shareholders increased by 23.3% to $342.8 million for the nine months ended September 30, 2015, compared to $277.5 million in the prior year period.
  • 2Total revenues grew by 4.7% to $5.02 billion for the nine months ended September 30, 2015, compared to $4.80 billion in the prior year period.
  • 3The company reported strong net revenue growth in airfreight services (up 16%) and ocean freight services (up 20%) for the nine months ended September 30, 2015.
  • 4Expeditors maintained a robust balance sheet with $968.7 million in cash and cash equivalents and no long-term debt as of September 30, 2015.
  • 5The company actively repurchased shares, using $415.5 million for repurchases during the nine months ended September 30, 2015.
  • 6Diluted earnings per share increased to $1.79 for the nine months ended September 30, 2015, from $1.40 in the prior year period.

Frequently Asked Questions

For the nine months ended September 30, 2015, Expeditors saw increased revenues in airfreight services (3% growth) and customs brokerage and other services (6% growth), while ocean freight and ocean services saw a 6% increase in revenue driven by higher volumes and sell rates compared to the prior year. Net revenues, a key metric for operational performance, showed significant growth in airfreight services (16%) and ocean freight services (20%), indicating improved efficiency and margin management.

Expeditors maintained a strong financial position as of September 30, 2015. The company held $968.7 million in cash and cash equivalents and had no long-term debt. Net cash provided by operating activities was $448.8 million for the first nine months of 2015, indicating healthy cash generation. Management believes its current cash position and operating cash flows are sufficient to meet its liquidity needs.

Expeditors is actively returning capital to shareholders. During the nine months ended September 30, 2015, the company spent $415.5 million on share repurchases to reduce the number of outstanding shares. Additionally, the company declared and paid dividends totaling $0.36 per share for the period, indicating a commitment to both share price appreciation and direct shareholder returns.

Operating income increased significantly by 33.5% for the nine months ended September 30, 2015, to $543.5 million. This was primarily driven by strong growth in net revenues across its services, particularly in airfreight and ocean freight, coupled with effective management of overhead expenses, which decreased as a percentage of net revenues. The company's ability to leverage its purchasing power and manage sell rates effectively contributed to improved profitability.