10-QPeriod: Q1 FY2017

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 4, 2017For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported solid revenue growth in the first quarter of 2017, with total revenues increasing by 9% to $1.55 billion compared to the prior year. This growth was primarily driven by a 10% increase in airfreight services and a 9% rise in ocean freight and ocean services. Net revenue, a key performance indicator for the company, also saw a modest increase of 2% to $527.6 million, demonstrating the company's ability to manage its operational costs effectively amidst rising volumes. The company's operating income for the quarter was $146.1 million, a slight decrease from $151.8 million in the prior year. This was primarily due to increased operating expenses, including salaries and related costs, which rose by 3%, and other overhead expenses which increased by 9%. Despite these cost pressures, the company maintained a strong balance sheet with total assets of $2.9 billion and shareholders' equity of $1.95 billion. Cash and cash equivalents saw a significant increase of $181.6 million, ending the quarter at $1.16 billion, providing ample liquidity.

Financial Highlights

40 data points
Beta

Revenue

$1.55B

Net Income

$93.26M

6.0% Net Margin

EPS (Diluted)

$0.51

Total Assets

$2.90B

Cash & Equivalents

$1.16B

Free Cash Flow

$195.68M

Financial Statements
Beta
Revenue$1.55B
Operating Expenses$1.40B
Operating Income$146.11M
Net Income$93.26M
EPS (Basic)$0.52
EPS (Diluted)$0.51
Shares Outstanding (Basic)180.06M
Shares Outstanding (Diluted)182.09M

Key Highlights

  • 1Total revenues increased by 9% to $1.55 billion in Q1 2017 compared to Q1 2016.
  • 2Airfreight services revenue grew by 10%, driven by a 16% increase in tonnage.
  • 3Ocean freight and ocean services revenue increased by 9%, supported by a 7% rise in container volume.
  • 4Net revenues, a key profitability metric, increased by 2% to $527.6 million.
  • 5Operating income was $146.1 million, a slight decrease from $151.8 million year-over-year, impacted by higher operating expenses.
  • 6Cash and cash equivalents significantly increased by $181.6 million, reaching $1.16 billion.
  • 7The company repurchased 954,219 shares of common stock under its Non-Discretionary Stock Repurchase Plan during the quarter.

Frequently Asked Questions

Revenue growth was primarily driven by increases in airfreight services (up 10%) and ocean freight and ocean services (up 9%). This was supported by higher shipment volumes, specifically a 16% increase in tonnage for airfreight and a 7% increase in container volume for ocean freight.

Operating income saw a slight decrease from $151.8 million to $146.1 million primarily due to increased operating expenses. Salaries and related costs rose by 3% and other overhead expenses increased by 9%, which offset the revenue gains.

Expeditors maintained a strong liquidity position with cash and cash equivalents increasing by $181.6 million to $1.16 billion. The company had no long-term debt as of March 31, 2017, indicating a healthy balance sheet and strong financial flexibility.

The company faces intense competition, leading to pricing pressures and yield declines in certain services like airfreight and ocean freight consolidation. Expeditors is focusing on operational efficiency, leveraging its purchasing power, and differentiating through sophisticated technology and global network capabilities. They also note continued volatility in carrier pricing due to capacity management and market conditions.