10-QPeriod: Q2 FY2020

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q2 Ended Jun 30, 2020

Filed August 6, 2020For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported a significant increase in revenues for the second quarter of 2020, largely driven by a surge in airfreight services. This growth was primarily due to unprecedented demand for time-sensitive deliveries of medical supplies and technology equipment, coupled with reduced airline capacity, leading to substantially higher freight rates. Despite the top-line growth, the company's financial performance was impacted by the broader economic disruptions caused by the COVID-19 pandemic. While airfreight boomed, ocean freight and customs brokerage services experienced declines. The company actively managed increased operating expenses related to higher airfreight buy rates and implemented a global business continuity and recovery plan to safeguard employees and operations. The company maintains a strong liquidity position with substantial cash and cash equivalents and expects current resources to be sufficient to meet its liquidity needs.

Financial Highlights

43 data points
Beta

Revenue

$2.41B

Net Income

$183.87M

7.6% Net Margin

EPS (Diluted)

$1.09

Total Assets

$3.81B

Cash & Equivalents

$1.18B

Free Cash Flow

$186.72M

Financial Statements
Beta
Revenue$2.41B
Operating Expenses$2.16B
Operating Income$247.63M
Net Income$183.87M
EPS (Basic)$1.10
EPS (Diluted)$1.09
Shares Outstanding (Basic)166.77M
Shares Outstanding (Diluted)169.29M

Key Highlights

  • 1Total revenues increased by 27% year-over-year to $2.58 billion for the three months ended June 30, 2020.
  • 2Airfreight services revenue saw a substantial increase of 93% to $1.43 billion due to significantly higher average sell rates.
  • 3Ocean freight and ocean services revenue decreased by 10% to $491.7 million, impacted by lower container volumes.
  • 4Customs brokerage and other services revenue decreased by 13% to $654.3 million, also affected by pandemic-related slowdowns.
  • 5Operating income increased by 29% to $247.6 million, driven by the strong performance in airfreight services.
  • 6Net earnings attributable to shareholders rose by 20% to $183.9 million, translating to diluted EPS of $1.09.
  • 7The company reported strong liquidity with $1.18 billion in cash and cash equivalents as of June 30, 2020, with no long-term debt other than lease liabilities.

Frequently Asked Questions

The primary driver of revenue growth was the airfreight services segment. This was due to a surge in demand for time-sensitive deliveries of medical supplies and technology equipment, combined with a significant reduction in airline capacity. This imbalance led to unprecedented increases in both average buy and sell rates for airfreight.

The pandemic had a mixed impact. Airfreight services saw a significant boom due to specific demands and reduced capacity. However, ocean freight and ocean services, as well as customs brokerage and other services, experienced revenue declines due to general slowdowns in global trade and business disruptions.

Expeditors maintained a strong liquidity position with $1.18 billion in cash and cash equivalents as of June 30, 2020. The company had no long-term debt other than recorded lease liabilities, indicating a healthy balance sheet.

The company expects the disruptive conditions caused by the COVID-19 pandemic to continue throughout the remainder of 2020. They have implemented a global business continuity and recovery plan and are monitoring the rapidly changing situation to adapt operations as needed.