10-QPeriod: Q2 FY2021

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 5, 2021For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported strong financial results for the second quarter and first half of 2021, demonstrating significant growth across its key service lines, driven by sustained high demand and capacity constraints in global logistics. Total revenues surged by 50% to $3.61 billion for the quarter and 97% to $6.81 billion for the six months, reflecting robust increases in airfreight, ocean freight, and customs brokerage services. Despite increased operating expenses, largely due to higher transportation costs resulting from market dynamics, the company achieved substantial operating income growth. Operating income rose 66% to $410.6 million for the quarter and 96% to $796.2 million for the six months. This strong performance underscores Expeditors' ability to navigate complex supply chain environments and capitalize on market opportunities, while its commitment to employee performance and an adaptive culture continues to be a key differentiator.

Financial Highlights

43 data points
Beta

Revenue

$3.61B

Net Income

$316.37M

8.8% Net Margin

EPS (Diluted)

$1.84

Total Assets

$5.95B

Cash & Equivalents

$1.67B

Free Cash Flow

$30.30M

Financial Statements
Beta
Revenue$3.61B
Operating Expenses$3.20B
Operating Income$410.64M
Net Income$316.37M
EPS (Basic)$1.87
EPS (Diluted)$1.84
Shares Outstanding (Basic)169.21M
Shares Outstanding (Diluted)171.68M

Key Highlights

  • 1Total revenues increased significantly, reaching $3.61 billion for Q2 2021 and $6.81 billion for the first six months of 2021, representing growth of 50% and 97% year-over-year, respectively.
  • 2Ocean freight and ocean services saw exceptional growth, with revenues up 124% in Q2 and 109% for the six months, driven by a substantial increase in average sell and buy rates and higher container volumes.
  • 3Airfreight services revenues grew by 20% for Q2 and 48% for the six months, reflecting increased tonnage and higher average sell/buy rates.
  • 4Customs brokerage and other services demonstrated solid growth, with revenues up 51% for Q2 and 41% for the six months, fueled by increased shipments and demand for brokerage services.
  • 5Operating income saw a substantial increase, up 66% to $410.6 million for Q2 and 96% to $796.2 million for the six months, indicating effective cost management amidst rising expenses.
  • 6Net earnings attributable to shareholders grew by 72% to $316.4 million for Q2 and 97% to $603.6 million for the six months.
  • 7The company repurchased $148.5 million of its common stock in the first six months of 2021 as part of its ongoing Discretionary Stock Repurchase Plan.

Frequently Asked Questions

Expeditors' revenue growth was primarily driven by strong demand across all service lines, particularly in ocean and airfreight, coupled with capacity constraints in the global logistics market. These conditions led to significantly higher average sell and buy rates, especially for ocean freight services, and increased shipment volumes.

While operating expenses increased, largely due to higher directly related transportation costs driven by market conditions, Expeditors managed to significantly grow its operating income. This suggests that the company was able to effectively pass on increased costs to customers through higher sell rates, while also benefiting from its operational model and employee performance, as reflected in the compensation structure tied to profitability.

The company anticipates that current challenging market conditions, characterized by high demand, capacity constraints, and pricing volatility, will continue at least for the remainder of 2021. While these conditions have significantly contributed to recent financial performance, Expeditors notes that these unprecedented operating conditions are not expected to be sustained long-term and are actively managing capacity and customer needs.

Expeditors continued its Discretionary Stock Repurchase Plan, repurchasing 0.5 million shares in Q2 2021 and 1.4 million shares in the first six months of 2021. This is part of a long-term strategy to reduce the number of outstanding shares.