10-QPeriod: Q3 FY2021

EXPEDITORS INTERNATIONAL OF WASHINGTON INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 4, 2021For Securities:EXPD

Summary

Expeditors International of Washington, Inc. (EXPD) reported robust financial performance for the nine months ended September 30, 2021, driven by significant revenue and net earnings growth compared to the same period in 2020. Total revenues surged by 69% to $11.13 billion, while net earnings attributable to shareholders increased by 93% to $962.7 million. This strong performance was largely fueled by unprecedented conditions in the air and ocean freight markets, characterized by high demand, constrained capacity, and significantly elevated average buy and sell rates. These factors led to substantial revenue and expense growth across all service segments, particularly airfreight and ocean freight services. The company's balance sheet as of September 30, 2021, shows a healthy increase in total assets to $7.08 billion, up from $4.93 billion at December 31, 2020. This growth is primarily attributed to substantial increases in current assets, including cash and cash equivalents, accounts receivable, and deferred contract costs. Current liabilities also rose significantly, reflecting increased accounts payable and contract liabilities. Despite these increases, the company maintained a strong liquidity position, with cash and cash equivalents reaching $1.82 billion. Management anticipates that its current cash position and operating cash flows will be sufficient to meet its liquidity and capital requirements.

Financial Highlights

43 data points
Beta

Revenue

$4.32B

Net Income

$359.07M

8.3% Net Margin

EPS (Diluted)

$2.09

Total Assets

$7.08B

Cash & Equivalents

$1.82B

Free Cash Flow

$177.37M

Financial Statements
Beta
Revenue$4.32B
Operating Expenses$3.83B
Operating Income$489.64M
Net Income$359.07M
EPS (Basic)$2.12
EPS (Diluted)$2.09
Shares Outstanding (Basic)169.63M
Shares Outstanding (Diluted)171.56M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2021, reached $11.13 billion, a 69% increase from $6.60 billion in the prior year period.
  • 2Net earnings attributable to shareholders for the nine months ended September 30, 2021, were $962.66 million, a 93% increase from $497.52 million in the prior year period.
  • 3Diluted earnings per share (EPS) for the nine months ended September 30, 2021, were $5.61, a significant increase from $2.92 in the prior year period.
  • 4Airfreight services revenue and expenses saw substantial increases of 54% and 57% respectively for the nine months ended September 30, 2021, driven by higher tonnage and significantly increased average sell and buy rates.
  • 5Ocean freight and ocean services revenue and expenses experienced even more dramatic increases of 130% and 143% respectively for the nine months ended September 30, 2021, due to soaring average rates and increased container shipments.
  • 6The company maintained a strong liquidity position with $1.82 billion in cash and cash equivalents as of September 30, 2021.
  • 7Operating income for the nine months ended September 30, 2021, more than doubled to $1.29 billion, a 95% increase from $658.63 million in the prior year period.

Frequently Asked Questions

The significant growth in revenue and earnings for the first nine months of 2021 was primarily driven by unprecedented conditions in the global air and ocean freight markets. These conditions included high demand, constrained capacity, and consequently, historically high average buy and sell rates. This environment led to substantial increases in both revenue and expenses across all service segments, particularly airfreight and ocean freight services.

Total assets increased to $7.08 billion as of September 30, 2021, from $4.93 billion at December 31, 2020. This increase was largely due to higher current assets, including cash and cash equivalents ($1.82 billion vs. $1.53 billion), accounts receivable, and deferred contract costs. Total current liabilities also increased significantly, primarily due to higher accounts payable and contract liabilities, reaching $3.28 billion as of September 30, 2021, compared to $1.89 billion at the end of 2020. Despite the growth in liabilities, the company maintained a strong working capital position.

Management believes that the current cash position and operating cash flows are sufficient to meet the company's capital and liquidity requirements for at least the next 12 months and into the foreseeable future. The company anticipates that the disruptive market conditions, characterized by high rates and constrained capacity, are expected to continue at least through the first half of 2022. However, these unprecedented operating conditions are not expected to be sustained long-term, and the company is unable to predict the exact impact of these uncertainties on future operations or financial results.

The filing highlights several risks, including the potential adverse impact of any reduction in international commerce or disruption in global trade. Intense competition in the global logistics services industry is also a significant factor. Operational risks related to employee retention, reliance on service providers (carriers) with potentially insufficient capacity, and the inability to meet customer needs due to market constraints are also noted. The ongoing impacts of the pandemic, supply chain disruptions, and potential changes in governmental policies and trade regulations are also identified as key uncertainties.