Expeditors International of Washington, Inc. (EXPD) Bundle
Understanding Expeditors International of Washington, Inc. (EXPD) Revenue Streams
Understanding Expeditors International of Washington, Inc. Revenue Streams
Expeditors International of Washington, Inc. (EXPD) generates revenue through three primary segments: airfreight services, ocean freight and ocean services, and customs brokerage and other services. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in $000) | Q3 2023 Revenue (in $000) | Year-over-Year Growth (%) | 9M 2024 Revenue (in $000) | 9M 2023 Revenue (in $000) | Year-over-Year Growth (%) |
|---|---|---|---|---|---|---|
| Airfreight Services | 986,950 | 724,331 | 36% | 2,606,647 | 2,380,405 | 10% |
| Ocean Freight and Ocean Services | 1,017,618 | 560,281 | 82% | 2,240,079 | 1,851,389 | 21% |
| Customs Brokerage and Other Services | 995,563 | 905,389 | 10% | 2,799,084 | 2,790,548 | 0% |
| Total Revenues | 3,000,131 | 2,190,001 | 37% | 7,645,810 | 7,022,342 | 9% |
Year-over-Year Revenue Growth Rate
The overall revenue for the third quarter of 2024 increased by 37% compared to the same quarter in 2023. The nine-month revenue growth was reported at 9% year-over-year.
Contribution of Different Business Segments to Overall Revenue
As of Q3 2024, the contributions from each segment to total revenue are as follows:
- Airfreight Services: 33% of total revenue
- Ocean Freight and Ocean Services: 34% of total revenue
- Customs Brokerage and Other Services: 33% of total revenue
Analysis of Significant Changes in Revenue Streams
The ocean freight and ocean services segment saw a significant increase in revenue, up 82% in Q3 2024, primarily driven by higher average sell and buy rates alongside increased shipment volumes. The airfreight segment also demonstrated strong growth, with revenues rising by 36% in Q3 2024, attributed to increased tonnage and demand for airfreight services.
In contrast, customs brokerage revenues remained relatively stable with only a 10% increase in Q3 2024 compared to Q3 2023. The flat growth in this segment suggests potential market saturation or competitive pressures affecting pricing and volume growth.
Overall, the company's diversified revenue streams have positioned it well to capitalize on varying market demands, with ocean freight consolidation representing a significant portion of revenue derived from ocean freight services.
A Deep Dive into Expeditors International of Washington, Inc. (EXPD) Profitability
Profitability Metrics
Gross Profit Margin: The gross profit for the nine months ended September 30, 2024, was $2,478,858, with total revenues of $7,645,810. This results in a gross profit margin of approximately 32.5%.
Operating Profit Margin: Operating income for the same period was $740,219. Thus, the operating profit margin is about 9.7%.
Net Profit Margin: Net earnings attributable to shareholders were $574,195 for the nine months ended September 30, 2024. This gives a net profit margin of approximately 7.5%.
Trends in Profitability Over Time
From the nine months ended September 30, 2023, to the same period in 2024, the gross profit increased from $2,478,858 to $2,478,858, while operating income rose from $740,535 to $740,219, indicating a slight decrease in operating efficiency.
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin in the logistics and transportation industry typically ranges from 20% to 30%. With a gross profit margin of 32.5%, the company outperforms the industry average.
The operating profit margin for the industry averages around 7% to 9%. The company's operating profit margin of 9.7% indicates a strong operational performance relative to its peers.
Net profit margins in the industry generally hover between 5% and 7%. The company’s net profit margin of 7.5% places it favorably within the market.
Analysis of Operational Efficiency
Cost management is crucial for maintaining profitability. The total operating expenses for the nine months ended September 30, 2024, were $6,905,591. This includes:
- Cost of Transportation and Other Expenses: $5,166,652
- Salaries and Other Operating Expenses: $1,738,939
The gross margin trend shows a slight increase, indicating effective cost control and operational efficiency, as evidenced by the relatively stable operating income.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Gross Profit | $2,478,858 | $2,478,858 |
| Operating Income | $740,219 | $740,535 |
| Net Earnings | $574,195 | $592,634 |
| Gross Profit Margin | 32.5% | 32.5% |
| Operating Profit Margin | 9.7% | 10.0% |
| Net Profit Margin | 7.5% | 8.4% |
The company continues to demonstrate strong profitability metrics, with effective cost management contributing to its operational efficiency amidst fluctuating market conditions.
Debt vs. Equity: How Expeditors International of Washington, Inc. (EXPD) Finances Its Growth
Debt vs. Equity: How Expeditors International of Washington, Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, the company reported no long-term debt, with total borrowings under short-term credit lines amounting to $48 million. Additionally, the company had contingently liable standby letters of credit and guarantees totaling $87 million, primarily related to obligations of its foreign subsidiaries.
Debt-to-Equity Ratio:
The debt-to-equity ratio stands at 0.02, calculated from total liabilities of $48 million and total equity of approximately $2.36 billion. This ratio is significantly lower than the industry average of approximately 1.0, indicating a conservative approach to leveraging.
Recent Debt Issuances and Credit Ratings:
The company has not engaged in any recent debt issuances, maintaining a stable credit profile. It has consistently received favorable credit ratings, reflecting its strong balance sheet and low debt levels. The company’s credit ratings remain stable, with no downgrades reported.
Equity Funding:
In the nine months ended September 30, 2024, the company repurchased 5.1 million shares of common stock, returning approximately $140 million to shareholders. The company's equity at the end of the period was reported at $2.36 billion, showcasing a robust capital structure.
Balance Between Debt Financing and Equity Funding:
The company maintains a balanced approach between debt financing and equity funding, with a strong preference for equity funding to finance growth. The absence of long-term debt allows for flexibility in capital allocation, enabling investments in operational efficiency and strategic initiatives without the burden of interest payments.
| Financial Metric | Value |
|---|---|
| Total Short-Term Debt | $48 million |
| Contingent Liabilities (Standby Letters of Credit) | $87 million |
| Total Equity | $2.36 billion |
| Debt-to-Equity Ratio | 0.02 |
| Recent Share Repurchases | 5.1 million shares |
| Cash Returned to Shareholders | $140 million |
This financial structure reflects the company’s strategy to minimize financial risk while maximizing shareholder value through prudent capital management and a focus on operational excellence.
Assessing Expeditors International of Washington, Inc. (EXPD) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio, which measures the ability to cover short-term liabilities with short-term assets, stands at 2.30 as of September 30, 2024. The quick ratio, a more stringent measure excluding inventory, is at 2.15. These ratios indicate a strong liquidity position, well above the generally accepted benchmark of 1.0.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is reported at $1,707 million, with cash and cash equivalents constituting $1,293 million of this amount. This represents a decrease in working capital from $1,790 million in the previous quarter, primarily due to increased investments in operational growth.
Cash Flow Statements Overview
The cash flow statements reveal the following trends:
- Operating Cash Flow: For the three months ended September 30, 2024, cash from operations was $90 million, down from $190 million in the same period of 2023.
- Investing Cash Flow: Cash used in investing activities totaled $12.3 million for the third quarter of 2024, compared to $8 million for the same period in 2023.
- Financing Cash Flow: Cash used in financing activities was $76 million for the three months ended September 30, 2024, down from $229 million in the same quarter of the previous year.
Potential Liquidity Concerns or Strengths
Despite the decrease in cash from operations, the company maintains a robust cash position and no long-term debt, indicating strong liquidity. However, the significant investment in working capital may raise concerns regarding future cash flow if growth does not materialize as anticipated. The liquidity position is underpinned by $48 million in borrowings under unsecured bank lines of credit as of September 30, 2024, and $87 million in contingent liabilities from standby letters of credit.
| Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Current Ratio | 2.30 | 2.15 |
| Quick Ratio | 2.15 | 2.05 |
| Working Capital | $1,707 million | $1,790 million |
| Cash and Cash Equivalents | $1,293 million | $1,639 million |
| Operating Cash Flow (Q3) | $90 million | $190 million |
| Investing Cash Flow (Q3) | ($12.3 million) | ($8 million) |
| Financing Cash Flow (Q3) | ($76 million) | ($229 million) |
Management expresses confidence that current cash flows and liquidity will sufficiently cover operational and capital needs for the foreseeable future.
Is Expeditors International of Washington, Inc. (EXPD) Overvalued or Undervalued?
Valuation Analysis
Is Expeditors International Overvalued or Undervalued?
The valuation of a company is often assessed using various financial ratios. For Expeditors International of Washington, Inc. (EXPD), key ratios as of the end of 2024 are as follows:
- Price-to-Earnings (P/E) Ratio: 22.1
- Price-to-Book (P/B) Ratio: 3.5
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 14.4
These ratios indicate the market's valuation relative to earnings, book value, and earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends Over the Last 12 Months
Over the past year, the stock price of Expeditors International has shown the following trends:
- 12-Month High: $130.00
- 12-Month Low: $94.50
- Current Stock Price: $124.75
- Year-to-Date Performance: +8.5%
The stock price has fluctuated within this range, reflecting market conditions and company performance.
Dividend Yield and Payout Ratios
Expeditors International has a consistent dividend policy, which can be summarized as follows:
- Annual Dividend Declared (2024): $1.46
- Current Dividend Yield: 1.17%
- Payout Ratio: 36.8%
The dividend yield and payout ratio indicate a balanced approach towards returning capital to shareholders while retaining earnings for growth.
Analyst Consensus on Stock Valuation
As of the end of 2024, analyst ratings for Expeditors International are as follows:
- Buy Ratings: 9
- Hold Ratings: 5
- Sell Ratings: 1
The consensus suggests a favorable outlook, with a majority of analysts recommending a buy or hold position on the stock.
Summary of Financial Ratios and Key Metrics
| Metric | Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 22.1 |
| Price-to-Book (P/B) Ratio | 3.5 |
| Enterprise Value-to-EBITDA (EV/EBITDA) | 14.4 |
| 12-Month High | $130.00 |
| 12-Month Low | $94.50 |
| Current Stock Price | $124.75 |
| Annual Dividend Declared | $1.46 |
| Current Dividend Yield | 1.17% |
| Payout Ratio | 36.8% |
| Buy Ratings | 9 |
| Hold Ratings | 5 |
| Sell Ratings | 1 |
Key Risks Facing Expeditors International of Washington, Inc. (EXPD)
Key Risks Facing Expeditors International of Washington, Inc.
The operational landscape for Expeditors International of Washington, Inc. is shaped by various internal and external risk factors that can significantly impact its financial health.
Industry Competition
Competition in the logistics industry is fierce, with numerous players vying for market share. The company operates in over 60 countries, making it vulnerable to price wars and aggressive marketing tactics from competitors. As of September 30, 2024, the revenues from airfreight services increased by 36% year-over-year, indicating a competitive market environment.
Regulatory Changes
Changes in governmental policies, including tariffs and trade restrictions, pose significant risks. The ongoing U.S.-China trade tensions may lead to additional tariffs, affecting the cost structure and pricing strategies. The company has noted that it cannot predict the outcome of regulatory changes and their potential impacts on business.
Market Conditions
The global economic environment remains uncertain, with inflationary pressures affecting operational costs. For the nine months ended September 30, 2024, the net cash provided by operating activities decreased to $474 million from $895 million in the same period of 2023. This reflects the impact of rising labor costs and service provider rates, which could erode profit margins.
Operational Risks
The company faces operational risks from disruptions in the supply chain, including geopolitical issues and natural disasters. For instance, the conflicts in the Middle East have shifted transportation demand from ocean to airfreight, complicating logistics planning. Tonnage increased by 19% during the three months ended September 30, 2024, compared to the same period in 2023, driven by these shifts.
Financial Risks
Financial health is contingent on effective credit management and liquidity. As of September 30, 2024, the company reported working capital of $1.707 billion and cash and cash equivalents of $1.293 billion. However, fluctuations in foreign exchange rates and interest rates could adversely affect financial results. The company experienced net foreign currency losses of approximately $11 million in the three months ended September 30, 2024.
Mitigation Strategies
To counteract these risks, the company maintains strong relationships with its carriers and partners to ensure stable service delivery. It also invests in technology and processes to enhance operational efficiency and reduce costs. The management's focus on aligning operational headcount with transactional volumes aims to manage overhead expenses effectively.
| Risk Factor | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | High competition leading to price wars | Potential decrease in market share | Strong branding and customer relationships |
| Regulatory Changes | Changes in tariffs and trade restrictions | Increased operational costs | Active monitoring of regulatory environment |
| Market Conditions | Economic uncertainties and inflation | Pressure on profit margins | Cost management and operational efficiency |
| Operational Risks | Supply chain disruptions | Increased logistics costs | Diverse transportation options and partnerships |
| Financial Risks | Foreign exchange and interest rate fluctuations | Potential financial losses | Effective credit management and liquidity monitoring |
Future Growth Prospects for Expeditors International of Washington, Inc. (EXPD)
Future Growth Prospects for Expeditors International of Washington, Inc.
Analysis of Key Growth Drivers
The company is positioned for future growth driven by several key factors:
- Market Expansion: The company operates in over 60 countries, which allows it to tap into various markets, especially in Asia and North America. Revenues from North Asia and South Asia ocean freight and ocean services increased by 135% and 164%, respectively, for the three months ended September 30, 2024, compared to the same period in 2023.
- Product Innovations: The company continues to expand its service offerings, particularly in airfreight and customs brokerage. Airfreight services revenues increased 36% during the three months ended September 30, 2024.
- Acquisitions: Strategic acquisitions and partnerships can enhance service capabilities and market reach, although specific recent acquisitions were not detailed in the reports.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections indicate a strong upward trend. For the nine months ended September 30, 2024, total revenues were reported at $7,645,810, up from $7,022,342 for the same period in 2023. Earnings attributable to shareholders increased by 34% compared to the third quarter of 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is focused on strengthening relationships with logistics partners and enhancing operational efficiencies. Recent investments in technology and security systems are expected to yield operational improvements. Additionally, the company emphasizes compliance and performance management with its service providers, which could lead to improved service delivery and customer satisfaction.
Competitive Advantages That Position the Company for Growth
The company benefits from several competitive advantages:
- Strong Financial Position: As of September 30, 2024, cash and cash equivalents totaled $1,293,173, providing liquidity for growth initiatives.
- Global Network: The extensive global network allows for efficient service delivery and responsiveness to market demands.
- Operational Efficiency: Continuous investments in technology and infrastructure enhance operational capabilities, evidenced by a 40% increase in operating income from the third quarter of 2023.
Comprehensive Financial Overview
| Metric | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Revenues | $2,190,001 | $3,000,131 | 37% |
| Operating Income | $216,069 | $301,524 | 40% |
| Net Earnings | $170,843 | $229,926 | 34% |
| Cash and Cash Equivalents | $1,639,428 | $1,293,173 | -21% |
The data demonstrates a robust performance trajectory, underpinned by effective management strategies and market positioning.
Expeditors International of Washington, Inc. (EXPD) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Expeditors International of Washington, Inc. (EXPD) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Expeditors International of Washington, Inc. (EXPD)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Expeditors International of Washington, Inc. (EXPD)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.