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Expeditors (EXPD) Misses on Q2 Earnings, Revenues in Line

Zacks Equity Research

Expeditors International of Washington Inc. (EXPD) reported second-quarter 2014 adjusted earnings of 46 cents per share, missing the Zacks Consensus Estimate of 47 cents. Results, however, improved 2% from the year-ago earnings of 45 cents per share.


Expeditors International Of Washington, Inc - Earnings Surprise | FindTheBest

Total revenue rose 6% year over year to $1.6 billion and were in line with the Zacks Consensus Estimate. Steady air and ocean freight volumes along with a good show in the customs brokerage business boosted the company's performance in the quarter.

Gross profit (net revenue) increased 3% year over year in the quarter to $484.7 million. Gross margin (yield) was 30.3%, down from 31.4% in the year-ago quarter.

In the second quarter, operating expense rose 7.1% to $1.5 billion while operating income dropped 1% to $142.4 million.

Revenue Segments                                                         

Airfreight Services revenues improved 3.8% year over year to $667.3 million in the second quarter.

Ocean Freight and Ocean Services revenues increased 9% year over year to $536.4 million.

Customs Brokerage and Other Services revenues rose 7.4% year over year to $395.4 million.


Expeditors’ exited the second quarter with cash and cash equivalents of $970.6 million as compared to $1,247.6 million at the end of 2013. Operating cash flows were $44.9 million versus $84 million in the prior-year quarter.

Our Analysis

We believe continued strength in the airfreight business owing to growing trade between the U.S. and China places the company favorably in the freight forwarding and customer brokerage business. Further, Expeditors’ growing supply chains and cost-control measures should support revenue and margin expansion going forward.

Nevertheless, we remain cautious about competitive threats from other logistic companies like CH Robinson Worldwide Inc. (CHRW), FedEx Corporation (FDX) and Radiant Logistics, Inc. (RLGT) along with weak consumer and business demand as well as higher freight rates charged by third party carriers which might hurt the company’s revenues.

Zacks Rank and Other Stocks

Currently, Expeditors carries a Zacks Rank #3 (Hold).

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