EXPEDITORS INTERNATIONAL OF WASHINGTON INC Annual Report - Your Investment Snapshot

Welcome to your investment snapshot of Expeditors International of Washington Inc. (Expeditors), a global leader in logistics. This summary cuts through the jargon to give you a clear picture of their business, financial health, and future outlook, helping you understand your investment or consider a potential one.

This report covers Expeditors' performance for the fiscal year that ended on December 31, 2025.

Business Overview: Expeditors: The Global Supply Chain Orchestrator

Expeditors operates as a third-party logistics provider (3PL), meaning it expertly manages the complex movement of goods worldwide without owning the planes, ships, or trucks themselves. This "asset-light" model is a cornerstone of their strategy. It offers flexibility, lower capital expenditures, and the ability to adapt quickly to market changes, though it also means the company relies on external carriers.

Expeditors' core services, tailored for larger, more complex shipping needs rather than small package delivery, include:

• Airfreight Services: Expeditors consolidates shipments from various customers to secure better rates and efficient air transport. They also act as agents for direct airfreight forwarding.
• Ocean Freight Services: The company arranges ocean transport for both full container loads (FCL) and less-than-container loads (LCL), leveraging its network with major shipping lines.
• Customs Brokerage and Other Services: Beyond transport, Expeditors navigates intricate customs regulations, offers warehousing, distribution, cargo insurance, and specialized solutions like "Project Cargo" for oversized or highly complex shipments requiring custom planning. This comprehensive suite provides clients with end-to-end supply chain management.

Competitive Position

Expeditors operates in a highly competitive global logistics market. The company gains its competitive edge from several key areas:

• Asset-Light Model: This model provides flexibility, reduces capital expenditure, and allows for rapid adaptation to market fluctuations and customer needs without the burden of owning and maintaining a large fleet of physical assets.
• Global Network and Expertise: A vast global network of offices and experienced personnel provides deep local market knowledge and the ability to manage complex supply chains across diverse geographies.
• Technology and Information Systems: Continuous investment in proprietary technology platforms enhances visibility, efficiency, and data analytics, offering customers sophisticated tools for supply chain management.
• Customer-Centric Approach: A strong emphasis on personalized customer service, tailored solutions, and long-term relationships helps differentiate Expeditors from competitors.
• Comprehensive Service Offering: The ability to provide an integrated suite of services—from air and ocean freight to customs brokerage, warehousing, and specialized project cargo—allows Expeditors to serve as a single-source provider for complex logistics requirements, fostering strong client loyalty.

The company competes with other global third-party logistics providers, freight forwarders, integrated carriers, and, to a lesser extent, direct shipping lines and airlines.

Financial Performance: A Look at the Numbers (Fiscal Year Ended December 31, 2025)

The past year presented a dynamic environment, and Expeditors navigated it with a focus on efficiency and client value.

• Revenue: Total revenue for 2025 reached $12.8 billion, a decrease of 15% compared to $15.1 billion in 2024. This decline primarily reflects the normalization of freight rates from pandemic-era highs and a general softening in global trade volumes.
• Net Income: Despite revenue pressures, Expeditors demonstrated strong cost management. The company reported Net Income of $1.2 billion, down 10% from $1.33 billion in 2024. This resulted in Diluted Earnings Per Share (EPS) of $7.25, compared to $7.80 in the prior year.
• Operating Margin: Expeditors maintained a healthy operating margin of approximately 9.5%, showcasing its ability to control costs even in a challenging market.
• Cash Flow: The company generated robust Operating Cash Flow of $1.5 billion, underscoring its strong liquidity and ability to fund operations, investments, and shareholder returns.

Financial Health

Expeditors ended the year with a strong financial position, including $2.5 billion in cash and cash equivalents and no significant long-term debt. This provides substantial financial flexibility. The company also returned $500 million to shareholders through dividends and share repurchases during the year.

Risk Factors

Investors should be aware of several key risks:

• Economic Downturns: Global economic slowdowns can significantly impact trade volumes.
• Trade Disruptions: Significant disruptions to international trade, such as port congestion or geopolitical conflicts, can affect operations.
• Cybersecurity Threats: The company faces ongoing risks from cybersecurity breaches.
• Intense Competition: Expeditors operates in a highly competitive market against other 3PLs, freight forwarders, integrated carriers, and direct shipping lines/airlines.
• Carrier Reliance: While flexible, the asset-light model means reliance on the capacity and pricing of third-party carriers.
• External Factors: Fluctuations in fuel prices, changes in trade policies and regulations, and the ability to attract and retain skilled personnel also represent ongoing risks.

Management Discussion (MD&A Highlights)

Market Dynamics: The logistics industry continues to face volatility from geopolitical events, fluctuating freight rates, and evolving consumer demand. Expeditors acknowledges ongoing challenges such as potential economic slowdowns in key markets, the impact of trade policies, and supply chain disruptions. Management focuses on adapting to these dynamics, leveraging the company's flexible model and global network to provide resilient solutions to clients.

Future Outlook

Looking ahead, Expeditors focuses on strategic initiatives to drive long-term growth and navigate future market complexities.

Strategic Priorities:

1. Technology Investment: Expeditors continues to invest in digital platforms and automation to enhance operational efficiency, improve customer visibility, and streamline processes. This includes leveraging data analytics for better decision-making and developing customer-facing tools.
2. Customer Diversification & Retention: The company aims to strengthen relationships with existing clients and expand into new sectors and geographies. This mitigates reliance on any single industry or market and involves focusing on high-value customer segments.
3. Service Enhancement: Expeditors is expanding specialized services like Project Cargo and value-added warehousing and distribution solutions. This captures higher-margin opportunities and provides more comprehensive supply chain solutions.
4. Sustainability: The company is increasing its focus on environmental, social, and governance (ESG) initiatives. These include optimizing routes for lower emissions, promoting ethical supply chain practices, and enhancing corporate social responsibility, which is becoming increasingly important for clients and investors.

Management's outlook emphasizes continued operational excellence and strategic investments to maintain profitability and market position.

Company Size and Valuation

As of February 19, 2026, Expeditors had approximately 133.5 million shares of common stock outstanding. The market value of their common stock held by non-affiliates was approximately $15.36 billion as of December 31, 2025, reflecting investor confidence in their long-term strategy and financial resilience.

Investor Takeaway

Expeditors demonstrated resilience in a challenging year. Revenue declined due to market normalization, but profitability remained strong thanks to effective cost management. Their asset-light model, robust cash flow, and debt-free balance sheet provide a solid foundation. Looking ahead, their strategic focus on technology, customer relationships, specialized services, and sustainability aims to position them for long-term growth and navigate future market complexities. Investors should monitor global trade conditions and the company's execution on its strategic initiatives.