Expeditors International of Washington (EXPD) Financials

Expeditors International of Washington (NASDAQ:EXPD) delivered strong year-over-year growth in Q2 2026, although cash conversion and liquidity weakened during the quarter. Revenue increased 32.1% year over year to $3.50 billion, while gross profit rose 19.8% to $511.8 million. Operating income increased 41.1% to $349.6 million, and net income attributable to common shareholders climbed 45.1% to $266.2 million. Basic earnings per share rose to $2.03 from $1.35.

The company’s operating margin improved to approximately 10.0% in Q2 2026 from 9.3% in Q2 2025, suggesting meaningful operating leverage. However, gross margin narrowed to about 14.6% from 16.1%, indicating that operating expense control, rather than gross-profit expansion, was the primary driver of profitability improvement. Revenue and earnings have also recovered substantially from 2023 and early 2024 levels, although they remain below the unusually strong results reported during 2022.

Expeditors continued to generate positive operating cash flow, but Q2 operating cash flow of $178.6 million was essentially flat compared with $179.2 million a year earlier and well below Q1 2026’s $309.2 million. A $123.4 million use of cash from operating assets and liabilities, compared with a $51.3 million use in Q2 2025, weighed on cash generation. The balance sheet remains largely debt-light, but cash fell to $1.03 billion from $1.32 billion at the end of Q1 after substantial share repurchases and dividend payments.

• Accelerating revenue and earnings: Q2 2026 revenue rose 32.1% year over year, while net income attributable to common shareholders increased 45.1%.
• Improved operating leverage: Operating income grew faster than revenue, lifting the operating margin to approximately 10.0% from 9.3%.
• Higher per-share results: Basic EPS increased to $2.03 from $1.35, supported by both stronger earnings and a lower share count.
• Continued shareholder returns: Expeditors repurchased $354.9 million of common stock in Q2 2026 and paid $106.6 million in dividends.
• Low financial leverage: The statements show limited debt activity, with only modest debt repayments and issuances compared with the company’s cash flow and equity base.
• Positive operating cash generation: The company produced $178.6 million in operating cash flow in Q2 and $487.9 million during the first half of 2026.
• Revenue recovery remains cyclical: Results have improved sharply from 2023 and 2024, but the freight and logistics business remains exposed to changing global trade volumes and pricing.
• Accounts receivable growth: Accounts receivable increased to $2.63 billion from $2.06 billion at the end of Q1, broadly alongside the revenue increase. Investors should monitor collections and working-capital efficiency.
• Weaker cash conversion: Q2 operating cash flow was nearly unchanged year over year despite much higher earnings, primarily because operating working capital consumed $123.4 million.
• Reduced liquidity after capital returns: Cash declined 21.6% from Q1 to $1.03 billion, while the current ratio fell from approximately 1.79 to 1.57. The decline reflects large buybacks and shareholder distributions rather than increased borrowing.