Expeditors International’s 8-K

Expeditors (EXPD) just released its latest 8-K report. If you’re not familiar with Expeditors—or for that matter, 8-K reports—I encourage you to give it a read. The company uses these public disclosure reports to answer questions from analysts and shareholders. Their answers are anything but your standard corporate boilerplate. I look at boring reports all day long and trust me—nobody does anything quite like this. Here are some examples:

While we’re on this topic, it is our observation that some seem to believe that if there are no backlogs at the ports and/or airports, we must not be experiencing a very strong peak season. It may just be us, but having a fair number of “peak season” scars on our back, we think that this perception is incorrect. The logic behind this assertion makes about as much sense as the postman only facing a challenging canine situation as they are being bitten.
Postal carriers are obviously smarter than this, and are renowned for taking proper evasive action in order to deliver the mail under any four-legged situation. They quickly and fully understand that once a set of incisors are imbedded in your gluteus maximus, the time for planning is long gone. At this stage, it’s too late to solve the problem, and you’re relegated to hoping you can manage your way through it.
Just as the growling or simply prowling canine custodian on the front porch sends a message to the postman of potential trouble ahead, a supply chain sends out “peak season” growls of its own and these typically happen long before we are in the teeth of a substantial backlog. The attentive and attuned managers, like the astute postman, will move to mitigate their exposure, rather than plowing blindly forward hoping to avoid being bitten.

And later, the company takes a shot at the “Street high” forecast.

You did not comment on the fourth quarter 2005 outlook this time; sometimes you do and I am aware that normally the third and fourth quarter are fairly similar. Anything different with this trend?
We did not provide color in our third quarter 2005 earnings concerning the outlook for the fourth quarter largely because we wouldn’t really know what to say at this point. The concern is that we really don’t know whether what we experienced during the third quarter was a meaningful trend that will carry forward into the fourth quarter or was a material acceleration of the shipping patterns from what we would typically expect to handle in the fourth quarter in anticipation of the possibility that extra transit time would be required. From a freight volume standpoint, October 2005 was a very strong month, as it usually is, but making any comment about the fourth quarter requires us to read the “tea leaves” as it were with respect to the last two months of 2005.
That all having been said, if we had to make estimates, and we don’t, we would not automatically get overly aggressive with a fourth quarter estimate. We also have to wonder about the motives of someone who is way outside the group consensus. Is $.54 a real estimate or is it a transposition of $.45 that pride will not allow you to correct? We know that $.54 is way above the other estimates, we just wonder why? This is especially true given the underlying opinion of the stock.

I think you can see why I feel more confident about investing in a company like this.

Posted by on November 15th, 2005 at 6:03 am


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