The Bitchiest 8-K Report

I bet you didn’t know SEC filings could have such a nasty attitude. Check out this Q&A from Expeditors‘ (EXPD) 8-K report:

20. You are generating a lot of cash and you are increasing the dividend. Your working capital is strong, etc. The balance sheet is probably the best in the transportation industry, so what else do you with the cash? You have always reinvested in the business, but you must be getting to the point where there is little else to invest in. Are there locations where you can open other offices? What’s next for your company? Where do you go from here? Is it more of the same in terms of growth? How should we think about the company going forward in terms of next steps? I know it’s an open-ended, broad question, but you have been one of the few companies that have consistently delivered on growth, on promises, etc., and the company has obviously shifted to a level of growth that your peer group has never been able to match. Thanks for indulging the question.
This was not an “open-ended, broad question” it was an interrogation that left us exhausted just reading it. We did not ‘indulge” your question, we endured it.
As much as we love being asked what we are going to do with the cash, we wonder why you don’t look to see what we have done so far? Last year, we generated approximately $280 million in cash flow from operating activities. We bought back $127 million worth of stock and paid out $32 million in dividends and we invested another $91 million into the business via capital expenditures. We ended the year 2005 with $55 million in additional cash. All in all, we think that was a pretty good use of cash.
This year, we estimate that we are going to use about $130 million for capital expenditures and as you note we’ve just raised the dividend to a level that means we might spend about $45 million on dividends. As to stock repurchases we would expect to spend at least as much as we did last year in keeping with our current goal of keeping our outstanding share count relatively flat.
As for the rest of your question, there are many locations where the company can and will open. As our same store sales figures demonstrate, new offices are not the story behind our historical growth and as we have said before, they do not require massive capital outlays.

It seemed like a reasonable question to me. (Sheesh, they should see some of my e-mail.) It’s a good thing they’re making money. Otherwise, they might come across as jerks.

Posted by on May 23rd, 2006 at 5:35 pm


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