Updates Full-Year Fiscal 2024 Earnings Outlook
and Confirms Full-Year Fiscal 2024 Adjusted Earnings Outlook
FedEx Corp. (NYSE: FDX) today reported the following
consolidated results for the second quarter ended November 30
(adjusted measures exclude the items listed below):
Fiscal 2024
Fiscal 2023
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$22.2 billion
$22.2 billion
$22.8 billion
$22.8 billion
Operating income
$1.28 billion
$1.42 billion
$1.18 billion
$1.21 billion
Operating margin
5.8%
6.4%
5.2%
5.3%
Net income
$0.90 billion
$1.01 billion
$0.79 billion
$0.82 billion
Diluted EPS
$3.55
$3.99
$3.07
$3.18
This year’s and last year’s quarterly consolidated results have
been adjusted for:
Impact per diluted share
Fiscal 2024
Fiscal 2023
Business optimization costs
$0.44
$0.11
Second quarter income and margin improved despite lower revenue,
with consolidated operating income up 9% and adjusted operating
income up 17%, primarily due to the execution of the company's
DRIVE program, and continued focus on service and revenue
quality.
“FedEx has delivered an unprecedented two consecutive quarters
of operating income growth and margin expansion even with lower
revenue, clear evidence of the progress we are making on our
transformation as we navigate an uncertain demand environment,”
said Raj Subramaniam, FedEx Corp. president and chief executive
officer. “We are moving with speed to make our network more
efficient while delivering outstanding service to our customers
through the peak season with the fastest Ground network in the
industry. I am confident in our strategy as we make our global
network more flexible, efficient, and intelligent.”
FedEx Ground operating income increased primarily due to yield
improvement, cost reductions, and higher volumes. Cost per package
declined 2%, driven by lower line-haul expense and improved first-
and last-mile productivity.
FedEx Freight operating income increased despite a decline in
revenue. The profit increase was driven by higher yield and
increased efficiency, partially offset by lower shipments.
FedEx Express operating income declined due to lower revenue,
partially offset by reduced operating expenses. The revenue
decrease was driven by volume declines, lower fuel surcharges,
reduced demand surcharges, and a mix shift toward lower-yielding
services.
The company completed a $500 million accelerated share
repurchase (ASR) transaction during the quarter. Approximately 2.0
million shares were delivered under the ASR agreement. The
year-to-date decrease in outstanding shares benefited second
quarter results by $0.05 per diluted share. FedEx expects to
repurchase an additional $1.0 billion of common stock during fiscal
2024. Cash on-hand as of November 30, 2023 was $6.7 billion.
“With demand continuing to pressure the top-line, we are pleased
with our ability to deliver stronger operating leverage and
improved profitability, enabling us to maintain our fiscal year
adjusted earnings outlook,” said John Dietrich, FedEx Corp.
executive vice president and chief financial officer. “These
results are a testament to DRIVE initiatives taking hold, where we
are focused on improving margins and driving long-term returns for
our stockholders.”
Outlook
FedEx is unable to forecast the fiscal 2024 mark-to-market (MTM)
retirement plans accounting adjustments. As a result, FedEx is
unable to provide a fiscal 2024 earnings per share or effective tax
rate (ETR) outlook on a GAAP basis and is relying on the exemption
provided by the Securities and Exchange Commission. It is
reasonably possible that the fiscal 2024 MTM retirement plans
accounting adjustments could have a material effect on fiscal 2024
consolidated financial results and ETR.
For fiscal 2024, FedEx expects:
- A low-single-digit percentage decline in revenue year over
year, compared to the prior forecast of approximately flat revenue
growth;
- Earnings per diluted share of $15.35 to $16.85 before the MTM
retirement plans accounting adjustments, compared to the prior
forecast of $15.10 to $16.60 per diluted share;
- Earnings per diluted share of $17.00 to $18.50 before the MTM
retirement plans accounting adjustments after also excluding costs
related to business optimization initiatives;
- Permanent cost reductions from the DRIVE transformation program
of $1.8 billion;
- ETR of approximately 25% prior to the MTM retirement plans
accounting adjustments; and
- Capital spending of $5.7 billion, with a priority on
investments to improve efficiency, including fleet and facility
modernization, network optimization and automation.
These forecasts assume the company's current economic forecast
and fuel price expectations, successful completion of the planned
stock repurchases, and no additional adverse geopolitical
developments. FedEx’s ETR and earnings per share forecasts are
based on current law and related regulations and guidance.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenue of $88 billion, the company
offers integrated business solutions through operating companies
competing collectively, operating collaboratively and innovating
digitally as one FedEx. Consistently ranked among the world's most
admired and trusted employers, FedEx inspires its more than 500,000
employees to remain focused on safety, the highest ethical and
professional standards and the needs of their customers and
communities. FedEx is committed to connecting people and
possibilities around the world responsibly and resourcefully, with
a goal to achieve carbon-neutral operations by 2040. To learn more,
please visit fedex.com/about.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and
Statistical Books. These materials, as well as a webcast of the
earnings release conference call to be held at 5:30 p.m. EST on
December 19, are available on the company’s website at
investors.fedex.com. A replay of the conference call webcast will
be posted on our website following the call.
The Investor Relations page of our website, investors.fedex.com,
contains a significant amount of information about FedEx, including
our Securities and Exchange Commission (SEC) filings and financial
and other information for investors. The information that we post
on our Investor Relations website could be deemed to be material
information. We encourage investors, the media and others
interested in the company to visit this website from time to time,
as information is updated and new information is posted.
Certain statements in this press release may be considered
forward-looking statements, such as statements regarding expected
cost savings, the planned consolidation of operating companies,
future financial targets, business strategies, management’s views
with respect to future events and financial performance, and the
assumptions underlying such expected cost savings, targets,
strategies, and statements. Forward-looking statements include
those preceded by, followed by or that include the words “will,”
“may,” “could,” “would,” “should,” “believes,” “expects,”
“forecasts,” “anticipates,” “plans,” “estimates,” “targets,”
“projects,” “intends” or similar expressions. Such forward-looking
statements are subject to risks, uncertainties and other factors
which could cause actual results to differ materially from
historical experience or from future results expressed or implied
by such forward-looking statements. Potential risks and
uncertainties include, but are not limited to, economic conditions
in the global markets in which we operate; our ability to
successfully implement our business strategy and global
transformation program and consolidate our operating companies into
one organization, effectively respond to changes in market
dynamics, and achieve the anticipated benefits of such strategies
and actions while managing related risks; our ability to achieve
our cost reduction initiatives and financial performance goals; the
timing and amount of costs related to our global transformation
program and other ongoing initiatives; damage to our reputation or
loss of brand equity; changes in the business or financial
soundness of the U.S. Postal Service or its relationship with
FedEx, including strategic changes to its operations to reduce its
reliance on the air network of FedEx Express; our ability to meet
our labor and purchased transportation needs while controlling
related costs; a significant data breach or other disruption to our
technology infrastructure; anti-trade measures and additional
changes in international trade policies and relations; the effect
of any international conflicts or terrorist activities; the impact
of a widespread outbreak of an illness or any other communicable
disease or public health crises; changes in fuel prices or currency
exchange rates; our ability to match capacity to shifting volume
levels; the effect of intense competition; an increase in
self-insurance accruals and expenses; failure to receive or collect
expected insurance coverage; our ability to effectively operate,
integrate, leverage, and grow acquired businesses and realize the
anticipated benefits of acquisitions and other strategic
transactions; noncash impairment charges related to our goodwill
and certain deferred tax assets; the future rate of e-commerce
growth and levels of inventory restocking; evolving or new U.S.
domestic or international laws and government regulations,
policies, and actions; future guidance, regulations,
interpretations, challenges, or judicial decisions related to our
tax positions; legal challenges or changes related to service
providers engaged by FedEx Ground and the drivers employed by them
and the coverage of U.S. employees at FedEx Express under the
Railway Labor Act of 1926, as amended; our ability to quickly and
effectively restore operations following adverse weather or a
localized disaster or disturbance in a key geography; any liability
resulting from and the costs of defending against litigation; our
ability to achieve or demonstrate progress on our goal of
carbon-neutral operations by 2040; and other factors which can be
found in FedEx Corp.’s and its subsidiaries’ press releases and
FedEx Corp.’s filings with the SEC. Any forward-looking statement
speaks only as of the date on which it is made. We do not undertake
or assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events,
or otherwise.
The financial section of this release is provided on the
company's website at investors.fedex.com.
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES TO GAAP FINANCIAL MEASURES
Second Quarter Fiscal 2024 and Fiscal
2023 Results
The company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP” or “reported”). We have supplemented the reporting of our
financial information determined in accordance with GAAP with
certain non-GAAP (or “adjusted”) financial measures, including our
adjusted second quarter fiscal 2024 and 2023 consolidated operating
income and margin, net income and diluted earnings per share,
adjusted second quarter fiscal 2024 FedEx Express and FedEx Ground
segment operating income and margin and adjusted second quarter
fiscal 2023 FedEx Express segment operating income and margin.
These financial measures have been adjusted to exclude the effects
of business optimization costs incurred in fiscal 2024 and
2023.
In fiscal 2023, FedEx announced DRIVE, a comprehensive program
to improve the company’s long-term profitability. This program
includes a business optimization plan to drive efficiency among our
transportation segments, lower our overhead and support costs, and
transform our digital capabilities. We incurred costs associated
with our business optimization initiatives in the second quarter of
fiscal 2024 and fiscal 2023. These costs were primarily related to
professional services and severance. Business optimization costs
are included in Corporate, other, and eliminations, FedEx Ground,
and FedEx Express. Costs related to business optimization
initiatives are excluded from our second quarter fiscal 2024 and
2023 consolidated and FedEx Express and FedEx Ground segment
non-GAAP financial measures, as applicable, because they are
unrelated to our core operating performance and to assist investors
with assessing trends in our underlying businesses.
We believe these adjusted financial measures facilitate analysis
and comparisons of our ongoing business operations because they
exclude items that may not be indicative of, or are unrelated to,
the company’s and our business segments’ core operating
performance, and may assist investors with comparisons to prior
periods and assessing trends in our underlying businesses. These
adjustments are consistent with how management views our
businesses. Management uses these non-GAAP financial measures in
making financial, operating and planning decisions and evaluating
the company’s and each business segment’s ongoing performance.
Our non-GAAP financial measures are intended to supplement and
should be read together with, and are not an alternative or
substitute for, and should not be considered superior to, our
reported financial results. Accordingly, users of our financial
statements should not place undue reliance on these non-GAAP
financial measures. Because non-GAAP financial measures are not
standardized, it may not be possible to compare these financial
measures with other companies’ non-GAAP financial measures having
the same or similar names. As required by SEC rules, the tables
below present a reconciliation of our presented non-GAAP financial
measures to the most directly comparable GAAP measures.
Fiscal 2024 Earnings Per Share and
Effective Tax Rate Forecasts
Our fiscal 2024 earnings per share (EPS) forecast is a non-GAAP
financial measure because it excludes fiscal 2024 mark-to-market
(MTM) retirement plans accounting adjustments and estimated costs
related to business optimization initiatives in fiscal 2024. Our
fiscal 2024 effective tax rate (ETR) forecast is a non-GAAP
financial measure because it excludes the effect of fiscal 2024 MTM
retirement plans accounting adjustments.
We have provided these non-GAAP financial measures for the same
reasons that were outlined above for historical non-GAAP measures.
Costs related to business optimization initiatives are excluded
from our fiscal 2024 EPS forecast for the same reasons described
above for historical non-GAAP measures.
We are unable to predict the amount of the MTM retirement plans
accounting adjustments, as they are significantly affected by
changes in interest rates and the financial markets, so such
adjustments are not included in our fiscal 2024 EPS and ETR
forecasts. For this reason, a full reconciliation of our fiscal
2024 EPS and ETR forecasts to the most directly comparable GAAP
measures is impracticable. It is reasonably possible, however, that
our fiscal 2024 MTM retirement plans accounting adjustments could
have a material effect on our fiscal 2024 consolidated financial
results and ETR.
The table included below titled “Fiscal 2024 Earnings Per Share
Forecast” outlines the effects of the items that are excluded from
our fiscal 2024 EPS forecast, other than the MTM retirement plans
accounting adjustments.
Second Quarter Fiscal
2024
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$1,276
5.8%
$302
$900
$3.55
Business optimization costs4
145
0.7%
35
110
0.44
Non-GAAP measure
$1,421
6.4%
$337
$1,010
$3.99
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$137
1.3%
Business optimization costs
41
0.4%
Non-GAAP measure
$178
1.7%
FedEx Ground Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$900
10.4%
Business optimization costs
36
0.4%
Non-GAAP measure
$936
10.8%
Second Quarter Fiscal
2023
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$1,176
5.2%
$271
$788
$3.07
Business optimization costs5
36
0.2%
9
27
0.11
Non-GAAP measure
$1,212
5.3%
$280
$815
$3.18
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$341
3.1%
Business optimization costs
11
0.1%
Non-GAAP measure
$352
3.2%
Fiscal 2024 Earnings Per Share
Forecast
Dollars in millions, except EPS
Adjustments
Diluted Earnings Per
Share
Earnings per diluted share before MTM
retirement plans accounting adjustments (non-GAAP)6
$15.35 to $16.85
Business optimization costs
$550
Income tax effect2
(130)
Net of tax effect
$420
1.65
Earnings per diluted share with
adjustments (non-GAAP)6
$17.00 to $18.50
Notes:
1 – Does not sum to total due to rounding. 2 – Income taxes are
based on the company’s approximate statutory tax rates applicable
to each transaction. 3 – Effect of “total other (expense) income”
on net income amount not shown. 4 – These expenses were recognized
at Corporate, other, and eliminations, as well as FedEx Express and
FedEx Ground. 5 – These expenses were recognized at FedEx Corporate
and FedEx Express. 6 – The MTM retirement plans accounting
adjustments, which are impracticable to calculate at this time, are
excluded.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231219423515/en/
Media Contact: Caitlin Adams Maier 901-434-8100 Investor
Contact: Stephen Hughes 901-818-7471
FedEx (NYSE:FDX)
Historical Stock Chart
Von Apr 2024 bis Mai 2024
FedEx (NYSE:FDX)
Historical Stock Chart
Von Mai 2023 bis Mai 2024