FedEx Corp. Reports First Quarter Results
FedEx Corp. (NYSE: FDX) reported first-quarter results for fiscal 2022, with revenue of $22 billion, up from $19.3 billion in fiscal 2021. Operating income fell to $1.4 billion, down from $1.59 billion, leading to a diluted EPS of $4.09 compared to $4.72 the previous year. Rising costs from labor shortages and operational inefficiencies adversely affected performance, particularly in FedEx Express and FedEx Ground segments. The company has adjusted its earnings outlook for fiscal 2022 to between $18.25 and $19.50 per diluted share. Rate increases for various services are set for January 2022.
- Revenue increased to $22 billion, reflecting higher package and freight yields.
- FedEx Freight posted record operating margins of 17.3%.
- Operating income decreased by approximately $190 million year-over-year due to increased costs.
- Labor shortages led to $450 million in additional expenses, impacting efficiency.
- Earnings outlook reduced due to lower-than-forecasted performance.
|
|
Fiscal 2022 |
|
Fiscal 2021 |
||||
|
|
As Reported
|
|
Adjusted
|
|
As Reported
|
|
Adjusted
|
Revenue |
|
|
|
|
|
|
|
|
Operating income |
|
|
|
|
|
|
|
|
Operating margin |
|
|
|
|
|
|
|
|
Net income |
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
This year’s and last year’s quarterly consolidated results have been adjusted for:
Impact per diluted share |
|
Fiscal 2022 |
|
Fiscal 2021 |
Business realignment costs |
|
|
|
$ — |
TNT Express integration expenses |
|
0.08 |
|
0.14 |
“The execution of our strategies continues to drive higher demand for our services, despite the disruptive impact of the pandemic to labor availability and global supply chains,” said
First quarter operating results were negatively affected by an estimated
FedEx Ground first quarter operating results declined primarily due to higher labor costs and network inefficiencies due to inadequate staffing, which negatively affected year-over-year results by an estimated
FedEx Freight first quarter operating results improved primarily due to the continued focus on revenue quality and cost management. FedEx Freight reported a record operating margin of
“The FedEx teams continue to diligently deliver for our customers under unique and challenging circumstances,” said
2022 Rate Increases
As previously announced, effective
Outlook
FedEx is unable to forecast the fiscal 2022 mark-to-market (MTM) retirement plan accounting adjustments. As a result, FedEx is unable to provide a fiscal 2022 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.
FedEx is reducing its earnings outlook to reflect first quarter results, which were lower than the company’s June forecast. As conditions during the first quarter were more challenging than anticipated and are now expected to extend longer, the revised FedEx outlook also reflects management’s updated expectations for the remainder of the fiscal year:
-
Earnings per diluted share of
to$18.25 before the MTM retirement plan accounting adjustments, compared to the prior forecast of$19.50 to$18.90 per diluted share;$19.90 -
Earnings per diluted share of
to$19.75 before the MTM retirement plan accounting adjustments and excluding estimated TNT Express integration expenses and costs associated with business realignment activities, compared to the prior forecast of$21.00 to$20.50 per diluted share;$21.50 -
ETR of approximately
24% prior to the MTM retirement plan accounting adjustments; and -
Capital spending of
.$7.2 billion
These forecasts assume continued growth in
“Our results for the first quarter reflect higher operating costs we are incurring during this uncertain and challenging operating environment,” said
Corporate Overview
Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and
The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance and underlying assumptions. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “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 meet our labor and purchased transportation needs while controlling related costs; a significant data breach or other disruption to our technology infrastructure; the continuing impact of the COVID-19 pandemic; anti-trade measures and additional changes in international trade policies and relations; our ability to successfully implement our business strategy, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such strategies and actions, including our ability to successfully implement our
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
First Quarter Fiscal 2022 and Fiscal 2021 Results
The company reports its financial results in accordance with accounting principles generally accepted in
- TNT Express integration expenses incurred in fiscal 2022 and 2021; and
- Business realignment costs incurred in fiscal 2022.
We have incurred and expect to incur significant expenses through fiscal 2022 in connection with our integration of TNT Express. We have adjusted our first quarter fiscal 2022 and 2021 consolidated and
The costs related to business realignment activities in connection with the
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
Fiscal 2022 Earnings Per Share and Effective Tax Rate Forecasts
Our fiscal 2022 earnings per share (EPS) forecast is a non-GAAP financial measure because it excludes (i) fiscal 2022 MTM retirement plan accounting adjustments, (ii) estimated fiscal 2022 TNT Express integration expenses, and (iii) estimated fiscal 2022 business realignment costs. Our fiscal 2022 effective tax rate (ETR) forecast is a non-GAAP financial measure because it excludes the impact of fiscal 2022 MTM retirement plan accounting adjustments.
We have provided these non-GAAP financial measures for the same reasons that were outlined above for historical non-GAAP measures. These items are excluded from our fiscal 2022 EPS and ETR forecasts, as applicable, for the same reasons described above for historical non-GAAP measures.
We are unable to predict the amount of the MTM retirement plan accounting adjustments, as they are significantly impacted by changes in interest rates and the financial markets, so such adjustments are not included in our fiscal 2022 EPS and ETR forecasts. For this reason, a full reconciliation of our fiscal 2022 EPS and ETR forecasts to the most directly comparable GAAP measures is impracticable. It is reasonably possible, however, that our fiscal 2022 MTM retirement plan accounting adjustments could have a material impact on our fiscal 2022 consolidated financial results and ETR.
The table included below titled “Fiscal 2022 Earnings Per Share Forecast” outlines the impacts of the items that are excluded from our fiscal 2022 EPS forecast, other than the MTM retirement plan accounting adjustments.
First Quarter Fiscal 2022
|
|
Operating |
|
Income |
|
Net |
|
Diluted
|
||
Dollars in millions, except EPS |
|
Income |
|
Margin |
|
Taxes1 |
|
Income2 |
|
Per Share3 |
GAAP measure |
|
|
|
|
|
|
|
|
|
|
Business realignment costs4 |
|
67 |
|
|
|
15 |
|
52 |
|
0.19 |
TNT Express integration expenses5 |
|
29 |
|
|
|
6 |
|
23 |
|
0.08 |
Non-GAAP measure |
|
|
|
|
|
|
|
|
|
|
FedEx Express Segment
|
|
Operating |
||
Dollars in millions |
|
Income |
|
Margin |
GAAP measure |
|
|
|
|
Business realigment costs |
|
67 |
|
|
TNT Express integration expenses |
|
26 |
|
|
Non-GAAP measure |
|
|
|
|
First Quarter Fiscal 2021
|
|
Operating |
|
Income |
|
Net |
|
Diluted Earnings |
||
Dollars in millions, except EPS |
|
Income |
|
Margin |
|
Taxes1 |
|
Income2 |
|
Per Share3 |
GAAP measure |
|
|
|
|
|
|
|
|
|
|
TNT Express integration expenses5 |
|
49 |
|
|
|
11 |
|
38 |
|
0.14 |
Non-GAAP measure |
|
|
|
|
|
|
|
|
|
|
FedEx Express Segment
|
|
Operating |
||
Dollars in millions |
|
Income |
|
Margin3 |
GAAP measure |
|
|
|
|
TNT Express integration expenses |
|
37 |
|
|
Non-GAAP measure |
|
|
|
|
Fiscal 2022 Earnings Per Share Forecast
Dollars in millions, except EPS |
|
Adjustments |
|
Diluted
|
Earnings per diluted share before MTM retirement plan accounting adjustments (non-GAAP)6 |
|
|
|
|
|
|
|
|
|
TNT Express integration expenses |
|
|
|
|
Income tax effect1 |
|
(28) |
|
|
Net of tax effect |
|
|
|
0.45 |
|
|
|
|
|
Business realignment costs |
|
|
|
|
Income tax effect1 |
|
(85) |
|
|
Net of tax effect |
|
|
|
1.05 |
|
|
|
|
|
Earnings per diluted share with adjustments6 |
|
|
|
|
Notes:
1 – Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction.
2 – Effect of “total other (expense) income” on net income amount not shown.
3 – Does not sum to total due to rounding.
4 – Business realignment costs were recognized at
5 – These expenses were recognized at FedEx Corporate and
6 – The MTM retirement plan accounting adjustments, which are impracticable to calculate at this time, are excluded.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210921006069/en/
Media Contact:
Investor Contact:
Home Page: fedex.com
Source:
FAQ
What were FedEx's first quarter results for fiscal 2022?
Why did FedEx lower its earnings outlook for fiscal 2022?
What challenges did FedEx face in its first quarter results?