FedEx Corp. Reports Fourth Quarter and Full-Year Results
FedEx Corp. reported its fiscal 2022 consolidated results, showing revenue of $93.5 billion, an increase from $84.0 billion in fiscal 2021. However, operating income fell to $6.25 billion from $5.86 billion, reflecting a lower operating margin of 6.7%. Net income declined to $3.83 billion compared to $5.23 billion the previous year, leading to diluted EPS of $14.33. The company anticipates earnings per diluted share between $22.45 and $24.45 for fiscal 2023. FedEx also plans to invest $6.8 billion in capital spending, aimed at improving operational efficiency.
- Revenue increased to $93.5 billion in fiscal 2022, up from $84.0 billion in fiscal 2021.
- FedEx expects earnings per diluted share of $22.45 to $24.45 for fiscal 2023, indicating potential profitability.
- Capital spending plans of $6.8 billion focus on efficiency improvements.
- Operating income declined to $6.25 billion from $6.87 billion in fiscal 2021.
- Net income dropped to $3.83 billion, a significant decrease from $5.50 billion in the previous year.
- Operating margin decreased to 6.7%, down from 7.3%.
Additional Earnings Momentum Expected During Fiscal 2023
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Fiscal 2022 |
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Fiscal 2021 |
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As Reported
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Adjusted
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As Reported
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Adjusted
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Revenue |
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Operating income |
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Operating margin |
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Net income |
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Diluted EPS |
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This year’s and last year’s quarterly and full-year consolidated results have been adjusted for:
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Fiscal 2022 |
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Fiscal 2021 |
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Impact per diluted share |
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Fourth
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Full
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Fourth
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Full
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Mark-to-market (MTM) retirement plans accounting adjustments |
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( |
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( |
FedEx Ground legal matter |
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0.61 |
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0.60 |
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— |
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— |
Business realignment costs |
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0.18 |
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0.80 |
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0.30 |
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0.33 |
TNT Express integration expenses |
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0.12 |
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0.39 |
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0.18 |
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0.60 |
Loss on debt extinguishment |
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— |
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— |
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1.09 |
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1.11 |
“Our fiscal 2022 financial performance was a result of our team's ability to adapt to a number of unexpected challenges and is a testament to the FedEx value proposition and the execution of our long-term strategy,” said
Fourth Quarter Results
Fourth quarter operating income improved primarily due to revenue management actions, including the favorable net impact of fuel at each transportation segment, and lower variable compensation expense. These factors were partially offset by lower shipment demand due to slower economic growth and supply chain disruptions, as well as higher purchased transportation and wage rates.
Fourth quarter net income included a tax benefit of
FedEx Ground operating results declined primarily due to higher self-insurance accruals and increased purchased transportation and wage rates. These costs were partially offset by higher revenue per package, including increased fuel surcharges. Average daily volume declined primarily due to yield management actions affecting the FedEx Ground Economy service.
FedEx Freight operating results sharply increased, with operating margin improving 570 basis points to
Full-Year Results
For the full fiscal year,
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Fiscal 2022 |
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Fiscal 2021 |
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As Reported
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Adjusted
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As Reported
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Adjusted
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Revenue |
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Operating income |
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Operating margin |
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Net income |
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Diluted EPS |
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Capital spending for fiscal 2022 was
Share Repurchases
During fiscal 2022 the company repurchased
Outlook
FedEx is unable to forecast the fiscal 2023 mark-to-market (MTM) retirement plans accounting adjustments. FedEx also may incur additional costs in fiscal 2023 related to business optimization initiatives. The company is currently unable to forecast the amount and timing of these additional costs, which may impact the fiscal 2023 effective tax rate (ETR). As a result, FedEx is unable to provide a fiscal 2023 earnings per share or ETR outlook on a GAAP basis.
For fiscal 2023, FedEx is forecasting:
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Earnings per diluted share of
to$22.45 before the MTM retirement plans accounting adjustments and costs related to business optimization initiatives;$24.45 -
Earnings per diluted share of
to$22.50 before the MTM retirement plans accounting adjustments and costs related to business optimization initiatives, and excluding estimated costs associated with business realignment activities;$24.50 -
ETR of approximately
24% prior to the MTM retirement plans accounting adjustments and costs related to business optimization initiatives; and -
Capital spending of
, with a priority on investments to improve efficiency, including fleet and facility modernization, and increased automation.$6.8 billion
These forecasts assume the company's current economic forecast and fuel price expectations, no additional COVID-19-related business restrictions, 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.
“Our continued emphasis on revenue quality drove significant improvement in our fourth quarter results,” said
Investors Meeting
On
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,” “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 meet our labor and purchased transportation needs while controlling related costs; a significant data breach or other disruption to our technology infrastructure; the continuing effect of the COVID-19 pandemic; anti-trade measures and additional changes in international trade policies and relations; the effect of any international conflicts or terrorist activities, including as a result of the current conflict between
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
Fourth Quarter and Full-Year Fiscal 2022 and Fiscal 2021 Results
The company reports its financial results in accordance with accounting principles generally accepted in
- MTM retirement plans accounting adjustments in fiscal 2022 and 2021;
- Business realignment costs in fiscal 2022 and 2021;
- Costs related to a FedEx Ground legal matter in fiscal 2022;
- TNT Express integration expenses incurred in fiscal 2022 and 2021; and
- Loss on debt extinguishment in fiscal 2021.
The MTM retirement plans accounting adjustments, costs related to business realignment activities in connection with the
We have incurred significant expenses through fiscal 2022 in connection with our integration of TNT Express. We have adjusted our fourth quarter and full-year fiscal 2022 and 2021 consolidated and
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 2023 Earnings Per Share and Effective Tax Rate Forecasts
Our fiscal 2023 earnings per share (EPS) forecast is a non-GAAP financial measure because it excludes (i) fiscal 2023 MTM retirement plans accounting adjustments, (ii) costs related to business optimization initiatives in fiscal 2023, and (iii) estimated fiscal 2023 business realignment costs. Our fiscal 2023 effective tax rate (ETR) forecast is a non-GAAP financial measure because it excludes the impact of fiscal 2023 MTM retirement plans accounting adjustments and costs related to business optimization initiatives.
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 2023 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 plans accounting adjustments, as they are significantly impacted by changes in interest rates and the financial markets. We also may incur additional costs in fiscal 2023 related to business optimization initiatives. We are currently unable to forecast the amount and timing of these additional costs, which may impact the fiscal 2023 ETR. Accordingly, such adjustments and costs are not included in our fiscal 2023 EPS and ETR forecasts. For this reason, a full reconciliation of our fiscal 2023 EPS and ETR forecasts to the most directly comparable GAAP measures is impracticable. It is reasonably possible, however, that our fiscal 2023 MTM retirement plans accounting adjustments and costs related to business optimization initiatives could have a material impact on our fiscal 2023 consolidated financial results and ETR.
The table included below titled “Fiscal 2023 Earnings Per Share Forecast” outlines the impacts of the items that are excluded from our fiscal 2023 EPS forecast, other than the MTM retirement plans accounting adjustments and costs related to business optimization initiatives.
Fourth Quarter Fiscal 2022
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Operating |
Income |
Net |
Diluted
|
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Dollars in millions, except EPS |
Income |
Margin |
Taxes1 |
Income2 |
Per Share |
||||||||||||||
GAAP measure |
$ |
1,924 |
7.9 |
% |
$ |
126 |
$ |
558 |
$ |
2.13 |
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MTM retirement plans accounting adjustment3 |
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— |
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— |
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|
315 |
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|
1,003 |
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3.83 |
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FedEx Ground legal matter4 |
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210 |
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0.9 |
% |
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50 |
|
|
160 |
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0.61 |
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Business realignment costs5 |
|
60 |
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0.2 |
% |
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14 |
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46 |
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0.18 |
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TNT Express integration expenses6 |
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40 |
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0.2 |
% |
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8 |
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32 |
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0.12 |
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Non-GAAP measure |
$ |
2,234 |
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9.2 |
% |
$ |
513 |
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$ |
1,799 |
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$ |
6.87 |
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FedEx Express Segment
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Operating |
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Dollars in millions |
Income |
Margin |
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GAAP measure |
$ |
886 |
7.4 |
% |
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Business realignment costs |
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60 |
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0.5 |
% |
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TNT Express integration expenses |
|
38 |
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0.3 |
% |
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Non-GAAP measure |
$ |
984 |
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8.2 |
% |
Full-Year Fiscal 2022
|
Operating |
Income |
Net |
Diluted
|
|||||||||||||||
Dollars in millions, except EPS |
Income |
Margin |
Taxes1 |
Income2 |
Per Share |
||||||||||||||
GAAP measure |
$ |
6,245 |
|
6.7 |
% |
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$ |
1,070 |
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$ |
3,826 |
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$ |
14.33 |
|||||
MTM retirement plans accounting adjustments3 |
|
— |
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|
— |
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379 |
|
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1,199 |
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|
4.49 |
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Business realignment costs5 |
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278 |
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0.3 |
% |
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|
64 |
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|
214 |
|
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0.80 |
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FedEx Ground legal matter4 |
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210 |
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0.2 |
% |
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50 |
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|
160 |
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0.60 |
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TNT Express integration expenses6 |
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132 |
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0.1 |
% |
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29 |
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|
103 |
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0.39 |
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Non-GAAP measure |
$ |
6,865 |
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7.3 |
% |
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$ |
1,592 |
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$ |
5,502 |
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$ |
20.61 |
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FedEx Express Segment
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Operating |
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Dollars in millions |
Income |
Margin7 |
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GAAP measure |
$ |
2,922 |
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6.4 |
% |
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Business realignment costs |
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278 |
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0.6 |
% |
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TNT Express integration expenses |
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115 |
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0.3 |
% |
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Non-GAAP measure |
$ |
3,315 |
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7.2 |
% |
Fourth Quarter Fiscal 2021
|
Operating |
Income |
Net |
Diluted
|
|||||||||||||||
Dollars in millions, except EPS |
Income |
Margin7 |
Taxes1 |
Income2 |
Per Share |
||||||||||||||
GAAP measure |
$ |
1,797 |
8.0 |
% |
$ |
745 |
|
$ |
1,868 |
|
$ |
6.88 |
|
||||||
MTM retirement plans accounting adjustment3 |
|
— |
|
— |
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(292 |
) |
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(936 |
) |
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(3.44 |
) |
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Loss on debt extinguishment |
|
— |
|
— |
|
|
96 |
|
|
297 |
|
|
1.09 |
|
|||||
Business realignment costs5 |
|
106 |
|
0.5 |
% |
|
24 |
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|
82 |
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0.30 |
|
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TNT Express integration expenses6 |
|
64 |
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0.3 |
% |
|
15 |
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|
49 |
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|
0.18 |
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Non-GAAP measure |
$ |
1,967 |
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8.7 |
% |
$ |
588 |
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$ |
1,360 |
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$ |
5.01 |
|
Fourth Quarter Fiscal 2021 (continued)
FedEx Express Segment
|
Operating |
||||||
Dollars in millions |
Income |
Margin7 |
|||||
GAAP measure |
$ |
737 |
|
6.5 |
% |
||
Business realignment costs |
|
106 |
|
|
0.9 |
% |
|
TNT Express integration expenses |
|
55 |
|
|
0.5 |
% |
|
Non-GAAP measure |
$ |
898 |
|
|
8.0 |
% |
Full-Year Fiscal 2021
|
Operating |
Income |
Net |
Diluted
|
|||||||||||||||
Dollars in millions, except EPS |
Income |
Margin |
Taxes1 |
Income2 |
Per Share7 |
||||||||||||||
GAAP measure |
$ |
5,857 |
7.0 |
% |
$ |
1,443 |
|
$ |
5,231 |
|
$ |
19.45 |
|
||||||
MTM retirement plans accounting adjustments3 |
|
— |
|
— |
|
|
(281 |
) |
|
(895 |
) |
|
(3.33 |
) |
|||||
Loss on debt extinguishment |
|
— |
|
— |
|
|
96 |
|
|
297 |
|
|
1.11 |
|
|||||
TNT Express integration expenses6 |
|
210 |
|
0.3 |
% |
|
48 |
|
|
162 |
|
|
0.60 |
|
|||||
Business realignment costs5 |
|
116 |
|
0.1 |
% |
|
26 |
|
|
90 |
|
|
0.33 |
|
|||||
Non-GAAP measure |
$ |
6,183 |
|
7.4 |
% |
$ |
1,332 |
|
$ |
4,885 |
|
$ |
18.17 |
|
FedEx Express Segment
|
Operating |
||||||
Dollars in millions |
Income |
Margin |
|||||
GAAP measure |
$ |
2,810 |
6.7 |
% |
|||
TNT Express integration expenses |
|
176 |
|
0.4 |
% |
||
Business realignment costs |
|
116 |
|
0.3 |
% |
||
Non-GAAP measure |
$ |
3,102 |
|
7.4 |
% |
Fiscal 2023 Earnings Per Share Forecast
Dollars in millions, except EPS |
Adjustments |
Diluted
|
||||
Earnings per diluted share before MTM retirement plans accounting adjustments and costs related to business optimization initiatives (non-GAAP)8 |
|
|
|
|||
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|
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|
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Business realignment costs |
$ |
20 |
|
|
|
|
Income tax effect1 |
|
(5 |
) |
|
|
|
Net of tax effect |
$ |
15 |
|
|
0.05 |
|
|
|
|
|
|||
Earnings per diluted share with adjustments8 |
|
|
|
Notes: | |
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|
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 – |
The MTM retirement plans accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans. For the full-year fiscal 2022 period, the MTM retirement plans accounting adjustments also include the second quarter TNT Express MTM retirement plans accounting adjustment related to a noncash loss associated with the termination of a TNT Express European pension plan and a curtailment charge related to the |
4 – |
These charges were recognized at |
5 – |
Business realignment costs were recognized at |
6 – |
These expenses were recognized at |
7 – |
Does not sum to total due to rounding. |
8 – |
The MTM retirement plans accounting adjustments and costs related to business optimization initiatives, which are impracticable to calculate at this time, are excluded. |
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