FedEx Reports Higher First Quarter Diluted EPS of $4.23 and Adjusted Diluted EPS of $4.55
- First quarter results show improved operating income and margin
- FedEx Ground had an outstanding quarter
- FedEx completes $500 million accelerated share repurchase transaction
- FedEx Freight operating income decreased
Updates Full-Year Fiscal 2024 Earnings Outlook and Increases Full-Year Fiscal 2024 Adjusted Earnings Outlook
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Fiscal 2023 |
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As Reported
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Adjusted
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As Reported
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Operating income |
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Net income |
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Diluted EPS |
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This year’s and last year’s quarterly consolidated results have been adjusted for:
Impact per diluted share |
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Fiscal 2024 |
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Fiscal 2023 |
Business optimization costs |
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Business realignment costs |
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0.04 |
“We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results,” said Raj Subramaniam, FedEx Corp. president and chief executive officer. “FedEx Ground had an outstanding quarter which, when combined with improved earnings at FedEx Express and expense controls across the organization, led to our better-than-expected overall financial performance. FedEx is well-positioned to continue to deliver improved profitability while becoming an even more flexible, efficient and data-driven organization.”
First quarter results improved primarily due to the execution of the company's DRIVE program initiatives and continued focus on revenue quality. The improvement in operating results was partially offset by ongoing demand weakness.
FedEx Express operating income increased
FedEx Ground operating income increased
FedEx Freight operating income decreased
The company completed a
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.
FedEx is revising its forecast for fiscal 2024 and now expects:
- Approximately flat revenue year over year, compared to the prior forecast of flat to low-single-digit-percent revenue growth;
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Earnings per diluted share of
to$15.10 before the MTM retirement plans accounting adjustments, compared to the prior forecast of$16.60 to$15.00 ;$17.00 -
Earnings per diluted share of
to$17.00 before the MTM retirement plans accounting adjustments after also excluding costs related to business optimization initiatives, compared to the prior forecast of$18.50 to$16.50 ;$18.50 -
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
, with a priority on investments to improve efficiency, including fleet and facility modernization, network optimization and automation.$5.7 billion
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.
“Our first quarter results demonstrate the significant opportunity FedEx has to create long-term value for its stockholders,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer. “The FedEx team is working tirelessly to implement its transformation initiatives, which are driving efficiencies and reducing expenses. As we look ahead to the rest of the year, my highest priority is building on this momentum to improve margins and returns.”
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 nearly
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. EDT on September 20, 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
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 2024 and Fiscal 2023 Results
The company reports its financial results in accordance with accounting principles generally accepted in
- Business optimization costs incurred in fiscal 2024 and 2023; and
- Business realignment costs incurred in fiscal 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 first 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. Additionally, we incurred costs associated with our business realignment activities in connection with the FedEx Express workforce reduction plan in
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.
First Quarter Fiscal 2024
FedEx Corporation
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Operating |
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Income |
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Net |
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Diluted
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Dollars in millions, except EPS |
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Income |
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Margin |
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Taxes1 |
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Income2 |
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Per Share |
GAAP measure |
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Business optimization costs3 |
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105 |
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24 |
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81 |
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0.32 |
Non-GAAP measure |
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FedEx Express Segment
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Operating |
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Dollars in millions |
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Income |
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Margin |
GAAP measure |
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Business optimization costs |
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10 |
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Non-GAAP measure |
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FedEx Ground Segment
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Operating |
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Dollars in millions |
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Income |
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Margin |
GAAP measure |
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Business optimization costs |
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17 |
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Non-GAAP measure |
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First Quarter Fiscal 2023
FedEx Corporation
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Operating |
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Income |
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Net |
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Diluted
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Dollars in millions, except EPS |
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Income |
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Margin |
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Taxes1 |
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Income2 |
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Per Share |
GAAP measure |
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Business optimization costs4 |
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24 |
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6 |
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19 |
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0.07 |
Business realignment costs5 |
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14 |
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3 |
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11 |
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0.04 |
Non-GAAP measure |
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FedEx Express Segment
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Operating |
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Dollars in millions |
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Income |
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Margin |
GAAP measure |
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Business realignment costs |
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14 |
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Non-GAAP measure |
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Fiscal 2024 Earnings Per Share Forecast
Dollars in millions, except EPS |
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Adjustments |
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Diluted
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Earnings per diluted share before MTM retirement plans accounting adjustments (non-GAAP)6 |
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Business optimization costs |
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Income tax effect1 |
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(145) |
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Net of tax effect |
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1.90 |
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Earnings per diluted share with adjustments (non-GAAP)6 |
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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 – These expenses were recognized at Corporate, other, and eliminations, as well as FedEx Express and FedEx Ground. |
4 – These expenses were recognized at FedEx Corporate. |
5 – These expenses were recognized at 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/20230920494793/en/
Media Contact: Caitlin Adams Maier 901-434-8100
Investor Contact: Mickey Foster 901-818-7468
Source: FedEx Corp.