FedEx Reports Third Quarter Diluted EPS of $3.76 and Adjusted Diluted EPS of $4.51
Delivered Revenue, Operating Income, and EPS Growth
Completed
Revises Full-Year Fiscal 2025 Earnings Outlook
Progresses FedEx Freight Spin-off Preparation
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Fiscal 2025 |
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Fiscal 2024 |
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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 consolidated results have been adjusted for:
Impact per diluted share |
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Fiscal 2025 |
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Fiscal 2024 |
Business optimization costs |
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International regulatory and legacy
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0.12 |
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— |
FedEx Freight spin-off costs |
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0.07 |
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"The FedEx team delivered improved profitability, while navigating a very challenging operating environment, including a compressed Peak season and severe weather events,” said Raj Subramaniam, FedEx Corp. president and chief executive officer. “I am proud of the team for executing on our transformation efforts while strengthening our value proposition and improving the customer experience. Looking ahead, we remain focused on supporting our customers amid the shifting macroeconomic environment.”
Consolidated operating results improved due to cost reduction benefits from DRIVE program initiatives, higher base yield at each transportation segment, and higher volume at Federal Express.
Federal Express segment operating results improved during the quarter, driven by cost reduction benefits from DRIVE, higher base yield, and increased
FedEx Freight segment operating results decreased during the quarter due to lower fuel surcharges, reduced weight per shipment, and fewer shipments, partially offset by higher base yield.
The quarter’s results include a net tax benefit of
Share Repurchase Program
FedEx completed its
As of February 28, 2025,
Cash on-hand as of February 28, 2025 was
Outlook
FedEx is unable to forecast the fiscal 2025 mark-to-market ("MTM") retirement plans accounting adjustments. As a result, FedEx is unable to provide a fiscal 2025 earnings per share ("EPS") or effective tax rate ("ETR") outlook on a GAAP basis and is relying on the exemption provided by the Securities and Exchange Commission ("SEC"). It is reasonably possible that the fiscal 2025 MTM retirement plans accounting adjustments could have a material effect on fiscal 2025 consolidated financial results and ETR.
FedEx is revising its fiscal 2025 revenue, earnings and capital spending forecasts, and now expects:
- Revenue flat to slightly down year over year, compared to the prior forecast of approximately flat;
-
Diluted EPS of
to$15.15 before the MTM retirement plans accounting adjustments compared to the prior forecast of$15.75 to$16.45 per share; and$17.45 to$18.00 per share after excluding costs related to business optimization initiatives, international regulatory and legacy FedEx Ground legal matters, and the planned spin-off of FedEx Freight, compared to the prior forecast of$18.60 to$19.00 per share; and$20.00 -
Capital spending of
, compared to the prior forecast of$4.9 billion , with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.$5.2 billion
FedEx is reaffirming its forecast of:
-
Permanent cost reductions from the DRIVE transformation program of
; and$2.2 billion -
ETR of approximately
24.0% prior to the MTM retirement plans accounting adjustments.
These forecasts assume the company's current economic forecast and fuel price expectations, and no additional adverse economic, geopolitical, or international trade-related developments. FedEx’s ETR and EPS forecasts are based on current law and related regulations and guidance.
“Our team continues to make strong progress on reducing our cost to serve and improving our operational performance–specifically at Federal Express–supporting operating income and earnings growth,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer. “Our revised earnings outlook reflects continued weakness and uncertainty in the
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
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 March 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 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 within the meaning of the Private Securities Litigation Reform Act, such as statements regarding expected cost savings, the optimization of our network through Network 2.0, the planned tax-free spin-off of the FedEx Freight business into a new independent publicly traded company (the "FedEx Freight Spin-off"), 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 optimize our network through Network 2.0, effectively respond to changes in market dynamics, and achieve the anticipated benefits of such strategies and actions; our ability to achieve our cost reduction initiatives and financial performance goals; the timing and amount of any costs or benefits or any specific outcome, transaction, or change (of which there can be no assurance), or the terms, timing, and structure thereof, related to our global transformation program and other ongoing reviews and initiatives; a significant data breach or other disruption to our technology infrastructure; our ability to successfully implement the FedEx Freight Spin-off and achieve the anticipated benefits of such transaction; anti-trade measures and additional changes in international trade policies and relations; damage to our reputation or loss of brand equity; our ability to remove costs related to services provided to 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
Third Quarter Fiscal 2025 and Fiscal 2024 Results
The company reports its financial results in accordance with accounting principles generally accepted in
- Business optimization costs incurred in fiscal 2025 and 2024;
- Costs related to international regulatory and legacy FedEx Ground legal matters incurred in fiscal 2025; and
- Costs related to the planned spin-off of FedEx Freight incurred in fiscal 2025.
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 third quarter of fiscal 2025 and fiscal 2024. These costs were primarily related to professional services and severance.
In December 2024, FedEx announced that its Board of Directors has decided to pursue a full separation of FedEx Freight through the capital markets, creating a new publicly traded company. The transaction, which will be implemented through the spin-off of shares of the new company to FedEx stockholders, is expected to be tax-free for
The charges incurred in connection with the international regulatory matter are extraordinary in nature and do not represent recurring expenses in our ordinary course of business. This item has been reduced in the amount of a gain recognized in the third quarter of fiscal 2025 in connection with the partial reversal of a loss accrual related to a legacy FedEx Ground legal matter that was also extraordinary in nature following a settlement.
Costs related to business optimization initiatives, international regulatory and legacy FedEx Ground legal matters, and the planned spin-off of FedEx Freight are excluded from our third quarter fiscal 2025 and 2024 consolidated and Federal Express 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.
The income tax effect of these costs is calculated based upon the tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment. The impact of these non-GAAP items on the company’s effective tax rate represents the difference in the effective tax rate calculated with and without the non-GAAP adjustment.
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 2025 Earnings Per Share and Effective Tax Rate Forecasts
Our fiscal 2025 EPS forecast is a non-GAAP financial measure because it excludes fiscal 2025 MTM retirement plans accounting adjustments and estimated costs related to business optimization initiatives, international regulatory and legacy FedEx Ground legal matters, and the planned spin-off of FedEx Freight in fiscal 2025. Our fiscal 2025 ETR forecast is a non-GAAP financial measure because it excludes the effect of fiscal 2025 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, international regulatory and legacy FedEx Ground legal matters, and the planned spin-off of FedEx Freight are excluded from our fiscal 2025 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 2025 EPS and ETR forecasts. For this reason, a full reconciliation of our fiscal 2025 EPS and ETR forecasts to the most directly comparable GAAP measures is impracticable. It is reasonably possible, however, that our fiscal 2025 MTM retirement plans accounting adjustments could have a material effect on our fiscal 2025 consolidated financial results and ETR.
The table included below titled “Fiscal 2025 Diluted Earnings Per Share Forecast” outlines the effects of the items that are excluded from our fiscal 2025 EPS forecast, other than the MTM retirement plans accounting adjustments.
Third Quarter Fiscal 2025
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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179 |
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42 |
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137 |
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0.56 |
International regulatory and legacy
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38 |
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9 |
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29 |
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0.12 |
FedEx Freight spin-off costs5 |
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5 |
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5 |
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17 |
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0.07 |
Non-GAAP measure |
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Federal Express Segment
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Operating |
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Dollars in millions |
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Income |
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Margin |
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GAAP measure |
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Business optimization costs |
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92 |
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International regulatory and legacy
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38 |
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Non-GAAP measure |
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Third 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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114 |
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27 |
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87 |
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0.35 |
Non-GAAP measure |
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Federal Express Segment
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Operating |
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Dollars in millions |
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Income |
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Margin |
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GAAP measure |
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Business optimization costs |
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45 |
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Non-GAAP measure |
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Fiscal 2025 Diluted Earnings Per Share Forecast
Dollars in millions, except EPS |
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Adjustments |
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Diluted
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Diluted earnings per share before
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Business optimization costs |
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International regulatory and legacy FedEx
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38 |
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FedEx Freight spin-off costs |
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25 |
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Total adjustments |
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Income tax effect1 |
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(214) |
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Net of tax effect |
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2.85 |
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Diluted earnings per share with adjustments
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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 Federal Express, as well as Corporate, other, and eliminations.
4 – These expenses were recognized at Federal Express.
5 – These expenses were recognized at Corporate, other, and eliminations.
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/20250320408836/en/
Media Contact:
Caitlin Maier
901-434-8100
mediarelations@fedex.com
Investor Relations Contact:
Jeni Hollander
901-818-7200
ir@fedex.com
Source: FedEx Corp.