FedEx Corp. (NYSE: FDX) today reported earnings of $2.42 per
diluted share for the first quarter ended August 31, compared to
adjusted earnings of $2.12 per diluted share a year ago. Without
adjustment, FedEx earned $2.26 per diluted share last year.
“FedEx Corp. is performing solidly given weaker-than-expected
economic conditions, especially in manufacturing and global trade,”
said Frederick W. Smith, FedEx Corp. chairman, president and chief
executive officer. “Our profit improvement program is on track and
delivering impressive results, and I am very confident FedEx is
well positioned to deliver value for shareowners, customers and
team members in fiscal 2016 and beyond.”
First Quarter Results
FedEx Corp. reported the following consolidated results for the
first quarter:
Fiscal
2016
Fiscal
2015
As
Reported(GAAP)
Adjusted(non-GAAP)
As
Reported(GAAP)
Revenue $12.3 billion $11.7 billion $11.7 billion Operating income
$1.14 billion $996 million $1.06 billion Operating margin 9.3 % 8.5
% 9.1 % Net income $692 million $612 million $653 million Diluted
EPS $ 2.42 $ 2.12 $ 2.26
Operating results rose compared to last year due to sharply
increased operating income at FedEx Express, the benefit from one
additional operating day at each of the company’s transportation
segments and the continued positive impacts from the company’s
profit improvement program. These benefits were partially offset by
higher incentive compensation accruals, higher self-insurance
reserves and operating costs at FedEx Ground, and
lower-than-anticipated volume at FedEx Freight. Fuel had a slightly
negative net impact to operating income. Costs related to the
pending acquisition of TNT Express were immaterial during the
quarter.
During the quarter, the company acquired 1.1 million shares of
FedEx common stock.
Outlook
FedEx now projects adjusted earnings for fiscal 2016 to be
$10.40 to $10.90 per diluted share before year-end mark-to-market
pension accounting adjustments, aided by benefits from the profit
improvement program. The outlook assumes moderate economic growth
and does not include any operating results or costs related to TNT
Express. The capital spending forecast for the fiscal year remains
$4.6 billion.
“Our new fiscal 2016 outlook is modestly lower than our initial
forecast due primarily to weaker LTL industry demand and higher
than expected self-insurance reserves and operating costs at FedEx
Ground,” said Alan B. Graf, Jr., FedEx Corp. executive vice
president and chief financial officer. “We still expect strong
earnings growth this year, as we remain focused on executing our
profit improvement program, leveraging e-commerce growth and
enhancing our revenue quality.”
2016 Rate Increases
As announced on September 15, 2015, FedEx Express, FedEx Ground
and FedEx Freight will increase shipping rates by an average of
4.9% effective January 4, 2016. FedEx is also increasing surcharges
for FedEx Ground shipments that exceed the published maximum weight
or dimensional limits, and updating certain fuel surcharge tables
at FedEx Express and FedEx Ground effective November 2, 2015.
Details of all changes to rates and surcharges are available at
fedex.com/rates2016.
FedEx Express Segment
For the first quarter, the FedEx Express segment reported:
- Revenue of $6.59 billion, down 4% from
last year’s $6.86 billion
- Operating income of $545 million, up
45% from $377 million a year ago
- Operating margin of 8.3%, up from 5.5%
the previous year
Revenue decreased 4% as lower fuel surcharges and unfavorable
currency exchange rates more than offset improved base rates. U.S.
domestic package volume grew by 1%, driven by growth in deferred
box and overnight envelope. U.S. domestic revenue per package
decreased 3% due to lower fuel surcharges, partially offset by
strong base rates. FedEx International Economy volume grew 4%,
while FedEx International Priority volume decreased 5%.
International export revenue per package decreased 7%, as lower
fuel surcharges and unfavorable currency exchange rates were
partially offset by higher rates and improved package weights.
Operating income and margin improved due to higher base rates,
the benefit from one additional operating day, and lower
international expenses due to currency exchange rates, more than
offsetting higher incentive compensation accruals. Profit
improvement program initiatives continued to improve revenue
quality and constrain expenses.
FedEx Ground Segment
For the first quarter, the FedEx Ground segment reported:
- Revenue of $3.83 billion, up 29% from
last year’s $2.96 billion
- Operating income of $537 million, down
1% from $545 million a year ago
- Operating margin of 14.0%, down from
18.4% the previous year
Revenue increased due to the inclusion of GENCO results, the
recording of FedEx SmartPost service revenues on a gross basis
versus the previous net treatment, and higher ground revenue per
package and volume. FedEx Ground average daily volume, including
FedEx SmartPost shipments, grew 4% in the first quarter due
primarily to continued growth in FedEx Home Delivery. FedEx Ground
yield increased 11% due to the recording of FedEx SmartPost
revenues on a gross basis, higher dimensional weight charges and
increased rates, partially offset by lower fuel surcharges.
Operating income decreased slightly due to increased
self–insurance reserves, and higher-than-expected operating costs
due in part to larger package sizes. These factors more than offset
the benefits from higher revenue and one additional operating day.
Operating margin decreased primarily due to increased
self-insurance reserves, the inclusion of GENCO results and the
change in FedEx SmartPost revenue reporting, which collectively
reduced year-over-year operating margin by 4.0 percentage
points.
FedEx Freight Segment
For the first quarter, the FedEx Freight segment reported:
- Revenue of $1.60 billion, essentially
flat with last year’s $1.61 billion
- Operating income of $132 million, down
21% from $168 million a year ago
- Operating margin of 8.2%, down from
10.4% the previous year
Less-than-truckload (LTL) average daily shipments declined 1%
due to weak industry demand. LTL revenue per shipment was down 1%
as higher rates from yield initiatives were more than offset by
lower fuel surcharges.
Operating results declined primarily due to salaries and
employee benefits expense outpacing lower-than-anticipated
volume.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses
worldwide with a broad portfolio of transportation, e-commerce and
business services. With annual revenues of $48 billion, the company
offers integrated business applications through operating companies
competing collectively and managed collaboratively, under the
respected FedEx brand. Consistently ranked among the world's most
admired and trusted employers, FedEx inspires its more than 325,000
team members to remain "absolutely, positively" focused on safety,
the highest ethical and professional standards and the needs of
their customers and communities. For more information, visit
news.fedex.com.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs and first quarter
fiscal 2016 Statistical Book. These materials, as well as a webcast
of the earnings release conference call to be held at 8:30 a.m. EDT
on September 16 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, such as statements relating to
management's views with respect to future events and financial
performance. 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 execute on our profit improvement programs, legal challenges or
changes related to FedEx Ground’s owner-operators, new U.S.
domestic or international government regulation, the impact from
any terrorist activities or international conflicts, our ability to
effectively operate, integrate and leverage acquired businesses,
changes in fuel prices and currency exchange rates, our ability to
match capacity to shifting volume levels and other factors which
can be found in FedEx Corp.'s and its subsidiaries' press releases
and 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.
RECONCILIATION OF FEDEX CORPORATION’S
NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES
The company believes that meaningful analysis of our financial
performance requires an understanding of the factors underlying
that performance, including an understanding of items that are
non-operational or non-recurring in nature. Excluding from first
quarter fiscal 2015 results the credit associated with the segment
reporting change will assist investors in understanding and allow
for more accurate comparisons of the company’s core operating
performance. As required by SEC rules, the table below presents a
reconciliation of our presented non-GAAP measures to the most
directly comparable GAAP measures. The inability to predict the
amount of any future year-end mark-to-market pension accounting
adjustments and the amount and timing of any operating results and
integration planning and acquisition-related costs with respect to
TNT Express makes a reconciliation of the forecasts for adjusted
earnings per diluted share impracticable.
First Quarter
Fiscal 2015
Diluted
Dollars in millions, except EPS
Operating
Net Earnings
Income2
Margin Income Per Share Non-GAAP measure $ 996
8.5 % $ 612 $ 2.12
Segment reporting change1
67 0.6 %
41 0.14 GAAP measure
$ 1,062 9.1 %
$ 653 $ 2.26
Notes
1 – Represents the credit at Corporate resulting from the change
in recognizing expected return on plan assets for our defined
benefit pension and post-retirement healthcare plans at the segment
level, as discussed further in our fiscal 2015 Annual Report on
Form 10-K.
2 – Does not sum to total due to rounding.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150916005419/en/
FedEx Corp.Media Contact:Jess Bunn, 901-818-7463orInvestor
Contact:Mickey Foster, 901-818-7468Home Page: fedex.com
FedEx (NYSE:FDX)
Historical Stock Chart
From Mar 2024 to Apr 2024
FedEx (NYSE:FDX)
Historical Stock Chart
From Apr 2023 to Apr 2024