Strong Earnings Growth Expected in Fiscal
2016
FedEx Corp. (NYSE: FDX) today reported adjusted earnings of
$2.66 per diluted share for the fourth quarter ended May 31,
compared to adjusted earnings of $2.54 per diluted share a year
ago. For fiscal 2015, adjusted earnings were $8.95 per diluted
share, compared to $7.05 per diluted share a year ago. Without
adjustments, FedEx reported a loss of $3.16 per diluted share for
the fourth quarter compared to a profit of $2.62 per diluted share
a year ago, and earnings of $3.65 per diluted share for the full
fiscal year, compared to $7.48 per diluted share last year.
Quarterly consolidated earnings have been adjusted for
previously announced changes in pension accounting ($4.88 per
diluted share), aircraft impairments ($0.62 per diluted share), a
legal reserve increase ($0.47 per diluted share) and changes in
segment reporting (favorable $0.15 per diluted share).
“Fiscal 2015 was a transformative year for FedEx with
outstanding financial results driving expanded long-term value for
shareowners,” said Frederick W. Smith, FedEx Corp. chairman,
president and chief executive officer. “Significant acquisitions
announced in the year promise to strengthen our portfolio of
services and change what’s possible for customers. I am very proud
of the FedEx team for its accomplishments and look forward to a
successful fiscal 2016.”
FedEx also announced today that independent members of its Board
of Directors have approved a change to FedEx’s Corporate Governance
Guidelines to increase the mandatory retirement age for directors
from age 72 to age 75, effective immediately. “This change is
consistent with the market trend of increasing the mandatory
retirement age for board members,” said David P. Steiner, FedEx
Corporation’s Lead Independent Director.
As previously disclosed, prior year amounts have been recast to
conform to the current year presentation reflecting the pension
accounting changes and allocation of corporate headquarters
costs.
Fourth Quarter Results
FedEx Corp. reported the following consolidated results for the
fourth quarter:
Fiscal
2015
Fiscal
2014
Adjusted(non-GAAP)
As
Reported(GAAP)
Adjusted(non-GAAP)
As
Reported(GAAP)
Revenue $12.1 billion $12.1 billion $11.8 billion $11.8 billion
Operating income $1.28 billion ($1.32 billion) $1.22 billion $1.26
billion Operating margin 10.5% (10.9%) 10.3% 10.7% Net income
(loss) $753 million ($895 million) $753 million $780 million
Diluted EPS (loss) $2.66 ($3.16) $2.54 $2.62 YOY share repurchase
impact, net of interest
$0.12
($0.14)
$0.13
$0.13
Adjusted operating income improved 5% during the quarter, due to
base yield growth in all three transportation segments, higher
ground and U.S. domestic express volume, and benefits from profit
improvement program initiatives. These improvements offset
increased employee variable incentive compensation and unfavorable
net impacts from fuel and weather.
Full Year Results
FedEx Corp. reported the following consolidated results for the
full year:
Fiscal
2015
Fiscal
2014
Adjusted(non-GAAP)
As
Reported(GAAP)
Adjusted(non-GAAP)
As
Reported(GAAP)
Revenue $47.5 billion $47.5 billion $45.6 billion $45.6 billion
Operating income $4.26 billion $1.87 billion $3.59 billion $3.82
billion Operating margin 9.0% 3.9% 7.9% 8.4% Net income $2.57
billion $1.05 billion $2.19 billion $2.32 billion Diluted EPS $8.95
$3.65 $7.05 $7.48
YOY share repurchase impact, net of
interest
$0.53
$0.14
$0.07
$0.08
Adjusted operating results increased sharply during the year due
to higher volumes and base yields in all three transportation
segments, benefits from profit improvement program initiatives and
a favorable net fuel impact. This was partially offset by increased
incentive compensation and higher aircraft maintenance expense.
Capital spending for fiscal 2015 was $4.3 billion.
Outlook
For fiscal 2016, FedEx projects adjusted earnings to be $10.60
to $11.10 per diluted share before year-end mark-to-market pension
accounting adjustments, driven by continued improvement in base
pricing and benefits from our profit improvement program. The
outlook assumes continued moderate economic growth and does not
include any operating results or costs related to TNT Express.
Capital spending for fiscal 2016 is expected to be approximately
$4.6 billion, which includes expansion of the FedEx Ground network
and planned aircraft deliveries to support the FedEx Express fleet
modernization program.
“Our operating performance significantly improved in fiscal 2015
as we focused on revenue quality and executed on our profit
improvement program initiatives,” said Alan B. Graf, Jr., FedEx
Corp. executive vice president and chief financial officer. “We
expect strong earnings growth in fiscal 2016 as we continue to
focus on improving performance and successfully executing our
profit improvement initiatives.”
FedEx Express Segment
For the fourth quarter, the FedEx Express segment reported:
Fiscal 2015
Fiscal 20141
Change
Revenue $6.70 billion $7.00 billion (4%) Adjusted operating income
$598 million $534 million 12% Adjusted operating margin 8.9% 7.6%
1.3 pts Operating income $322 million $534 million (40%) Operating
margin 4.8% 7.6% (2.8 pts)
1 – There were no adjustments to fourth quarter fiscal 2014
results.
During the fourth quarter, FedEx Express permanently retired 15
aircraft and 21 related engines, and adjusted the retirement
schedule of an additional 23 aircraft and 57 engines. These actions
resulted in $276 million of impairment and related charges, of
which $246 million was noncash. These charges are excluded from
this year’s adjusted operating income and margin.
Revenue decreased 4% as lower fuel surcharges and unfavorable
currency exchange rates more than offset base yield and volume
growth. U.S. domestic package volume grew 2%, driven by a 3%
increase in overnight box. U.S. domestic revenue per package
declined 4%, with lower fuel surcharges offsetting improved base
rates. International export volume was down 1%, as FedEx
International Economy grew 3% while FedEx International Priority®
declined 2%. International export revenue per package decreased 8%,
as lower fuel surcharges and unfavorable currency exchange rates
more than offset higher base rates.
Adjusted segment operating results improved due to higher base
yield and U.S. domestic volume growth, the benefit from profit
improvement program initiatives and lower international expenses
due to currency exchange rates. These benefits were partially
offset by an unfavorable net fuel impact, higher incentive
compensation and a negative impact from weather.
FedEx Ground Segment
For the fourth quarter, the FedEx Ground segment reported:
Fiscal 2015
Fiscal 2014
Change
Revenue $3.57 billion $3.01 billion 19% Operating income $603
million $601 million — Operating margin 16.9% 20.0% (3.1 pts)
Revenue increased due to the inclusion of GENCO results and
higher ground volume and revenue per package. Ground yield
increased 2% due to higher dimensional weight charges and increased
rates, partially offset by lower fuel surcharges. Ground average
daily volume grew 5% in the quarter, primarily driven by growth in
residential deliveries. FedEx SmartPost average daily volume
decreased 1% due to the reduction in volume from a major customer.
FedEx SmartPost revenue per package increased 7% due to rate
increases and improved customer mix, partially offset by higher
postage costs.
Segment operating margin declined due predominantly to the
inclusion of GENCO results and increased self-insurance
reserves.
FedEx Freight Segment
For the fourth quarter, the FedEx Freight segment reported:
Fiscal 2015
Fiscal 2014
Change
Revenue $1.57 billion $1.55 billion 1% Operating income $137
million $130 million 5% Operating margin 8.7% 8.4% 0.3 pts
LTL revenue per shipment improved 2% due to higher rates from
ongoing yield initiatives, significantly offset by lower fuel
surcharges. Less-than-truckload (LTL) average daily shipments were
flat.
Segment operating results improved primarily due to the positive
impact of higher LTL revenue per shipment.
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 $47 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, Form 8-Ks and
fourth quarter fiscal 2015 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 June 17, 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.
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.
The financial section of this release is provided on the
company's website at investors.fedex.com.
RECONCILIATION OF 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 the credit
associated with the segment reporting change, amounts associated
with changes in pension accounting, aircraft impairment and related
charges at FedEx Express and a legal reserve increase from results
will assist investors in understanding and allow for more accurate
comparisons of the company’s and its segments’ core operating
performance. Where applicable, the impacts of these events are
shown net of incentive compensation impacts. As required by SEC
rules, the tables below present 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 and the adjusted effective tax rate impracticable.
Fourth Quarter
Fiscal 2015
FedEx Corporation
Dollars in millions, except EPS
Diluted
Operating
Net
Earnings/
Income/
Income/
(Loss)
(Loss)
Margin3
(Loss)
Per Share Non-GAAP measure $ 1,275 10.5 % $ 753 $ 2.66
Segment reporting change1 67 0.5 % 42 0.15 Mark-to-market pension
accounting adjustments2
(2,190
)
(18.1
%)
(1,382
)
(4.88
)
Aircraft impairment and related charges (276 ) (2.3 %) (175 ) (0.62
) Legal reserve
(197 )
(1.6 %) (133
) (0.47 ) GAAP
measure
($1,321 )
(10.9 %) ($ 895
) ($3.16 )
Dollars in millions
FedEx Express
Operating
Income
Margin
Non-GAAP measure $ 598 8.9 % Aircraft impairment and related
charges
(276
)
(4.1
%)
GAAP measure4
$ 322
4.8 %
Full Year Fiscal
2015
FedEx Corporation
Diluted
Dollars in millions, except EPS
Operating Net
Earnings
Income
Margin3
Income Per Share Non-GAAP measure $ 4,264 9.0 % $
2,572 $ 8.95 Segment reporting change1 266 0.6 % 168 0.58
Mark-to-market pension accounting adjustments2
(2,190
)
(4.6
%)
(1,382
)
(4.81
)
Aircraft impairment and related charges
(276
)
(0.6
%)
(175
)
(0.61
)
Legal reserve
(197 )
(0.4 %) (133
) (0.46 ) GAAP
measure
$ 1,867 3.9
% $ 1,050
$ 3.65
Dollars in millions
FedEx Express Operating
Income
Margin
Non-GAAP measure $ 1,860 6.8 % Aircraft impairment and related
charges
(276
)
(1.0
%)
GAAP measure4
$ 1,584
5.8 %
Fourth Quarter
Fiscal 2014
FedEx Corporation
Diluted
Dollars in millions, except EPS
Operating Net
Earnings
Income
Margin
Income
Per Share3
Non-GAAP measure $ 1,220 10.3 % $ 753 $ 2.54 Segment reporting
change1 59 0.5 % 36 0.12 Mark-to-market pension accounting
adjustments2
(15
)
(0.1
%)
(9
)
(0.03
)
GAAP measure
$ 1,264
10.7 % $ 780
$ 2.62
Full Year Fiscal
2014
FedEx Corporation
Dollars in millions, except EPS
Diluted
Operating
Net
Earnings
Income
Margin
Income
Per Share
Non-GAAP measure $ 3,593 7.9 % $ 2,190 $ 7.05 Segment reporting
change1 237 0.5 % 143 0.46 Mark-to-market pension accounting
adjustments2
(15
)
0.0
%
(9
)
(0.03
)
GAAP measure
$ 3,815
8.4 % $ 2,324
$ 7.48
Notes
1 – At the segment level, the expected return on assets (EROA)
has been set at 6.5%, which will equal the company’s consolidated
EROA assumption in fiscal 2016. In fiscal years where the
consolidated EROA is greater than 6.5% the difference is reflected
as a credit at Corporate. The segment reporting change reflects
this credit.
2 – Mark-to-market pension accounting adjustments reflect the
year-end noncash adjustment to the valuation of the company’s
defined benefit retirement plans.
3 – Does not sum to total due to rounding.
4 – The most directly comparable GAAP measure is segment
operating income.
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version on businesswire.com: http://www.businesswire.com/news/home/20150617005393/en/
FedEx Corp.Media Contact:Jess Bunn, 901-818-7463orInvestor
Contact:Mickey Foster, 901-818-7468Home Page:fedex.com
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