FedEx Corp. (NYSE: FDX) today reported the following
consolidated results for the first quarter ended August 31
(adjusted measures exclude TNT Express integration expenses as
described below):
Fiscal 2020
Fiscal 2019
Dollars in millions, except
EPS
As Reported
(GAAP)
Adjusted
(non-GAAP)
As Reported
(GAAP)
Adjusted
(non-GAAP)
Revenue
$
17,048
$
17,048
$
17,052
$
17,052
Operating income
$
977
$
1,048
$
1,071
$
1,192
Operating margin
5.7%
6.1%
6.3%
7.0%
Net income
$
745
$
800
$
835
$
933
Diluted EPS
$
2.84
$
3.05
$
3.10
$
3.46
This year’s and last year’s quarterly consolidated results have
been adjusted for TNT Express integration expenses of $71 million
($0.21 per diluted share) for this year and $121 million ($0.36 per
diluted share) for last year.
“Our performance continues to be negatively impacted by a
weakening global macro environment driven by increasing trade
tensions and policy uncertainty,” said Frederick W. Smith, FedEx
Corp. chairman and chief executive officer. “Despite these
challenges, we are positioning FedEx to leverage future growth
opportunities as we continue the integration of TNT Express,
enhance FedEx Ground residential delivery capabilities and
modernize the FedEx Express air fleet and hub operations.”
Operating results declined primarily due to weakening global
economic conditions, increased costs to expand service offerings
and continued mix shift to lower-yielding services. The impact of
one fewer operating day and the loss of business from a large
customer also negatively impacted results. These factors were
partially offset by lower variable incentive compensation expenses,
revenue growth at FedEx Ground and increased yields at FedEx
Freight.
2020 Rate Increases
As previously announced, effective January 6, 2020, FedEx
Express, FedEx Ground and FedEx Home Delivery shipping rates will
increase by an average of 4.9%, while FedEx Freight shipping rates
will increase by an average of 5.9%. Details related to these and
additional changes to rates and surcharges are available at
fedex.com/rates2020.
Outlook
FedEx is unable to forecast the fiscal 2020 year-end
mark-to-market (MTM) retirement plan accounting adjustment. As a
result, the company is unable to provide a fiscal 2020 earnings per
share or effective tax rate (ETR) outlook on a GAAP basis.
FedEx is lowering its fiscal 2020 earnings forecast as the
company’s revenue outlook has been reduced due to increased trade
tensions and additional weakening of global economic conditions
since the company’s initial fiscal 2020 forecast in June. The
company’s revised outlook also reflects increased FedEx Ground
costs and August’s loss of FedEx Ground business from a large
customer. In addition, the FedEx ETR is now expected to be 24% to
26% before the year-end MTM retirement plan accounting adjustment,
due to lower-than-expected earnings in certain non-U.S.
jurisdictions.
FedEx now forecasts earnings of $10.00 to $12.00 per diluted
share before the year-end MTM retirement plan accounting
adjustment, and earnings of $11.00 to $13.00 per diluted share
before the year-end MTM retirement plan accounting adjustment and
excluding TNT Express integration expenses. The capital spending
forecast remains $5.9 billion.
“FedEx is implementing additional cost-reduction initiatives to
mitigate the effects of macroeconomic uncertainty, including
post-peak reductions to the global FedEx Express air network to
better match capacity with demand,” said Alan B. Graf, Jr., FedEx
Corp. executive vice president and chief financial officer.
“However, we are continuing to make strategic investments to
improve our capabilities and efficiency, which we expect will drive
long-term increases in earnings, margins, cash flows and
returns.”
These forecasts assume moderate U.S. economic growth, the
company’s current fuel price expectations, no further weakening in
international economic conditions from the company’s current
forecast and no additional adverse developments in international
trade policies and relations. FedEx’s ETR and earnings per share
outlooks are based on the company’s current interpretations of the
Tax Cuts and Jobs Act (TCJA) and related regulations and guidance,
and are subject to change based on future guidance, as well as
FedEx’s ability to defend its interpretations. These forecasts do
not include potential costs associated with capacity
reductions.
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 $70 billion, the company
offers integrated business solutions 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 450,000
team members to remain focused on safety, the highest ethical and
professional standards and the needs of their customers and
communities. To learn more about how FedEx connects people and
possibilities around the world, please visit about.fedex.com.
Additional information and operating data are contained in the
company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks,
Statistical Books and supplemental first quarter fiscal 2020
earnings release conference call slides. These materials, as well
as a webcast of the earnings release conference call to be held at
5:30 p.m. EDT on September 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.
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 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; anti-trade
measures and additional changes in international trade policies and
relations; a significant data breach or other disruption to our
technology infrastructure; our ability to successfully integrate
the businesses and operations of FedEx Express and TNT Express in
the expected time frame and at the expected cost and to achieve the
expected benefits from the combined businesses; our ability to
successfully implement our business strategy and effectively
respond to changes in market dynamics; the impact of the United
Kingdom’s vote to leave the European Union and the terms of its
withdrawal if it ultimately occurs; our ability to match capacity
to shifting volume levels; changes in fuel prices or currency
exchange rates; the impact of intense competition; evolving or new
U.S. domestic or international government regulation or regulatory
actions; future guidance, regulations, interpretations or
challenges to our tax positions relating to the TCJA and our
ability to defend our interpretations of the TCJA; our ability to
effectively operate, integrate, leverage and grow acquired
businesses; legal challenges or changes related to owner-operators
engaged by FedEx Ground and the drivers providing services on their
behalf; disruptions or modifications in service by, or changes in
the business or financial soundness of, the U.S. Postal Service;
the impact of any international conflicts or terrorist activities;
our ability to quickly and effectively restore operations following
adverse weather or a localized disaster or disturbance in a key
geography; and other factors which can be found in FedEx Corp.’s
and its subsidiaries’ press releases and FedEx Corp.’s 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.
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES TO GAAP FINANCIAL MEASURES
First Quarter Fiscal 2020 and Fiscal
2019 Results
The company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP” or “reported”). We have supplemented the reporting of our
financial information determined in accordance with GAAP with
certain non-GAAP (or “adjusted”) financial measures, including our
adjusted first quarter fiscal 2020 and 2019 consolidated operating
income and margin, net income and diluted earnings per share. These
financial measures have been adjusted to exclude the impact of TNT
Express integration expenses incurred in fiscal 2020 and 2019.
We have incurred and expect to incur significant expenses
through fiscal 2021, and may incur additional expenses thereafter,
in connection with our integration of TNT Express. We have adjusted
our first quarter fiscal 2020 and 2019 consolidated financial
measures to exclude TNT Express integration expenses because we
generally would not incur such expenses as part of our continuing
operations. The integration expenses are predominantly incremental
costs directly associated with the integration of TNT Express,
including professional and legal fees, salaries and employee
benefits, travel and advertising expenses. Internal salaries and
employee benefits are included only to the extent the individuals
are assigned full-time to integration activities. The integration
expenses also include any restructuring charges at TNT Express.
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 Securities and Exchange
Commission rules, the tables below present a reconciliation of our
presented non-GAAP financial measures to the most directly
comparable GAAP measures.
Fiscal 2020 Earnings Per Share and
Effective Tax Rate Forecasts
Our fiscal 2020 earnings per share (EPS) forecast is a non-GAAP
financial measure because it excludes the fiscal 2020 year-end
mark-to-market (MTM) retirement plan accounting adjustment and
estimated fiscal 2020 TNT Express integration expenses. Our fiscal
2020 effective tax rate (ETR) forecast is a non-GAAP financial
measure because it excludes the impact of the fiscal 2020 year-end
MTM retirement plan accounting adjustment.
We have provided these non-GAAP financial measures for the same
reasons that were outlined above for historical non-GAAP measures.
The fiscal 2020 year-end MTM retirement plan accounting adjustment
is excluded from our fiscal 2020 EPS and ETR forecasts, as
applicable, because it is unrelated to our core operating
performance and to assist investors with assessing trends in our
underlying businesses. Estimated fiscal 2020 TNT Express
integration expenses are excluded from our fiscal 2020 EPS forecast
for the same reasons described above for historical non-GAAP
measures.
We are unable to predict the amount of the year-end MTM
retirement plan accounting adjustment, as it is significantly
impacted by changes in interest rates and the financial markets, so
such adjustment is not included in our fiscal 2020 EPS and ETR
forecasts. For this reason, a full reconciliation of our fiscal
2020 EPS and ETR forecasts to the most directly comparable GAAP
measures is impracticable. It is reasonably possible, however, that
our fiscal 2020 year-end MTM retirement plan accounting adjustment
could have a material impact on our fiscal 2020 consolidated
financial results and ETR.
The table included below titled “Fiscal 2020 Earnings Per Share
Forecast” outlines the impacts of the items that are excluded from
our fiscal 2020 EPS forecast, other than the year-end MTM
retirement plan accounting adjustment.
First Quarter Fiscal
2020
FedEx
Corporation
Dollars in millions, except EPS
Operating
Income
Net
Diluted Earnings
Income
Margin
Taxes1
Income2
Per
Share
GAAP measure
$
977
5.7
%
$
251
$
745
$
2.84
TNT Express integration expenses3
71
0.4
%
16
55
0.21
Non-GAAP measure
$
1,048
6.1
%
$
267
$
800
$
3.05
First Quarter Fiscal
2019
FedEx
Corporation
Dollars in millions, except EPS
Operating
Income
Net
Diluted Earnings
Income
Margin
Taxes1
Income2
Per
Share
GAAP measure
$
1,071
6.3
%
$
266
$
835
$
3.10
TNT Express integration expenses3
121
0.7
%
23
98
0.36
Non-GAAP measure
$
1,192
7.0
%
$
289
$
933
$
3.46
Fiscal 2020 Earnings Per Share
Forecast
Dollars in millions, except EPS
Adjustments
Diluted Earnings
Per
Share
Earnings per diluted share before year-end
MTM retirement plan accounting adjustment (non-GAAP)4
$10.00 to $12.00
TNT Express integration expenses
$350
Income tax effect1
(86)
Net of tax effect
$264
1.00
Earnings per diluted share with
adjustments4
$11.00 to $13.00
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, including restructuring
charges, were recognized at FedEx Corporate and FedEx Express.
4 –
The year-end MTM retirement plan
accounting adjustment, which is impracticable to calculate at this
time, is excluded.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190917006101/en/
Media Contact: Jenny Robertson 901-434-4829 Investor Contact:
Mickey Foster 901-818-7468 Home 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