Introduces Fiscal 2025 Outlook, Including $2.2
Billion of DRIVE Cost Savings Conducting an Assessment of the Role
of FedEx Freight in Value-Creation Plans Returned $3.8 Billion to
Stockholders Through Stock Repurchases and Dividends During Fiscal
2024
FedEx Corp. (NYSE: FDX) today reported the following
consolidated results for the quarter ended May 31 (adjusted
measures exclude the items listed below for the applicable fiscal
year):
Fiscal 2024
Fiscal 2023
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$22.1 billion
$22.1 billion
$21.9 billion
$21.9 billion
Operating income
$1.56 billion
$1.87 billion
$1.50 billion
$1.77 billion
Operating margin
7.0%
8.5%
6.9%
8.1%
Net income
$1.47 billion
$1.34 billion
$1.54 billion
$1.25 billion
Diluted EPS
$5.94
$5.41
$6.05
$4.94
This year’s and last year’s quarterly and full-year consolidated
results have been adjusted for:
Fiscal 2024
Fiscal 2023
Impact per diluted share
Fourth Quarter
Full Year
Fourth Quarter
Full Year
Mark-to-market (MTM) retirement plans
accounting adjustments
($1.72)
($1.69)
($1.94)
($1.92)
Business optimization costs
0.67
1.77
0.28
0.81
Goodwill and other asset impairment
charges
0.48
0.48
0.38
0.38
Remeasurement of state deferred income
taxes under one FedEx structure
0.22
0.21
—
—
FedEx Ground legal matters
(0.18)
(0.17)
0.10
0.10
Business realignment costs
—
—
0.06
0.11
Fourth quarter revenue increased modestly versus the prior year
period. Operating income and margin improved, reflecting lower
structural costs as the company continued to execute on its DRIVE
program.
“We made significant progress in fiscal 2024 and ended the year
strong, delivering four consecutive quarters of expanding operating
income and margin in a challenging revenue environment,” said Raj
Subramaniam, FedEx Corp. president and chief executive officer.
“These results are unprecedented in this current environment,
reflecting our continued execution of our DRIVE initiatives and our
resolve to transform FedEx while we deliver outstanding service to
our customers. We expect this momentum to continue in fiscal 2025
as we advance our efforts to create the world’s most flexible,
efficient, and intelligent network.”
FedEx Ground operating results increased due to reduced
structural costs resulting from DRIVE initiatives, increased yield,
lower self-insurance costs, and growth in ground commercial
volume.
FedEx Freight operating results increased due to higher yield
and effective cost management. FedEx Freight has announced plans to
further optimize its operations and match capacity with demand
through the planned permanent closure of seven facilities.
FedEx Express operating results declined primarily due to lower
international yields, partially offset by reduced structural costs
from DRIVE initiatives and higher U.S. domestic package yields.
During the quarter, FedEx Express permanently retired certain
aircraft and related engines as part of its fleet modernization
program.
Fourth quarter results include a noncash impairment charge of
$157 million ($0.48 per diluted share) from the decision to
permanently retire 22 Boeing 757-200 aircraft and seven related
engines as the company continues to modernize its air fleet,
improve its global network efficiency, and better align air network
capacity with current and anticipated demand. Last year's fourth
quarter results included a noncash impairment charge of $70 million
($0.21 per diluted share) from the decision to permanently retire
18 aircraft and 34 related engines, and $47 million ($0.17 per
diluted share) of goodwill and other asset impairment charges
related to the ShopRunner acquisition.
Fourth quarter results include an income tax expense of $54
million ($0.22 per diluted share) from the remeasurement of U.S.
state deferred income tax balances related to the merger of FedEx
Ground and FedEx Services into Federal Express Corporation. Last
year's fourth quarter results included a tax expense of $46 million
($0.18 per diluted share) from a revaluation of certain foreign tax
assets.
Full-Year Results
For the full fiscal year, FedEx Corp. reported the following
consolidated results (adjusted measures exclude the items listed
above for the applicable fiscal year):
Fiscal 2024
Fiscal 2023
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$87.7 billion
$87.7 billion
$90.2 billion
$90.2 billion
Operating income
$5.56 billion
$6.24 billion
$4.91 billion
$5.37 billion
Operating margin
6.3%
7.1%
5.4%
6.0%
Net income
$4.33 billion
$4.48 billion
$3.97 billion
$3.84 billion
Diluted EPS
$17.21
$17.80
$15.48
$14.96
Capital spending for fiscal 2024 was $5.2 billion, down 16% from
$6.2 billion in fiscal 2023.
Capital Returns
During fiscal 2024, FedEx returned approximately $3.8 billion to
stockholders through the combination of $2.5 billion of stock
repurchases and $1.3 billion of dividend payments. Repurchases
during fiscal 2024 totaled approximately 9.8 million shares or 3.9%
of the shares outstanding at the beginning of the year, and
increased fourth quarter and full-year earnings by $0.21 and $0.34
per share, respectively. As of May 31, 2024, $5.1 billion remained
under the existing stock repurchase authorizations.
For fiscal 2025, FedEx expects to repurchase $2.5 billion of
FedEx common stock, including $1.0 billion during the first fiscal
quarter, and previously announced a 10% increase ($0.48 per share)
in the annual dividend rate on its common stock to $5.52 per
share.
“As we advance our transformation, we continue to focus on
reducing structural costs and lowering the capital intensity of the
business,” said John Dietrich, FedEx Corp. executive vice president
and chief financial officer. “Improved earnings and enhanced
capital discipline enabled us to return $3.8 billion to
stockholders during fiscal 2024 while prudently investing in our
business and maintaining a strong balance sheet.”
Outlook
FedEx is unable to forecast the fiscal 2025 MTM retirement plans
accounting adjustments. As a result, FedEx is unable to provide a
fiscal 2025 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 (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.
For fiscal 2025, FedEx is forecasting:
- A low-to-mid single-digit percent revenue growth year over
year;
- Earnings per diluted share of $18.25 to $20.25 before the MTM
retirement plans accounting adjustments and $20.00 to $22.00 after
also excluding costs related to business optimization
initiatives;
- Permanent cost reductions from the DRIVE transformation program
of $2.2 billion;
- ETR of approximately 24.5% prior to the MTM retirement plans
accounting adjustments; and
- Capital spending of $5.2 billion, with a priority on
investments in network optimization and efficiency improvement,
including fleet and facility modernization and automation.
These forecasts assume the company's current economic forecast
and fuel price expectations, successful completion of the planned
stock repurchases, and no additional adverse economic or
geopolitical developments. FedEx’s ETR and earnings per share
forecasts are based on current law and related regulations and
guidance.
With the recent completion of the FY25 planning process, FedEx
has turned its focus to the next phase of its long-term stockholder
value-creation plans. As a part of this work, FedEx management and
Board of Directors are conducting an assessment of the role of
FedEx Freight in the company’s portfolio structure and potential
steps to further unlock sustainable shareholder value. The company
is committed to completing this review thoroughly and deliberately,
by the end of the calendar year. FedEx will conduct this assessment
while continuing to focus on customers, team members, and the
safety of its operations.
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 $88 billion, the company
offers integrated business solutions utilizing its flexible,
efficient, and intelligent global network. Consistently ranked
among the world's most admired and trusted employers, FedEx
inspires its more than 500,000 employees to remain focused on
safety, the highest ethical and professional standards and the
needs of their customers and communities. FedEx is committed to
connecting people and possibilities around the world responsibly
and resourcefully, with a goal to achieve carbon-neutral operations
by 2040. To learn more, please visit fedex.com/about.
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 5:00 p.m. EDT on
June 25, 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 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 optimization of our network through Network 2.0,
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; damage to our reputation or loss of brand
equity; our ability to adjust our air network to remove costs
related to services currently provided to the U.S. Postal Service
("USPS") under the contract for Federal Express Corporation to
provide the USPS domestic transportation services, or a decision by
the USPS to terminate the agreement early; our ability to meet our
labor and purchased transportation needs while controlling related
costs; a significant data breach or other disruption to our
technology infrastructure; the impact of a widespread outbreak of
an illness or any other communicable disease or public health
crises; anti-trade measures and additional changes in international
trade policies and relations; the effect of any international
conflicts or terrorist activities, including as a result of the
current conflicts between Russia and Ukraine and in the Middle
East; changes in fuel prices or currency exchange rates, including
significant increases in fuel prices as a result of the ongoing
conflicts between Russia and Ukraine and in the Middle East and
other geopolitical and regulatory developments; our ability to
match capacity to shifting volume levels; the effect of intense
competition; an increase in self-insurance accruals and expenses;
failure to receive or collect expected insurance coverage; our
ability to effectively operate, integrate, leverage, and grow
acquired businesses and realize the anticipated benefits of
acquisitions and other strategic transactions; noncash impairment
charges related to our goodwill and certain deferred tax assets;
the future rate of e-commerce growth and levels of inventory
restocking; passenger airline cargo capacity; evolving or new U.S.
domestic or international laws and government regulations,
policies, and actions; future guidance, regulations,
interpretations, challenges, or judicial decisions related to our
tax positions; legal challenges or changes related to service
providers contracted to conduct certain linehaul and
pickup-and-delivery operations and the drivers providing services
on their behalf and the coverage of U.S. employees at Federal
Express Corporation under the Railway Labor Act of 1926, as
amended; our ability to quickly and effectively restore operations
following adverse weather or a localized disaster or disturbance in
a key geography; any liability resulting from and the costs of
defending against litigation; our ability to achieve our goal of
carbon-neutral operations by 2040; 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
Fourth Quarter and Full-Year Fiscal
2024 and Fiscal 2023 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 fourth quarter and adjusted full-year fiscal 2024 and 2023
consolidated operating income and margin, net income and diluted
earnings per share; adjusted fourth quarter and adjusted full-year
fiscal 2024 and 2023 FedEx Express segment operating income and
margin; and adjusted fourth quarter and adjusted full-year fiscal
2024 FedEx Ground segment operating income and margin. These
financial measures have been adjusted to exclude the impact of the
following items (as applicable):
- MTM retirement plans accounting adjustments in fiscal 2024 and
2023;
- Business optimization costs incurred in fiscal 2024 and
2023;
- Goodwill and other asset impairment charges incurred in fiscal
2024 and 2023;
- Remeasurement of state deferred income taxes under the one
FedEx structure in fiscal 2024;
- Insurance recoveries related to a FedEx Ground legal matter
received in fiscal 2024, and costs related to a separate FedEx
Ground legal matter incurred in fiscal 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 fiscal 2024 and
fiscal 2023. These costs were primarily related to professional
services and severance. Additionally, we incurred costs associated
with our business realignment activities in connection with the
FedEx Express workforce reduction plan in Europe announced in
January 2021 in fiscal 2023.
Costs related to business optimization initiatives and business
realignment activities, as well as MTM retirement plans accounting
adjustments, goodwill and other asset impairment charges, costs
related to a FedEx Ground legal matter, and insurance recoveries
related to accrued pre- and post-judgment interest incurred in
connection with a separate FedEx Ground legal matter in fiscal 2022
are excluded from our fourth quarter and full-year fiscal 2024 and
2023 consolidated and FedEx Express and FedEx Ground segment
non-GAAP financial measures, as applicable, because they are
unrelated to our core operating performance and/or to assist
investors with assessing trends in our underlying businesses. The
charges incurred in connection with a FedEx Ground legal matter in
fiscal 2023 are extraordinary in nature and do not represent a
recurring expense arising in our ordinary course of business.
An income tax expense related to the remeasurement of U.S. state
deferred income tax balances in connection with the merger of FedEx
Ground and FedEx Services into Federal Express Corporation pursuant
to our one FedEx consolidation is excluded from our fourth quarter
and full-year fiscal 2024 consolidated non-GAAP financial measures
because it results from the non-recurring impact of the one FedEx
consolidation on our overall deferred tax position, which
accumulated over many prior reporting periods. The adjustment to
our fourth quarter and full-year fiscal 2024 consolidated financial
measures includes only the transitional impact related to the one
FedEx consolidation.
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 earnings per share (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 in fiscal 2025. Our fiscal 2025
effective tax rate (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 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 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.
Fourth Quarter Fiscal
2024
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$1,555
7.0%
$554
$1,474
$5.94
MTM retirement plans accounting
adjustment4
—
—
(135)
(426)
(1.72)
Business optimization costs5
218
1.0%
51
166
0.67
Asset impairment charges6
157
0.7%
37
120
0.48
Remeasurement of state deferred income
taxes under one FedEx structure7
—
—
(54)
54
0.22
FedEx Ground legal matter7
(57)
(0.3%)
(13)
(44)
(0.18)
Non-GAAP measure
$1,873
8.5%
$440
$1,344
$5.41
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$201
1.9%
Asset impairment charges
157
1.5%
Business optimization costs
69
0.7%
Non-GAAP measure
$427
4.1%
FedEx Ground Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$1,104
13.0%
Business optimization costs
33
0.4%
Non-GAAP measure
$1,137
13.4%
Full-Year Fiscal 2024
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin
Taxes2
Income3
Per Share1
GAAP measure
$5,559
6.3%
$1,505
$4,331
$17.21
MTM retirement plans accounting
adjustment4
—
—
(135)
(426)
(1.69)
Business optimization costs5
582
0.7%
137
444
1.77
Asset impairment charges6
157
0.2%
37
120
0.48
Remeasurement of state deferred income
taxes under one FedEx structure7
—
—
(54)
54
0.21
FedEx Ground legal matter7
(57)
(0.1%)
(13)
(44)
(0.17)
Non-GAAP measure
$6,241
7.1%
$1,477
$4,479
$17.80
FedEx Express Segment
Operating
Dollars in millions
Income
Margin1
GAAP measure
$776
1.9%
Asset impairment charges
157
0.4%
Business optimization costs
143
0.4%
Non-GAAP measure
$1,076
2.6%
FedEx Ground Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$4,049
11.8%
Business optimization costs
108
0.3%
Non-GAAP measure
$4,157
12.1%
Fourth Quarter Fiscal
2023
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin
Taxes1,2
Income3
Per Share1
GAAP measure
$1,503
6.9%
$590
$1,538
$6.05
MTM retirement plans accounting
adjustment4
—
—
(157)
(493)
(1.94)
Goodwill and other asset impairment
charges8
117
0.5%
19
98
0.38
Business optimization costs7
93
0.4%
22
71
0.28
FedEx Ground legal matter7
35
0.2%
9
26
0.10
Business realignment costs6
19
0.1%
5
14
0.06
Non-GAAP measure
$1,767
8.1%
$487
$1,254
$4.94
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$430
4.1%
Asset impairment charges
70
0.7%
Business realignment costs
19
0.2%
Non-GAAP measure
$519
5.0%
Full-Year Fiscal 2023
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin1
Taxes2
Income3
Per Share
GAAP measure
$4,912
5.4%
$1,391
$3,972
$15.48
MTM retirement plans accounting
adjustment4
—
—
(157)
(493)
(1.92)
Business optimization costs9
273
0.3%
64
209
0.81
Goodwill and other asset impairment
charges8
117
0.1%
19
98
0.38
Business realignment costs6
36
—
9
27
0.11
FedEx Ground legal matter7
35
—
9
26
0.10
Non-GAAP measure
$5,373
6.0%
$1,335
$3,839
$14.96
Full-Year Fiscal 2023
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$1,064
2.5%
Asset impairment charges
70
0.2%
Business realignment costs
36
0.1%
Business optimization costs
11
—
Non-GAAP measure
$1,181
2.8%
Fiscal 2025 Earnings Per Share
Forecast
Dollars in millions, except EPS
Adjustments
Diluted Earnings Per
Share
Earnings per diluted share before MTM
retirement plans accounting adjustments (non-GAAP)10
$18.25 to $20.25
Business optimization costs
$560
Income tax effect2
(130)
Net of tax effect
$430
1.75
Earnings per diluted share with
adjustments (non-GAAP)10
$20.00 to $22.00
Notes:
1 –
Does not sum to total due to rounding.
2 –
Income taxes are based on the company’s
approximate statutory tax rates applicable to each transaction.
3 –
Effect of “total other (expense) income”
on net income amount not shown.
4 –
The MTM retirement plans accounting
adjustment reflects the year-end adjustment to the valuation of the
company’s defined benefit pension and other postretirement
plans.
5 –
These expenses were recognized at FedEx
Corporate, FedEx Express, and FedEx Ground.
6 –
These expenses were recognized at FedEx
Express.
7 –
These amounts were recognized at FedEx
Corporate.
8 –
Asset impairment charges were recognized
at FedEx Express and FedEx Dataworks.
The charges recognized at FedEx Dataworks
are related to the ShopRunner acquisition. Goodwill impairment
charges recognized at FedEx Dataworks are not deductible for income
tax purposes.
9 –
These expenses were recognized at FedEx
Corporate and FedEx Express.
10 –
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/20240625515548/en/
Media Contact: Caitlin Adams Maier 901-434-8100 Investor
Contact: Jeni Hollander 901-818-7200
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