FDX
$169.22
Fedex
$.82
.49%
Earnings Details
Quarter May 2020
Tuesday, June 30, 2020 4:03:00 PM
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Summary

Fedex Beats

Fedex (FDX) reported Quarter May 2020 earnings of $2.53 per share on revenue of $17.4 billion. The consensus earnings estimate was $1.42 per share on revenue of $16.3 billion. The Earnings Whisper number was $1.65 per share. Revenue fell 2.5% compared to the same quarter a year ago.

FedEx Corp provides a portfolio of transportation, e-commerce and business services. It operates in four business: FedEx Express, FedEx Ground, FedEx Freight and FedEx Services.

Results
Reported Earnings
$2.53
Earnings Whisper
$1.65
Consensus Estimate
$1.42
Reported Revenue
$17.36 Bil
Revenue Estimate
$16.31 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

FedEx Corp. Reports Fourth Quarter and Full-Year Earnings

MEMPHIS, Tenn.--(BUSINESS WIRE)--FedEx Corp. (NYSE: FDX) today reported the following consolidated results for the fourth quarter ended May 31 (adjusted measures exclude the items listed below for the applicable fiscal year):

 

 

Fiscal 2020

 

Fiscal 2019

 

 

As Reported
(GAAP)

 

Adjusted
(non-GAAP)

 

As Reported
(GAAP)

 

Adjusted
(non-GAAP)

Revenue

 

$17.4 billion

 

$17.4 billion

 

$17.8 billion

 

$17.8 billion

Operating income

 

$475 million

 

$907 million

 

$1.32 billion

 

$1.72 billion

Operating margin

 

2.7%

 

5.2%

 

7.4%

 

9.6%

Net (loss) income

 

($334 million)

 

$663 million

 

($1.97 billion)

 

$1.32 billion

Diluted (loss) EPS

 

($1.28)

 

$2.53

 

($7.56)

 

$5.01

This year’s and last year’s quarterly and full-year consolidated results have been adjusted for:

Impact per diluted share

 

 

Fiscal 2020

 

Fiscal 2019

 

 

 

Fourth
Quarter

 

Full Year

 

Fourth
Quarter

 

Full Year

Mark-to-market retirement plan accounting adjustment

 

 

$2.22

 

$2.22

 

$11.33

 

$11.22

Goodwill and other asset impairment charges

 

 

1.40

 

1.58

 

 

TNT Express integration expenses

 

 

0.18

 

0.80

 

0.26

 

1.18

Business realignment costs

 

 

 

 

0.91

 

0.91

FedEx Ground legal matter

 

 

 

 

 

0.16

Net U.S. deferred tax liability remeasurement

 

 

 

 

 

0.02

“Though our fiscal fourth quarter performance was severely affected by the COVID-19 pandemic, I am extremely proud of the herculean efforts of our team members,” said Frederick W. Smith, FedEx Corp. chairman and CEO. “With safety as the first priority, these men and women provided essential transportation of critical supplies across the globe and delivered peak-level e-commerce volumes in the United States. As a result of the strategic investments we have made to enhance our capabilities and efficiencies, FedEx is well positioned to support and benefit from the reopening of the global economy.”

Virtually all revenue and expense line items were affected by the COVID-19 pandemic during the quarter. While commercial volumes were down significantly due to business closures across the globe, there were surges in residential deliveries at FedEx Ground and in transpacific and charter flights at FedEx Express, which required incremental costs to serve. The company also incurred an approximate $125 million increase in operating costs related to personal protective equipment and medical/safety supplies, as well as additional security and cleaning services to protect our team members and ensure we are safely providing essential services for our customers.

Additionally, operating results were negatively affected by one fewer operating weekday, increased costs to expand services, higher bad debt expense, increased self-insurance accruals and the loss of business from a large customer. These factors were partially offset by the strong residential delivery volume growth at FedEx Ground, increased revenue per shipment at FedEx Freight, a favorable net impact of fuel and lower variable incentive compensation expenses.

Fourth quarter results include goodwill and other asset impairments of approximately $370 million, primarily related to goodwill impairment at FedEx Office. The COVID-19 pandemic resulted in temporary store closures and declining print revenue at FedEx Office during the fourth quarter and is expected to continue to negatively impact its near-term operating performance. The quarter’s results also include a pre-tax noncash mark-to-market (MTM) retirement plan accounting adjustment of a net $794 million loss. The negative impact from a 64 basis point decrease in the discount rate more than offset the benefit from stronger than expected asset returns.

Net income includes a tax benefit of $71 million related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provision which allows tax losses to be offset against income from prior years that was taxed at higher rates. This benefit was mostly offset by a non-cash tax expense of $51 million due to a change in deferred tax balances related to foreign operations.

Full-Year Results

FedEx Corp. reported the following consolidated results for the full year (adjusted measures exclude the items listed above for the applicable fiscal year):

 

 

Fiscal 2020

 

Fiscal 2019

 

 

As Reported
(GAAP)

 

Adjusted
(non-GAAP)

 

As Reported
(GAAP)

 

Adjusted
(non-GAAP)

Revenue

 

$69.2 billion

 

$69.2 billion

 

$69.7 billion

 

$69.7 billion

Operating income

 

$2.42 billion

 

$3.12 billion

 

$4.47 billion

 

$5.22 billion

Operating margin

 

3.5%

 

4.5%

 

6.4%

 

7.5%

Net income

 

$1.29 billion

 

$2.49 billion

 

$540 million

 

$4.13 billion

Diluted EPS

 

$4.90

 

$9.50

 

$2.03

 

$15.52

Capital spending for fiscal 2020 was $5.9 billion.

Outlook

FedEx is not providing an earnings forecast for fiscal 2021 as the timing and pace of an economic recovery are uncertain.

FedEx will continue to manage network capacity, making adjustments as needed to align with volumes and operating conditions. FedEx will also remain focused on last-mile optimization, including the continued rollout of the FedEx Express initiative to utilize FedEx Ground for the transport and delivery of select day-definite FedEx Express residential packages within the U.S. FedEx Ground will complete the integration of FedEx SmartPost packages into standard FedEx Ground operations by peak season.

TNT Express integration expenses are estimated to total approximately $1.7 billion through the completion of the physical network integration in fiscal 2022, of which $175 million is expected to be incurred this fiscal year.

Capital expenditures for fiscal 2021 are targeted to be approximately $4.9 billion, a $1 billion year-over-year decline, due primarily to reduced vehicle replacement spending and delayed facility investments.

The company does not anticipate making contributions to its tax-qualified U.S. domestic pension plans during fiscal 2021, following voluntary contributions of $1 billion during each of the last two fiscal years.

“We have reduced our planned capital spending where possible and have taken actions to mitigate the impact of the pandemic,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “While the near-term outlook is unclear, we expect to benefit from the global recovery as we leverage the strength of our unmatched air network and U.S. residential capabilities, our yield management efforts and multiple initiatives to improve our financial performance.”

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 $69 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 500,000 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 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 30, 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 and underlying assumptions. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “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, the negative impacts of the COVID-19 pandemic; 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, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such strategies and actions; the impact of the United Kingdom’s withdrawal from the European Union; changes in fuel prices or currency exchange rates; our ability to match capacity to shifting volume levels; 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, including our ability to defend our interpretations of the Tax Cuts and Jobs Act (TCJA); our ability to effectively operate, integrate, leverage and grow acquired businesses; legal challenges or changes related to service providers engaged by FedEx Ground and the drivers providing services on their behalf; an increase in self-insurance accruals and expenses; 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

Fourth Quarter and Full-Year 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 fourth quarter and adjusted full-year fiscal 2020 and 2019 consolidated operating income and margin, net (loss) income and diluted (loss) earnings per share, and adjusted fourth quarter and adjusted full-year fiscal 2020 and 2019 FedEx Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of the following items (as applicable):

  • The fiscal 2020 and 2019 year-end MTM retirement plan accounting adjustments for our defined benefit pension and other postretirement plans;
  • Goodwill and other asset impairment charges in fiscal 2020;
  • TNT Express integration expenses incurred in fiscal 2020 and 2019;
  • Business realignment costs incurred in fiscal 2019;
  • Fiscal 2019 charges related to a legal matter involving FedEx Ground; and
  • Net U.S. deferred tax liability remeasurement revision during fiscal 2019.

The MTM retirement plan accounting adjustments, goodwill and other asset impairment charges, business realignment costs, and charges related to a legal matter involving FedEx Ground are excluded from our fourth quarter and full-year fiscal 2020 and 2019 consolidated and FedEx Express 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.

We have incurred and expect to incur significant expenses through fiscal 2022 in connection with our integration of TNT Express. We have adjusted our fourth quarter and full-year fiscal 2020 and 2019 consolidated and FedEx Express segment 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 fiscal 2019 revision to the provisional benefit from the remeasurement of our net U.S. deferred tax liability as of the date of the enactment of the TCJA is excluded from our full-year fiscal 2019 consolidated non-GAAP financial measures because the provisional benefit resulted from the non-recurring impact of a significant change in the U.S. federal statutory income tax rate due to the enactment of the TCJA on our overall deferred tax position, which accumulated over many reporting periods prior to enactment. The adjustment to our full-year fiscal 2019 consolidated financial measures related to the TCJA includes only a revision to this transitional impact.

As previously disclosed, the provisional benefit from the remeasurement of our net U.S. deferred tax liability included in our fiscal 2018 earnings was an estimate subject to adjustment during a 12-month measurement period ending in fiscal 2019. The exclusion of adjustments to this provisional benefit from our full-year fiscal 2019 non-GAAP financial measures is consistent with our presentation of the effects of the initial provisional benefit in our fiscal 2018 non-GAAP earnings measures.

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.

Fourth Quarter Fiscal 2020

FedEx Corporation

 

 

Operating

 

Income

 

Net
(Loss)

 

Diluted
(Loss)
Earnings

Dollars in millions, except EPS

 

Income

 

Margin

 

Taxes1

 

Income2

 

Per Share3

GAAP measure

 

$475

 

2.7%

 

$15

 

($334)

 

($1.28)

MTM retirement plan accounting adjustment4

 

 

 

211

 

583

 

2.22

Goodwill and other asset impairment charges5

 

369

 

2.1%

 

3

 

366

 

1.40

TNT Express integration expenses6

 

63

 

0.4%

 

15

 

48

 

0.18

Non-GAAP measure

 

$907

 

5.2%

 

$244

 

$663

 

$2.53

FedEx Express Segment

 

 

Operating

Dollars in millions

 

Income

 

Margin7

GAAP measure

 

$338

 

3.9%

TNT Express integration expenses

 

54

 

0.6%

Non-GAAP measure

 

$392

 

4.6%

Full-Year Fiscal 2020

FedEx Corporation

 

 

Operating

 

Income

 

Net

 

Diluted
Earnings

Dollars in millions, except EPS

 

Income

 

Margin

 

Taxes1

 

Income2

 

Per Share

GAAP measure

 

$2,417

 

3.5%

 

$383

 

$1,286

 

$4.90

MTM retirement plan accounting adjustment4

 

 

 

211

 

583

 

2.22

Goodwill and other asset impairment charges5

 

435

 

0.6%

 

19

 

416

 

1.58

TNT Express integration expenses6

 

270

 

0.4%

 

61

 

209

 

0.80

Non-GAAP measure

 

$3,122

 

4.5%

 

$674

 

$2,494

 

$9.50

FedEx Express Segment

 

 

Operating

Dollars in millions

 

Income

 

Margin

GAAP measure

 

$996

 

2.8%

TNT Express integration expenses

 

222

 

0.6%

Asset impairment charges

 

66

 

0.2%

Non-GAAP measure

 

$1,284

 

3.6%

Fourth Quarter Fiscal 2019

FedEx Corporation

 

 

Operating

 

Income

 

Net (Loss)

 

Diluted
(Loss)
Earnings

Dollars in millions, except EPS

 

Income

 

Margin7

 

Taxes1

 

Income2

 

Per Share3

GAAP measure

 

$1,316

 

7.4%

 

($585)

 

($1,969)

 

($7.56)

MTM retirement plan accounting adjustment4

 

 

 

902

 

2,981

 

11.33

Business realignment costs8

 

316

 

1.8%

 

76

 

240

 

0.91

TNT Express integration expenses6

 

84

 

0.5%

 

16

 

68

 

0.26

Non-GAAP measure

 

$1,716

 

9.6%

 

$409

 

$1,320

 

$5.01

FedEx Express Segment

 

 

Operating

Dollars in millions

 

Income

 

Margin

GAAP measure

 

$769

 

8.1%

TNT Express integration expenses

 

68

 

0.7%

Non-GAAP measure

 

$837

 

8.8%

Full-Year Fiscal 2019

FedEx Corporation

 

 

Operating

 

Income

 

Net

 

Diluted
Earnings

Dollars in millions, except EPS

 

Income

 

Margin7

 

Taxes1

 

Income2

 

Per Share

GAAP measure

 

$4,466

 

6.4%

 

$115

 

$540

 

$2.03

MTM retirement plan accounting adjustment4

 

 

 

902

 

2,981

 

11.22

TNT Express integration expenses6

 

388

 

0.6%

 

74

 

314

 

1.18

Business realignment costs8

 

320

 

0.5%

 

77

 

243

 

0.91

FedEx Ground legal matter

 

46

 

0.1%

 

3

 

43

 

0.16

Net U.S. deferred tax liability remeasurement

 

 

 

(4)

 

4

 

0.02

Non-GAAP measure

 

$5,220

 

7.5%

 

$1,167

 

$4,125

 

$15.52

FedEx Express Segment

 

 

Operating

Dollars in millions

 

Income

 

Margin

GAAP measure

 

$2,176

 

5.8%

TNT Express integration expenses

 

325

 

0.9%

Non-GAAP measure

 

$2,501

 

6.7%

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 –

Does not sum to total due to difference in weighted-average number of shares outstanding used to calculate EPS in accordance with GAAP.

4 –

The MTM retirement plan accounting adjustment reflects the year-end adjustment to the valuation of the company’s defined benefit pension and other postretirement plans.

5 –

Goodwill impairment charges are not deductible for income tax purposes.

6 –

These expenses were recognized at FedEx Corporate and FedEx Express.

7 –

Does not sum to total due to rounding.

8 –

Business realignment costs are recognized at FedEx Corporate.

 

Media Contact: Jenny Robertson 901-434-4829
Investor Contact: Mickey Foster 901-818-7468
Home Page: fedex.com

Source: FedEx Corp.