Additional Earnings Momentum Expected During
Fiscal 2023
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 2022
Fiscal 2021
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$24.4 billion
$24.4 billion
$22.6 billion
$22.6 billion
Operating income
$1.92 billion
$2.23 billion
$1.80 billion
$1.97 billion
Operating margin
7.9%
9.2%
8.0%
8.7%
Net income
$558 million
$1.80 billion
$1.87 billion
$1.36 billion
Diluted EPS
$2.13
$6.87
$6.88
$5.01
This year’s and last year’s quarterly and full-year consolidated
results have been adjusted for:
Fiscal 2022
Fiscal 2021
Impact per diluted share
Fourth Quarter
Full Year
Fourth Quarter
Full Year
Mark-to-market (MTM) retirement plans
accounting adjustments
$3.83
$4.49
($3.44)
($3.33)
FedEx Ground legal matter
0.61
0.60
—
—
Business realignment costs
0.18
0.80
0.30
0.33
TNT Express integration expenses
0.12
0.39
0.18
0.60
Loss on debt extinguishment
—
—
1.09
1.11
“Our fiscal 2022 financial performance was a result of our
team's ability to adapt to a number of unexpected challenges and is
a testament to the FedEx value proposition and the execution of our
long-term strategy,” said Raj Subramaniam, FedEx Corp. president
and chief executive officer. “Our foundational investments have set
the stage for a strong fiscal 2023. As we move forward, our focus
will be on revenue quality and lowering our cost to serve. I am
honored to lead our dedicated global team who enable FedEx to lead
the industry from a position of strength.”
Fourth Quarter Results
Fourth quarter operating income improved primarily due to
revenue management actions, including the favorable net impact of
fuel at each transportation segment, and lower variable
compensation expense. These factors were partially offset by lower
shipment demand due to slower economic growth and supply chain
disruptions, as well as higher purchased transportation and wage
rates.
Fourth quarter net income included a tax benefit of $46 million
($0.18 per diluted share) related to revisions of prior year
estimates for actual tax return results.
FedEx Express operating results improved in the fourth quarter
driven by revenue management actions, including increased fuel
surcharges. Global volume softness, driven by COVID lockdowns,
geopolitical uncertainty, and slower economic growth, partially
offset the year-over-year improvement.
FedEx Ground operating results declined primarily due to higher
self-insurance accruals and increased purchased transportation and
wage rates. These costs were partially offset by higher revenue per
package, including increased fuel surcharges. Average daily volume
declined primarily due to yield management actions affecting the
FedEx Ground Economy service.
FedEx Freight operating results sharply increased, with
operating margin improving 570 basis points to 21.8%. The improved
results were driven by a 28% increase in revenue per shipment from
the continued focus on revenue quality and profitable growth.
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 2022
Fiscal 2021
As Reported (GAAP)
Adjusted (non-GAAP)
As Reported (GAAP)
Adjusted (non-GAAP)
Revenue
$93.5 billion
$93.5 billion
$84.0 billion
$84.0 billion
Operating income
$6.25 billion
$6.87 billion
$5.86 billion
$6.18 billion
Operating margin
6.7%
7.3%
7.0%
7.4%
Net income
$3.83 billion
$5.50 billion
$5.23 billion
$4.89 billion
Diluted EPS
$14.33
$20.61
$19.45
$18.17
Capital spending for fiscal 2022 was $6.8 billion.
Share Repurchases
During fiscal 2022 the company repurchased $2.2 billion of FedEx
common stock. As of May 31, 2022, $4.1 billion remained under the
existing share repurchase authorization. The company expects to
repurchase $1.5 billion of FedEx common stock during the first half
of fiscal 2023.
Outlook
FedEx is unable to forecast the fiscal 2023 mark-to-market (MTM)
retirement plans accounting adjustments. FedEx also may incur
additional costs in fiscal 2023 related to business optimization
initiatives. The company is currently unable to forecast the amount
and timing of these additional costs, which may impact the fiscal
2023 effective tax rate (ETR). As a result, FedEx is unable to
provide a fiscal 2023 earnings per share or ETR outlook on a GAAP
basis.
For fiscal 2023, FedEx is forecasting:
- Earnings per diluted share of $22.45 to $24.45 before the MTM
retirement plans accounting adjustments and costs related to
business optimization initiatives;
- Earnings per diluted share of $22.50 to $24.50 before the MTM
retirement plans accounting adjustments and costs related to
business optimization initiatives, and excluding estimated costs
associated with business realignment activities;
- ETR of approximately 24% prior to the MTM retirement plans
accounting adjustments and costs related to business optimization
initiatives; and
- Capital spending of $6.8 billion, with a priority on
investments to improve efficiency, including fleet and facility
modernization, and increased automation.
These forecasts assume the company's current economic forecast
and fuel price expectations, no additional COVID-19-related
business restrictions, successful completion of the planned stock
repurchases, and no additional adverse geopolitical developments.
FedEx’s ETR and earnings per share forecasts are based on current
law and related regulations and guidance.
“Our continued emphasis on revenue quality drove significant
improvement in our fourth quarter results,” said Michael C. Lenz,
FedEx Corp. executive vice president and chief financial officer.
“We expect further momentum in fiscal 2023 and beyond as we execute
on our initiatives to drive increased profitability and
returns.”
Investors Meeting
On June 29, 2022, the FedEx executive team will discuss its
strategy and plans for the future. These plans will guide the
company’s short-term and long-term priorities for maximizing value
for customers, stockholders, and team members. The meeting will be
streamed beginning at 8:30 a.m. CDT at investors.fedex.com, and the
materials presented will be available to download.
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 $94 billion, the company
offers integrated business solutions through operating companies
competing collectively, operating collaboratively and innovating
digitally under the respected FedEx brand. Consistently ranked
among the world's most admired and trusted employers, FedEx
inspires its 550,000 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 23, 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,”
“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 meet our
labor and purchased transportation needs while controlling related
costs; a significant data breach or other disruption to our
technology infrastructure; the continuing effect of the COVID-19
pandemic; 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 conflict between Russia and Ukraine; 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, including our ability to successfully implement our
FedEx Express workforce reduction plan in Europe and to continue to
transform and optimize the FedEx Express international business,
particularly in Europe; damage to our reputation or loss of brand
equity; changes in the business or financial soundness of the U.S.
Postal Service, including strategic changes to its operations to
reduce its reliance on the air network of FedEx Express; changes in
fuel prices or currency exchange rates, including significant
increases in fuel prices as a result of the ongoing conflict
between Russia and Ukraine; our ability to match capacity to
shifting volume levels; the effect of intense competition; an
increase in self-insurance accruals and expenses; our ability to
effectively operate, integrate, leverage, and grow acquired
businesses and realize the anticipated benefits of acquisitions and
other strategic transactions; the future rate of e-commerce growth
and our ability to successfully expand our e-commerce services
portfolio; the timeline for recovery of 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 engaged by FedEx Ground and the drivers
providing services on their behalf; our ability to quickly and
effectively restore operations following adverse weather or a
localized disaster or disturbance in a key geography; 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
2022 and Fiscal 2021 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 2022 and 2021
consolidated operating income and margin, net income and diluted
earnings per share, and adjusted fourth quarter and adjusted
full-year fiscal 2022 and 2021 FedEx Express 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 2022 and
2021;
- Business realignment costs in fiscal 2022 and 2021;
- Costs related to a FedEx Ground legal matter in fiscal
2022;
- TNT Express integration expenses incurred in fiscal 2022 and
2021; and
- Loss on debt extinguishment in fiscal 2021.
The MTM retirement plans accounting adjustments, costs related
to business realignment activities in connection with the FedEx
Express workforce reduction plan in Europe, costs related to a
FedEx Ground legal matter, and loss on debt extinguishment are
excluded from our fourth quarter and full-year fiscal 2022 and 2021
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. The charges related to accrued pre- and
post-judgment interest incurred in connection with the FedEx Ground
legal matter are extraordinary in nature and do not represent a
recurring expense arising in our ordinary course of business.
We have incurred significant expenses through fiscal 2022 in
connection with our integration of TNT Express. We have adjusted
our fourth quarter and full-year fiscal 2022 and 2021 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, advertising and travel
expenses. Internal salaries and employee benefits are included only
to the extent the individuals are assigned full-time to integration
activities. The integration expenses do not include costs
associated with our business realignment activities.
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 2023 Earnings Per Share and
Effective Tax Rate Forecasts
Our fiscal 2023 earnings per share (EPS) forecast is a non-GAAP
financial measure because it excludes (i) fiscal 2023 MTM
retirement plans accounting adjustments, (ii) costs related to
business optimization initiatives in fiscal 2023, and (iii)
estimated fiscal 2023 business realignment costs. Our fiscal 2023
effective tax rate (ETR) forecast is a non-GAAP financial measure
because it excludes the impact of fiscal 2023 MTM retirement plans
accounting adjustments and costs related to business optimization
initiatives.
We have provided these non-GAAP financial measures for the same
reasons that were outlined above for historical non-GAAP measures.
These items are excluded from our fiscal 2023 EPS and ETR
forecasts, as applicable, 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 impacted by
changes in interest rates and the financial markets. We also may
incur additional costs in fiscal 2023 related to business
optimization initiatives. We are currently unable to forecast the
amount and timing of these additional costs, which may impact the
fiscal 2023 ETR. Accordingly, such adjustments and costs are not
included in our fiscal 2023 EPS and ETR forecasts. For this reason,
a full reconciliation of our fiscal 2023 EPS and ETR forecasts to
the most directly comparable GAAP measures is impracticable. It is
reasonably possible, however, that our fiscal 2023 MTM retirement
plans accounting adjustments and costs related to business
optimization initiatives could have a material impact on our fiscal
2023 consolidated financial results and ETR.
The table included below titled “Fiscal 2023 Earnings Per Share
Forecast” outlines the impacts of the items that are excluded from
our fiscal 2023 EPS forecast, other than the MTM retirement plans
accounting adjustments and costs related to business optimization
initiatives.
Fourth Quarter Fiscal
2022
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin
Taxes1
Income2
Per Share
GAAP measure
$
1,924
7.9
%
$
126
$
558
$
2.13
MTM retirement plans accounting
adjustment3
—
—
315
1,003
3.83
FedEx Ground legal matter4
210
0.9
%
50
160
0.61
Business realignment costs5
60
0.2
%
14
46
0.18
TNT Express integration expenses6
40
0.2
%
8
32
0.12
Non-GAAP measure
$
2,234
9.2
%
$
513
$
1,799
$
6.87
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$
886
7.4
%
Business realignment costs
60
0.5
%
TNT Express integration expenses
38
0.3
%
Non-GAAP measure
$
984
8.2
%
Full-Year Fiscal 2022
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin
Taxes1
Income2
Per Share
GAAP measure
$
6,245
6.7
%
$
1,070
$
3,826
$
14.33
MTM retirement plans accounting
adjustments3
—
—
379
1,199
4.49
Business realignment costs5
278
0.3
%
64
214
0.80
FedEx Ground legal matter4
210
0.2
%
50
160
0.60
TNT Express integration expenses6
132
0.1
%
29
103
0.39
Non-GAAP measure
$
6,865
7.3
%
$
1,592
$
5,502
$
20.61
FedEx Express Segment
Operating
Dollars in millions
Income
Margin7
GAAP measure
$
2,922
6.4
%
Business realignment costs
278
0.6
%
TNT Express integration expenses
115
0.3
%
Non-GAAP measure
$
3,315
7.2
%
Fourth Quarter Fiscal
2021
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin7
Taxes1
Income2
Per Share
GAAP measure
$
1,797
8.0
%
$
745
$
1,868
$
6.88
MTM retirement plans accounting
adjustment3
—
—
(292
)
(936
)
(3.44
)
Loss on debt extinguishment
—
—
96
297
1.09
Business realignment costs5
106
0.5
%
24
82
0.30
TNT Express integration expenses6
64
0.3
%
15
49
0.18
Non-GAAP measure
$
1,967
8.7
%
$
588
$
1,360
$
5.01
Fourth Quarter Fiscal 2021
(continued)
FedEx Express Segment
Operating
Dollars in millions
Income
Margin7
GAAP measure
$
737
6.5
%
Business realignment costs
106
0.9
%
TNT Express integration expenses
55
0.5
%
Non-GAAP measure
$
898
8.0
%
Full-Year Fiscal 2021
FedEx Corporation
Operating
Income
Net
Diluted Earnings
Dollars in millions, except EPS
Income
Margin
Taxes1
Income2
Per Share7
GAAP measure
$
5,857
7.0
%
$
1,443
$
5,231
$
19.45
MTM retirement plans accounting
adjustments3
—
—
(281
)
(895
)
(3.33
)
Loss on debt extinguishment
—
—
96
297
1.11
TNT Express integration expenses6
210
0.3
%
48
162
0.60
Business realignment costs5
116
0.1
%
26
90
0.33
Non-GAAP measure
$
6,183
7.4
%
$
1,332
$
4,885
$
18.17
FedEx Express Segment
Operating
Dollars in millions
Income
Margin
GAAP measure
$
2,810
6.7
%
TNT Express integration expenses
176
0.4
%
Business realignment costs
116
0.3
%
Non-GAAP measure
$
3,102
7.4
%
Fiscal 2023 Earnings Per Share
Forecast
Dollars in millions, except EPS
Adjustments
Diluted Earnings Per
Share
Earnings per diluted share before MTM
retirement plans accounting adjustments and costs related to
business optimization initiatives (non-GAAP)8
$22.45 to $24.45
Business realignment costs
$
20
Income tax effect1
(5
)
Net of tax effect
$
15
0.05
Earnings per diluted share with
adjustments8
$22.50 to $24.50
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 –
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.
For the full-year fiscal 2022 period, the MTM retirement plans
accounting adjustments also include the second quarter TNT Express
MTM retirement plans accounting adjustment related to a noncash
loss associated with the termination of a TNT Express European
pension plan and a curtailment charge related to the U.S. FedEx
Freight pension plan. For the full-year fiscal 2021 period, the MTM
retirement plans accounting adjustments also include the second
quarter TNT Express MTM retirement plans accounting adjustment
related to a noncash loss associated with amending a TNT Express
European pension plan to harmonize retirement benefits.
4 –
These charges were recognized at FedEx
Corporation.
5 –
Business realignment costs were recognized
at FedEx Express.
6 –
These expenses were recognized at FedEx
Corporation and FedEx Express.
7 –
Does not sum to total due to rounding.
8 –
The MTM retirement plans accounting
adjustments and costs related to business optimization initiatives,
which are impracticable to calculate at this time, are
excluded.
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Media Contact: Jenny Robertson 901-434-4829 Investor Contact:
Mickey Foster 901-818-7468
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