10-KPeriod: FY2014

FEDEX CORP Annual Report, Year Ended May 31, 2014

Filed July 14, 2014For Securities:FDX

Summary

FedEx Corporation reported strong financial performance for the fiscal year ending May 31, 2014, with revenues increasing by 3% to $45.6 billion and operating income surging by 35% to $3.4 billion. This growth was driven by improved performance across all transportation segments, particularly FedEx Ground and FedEx Freight, benefiting from higher volumes and yields. The company's net income rose significantly by 34% to $2.1 billion, with diluted earnings per share increasing to $6.75. The results benefited from lower pension expense, a voluntary employee severance program, and reduced variable incentive compensation, partially offset by the negative impact of severe weather and one less operating day. FedEx also made substantial progress on its strategic initiatives, including fleet modernization and network expansion. Shareholder returns were a focus, with $4.9 billion repurchased through open market purchases and accelerated share repurchase agreements. The company provided a positive outlook for fiscal year 2015, anticipating continued revenue and earnings growth driven by moderate global economic expansion and ongoing execution of profit improvement programs.

Financial Highlights

46 data points
Beta

Revenue

$45.57B

Net Income

$2.32B

5.1% Net Margin

EPS (Diluted)

$7.48

Total Assets

$33.07B

Cash & Equivalents

$2.91B

Free Cash Flow

$4.26B

Financial Statements
Beta
Revenue$45.57B
Operating Expenses$41.75B
Operating Income$3.81B
Interest Expense$160.00M
Net Income$2.32B
EPS (Basic)$7.56
EPS (Diluted)$7.48
Shares Outstanding (Basic)307.00M
Shares Outstanding (Diluted)310.00M

Key Highlights

  • 1Revenue increased by 3% to $45.6 billion in fiscal year 2014.
  • 2Operating income saw a significant jump of 35% to $3.4 billion.
  • 3Net income increased by 34% to $2.1 billion, with diluted EPS rising to $6.75.
  • 4FedEx Ground and FedEx Freight segments showed strong performance with increased volumes and yields.
  • 5The company repurchased $4.9 billion of its common stock in fiscal year 2014.
  • 6Capital expenditures increased by 5% to $3.5 billion, with significant investments in fleet modernization and network expansion.
  • 7FedEx Express segment revenues remained flat due to a shift towards economy services and lower fuel surcharges, though operating income improved significantly due to prior year charges.

Frequently Asked Questions

FedEx's revenue growth in fiscal year 2014 was primarily driven by higher volumes and yield increases at FedEx Ground and FedEx Freight. While FedEx Express revenues were flat, the company saw growth in its U.S. domestic and international export package business and its freight-forwarding business, despite a demand shift towards economy international services and lower fuel surcharges.

FedEx's operating income increased substantially in 2014, benefiting from lower pension expense, the impact of a voluntary employee severance program, and reduced variable incentive compensation. These were partially offset by the negative net impact of fuel prices, severe weather, and one fewer operating day. The comparison to the prior year was also favorable due to the inclusion of business realignment costs and an aircraft impairment charge in fiscal year 2013.

FedEx anticipates revenue and earnings growth in fiscal year 2015, driven by moderate global economic growth, improved performance across its transportation segments, and continued execution of profit improvement programs. Key capital investment priorities include $4.2 billion for additional aircraft deliveries to support fleet modernization and continued expansion of the FedEx Ground network.

FedEx Ground is involved in numerous legal proceedings challenging the independent contractor status of its owner-operators. While the company believes its owner-operators are properly classified as independent contractors, it acknowledges the potential for material losses or required changes to its contractor model. However, FedEx does not believe these challenges will impair its ability to operate and profitably grow the FedEx Ground business.