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FDX · FedEx

50 filings

10-Q

FDX 10-Q Quarterly Reports

FedEx - 50 quarterly reports

Filing record · 2016–202610-K1210-Q328-K159

FDX filed 12 annual reports (10-K), 32 quarterly reports (10-Q) and 159 current reports (8-K) between 2016 and 2026.

  1. Impairment8-K · May ’18May ’18
  2. Material agreement8-K · Mar ’20Mar ’20
  3. Leadership change8-K · Mar ’22Mar ’22
  4. Leadership change8-K · Jan ’26Jan ’26
  1. 2027-Q2

    FedEx Quarterly Report for Q2 Ended Sep 30, 2026

    FedEx Corporation reported solid revenue growth for the four months ended September 30, 2026, driven by improved base yields and higher fuel surcharges across its U.S. Domestic and International segments. The company demonstrated strong operational execution, particularly in its Express U.S. Domestic segment, which saw a significant increase in operating income due to yield improvements and volume growth. Financially, FedEx benefited from a substantial non-taxable gain related to its FedEx Freight ownership interest, which significantly boosted net income and reduced the effective tax rate for the four-month period. Despite increased operating expenses, notably in purchased transportation and fuel, the company's strategic pricing initiatives and cost management efforts helped to partially offset these pressures. The company also continued its share repurchase program and demonstrated adequate liquidity to meet its financial obligations, with robust cash flows from operations.

    Oct 28, 2026
  2. 2026-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2026

    FedEx reported strong third-quarter fiscal 2026 results (quarter ended February 28, 2026). Revenue rose 8% to $24.0 billion, and operating income rose 4% to $1.35 billion. Net income increased 16% to $1.06 billion, and diluted EPS grew 17% to $4.41. For the nine months, operating income rose 14% to $3.91 billion and diluted EPS rose 19% to $11.91. Federal Express drove the gains: its segment operating income increased 21% in the quarter on higher U.S. domestic and international priority yields, business optimization savings, and stronger U.S. domestic volume. FedEx Freight, by contrast, nearly collapsed, with segment operating income falling 97% to $8 million on weak LTL shipment volumes and $126 million of spin-off-related separation costs. The balance sheet and cash flow changed materially because of the planned spin-off of FedEx Freight, which is expected to be completed by June 1, 2026. In February 2026, FedEx Freight Holding issued $3.7 billion of senior unsecured notes. The proceeds are held as restricted cash and will be distributed to FedEx in the spin-off. Total cash, cash equivalents, and restricted cash reached $11.7 billion, and long-term debt including current maturities was $24.1 billion. Nine-month operating cash flow rose to $5.66 billion from $4.52 billion, and capital expenditures fell to $2.34 billion. FedEx did not repurchase shares in the quarter, but it still has $1.3 billion of authorization remaining. The quarterly dividend is $1.45 per share. Investors should weigh several items beyond the headline earnings beat. Potential IEEPA tariff refunds following the February 20, 2026 Supreme Court ruling could be material, but no benefit has been recorded, and FedEx has filed suit to recover them. The company also faces the planned FedEx Freight spin-off costs, a pending InPost investment of about $2.6 billion, international workforce restructuring of up to $225 to $325 million, and the MD-11 grounding. Management still expects inflation, global trade uncertainty, and industrial softness to weigh on international export and LTL demand through the rest of 2026. The effective tax rate was 16.4% in the quarter, aided by a $99 million one-time valuation allowance release, and FedEx is litigating a $249 million cumulative tax benefit that could be reversed if it loses its appeal.

    Mar 19, 2026
  3. 2026-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2025

    FedEx's fiscal second quarter 2026 (three months ended November 30, 2025) showed a strong earnings rebound. Revenue rose 7% to $23.5 billion, and operating income climbed 31% to $1.38 billion, lifting the operating margin 110 basis points to 5.9%. Diluted EPS was $4.04, up 33% from $3.03. Federal Express drove the improvement, with segment operating income up 47% on higher U.S. domestic and international priority yields, structural cost savings from business optimization programs, and stronger U.S. domestic package volume. FedEx Freight was the clear laggard, with operating income down 71% to $90 million on weak industrial demand, lower shipments, and $152 million of spin-off costs in the quarter. For the first half of fiscal 2026, operating income rose 20% to $2.56 billion and diluted EPS was $7.50, up 20%. Cash from operations increased to $3.67 billion from $2.51 billion, supported largely by working capital changes. Capital expenditures fell to $1.38 billion, and cash ended the period at $6.57 billion. Total debt stood at roughly $21.2 billion, with a debt-to-adjusted-EBITDA ratio of 1.9x against a 3.5x covenant. Management guided 2026 capital expenditures to about $4.5 billion, up $0.4 billion, mainly for Network 2.0, and expects an incremental $1.0 billion in structural cost savings from DRIVE and Network 2.0 in 2026. The key investor watch items are the planned spin-off of FedEx Freight by June 1, 2026, the change in fiscal year-end to December 31 effective June 1, 2026, and the macro risks that management flagged, including international export volume pressure from trade policy changes, inflation and elevated interest rates, and the FAA grounding of MD-11 aircraft. The filing also discloses a pending appeal in a tax refund case that could require reversing a previously recorded $249 million benefit. Management says there were no material changes to risk factors from the FY2025 10-K.

    Dec 18, 2025
  4. 2026-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2025

    FedEx reported a solid first quarter of fiscal 2026 (three months ended August 31, 2025). Revenue rose 3% to $22.2 billion, and operating income grew 10% to $1.19 billion, lifting the operating margin to 5.3% from 5.0%. Diluted EPS increased 8% to $3.46, and net income rose 4% to $824 million. The Federal Express segment drove the improvement, with operating income up 19% to $1.14 billion on higher U.S. domestic and international priority yields, structural cost savings from business optimization programs, and stronger U.S. domestic package demand. These gains were partly offset by a 18% decline in FedEx Freight operating income, to $360 million, as LTL shipments and base yields weakened amid macroeconomic softness. The company also faced higher operating expenses, a loss of USPS contract revenue since September 2024, and a higher effective tax rate of 27.3%. Cash generation improved meaningfully, with operating cash flow of $1.72 billion versus $1.19 billion a year earlier, while capital expenditures fell to $623 million from $767 million. FedEx ended the quarter with $6.2 billion in cash and cash equivalents and $3.5 billion of available credit-facility liquidity. It repurchased $500 million of stock and paid $345 million in dividends. Total long-term debt, including current maturities, reached about $21.2 billion on the balance sheet, after the company issued €850 million of senior notes in July 2025. Leverage remains conservative, with a debt-to-adjusted-EBITDA ratio of 1.9x against a 3.5x covenant. For investors, the key items to monitor are the planned spin-off of FedEx Freight by June 2026, the fiscal year-end change to December 31 effective June 1, 2026, and management's 2026 outlook. Management expects an incremental $1.0 billion in structural cost savings from DRIVE and Network 2.0, but it also expects industrial softness and global trade headwinds to keep pressuring demand, particularly for higher-yielding priority services. Capital expenditures are guided to about $4.5 billion for 2026, up $0.4 billion, driven by Network 2.0 and facility modernization. A pending IRS-related tax matter could require reversing a $249 million cumulative benefit if FedEx loses its appeal.

    Sep 18, 2025
  5. 2025-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2025

    FedEx's fiscal third-quarter 2025 10-Q (quarter ended February 28, 2025) shows modest top-line growth but weaker profitability over the nine months. Third-quarter revenue rose 2% to $22.16 billion, led by Federal Express, while FedEx Freight revenue fell 5% on lower shipments. Third-quarter operating income rose 4% to $1.29 billion and diluted EPS rose 7% to $3.76, helped by DRIVE savings, higher base yields, and buybacks. For the nine months, revenue was flat at $65.7 billion, but operating income fell 14% to $3.42 billion and diluted EPS fell 12% to $9.99. Business optimization costs of $633 million (about $1.98 per diluted share) and higher purchased transportation and wage costs weighed on results, and the loss of the USPS contract, one fewer operating day, and weaker FedEx Freight volumes added to the pressure. Cash generation and balance sheet items are mixed. Operating cash flow fell to $4.52 billion from $5.61 billion, mainly on working capital, but capital expenditures dropped to $2.58 billion from $3.97 billion, so free cash flow was about $1.9 billion versus $1.6 billion a year earlier. FedEx returned $3.5 billion to shareholders in the nine months through $2.5 billion of buybacks and $1.0 billion of dividends. Cash ended at $5.1 billion, and the debt-to-adjusted-EBITDA ratio was 1.8x against a 3.5x covenant maximum. The main strategic event is the planned tax-free spin-off of FedEx Freight by June 2026, which the company says will generate significant costs. Management expects continued revenue pressure from macroeconomic and trade uncertainty and a shift toward lower-yield deferred services, and it is guiding 2025 capex to about $4.9 billion.

    Mar 20, 2025
  6. 2025-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2024

    FedEx's fiscal second quarter ended November 30, 2024 was weak. Revenue fell 1% to $21.97 billion, while operating income dropped 18% to $1.05 billion and the operating margin contracted 100 basis points to 4.8%. Net income declined 18% to $741 million, and diluted EPS fell 15% to $3.03. The first half was weaker still: operating income fell 23% to $2.13 billion and diluted EPS dropped 20% to $6.24. Management attributes the decline to lower U.S. domestic package and LTL freight demand, higher purchased transportation and wage costs, and $326 million of business optimization costs in the quarter ($1.02 per diluted share). These were partly offset by international export growth, base yield gains, and DRIVE savings. The FedEx Freight segment was hit hardest, with operating income down 36% in the quarter on a 14.3% margin, while Federal Express operating income rose 2% in the quarter. Cash generation and capital allocation shifted materially. Operating cash flow for the first half fell to $2.5 billion from $4.0 billion, driven by working-capital changes. Capital expenditures dropped to $1.6 billion from $2.6 billion, leaving free cash flow of roughly $0.9 billion, versus about $1.4 billion a year earlier. Cash fell to $5.0 billion from $6.5 billion at May 31, 2024. Despite this, the company repurchased $2.0 billion of stock in the first half, paid $676 million in dividends, and made $600 million of voluntary pension contributions. Total debt is about $20.0 billion, and the adjusted debt-to-EBITDA ratio of 1.8x is well inside the 3.5x covenant. Management expects 2025 capex of about $5.2 billion, plus an additional $500 million of buybacks. The most consequential disclosure is the December 19, 2024 decision to pursue a full, tax-free spin-off of FedEx Freight through the capital markets within roughly 18 months. The filing flags meaningful execution risk, including IRS private letter ruling requirements, separation costs described as significant, and possible dis-synergies. The company also expects revenue growth to remain constrained, with headwinds from two fewer operating days, the expired USPS contract, and inflation. It is also pursuing a European workforce reduction of 1,700 to 2,000 roles, with $250 to $375 million in expected cash costs, and about $1.7 billion of total other business optimization costs through 2025.

    Dec 19, 2024
  7. 2025-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2024

    FedEx's first-quarter fiscal 2025 10-Q (quarter ended August 31, 2024) shows a business under pressure. Revenue was essentially flat at $21.6 billion, down 0.5% from $21.7 billion a year earlier, while operating income fell 27% to $1.08 billion and the operating margin compressed 180 basis points to 5.0%. Net income declined 26% to $794 million, and diluted EPS fell to $3.21 from $4.23. Management attributed the weakness to a mix shift toward lower-yielding deferred services, pressure on U.S. priority volumes, one fewer operating day, higher wage and purchased transportation rates, and business optimization costs of $128 million. Partly offsetting these were savings from the DRIVE cost program. The FedEx Freight segment also weakened, with operating income down 9% on lower shipments. Cash generation weakened meaningfully. Operating cash flow fell to $1.19 billion from $2.23 billion, driven by working capital outflows, mainly lower accrued liabilities. Capital expenditures dropped to $767 million from $1.29 billion, which lifted free cash flow somewhat but not enough to offset the decline in operating cash. Shareholder returns remained substantial: the company paid $339 million in dividends and repurchased $1.0 billion of stock through accelerated share repurchase agreements, with management expecting another $1.5 billion of repurchases during 2025. Cash fell to $5.9 billion, and total debt, including current portion, was roughly $20.3 billion. Management guides to modestly higher 2025 revenue, with expense headwinds from inflation, the expiration of the USPS contract in September 2024, and two fewer operating days. Capital expenditures are expected to be about $5.2 billion. The company also announced a Europe workforce reduction and is reviewing the strategic role of FedEx Freight. For investors, the key issues are the sharp margin compression, the cash flow decline, and whether DRIVE savings and revenue quality initiatives can offset macroeconomic and mix headwinds. The balance sheet remains sound, with a debt-to-adjusted-EBITDA ratio of 1.8x against a 3.5x covenant, and the company has $4.1 billion remaining under its repurchase authorization.

    Sep 19, 2024
  8. 2024-Q3

    FedEx Quarterly Report for Q3 Ended Feb 29, 2024

    FedEx's fiscal Q3 2024 (quarter ended February 29, 2024) showed a shift from top-line contraction to profit improvement. Revenue fell 2% year over year to $21.7 billion, and nine-month revenue fell 4% to $65.6 billion, as weak global trade, lower fuel surcharges, and reduced volumes at FedEx Express and FedEx Freight weighed on sales. Operating income nonetheless rose 19% to $1.24 billion in the quarter, lifting the operating margin 100 basis points to 5.7%, and diluted EPS rose 15% to $3.51. Management attributes the gains to DRIVE cost initiatives, network rationalization, Ground yield improvement, and one additional operating day in the quarter. Fuel expense fell 16% in the quarter and 25% for the nine months, which helped margins but also reduced fuel surcharge revenue. Cash generation and balance sheet metrics were solid but uneven. Nine-month operating cash flow rose to $5.6 billion, and capital expenditures fell 10% to $4.0 billion, leaving roughly $1.6 billion of free cash flow before shareholder returns. The company returned about $2.9 billion to shareholders through $2.0 billion of buybacks and $949 million of dividends. Cash stood at $5.6 billion, and debt to adjusted EBITDA was 1.9x against a 3.5x covenant. In March 2024, FedEx replaced its credit facilities with $3.5 billion of new revolving capacity and authorized a new $5 billion buyback. Key risks include continued macroeconomic pressure on volumes, ongoing DRIVE and one FedEx restructuring costs (about $530 million expected in fiscal 2024), an unresolved pilot contract, and the September 2024 expiration of the USPS contract.

    Mar 21, 2024
  9. 2024-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2023

    FedEx reported fiscal 2024 second-quarter results (quarter ended November 30, 2023) with revenue down 3% to $22.165 billion, but operating income rose 9% to $1.276 billion and operating margin expanded 60 basis points to 5.8%. Net income increased 14% to $900 million, and diluted EPS rose 16% to $3.55, helped by cost-reduction results from the DRIVE program and a lower share count. For the first half, revenue fell 5% to $43.846 billion while operating income climbed 17% to $2.761 billion, and diluted EPS was $7.79 versus $6.41. The gains came mainly from FedEx Ground, which grew operating income 51% in the quarter on yield improvement and lower purchased transportation costs. FedEx Express was the weak spot, with segment operating income down 60% in the quarter as volumes fell, fuel surcharges declined, and the service mix shifted. Cash generation and balance sheet metrics were solid. First-half operating cash flow rose to $4.0 billion from $3.1 billion, and capital expenditures fell 17% to $2.6 billion, leaving roughly $1.4 billion of free cash flow before dividends and buybacks. FedEx returned about $1.6 billion to shareholders in the half through dividends ($635 million paid) and $1.0 billion of share repurchases. Cash stood at $6.7 billion, long-term debt carrying value was $19.8 billion, and the debt-to-adjusted-EBITDA ratio was 2.0x against a 3.5x covenant ceiling. Management guided to fiscal 2024 capex of about $5.7 billion, a $0.5 billion reduction, and expects revenue pressure from weak macroeconomic conditions to continue, with operating income improvement driven by DRIVE and revenue quality initiatives. The main risks flagged are continued macro and inflation pressure on demand, near-term restructuring costs (business optimization expense of about $550 million expected in fiscal 2024 and about $2.0 billion through fiscal 2025), an unresolved FedEx Express pilot contract, and litigation including a $366 million judgment in a retaliation case that FedEx is appealing, with insurance expected to cover up to $75 million of exposure above a $5 million retention. The company also disclosed a $1.7 billion pipeline of build-to-suit facility leases not yet commenced.

    Dec 19, 2023
  10. 2024-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2023

    FedEx's first-quarter fiscal 2024 results (quarter ended August 31, 2023) show revenue falling 7% to $21.7 billion, while operating income rose 25% to $1.49 billion and the operating margin widened 170 basis points to 6.8%. Management attributes the profit gain mainly to DRIVE cost-reduction initiatives, higher base yields at FedEx Ground and FedEx Freight, and a 40% drop in fuel expense. Lower fuel surcharges and weaker volumes at FedEx Express and FedEx Freight were the main drags on revenue. Diluted EPS rose 27% to $4.23 and net income rose 23% to $1.08 billion, though the quarter included $105 million of business optimization costs ($0.32 per diluted share). Cash generation improved, with operating cash flow up 39% to $2.23 billion and cash of $7.06 billion at quarter-end. Capital expenditures were flat at $1.29 billion. FedEx completed a $500 million accelerated share repurchase, has about $2.1 billion left under its authorization, and expects to repurchase another $1.5 billion in 2024. Leverage is well inside the credit agreement limit, with debt to adjusted EBITDA at 2.01x versus a 3.5x maximum. Investors should weigh the margin improvement against management's cautious outlook. FedEx expects inflation, high interest rates, and volatile macroeconomic conditions to pressure demand through the rest of 2024, and it plans about $620 million of 2024 business optimization costs (roughly $2.0 billion through 2025) to execute the DRIVE program and the 'one FedEx' consolidation. The filing also flags a pilot contract that failed ratification and an unresolved $366 million jury award in a FedEx Services employment case, now on appeal.

    Sep 20, 2023
  11. 2023-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2023

    FedEx's fiscal third-quarter 2023 10-Q (quarter ended February 28, 2023) shows a clear earnings decline driven by global volume weakness. Revenue fell 6% year over year to $22.2 billion, and operating income dropped 21% to $1.04 billion, compressing operating margin to 4.7% from 5.6%. Net income fell 31% to $771 million, and diluted EPS declined 27% to $3.05. For the nine months, revenue was down 1% to $68.2 billion and diluted EPS was $9.46 versus $12.17. The decline was concentrated in FedEx Express, where segment operating income fell 77% to $119 million as volumes dropped about 10% and cost reductions lagged demand. FedEx Ground (up 32%) and FedEx Freight (up 15%) partially offset this through yield gains, including higher fuel surcharges. Cash generation and capital allocation are under pressure. Operating cash flow for the nine months was $5.4 billion, down from $6.3 billion, and capital expenditures were $4.4 billion. After $888 million in dividends and $1.5 billion in share repurchases, cash fell to $5.4 billion from $6.9 billion at fiscal year-end. Management expects 2023 capex of about $5.9 billion. Leverage remains conservative, with a debt-to-adjusted-EBITDA ratio of 1.99x against a 3.5x covenant maximum. Management also launched the DRIVE program, which carries an expected pre-tax cost of about $2.0 billion through 2025 and is intended to restore long-term profitability. Management expects macroeconomic conditions, inflation, and high interest rates to continue weighing on revenue and operating profit in the fourth quarter of 2023. Key risks include the USPS contract, which expires September 29, 2024, and carries reduced volume expectations. Other risks include a $365 million punitive damages verdict in a FedEx Services employment case (management expects insurance to cover up to $75 million, subject to a $5 million retention), possible goodwill impairment in the fourth quarter (particularly at FedEx Express), and ongoing joint-employment litigation at FedEx Ground.

    Mar 16, 2023
  12. 2023-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2022

    FedEx's quarterly report for the three and six months ended November 30, 2022 (fiscal Q2 2023) shows a clear earnings slowdown driven by falling volumes. Revenue fell 3% to $22.8 billion in the quarter, though first-half revenue rose 1% to $46.1 billion on yield gains and higher fuel surcharges. Operating income dropped 26% to $1.18 billion, and the operating margin narrowed to 5.2% from 6.8%. Net income declined 25% to $788 million, and diluted EPS fell to $3.07 from $3.88. The weakness is concentrated in FedEx Express, where segment operating income fell 64% on a 12% drop in average daily package volume and a 39% rise in fuel expense. FedEx Ground and FedEx Freight grew operating income by 24% and 32%, respectively, on pricing and fuel-surcharge gains. Cash flow and liquidity are under pressure but remain adequate. Cash and equivalents fell to $4.6 billion from $6.9 billion at May 31, 2022, and first-half operating cash flow declined to $3.1 billion from $4.1 billion. Shareholder returns were significant: the company spent $1.5 billion on an accelerated share repurchase and paid $598 million in dividends in the first half. Leverage is comfortable, with a debt-to-adjusted-EBITDA ratio of 1.93x against a 3.5x covenant. Management expects revenue and operating profit to keep declining during the rest of the fiscal year, and it cut 2023 capital expenditure guidance by $400 million to about $5.9 billion. It also flagged a large punitive damages verdict of $365 million against FedEx Services that management expects to be reduced, and a FedEx Ground lawsuit that could be material. For investors, the key questions are whether cost actions under the DRIVE program (approximately $2.0 billion in pre-tax costs through 2025) and the European workforce reduction can offset weak volumes, and whether yield gains can keep pace with inflation and higher fuel and labor costs. The continued share buybacks and dividend, funded partly by cash on hand, make cash generation in the second half of the year an important watch item.

    Dec 20, 2022
  13. 2023-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2022

    FedEx's first-quarter fiscal 2023 results (quarter ended August 31, 2022) show revenue growing 6% to $23.2 billion, driven by yield management and higher fuel surcharges, while profitability weakened. Operating income fell 15% to $1.19 billion, and operating margin contracted 130 basis points to 5.1%. Net income declined 21% to $875 million, and diluted EPS fell 19% to $3.33. Volumes declined across segments: total FedEx Express average daily package volume fell 11%, FedEx Ground volume fell 3%, and FedEx Freight shipments fell 5%. Management attributed the weakness to weakening global economic conditions, cost actions that lagged volume declines, and fuel expense that rose 81% to $1.82 billion. The segment picture is sharply divergent. FedEx Express operating income collapsed 69% to $174 million (1.6% margin) on volume declines, service challenges, and high operating costs relative to demand. FedEx Freight was the standout, with operating income up 67% to $651 million and a 23.9% margin, supported by a 27% increase in revenue per shipment. FedEx Ground was roughly flat, with operating income up 3% to $694 million. Cash generation and capital allocation were weaker. Operating cash flow fell to $1.61 billion from $2.08 billion, and capital expenditures declined to $1.28 billion, leaving free cash flow of roughly $0.3 billion versus about $0.5 billion a year earlier. No shares were repurchased in the quarter, though management expects to buy back $1.5 billion of stock in fiscal 2023. The company lowered its 2023 capital expenditure outlook by $500 million to about $6.3 billion and reaffirmed a comprehensive business optimization program with roughly $2.0 billion of pre-tax costs through 2025. Liquidity remains solid, with $6.9 billion in cash and a debt-to-adjusted-EBITDA ratio of 1.83x against a 3.5x covenant.

    Sep 22, 2022
  14. 2022-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2022

    FedEx's fiscal Q3 2022 10-Q (quarter and nine months ended February 28, 2022) shows strong top-line and quarterly profit growth alongside cost pressure. Third-quarter revenue rose 10% to $23.6 billion, and operating income rose 32% to $1.33 billion, lifting operating margin to 5.6% from 4.7%. Diluted EPS was $4.20, up 27% from $3.30. Management attributes the gains to yield management actions, a favorable net fuel impact (fuel surcharges outpacing fuel price increases), and volume growth at FedEx Ground and FedEx Freight. Results were held back by labor market constraints, wage pressures, and Omicron-related disruption. For the nine months, revenue grew 13% to $69.1 billion, but operating income rose only 6% to $4.32 billion and net income fell 3% to $3.27 billion, which was pressured by a $260 million non-cash pension mark-to-market loss. Operating margin was 6.3% versus 6.6% a year earlier. Cash generation weakened over the nine months. Operating cash flow was $6.33 billion, down about $1.1 billion, mainly on lower tax liabilities after prior-year CARES Act relief and the timing of incentive payments. Capital expenditures were $4.38 billion, leaving roughly $1.95 billion of operating cash flow less capex. Management raised 2022 capex guidance to about $7.0 billion. FedEx returned about $2.2 billion through buybacks and $0.6 billion in dividends, and it has $4.1 billion remaining under a new $5 billion repurchase authorization. Cash stood at $6.1 billion, and leverage is conservative, with debt to adjusted EBITDA of 1.87x against a 3.5x covenant. Management guides to higher revenue and operating income in the fourth quarter, driven mainly by yield growth, and expects labor cost pressure to ease. Risks include the Russia-Ukraine conflict, fuel price volatility, labor availability, and the ongoing European TNT network integration and workforce reduction.

    Mar 17, 2022
  15. 2022-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2021

    FedEx reported fiscal Q2 2022 results (quarter ended November 30, 2021) with revenue of $23.5 billion, up 14% year over year, driven mainly by yield improvement, higher fuel surcharges, and volume growth. Operating income rose 9% to $1.6 billion, but the operating margin fell 30 basis points to 6.8%. Net income declined 15% to $1.04 billion, and diluted EPS fell to $3.88 from $4.55. The decline reflects a $260 million pre-tax noncash mark-to-market pension loss, $44 million of business realignment costs tied to the European workforce reduction, and a higher effective tax rate of 24.3% versus 12.8% a year earlier, which was flattered by a $191 million CARES Act tax benefit in the prior-year quarter. For the first half, revenue grew 14% to $45.5 billion, but operating income fell 2% and diluted EPS fell 14% to $7.97. Cost pressure is the central theme. Fuel expense rose 83% on higher prices, though the net fuel impact was a moderate benefit because surcharges outpaced price increases. Salaries, purchased transportation, and other operating costs rose sharply as a constrained labor market caused network inefficiencies, higher wage rates, and greater use of third-party carriers. Management expects these labor-related pressures to persist in the second half of fiscal 2022 before easing as labor conditions improve. FedEx Ground's operating margin fell to 5.8% from 7.5%, while FedEx Freight's margin improved to 14.7% from 13.0% on pricing and revenue quality initiatives. On cash and capital allocation, operating cash flow for the first half declined to $4.1 billion from $5.2 billion, and capital expenditures rose to $3.1 billion. Management guides to roughly $7.2 billion of capex for fiscal 2022. Cash stood at $6.8 billion and the debt-to-adjusted-EBITDA ratio was 1.93x against a 3.5x covenant limit. FedEx repurchased $748 million of stock in the first half and authorized a new $5 billion buyback program in December 2021, including a $1.5 billion accelerated share repurchase. The quarterly dividend was raised to $0.75 per share from $0.65.

    Dec 16, 2021
  16. 2022-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2021

    FedEx's first-quarter fiscal 2022 results (quarter ended August 31, 2021) show revenue growing 14% to $22.0 billion on volume growth, yield improvement, and higher fuel surcharges across all transportation segments. Profitability fell sharply, however. Operating income declined 12% to $1.4 billion, operating margin contracted 180 basis points to 6.4%, and diluted EPS dropped 13% to $4.09. Management attributes the decline mainly to a constrained labor market that caused network inefficiencies, higher wage rates, higher purchased transportation costs, and elevated self-insurance expense. Fuel expense rose 79% on higher fuel prices, though the net fuel impact was a moderate benefit to operating income because surcharges outpaced price increases. Cash generation and capital allocation were mixed. Operating cash flow fell to $2.1 billion from $2.6 billion, and capital expenditures rose 10% to $1.6 billion. FedEx repurchased $549 million of stock (1.9 million shares at an average of $287.51) and raised its declared dividend to $1.50 per share from $1.30. Cash ended at $6.9 billion, and total debt is about $20.7 billion. The debt-to-adjusted-EBITDA ratio of 1.98x is well inside the 3.5x covenant, and the company reports $3.5 billion of undrawn credit facility availability. Management guides to yield and volume growth for fiscal 2022 but expects labor and purchased transportation costs to pressure profit growth through the rest of the year, with capital expenditures rising to roughly $7.2 billion. Longer-term items include a European workforce reduction affecting 5,500 to 6,300 employees, with pre-tax costs of $300 million to $575 million through fiscal 2023 and targeted annualized savings of $275 million to $350 million beginning in fiscal 2024. Integration of TNT Express is expected to total about $1.8 billion in aggregate costs. The filing also flags ongoing joint-employer litigation at FedEx Ground, and the company is pursuing a lawsuit over a transition-tax regulation under which it has recorded a $215 million cumulative benefit that could be reversed if it loses.

    Sep 21, 2021
  17. 2021-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2021

    FedEx's fiscal third quarter 2021 (three months ended February 28, 2021) showed a sharp recovery in profitability. Revenue rose 23% year over year to $21.5 billion, and operating income more than doubled to $1.0 billion, lifting operating margin to 4.7% from 2.4%. Diluted EPS was $3.30 versus $1.20. For the nine months, revenue grew 18% to $61.4 billion, and diluted EPS was $12.55 versus $6.17. Growth was driven mainly by residential e-commerce volume at FedEx Ground (revenue up 37%), U.S. domestic and international export package volume at FedEx Express, and pricing initiatives. Results were partly offset by higher variable incentive compensation (about $485 million in the quarter and $895 million year to date), COVID-19 operating costs, and severe winter weather. Nine-month net income also benefited from roughly $299 million of tax benefits, or $1.12 per diluted share. Cash generation and balance-sheet metrics improved meaningfully. Operating cash flow for the nine months was $7.4 billion, up from $3.3 billion, and cash reached $8.9 billion. Capital expenditures fell to $4.2 billion, and management expects roughly $5.7 billion for full-year 2021. The debt-to-adjusted-EBITDA ratio was 2.45x against a covenant maximum of 4.75x. Management stated that capital allocation will prioritize strengthening the balance sheet and reducing and refinancing debt, which may involve material costs. The company repurchased no shares in the period, and it refreshed its credit facilities in March 2021 with a tighter 3.5x covenant and removal of the temporary buyback and dividend-increase restrictions. Longer-term items to watch include the European workforce reduction plan (5,500 to 6,300 roles), with pre-tax costs of $300 million to $575 million through fiscal 2023 and expected annualized savings of $275 million to $350 million beginning in fiscal 2024. Integration expenses for TNT Express are projected at $1.7 billion in aggregate through 2022. The company also disclosed a $100 million expense in the fourth quarter tied to its Yale University carbon sequestration pledge. Management expects continued strong demand for international priority shipments due to constrained air capacity, though it cautioned that COVID-19 developments and fuel prices remain key uncertainties.

    Mar 18, 2021
  18. 2021-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2020

    FedEx's 10-Q for the second quarter of fiscal 2021 (quarter ended November 30, 2020) shows a sharp rebound in profitability. Revenue rose 19% year over year to $20.56 billion, and operating income more than doubled to $1.47 billion, lifting operating margin to 7.1% from 3.2%. Diluted EPS was $4.55 versus $2.13. Results were driven by residential e-commerce volume at FedEx Ground, U.S. domestic and international export package growth at FedEx Express, and yield and pricing gains across segments. Part of the net income improvement came from a $191 million tax benefit tied to CARES Act loss carrybacks, and the quarter also absorbed higher variable incentive compensation (about $215 million year over year) and COVID-related costs. For the first half of fiscal 2021, revenue grew 16% to $39.88 billion, operating income reached $3.06 billion, and net income was $2.47 billion. Operating cash flow nearly tripled to $5.23 billion, and cash rose to $8.3 billion from $4.9 billion at May 31, 2020. Total debt (current plus long-term) was about $23.3 billion, and the company reported a debt-to-adjusted-EBITDA ratio of 2.6x against a 4.9x covenant maximum. Capital expenditures were $2.8 billion in the first half, with full-year fiscal 2021 spending now expected at about $5.1 billion. Management said it expects continued growth at FedEx Ground and FedEx Express in the second half, but flagged uncertainty from the pandemic, the expiration of the aviation excise tax holiday, and a higher effective tax rate for the second half. Capital return and balance sheet flexibility remain constrained. The quarterly dividend is held at $0.65 per share, and the credit agreement amendments bar share repurchases and dividend increases through May 31, 2021. Management also flagged ongoing TNT Express integration costs (about $1.7 billion in aggregate through 2022), a pending ShopRunner acquisition expected to close in December 2020, and continued legal exposure, including FedEx Ground joint-employer lawsuits and securities litigation.

    Dec 17, 2020
  19. 2021-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2020

    FedEx reported a strong fiscal first quarter 2021 (three months ended August 31, 2020), with revenue up 13% to $19.3 billion and operating income up 63% to $1.59 billion. Operating margin widened to 8.2% from 5.7%, and diluted EPS rose 66% to $4.72 from $2.84. The gains were driven by e-commerce-related residential volume growth at FedEx Ground (revenue up 36%), U.S. domestic and international export package growth at FedEx Express (revenue up 8%, segment operating income up 149%), and yield and cost improvements at FedEx Freight, where operating income rose 41% despite a 4% revenue decline. Management attributes the growth in part to COVID-19 demand for residential delivery, though it notes higher variable incentive compensation (a $195 million headwind year over year), added pandemic-related operating costs, and a $130 million benefit from an extra operating day. Cash generation improved sharply. Operating cash flow was $2.65 billion versus $0.57 billion a year earlier, helped by lower pension contributions (the prior year included a $1.0 billion voluntary contribution), CARES Act tax relief, and lower incentive compensation payments. Capital expenditures were flat at $1.42 billion, leaving free cash flow of roughly $1.2 billion. Cash rose to $6.95 billion, and long-term debt increased to $22.8 billion in carrying value after FedEx Express issued $970 million of 1.875% pass-through certificates secured by 19 aircraft. Leverage stood at 2.9x debt to adjusted EBITDA against a 4.75x covenant. Liquidity was about $3.5 billion of undrawn credit facilities. Investors should weigh the strong quarter against ongoing risks. The Credit Agreements temporarily bar share repurchases and any increase in the $0.65 quarterly dividend through May 31, 2021. Management expects 2021 capital expenditures of about $5.1 billion, roughly $0.8 billion lower than 2020, and continued TNT Express integration costs (about $125 million for the rest of fiscal 2021, with a total program cost near $1.7 billion). Management also flagged that European results continue to underperform expectations. The auditor, Ernst & Young, issued a review report with no reported material modifications, and the company's FedEx Ground contractor-classification litigation remains open, though management does not expect a material loss.

    Sep 15, 2020
  20. 2020-Q3

    FedEx Quarterly Report for Q3 Ended Feb 29, 2020

    FedEx reported a sharp profit decline for the fiscal third quarter ended February 29, 2020. Revenue rose 3% to $17.5 billion, driven by residential volume growth at FedEx Ground and one extra operating weekday. However, operating income fell 55% to $411 million, and the operating margin compressed to 2.4% from 5.4%. Net income dropped 57% to $315 million, and diluted EPS fell to $1.20 from $2.80. For the nine months, revenue was flat at $51.9 billion, while operating income declined 38% to $1.9 billion and diluted EPS fell to $6.17 from $9.41. Management attributed the weakness to slowing global trade, the emerging COVID-19 pandemic, higher self-insurance accruals, the loss of a large customer, the costs of expanding Ground's seven-day residential network, a shift toward lower-yielding services, and a more competitive pricing environment. Results were partly cushioned by a $133 million tax benefit from a valuation allowance release in the nine-month period. The balance sheet and cash flow profile show increased investment and leverage. Capital expenditures rose 25% to $4.7 billion for the nine months, and the company expects roughly $5.9 billion for fiscal 2020. Operating cash flow was roughly flat at $3.3 billion, and cash fell to $1.8 billion from $2.3 billion. FedEx issued $2.1 billion of senior notes, used partly to make $1.0 billion of voluntary U.S. pension contributions and to retire maturing debt. Debt-to-adjusted EBITDA stood at 2.8x against a 3.5x covenant. Adoption of the new lease standard added roughly $14.1 billion of operating lease liabilities, which materially changed the balance sheet without a material income statement effect. Management's outlook is cautious. It expects continued Ground revenue growth but weaker results at FedEx Express and FedEx Freight in the fourth quarter, with COVID-19 likely to exacerbate global economic weakness. The TNT Express integration is expected to cost about $100 million in the fourth quarter and roughly $1.7 billion in total through 2021, and synergies are not expected to build meaningfully until 2021 and beyond. The dividend was held at $0.65 per quarter. Key open items include securities class action litigation, a derivative suit, a China State Post Bureau investigation, and ongoing lawsuits over whether FedEx Ground should be treated as the employer of contractor drivers.

    Mar 17, 2020
  21. 2020-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2019

    FedEx's fiscal 2020 second-quarter 10-Q (quarter ended November 30, 2019) shows a sharp earnings decline. Revenue fell 3% to $17.3 billion, but operating income dropped 53% to $554 million, and the operating margin compressed to 3.2% from 6.6%. Diluted EPS was $2.13 versus $3.51. Results were supported by a $133 million ($0.51 per share) tax benefit from releasing a valuation allowance, which pushed the quarterly effective tax rate down to 2.1%. Without that benefit, earnings would have been much weaker. Management cited weaker global economic conditions, the loss of a large customer, mix shift to lower-yielding services, a more competitive pricing environment, and the later timing of Thanksgiving. Several one-time items also weighed on results, including a $66 million aircraft impairment and $64 million of TNT Express integration expenses. The segment picture is uneven. FedEx Express operating income fell 63% to $236 million, and FedEx Ground fell 42% to $342 million as it invests to expand its network and absorbs higher self-insurance accruals. FedEx Freight was relatively resilient, with operating income down only 5%, helped by yield management. Cash generation weakened as well. Operating cash flow was $2.07 billion for the first half, down from $2.18 billion, while capital expenditures rose 24% to $3.27 billion, leaving negative free cash flow of roughly $1.2 billion. The company funded this gap with $2.1 billion of new senior notes, and it also made $1.0 billion of voluntary pension contributions. Management guided to continued revenue growth weakness and operating income declines through the rest of fiscal 2020, expects roughly $5.9 billion in 2020 capex, and expects about $200 million of additional TNT integration expenses in the remainder of the year (about $1.7 billion in total through 2021). For investors, the key issues are the sustainability of earnings without one-time tax benefits, the margin pressure from the Express and Ground network investments and the integration of TNT, and the balance-sheet trade-off. Debt rose to about $18.9 billion, and the adoption of the new lease standard added roughly $14.4 billion of operating lease liabilities. The company remains within its leverage covenant at 2.6x against a 3.5x maximum, and its dividend of $0.65 per quarter was maintained. Share repurchases were negligible, and the Moody's outlook was revised to negative.

    Dec 17, 2019
  22. 2020-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2019

    FedEx reported flat fiscal 2020 first-quarter revenue of $17.05 billion (quarter ended August 31, 2019), but profitability weakened. Operating income fell 9% to $977 million and operating margin contracted 60 basis points to 5.7%. Net income declined 11% to $745 million, and diluted EPS fell 8% to $2.84. Management attributed the decline to weaker global economic conditions, a mix shift toward lower-yielding deferred and e-commerce services, the loss of a large customer, one fewer operating day (about $100 million impact), and higher costs for network expansion. Lower variable incentive compensation (about $300 million benefit) partly offset these pressures. FedEx Express was the main drag, with segment operating income down 27% and margin falling to 3.2%. FedEx Ground operating income declined 5% despite 8% revenue growth, and FedEx Freight operating income rose 10%. Cash generation weakened sharply. Operating cash flow fell to $565 million from $701 million, and capital expenditures rose 20% to $1.42 billion, producing negative free cash flow of roughly $853 million. FedEx funded the gap with $2.1 billion of new senior unsecured notes, which it used to make $1.0 billion of voluntary U.S. pension contributions and to retire $985 million of maturing debt. Total debt rose to roughly $18.8 billion from about $17.6 billion at May 31, 2019. Liquidity remains solid, with $2.4 billion of cash, $3.4 billion available under credit facilities, and a debt-to-adjusted-EBITDA ratio of 2.41x against a 3.5x covenant. The balance sheet also changed materially from adoption of the new lease standard (ASC 842), which added about $13.8 billion of operating lease right-of-use assets and $14.0 billion of lease liabilities. Management's outlook is cautious. It expects operating income to decline for the remainder of fiscal 2020, citing weaker global trade, an ongoing revenue shortfall in Europe and Asia Pacific, and a near-term cost-to-volume mismatch in U.S. domestic package operations. FedEx plans to accelerate aircraft retirements and parking, and it expects about $280 million of TNT Express integration expense for the rest of fiscal 2020, with aggregate integration costs of roughly $1.7 billion through 2021. Full-year fiscal 2020 capital expenditures are projected at about $5.9 billion. Investors should watch whether the cost actions and the Ground ISP transition can offset soft global volumes, and whether free cash flow turns positive as heavy capex and pension funding ease.

    Sep 17, 2019
  23. 2019-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2019

    FedEx's third-quarter fiscal 2019 10-Q (quarter ended February 28, 2019) shows revenue growth of 3% to $17.0 billion for the quarter and 8% to $51.9 billion for the nine months, with diluted EPS of $2.80 versus $7.59 a year earlier. The year-over-year EPS decline is largely a distortion from the prior-year $1.15 billion one-time TCJA tax benefit and the $204 million pension-contribution tax benefit, not a deterioration in core operations. Consolidated operating income rose 7% to $3.15 billion in the quarter, with operating margin up 20 basis points to 5.4%, helped by roughly $350 million of lower variable incentive compensation. Excluding tax items, the quarter was a solid operational result, although management flagged softening international package volumes at FedEx Express, a shift toward lower-yielding services, and higher purchased transportation costs at FedEx Ground. The outlook is more cautious. Management expects FedEx Express earnings to decline in the fourth quarter on lower yields and weak international volumes, while FedEx Ground and FedEx Freight are expected to keep growing revenue. The company also announced a cost-reduction program with a U.S. voluntary buyout, with 2019 pre-tax realignment costs of $450 million to $575 million and 2020 savings of $225 million to $275 million. TNT Express integration remains a multi-year cost drag, with expenses estimated above $1.5 billion through 2021. Balance sheet and cash flow shifted meaningfully. Operating cash flow rose to $3.3 billion for the nine months from $1.2 billion, largely because of lower pension contributions, though this comparison was flattered by the prior-year $1.5 billion pension contribution. Total debt rose to about $18.6 billion, and the company repurchased $1.4 billion of stock year to date. Debt-to-adjusted-EBITDA was 2.2x against a 3.5x covenant. Investors should also note the risk disclosures: a possible reversal of the $225 million 2018 TCJA benefit if IRS positions are not sustained, a self-disclosed sanctions matter involving P2P Mailing and Iran shipments, and Brexit-related uncertainty.

    Mar 19, 2019
  24. 2019-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2018

    FedEx's first-half fiscal 2019 (six months ended November 30, 2018) showed revenue growth and higher profitability on a reported basis. Revenues rose 10% to $34.9 billion and operating income rose 7% to $2.24 billion, while diluted EPS climbed to $6.60 from $5.03 (net income of $1.77 billion vs. $1.37 billion). Much of the EPS improvement reflects a $285 million (about $1.06 per diluted share) tax benefit tied to the TCJA's lower statutory rate, and the effective tax rate fell to 22.3% from 35.4%. Second-quarter operating margin slipped to 6.6% from 6.8%, as a shift in mix from international package to freight volume, higher U.S. deferred volume, and softer Eurozone and Asian demand weighed on results. Operating margin in the first half was 6.4% versus 6.6% a year earlier. Management signaled a more cautious outlook. It expects volume growth to support earnings growth in the second half, but it now says the $1.2 to $1.5 billion FedEx Express operating profit improvement target from 2017 will not be achieved by 2020, citing weaker international demand and the NotPetya-related service mix change. It also announced cost-reduction actions, including a U.S. voluntary buyout program expected to cost $450 to $575 million and save $225 to $275 million annually from 2020, along with reduced air network capacity and discretionary spending controls. TNT Express integration costs remain on track for roughly $1.5 billion through 2020. Balance sheet and cash flow remain sound. Operating cash flow was $2.18 billion, up from $1.50 billion, and capital expenditures were $2.63 billion. Cash fell to $2.1 billion from $3.3 billion, largely because of $1.27 billion in share repurchases and $785 million of debt principal payments. Total debt was about $17.7 billion, the debt-to-adjusted EBITDA ratio was 2.1x against a 3.5x covenant, and the company guided to about $5.6 billion of 2019 capex. The filing also discloses a contingent tax exposure of $225 million tied to the 2018 transition-tax benefit, which could be reversed if proposed Treasury regulations are finalized as drafted.

    Dec 18, 2018
  25. 2019-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2018

    FedEx's first-quarter fiscal 2019 10-Q (quarter ended August 31, 2018) shows a business that grew strongly while absorbing heavy one-time and timing-related costs. Revenue rose 11% to $17.1 billion, with growth at every transportation segment, and FedEx Express benefited from recovery after the June 2017 NotPetya cyberattack. Operating income rose 10% to $1.07 billion, but operating margin was flat at 6.3% because of higher salaries and purchased transportation costs. Diluted EPS increased 42% to $3.10, helped by a roughly $135 million tax benefit from the Tax Cuts and Jobs Act (TCJA). The effective tax rate fell to 24.2% from 39.3%, so net income growth (40%) overstates the underlying operating improvement. Cash generation and capital spending were both heavier this quarter. Operating cash flow was $701 million, up from $590 million, while capital expenditures reached $1.18 billion, leaving free cash flow negative at roughly $478 million. FedEx returned capital through $625 million of share repurchases and $173 million of dividends, funded in part by $299 million of short-term borrowings and $300 million of commercial paper. Cash fell to $2.4 billion from $3.3 billion. Leverage remains manageable, with a debt-to-adjusted-EBITDA ratio of 2.0x against a 3.5x covenant, and the $2.0 billion revolver had $1.646 billion available. The main risks flagged are the TCJA benefit, which may partly reverse if the Treasury's proposed transition-tax regulations are finalized as drafted (a potential $225 million reversal, or $0.94 per diluted share), along with ongoing TNT Express integration costs (about $450 million expected in 2019), FedEx Ground independent-contractor litigation, and a New York cigarette-shipment lawsuit scheduled for trial in October 2018 that management expects to be immaterial. Management reiterated expectations for volume and yield growth supporting 2019 earnings growth and targeted $1.2 to $1.5 billion of FedEx Express operating income improvement by 2020, versus 2017.

    Sep 17, 2018
  26. 2018-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2018

    FedEx's 10-Q for the third quarter of fiscal 2018 (quarter ended February 28, 2018) shows revenue growth of 10% to $16.5 billion, but operating income fell 2% to $1.0 billion and operating margin contracted 70 basis points to 6.1%. Net income rose sharply to $2.07 billion ($7.59 diluted EPS) versus $1.0 billion-equivalent prior-year levels, but this was driven almost entirely by non-operating tax items: a provisional $1.15 billion benefit from remeasuring the net U.S. deferred tax liability under the Tax Cuts and Jobs Act, plus a $204 million benefit from a voluntary $1.5 billion pension contribution and a $165 million lower-statutory-rate benefit. Investors should look past the headline EPS, since the quarter's core operating performance was pressured by higher incentive compensation accruals, TNT Express integration costs ($106 million in the quarter), peak-season costs at FedEx Express, and weather disruptions. FedEx Ground and FedEx Freight were the bright spots, with Ground operating income up 12% over nine months and Freight up 34% in the quarter, driven by volume growth and yield improvement. FedEx Express was the weak link, with its operating margin falling to 4.5% from 6.5%, reflecting the lingering impact of the NotPetya cyberattack (estimated at $400 million for the first half) and integration costs. Management also announced more than $3.2 billion in wage increases, bonuses, pension funding and capital investment following tax reform, with wage-related expenses beginning in the fourth quarter, and reaffirmed a TNT integration program of about $1.4 billion over four years. Balance sheet and cash flow warrant attention. Operating cash flow fell to $1.16 billion for the nine months from $2.65 billion, largely due to voluntary pension contributions and the NotPetya impact, while capital expenditures rose to $3.99 billion, and cash fell to $2.8 billion. Debt rose to about $16.7 billion, though leverage remains manageable at 2.2x debt to adjusted EBITDA against a 3.5x covenant. The company also repurchased $558 million of stock year-to-date and kept its quarterly dividend at $0.50.

    Mar 21, 2018
  27. 2018-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2017

    FedEx's fiscal 2018 second-quarter 10-Q (three months ended November 30, 2017) shows top-line growth that did not carry through to profit. Revenue rose 9% to $16.3 billion, and diluted EPS increased 10% to $2.84 from $2.59. Operating income grew 8% to $1.26 billion, but the operating margin slipped to 7.7% from 7.8%. Management attributes the margin pressure to the NotPetya cyberattack on TNT Express, which it estimates cut results by about $100 million in the quarter, and to $122 million of TNT integration expenses. For the first half, revenue rose 7%, but operating income fell 2% to $2.38 billion, net income fell 3% to $1.37 billion, and diluted EPS fell 4% to $5.03. The cyberattack's estimated impact for the half is about $400 million, or $1.10 per diluted share. Cash generation weakened sharply. Operating cash flow fell to $1.50 billion from $2.64 billion, driven by the cyberattack, higher tax payments, pension contributions, and a previously accrued legal settlement. Capital expenditures were $2.62 billion, which left free cash flow negative at roughly -$1.1 billion for the half. Cash fell to $2.77 billion from $3.97 billion at May 31, 2017. Shareholder returns continued, with $268 million in dividends and $270 million in share repurchases in the half. The quarterly dividend was raised to $0.50 per share from $0.40 a year earlier. Leverage remains moderate: debt to adjusted EBITDA was 1.9x against a 3.5x covenant, and the company has $1.245 billion available under its revolver. Looking ahead, management expects yield and volume growth to support revenue and earnings growth in the second half, with continued recovery from the cyberattack and diminishing but ongoing revenue effects. The TNT Express integration program is now expected to cost up to $1.4 billion over four years, with about $450 million in 2018, which is above prior estimates. Management is targeting $1.2 to $1.5 billion of operating income improvement at FedEx Express by 2020 versus 2017. Pending U.S. tax legislation (the Tax Cuts and Jobs Act) is estimated to produce a $1.2 to $1.5 billion tax benefit for 2018. The new pension cost presentation rule would lower reported operating income by $146 million in the quarter, though it has no effect on net income or EPS.

    Dec 20, 2017
  28. 2018-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2017

    FedEx's first-quarter fiscal 2018 10-Q (quarter ended August 31, 2017) shows revenue growth overshadowed by profit declines. Revenue rose 4% to $15.3 billion, with FedEx Ground (+8%) and FedEx Freight (+6%) growing and FedEx Express up 2%. Operating income fell 12% to $1.12 billion, and the operating margin contracted 130 basis points to 7.3%. Net income declined 17% to $596 million, and diluted EPS fell to $2.19 from $2.65. Management attributes roughly $300 million (about $0.79 per diluted share) of the profit hit to the June 2017 NotPetya cyberattack on TNT Express, which was not covered by any cyber or other insurance. TNT integration expenses of $112 million ($0.30 per diluted share) also weighed on results. Cash generation weakened materially. Operating cash flow fell to $590 million from $971 million, driven largely by the cyberattack and working capital outflows. Capital expenditures declined 14% to $1.04 billion, and cash ended the quarter at $3.5 billion. Long-term debt rose slightly to $15.1 billion, and the debt-to-adjusted-EBITDA ratio was 1.9x against a 3.5x covenant. The company repurchased $86 million of stock and paid $134 million in dividends. Looking ahead, management expects yield and volume growth across transportation segments to support 2018 revenue and earnings growth, but flags ongoing, diminishing cyberattack impacts for the rest of 2018. It expects 2018 capital expenditures of about $5.9 billion, TNT integration costs of about $350 million in 2018 (roughly $800 million over four years), and a $1.2 to $1.5 billion operating income improvement target at FedEx Express by 2020. Key risks include the cyberattack recovery, the FedEx Ground independent contractor litigation, fuel prices, and the pending TNT integration.

    Sep 20, 2017
  29. 2017-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2017

    FedEx's fiscal Q3 2017 10-Q (quarter ended February 28, 2017) shows revenue up 19% to $15.0 billion, driven mainly by the first full inclusion of TNT Express, which was acquired May 25, 2016. Operating income rose 19% to $1.03 billion, but the consolidated operating margin was flat at 6.8%, and diluted EPS grew 13% to $2.07. Prior-year Q3 results included roughly $204 million of FedEx Ground independent-contractor litigation charges, which flattered the year-over-year comparison. Net income grew 11% to $562 million. Nine-month results were less favorable: operating margin fell 60 basis points to 7.8%, and FedEx Express, Ground and Freight segment profits were pressured by fuel, one fewer operating day, network expansion costs and TNT integration expenses. Cash generation weakened sharply. Nine-month operating cash flow fell to $2.65 billion from $3.80 billion, mainly because of $1.75 billion in U.S. pension contributions, higher variable compensation payouts and higher interest payments. Capital expenditures rose to $3.79 billion, leaving free cash flow negative at roughly -$1.1 billion for the nine months. FedEx funded the shortfall through a $1.2 billion senior unsecured bond issuance and $265 million in stock option proceeds, and it continued returning capital through $319 million in dividends and $358 million in buybacks. Long-term debt rose to $14.7 billion, and management reports a debt-to-adjusted EBITDA ratio of 1.9x, well within its 3.5x covenant. Looking forward, management reiterated that volume and yield growth plus the TNT Express contribution should drive fourth-quarter and full-year earnings growth before any pension mark-to-market adjustment. It now expects about $300 million of TNT integration costs in 2017 and roughly $800 million over four years, and it targets $1.2 to $1.5 billion of incremental FedEx Express group operating income by 2020. Full-year 2017 capital spending is expected at about $5.3 billion, and the effective tax rate is guided to about 35%. Key risks include fuel prices, the pace of TNT integration, the ongoing FedEx Ground independent-contractor litigation, and a newly disclosed U.S. Customs matter that management says could produce a material loss.

    Mar 22, 2017
  30. 2017-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2016

    FedEx's fiscal second-quarter 2017 10-Q (quarter ended November 30, 2016) shows revenue up 20% to $14.9 billion, driven mainly by the first full quarter of TNT Express, which FedEx acquired on May 25, 2016 for about $4.9 billion. Operating income rose only 3% to $1.17 billion, and operating margin fell 130 basis points to 7.8%. Diluted EPS grew 6% to $2.59, helped by a lower share count after buybacks. Underlying performance was mixed: FedEx Express margins were flat at 9.4% and benefited from yield gains, while FedEx Ground operating income fell 12% on network expansion costs and higher purchased transportation rates, and FedEx Freight operating income fell 13%. TNT Express integration and Outlook restructuring costs were $58 million in the quarter and $126 million year to date. Cash generation and balance sheet items require attention. Operating cash flow for the first half was $2.64 billion, but capital expenditures of $2.68 billion left free cash flow slightly negative for the period. Management guides to about $5.6 billion of capex in fiscal 2017, plus $2.0 billion of U.S. pension contributions, including a planned $1 billion voluntary contribution in January 2017 to be funded with debt. Long-term debt is $13.6 billion, and the debt-to-adjusted-EBITDA ratio of 1.8x sits well inside the 3.5x covenant. Investors should weigh the pending FedEx Ground independent-contractor settlements, the preliminary and still-changing TNT purchase price allocation, and the longer-term synergy target of $750 million in annual pre-tax savings after integration is completed in fiscal 2020. Overall, the filing shows strong top-line growth from the TNT acquisition and steady Express yields, but limited operating income growth and margin compression. Near-term earnings depend on delivering TNT integration savings, managing Ground's network expansion costs, and keeping fuel surcharges aligned with fuel prices.

    Dec 21, 2016
  31. 2017-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2016

    FedEx's first-quarter fiscal 2017 10-Q (quarter ended August 31, 2016) shows consolidated revenue up 19% to $14.66 billion, driven mainly by the May 2016 acquisition of TNT Express, which contributed $1.8 billion of revenue in its first partial quarter. Operating income rose 10% to $1.26 billion, but operating margin contracted 70 basis points to 8.6% as TNT Express posted a $14 million operating loss and FedEx Ground and FedEx Freight carried higher integration, network expansion, and purchased transportation costs. Diluted EPS rose 10% to $2.65, though net income grew only 3% to $715 million, reflecting higher interest expense ($113 million, up $50 million) and a higher effective tax rate of 37.4%. Excluding TNT Express, the core businesses showed solid operating income growth, with FedEx Express operating income up 14% and FedEx Ground up 14%. Cash flow was weaker: operating cash flow fell to $971 million from $1,241 million, largely due to higher variable compensation payouts and pension contributions, and free cash flow after $1,215 million of capex was negative at roughly $244 million. Management returned capital through $106 million in dividends and $222 million in share repurchases, and cash fell to $2.99 billion. Total debt, including current portion, was about $13.8 billion, with a debt-to-adjusted-EBITDA ratio of 1.9x against a 3.5x covenant. The filing also highlights ongoing legal exposure at FedEx Ground, where settlements totaling $204 million were accrued in the quarter to resolve 19 independent-contractor cases on appeal, and management guided to $275 million of integration and Outlook restructuring costs in fiscal 2017 with targeted annual pre-tax synergies of $750 million by fiscal 2020.

    Sep 21, 2016
  32. 2016-Q3

    FedEx Quarterly Report for Q3 Ended Feb 29, 2016

    FedEx's third-quarter fiscal 2016 results (quarter ended February 29, 2016) show revenue growth masking weaker profitability. Revenues rose 8% to $12.65 billion, driven by FedEx Ground volume and yield growth, the GENCO acquisition, and a gross-basis accounting change for FedEx SmartPost that added roughly $350 million to the quarter. Operating income fell 17% to $864 million, and operating margin contracted 210 basis points to 6.8%. Net income declined 19% to $507 million, and diluted EPS dropped 16% to $1.84. Nine-month revenue rose 6% to $37.4 billion, but nine-month diluted EPS was $6.71, roughly flat year over year. The decline was driven largely by discrete items. FedEx recorded a $204 million charge (about $0.46 per diluted share) for settling independent-contractor litigation at FedEx Ground, and a $69 million charge (about $0.15 per share) for a U.S. Customs and Border Protection duties matter. Together these items reduced margin by roughly 220 basis points in the quarter. Underlying trends were mixed. FedEx Express segment operating income rose 51% on yield management, lower fuel costs, and cost discipline. FedEx Ground operating income was flat, and FedEx Freight declined 16% on weak industrial volume and higher salary costs. Balance-sheet and capital allocation activity was heavy. Long-term debt rose to $8.5 billion from $7.2 billion after a $1.25 billion notes issuance, and cash fell to $2.8 billion. The company repurchased $2.1 billion of stock in the nine months, including $1.0 billion in the quarter, and began a new 25 million-share authorization. Capital expenditures reached $3.6 billion for the nine months, with full-year 2016 guidance of about $4.8 billion. Pending TNT Express acquisition (about $4.9 billion) remains a major forward-looking item, and Moody's lowered FedEx's senior unsecured rating to Baa2 in March 2016.

    Mar 17, 2016
  33. 2016-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2015

    FedEx reported fiscal second-quarter 2016 results (quarter ended November 30, 2015) that grew modestly. Revenue rose 4% to $12.45 billion and operating income rose 5% to $1.14 billion, with the operating margin flat at 9.1%. Net income increased 4% to $691 million, and diluted EPS rose 6% to $2.44. For the six months, revenue grew 5% to $24.73 billion and diluted EPS was $4.86, up 6%. Growth was driven by FedEx Express, where operating income rose 26% on higher base yields and sharply lower fuel expense, and by FedEx Ground, where operating income rose 13% despite margin compression from the GENCO acquisition and the gross reporting of FedEx SmartPost revenue. FedEx Freight was weaker, with operating income down 10% on soft volumes and higher salary costs. Cash generation and capital spending both increased. Operating cash flow for the six months was $2.45 billion, up from $2.15 billion, while capital expenditures rose 36% to $2.56 billion, and full-year 2016 capex is guided to about $4.6 billion. The company issued $1.25 billion of 4.75% notes due 2045 and repurchased $1.1 billion of stock in the first half, including $911 million in the quarter. Long-term debt rose to $8.5 billion from $7.2 billion, but the debt-to-EBITDA covenant ratio was 1.2x against a 3.5x maximum. The pending TNT Express acquisition (about $4.8 billion, expected to close in the first half of calendar 2016) remains the largest strategic item. The main investor risks are legal and regulatory. FedEx Ground faces independent contractor litigation, with a $228 million California settlement accrued and additional settlements in Kansas, Arkansas, Florida, and Oregon. A criminal indictment related to online pharmacy shipments could be material if FedEx is convicted, and U.S. Customs has indicated potential duty liability of $76 million to $210 million at FedEx Trade Networks. Management still described the outlook as supportive, with expected full-year earnings growth before any year-end pension mark-to-market adjustment.

    Dec 17, 2015
  34. 2016-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2015

    FedEx's first-quarter fiscal 2016 10-Q (quarter ended August 31, 2015) shows revenue up 5% to $12.3 billion and operating income up 8% to $1.14 billion, with operating margin edging up to 9.3% from 9.1%. Net income rose 6% to $692 million and diluted EPS rose 7% to $2.42. Growth was driven by a 45% jump in FedEx Express operating income, which more than offset a 14% operating margin at FedEx Ground (down 440 basis points) and a 21% decline in FedEx Freight operating income. Part of the revenue increase reflects accounting and acquisition effects: gross recording of FedEx SmartPost revenue (about $240 million), the GENCO acquisition, and one extra operating day. Fuel expense fell 36% on lower prices, though lower fuel surcharges weighed on revenue at every transportation segment. The main investor risks are legal and strategic. FedEx Ground's owner-operator independent contractor litigation remains a significant overhang: the California case was settled for $228 million, management says material exposure above accruals is reasonably possible in Oregon and other states, and the company cannot estimate a loss range. A criminal indictment related to internet pharmacy shipments could also be material if FedEx is convicted. Pending deals and commitments add to the picture: the TNT Express acquisition (about $5.0 billion, expected to close in the first half of calendar 2016) and roughly $12.8 billion of aircraft commitments. Capital expenditures rose 68% to $1.2 billion, with 2016 guidance of about $4.6 billion, and cash flow from operations rose to $1.24 billion. Leverage stood at 61% against a 70% covenant, and share repurchases continued at $190 million, with 11.1 million shares remaining under authorization.

    Sep 17, 2015
  35. 2015-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2015

    FedEx Corporation reported robust financial performance for the nine months ended February 28, 2015, with significant increases in revenue and net income compared to the prior year. This growth was driven by strong volume and yield improvements across all its transportation segments, particularly FedEx Ground and FedEx Freight. The company also benefited from a favorable net impact of fuel costs and efficiencies gained from its profit improvement programs. Strategic acquisitions, including GENCO Distribution System, Inc., were completed to expand e-commerce and supply chain solutions capabilities, further positioning FedEx for future growth. Operationally, FedEx demonstrated strong execution with expanded operating margins, despite increased expenses related to salaries, purchased transportation, and maintenance. The company's proactive management of fuel costs through surcharges and its ongoing commitment to cost control measures were key contributors to its improved profitability. FedEx also continued its share repurchase program, demonstrating a commitment to returning value to shareholders.

    Mar 19, 2015
  36. 2015-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2014

    FedEx reported a strong fiscal second quarter 2015 (three months ended November 30, 2014). Revenue rose 5% to $11.9 billion and operating income rose 22% to $1.01 billion, lifting operating margin 120 basis points to 8.5%. Net income increased 23% to $616 million, and diluted EPS rose 36% to $2.14. For the first half, revenue was $23.6 billion (+5%), operating income $2.0 billion (+23%), and diluted EPS $4.24 (+37%). Management attributed the gains to volume and yield growth across all three transportation segments, profit improvement programs begun in 2013, lower pension expense, and a slight net benefit from fuel. Share repurchases added $0.16 to Q2 diluted EPS and $0.31 to first-half EPS. Partially offsetting these gains was higher aircraft maintenance expense, which rose 15% in the first half due to the timing of maintenance events. Cash generation improved, with first-half operating cash flow of $2.15 billion, up from $1.61 billion. Capital expenditures rose to $1.89 billion, so free cash flow (operating cash flow less capex) was about $261 million, compared with roughly negative $81 million a year earlier. The company returned cash through $947 million of treasury stock purchases and $114 million of dividends. Cash fell to $2.27 billion from $2.91 billion at May 31, 2014. Full-year 2015 capex is expected to be about $4.2 billion. Long-term debt was essentially flat at $4.7 billion, and the leverage ratio of 57% is well inside the 70% covenant. The $1 billion revolver was fully available. The key risk for investors is legal exposure. FedEx Ground faces numerous independent-contractor misclassification cases, and a Ninth Circuit ruling in August 2014 found California and Oregon owner-operators were employees as a matter of law. Management cannot estimate a reasonably possible loss range in excess of the amount accrued, and the outcome could be material. A DOJ criminal indictment related to internet pharmacy shipments could also be material if FedEx is convicted. Pilot contract negotiations at FedEx Express are ongoing, and an acquisition agreement (GENCO) and an acquired business (Bongo) are expected to be immaterial to 2015 results.

    Dec 18, 2014
  37. 2015-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2014

    FedEx Corporation's (FDX) 10-Q filing for the period ending August 31, 2014, reveals a solid financial performance for the first quarter of fiscal year 2015. The company reported a significant increase in both revenue and operating income compared to the same period last year, driven by strong growth across all its transportation segments. This positive momentum is attributed to increased shipment volumes and improved yields, alongside benefits from ongoing profit improvement programs and lower pension expenses. The company also continues to return value to shareholders through share repurchases and dividends, demonstrating financial strength and commitment to shareholder returns. Despite the positive operational results, investors should be aware of potential headwinds. The company faces ongoing legal proceedings, particularly concerning the classification of its independent contractors at FedEx Ground, which could lead to material financial impacts. Additionally, market risks such as fluctuating fuel prices and global economic conditions remain key factors influencing future performance. The company maintains a healthy liquidity position and anticipates continued revenue and earnings growth, supported by strategic capital expenditures and ongoing operational efficiencies.

    Sep 18, 2014
  38. 2014-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2014

    FedEx's fiscal third-quarter 2014 10-Q (quarter ended February 28, 2014) shows modest top-line growth and improving profitability despite a significant drag from severe winter weather and a negative net fuel impact. Revenue rose 3% to $11.3 billion, operating income grew 9% to $641 million, and net income increased 5% to $378 million, or $1.23 per diluted share versus $1.13 a year earlier. For the nine months, diluted EPS was $4.34 versus $3.97. Management estimated winter weather reduced earnings by about $125 million year over year. Growth was led by FedEx Ground, where revenue rose 10% on volume gains and rate increases, and FedEx Freight, where revenue rose 9% on higher LTL shipments. FedEx Express was flat, as lower fuel surcharges and freight weakness offset stronger export package volumes. The balance sheet and capital allocation shifted meaningfully. Cash fell to $3.0 billion from $4.9 billion at May 31, 2013, and long-term debt rose to $4.7 billion after a $2.0 billion senior unsecured issuance. Proceeds funded a $2.0 billion accelerated share repurchase, and total nine-month buybacks reached $2.0 billion across 15.6 million shares. Operating cash flow declined 13% to $2.6 billion, while 2014 capital expenditures are guided to about $3.8 billion. Leverage stood at 57% against a 70% covenant maximum, and the company retains a $1 billion undrawn revolver. Management guides to continued earnings growth in the fourth quarter, with the majority of profit-improvement benefits expected in 2015 and 2016. Key risks include the pace of the global economy, the ongoing shift from priority to lower-yielding economy international services, fuel surcharge lag, and litigation over whether FedEx Ground's owner-operators are independent contractors. The company says a potential loss from the contractor cases could be material but cannot yet be estimated. It also discloses a DOJ criminal investigation related to online pharmacy shipments, for which no loss estimate is possible.

    Mar 20, 2014
  39. 2014-Q2-A

    FedEx Quarterly Report (Amendment) for Q2 Ended Nov 30, 2013

    This filing is an amendment (10-Q/A) to FedEx Corporation's Quarterly Report on Form 10-Q for the quarter ended November 30, 2013. The primary purpose of this amendment is to file revised redacted versions of certain exhibits, specifically related to amendments to a Transportation Agreement with the United States Postal Service (USPS). These revisions were made in response to SEC requests for confidential treatment. Investors should note that this filing does not introduce new financial or operational results; it only updates the presentation of specific contractual information that was previously filed.

    Feb 18, 2014
  40. 2014-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2013

    FedEx's first-half fiscal 2014 10-Q (quarter ended November 30, 2013) shows steady top- and bottom-line growth. Revenue rose 3% in the second quarter to $11.4 billion and 2% for the six months to $22.4 billion. Operating income grew 15% in the quarter to $827 million, lifting operating margin to 7.3% from 6.5%, and diluted EPS rose 13% to $1.57. Growth was led by FedEx Ground (revenue up 10%, with volume gains and rate increases) and by a sharp profitability improvement at FedEx Express, where operating income rose 42% on lower aircraft maintenance costs and cost controls even though segment revenue was flat to slightly down. Fuel was a notable headwind in the first half because surcharges lag fuel price changes, and one fewer operating day also weighed on results. Balance-sheet and cash-flow data show a company returning capital aggressively. Cash fell to $3.9 billion from $4.9 billion as the company repurchased 10 million shares for $1.2 billion in the first half and paid $95 million in dividends, while operating cash flow was $1.6 billion against $1.7 billion a year earlier. Capital expenditures were $1.7 billion, down 10% year over year, and management expects roughly $4.0 billion for fiscal 2014. Debt is stable at about $3.0 billion, the revolver of $1 billion is undrawn, and the leverage ratio is 51% against a 70% covenant limit. Key risks include the ongoing litigation over whether FedEx Ground's owner-operators are independent contractors, which management says could be material but cannot yet quantify. Also noted are a pending DOJ criminal investigation tied to online pharmacy shipments, and pilot union contract negotiations. Management guides to continued revenue and earnings growth into the second half, with the bulk of profit-improvement benefits expected in 2015 and 2016.

    Dec 19, 2013
  41. 2014-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2013

    FedEx Corporation (FDX) reported its fiscal first-quarter 2014 results for the period ending August 31, 2013. The company saw a modest 2% increase in revenue, reaching $11.02 billion, driven primarily by solid performance in its FedEx Ground segment, which benefited from higher volumes and yield improvements due to rate increases. Operating income also rose by 7% to $795 million, and net income increased by 7% to $489 million, translating to diluted earnings per share of $1.53, up from $1.45 in the prior year. Despite these positive top-line and bottom-line improvements, the report highlights headwinds such as the net negative impact of fuel price fluctuations and one fewer operating day, which constrained earnings growth. The company continues to focus on profit improvement programs, with significant benefits expected in future periods.

    Sep 19, 2013
  42. 2013-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2013

    FedEx's 10-Q for the third quarter of fiscal 2013 (ended February 28, 2013) shows revenue growth alongside a sharp decline in profitability. Revenues rose 4% to $10.95 billion in the quarter and 4% to $32.85 billion for the nine months, but operating income fell 28% to $589 million in the quarter (operating margin down 230 basis points to 5.4%) and 12% to $2.05 billion for the nine months. Net income declined 31% to $361 million for the quarter, and diluted EPS fell to $1.13 from $1.65. Management attributes the weakness mainly to FedEx Express, where operating income dropped 66% in the quarter as customers shifted from higher-yielding priority international services to lower-yielding economy services, along with higher pension and depreciation costs and a $66 million legal reserve reversal that depressed the prior-year comparison. FedEx Ground and FedEx Freight were the bright spots, with Ground revenue up 11% on e-commerce-driven volume growth and Freight operating income improving. Management guides to higher full-year 2013 revenue but lower earnings, citing business realignment costs and the Express yield shift. The company launched a voluntary buyout program with expected 2013 cash costs of $450 million to $550 million, and targets $1.6 billion of annual profit improvement at FedEx Express by the end of 2016. Management also flagged that it is evaluating further aircraft grounding that could trigger impairment or other charges. Balance sheet changes include cash rising to $3.4 billion, long-term debt increasing to about $2.2 billion after a $1 billion bond issuance, and $246 million of share repurchases, with a 10 million share buyback authorization added in March 2013. Investors should also monitor the unresolved FedEx Ground independent contractor litigation, the DOJ investigations, and the USPS contract decision, all of which carry uncertain but potentially material exposure.

    Mar 21, 2013
  43. 2013-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2012

    FedEx's fiscal Q2 2013 10-Q (quarter ended November 30, 2012) shows revenue growth alongside weaker profitability. Revenues rose 5% to $11.1 billion in the quarter and 4% to $21.9 billion for the first half, but operating income fell 8% to $718 million and operating margin contracted 90 basis points to 6.5%. Diluted EPS declined 11% to $1.39 for the quarter and 6% to $2.84 for the six months. The core driver was FedEx Express, where operating income fell 33% in the quarter, reflecting a shift in demand toward lower-yielding international services, unfavorable year-over-year fuel timing, higher depreciation and pension costs, and Superstorm Sandy. By contrast, FedEx Ground (operating income up 4% for the quarter) and FedEx Freight (up 90%) performed well on volume and yield growth. Balance sheet and cash flow changes are notable. Cash fell to $2.5 billion from $2.8 billion, and operating cash flow declined to $1.7 billion from $2.2 billion, largely due to higher variable compensation payments and a $280 million required U.S. pension contribution. Capital expenditures fell 15% to $1.9 billion, mainly on lower aircraft spending. Total long-term debt rose to roughly $2.2 billion after a $1 billion bond issuance in July 2012, and the company repurchased $246 million of stock. The $1 billion revolver was undrawn, and the leverage ratio stood at 53% against a 70% covenant. Management guided to continued weakness in global economies and increased demand for lower-yielding international services, and announced profit improvement programs targeting $1.7 billion in annual savings over three years, including voluntary buyouts estimated at $550-650 million. Investors should also weigh the open FedEx Ground independent-contractor litigation, which management says could be material in some outcomes but cannot yet be quantified, and the pending U.S. Postal Service air contract decision.

    Dec 20, 2012
  44. 2013-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2012

    FedEx's first-quarter fiscal 2013 10-Q (quarter ended August 31, 2012) shows a company under pressure on profitability while revenue grows modestly. Revenue rose 3% to $10.8 billion and operating income edged up 1% to $742 million, but operating margin slipped to 6.9% from 7.0%. Net income fell 1% to $459 million and diluted EPS declined to $1.45 from $1.46. The mix was sharply divergent: FedEx Express operating income fell 28% to $207 million on weak global demand for priority services and rising depreciation and purchased transportation costs, while FedEx Ground (+9%) and FedEx Freight (+114%) delivered strong improvements. Management expects weak global economic conditions to persist into the second quarter and says cost actions and a planned voluntary employee buyout are under way. Balance sheet and cash flow activity was heavy. Operating cash flow was $903 million, while capital expenditures of $972 million (down 12%, mainly aircraft spending) and $483 million of acquisitions (Rapidão Cometa, TATEX, Opek) drove free cash flow negative after dividends. FedEx issued $1 billion of senior unsecured notes, repaid a $300 million maturity, and repurchased $246 million of stock (2.7 million shares at about $91). Long-term debt rose to $2.2 billion from $1.25 billion, and cash fell to $2.7 billion. Management guides to approximately $3.9 billion of capex for fiscal 2013 and a 37-38% effective tax rate. The company's leverage ratio was 53% against a 70% covenant limit, and the $1 billion revolver was fully undrawn. The key legal overhang remains FedEx Ground's independent contractor litigation. Management said that while a number of recent rulings support the model, adverse outcomes could be material and cannot yet be quantified. The ATA Airlines $66 million accrual was reversed in the quarter, which provided a one-time benefit. Investors should weigh the Express segment's deterioration and the ongoing capital intensity against the strength of Ground and Freight.

    Sep 19, 2012
  45. 2012-Q3

    FedEx Quarterly Report for Q3 Ended Feb 29, 2012

    FedEx Corporation's 10-Q for the third quarter of fiscal 2012 (ended February 29, 2012) shows continued top-line and profit growth. Revenues rose 9% to $10.56 billion in the quarter and 10% to $31.67 billion for the nine months. Operating income nearly doubled to $813 million in the quarter (up 107%), lifting operating margin to 7.7% from 4.1%. Net income reached $521 million ($1.65 diluted EPS) versus $231 million ($0.73) a year earlier. Results were helped by one-time items, including a $66 million reversal of the ATA Airlines legal reserve, along with a fuel-surcharge timing lag, milder weather versus the prior year, and yield gains across all transportation segments. FedEx Ground was the standout, with operating income up 43% in the quarter and an 18.8% margin, while FedEx Express and FedEx Freight also improved. Freight volumes and U.S. domestic and international priority package volumes softened, reflecting weak global demand. Balance sheet and cash flow remain solid. Operating cash flow was $3.02 billion for the nine months, up from $2.46 billion, though it was partly offset by $710 million in pension contributions. Capital expenditures reached $2.95 billion, and management expects roughly $4.2 billion for fiscal 2012, including aircraft commitments of about $9.5 billion. Cash stood at $2.04 billion, long-term debt was about $1.5 billion, and the company repurchased $197 million of stock. Moody's raised FedEx's senior unsecured rating to Baa1. The leverage ratio was 50% against a 70% covenant limit. The key risk for investors is the FedEx Ground independent contractor litigation. Management says a material loss is reasonably possible but cannot estimate the amount, though it believes the business model is likely to be upheld after favorable summary judgment rulings in 20 of 28 certified cases. Investors should also watch fuel price volatility given the lagged surcharge mechanism, the timing of the B777F and B767F fleet commitments, and the sustainability of one-time benefits.

    Mar 23, 2012
  46. 2012-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2011

    FedEx reported strong fiscal second-quarter 2012 results (quarter ended November 30, 2011). Revenue rose 10% to $10.6 billion and operating income rose 66% to $780 million, lifting operating margin to 7.4% from 4.9%. Net income was $497 million, or $1.57 per diluted share, versus $0.89 a year earlier. Part of the year-over-year improvement reflects the lapping of $152 million in charges in the prior-year quarter, including $86 million for combining FedEx Freight and FedEx National LTL and a $66 million ATA Airlines reserve. Management attributes the underlying gains mainly to higher yields across all transportation segments, with FedEx Ground and FedEx Freight the clear standouts. FedEx Express profit rose on fuel-surcharge timing benefits even as U.S. domestic and International Priority package volumes declined. Cash generation and balance sheet strength remain solid. Operating cash flow was $2.2 billion for the first half, and cash and equivalents stood at $1.9 billion. Capital expenditures were $2.2 billion in the first half and are expected to reach about $4.2 billion for fiscal 2012, driven by aircraft, vehicles and technology. The company repurchased 2.8 million shares for $197 million, and its adjusted debt-to-capital leverage ratio was 0.5 against a 0.7 covenant limit. Investors should watch the $300 million note maturing in June 2012 and the unresolved FedEx Ground independent contractor litigation, which management says could be material. On the fleet side, FedEx Express ordered 27 Boeing 767-300 Freighters to replace aging MD10 aircraft and deferred delivery of nine 777 Freighters, bringing total 777F deferrals to 11. These moves are intended to align network capacity with the slower demand environment, and management expects the B767F to deliver meaningful fuel and unit-cost savings.

    Dec 16, 2011
  47. 2012-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2011

    FedEx's first-quarter fiscal 2012 10-Q (quarter ended August 31, 2011) shows revenue up 11% to $10.52 billion and net income up 22% to $464 million, with diluted EPS of $1.46 versus $1.20. Operating income rose 17% to $737 million and operating margin expanded 40 basis points to 7.0%. Growth was driven by FedEx Ground (segment operating income up 42%) and a sharp turnaround at FedEx Freight (operating income of $42 million versus a $16 million loss a year earlier). FedEx Express was the weak spot: segment operating income fell 19% to $288 million as package volumes declined in higher-yielding international priority and U.S. domestic services amid slowing global growth, and its operating margin dropped to 4.4% from 6.0%. Fuel expense rose 40% company-wide, but management states fuel surcharges more than offset incremental fuel costs for the quarter. Balance sheet and cash flow were stable. Cash fell to $1.96 billion from $2.33 billion, mainly because capital expenditures rose 10% to $1.11 billion, and operating cash flow of $860 million rose from $796 million. Long-term debt dropped to $1.37 billion, and the leverage ratio covenant stood at 0.5 against a 0.7 limit. The $1 billion revolver remained fully undrawn. Management expects 2012 capital expenditures of about $4.2 billion, with aircraft commitments of roughly $5.4 billion and $418 million of required pension contributions for the rest of fiscal 2012. The main investor risk is FedEx Ground's independent contractor litigation. Management says it cannot estimate the potential loss, which could be material, and a separate $66 million ATA Airlines verdict was accrued in Q2 fiscal 2011. Management guides to continued revenue and earnings growth in the second quarter but says the pace for the rest of the year is hard to predict given a weaker global economy.

    Sep 23, 2011
  48. 2011-Q3

    FedEx Quarterly Report for Q3 Ended Feb 28, 2011

    FedEx's Form 10-Q for the third quarter of fiscal 2011 (quarter ended February 28, 2011) shows revenue growth and an operating margin that was roughly flat year over year. Revenues rose 11% to $9.66 billion in the quarter and 14% to $28.75 billion for the nine months. Operating income was $1.49 billion for the quarter, up from $1.30 billion for the nine months, while the quarterly operating margin slipped to 4.1% from 4.8%. Diluted EPS was $0.73 for the quarter, down from $0.76, and $2.82 for the nine months, up from $2.43. Management attributed the quarterly margin pressure to severe winter weather, higher aircraft maintenance, higher compensation and benefit costs, and about $43 million of costs tied to the FedEx Freight/National LTL combination. The FedEx Freight segment remained loss-making, with a $110 million operating loss in the quarter. Cash generation improved, with operating cash flow of $2.46 billion for the nine months, up from $1.91 billion, largely because pension contributions were lower. Capital expenditures rose sharply to $2.70 billion from $1.98 billion, driven by aircraft purchases including new B777Freighters, and management guides to about $3.5 billion for fiscal 2011. Cash fell to $1.36 billion, and the company repaid a $250 million note. Leverage stayed low, with an adjusted debt-to-capital ratio of 0.5 against a 0.7 covenant limit. Management expects a strong fourth quarter driven by economic recovery and a return to profitability at FedEx Freight. Key risks include the outcome of FedEx Ground's independent-contractor litigation, which management says could be material, a wage-and-hour class action trial scheduled for July 2011, a $66 million accrual for the ATA Airlines verdict, fuel price volatility, a pilot labor contract still awaiting ratification, and a DOJ antitrust investigation into dealings with third-party pricing consultants.

    Mar 18, 2011
  49. 2011-Q2

    FedEx Quarterly Report for Q2 Ended Nov 30, 2010

    FedEx reported fiscal Q2 2011 (quarter ended November 30, 2010) with revenue up 12% year over year to $9.63 billion, and first-half revenue up 15% to $19.09 billion. Growth was driven by volume and yield gains across all transportation segments, especially international priority package volume at FedEx Express and LTL yields at FedEx Freight. Profitability weakened, however. Operating income fell about 18% to roughly $469 million, operating margin contracted about 170 basis points to 4.9%, and diluted EPS dropped 19% to $0.89 from $1.10. The decline reflects two special charges: $86 million of costs tied to combining FedEx Freight and FedEx National LTL, and a $66 million reserve for an adverse ATA Airlines jury verdict. Management estimates these charges reduced EPS by $0.27. Higher salaries and benefits, reinstated compensation programs, higher pension costs, and higher aircraft maintenance also weighed on margins, while fuel surcharges provided a partial offset. Cash generation improved, with operating cash flow of $2.01 billion in the first half, up from $1.36 billion, largely due to lower pension contributions. Capital expenditures rose to $2.06 billion, mainly for aircraft, so free cash flow was roughly breakeven to slightly negative for the half. FedEx expects 2011 capital spending of about $3.5 billion, which keeps free cash flow under pressure in the near term. The balance sheet remains sound, with $1.88 billion of cash, roughly $1.8 billion of long-term debt, a leverage ratio of 0.5 against a 0.7 covenant limit, and an undrawn $1 billion revolver. The quarterly dividend was raised to $0.12 per share. The main risks for investors are the FedEx Ground independent contractor litigation and the pending pilot contract negotiations. Although FedEx Ground won summary judgment in 19 of 28 certified multidistrict cases, the company says an adverse outcome in the remaining cases or in state proceedings could be material and cannot be reasonably estimated. Management also expects continued cost pressure in the second half, including aircraft maintenance, pension expense, and the remaining compensation restoration, partially offset by yield increases and volume growth. The FedEx Freight realignment will generate additional charges.

    Dec 17, 2010
  50. 2011-Q1

    FedEx Quarterly Report for Q1 Ended Aug 31, 2010

    FedEx's first-quarter fiscal 2011 10-Q (quarter ended August 31, 2010) shows a strong rebound in the business. Revenue rose 18% to $9.457 billion from $8.009 billion, and operating margin expanded to 6.6% from 3.9%. Diluted EPS was $1.20 versus $0.58 a year earlier, and net income was roughly $0.6 billion (the exact figure is blank in the extracted text). Management attributes the growth to higher volumes across all transportation segments, particularly international priority (IP) package shipments at FedEx Express, along with higher fuel surcharges and yield gains at FedEx Express and FedEx Ground. The quarter also brought cost pressure. Salaries and benefits rose 13%, purchased transportation rose 26%, and maintenance and repairs rose 29%, reflecting reinstated compensation programs, higher pension and medical costs, and the partial reinstatement of 401(k) matching. FedEx Freight remained a drag, posting an operating loss of $16 million because LTL pricing is discounted amid excess industry capacity. Management plans to combine FedEx Freight with FedEx National LTL effective January 30, 2011, with an estimated $150 to $200 million cost and a target of substantially improved Freight profitability in 2012. On the balance sheet, cash declined to $1.709 billion from $1.952 billion, mainly because capital expenditures of $1.012 billion exceeded operating cash flow. Management guides to about $3.5 billion in 2011 capital spending, largely for aircraft, and the company is funding it while keeping leverage low (adjusted debt to capital of 0.5 against a 0.7 covenant limit). Investors should watch the pilot contract negotiations, the wage-and-hour and independent contractor litigation at FedEx Ground, and the ATA Airlines suit.

    Sep 17, 2010