10-QPeriod: Q3 FY2014

FEDEX CORP Quarterly Report for Q3 Ended Feb 28, 2014

Filed March 20, 2014For Securities:FDX

Summary

FedEx Corporation reported solid revenue growth of 3% for both the third quarter and the first nine months of fiscal year 2014, reaching $11.3 billion and $33.7 billion, respectively. Net income also saw an increase, rising 5% to $378 million for the quarter and 9% to $1.37 billion for the nine-month period. Diluted earnings per share followed suit, improving by 9% to $1.23 in the quarter and $4.34 for the year-to-date period. Despite facing headwinds from severe winter weather and the net impact of fuel costs, the company demonstrated resilience through increased volumes at FedEx Ground and FedEx Freight, alongside yield improvements. Significant capital allocation activities were undertaken, including substantial share repurchases totaling $2.0 billion in the third quarter through accelerated share repurchase agreements and open market purchases, reflecting a commitment to returning capital to shareholders. The company also continued its strategic capital expenditures, with investments in fleet modernization and facility expansions across its segments, particularly at FedEx Ground and FedEx Express, signaling ongoing investment in operational efficiency and future growth. Despite challenges, FedEx maintained a strong liquidity position with $3.0 billion in cash and cash equivalents at the end of the period.

Financial Highlights

41 data points
Beta

Revenue

$11.30B

Net Income

$437.00M

3.9% Net Margin

EPS (Diluted)

$1.42

Total Assets

$32.73B

Cash & Equivalents

$3.04B

Free Cash Flow

$969.00M

Financial Statements
Beta
Revenue$11.30B
Operating Expenses$10.66B
Operating Income$737.00M
Net Income$437.00M
EPS (Basic)$1.44
EPS (Diluted)$1.42
Shares Outstanding (Basic)303.00M
Shares Outstanding (Diluted)307.00M

Key Highlights

  • 1Revenue grew 3% to $11.3 billion in Q3 FY14 and 9% to $33.7 billion for the first nine months.
  • 2Net income increased by 5% to $378 million in Q3 FY14 and 9% to $1.37 billion for the nine-month period.
  • 3Diluted EPS rose 9% to $1.23 in Q3 FY14 and 9% to $4.34 for the first nine months.
  • 4Severe winter weather impacted results, reducing earnings by an estimated $125 million year-over-year in Q3.
  • 5FedEx repurchased approximately $2.0 billion of common stock in Q3 FY14 through accelerated share repurchase agreements and open market purchases.
  • 6Capital expenditures were $2.55 billion for the first nine months, focused on aircraft and facility expansion.
  • 7FedEx Ground and FedEx Freight showed strong revenue growth driven by volume and yield improvements.

Frequently Asked Questions

FedEx reported that the severe winter weather in Q3 FY14 had a significant negative impact on its earnings, reducing them by an estimated $125 million year-over-year across all transportation segments. This included disruptions to operations and increased costs.

In Q3 FY14, FedEx significantly increased its capital allocation towards shareholders by repurchasing approximately $2.0 billion of its common stock through accelerated share repurchase (ASR) agreements and open market purchases. This activity is part of a broader share repurchase program authorized by the Board of Directors.

FedEx anticipates capital expenditures of approximately $3.8 billion for the full fiscal year 2014. These investments are primarily directed towards aircraft and related equipment at FedEx Express, facility projects at FedEx Ground and FedEx Express, and vehicle replacements across its transportation segments, reflecting a continued focus on modernization and expansion.

FedEx Express revenues were flat, impacted by lower freight revenues and fuel surcharges, though partially offset by domestic and international package business strength. FedEx Ground saw robust revenue growth of 10% driven by volume and yield increases. FedEx Freight also experienced strong revenue growth of 9%, attributed to higher LTL shipments and weight per shipment. The FedEx Services segment saw a slight revenue decline.