10-QPeriod: Q3 FY2015

FEDEX CORP Quarterly Report for Q3 Ended Feb 28, 2015

Filed March 19, 2015For Securities:FDX

Summary

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.

Financial Highlights

42 data points
Beta

Revenue

$11.72B

Net Income

$628.00M

5.4% Net Margin

EPS (Diluted)

$2.18

Total Assets

$36.11B

Cash & Equivalents

$3.48B

Free Cash Flow

$1.32B

Financial Statements
Beta
Revenue$11.72B
Operating Expenses$10.68B
Operating Income$1.04B
Net Income$628.00M
EPS (Basic)$2.21
EPS (Diluted)$2.18
Shares Outstanding (Basic)283.00M
Shares Outstanding (Diluted)287.00M

Key Highlights

  • 1Revenue increased by 5% to $35.3 billion for the nine months ended February 28, 2015, compared to the prior year, driven by all transportation segments.
  • 2Net income surged by 32% to $1.8 billion for the nine months ended February 28, 2015, compared to the prior year.
  • 3Diluted earnings per share rose significantly by 44% to $6.25 for the nine months ended February 28, 2015.
  • 4FedEx completed two strategic acquisitions: GENCO Distribution System, Inc. for $1.4 billion and Bongo International, LLC for $42 million, to enhance its e-commerce and supply chain offerings.
  • 5Operating income for FedEx Express significantly increased by 55% to $1.24 billion, indicating improved operational efficiency.
  • 6FedEx Ground showed strong revenue growth of 9% to $9.4 billion and operating income growth of 11% to $1.57 billion for the nine months.
  • 7FedEx Freight reported a substantial 60% increase in operating income to $348 million, driven by higher shipments and revenue per shipment.

Frequently Asked Questions

Revenue growth was primarily driven by strong performance across all transportation segments, including increased volumes and improved yields at FedEx Ground and FedEx Freight. FedEx Express also contributed with growth in U.S. domestic and international export volumes and yields.

FedEx experienced a favorable net impact from fuel costs. While fuel prices decreased, the company's fuel surcharge revenue also saw a year-over-year decrease. The net effect contributed positively to operating income due to lower overall fuel prices outpacing the reduction in surcharges.

FedEx acquired GENCO Distribution System, Inc. for $1.4 billion to strengthen its third-party logistics capabilities and Bongo International, LLC for $42 million to enhance its cross-border e-commerce solutions. These acquisitions are aimed at expanding its portfolio in e-commerce and supply chain services.

FedEx is involved in several significant legal proceedings, most notably those challenging the independent contractor status of its owner-operators at FedEx Ground. While the company believes its owner-operators are properly classified, adverse determinations could have material consequences. Other risks include potential impacts from international conflicts, regulatory changes, severe weather, and labor negotiations.