10-QPeriod: Q2 FY2021

FEDEX CORP Quarterly Report for Q2 Ended Nov 30, 2020

Filed December 17, 2020For Securities:FDX

Summary

FedEx Corporation (FDX) reported a significant improvement in financial performance for the quarter ending November 29, 2020, driven by a substantial surge in residential delivery volumes and a recovery in business-to-business services, largely attributed to the ongoing impact of the COVID-19 pandemic. Consolidated revenue increased by 19% year-over-year for the quarter, reaching $20.6 billion, with operating income more than doubling to $1.5 billion. This strong performance was primarily fueled by FedEx Ground and FedEx Express segments, which saw robust growth in package volumes. Despite increased operating expenses related to enhanced safety measures and network capacity to support demand, the company demonstrated effective cost management and benefited from pricing initiatives. The company's liquidity position remained strong, with cash and cash equivalents significantly increasing to $8.3 billion, and available liquidity under its credit agreements providing ample financial flexibility.

Financial Highlights

42 data points
Beta

Revenue

$20.56B

Net Income

$1.23B

6.0% Net Margin

EPS (Diluted)

$4.55

Total Assets

$81.16B

Cash & Equivalents

$8.34B

Free Cash Flow

$2.58B

Financial Statements
Beta
Revenue$20.56B
Operating Expenses$19.10B
Operating Income$1.47B
Net Income$1.23B
EPS (Basic)$4.64
EPS (Diluted)$4.55
Shares Outstanding (Basic)264.00M
Shares Outstanding (Diluted)269.00M

Key Highlights

  • 1Consolidated revenue surged by 19% to $20.6 billion in the quarter, driven by strong demand across key segments.
  • 2Operating income more than doubled to $1.5 billion, reflecting improved operational efficiency and pricing strategies.
  • 3FedEx Ground experienced a 38% revenue increase, largely due to a surge in residential delivery volumes from e-commerce growth.
  • 4FedEx Express saw a 14% revenue increase, benefiting from higher international export and U.S. domestic package volumes.
  • 5The company's liquidity position strengthened significantly, with cash and cash equivalents rising to $8.3 billion.
  • 6Operating expenses increased by 14% but were managed effectively relative to revenue growth, leading to improved operating margins.
  • 7The company benefited from lower fuel prices, which helped offset some increased operating costs.

Frequently Asked Questions

The primary driver for FedEx's strong revenue growth was the elevated demand for residential delivery services, significantly boosted by the ongoing COVID-19 pandemic and the accelerated shift to e-commerce. Additionally, a recovery in business-to-business delivery services as COVID-19 restrictions moderated globally also contributed to the revenue increase.

The COVID-19 pandemic led to increased operating expenses for FedEx. These include costs for personal protective equipment, medical/safety supplies, enhanced security and cleaning services, additional labor to support elevated demand, and operating a seven-day network for FedEx Ground. Network contingency costs also rose to support operations during peak seasons.

FedEx anticipates continued strong demand for its Ground and Express services in the second half of the fiscal year, projecting improved year-over-year revenue and operating income for these segments. They also expect yield management and productivity improvements to drive growth in the Freight segment. However, the company acknowledges the inherent uncertainty surrounding the pandemic and potential government restrictions.

FedEx's liquidity position has significantly strengthened, with cash and cash equivalents increasing to $8.3 billion. The company believes its current cash, cash flow from operations, and available financing sources are adequate to meet its liquidity needs. They are prioritizing strengthening the balance sheet as business conditions improve and expect operating cash flow to fund anticipated capital expenditures.