10-QPeriod: Q3 FY2021

FEDEX CORP Quarterly Report for Q3 Ended Feb 28, 2021

Filed March 18, 2021For Securities:FDX

Summary

FedEx Corporation (FDX) reported a strong performance in its third quarter and the first nine months of fiscal year 2021, driven by robust demand for its e-commerce and residential delivery services. This surge in demand, significantly amplified by the COVID-19 pandemic, led to substantial revenue and operating income growth across its key segments, particularly FedEx Ground and FedEx Express. Despite increased operating expenses related to managing higher volumes, safety protocols, and network capacity, the company's pricing initiatives and improved yields contributed positively to profitability. FedEx also highlighted ongoing efforts in integrating TNT Express, along with strategic investments in its networks. The company maintained a healthy liquidity position, supported by strong operating cash flow and available credit facilities, and provided an outlook anticipating continued demand and strategic investments for growth.

Financial Highlights

43 data points
Beta

Revenue

$21.51B

Net Income

$892.00M

4.1% Net Margin

EPS (Diluted)

$3.30

Total Assets

$82.79B

Cash & Equivalents

$8.86B

Free Cash Flow

$2.16B

Financial Statements
Beta
Revenue$21.51B
Operating Expenses$20.50B
Operating Income$1.00B
Net Income$892.00M
EPS (Basic)$3.36
EPS (Diluted)$3.30
Shares Outstanding (Basic)265.00M
Shares Outstanding (Diluted)270.00M

Key Highlights

  • 1Consolidated revenue increased by 23% for the third quarter and 18% for the nine months ended February 28, 2021, driven by strong e-commerce demand and yield improvements.
  • 2Operating income saw significant growth, up 145% for the third quarter and 109% for the nine months, reflecting effective cost management and pricing strategies.
  • 3FedEx Ground experienced a 37% revenue increase in both periods, primarily due to a surge in residential delivery volumes driven by e-commerce.
  • 4FedEx Express revenue grew 21% in the quarter and 14% year-to-date, boosted by international export and U.S. domestic package volume growth, with international priority showing particularly strong gains.
  • 5Despite increased operating expenses, including higher salaries and purchased transportation costs, operating margins improved across all segments.
  • 6The company completed the acquisition of ShopRunner, an e-commerce platform, for $225 million to enhance its digital capabilities.
  • 7FedEx announced a workforce reduction plan in Europe as part of the TNT Express integration, expecting pre-tax costs between $300 million and $575 million.

Frequently Asked Questions

The primary drivers were significantly increased demand for e-commerce and residential delivery services, largely attributed to the COVID-19 pandemic. This was complemented by successful yield improvements through pricing initiatives across all transportation segments.

The pandemic led to increased operating expenses, including higher costs for salaries and benefits due to increased staffing and incentive compensation, higher purchased transportation costs, and additional expenses for personal protective equipment, safety supplies, security, and cleaning services to protect employees and customers.

FedEx is progressing with the TNT Express integration, aiming to complete the physical network integration in 2022. Integration expenses for the nine months were $146 million. The company also announced a workforce reduction plan in Europe, which is expected to incur pre-tax costs between $300 million and $575 million through fiscal year 2023.

FedEx maintained a strong liquidity position with $8.9 billion in cash and significant available credit facilities. Capital expenditures for the nine months were $4.2 billion, with a planned total of approximately $5.7 billion for the full fiscal year 2021, focusing on aircraft modernization and capacity expansion at FedEx Ground. The company expects operating cash flow to fund these expenditures.