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FedEx Corp. (FDX) today reported earnings of $1.73 per diluted
share for the fourth quarter ended May 31, which includes a previously
announced $0.26 per diluted share non-cash aircraft impairment charge at
FedEx Express. Excluding this charge, earnings were $1.99 per diluted
share in the fourth quarter compared to $1.75 per diluted share a year
ago.
"FedEx delivered strong earnings results for fiscal 2012 due to the
outstanding performance by FedEx Ground, our new value proposition at
FedEx Freight and improved yields across all transportation segments,"
said Frederick W. Smith, FedEx Corp. chairman, president and chief
executive officer. "In fiscal 2013, we will continue our focus on
improving our operating efficiencies and our financial performance
across all of our businesses, while simultaneously enhancing our service
capabilities. We remain absolutely committed to higher earnings,
margins, cash flows and returns."
Fourth Quarter Results
FedEx Corp. reported the following consolidated results for the
fourth quarter:
Fiscal 2012 Fiscal 2011
---------------------------------- -------------
As YOY Before Aircraft YOY As Reported
Reported % Impairment % (GAAP)
(GAAP) Charge
------------- --- --------------- --- -------------
Revenue $11.0 billion 4 $11.0 billion 4 $10.6 billion
Operating Income $856 million (4) $990 million 11 $888 million
Operating Margin 7.8% 9.0% 8.4%
Net Income $550 million (1) $634 million 14 $558 million
Diluted EPS $1.73 (1) $1.99 14 $1.75
As announced on June 4, 2012, during the quarter FedEx Express
permanently retired from service 18 Airbus A310-200 aircraft and 26
related engines, as well as six Boeing MD10-10 aircraft and 17 related
engines. As a consequence, a non-cash impairment charge of $134 million
($84 million, net of tax, or $0.26 per diluted share) was recorded in
the fourth quarter. The decision to permanently retire these aircraft
will better align the U.S. domestic air network capacity of FedEx
Express to match current and anticipated shipment volumes.
Excluding the aircraft impairment charge, operating results improved due
to higher yields, volumes and margins at FedEx Ground and FedEx Freight.
Full Year Results
FedEx Corp. reported the following consolidated results for the
full year:
Fiscal 2012 Fiscal 2011
---------------------------- --------------------------
As Before Aircraft As Before
Reported Impairment Reported Freight Costs
(GAAP) Charge and (GAAP) and Legal
Legal Reserve
Reserve
Reversal
------------- --------------- ------------- -------------
Revenue $42.7 billion $42.7 billion $39.3 billion $39.3 billion
Operating Income $3.19 billion $3.28 billion $2.38 billion $2.54 billion
Operating Margin 7.5% 7.7% 6.1% 6.5%
Net Income $2.03 billion $2.09 billion $1.45 billion $1.56 billion
Diluted EPS $6.41 $6.59 $4.57 $4.90
Capital spending for fiscal 2012 was $4.0 billion, of which $1.9 billion
was for investments in aircraft and related equipment.
Outlook
"We are focused on improving margins in all businesses, although we face
certain cost increases in fiscal 2013," said Alan B. Graf, Jr., FedEx
Corp. executive vice president and chief financial officer. "These
headwinds include higher employee-related costs, including higher
pension expenses of approximately $150 million due to a historically low
discount rate on our May 31, 2012 measurement date, as well as higher
depreciation costs. We expect to mitigate these challenges by reducing
costs and improving efficiencies, and are continuing to evaluate
additional actions to substantially improve FedEx Express margins."
FedEx projects earnings to be $1.45 to $1.60 per diluted share in the
first quarter and $6.90 to $7.40 per diluted share for fiscal 2013. This
earnings guidance does not include the impacts of the significant cost
reduction programs currently under review that should be announced in
the fall. The company’s outlook assumes U.S. GDP growth of 2.2% and
world GDP growth of 2.6% during the fiscal year. FedEx reported earnings
of $1.46 per diluted share in last year’s first quarter. Capital
spending for fiscal 2013 is expected to decline to $3.9 billion, with
fewer aircraft deliveries at FedEx Express and increased investment in
the high-margin, high-return FedEx Ground business.
FedEx Express Segment
For the fourth quarter, the FedEx Express segment reported:
Fiscal 2012 Fiscal 2011
----------------------------------- -------------
As YOY Before Aircraft YOY As Reported
Reported % Impairment % (GAAP)
(GAAP) Charge
------------- ---- --------------- --- -------------
Revenue $6.80 billion 3 $6.80 billion 3 $6.63 billion
Operating Income $281 million (34) $415 million (3) $429 million
Operating Margin 4.1% 6.1% 6.5%
U.S. domestic revenue per package grew 6% due to higher rate per pound,
the growth of the premium FedEx First Overnight service and fuel
surcharges, while average daily package volume declined 5%. FedEx
international priority (IP) revenue per package grew 3% due to higher
package weights and fuel surcharges, while average daily package volume
decreased 3% driven by year-over-year declines from Asia. IP freight
pounds increased 3%, while revenue per pound decreased 4% due to lower
rate per pound. In total, IP package and freight pounds increased 2% and
revenue decreased 1% year-over-year. IP revenue growth was affected by a
lower-yielding mix of services, consisting of growth in deferred
services and declines in premium services.
Operating income and margin were impacted by the aircraft impairment
charge as well as declining package volumes. The demand shift toward
lower-yielding international services also negatively affected margins,
partially offset by the year-over-year benefit of the fuel surcharge
timing lag.
FedEx Ground Segment
For the fourth quarter, the FedEx Ground segment reported:
--
Revenue of $2.48 billion, up 9% from last year’s $2.26 billion
--
Operating income of $494 million, up 18% from $417 million a year ago
--
Operating margin of 20.0%, up from 18.4% the previous year
Operating income and margin reached record highs in the quarter
primarily due to increased yield and volume. Revenue per package
increased 5% primarily due to increased rates and higher extra services.
Average daily package volume grew 3% in the quarter, driven by growth in
both FedEx Home Delivery and business-to-business services. FedEx
SmartPost average daily volume increased 16% primarily due to growth in
e-commerce. FedEx SmartPost revenue per package increased 7% due to
increased rates.
FedEx Freight Segment
For the fourth quarter, the FedEx Freight segment reported:
--
Revenue of $1.40 billion, up 7% from last year’s $1.31 billion
--
Operating income of $81 million, up 93% from $42 million a year ago
--
Operating margin of 5.8%, up from 3.2% the previous year
Operating income and margin increased primarily due to higher yield,
volume growth and continued improvements in operational efficiencies.
Less-than-truckload (LTL) average daily shipments increased 4% due to an
increase in customer demand for the company’s service offerings,
enhanced service levels and modest economic improvement. LTL yield
increased 4% due to higher fuel surcharges and base yield improvement.
Effective July 9, 2012, FedEx Freight will increase U.S. and certain
other shipping rates by 6.9%.
As part of its ongoing commitment to continuous improvement, FedEx
Freight will be making some adjustments to its network on July 9, 2012
to drive incremental operational efficiencies and further enhance the
customer experience.
Corporate Overview
FedEx Corp. (FDX) provides customers and businesses worldwide with
a broad portfolio of transportation, e-commerce and business services.
With annual revenues of $43 billion, the company offers integrated
business applications through operating companies competing collectively
and managed collaboratively, under the respected FedEx brand.
Consistently ranked among the world’s most admired and trusted
employers, FedEx inspires its more than 300,000 team members to remain
"absolutely, positively" focused on safety, the highest ethical and
professional standards and the needs of their customers and communities.
For more information, visit news.fedex.com.
Additional information and operating data are contained in the company’s
annual report, Form 10-K, Form 10-Qs and fourth quarter fiscal 2012
Statistical Book. These materials, as well as a webcast of the earnings
release conference call to be held at 8:30 a.m. EDT on June 19 are
available on the company’s website at investors.fedex.com.
A replay of the conference call webcast will be posted on our Web site
following the call.
Certain statements in this press release may be considered
forward-looking statements, such as statements relating to management’s
views with respect to future events and financial performance. Such
forward-looking statements are subject to risks, uncertainties and other
factors which could cause actual results to differ materially from
historical experience or from future results expressed or implied by
such forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions in the global
markets in which we operate, legal challenges or changes related to
FedEx Ground’s owner-operators, new U.S. domestic or international
government regulation, the impact from any terrorist activities or
international conflicts, our ability to effectively operate, integrate
and leverage acquired businesses, changes in fuel prices and currency
exchange rates, our ability to match capacity to shifting volume levels
and other factors which can be found in FedEx Corp.’s and its
subsidiaries’ press releases and filings with the SEC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP
FINANCIAL MEASURES
The company believes that meaningful analysis of our financial
performance requires an understanding of the factors underlying that
performance and our judgments about the likelihood that particular
factors will repeat. Excluding the reversal of a reserve associated with
a legal matter and a non-cash aircraft impairment charge at FedEx
Express from current results and the costs of the combination of FedEx
Freight and FedEx National LTL operations and the initial recording of
the legal reserve from our prior period earnings will allow for more
accurate comparisons of our operating performance. Where applicable, the
impacts of these events are shown net of incentive compensation impacts.
As required by SEC rules, the tables below present a reconciliation of
our presented non-GAAP measures to the most directly comparable GAAP
measures.
Fourth Quarter Fiscal 2012
----------------------------------------------------------------------------------
FedEx Corporation FedEx Express
Segment
------------------------------------ ---------------
Operating Net Diluted Operating
Earnings
---------------- ---------------
Dollars in millions, except EPS Income Margin Income Per Share Income Margin
--------- ------- --------- ----------- -------- -------
Non-GAAP Measure $ 990 9.0 % $ 634 $ 1.99 $ 415 6.1 %
Aircraft Impairment (134 ) (1.2 %) (84 ) (0.26 ) (134 ) (2.0 %)
----- -- ---- --- ----- -- ----- --- ---- -- ---- ---
GAAP Measure $ 856 7.8 % $ 550 $ 1.73 $ 281 4.1 %
== ===== == ==== === == ===== == === ===== === == ==== == ==== ===
Full Year Fiscal 2012
-------------------------------------------------------------------
FedEx Corporation
------------------------------------
Operating Net Diluted
Earnings
----------------
Dollars in millions, except EPS Income Margin Income Per Share
--------- ------- --------- -----------
Non-GAAP Measure $ 3,277 7.7 % $ 2,089 $ 6.59
Aircraft Impairment (134 ) (0.3 %) (84 ) (0.26 )
ATA Legal Reserve, Net 43 0.1 % 27 0.08
----- ---- --- ----- -----
GAAP Measure $ 3,186 7.5 % $ 2,032 $ 6.41
== ===== == ==== === == ===== == === ===== ===
Full Year Fiscal 2011
-------------------------------------------------------------------
FedEx Corporation
------------------------------------
Operating Net Diluted
Earnings
----------------
Dollars in millions, except EPS Income Margin Income Per Share
--------- ------- --------- -----------
Non-GAAP Measure $ 2,544 6.5 % $ 1,556 $ 4.90
FedEx Freight Combination Costs (133 ) (0.3 %) (84 ) (0.26 )
ATA Legal Reserve, Net (33 ) (0.1 %) (20 ) (0.07 )
----- -- ---- --- ----- -- ----- ---
GAAP Measure $ 2,378 6.1 % $ 1,452 $ 4.57
== ===== == ==== === == ===== == === ===== ===
The financial section of this release is provided on the company’s
website at investors.fedex.com.
SOURCE: FedEx Corp.
FedEx Corp.
Media Contact:
Jess Bunn, 901-818-7463
or
Investor Contact:
Mickey Foster, 901-818-7468
Home Page: fedex.com
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