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MEMPHIS, Tenn .– (BUSINESS WIRE) – FedEx Corp. (NYSE: FDX) today announced the following consolidated results for the first quarter ended August 31 (adjusted measures exclude TNT Express integration fees described below):
|
Fiscal 2020 |
Exercise 2019 |
|||||||||||
|
Dollars in millions, except EPS |
As reported (GAAP) |
adjusted (Non-GAAP) |
As reported (GAAP) |
adjusted (Non-GAAP) |
||||||||
|
Returned |
$ |
17,048 |
$ |
17,048 |
$ |
17,052 |
$ |
17,052 |
||||
|
Operating product |
$ |
977 |
$ |
1,048 |
$ |
1,071 |
$ |
1,192 |
||||
|
Operating margin |
|
5.7% |
|
6.1% |
|
6.3% |
|
7.0% |
||||
|
Net revenue |
$ |
745 |
$ |
800 |
$ |
835 |
$ |
933 |
||||
|
EPS diluted |
$ |
2.84 |
$ |
3.05 |
$ |
3.10 |
$ |
3.46 |
||||
The quarterly consolidated results for both this year and last year have been adjusted to reflect TNT Express integration costs of $ 71 million ($ 0.21 per diluted share) for this year and $ 121 million. ($ 0.36 per diluted share) for the previous year.
"Our performance continues to be affected by a weakened global macroeconomic environment driven by increasing trade tensions and political uncertainty," said Frederick W. Smith, President and CEO of FedEx Corp. "Despite these challenges, we are preparing FedEx to take advantage of future growth opportunities while continuing to integrate TNT Express, improving FedEx Ground's residential delivery capabilities, and modernizing the operations of the airline fleet and hub. FedEx Express. "
Operating results decreased mainly due to the deterioration in the global economic environment, higher costs associated with expanding the service offering and the continued transition of the Company's operations. combination of products towards lower performing services. The impact of one less operating day and the loss of business of a large customer also had a negative impact on results. These factors were partially offset by lower variable incentive compensation expense, FedEx Ground revenue growth and increased FedEx Freight returns.
2020 rate increases
As previously announced, effective January 6, 2020, FedEx Express, FedEx Ground and FedEx Home Delivery shipping rates will increase by an average of 4.9%, while FedEx Freight's shipping rates will increase. on average 5.9%. Details of these changes and additional changes to rates and surcharges are available at fedex.com/rates2020.
Perspective; view; vision; horizon
FedEx is not in a position to forecast the accounting adjustment of the retirement plan according to the Market Value Assessment (MTM) at the end of the 2020 fiscal year. As a result, the company is unable to provide a earnings per share or effective tax rate (ETR) outlook for fiscal year 2020 on a GAAP basis.
FedEx lowers its guidance for fiscal year 2020 as the company's revenue forecast has been reduced due to increased trade tensions and a further weakening of global economic conditions since the company's 2020 forecast in June. The Company's revised outlook also reflects FedEx Ground's increased costs and the loss of FedEx Ground business by a major customer in August. In addition, the FedEx TER is expected to be between 24% and 26% before the MTM pension plan's accounting adjustment at the end of the year, due to lower earnings in some jurisdictions other than the United States.
FedEx now expects earnings of $ 10.00 to $ 12.00 per diluted share before the accounting adjustment of the end-of-year MTM plan, and earnings of $ 11.00 to $ 13.00 $ per diluted share before the accounting adjustment of the end-of-year MTM pension plan and excluding TNT Express integration fees. Planned capital expenditures remain at $ 5.9 billion.
"FedEx is implementing additional cost-cutting initiatives to mitigate the effects of macroeconomic uncertainty, including post-peak reductions in the FedEx Express global air network to better match capacity with demand," Alan said. B. Graf, Jr., FedEx Corp. Officer Vice President and Chief Financial Officer. "However, we continue to make strategic investments to improve our capabilities and efficiency, which we believe will lead to long-term increases in earnings, margins, cash flow and returns."
These forecasts assume moderate US economic growth, the company's current forecast of fuel prices, further weakening international economic conditions relative to the company's current expectations, and no further adverse developments in international trade and policy. FedEx's ETRE and earnings-per-share outlooks are based on current interpretations of the Employment Tax Reduction Act (TCJA) and related regulations and guidelines, and are subject to change based on future expectations. as well as FedEx's ability to defend its interpretations. These forecasts do not include the potential costs associated with capacity reductions.
Overview of the company
FedEx Corp. (NYSE: FDX) provides customers and businesses around the world with a broad portfolio of transportation, e-commerce and business services. With $ 70 billion in annual revenue, the company offers integrated enterprise solutions through competitively managed and collaborative operating companies under the respected FedEx brand. Consistently ranked among the most admired and trusted employers in the world, FedEx encourages its more than 450,000 members to remain focused on safety, the highest ethical and professional standards, and the needs of their customers and their communities. To learn more about how FedEx connects people and opportunities around the world, visit about.fedex.com.
Additional information and operational data can be found in the company's annual report, Forms 10-K, Forms 10-Qs, Form 8-Ks, Statistical Works, as well as on the teleconference slides for the first quarter of the year. fiscal year 2020. These documents, as well as the webcast of the financial results conference call to be held at 5:30 pm, September 17, are available on the company's website at investors.fedex.com. A retransmission of the webcast of the teleconference will be posted on our website after the teleconference.
The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including documents filed by the Securities and Exchange Commission (SEC), as well as financial and other information about investor intention. The information we post on our Investor Relations website may be considered important information. Investors, the media and others interested in the business are encouraged to visit this website from time to time as the information is updated and new information is posted.
Certain statements in this press release may be considered forward-looking statements, such as statements regarding management's views on future events and financial performance. These forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from past experience or future results expressed or implied by such statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate; anti-trade measures and further amendments to international trade policies and relations; a material data breach or other disruption of our technology infrastructure; our ability to successfully integrate the operations and operations of FedEx Express and TNT Express on time and at cost and to realize the expected benefits from the combined operations; our ability to successfully implement our business strategy and respond effectively to changes in market dynamics; the impact of the United Kingdom's vote in favor of leaving the European Union and the terms of its withdrawal, if any; our ability to match capacity with varying volume levels; changes in fuel prices or exchange rates; the impact of intense competition; existing or new regulatory or regulatory arrangements of US or international governments, at the national or international level; future directions, regulations, interpretations or challenges regarding our tax positions with respect to the TCJA and our ability to defend our interpretations of the TCJA; our ability to effectively exploit, integrate, operate and develop the acquired businesses; legal issues or changes regarding owner-operators engaged by FedEx Ground and drivers providing services on their behalf; interruptions or changes in service, or changes in the commercial or financial strength of the US Postal Service; the impact of any international conflict or terrorist activity; our ability to quickly and efficiently restore operations due to adverse weather conditions, disaster or localized disruption in a key geographic area; and other factors that appear in FedEx Corp. press releases. and its subsidiaries and in the documents that FedEx Corp. filed with the SEC. Any forward-looking statement speaks only of the date on which it is made. We disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The financial section of this press release is available on the company's website at investors.fedex.com.
Reconciliations of non-GAAP financial measures
TO FINANCIAL MEASURES IN ACCORDANCE WITH GAAP
Results of the first quarter of fiscal year 2020 and fiscal year 2019
The Company reports its financial results in accordance with US generally accepted accounting principles ("GAAP" or "reported"). We have completed the presentation of our financial information determined in accordance with GAAP by certain non-GAAP (or "adjusted") financial measures, including our operating income and consolidated operating margin, margins and net income. and our diluted earnings per share. These financial measures have been adjusted to exclude the impact of TNT Express's integration expenses incurred during the 2020 and 2019 financial years.
We committed and expect to incur significant expenses throughout fiscal year 2021 and could incur additional expenses thereafter as part of the TNT Express integration. We have adjusted our consolidated financial measures for the first quarter of Fiscal Year 2020 and 2019 to exclude the integration costs of TNT Express, as we would not generally engage them in our continuing operations. Integration expenses are primarily incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and benefits, travel expenses and advertising expenses. Internal salaries and staff benefits are included only to the extent that people are fully engaged in integration activities. The integration costs also include the restructuring costs of TNT Express.
We believe that these adjusted financial measures facilitate the analysis and comparison of our ongoing business activities as they exclude items that are not necessarily indicative of the core operating performance of the Company and our business segments, or which are not related, and can help investors make comparisons with previous results. periods and evaluate trends in our underlying business. These adjustments correspond to the way management perceives our activities. Management uses these non-GAAP financial measures to make financial, operational and planning decisions, as well as to assess the ongoing performance of the Company and each business line.
Our non-GAAP financial measures are intended to supplement and should be read in conjunction with and are not an alternative or substitute and should not be considered superior to the financial results presented. As a result, users of our financial statements should not place undue reliance on these non-GAAP financial measures. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with non-GAAP financial measures of other companies with the same or similar names. In accordance with the rules of the Securities and Exchange Commission, the tables below provide a reconciliation of the non-GAAP financial measures presented with those most directly comparable.
Earnings per share and effective tax rate forecasts for the 2020 financial year
Our earnings per share (EPS) guidance for Fiscal Year 2020 is a non-GAAP financial measure as it excludes the accounting adjustment of the pension plan at the end of the fiscal year. fiscal year 2020 and the estimated integration expenses of TNT Express for the fiscal year 2020. Our forecast for the effective tax rate for the fiscal year 2020 is a non-GAAP financial measure, because they exclude the impact of the accounting adjustment of the MTM pension plan at the end of the financial year 2020.
We have presented these non-GAAP financial measures for the same reasons as those described above for non-GAAP historical measures. The accounting adjustment of the MTM pension plan at the end of the 2020 financial year is excluded from our EPS and ETR forecasts for fiscal year 2020, as the case may be, because it is not related to our operating performance. principal and helps investors assess trends in our underlying business. The estimated integration costs of TNT Express for fiscal year 2020 are excluded from our EPS guidance for fiscal year 2020 for the same reasons as those described above for historical measures not defined by the GAAP.
We are not able to predict the amount of the accounting adjustment of the MTM pension plan at the end of the year because it is heavily impacted by changes in interest rates and financial markets. This adjustment is therefore not included in our EPS and ETR forecasts for the 2020 fiscal year. For this reason, a full reconciliation of our EPS and ETR forecasts for fiscal year 2020 with the most directly comparable GAAP measures is unachievable. However, it is reasonably possible that our accounting adjustment for the MTM Pension Plan at the end of the 2020 fiscal year could have a significant impact on our consolidated financial results and our consolidated FTE for the 2020 financial year.
The table below entitled "Earnings Per Share Forecast for Fiscal Year 2020" describes the effects of items excluded from our EPS guidance for Fiscal Year 2020, other than the accounting adjustment of the Fiscal Year 2020 Plan. MTM retirement of the end of the year.
First fiscal quarter 2020
|
FedEx Corporation |
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|
Dollars in millions, except EPS |
Operating |
Income |
Net |
Diluted result |
|||||||||||
|
Income |
Margin |
The taxes1 |
Income2 |
By part |
|||||||||||
|
GAAP measure |
$ |
977 |
5.7 |
% |
$ |
251 |
$ |
745 |
$ |
2.84 |
|||||
|
TNT Express integration fee3 |
|
71 |
0.4 |
% |
16 |
55 |
0.21 |
||||||||
|
Non-GAAP measure |
$ |
1,048 |
6.1 |
% |
$ |
267 |
$ |
800 |
$ |
3.05 |
|||||
First quarter of fiscal year 2019
|
FedEx Corporation |
|||||||||||||||
|
Dollars in millions, except EPS |
Operating |
|
Income |
|
Net |
|
Diluted result |
||||||||
|
Income |
|
Margin |
|
The taxes1 |
|
Income2 |
|
By part |
|||||||
|
GAAP measure |
$ |
1,071 |
6.3 |
% |
$ |
266 |
$ |
835 |
$ |
3.10 |
|||||
|
TNT Express integration fee3 |
|
121 |
0.7 |
% |
|
23 |
|
98 |
|
0.36 |
|||||
|
Non-GAAP measure |
$ |
1,192 |
7.0 |
% |
$ |
289 |
$ |
933 |
$ |
3.46 |
|||||
Forecast Earnings Per Share for Fiscal Year 2020
|
Dollars in millions, except EPS |
adjustments |
Diluted result By part |
||
|
Diluted earnings per share before accounting adjustment of the MTM pension plan at the end of the year (non-GAAP)4 |
|
$ 10.00 to $ 12.00 |
||
|
TNT Express integration fee |
$ 350 |
|
||
|
Effect of income tax1 |
(86) |
|
||
|
Net effect of tax |
$ 264 |
1.00 |
||
|
Diluted earnings per share with adjustments4 |
|
$ 11.00 to $ 13.00 |
| Remarks: | |
|
|
|
|
1 – |
Income taxes are based on the Company's approximate statutory tax rates applicable to each transaction. |
|
2 – |
Effect of "total other income (expense)" on net income amount not shown. |
|
3 – |
These expenses, including restructuring costs, were recorded at FedEx Corporate and FedEx Express. |
|
4 – |
The accounting adjustment of the MTM pension plan at the end of the year, impossible to calculate at this stage, is excluded. |
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