FedEx Delivers Quarterly Profit of More Than $1 Billion

FedEx Delivers Quarterly Profit of More Than $1 Billion

FedEx Delivers Quarterly Profit of More Than $1 Billion

 

The FINANCIAL -- FedEx Corp. on June 20 reported earnings of $3.75 per diluted share ($4.25 per diluted share on an adjusted basis) for the fourth quarter ended May 31, compared to a loss of $0.26 per diluted share (earnings of $3.30 per diluted share on an adjusted basis) a year ago.

“Strong fourth quarter results completed a record fiscal 2017,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We enter fiscal 2018 confident FedEx Corp. will continue to deliver outstanding value and opportunities for shareowners, customers, and team members for years to come.”

Operating results benefited from higher base rates, increased package volume and the inclusion of TNT Express results.  Net income and earnings per share reflect tax benefits of $104 million, or $0.37 per diluted share, related to the implementation of new foreign currency tax regulations, the adoption of a new accounting standard for share-based payments, and certain transactions related to the TNT Express integration, according to FedEx.

Operating results benefited from higher base rates, increased volume, continued cost management at FedEx Express and the inclusion of TNT Express results.  Tax benefits from the implementation of new foreign currency tax regulations and the adoption of a new accounting standard for share-based payments also benefited results.  These factors were partially offset by TNT Express integration and restructuring expenses and network expansion costs at FedEx Ground.

Capital spending for fiscal 2017 was $5.1 billion, as certain FedEx Ground expansion projects were deferred to fiscal 2018.

For the year, the company acquired 2.96 million shares of FedEx common stock at an average price of $172.13.

Outlook

FedEx is unable to forecast the fiscal 2018 year-end MTM pension accounting adjustments.  As a result, the company is unable to provide fiscal 2018 earnings guidance on a GAAP basis.

Before year-end MTM pension accounting adjustments, earnings are projected to be $12.45 to $13.25 per diluted share for fiscal 2018.  This forecast assumes moderate economic growth.  The earnings forecast before year-end MTM pension accounting adjustments and excluding TNT Express integration expenses, including restructuring charges, is $13.20 to $14.00 per diluted share for fiscal 2018.  These forecasts include an estimated $65 million of TNT Express intangible asset amortization expense.

Capital spending for fiscal 2018 is expected to be approximately $5.9 billion, which includes an increase in planned aircraft deliveries to support the FedEx Express fleet modernization program and continued investments in FedEx Ground automation and capacity expansion, including certain projects deferred from fiscal 2017.

“Investments to modernize our aircraft fleet and expand our FedEx Ground capacity are supporting our strong earnings growth,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “We are very optimistic about fiscal 2018 as evidenced by our earnings outlook.”

Revenue increased 7% primarily due to increased package volume, driven by international export growth of 5%, and higher base rates.

Operating results increased primarily due to higher base rates, increased package volume, a positive net benefit from fuel and the continued benefit of cost management initiatives.  As-reported results include $46 million of expenses related to the integration of TNT Express.

The TNT Express as-reported results include $37 million of integration expenses, including restructuring charges, and $20 million of intangible asset amortization expense.

Revenue increased due to higher base rates and fuel surcharges. Average daily shipments were flat as the company focuses on improving revenue quality.

Operating results decreased slightly as higher salaries and wages and increased information technology expenses offset the benefit from higher base rates.