MEMPHIS, Tenn., September 15, 2020 ... FedEx Corp. today reported the following consolidated results for the first quarter ended August 31 (adjusted measures exclude TNT Express integration expenses as described below):
| Fiscal 2021 | Fiscal 2020 | |||
| As Reported (GAAP) | Adjusted (non-GAAP) | As Reported (GAAP) | Adjusted (non-GAAP) | |
| Revenue | $19.3 billion | $19.3 billion | $17.0 billion | $17.0 billion |
| Operating income | $1.59 billion | $1.64 billion | $0.98 billion | $1.05 billion |
| Operating margin | 8.2% | 8.5% | 5.7% | 6.1% |
| Net income | $1.25 billion | $1.28 billion | $745 million | $800 million |
| Diluted EPS | $4.72 | $4.87 | $2.84 | $3.05 |
This year’s and last year’s quarterly consolidated results have been adjusted for TNT Express integration expenses of $49 million ($0.14 per diluted share) for this year and $71 million ($0.21 per diluted share) for last year.
“Our earnings growth underscores the importance of our business initiatives and investments over the last several years, and, in many ways, the world has accelerated to meet our strategies,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “I would like to thank our team members whose efforts during this time have helped keep the world’s health care, industrial and at-home supply chains moving despite the challenges of the global pandemic.”
Operating results increased due to volume growth in FedEx International Priority and U.S. domestic residential package services, yield improvement at FedEx Ground and FedEx Freight, and one additional operating weekday. These factors were partially offset by costs to support strong demand and to expand services, variable compensation expenses, and COVID-19 related costs incurred to ensure the safety of FedEx team members and customers.
Outlook
FedEx is not providing an earnings forecast for fiscal 2021. The capital spending forecast for the year is up $200 million to $5.1 billion, driven by additional capacity initiatives to support increased volume levels.
“While business demand improved in the first quarter, continued uncertainties cloud our ability to forecast full-year earnings,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “However, we expect to continue to benefit from our strong position in the U.S. and international package and freight markets, yield improvement opportunities and cost management initiatives.”
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of $71 billion, the company offers integrated business solutions 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 500,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities. To learn more about how FedEx connects people and possibilities around the world, please visit about.fedex.com.
Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books. These materials, as well as a webcast of the earnings release conference call to be held at 5:30 p.m. EDT on September 15, are available on the company’s website at investors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.
The Investor Relations page of our website, investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (SEC) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.
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 and underlying assumptions. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. 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, the negative impacts of the COVID-19 pandemic; economic conditions in the global markets in which we operate; anti-trade measures and additional changes in international trade policies and relations; a significant data breach or other disruption to our technology infrastructure; our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame and at the expected cost and to achieve the expected benefits from the combined businesses; our ability to successfully implement our business strategy, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such strategies and actions; the impact of the United Kingdom’s withdrawal from the European Union; changes in fuel prices or currency exchange rates; our ability to match capacity to shifting volume levels; the impact of intense competition; evolving or new U.S. domestic or international government regulation or regulatory actions, future guidance, regulations, interpretations or challenges to our tax positions; our ability to effectively operate, integrate, leverage and grow acquired businesses; legal challenges or changes related to service providers engaged by FedEx Ground and the drivers providing services on their behalf; an increase in self-insurance accruals and expenses; disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service; the impact of any international conflicts or terrorist activities; our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography; and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
TO GAAP FINANCIAL MEASURES
First Quarter Fiscal 2021 and Fiscal 2020 Results
The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or “reported”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certain non-GAAP (or “adjusted”) financial measures, including our adjusted first quarter fiscal 2021 and 2020 consolidated operating income and margin, net income and diluted earnings per share, and adjusted first quarter fiscal 2021 and 2020 FedEx Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of TNT Express integration expenses incurred in fiscal 2021 and 2020.
We have incurred and expect to incur significant expenses through fiscal 2022 in connection with our integration of TNT Express. We have adjusted our first quarter fiscal 2021 and 2020 consolidated and FedEx Express segment financial measures to exclude TNT Express integration expenses because we generally would not incur such expenses as part of our continuing operations. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and employee benefits, advertising and travel expenses. Internal salaries and employee benefits are included only to the extent the individuals are assigned full-time to integration activities.
We believe these adjusted financial measures facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company’s and each business segment’s ongoing performance.
Our non-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, 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 other companies’ non-GAAP financial measures having the same or similar names. As required by Securities and Exchange Commission rules, the tables below present a reconciliation of our presented non-GAAP financial measures to the most directly comparable GAAP measures.
First Quarter Fiscal 2021
| FedEx Corporation | |||||||||||||||
| Dollars in millions, except EPS |
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| GAAP measure | $1,590 | 8.2% | $361 | $1,245 | $4.72 | ||||||||||
| TNT Express integration expenses4 | 49 | 0.3% | 11 | 38 | 0.14 | ||||||||||
| Non-GAAP measure | $1,639 | 8.5% | $372 | $1,283 | $4.87 | ||||||||||
| FedEx Express Segment | |||||||||||||||
| Dollars in millions |
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| |||||||||||
| GAAP measure | $710 | 7.4% | |||||||||||||
| TNT Express integration expenses4 | 37 | 0.4% | |||||||||||||
| Non-GAAP measure | $747 | 7.7% | |||||||||||||
First Quarter Fiscal 2020
| FedEx Corporation | |||||||||||||||
| Dollars in millions, except EPS |
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| |||||||||||
| GAAP measure | $977 | 5.7% | $251 | $745 | $2.84 | ||||||||||
| TNT Express integration expenses4 | 71 | 0.4% | 16 | 55 | 0.21 | ||||||||||
| Non-GAAP measure | $1,048 | 6.1% | $267 | $800 | $3.05 | ||||||||||
| FedEx Express Segment | |||||||||||||||
| Dollars in millions |
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|
| |||||||||||
| GAAP measure | $285 | 3.2% | |||||||||||||
| TNT Express integration expenses4 | 57 | 0.6% | |||||||||||||
| Non-GAAP measure | $342 | 3.8% | |||||||||||||
Notes:
| 1 | – | Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction. |
| 2 | – | Effect of “total other (expense) income” on net income amount not shown. |
| 3 | – | Does not sum to total due to rounding. |
| 4 | – | These expenses were recognized at FedEx Corporate and FedEx Express. |