FedEx: Reports First Quarter Diluted EPS of $3.21 and Adjusted Diluted EPS of $3.60

FedEx Seamlessly Transitioned to One FedEx at the Start of Fiscal 2025

$1 Billion Share Repurchase Completed During Quarter

Full-Year Fiscal 2025 Earnings Outlook Range Narrowed
FedEx Corp. (NYSE: FDX) today reported the following consolidated results for the first quarter ended August 31 (adjusted measures exclude the item listed below):
    Fiscal 2025   Fiscal 2024
    As Reported (GAAP)   Adjusted (non-GAAP)   As Reported (GAAP)   Adjusted (non-GAAP)
Revenue   $21.6 billion   $21.6 billion   $21.7 billion   $21.7 billion
Operating income   $1.08 billion   $1.21 billion   $1.49 billion   $1.59 billion
Operating margin   5.0%   5.6%   6.8%   7.3%
Net income   $0.79 billion   $0.89 billion   $1.08 billion   $1.16 billion
Diluted EPS   $3.21   $3.60   $4.23   $4.55
This year’s and last year’s quarterly consolidated results have been adjusted for:
Impact per diluted share   Fiscal 2025   Fiscal 2024
Business optimization costs   $0.39   $0.32
First quarter results were negatively affected by a mix shift, which reduced demand for priority services, increased demand for deferred services, and constrained yield growth. In addition, higher operating expenses and one fewer operating days negatively affected the quarter’s results. A reduction of structural costs from the company’s DRIVE program initiatives partially offset these factors.
“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics,” said Raj Subramaniam, FedEx Corp. president and chief executive officer. “Overall, I remain confident in the value-creation opportunities ahead as we focus on reducing our structural cost, growing revenue profitably, and leveraging the insights from our vast collection of data as we continue to build the world’s most flexible, efficient and intelligent network.”
On June 1, 2024, FedEx Ground and FedEx Services were successfully merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network. FedEx Freight continues to provide less-than-truckload freight transportation services as a separate subsidiary. Federal Express and FedEx Freight now represent the company's major service lines and constitute its reportable segments. Additionally, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment. Prior year amounts were revised to reflect this presentation.
Federal Express operating results decreased during the quarter due to one fewer operating days and lower U.S. domestic priority package volume, partially offset by higher International Economy package volume. Increased wages and purchased transportation rates also negatively impacted operating results. These headwinds were partially offset by the reduction of structural costs from the company's DRIVE program initiatives.
FedEx Freight's operating results decreased during the quarter due to a decline in weight per shipment, reduced priority shipments, and one fewer operating day, partially offset by higher base yield. FedEx Freight continues to execute its long-term strategy of streamlining its network, completing the closure of seven small-market facilities during the quarter.
Share Repurchase Program
The company completed a $1 billion accelerated share repurchase (ASR) transaction during the quarter. Approximately 3.4 million shares were delivered under the ASR agreement, with the decrease in outstanding shares benefiting first-quarter results by $0.03 per diluted share.
FedEx expects to repurchase an additional $1.5 billion of common stock during fiscal 2025, for a buyback total of $2.5 billion. As of August 31, 2024, $4.1 billion remained available for repurchases under the company's 2024 stock repurchase authorization.
Cash on hand as of August 31, 2024, was $5.9 billion.
Outlook
FedEx is unable to forecast the fiscal 2025 mark-to-market (MTM) retirement plan accounting adjustments. As a result, FedEx is unable to provide a fiscal 2025 earnings per share or effective tax rate (ETR) outlook on a GAAP basis and is relying on the exemption provided by the Securities and Exchange Commission (SEC). It is reasonably possible that the fiscal 2025 MTM retirement plan accounting adjustments could have a material effect on fiscal 2025 consolidated financial results and ETR.
FedEx is revising its fiscal 2025 revenue and earnings forecasts, and now expects:
  • A low single-digit percentage revenue growth rate year over year, compared to the prior forecast of a low-to-mid single-digit percentage increase.
  • Earnings per diluted share of $17.90 to $18.90 before the MTM retirement plans accounting adjustments compared to the prior forecast of $18.25 to $20.25 per share; and $20.00 to $21.00 per share after also excluding costs related to business optimization initiatives, compared to the prior forecast of $20.00 to $22.00 per share.
FedEx is reaffirming its forecast of:
  • Permanent cost reductions from the DRIVE transformation program of $2.2 billion.
  • ETR of approximately 24.5% before the MTM retirement plans accounting adjustments; and
  • Capital spending of $5.2 billion, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.
These forecasts assume the company's current economic forecast and fuel price expectations, successful completion of the planned stock repurchases, and no additional adverse economic or geopolitical developments. FedEx’s ETR and earnings per share forecasts are based on current law and related regulations and guidance.
“Our revised outlook reflects our continued confidence in the execution of our DRIVE initiatives and the effects of our recent pricing actions, which we expect to help offset weaker-than-expected demand trends,” said John Dietrich, FedEx Corp. executive vice president and chief financial officer. “We will continue to manage our capital prudently and remain committed to our plan to return $3.8 billion to stockholders this fiscal year.”
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FedEx Corp
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