On September 19, 2024, FedEx Corp (FDX, Financial) released its 8-K filing for the first quarter of fiscal 2025, ending August 31, 2024. The company reported diluted earnings per share (EPS) of $3.21 and adjusted diluted EPS of $3.60, falling short of the analyst estimates of $4.72. Revenue for the quarter was $21.6 billion, slightly below the estimated $21.955 billion.
Company Overview
FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2024, which ended May 2024, FedEx derived 47% of revenue from its express division, 37% from ground, and 10% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016, boosting the firm's presence across Europe. TNT was previously the fourth-largest global parcel delivery provider.
Performance and Challenges
FedEx Corp (FDX, Financial) faced several challenges in the first quarter, including a mix shift that reduced demand for priority services and increased demand for deferred services, which constrained yield growth. Additionally, higher operating expenses and one fewer operating day negatively impacted the quarter’s results. The company’s DRIVE program initiatives, aimed at reducing structural costs, 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.
Financial Achievements
FedEx Corp (FDX, Financial) completed a $1 billion share repurchase during the quarter, delivering approximately 3.4 million shares under the accelerated share repurchase agreement. This buyback benefited the first quarter results by $0.03 per diluted share. The company plans to repurchase an additional $1.5 billion of common stock during fiscal 2025, aiming for a total buyback of $2.5 billion.
Income Statement Highlights
| Fiscal 2025 | Fiscal 2024 |
|---|---|
| Revenue: $21.6 billion | Revenue: $21.7 billion |
| Operating Income: $1.08 billion | Operating Income: $1.49 billion |
| Operating Margin: 5.0% | Operating Margin: 6.8% |
| Net Income: $0.79 billion | Net Income: $1.08 billion |
| Diluted EPS: $3.21 | Diluted EPS: $4.23 |
Balance Sheet and Cash Flow
As of August 31, 2024, FedEx Corp (FDX, Financial) reported cash on hand of $5.9 billion. The company continues to focus on capital spending of $5.2 billion, prioritizing investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.
Outlook
FedEx Corp (FDX, Financial) revised its fiscal 2025 revenue and earnings forecasts, now expecting a low single-digit percentage revenue growth rate year over year. The company forecasts earnings per diluted share of $17.90 to $18.90 before mark-to-market retirement plans accounting adjustments and $20.00 to $21.00 per share after excluding costs related to business optimization initiatives.
“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.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from FedEx Corp for further details.
