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FedEx Q1 Earnings & Revenues Lag Estimates, View Down
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FedEx Corporation (FDX - Free Report) reported disappointing first-quarter fiscal 2025 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.
Quarterly earnings per share (EPS) (excluding 39 cents from non-recurring items) of $3.60 missed the Zacks Consensus Estimate of $4.82 and declined 20.8% year over year. Revenues of $21.6 billion fell short of the Zacks Consensus Estimate of $22.1 billion and fell 0.5% from the year-ago fiscal quarter’s reported figure.
Quarterly results were unfavorably impacted by the reduced demand for priority services and, increased demand for deferred services and constrained yield growth. Higher operating expenses and one less operating day also weighed on the reported quarter. These headwinds were partially offset by the reduction of structural costs from the company's DRIVE program initiatives.
Operating income, on a reported basis, decreased 24% to $1.21 billion from the first quarter of fiscal 2024. Operating margin fell to 5.6% from 7.3% in the year-ago reported quarter.
Operating expenses (reported basis) increased 2% year over year to $20.5 billion.
Segmental Performance During the Quarter
On June 1, 2024, FedEx Ground and FedEx Services merged into Federal Express, becoming a a fully integrated- more -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. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.
Federal Express segment’s revenues fell 1% year over year to $18.3 billion. Federal Express was hurt due to one less operating day and lower U.S. domestic priority package volume, partially offset by higher International Economy package volume. Increased wages and purchased transportation rates also unfavorably impacted the segment
FedEx Freight revenues fell 2% from the year-ago fiscal quarter’s reported figure to $2.3 billion. Our estimate reflects a year-over-year decline of 2.9%. FedEx Freight segment was weighed down due to a decline in weight per shipment, reduced priority shipments and one less operating day, partially offset by higher base yield.
Average daily shipments fell 3% year over year. Capital expenditures for the reported quarter were $767 million.
Liquidity
FedEx exited first-quarter fiscal 2025 with cash and cash equivalents of $5.94 billion compared with $6.50 billion at the prior-quarter end. Long-term debt (less current portion) was $19.6 billion compared with $20.1 billion at the end of the prior quarter.
During the reported quarter, FDX completed a $1 billion accelerated share repurchase (ASR) transaction. Almost 3.4 million shares were delivered under the ASR agreement, with the decrease in outstanding shares aiding fiscal first-quarter results by 3 cents per diluted share.
Fiscal 2025 Outlook
FDX now expects revenues to grow in a low single-digit percentage year over year compared with the prior view of low-to-mid single-digit percentage growth year over year.
EPS is now expected to be in the range of $17.90-$18.90 (prior view: $18.25 to $20.25) before the MTM retirement plans accounting adjustments and $20.00 to $21.00 (prior view: $20.00 to $22.00) after excluding costs related to business optimization initiatives
FDX still anticipates capital spending of $5.2 billion in fiscal 2025. Effective tax rate is still estimated to be 24.5%.
For fiscal 2025, FedEx anticipates to repurchase an additional $1.5 billion of common stock. As of Aug. 31, 2024, $4.1 billion was available for repurchases under the company's 2024 stock repurchase authorization.
So far this year, shares of FDX have gained 18.8%, outperforming the industry’s loss of 5.3%.
Image Source: Zacks Investment Research
Performances of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported second-quarter 2024 earnings (excluding 35 cents from non-recurring items) of $2.36 per share, which marginally missed the Zacks Consensus Estimate of $2.37. Earnings decreased 11.9% on a year-over-year basis. Apart from high costs, the carrier blamed the discounting pressure at the low end of the market, which hurt its pricing power, for the disappointing performance.
Revenues of $16.65 billion surpassed the Zacks Consensus Estimate of $16.25 billion and increased 6.9% year over year, driven by upbeat air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $15.41 billion, up 5.4% year over year.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported disappointing second-quarter 2024 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.
JBHT’s earnings of $1.32 per share missed the Zacks Consensus Estimate of $1.51 and declined 27% year over year.
JBHT’s total operating revenues of $2.93 billion missed the Zacks Consensus Estimate of $3.03 billion and fell 7% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year. The downfall was owing to a 5% decrease in gross revenue per load in Intermodal (JBI) and a decline in load volume of 25% in Integrated Capacity Solutions (ICS), 9% in Truckload (JBT), and 9% in Dedicated Contract Services (DCS). These were partially offset by the 5% revenue growth of Final Mile Services (FMS), primarily driven by new contracts implemented over the past year, and a 5% increase in revenue per load in ICS.
United Airlines Holdings, Inc. (UAL - Free Report) reported second-quarter 2024 earnings per share (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis.
Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion. The top line increased 5.7% year over year due to upbeat air-travel demand. This was driven by a 5.2% rise in passenger revenues (which accounted for 91.2% of the top line) to $13.680 billion. Almost 44,375 passengers traveled on UAL flights in the second quarter, up 5.8% year over year.
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FedEx Corporation (FDX - Free Report) reported disappointing first-quarter fiscal 2025 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.
Quarterly earnings per share (EPS) (excluding 39 cents from non-recurring items) of $3.60 missed the Zacks Consensus Estimate of $4.82 and declined 20.8% year over year. Revenues of $21.6 billion fell short of the Zacks Consensus Estimate of $22.1 billion and fell 0.5% from the year-ago fiscal quarter’s reported figure.
Quarterly results were unfavorably impacted by the reduced demand for priority services and, increased demand for deferred services and constrained yield growth. Higher operating expenses and one less operating day also weighed on the reported quarter. These headwinds were partially offset by the reduction of structural costs from the company's DRIVE program initiatives.
Operating income, on a reported basis, decreased 24% to $1.21 billion from the first quarter of fiscal 2024. Operating margin fell to 5.6% from 7.3% in the year-ago reported quarter.
Operating expenses (reported basis) increased 2% year over year to $20.5 billion.
Segmental Performance During the Quarter
On June 1, 2024, FedEx Ground and FedEx Services merged into Federal Express, becoming a a fully integrated- more -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. Further, the results of FedEx Custom Critical are now included in the FedEx Freight segment instead of the Federal Express segment.
Federal Express segment’s revenues fell 1% year over year to $18.3 billion. Federal Express was hurt due to one less operating day and lower U.S. domestic priority package volume, partially offset by higher International Economy package volume. Increased wages and purchased transportation rates also unfavorably impacted the segment
FedEx Freight revenues fell 2% from the year-ago fiscal quarter’s reported figure to $2.3 billion. Our estimate reflects a year-over-year decline of 2.9%. FedEx Freight segment was weighed down due to a decline in weight per shipment, reduced priority shipments and one less operating day, partially offset by higher base yield.
Average daily shipments fell 3% year over year. Capital expenditures for the reported quarter were $767 million.
Liquidity
FedEx exited first-quarter fiscal 2025 with cash and cash equivalents of $5.94 billion compared with $6.50 billion at the prior-quarter end. Long-term debt (less current portion) was $19.6 billion compared with $20.1 billion at the end of the prior quarter.
During the reported quarter, FDX completed a $1 billion accelerated share repurchase (ASR) transaction. Almost 3.4 million shares were delivered under the ASR agreement, with the decrease in outstanding shares aiding fiscal first-quarter results by 3 cents per diluted share.
Fiscal 2025 Outlook
FDX now expects revenues to grow in a low single-digit percentage year over year compared with the prior view of low-to-mid single-digit percentage growth year over year.
EPS is now expected to be in the range of $17.90-$18.90 (prior view: $18.25 to $20.25) before the MTM retirement plans accounting adjustments and $20.00 to $21.00 (prior view: $20.00 to $22.00) after excluding costs related to business optimization initiatives
FDX still anticipates capital spending of $5.2 billion in fiscal 2025. Effective tax rate is still estimated to be 24.5%.
For fiscal 2025, FedEx anticipates to repurchase an additional $1.5 billion of common stock. As of Aug. 31, 2024, $4.1 billion was available for repurchases under the company's 2024 stock repurchase authorization.
FDX’s Zacks Rank and Price Performance
FedEx currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
So far this year, shares of FDX have gained 18.8%, outperforming the industry’s loss of 5.3%.
Image Source: Zacks Investment Research
Performances of Other Transportation Companies
Delta Air Lines (DAL - Free Report) reported second-quarter 2024 earnings (excluding 35 cents from non-recurring items) of $2.36 per share, which marginally missed the Zacks Consensus Estimate of $2.37. Earnings decreased 11.9% on a year-over-year basis. Apart from high costs, the carrier blamed the discounting pressure at the low end of the market, which hurt its pricing power, for the disappointing performance.
Revenues of $16.65 billion surpassed the Zacks Consensus Estimate of $16.25 billion and increased 6.9% year over year, driven by upbeat air travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $15.41 billion, up 5.4% year over year.
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported disappointing second-quarter 2024 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.
JBHT’s earnings of $1.32 per share missed the Zacks Consensus Estimate of $1.51 and declined 27% year over year.
JBHT’s total operating revenues of $2.93 billion missed the Zacks Consensus Estimate of $3.03 billion and fell 7% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year. The downfall was owing to a 5% decrease in gross revenue per load in Intermodal (JBI) and a decline in load volume of 25% in Integrated Capacity Solutions (ICS), 9% in Truckload (JBT), and 9% in Dedicated Contract Services (DCS). These were partially offset by the 5% revenue growth of Final Mile Services (FMS), primarily driven by new contracts implemented over the past year, and a 5% increase in revenue per load in ICS.
United Airlines Holdings, Inc. (UAL - Free Report) reported second-quarter 2024 earnings per share (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis.
Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion. The top line increased 5.7% year over year due to upbeat air-travel demand. This was driven by a 5.2% rise in passenger revenues (which accounted for 91.2% of the top line) to $13.680 billion. Almost 44,375 passengers traveled on UAL flights in the second quarter, up 5.8% year over year.