FedEx: continued execution of our strategies is producing strong earnings growth

FedEx: continued execution of our strategies is producing strong earnings growth

FedEx Corp. has reported its results third quarter results with operating results significantly impacted by severe Winter weather; continued strong earnings growth expected in Q4. 

The following consolidated results for the quarter ended February 28 (adjusted measures exclude the items listed below for the applicable fiscal year):

 

Fiscal 2021 Fiscal 2020
As Reported
(GAAP)
Adjusted
(non-GAAP)
As Reported
(GAAP)
Adjusted
(non-GAAP)
Revenue $21.5 billion $21.5 billion $17.5 billion $17.5 billion
Operating income $1.01 billion $1.06 billion $411 million $483 million
Operating margin 4.7% 4.9% 2.4% 2.8%
Net income $892 million $939 million $315 million $371 million
Diluted EPS $3.30 $3.47 $1.20 $1.41

 

This year’s and last year’s quarterly consolidated results have been adjusted for:

Impact per diluted share 

 

Fiscal 2021 Fiscal 2020
TNT Express integration expenses $0.14 $0.21
Business realignment costs  0.03

 

“I’m exceedingly proud of our FedEx team members, who are moving the world forward through the delivery of COVID-19 vaccines — the most important work in the history of FedEx,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “As reflected in this quarter’s results, continued execution of our strategies is producing strong earnings growth and margin improvement across our company. We expect demand for our unmatched e-commerce and international express solutions to remain very high for the foreseeable future.”

Operating results increased primarily due to strong volume growth in U.S. domestic residential package and FedEx International Priority services and pricing initiatives across all transportation segments. These factors were partially offset by costs to support strong demand and expand services, variable compensation expense, higher labor rates, and one fewer operating weekday.

Severe winter weather during February reduced the quarter’s operating income by an estimated $350 million. The weather significantly impaired operations at several of the company’s largest facilities, including the primary FedEx Express hub in Memphis and FedEx Express hubs in Indianapolis and North Texas.

Net income includes tax benefits of $108 million ($0.40 per diluted share) from a tax rate increase in the Netherlands applied to deferred tax balances and associated with voluntary contributions to the company’s pension plans.

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