FedEx Express: fourth quarter operating income more than doubled year over year
FedEx Corp. has reported record fourth quarter and full year results – earning growth predicted for fiscal 2022.
Fourth quarter operating results increased primarily due to volume growth and disciplined revenue and portfolio management. These factors were partially offset by costs to support strong demand, increased variable compensation expense, and higher labor rates.
Net results include a loss on debt extinguishment of $393 million ($297 million net of tax).
FedEx Express fourth quarter operating income more than doubled year over year, driven by exceptional growth in international export and U.S. domestic package services. Operating margin increased 260 basis points (an adjusted 340 basis points; adjusted measures exclude the items listed below for the applicable fiscal year), as improved network optimization and asset utilization enabled profit growth from record fourth quarter volume.
FedEx Ground reported record earnings for the quarter and revenue growth of 27%. The revenue increase was primarily driven by strong growth in business-to-business shipments and a 14% rise in revenue per package. Operating margin improved 310 basis points to 13.6% due to strong revenue growth and slower growth in purchased transportation expenses, aided by a higher mix of business-to-business shipments and benefits from dynamic route optimization technology. This improvement was partially offset by higher expenses driven by constrained labor availability.
FedEx Freight reported record earnings and operating margin of 16.1% for the quarter, as average daily shipments grew 30% and revenue per shipment increased 6%. Operating results improved primarily due to the continued focus on revenue quality and profitable growth.
Outlook
For fiscal 2022, FedEx is forecasting:
- Earnings per diluted share of $18.90 to $19.90 before the MTM retirement plan accounting adjustments;
- Earnings per diluted share of $20.50 to $21.50 before the MTM retirement plan accounting adjustments and excluding estimated TNT Express integration expenses and costs associated with business realignment activities;
- ETR of approximately 24% prior to the MTM retirement plan accounting adjustments; and
- Capital spending of $7.2 billion, with continued investment in the key strategic priorities of e-commerce, operational excellence and efficiency. Strategic initiatives include accelerated capacity expansion, fleet and facility modernization, and increased automation.
These forecasts assume continued recovery in U.S. industrial production and global trade, no additional COVID-19-related business restrictions, and current fuel price expectations. FedEx’s ETR and earnings per share forecasts are based on current law and related regulations and guidance.
“The ongoing execution of our strategic initiatives has driven significant improvement in our fourth quarter results and highlights the continued strength of our business,” said Michael C. Lenz, FedEx Corp. executive vice president and chief financial officer. “For fiscal 2021, we delivered record financial results while also recognizing the valuable contributions by our team members. We expect continued strong momentum in fiscal 2022, and our investments are focused on the areas of greatest growth and highest returns, like e-commerce, to position us for sustained long-term growth in earnings, cash flows, and returns.”
Results for the quarter ended May 31 (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 | $22.6 billion | $22.6 billion | $17.4 billion | $17.4 billion |
| Operating income | $1.80 billion | $1.97 billion | $475 million | $907 million |
| Operating margin | 8.0% | 8.7% | 2.7% | 5.2% |
| Net income (loss) | $1.87 billion | $1.36 billion | ($334 million) | $663 million |
| Diluted EPS (loss) | $6.88 | $5.01 | ($1.28) | $2.53 |
For the full fiscal year, FedEx Corp. reported the following consolidated results (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 | $84.0 billion | $84.0 billion | $69.2 billion | $69.2 billion |
| Operating income | $5.86 billion | $6.18 billion | $2.42 billion | $3.12 billion |
| Operating margin | 7.0% | 7.4% | 3.5% | 4.5% |
| Net income | $5.23 billion | $4.89 billion | $1.29 billion | $2.49 billion |
| Diluted EPS | $19.45 | $18.17 | $4.90 | $9.50 |
“I thank our team members around the world for their outstanding efforts during this extraordinary year,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We continue to play an important role in global economic recovery and the delivery of COVID-19 vaccines and relief supplies throughout the U.S., Canada and more than 35 other countries. I am optimistic about the future of FedEx as we continue to innovate for our customers and meet strong demand for our global transportation network and capabilities.”
