Quarterly revenues of $22,814 million fell short of the Zacks Consensus Estimate of $23,662.9 million and decreased 2.8% from the year-ago fiscal quarter’s reported figure. The reported figure came below the guided range of $23.5-$24 billion.

The top line was favorably impacted by yield improvement and higher fuel surcharges, partially offset by global volume softness, at each of FDX’s transportation segments.

FedEx Corporation Price, Consensus and EPS Surprise

FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote

Operating expenses (reported basis) decreased 1% to $21.6 billion.  Expenses pertaining to salaries and employee benefits inched down 4% in the fiscal second quarter. Purchased transportation expenses decreased 9%, while fuel expenses rose 39%. Other operating expenses climbed 4%, while rentals expense increased 2%.

Operating income (on a reported basis) decreased 26.3% from the year-ago fiscal quarter’s reported number to $1.18 billion. Operating income (on an adjusted basis) declined 27.9% from the year-ago fiscal quarter’s reading to $1.21 billion for the reported quarter. Operating margin (adjusted) declined to 5.3% from 7.1% in the year-ago fiscal period.

Segmental Performance

FedEx Express segment revenues fell 6% year over year to $10,864 million, owing to the decreased global volume and unfavorable exchange rates, partially offset by global package yield improvement, including higher fuel surcharges. Segment operating income fell 64% year over year, owing to lower global volumes, partially offset by an 8% package yield increase.

FedEx Ground segment revenues increased 2% year over year to $8,393 million, owing to yield improvement, including higher fuel surcharges, partially offset by lower volumes. Operating income increased 24% year over year, owing to 13% yield increase and cost reduction actions, partially offset by increased purchased transportation rates, lower package volume.

FedEx Freight revenues climbed 8% from the year-ago fiscal quarter’s reported figure to $2,454 million, driven by higher revenues per shipment. The segment’s operating income grew 32% year over year due to 18% yield increase, partially offset by higher salaries and employee benefits and decreased shipments. Average daily shipments declined 9%, while revenue per shipment increased 18%.

Capital expenditures for the quarter came in at $ 3,142 million.

Liquidity

FedEx exited second-quarter fiscal 2023 with cash and cash equivalents of $4.65 billion compared with $6.85 billion recorded as of Aug 31, 2022. Long-term debt (less current portion) was $20.08 billion compared with $19.91 billion recorded at the end of the previous quarter.

2023 Outlook

FDX expects earnings per share for 2023 (excluding costs related to business optimization initiatives and business realignment activities) between $13.00 and $14.00. The Zacks Consensus Estimate of $14.11 lies above the guidance.

FDX now anticipates capital spending of $5.9 billion (prior view: $6.3 billion) in fiscal 2023.

FDX has identified around $1 billion in cost savings beyond its September expectation and now anticipates generating cost savings of nearly $3.7 billion in fiscal 2023.

Currently, FDX carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ (DAL Quick QuoteDAL - Free Report) third-quarter 2022 earnings (excluding 42 cents from non-recurring items) of $1.51 per share fell short of the Zacks Consensus Estimate of $1.56. Escalated operating expenses induced the earnings miss. Multiple flight cancelations and booking weaknesses due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, dull in comparison to the current scenario, as air-travel demand was not so buoyant then.

DAL reported revenues of $13,975 million, which lagged the Zacks Consensus Estimate of $14,157.2 million. Driven by the high air-travel demand, total revenues increased more than 52% on a year-over-year basis.

United Airlines’ (UAL Quick QuoteUAL - Free Report) third-quarter 2022 earnings (excluding 5 cents from non-recurring items) of $2.81 per share beat the Zacks Consensus Estimate of $2.21 and our estimate of $2.17. An upbeat in air-travel demand aided results.

In the year-ago quarter, UAL had incurred a loss of $1.02 per share when air-travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the onset of the pandemic.

UAL’s operating revenues of $12,877 million beat the Zacks Consensus Estimate of $12,709.5 million and our estimate of $12, 631.6 million. UAL’s revenues increased more than 66% year over year owing to an upbeat in air-travel demand. The optimistic air-travel demand scenario is also evident from the fact that total operating revenues increased 13.2% from third-quarter 2019 (pre-coronavirus) levels.

J.B. Hunt Transport Services, Inc. (JBHT Quick QuoteJBHT - Free Report) reported better-than-expected third-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.JBHT’squarterly earnings of $2.57 per share surpassed the Zacks Consensus Estimate of $2.45 and improved 36.7% year over year.

JBHT’s operating revenues of $3,838.3 million also outperformed the Zacks Consensus Estimate of $3803.4 million. The top line jumped 22.1% year over year on the back of strength across — Dedicated Contract Services, Intermodal, Truckload and Final Mile Services segments. Total operating revenues, excluding fuel surcharges, rose 12.4% year over year.