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FedEx (FDX) Q3 Earnings Surpass Estimates, Revenues Lag
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FedEx Corporation's (FDX - Free Report) reported third-quarter fiscal 2024 earnings per share (EPS) (excluding 35 cents from non-recurring items) of $3.86, which beat the Zacks Consensus Estimate of $3.49 and improved 13.2% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality.
Revenues of $21.70 billion fell short of the Zacks Consensus Estimate of $22.02 million and decreased 2.1% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20.49 billion owing to the company’s cost reduction actions.
Operating income, on a reported basis, increased 16.2% to $1.36 million from the year-ago fiscal quarter’s reported number. Operating margin improved to 6.3% from 5.35% in the year-ago reported quarter.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Express segment’s revenues fell 2% year over year to $10,101 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment grew 96% year over year, owing to lower structural costs resulting from DRIVE initiatives and the benefit from one additional operating day, partially offset by lower revenues.
FedEx Ground segment’s revenues increased 1% year over year to $8,703 million due to higher yield. Operating income grew 12% year over year, owing to lower structural costs resulting from DRIVE initiatives, higher base yield, and reduced self-insurance costs. Cost per package was flat, as lower line-haul expense and improved dock productivity offset higher first-mile and last-mile costs.
FedEx Freight revenues declined 3% from the year-ago fiscal quarter’s reported figure to $2,125 million. The segment’s operating income fell 12% year over year owing to lower fuel surcharges, reduced weight per shipment and lower shipments, partially offset by higher base yield and the benefit from one additional operating day.
Average daily shipments declined 4%. Capital expenditures for third-quarter fiscal 2024 were $1,379 million.
Liquidity
FedEx exited third-quarter fiscal 2024 with cash and cash equivalents of $5,644 million compared with $6,729 million at the end of the prior quarter. Long-term debt (less current portion) was $20,122 million compared with $20,193 million at the end of the fiscal second quarter.
FDX completed a $1 billion accelerated share repurchase (ASR) transaction during the reported quarter, and almost 4.1 million shares were delivered under the ASR agreement. The year-to-date decline in outstanding shares benefited third-quarter results by $0.09 per diluted share.
FDX’s board of directors also authorized a new $5 billion share repurchase program in addition to the existing $0.6 billion that remains available for repurchase under the 2021 authorization.
Fiscal 2024 Outlook
FDX continues to expect revenues to decline by a low-single-digit percentage.
EPS is now expected to be in the range of 15.65-$16.65 (prior view: 15.35 to $16.85, before the MTM retirement plans accounting adjustments).
FDX now expects an EPS view between $17.25 and $18.25, excluding costs related to business optimization initiatives (prior view: $17.00 to $18.50).
FDX now anticipates capital spending of $5.4 billion (prior view: $5.7 billion) in fiscal 2024. Effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $500 million of common stock during the fiscal fourth quarter, which will bring the fiscal 2024 buyback value to $2.5 billion.
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2023 earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
JBHT’s total operating revenues of $3,303.70million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.
Delta Air Lines (DAL - Free Report) has reported fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines Holdings, Inc. (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. This was driven by a 10.9% rise in passenger revenues (accounting for 91.1% of the top line) to $12,421 million. Almost 41,779 passengers traveled on UAL flights in the fourth quarter.
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FedEx (FDX) Q3 Earnings Surpass Estimates, Revenues Lag
FedEx Corporation's (FDX - Free Report) reported third-quarter fiscal 2024 earnings per share (EPS) (excluding 35 cents from non-recurring items) of $3.86, which beat the Zacks Consensus Estimate of $3.49 and improved 13.2% year over year. The uptick was backed by the execution of the company's DRIVE program initiatives and continued focus on service and revenue quality.
Revenues of $21.70 billion fell short of the Zacks Consensus Estimate of $22.02 million and decreased 2.1% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20.49 billion owing to the company’s cost reduction actions.
Operating income, on a reported basis, increased 16.2% to $1.36 million from the year-ago fiscal quarter’s reported number. Operating margin improved to 6.3% from 5.35% in the year-ago reported quarter.
FedEx Corporation Price, Consensus and EPS Surprise
FedEx Corporation price-consensus-eps-surprise-chart | FedEx Corporation Quote
Segmental Performance during the Quarter
FedEx Express segment’s revenues fell 2% year over year to $10,101 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment grew 96% year over year, owing to lower structural costs resulting from DRIVE initiatives and the benefit from one additional operating day, partially offset by lower revenues.
FedEx Ground segment’s revenues increased 1% year over year to $8,703 million due to higher yield. Operating income grew 12% year over year, owing to lower structural costs resulting from DRIVE initiatives, higher base yield, and reduced self-insurance costs. Cost per package was flat, as lower line-haul expense and improved dock productivity offset higher first-mile and last-mile costs.
FedEx Freight revenues declined 3% from the year-ago fiscal quarter’s reported figure to $2,125 million. The segment’s operating income fell 12% year over year owing to lower fuel surcharges, reduced weight per shipment and lower shipments, partially offset by higher base yield and the benefit from one additional operating day.
Average daily shipments declined 4%. Capital expenditures for third-quarter fiscal 2024 were $1,379 million.
Liquidity
FedEx exited third-quarter fiscal 2024 with cash and cash equivalents of $5,644 million compared with $6,729 million at the end of the prior quarter. Long-term debt (less current portion) was $20,122 million compared with $20,193 million at the end of the fiscal second quarter.
FDX completed a $1 billion accelerated share repurchase (ASR) transaction during the reported quarter, and almost 4.1 million shares were delivered under the ASR agreement. The year-to-date decline in outstanding shares benefited third-quarter results by $0.09 per diluted share.
FDX’s board of directors also authorized a new $5 billion share repurchase program in addition to the existing $0.6 billion that remains available for repurchase under the 2021 authorization.
Fiscal 2024 Outlook
FDX continues to expect revenues to decline by a low-single-digit percentage.
EPS is now expected to be in the range of 15.65-$16.65 (prior view: 15.35 to $16.85, before the MTM retirement plans accounting adjustments).
FDX now expects an EPS view between $17.25 and $18.25, excluding costs related to business optimization initiatives (prior view: $17.00 to $18.50).
FDX now anticipates capital spending of $5.4 billion (prior view: $5.7 billion) in fiscal 2024. Effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $500 million of common stock during the fiscal fourth quarter, which will bring the fiscal 2024 buyback value to $2.5 billion.
FedEx currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) fourth-quarter 2023 earnings of $1.47 per share missed the Zacks Consensus Estimate of $1.74 and declined 23.4% year over year.
JBHT’s total operating revenues of $3,303.70million surpassed the Zacks Consensus Estimate of $3,236.2 million but fell 9.5% year over year. Total operating revenues, excluding fuel surcharge revenue, fell 6% year over year.
Delta Air Lines (DAL - Free Report) has reported fourth-quarter 2023 earnings (excluding $1.88 from non-recurring items) of $1.28 per share, which comfortably beat the Zacks Consensus Estimate of $1.17. Earnings, however, declined 13.51% on a year-over-year basis due to high labor costs.
Revenues of $14,223 million surpassed the Zacks Consensus Estimate of $14,069.5 million and increased 5.87% on a year-over-year basis, driven by strong holiday-air-travel demand. Adjusted operating revenues (excluding third-party refinery sales) came in at $13,661 million, up 11% year over year.
United Airlines Holdings, Inc. (UAL - Free Report) reported fourth-quarter 2023 earnings per share (excluding 19 cents from non-recurring items) of $2.00, which outpaced the Zacks Consensus Estimate of $1.61 but declined 18.7% year over year.
Operating revenues of $13,626 million beat the Zacks Consensus Estimate of $13,546.8 million. The top line increased 9.9% year over year due to upbeat air-travel demand. This was driven by a 10.9% rise in passenger revenues (accounting for 91.1% of the top line) to $12,421 million. Almost 41,779 passengers traveled on UAL flights in the fourth quarter.