FedEx Corporation’s (FDX - Free Report) second-quarter fiscal 2024 earnings (excluding 44 cents from non-recurring items) of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% 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 $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
Segmental Performance During the Quarter
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
For 2024, FedEx has updated its guidance.
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share (EPS) are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect EPS view in the range of $17.00-$18.50, excluding costs related to business optimization initiatives.
FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
FedEx currently carries a Zacks Rank #3 (Hold).
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from nonrecurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023 EPS of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.
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FedEx Corporation’s (FDX - Free Report) second-quarter fiscal 2024 earnings (excluding 44 cents from non-recurring items) of $3.99 per share missed the Zacks Consensus Estimate of $4.14. However, the bottom line improved 25.5% 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 $22,165 million fell short of the Zacks Consensus Estimate of $22,328.9 million and decreased 3% from the year-ago fiscal quarter’s reported figure.
Operating expenses (reported basis) decreased 3% to $20,889 million owing to the company’s cost-reduction actions. Operating income, on a reported basis, increased 9% to $1,276 million from the year-ago fiscal quarter’s reported number.
Segmental Performance During the Quarter
FedEx Express segment’s revenues fell 6% year over year to $10,254 million, owing to volume declines, lower fuel surcharges, reduced demand surcharges, and a mix shift toward lower-yielding services. Operating income of the segment fell 60% year over year due to lower revenues, partially offset by reduced operating expenses.
FedEx Ground segment’s revenues increased 3% year over year to $8,639 million due to higher yield. Operating income grew 51% year over year, owing to yield improvement, cost reductions, and higher volumes. Cost per package declined 2%, driven by lower line-haul expenses and improved first-mile and last-mile productivity.
FedEx Freight revenues declined 4% from the year-ago fiscal quarter’s reported figure to $2,360 million. The segment’s operating income grew 11% year over year despite a decline in revenues. The uptick was backed by higher yield and increased efficiency, partially offset by lower shipments.
Average daily shipments declined 5%. Capital expenditures for second-quarter fiscal 2024 were $1,305 million.
Liquidity
FedEx exited second-quarter fiscal 2024 with cash and cash equivalents of $6,729 million compared with $7,055 million at the end of the prior quarter. Long-term debt (less current portion) was $20,193 million compared with $20,145 million at the prior-quarter end.
FDX completed a $500 million accelerated share repurchase (ASR) transaction during the reported quarter and 2 million shares were delivered under the ASR agreement. The decline in outstanding shares benefited second-quarter results by $0.05 per diluted share.
Fiscal 2024 Outlook
For 2024, FedEx has updated its guidance.
FDX now expects revenues to decline by low-single-digit percentage (prior view: flat year over year). Earnings per share (EPS) are now expected to be in the range of $15.35-$16.85 (prior view: $15.10-$16.60) before the MTM retirement plans accounting adjustments. FDX continues to expect EPS view in the range of $17.00-$18.50, excluding costs related to business optimization initiatives.
FDX continues to anticipate capital spending of $5.7 billion in fiscal 2024. The effective tax rate is still estimated to be 25%.
FedEx anticipates repurchasing an additional $1 billion of common stock during fiscal 2024. As of Nov 30, 2023, FDX had available cash balance of $6.7 billion.
FedEx currently carries a Zacks Rank #3 (Hold).
Performances of Other Transportation Companies
J.B. Hunt Transport Services, Inc.’s (JBHT - Free Report) third-quarter 2023 EPS of $1.80 missed the Zacks Consensus Estimate of $1.85 and declined 30% year over year.
JBHT’s total operating revenues of $3,163.8 million also lagged the Zacks Consensus Estimate of $3,224 million and fell 18% year over year. Total operating revenues, excluding fuel surcharges, decreased 15% year over year.
Delta Air Lines, Inc. (DAL - Free Report) reported third-quarter 2023 EPS (excluding 31 cents from nonrecurring items) of $2.03, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis.
DAL’s revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air-travel demand.
Alaska Air Group, Inc. (ALK - Free Report) reported third-quarter 2023 EPS of $1.83, which missed the Zacks Consensus Estimate of $1.88 and declined 28% year over year.
Operating revenues of $2,839 million missed the Zacks Consensus Estimate of $2,876.1 million. The top line jumped 0.4% year over year, with passenger revenues accounting for 92.2% of the top line and increasing 0.1% owing to continued recovery in air-travel demand.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
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