On June 25, 2024, FedEx Corp (FDX, Financial) released its 8-K filing for the quarter ended May 31, 2024. The company reported higher-than-expected earnings per share (EPS) and revenue, driven by effective cost management and strategic initiatives.
Company Overview
FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2023, which ended May 2023, FedEx derived 47% of revenue from its express division, 37% from ground, and 11% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel delivery provider.
Performance and Challenges
FedEx Corp (FDX, Financial) reported consolidated revenue of $22.1 billion for Q4 2024, slightly up from $21.9 billion in the same period last year. The company achieved an operating income of $1.56 billion, reflecting an improvement from $1.50 billion in Q4 2023. The operating margin also saw a slight increase to 7.0% from 6.9% in the previous year.
Despite the modest revenue growth, FedEx faced challenges such as lower international yields in its Express segment. However, these were offset by reduced structural costs and higher U.S. domestic package yields.
Financial Achievements
FedEx Corp (FDX, Financial) reported a diluted EPS of $5.94 for Q4 2024, surpassing the analyst estimate of $5.14. The company's net income stood at $1.47 billion, slightly down from $1.54 billion in Q4 2023. For the full fiscal year, FedEx reported a diluted EPS of $17.21, exceeding the annual estimate of $16.50.
FedEx's DRIVE program, aimed at reducing structural costs, played a significant role in these achievements. The company reported $2.2 billion in cost savings from this initiative, which contributed to the improved operating income and margin.
Income Statement Highlights
| Fiscal 2024 | Fiscal 2023 |
|---|---|
| Revenue: $22.1 billion | Revenue: $21.9 billion |
| Operating Income: $1.56 billion | Operating Income: $1.50 billion |
| Operating Margin: 7.0% | Operating Margin: 6.9% |
| Net Income: $1.47 billion | Net Income: $1.54 billion |
| Diluted EPS: $5.94 | Diluted EPS: $6.05 |
Balance Sheet and Cash Flow
FedEx reported capital spending of $5.2 billion for fiscal 2024, down 16% from $6.2 billion in fiscal 2023. The company returned $3.8 billion to stockholders through stock repurchases and dividends during the fiscal year.
Commentary and Outlook
“We made significant progress in fiscal 2024 and ended the year strong, delivering four consecutive quarters of expanding operating income and margin in a challenging revenue environment,” said Raj Subramaniam, FedEx Corp. president and chief executive officer.
For fiscal 2025, FedEx forecasts a low-to-mid single-digit percent revenue growth year over year and earnings per diluted share of $18.25 to $20.25 before MTM retirement plans accounting adjustments. The company also plans to repurchase $2.5 billion of FedEx common stock and has announced a 10% increase in the annual dividend rate.
FedEx Corp (FDX, Financial) continues to focus on reducing structural costs and optimizing its operations to drive long-term profitability. The company's strategic initiatives and cost-saving measures are expected to support its financial performance in the coming fiscal year.
Explore the complete 8-K earnings release (here) from FedEx Corp for further details.
