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Feb 29, 2024
FedEx Q3 2024 Earnings Report
FedEx's Q3 2024 earnings exceeded expectations, driven by the DRIVE program and revenue quality focus.
Key Takeaways
FedEx Corp. reported improved third-quarter profitability despite lower revenue, attributed to the DRIVE program and focus on revenue quality. The company's operating income increased by 19% year-over-year, and adjusted diluted EPS reached $3.86. FedEx is also reducing its capital spending forecast and planning an additional share repurchase.
Third quarter income and margin improved due to DRIVE program and focus on revenue quality.
FedEx Express operating results improved due to lower structural costs from DRIVE initiatives and one additional operating day.
FedEx Ground operating results increased due to lower structural costs from DRIVE initiatives, higher base yield, and reduced self-insurance costs.
The company completed a $1 billion accelerated share repurchase transaction during the quarter.
FedEx
FedEx
Forward Guidance
FedEx expects a low-single-digit percentage decline in revenue year over year. Earnings per diluted share are expected to be $15.65 to $16.65 before mark-to-market (MTM) retirement plans accounting adjustments. Permanent cost reductions from the DRIVE transformation program are projected to be $1.8 billion. Capital spending is forecasted at $5.4 billion.
Positive Outlook
- Earnings per diluted share of $15.65 to $16.65 before the MTM retirement plans accounting adjustments, compared to the prior forecast of $15.35 to $16.85 per diluted share.
- Earnings per diluted share of $17.25 to $18.25 before the MTM retirement plans accounting adjustments after also excluding costs related to business optimization initiatives, compared to the prior forecast of $17.00 to $18.50 per diluted share.
- Permanent cost reductions from the DRIVE transformation program of $1.8 billion.
- ETR of approximately 25% prior to the MTM retirement plans accounting adjustments.
- Capital spending of $5.4 billion, compared to the prior forecast of $5.7 billion, with a priority on investments to improve efficiency, including fleet and facility modernization, network optimization, and automation.
Challenges Ahead
- A low-single-digit percentage decline in revenue year over year.
- FedEx is unable to forecast the fiscal 2024 mark-to-market (MTM) retirement plans accounting adjustments.
- It is reasonably possible that the fiscal 2024 MTM retirement plans accounting adjustments could have a material effect on fiscal 2024 consolidated financial results and ETR.
- These forecasts assume the company's current economic forecast and fuel price expectations, successful completion of the planned stock repurchases, and no additional adverse geopolitical developments.
- FedEx’s ETR and earnings per share forecasts are based on current law and related regulations and guidance.