Mar 21th, 2024 – $FedEx (FDX.US)$ shares rose 12.89% to $299 in post-market trading on Thursday.
On March 21, 2024, $FedEx (FDX.US)$ announced results for its third quarter of fiscal 2024, which ended February 29, 2024.
Fiscal Q3 2024 highlights
1. Adjusted diluted earnings per share (Diluted EPS): Adjusted EPS for this fiscal quarter was $3.86, an increase of approximately 13.2% from $3.41 in the same period last year.
2. Operating Income: Operating profit during the reporting period increased to 136 million, an increase of approximately 16% compared to the adjusted 117 million in the same period of the previous year.
3. Operating profit margin (Operating Margin): The operating profit margin for this fiscal quarter increased to 6.2% from 5.3% in the same period last year, a year-on-year increase of 0.9 percentage points.
4. Net Income: Net income during the reporting period was 966 million, an increase of approximately 11.7% compared to the adjusted 865 million in the same period of the previous fiscal year.
5. Capital Spending Forecast: The company has reduced its future capital spending plans.
6. Share Repurchase: The board of directors authorized an additional US$5 billion stock repurchase plan and plans to repurchase an additional US$500 million worth of stock in the fourth quarter.
Third quarter income and margin improved despite lower revenue, primarily due to execution of the company’s DRIVE program and the continued focus on revenue quality.
“FedEx delivered another quarter of improved profitability in what remains a difficult demand environment, reflecting outstanding service and continued benefits from DRIVE,” said Raj Subramaniam, FedEx Corp. president and chief executive officer. “We are making meaningful progress on our transformation, while strengthening our value proposition and improving the customer experience. I’ve never been more confident in our path ahead as we build a more flexible, efficient, and intelligent network.”
FedEx Express operating results improved due to lower structural costs resulting from DRIVE initiatives and the benefit from one additional operating day, partially offset by lower revenue.
Share Repurchase Program
The company completed a $1 billion accelerated share repurchase (ASR) transaction during the quarter. Approximately 4.1 million shares were delivered under the ASR agreement. The year-to-date decrease in outstanding shares benefited third quarter results by $0.09 per diluted share. FedEx expects to repurchase an additional $500 million of common stock during the fiscal fourth quarter, which will bring the fiscal 2024 buyback total to $2.5 billion. The FedEx Corp. Board of Directors has 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. Cash on-hand as of February 29, 2024 was $5.6 billion.
Outlook
For fiscal 2024, FedEx expects:
A low-single-digit percentage decline in revenue year over year;
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.
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.
Source:FedEx Reports Higher Third Quarter Diluted EPS of $3.51 and Adjusted Diluted EPS of $3.86
