Exhibit 99.1
FedEx Corp. Reports Second Quarter Results
MEMPHIS, Tenn., December 17, 2019 ... FedEx Corp. (NYSE: FDX) today reported the following consolidated results for the second quarter ended November 30 (adjusted measures exclude the items listed below for the applicable fiscal year):
Fiscal 2020 | Fiscal 2019 | |||||||
As Reported (GAAP) | Adjusted (non-GAAP) | As Reported (GAAP) | Adjusted (non-GAAP) | |||||
Revenue | $17.3 billion | $17.3 billion | $17.8 billion | $17.8 billion | ||||
Operating income | $554 million | $684 million | $1.17 billion | $1.33 billion | ||||
Operating margin | 3.2% | 3.9% | 6.6% | 7.5% | ||||
Net income | $560 million | $660 million | $935 million | $1.08 billion | ||||
Diluted EPS | $2.13 | $2.51 | $3.51 | $4.03 |
This year’s and last year’s quarterly consolidated results have been adjusted for:
Impact per diluted share
Fiscal 2020 | Fiscal 2019 | |||||||
TNT Express integration expenses | $ | 0.19 | $ | 0.34 | ||||
Aircraft impairment charges | 0.19 | — | ||||||
FedEx Ground legal matter | — | 0.17 | ||||||
Net U.S. deferred tax liability remeasurement | — | 0.02 |
“Fiscal 2020 is a year of continued significant challenges and changes for FedEx, particularly in the quarter just ended due to the compressed shipping season,” said Frederick W. Smith, FedEx Corp. chairman and chief executive officer. “We have significantly enhanced oure-commerce capabilities with strategic initiatives including year-roundseven-day FedEx Ground delivery, enhanced large package capabilities and the insourcing of FedEx SmartPost packages. These changes have been well-received by the marketplace as reflected in our record volumes this peak season. While we have
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experienced some higher-than-expected expenses this quarter, we forecast FedEx Ground operating margins to rebound to the teens in our fiscal fourth quarter as the bow wave of costs for these changes is absorbed.”
“Thanks to over 490,000 FedEx team members for their hard work and dedication to our Purple Promise of making every FedEx experience outstanding.”
Operating results declined due to weak global economic conditions, increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to lower-yielding services and a more competitive pricing environment. In addition, the later timing of the Thanksgiving holiday resulted in the shifting of Cyber Week into December, which negatively impacted the quarter’s results. These factors were partially offset by lower variable incentive compensation expenses and increased yields at FedEx Freight. Net income includes a tax benefit of $133 million ($0.51 per diluted share) from the recognition of certain foreign tax loss carryforwards.
FedEx Express recorded asset impairment charges of $66 million ($50 million, net of tax, or $0.19 per diluted share) related to the permanent retirement of 10 AirbusA310-300 aircraft and 12 related engines. During the remainder of fiscal 2020, FedEx Express will make further network capacity changes by reducing flight hours. The company continues to evaluate if additional aircraft retirements are warranted.
“Our strategies are clear: To develop the premiere-commerce portfolio in the U.S., improve international profitability, enhance our market-leading revenue quality and continue to optimize our U.S. and international networks,” said Rajesh Subramaniam, FedEx Corp. president and chief operating officer. “We are also taking immediate actions to address the short-term challenges facing our business, including eliminating multiple international flights to reflect reduced global air freight demand. These actions combined with benefits from the TNT integration should allow FedEx Express to enter fiscal 2021 with profit improvement underway.”
Outlook
FedEx is unable to forecast the fiscal 2020year-endmark-to-market (MTM) retirement plan accounting adjustment. As a result, the company is unable to provide a fiscal 2020 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.
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FedEx now forecasts fiscal 2020 earnings of $9.10 to $10.35 per diluted share before theyear-end MTM retirement plan accounting adjustment, and earnings of $10.25 to $11.50 per diluted share before theyear-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses and aircraft impairment charges. The company’s ETR is now expected to be 23% to 26% before theyear-end MTM retirement plan accounting adjustment. The capital spending forecast remains $5.9 billion.
“Our revised guidance reflects lower-than-expected revenue at each of our transportation segments and higher-than-expected expenses driven by continued mix shift to residential delivery services,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “In response, we are implementing reductions to the global FedEx Express air network to better match capacity with demand. We are also further restricting hiring and pursuing opportunities to optimize our networks, including investments in technology aimed at improving our productivity and lowering our costs.”
These forecasts assume moderate U.S. economic growth, the company’s current fuel price expectations, no further weakening in international economic conditions from the company’s current forecast and no additional adverse developments in international trade policies and relations. FedEx’s ETR and earnings per share outlooks are based on the company’s current interpretations of the Tax Cuts and Jobs Act (TCJA) and related regulations and guidance, and are subject to change based on future guidance, as well as FedEx’s ability to defend its interpretations.
Corporate Overview
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation,e-commerce and business services. With annual revenues of $69 billion, the company offers integrated business solutions through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 490,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities. To learn more about how FedEx connects people and possibilities around the world, please visitabout.fedex.com.
Additional information and operating data are contained in the company’s annual report, Form10-K, Form10-Qs, Form8-Ks and Statistical Books.
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These materials, as well as a webcast of the earnings release conference call to be held at 5:30 p.m. EST on December 17, are available on the company’s website atinvestors.fedex.com. A replay of the conference call webcast will be posted on our website following the call.
The Investor Relations page of our website,investors.fedex.com, contains a significant amount of information about FedEx, including our Securities and Exchange Commission (SEC) filings and financial and other information for investors. The information that we post on our Investor Relations website could be deemed to be material information. We encourage investors, the media and others interested in the company to visit this website from time to time, as information is updated and new information is posted.
Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate; anti-trade measures and additional changes in international trade policies and relations; a significant data breach or other disruption to our technology infrastructure; our ability to successfully integrate the businesses and operations of FedEx Express and TNT Express in the expected time frame and at the expected cost and to achieve the expected benefits from the combined businesses; our ability to successfully implement our business strategy and effectively respond to changes in market dynamics; the impact of the United Kingdom’s expected withdrawal from the European Union and the terms of its withdrawal if it ultimately occurs; our ability to match capacity to shifting volume levels; changes in fuel prices or currency exchange rates; the impact of intense competition; evolving or new U.S. domestic or international government regulation or regulatory actions; future guidance, regulations, interpretations or challenges to our tax positions relating to the TCJA and our ability to defend our interpretations of the TCJA; our ability to effectively operate, integrate, leverage and grow acquired businesses; legal challenges or changes related to service providers engaged by FedEx Ground and the drivers providing services on their behalf; disruptions or modifications in service by, or changes in the business or financial soundness of, the U.S. Postal Service; the impact of any international conflicts or terrorist activities; our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography; and other
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factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
Media Contact: Jenny Robertson901-434-4829
Investor Contact: Mickey Foster901-818-7468
Home Page: fedex.com
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RECONCILIATIONS OFNON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
Second Quarter Fiscal 2020 and Fiscal 2019 Results
The company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or “reported”). We have supplemented the reporting of our financial information determined in accordance with GAAP with certainnon-GAAP (or “adjusted”) financial measures, including our adjusted second quarter fiscal 2020 and 2019 consolidated operating income and margin, net income and diluted earnings per share, and adjusted second quarter fiscal 2020 and 2019 FedEx Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of the following items (as applicable):
• | TNT Express integration expenses incurred in fiscal 2020 and 2019; |
• | Fiscal 2020 aircraft impairment charges; |
• | Fiscal 2019 charges related to a legal matter involving FedEx Ground; and |
• | The fiscal 2019 revision to the net U.S. deferred tax liability remeasurement included in our fiscal 2018 earnings. |
We have incurred and expect to incur significant expenses through fiscal 2021, and may incur additional expenses thereafter, in connection with our integration of TNT Express. We have adjusted our second quarter fiscal 2020 and 2019 consolidated financial measures and the FedEx Express segment second quarter fiscal 2020 and 2019 financial measures to exclude TNT Express integration expenses because we generally would not incur such expenses as part of our continuing operations. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional and legal fees, salaries and employee benefits, travel and advertising expenses. Internal salaries and employee benefits are included only to the extent the individuals are assigned full-time to integration activities. The integration expenses also include any restructuring charges at TNT Express.
The aircraft impairment charges and charges related to the settlement of a legal matter involving FedEx Ground are excluded from our second quarter fiscal 2020 and 2019 consolidatednon-GAAP financial measures and FedEx Express segmentnon-GAAP financial measures, as applicable, because they are unrelated to our core operating performance and to assist investors with assessing trends in our underlying businesses.
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The fiscal 2019 revision to the provisional benefit from the remeasurement of our net U.S. deferred tax liability as of the date of the enactment of the Tax Cuts and Jobs Act (TCJA) is excluded from our second quarter fiscal 2019 consolidatednon-GAAP financial measures because the provisional benefit resulted from thenon-recurring impact of a significant change in the U.S. federal statutory income tax rate due to the enactment of the TCJA on our overall deferred tax position, which accumulated over many reporting periods prior to enactment. The adjustment to our second quarter fiscal 2019 consolidated financial measures includes only a revision to this transitional impact.
As previously disclosed, the provisional benefit from the remeasurement of our net U.S. deferred tax liability included in our fiscal 2018 earnings was an estimate subject to adjustment during a12-month measurement period ending in fiscal 2019. The exclusion of adjustments to this provisional benefit from our second quarter fiscal 2019non-GAAP earnings measures is consistent with our presentation of the effects of the initial provisional benefit in our fiscal 2018non-GAAP earnings measures. We have not included the tax benefit from the recognition of certain tax loss carryforwards in the second quarter fiscal 2020 adjustment because the benefit resulted from operational changes in a foreign jurisdiction.
We believe these adjusted financial measures facilitate analysis and comparisons of our ongoing business operations because they exclude items that may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and may assist investors with comparisons to prior periods and assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses thesenon-GAAP financial measures in making financial, operating and planning decisions and evaluating the company’s and each business segment’s ongoing performance.
Ournon-GAAP financial measures are intended to supplement and should be read together with, and are not an alternative or substitute for, and should not be considered superior to, our reported financial results. Accordingly, users of our financial statements should not place undue reliance on thesenon-GAAP financial measures. Becausenon-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’non-GAAP financial measures having the same or similar names. As required by Securities and Exchange Commission rules, the tables below present a reconciliation of our presentednon-GAAP financial measures to the most directly comparable GAAP measures.
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Fiscal 2020 Earnings Per Share and Effective Tax Rate Forecasts
Our fiscal 2020 earnings per share (EPS) forecast is anon-GAAP financial measure because it excludes the fiscal 2020year-endmark-to-market (MTM) retirement plan accounting adjustment, estimated fiscal 2020 TNT Express integration expenses, and aircraft impairment charges. Our fiscal 2020 effective tax rate (ETR) forecast is anon-GAAP financial measure because it excludes the impact of the fiscal 2020year-end MTM retirement plan accounting adjustment.
We have provided thesenon-GAAP financial measures for the same reasons that were outlined above for historicalnon-GAAP measures. The fiscal 2020year-end MTM retirement plan accounting adjustment is excluded from our fiscal 2020 EPS and ETR forecasts because it is unrelated to our core operating performance and to assist investors with assessing trends in our underlying businesses. Estimated fiscal 2020 TNT Express integration expenses and the aircraft impairment charges are excluded from our fiscal 2020 EPS forecast for the same reasons described above for historicalnon-GAAP measures.
We are unable to predict the amount of theyear-end MTM retirement plan accounting adjustment, as it is significantly impacted by changes in interest rates and the financial markets, so such adjustment is not included in our fiscal 2020 EPS and ETR forecasts. For this reason, a full reconciliation of our fiscal 2020 EPS and ETR forecasts to the most directly comparable GAAP measures is impracticable. It is reasonably possible, however, that our fiscal 2020year-end MTM retirement plan accounting adjustment could have a material impact on our fiscal 2020 consolidated financial results and ETR.
The table included below titled “Fiscal 2020 Earnings Per Share Forecast” outlines the impacts of the items that are excluded from our fiscal 2020 EPS forecast, other than theyear-end MTM retirement plan accounting adjustment.
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Second Quarter Fiscal 2020
FedEx Corporation
Operating | Income Taxes2 | Net Income3 | Diluted Earnings Per Share | |||||||||||||||||
Dollars in millions, except EPS | Income | Margin1 | ||||||||||||||||||
GAAP measure | $ | 554 | 3.2 | % | $ | 12 | $ | 560 | $ | 2.13 | ||||||||||
TNT Express integration expenses4 | 64 | 0.4 | % | 14 | 50 | 0.19 | ||||||||||||||
Aircraft impairment charges | 66 | 0.4 | % | 16 | 50 | 0.19 | ||||||||||||||
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Non-GAAP measure | $ | 684 | 3.9 | % | $ | 42 | $ | 660 | $ | 2.51 |
FedEx Express Segment
Operating | ||||||||
Dollars in millions | Income | Margin1 | ||||||
GAAP measure | $ | 236 | 2.6 | % | ||||
TNT Express integration expenses | 49 | 0.5 | % | |||||
Aircraft impairment charges | 66 | 0.7 | % | |||||
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Non-GAAP measure | $ | 351 | 3.9 | % |
Second Quarter Fiscal 2019
FedEx Corporation
Operating | Income Taxes1,2 | Net Income3 | Diluted Earnings Per Share1 | |||||||||||||||||
Dollars in millions, except EPS | Income | Margin | ||||||||||||||||||
GAAP measure | $ | 1,168 | 6.6 | % | $ | 242 | $ | 935 | $ | 3.51 | ||||||||||
TNT Express integration expenses4 | 114 | 0.6 | % | 24 | 90 | 0.34 | ||||||||||||||
FedEx Ground legal matter | 46 | 0.3 | % | — | 46 | 0.17 | ||||||||||||||
Net U.S. deferred tax liability remeasurement | — | — | (4 | ) | 4 | 0.02 | ||||||||||||||
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Non-GAAP measure | $ | 1,328 | 7.5 | % | $ | 261 | $ | 1,075 | $ | 4.03 |
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Second Quarter Fiscal 2019 (continued)
FedEx Express Segment
Operating | ||||||||
Dollars in millions | Income | Margin | ||||||
GAAP measure | $ | 630 | 6.6 | % | ||||
TNT Express integration expenses | 99 | 1.0 | % | |||||
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Non-GAAP measure | $ | 729 | 7.6 | % |
Fiscal 2020 Earnings Per Share Forecast
Dollars in millions, except EPS | Adjustments | Diluted Earnings Per Share | ||||||
Earnings per diluted share beforeyear-end MTM retirement plan accounting adjustment(non-GAAP)5 | $9.10 to $10.35 | |||||||
TNT Express integration expenses | $ | 325 | ||||||
Income tax effect2 | (72 | ) | ||||||
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Net of tax effect | $ | 253 | 0.96 | |||||
Aircraft impairment charges | $ | 66 | ||||||
Income tax effect2 | (16 | ) | ||||||
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Net of tax effect | $ | 50 | 0.19 | |||||
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Earnings per diluted share with adjustments5 | $10.25 to $11.50 |
Notes:
1 – Does not sum to total due to rounding.
2 – Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction.
3 – Effect of “total other (expense) income” on net income amount not shown.
4 – These expenses, including restructuring charges, were recognized at FedEx Corporate and FedEx Express.
5 – Theyear-end MTM retirement plan accounting adjustment, which is impracticable to calculate at this time, is excluded.
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FEDEX CORP. FINANCIAL HIGHLIGHTS
Second Quarter Fiscal 2020
(In millions, except earnings per share)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
November 30 | November 30 | |||||||||||||||||||||||
2019 | 2018 | % | 2019 | 2018 | % | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
FedEx Express segment | $ | 9,084 | $ | 9,604 | (5 | %) | $ | 18,029 | $ | 18,826 | (4 | %) | ||||||||||||
FedEx Ground segment | 5,315 | 5,142 | 3 | % | 10,494 | 9,941 | 6 | % | ||||||||||||||||
FedEx Freight segment | 1,844 | 1,918 | (4 | %) | 3,749 | 3,877 | (3 | %) | ||||||||||||||||
FedEx Services segment | 5 | 4 | 25 | % | 9 | 13 | (31 | %) | ||||||||||||||||
Other and eliminations1 | 1,076 | 1,156 | (7 | %) | 2,091 | 2,219 | (6 | %) | ||||||||||||||||
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Total Revenue | 17,324 | 17,824 | (3 | %) | 34,372 | 34,876 | (1 | %) | ||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Salaries and employee benefits | 6,235 | 6,260 | — | 12,322 | 12,520 | (2 | %) | |||||||||||||||||
Purchased transportation | 4,328 | 4,346 | — | 8,356 | 8,313 | 1 | % | |||||||||||||||||
Rentals | 924 | 836 | 11 | % | 1,844 | 1,659 | 11 | % | ||||||||||||||||
Depreciation and amortization | 901 | 828 | 9 | % | 1,780 | 1,636 | 9 | % | ||||||||||||||||
Fuel | 890 | 1,052 | (15 | %) | 1,760 | 2,038 | (14 | %) | ||||||||||||||||
Maintenance and repairs | 774 | 751 | 3 | % | 1,542 | 1,486 | 4 | % | ||||||||||||||||
Asset impairment charges | 66 | — | N | M | 66 | — | N | M | ||||||||||||||||
Other | 2,652 | 2,583 | 3 | % | 5,171 | 4,985 | 4 | % | ||||||||||||||||
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Total Operating Expenses | 16,770 | 16,656 | 1 | % | 32,841 | 32,637 | 1 | % | ||||||||||||||||
Operating Income: | ||||||||||||||||||||||||
FedEx Express segment2 | 236 | 630 | (63 | %) | 521 | 1,018 | (49 | %) | ||||||||||||||||
FedEx Ground segment2 | 342 | 590 | (42 | %) | 986 | 1,266 | (22 | %) | ||||||||||||||||
FedEx Freight segment | 141 | 148 | (5 | %) | 335 | 324 | 3 | % | ||||||||||||||||
Corporate, eliminations and other1,2 | (165 | ) | (200 | ) | (18 | %) | (311 | ) | (369 | ) | (16 | %) | ||||||||||||
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Total Operating Income | 554 | 1,168 | (53 | %) | 1,531 | 2,239 | (32 | %) | ||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||||||
Interest, net | (151 | ) | (131 | ) | 15 | % | (288 | ) | (258 | ) | 12 | % | ||||||||||||
Other retirement plans income | 168 | 158 | 6 | % | 336 | 316 | 6 | % | ||||||||||||||||
Other, net | 1 | (18 | ) | N | M | (11 | ) | (19 | ) | (42 | %) | |||||||||||||
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Total Other Income | 18 | 9 | 100 | % | 37 | 39 | (5 | %) | ||||||||||||||||
Income Before Income Taxes | 572 | 1,177 | (51 | %) | 1,568 | 2,278 | (31 | %) | ||||||||||||||||
Provision for Income Taxes | 12 | 242 | (95 | %) | 263 | 508 | (48 | %) | ||||||||||||||||
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Net Income | $ | 560 | $ | 935 | (40 | %) | $ | 1,305 | $ | 1,770 | (26 | %) | ||||||||||||
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Diluted Earnings Per Share | $ | 2.13 | $ | 3.51 | (39 | %) | $ | 4.97 | $ | 6.60 | (25 | %) | ||||||||||||
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Weighted Average Common and Common Equivalent Shares | 262 | 266 | (2 | %) | 262 | 268 | (2 | %) | ||||||||||||||||
Capital Expenditures | $ | 1,848 | $ | 1,455 | 27 | % | $ | 3,266 | $ | 2,634 | 24 | % |
1 - | Includes the FedEx Logistics and FedEx Office operating segments. |
2 - | Prior year amounts have been recast to conform to the current year presentation. |
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FEDEX CORP. CONDENSED CONSOLIDATED BALANCE SHEETS
Second Quarter Fiscal 2020
(In millions)
Nov. 30, 2019 | ||||||||
(Unaudited) | May 31, 2019 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 2,031 | $ | 2,319 | ||||
Receivables, less allowances | 9,709 | 9,116 | ||||||
Spare parts, supplies and fuel, less allowances | 576 | 553 | ||||||
Prepaid expenses and other | 882 | 1,098 | ||||||
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Total current assets | 13,198 | 13,086 | ||||||
Property and Equipment, at Cost | 62,715 | 59,511 | ||||||
Less accumulated depreciation and amortization | 30,307 | 29,082 | ||||||
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Net property and equipment | 32,408 | 30,429 | ||||||
Other Long-Term Assets | ||||||||
Operating leaseright-of-use assets, net | 14,097 | — | ||||||
Goodwill | 6,861 | 6,884 | ||||||
Other assets | 3,390 | 4,004 | ||||||
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Total other long-term assets | 24,348 | 10,888 | ||||||
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$ | 69,954 | $ | 54,403 | |||||
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LIABILITIES AND COMMON STOCKHOLDERS’ INVESTMENT |
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Current Liabilities | ||||||||
Short-term borrowings | $ | 150 | $ | — | ||||
Current portion of long-term debt | 16 | 964 | ||||||
Accrued salaries and employee benefits | 1,632 | 1,741 | ||||||
Accounts payable | 3,283 | 3,030 | ||||||
Operating lease liabilities | 1,928 | — | ||||||
Accrued expenses | 3,538 | 3,278 | ||||||
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Total current liabilities | 10,547 | 9,013 | ||||||
Long-Term Debt, Less Current Portion | 18,691 | 16,617 | ||||||
Other Long-Term Liabilities | ||||||||
Deferred income taxes | 3,072 | 2,821 | ||||||
Pension, postretirement healthcare and other benefit obligations | 4,156 | 5,095 | ||||||
Self-insurance accruals | 1,921 | 1,899 | ||||||
Operating lease liabilities | 12,432 | — | ||||||
Deferred lease obligations | — | 531 | ||||||
Other liabilities | 476 | 670 | ||||||
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Total other long-term liabilities | 22,057 | 11,016 | ||||||
Commitments and Contingencies | ||||||||
Common Stockholders’ Investment | ||||||||
Common stock, $0.10 par value, 800 million shares authorized | 32 | 32 | ||||||
Additionalpaid-in capital | 3,287 | 3,231 | ||||||
Retained earnings | 25,431 | 24,648 | ||||||
Accumulated other comprehensive loss | (866 | ) | (865 | ) | ||||
Treasury stock, at cost | (9,225 | ) | (9,289 | ) | ||||
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Total common stockholders’ investment | 18,659 | 17,757 | ||||||
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$ | 69,954 | $ | 54,403 | |||||
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FEDEX CORP. CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Second Quarter Fiscal 2020
(In millions)
(Unaudited)
Six Months Ended | ||||||||
November 30 | ||||||||
2019 | 2018 | |||||||
Operating Activities: | ||||||||
Net income | $ | 1,305 | $ | 1,770 | ||||
Noncash charges: | ||||||||
Depreciation and amortization | 1,780 | 1,636 | ||||||
Other, net | 1,542 | 504 | ||||||
Changes in operating assets and liabilities, net | (2,553 | ) | (1,731 | ) | ||||
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Net cash provided by operating activities | 2,074 | 2,179 | ||||||
Investing Activities: | ||||||||
Capital expenditures | (3,266 | ) | (2,634 | ) | ||||
Proceeds from asset dispositions and other | 4 | 53 | ||||||
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Net cash used in investing activities | (3,262 | ) | (2,581 | ) | ||||
Financing Activities: | ||||||||
Proceeds from short-term borrowings, net | 150 | 248 | ||||||
Principal payments on debt | (1,021 | ) | (785 | ) | ||||
Proceeds from debt issuances | �� | 2,093 | 1,233 | |||||
Proceeds from stock issuances | 26 | 45 | ||||||
Dividends paid | (339 | ) | (173 | ) | ||||
Purchase of treasury stock | (3 | ) | (1,271 | ) | ||||
Other, net | (5 | ) | 1 | |||||
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Net cash provided by (used in) financing activities | 901 | (702 | ) | |||||
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Effect of exchange rate changes on cash | (1 | ) | (38 | ) | ||||
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Net decrease in cash and cash equivalents | (288 | ) | (1,142 | ) | ||||
Cash and cash equivalents at beginning of period | 2,319 | 3,265 | ||||||
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Cash and cash equivalents at end of period | $ | 2,031 | $ | 2,123 | ||||
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FEDEX EXPRESS SEGMENT FINANCIAL HIGHLIGHTS
Second Quarter Fiscal 2020
(Dollars in millions)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
November 30 | November 30 | |||||||||||||||||||||||
2019 | 2018 | % | 2019 | 2018 | % | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Package Revenue: | ||||||||||||||||||||||||
U.S. Overnight Box | $ | 1,864 | $ | 1,948 | (4 | %) | $ | 3,730 | $ | 3,834 | (3 | %) | ||||||||||||
U.S. Overnight Envelope | 457 | 444 | 3 | % | 936 | 912 | 3 | % | ||||||||||||||||
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Total U.S. Overnight | 2,321 | 2,392 | (3 | %) | 4,666 | 4,746 | (2 | %) | ||||||||||||||||
U.S. Deferred | 980 | 1,060 | (8 | %) | 1,936 | 2,012 | (4 | %) | ||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||
Total U.S. Package Revenue | 3,301 | 3,452 | (4 | %) | 6,602 | 6,758 | (2 | %) | ||||||||||||||||
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|
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| |||||||||||||||||
International Priority | 1,817 | 1,896 | (4 | %) | 3,634 | 3,770 | (4 | %) | ||||||||||||||||
International Economy | 873 | 885 | (1 | %) | 1,728 | 1,735 | — | |||||||||||||||||
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|
|
|
|
|
| |||||||||||||||||
Total International Export Package | 2,690 | 2,781 | (3 | %) | 5,362 | 5,505 | (3 | %) | ||||||||||||||||
International Domestic1 | 1,165 | 1,203 | (3 | %) | 2,241 | 2,334 | (4 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Package Revenue | 7,156 | 7,436 | (4 | %) | 14,205 | 14,597 | (3 | %) | ||||||||||||||||
Freight Revenue: | ||||||||||||||||||||||||
U.S. | 698 | 792 | (12 | %) | 1,393 | 1,522 | (8 | %) | ||||||||||||||||
International Priority | 473 | 564 | (16 | %) | 937 | 1,097 | (15 | %) | ||||||||||||||||
International Economy | 541 | 554 | (2 | %) | 1,057 | 1,073 | (1 | %) | ||||||||||||||||
International Airfreight | 70 | 83 | (16 | %) | 136 | 168 | (19 | %) | ||||||||||||||||
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|
|
|
|
|
| |||||||||||||||||
Total Freight Revenue | 1,782 | 1,993 | (11 | %) | 3,523 | 3,860 | (9 | %) | ||||||||||||||||
Other Revenue | 146 | 175 | (17 | %) | 301 | 369 | (18 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Express Revenue | $ | 9,084 | $ | 9,604 | (5 | %) | $ | 18,029 | $ | 18,826 | (4 | %) | ||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Salaries and employee benefits | 3,405 | 3,441 | (1 | %) | 6,777 | 6,914 | (2 | %) | ||||||||||||||||
Purchased transportation | 1,267 | 1,354 | (6 | %) | 2,499 | 2,661 | (6 | %) | ||||||||||||||||
Rentals and landing fees | 505 | 474 | 7 | % | 1,018 | 944 | 8 | % | ||||||||||||||||
Depreciation and amortization | 469 | 449 | 4 | % | 931 | 885 | 5 | % | ||||||||||||||||
Fuel | 754 | 899 | (16 | %) | 1,497 | 1,744 | (14 | %) | ||||||||||||||||
Maintenance and repairs | 514 | 514 | — | 1,031 | 1,016 | 1 | % | |||||||||||||||||
Asset impairment charges | 66 | — | N | M | 66 | — | N | M | ||||||||||||||||
Intercompany charges2 | 500 | 517 | (3 | %) | 969 | 1,035 | (6 | %) | ||||||||||||||||
Other | 1,368 | 1,326 | 3 | % | 2,720 | 2,609 | 4 | % | ||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||
Total Operating Expenses2 | 8,848 | 8,974 | (1 | %) | 17,508 | 17,808 | (2 | %) | ||||||||||||||||
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|
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| |||||||||||||||||
Operating Income2 | $ | 236 | $ | 630 | (63 | %) | $ | 521 | $ | 1,018 | (49 | %) | ||||||||||||
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| |||||||||||||||||
Operating Margin2 | 2.6 | % | 6.6 | % | (4.0 p | ts) | 2.9 | % | 5.4 | % | (2.5 p | ts) |
1 - | International Domestic relates to international intra-country operations. |
2 - | Prior year amounts have been recast to conform to the current year presentation. |
14
FEDEX EXPRESS SEGMENT OPERATING HIGHLIGHTS
Second Quarter Fiscal 2020
(Unaudited)
Three Months Ended November 30 | Six Months Ended November 30 | |||||||||||||||||||||||
2019 | 2018 | % | 2019 | 2018 | % | |||||||||||||||||||
PACKAGE STATISTICS | ||||||||||||||||||||||||
Average Daily Package Volume (000s): |
| |||||||||||||||||||||||
U.S. Overnight Box | 1,244 | 1,308 | (5 | %) | 1,231 | 1,269 | (3 | %) | ||||||||||||||||
U.S. Overnight Envelope | 547 | 532 | 3 | % | 554 | 541 | 2 | % | ||||||||||||||||
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|
|
|
|
|
| |||||||||||||||||
Total U.S. Overnight Package | 1,791 | 1,840 | (3 | %) | 1,785 | 1,810 | (1 | %) | ||||||||||||||||
U.S. Deferred | 1,012 | 1,082 | (6 | %) | 994 | 998 | — | |||||||||||||||||
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|
|
|
|
|
|
| |||||||||||||||||
Total U.S. Domestic Package | 2,803 | 2,922 | (4 | %) | 2,779 | 2,808 | (1 | %) | ||||||||||||||||
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|
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|
|
| |||||||||||||||||
International Priority | 565 | 555 | 2 | % | 548 | 540 | 1 | % | ||||||||||||||||
International Economy | 315 | 302 | 4 | % | 304 | 289 | 5 | % | ||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||
Total International Export Package | 880 | 857 | 3 | % | 852 | 829 | 3 | % | ||||||||||||||||
International Domestic1 | 2,669 | 2,670 | — | 2,509 | 2,530 | (1 | %) | |||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||
Total Average Daily Packages | 6,352 | 6,449 | (2 | %) | 6,140 | 6,167 | — | |||||||||||||||||
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| |||||||||||||||||
Yield (Revenue Per Package): | ||||||||||||||||||||||||
U.S. Overnight Box | $ | 23.78 | $ | 23.63 | 1 | % | $ | 23.86 | $ | 23.60 | 1 | % | ||||||||||||
U.S. Overnight Envelope | 13.26 | 13.24 | — | 13.29 | 13.16 | 1 | % | |||||||||||||||||
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| |||||||||||||||||
U.S. Overnight Composite | 20.57 | 20.63 | — | 20.58 | 20.48 | — | ||||||||||||||||||
U.S. Deferred | 15.39 | 15.54 | (1 | %) | 15.34 | 15.75 | (3 | %) | ||||||||||||||||
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| |||||||||||||||||
U.S. Domestic Composite | 18.70 | 18.75 | — | 18.71 | 18.80 | — | ||||||||||||||||||
|
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| |||||||||||||||||
International Priority | 51.03 | 54.25 | (6 | %) | 52.25 | 54.52 | (4 | %) | ||||||||||||||||
International Economy | 43.94 | 46.45 | (5 | %) | 44.71 | 46.92 | (5 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total International Export Composite | 48.49 | 51.50 | (6 | %) | 49.55 | 51.87 | (4 | %) | ||||||||||||||||
International Domestic1 | 6.92 | 7.15 | (3 | %) | 7.03 | 7.21 | (2 | %) | ||||||||||||||||
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| |||||||||||||||||
Composite Package Yield | $ | 17.88 | $ | 18.30 | (2 | %) | $ | 18.21 | $ | 18.49 | (2 | %) | ||||||||||||
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| |||||||||||||||||
FREIGHT STATISTICS | ||||||||||||||||||||||||
Average Daily Freight Pounds (000s): |
| |||||||||||||||||||||||
U.S. | 8,364 | 8,917 | (6 | %) | 8,188 | 8,608 | (5 | %) | ||||||||||||||||
International Priority | 5,230 | 5,684 | (8 | %) | 5,010 | 5,469 | (8 | %) | ||||||||||||||||
International Economy | 15,241 | 15,373 | (1 | %) | 14,473 | 14,401 | — | |||||||||||||||||
International Airfreight | 1,726 | 1,759 | (2 | %) | 1,640 | 1,738 | (6 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Avg Daily Freight Pounds | 30,561 | 31,733 | (4 | %) | 29,311 | 30,216 | (3 | %) | ||||||||||||||||
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|
|
| |||||||||||||||||
Revenue Per Freight Pound: | ||||||||||||||||||||||||
U.S. | $ | 1.32 | $ | 1.41 | (6 | %) | $ | 1.34 | $ | 1.38 | (3 | %) | ||||||||||||
International Priority | 1.43 | 1.57 | (9 | %) | 1.47 | 1.57 | (6 | %) | ||||||||||||||||
International Economy | 0.56 | 0.57 | (2 | %) | 0.57 | 0.58 | (2 | %) | ||||||||||||||||
International Airfreight | 0.65 | 0.75 | (13 | %) | 0.65 | 0.75 | (13 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Composite Freight Yield | $ | 0.93 | $ | 1.00 | (7 | %) | $ | 0.95 | $ | 1.00 | (5 | %) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Operating Weekdays | 63 | 63 | — | 127 | 128 | (1 | %) |
1 - | International Domestic revenues relate to international intra-country operations. |
15
FEDEX GROUND SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
Second Quarter Fiscal 2020
(Dollars in millions)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
November 30 | November 30 | |||||||||||||||||||||||
2019 | 2018 | % | 2019 | 2018 | % | |||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||
Revenue | $ | 5,315 | $ | 5,142 | 3 | % | $ | 10,494 | $ | 9,941 | 6 | % | ||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Salaries and employee benefits | 971 | 891 | 9 | % | 1,842 | 1,696 | 9 | % | ||||||||||||||||
Purchased transportation | 2,561 | 2,342 | 9 | % | 4,864 | 4,404 | 10 | % | ||||||||||||||||
Rentals | 249 | 200 | 25 | % | 488 | 391 | 25 | % | ||||||||||||||||
Depreciation and amortization | 195 | 180 | 8 | % | 388 | 353 | 10 | % | ||||||||||||||||
Fuel | 4 | 4 | — | 7 | 7 | — | ||||||||||||||||||
Maintenance and repairs | 98 | 84 | 17 | % | 185 | 161 | 15 | % | ||||||||||||||||
Intercompany charges1 | 394 | 390 | 1 | % | 769 | 778 | (1 | %) | ||||||||||||||||
Other | 501 | 461 | 9 | % | 965 | 885 | 9 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Operating Expenses1 | 4,973 | 4,552 | 9 | % | 9,508 | 8,675 | 10 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Operating Income1 | $ | 342 | $ | 590 | (42 | %) | $ | 986 | $ | 1,266 | (22 | %) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Operating Margin1 | 6.4 | % | 11.5 | % | (5.1 pts | ) | 9.4 | % | 12.7 | % | (3.3 pts | ) | ||||||||||||
OPERATING STATISTICS | ||||||||||||||||||||||||
Operating Weekdays | 63 | 63 | — | 127 | 128 | (1 | %) | |||||||||||||||||
Average Daily Package Volume (000s) | 9,556 | 9,237 | 3 | % | 9,192 | 8,721 | 5 | % | ||||||||||||||||
Yield (Revenue Per Package) | $ | 8.80 | $ | 8.81 | — | $ | 8.96 | $ | 8.88 | 1 | % |
1 - | Prior year amounts have been recast to conform to the current year presentation. |
16
FEDEX FREIGHT SEGMENT FINANCIAL AND OPERATING HIGHLIGHTS
Second Quarter Fiscal 2020
(Dollars in millions)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
November 30 | November 30 | |||||||||||||||||||||||
2019 | 2018 | % | 2019 | 2018 | % | |||||||||||||||||||
FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||
Revenue | $ | 1,844 | $ | 1,918 | (4 | %) | $ | 3,749 | $ | 3,877 | (3 | %) | ||||||||||||
Operating Expenses: | ||||||||||||||||||||||||
Salaries and employee benefits | 900 | 919 | (2 | %) | 1,819 | 1,847 | (2 | %) | ||||||||||||||||
Purchased transportation | 187 | 250 | (25 | %) | 374 | 509 | (27 | %) | ||||||||||||||||
Rentals | 52 | 42 | 24 | % | 104 | 84 | 24 | % | ||||||||||||||||
Depreciation and amortization | 97 | 76 | 28 | % | 191 | 154 | 24 | % | ||||||||||||||||
Fuel | 132 | 150 | (12 | %) | 255 | 287 | (11 | %) | ||||||||||||||||
Maintenance and repairs | 68 | 63 | 8 | % | 133 | 125 | 6 | % | ||||||||||||||||
Intercompany charges | 130 | 137 | (5 | %) | 256 | 275 | (7 | %) | ||||||||||||||||
Other | 137 | 133 | 3 | % | 282 | 272 | 4 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Operating Expenses | 1,703 | 1,770 | (4 | %) | 3,414 | 3,553 | (4 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Operating Income | $ | 141 | $ | 148 | (5 | %) | $ | 335 | $ | 324 | 3 | % | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Operating Margin | 7.6 | % | 7.7 | % | (0.1 pts | ) | 8.9 | % | 8.4 | % | 0.5 pts | |||||||||||||
OPERATING STATISTICS | ||||||||||||||||||||||||
Operating Weekdays | 62 | 62 | — | 126 | 127 | (1 | %) | |||||||||||||||||
Average Daily Shipments (000s) | ||||||||||||||||||||||||
Priority | 77.4 | 81.7 | (5 | %) | 78.0 | 81.4 | (4 | %) | ||||||||||||||||
Economy | 32.6 | 35.4 | (8 | %) | 32.7 | 35.0 | (7 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Total Average Daily Shipments | 110.0 | 117.1 | (6 | %) | 110.7 | 116.4 | (5 | %) | ||||||||||||||||
Weight Per Shipment (lbs) | ||||||||||||||||||||||||
Priority | 1,139 | 1,203 | (5 | %) | 1,147 | 1,211 | (5 | %) | ||||||||||||||||
Economy | 983 | 1,043 | (6 | %) | 971 | 1,026 | (5 | %) | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Composite Weight Per Shipment | 1,092 | 1,155 | (5 | %) | 1,095 | 1,155 | (5 | %) | ||||||||||||||||
Revenue/Shipment | ||||||||||||||||||||||||
Priority | $ | 258.90 | $ | 249.76 | 4 | % | $ | 257.14 | $ | 248.24 | 4 | % | ||||||||||||
Economy | 295.29 | 297.73 | (1 | %) | 295.53 | 295.00 | — | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Composite Revenue/Shipment | $ | 270.38 | $ | 264.27 | 2 | % | $ | 268.83 | $ | 262.29 | 2 | % | ||||||||||||
Revenue/CWT | ||||||||||||||||||||||||
Priority | $ | 22.74 | $ | 20.76 | 10 | % | $ | 22.41 | $ | 20.50 | 9 | % | ||||||||||||
Economy | 30.05 | 28.55 | 5 | % | 30.43 | 28.76 | 6 | % | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||
Composite Revenue/CWT | $ | 24.75 | $ | 22.89 | 8 | % | $ | 24.54 | $ | 22.71 | 8 | % |
17