FedEx misses by $1.15, misses on revs; lowers top end of FY25 EPS guidance; lowers FY25 revenue guidance (300.38 +2.20)
- Reports Q1 (Aug) earnings of $3.60 per share, excluding non-recurring items, $1.15 worse than the FactSet Consensus of $4.75; revenues fell 0.5% year/year to $21.58 bln vs the $21.87 bln FactSet Consensus.
- Co issues downside guidance for FY25, lowers top end of adjusted EPS outlook to $20.00-21.00 from $20.00-22.00; this compares to $20.74 FactSet Consensus; Co lowers FY25 revenue outlook to low single-digit growth vs prior forecast of a low-to-mid single digit growth; this compares to $89.69 bln FactSet Consensus, or +2.3%.
- Co is reaffirming its forecast of: Permanent cost reductions from the DRIVE transformation program of $2.2 bln; ETR of approximately 24.5% prior to the MTM retirement plans accounting adjustments; and Capital spending of $5.2 bln, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation.
- Co says Q1 results were negatively affected by a mix shift, which reduced demand for priority services, increased demand for deferred services, and constrained yield growth. In addition, higher operating expenses and one fewer operating day negatively affected the quarter's results. A reduction of structural costs from the company's DRIVE program initiatives partially offset these factors.
- Note: On June 1, 2024, FedEx Ground and FedEx Services were successfully merged into Federal Express, becoming a single company operating a unified, fully integrated air-ground express network. FedEx Freight continues to provide less-than-truckload freight transportation services as a separate subsidiary. Federal Express and FedEx Freight now represent the company's major service lines and constitute its reportable segments.
- Share Repurchase Program: Co completed a $1 bln accelerated share repurchase (ASR) transaction during the quarter. Co expects to repurchase an additional $1.5 bln of common stock during FY25, for a buyback total of $2.5 bln. As of August 31, 2024, $4.1 bln remained available for repurchases.