FedEx Corp. Lowers Earnings Guidance
February 14, 2011
FedEx Corporation (NYSE: FDX) today announced third quarter earnings have been negatively impacted by an estimated $0.25 per diluted share due to loss of revenue and increased expenses resulting from severe winter storms and higher-than-expected fuel prices. The company now expects as-adjusted earnings, excluding FedEx Freight combination costs, of $0.70 to $0.90 per diluted share for the third quarter ending February 28, compared to the company's previous guidance of $0.95 to $1.15 per diluted share. This guidance assumes no further weather impact and stable fuel prices for the remainder of the quarter. The company reported earnings of $0.76 per diluted share in last year's third quarter.
"We experienced significant network disruptions in the U.S. and Europe and unusually high costs from severe winter storms. In addition, fuel prices continued to escalate since we provided our earnings outlook in December," said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. "We continue to see strength in our base business across all transportation segments and geographies. I would like to take this opportunity to thank all our team members for their hard work and dedication during the recent severe weather events."
These costs will also impact earnings guidance for the full year, which the company will update when it announces third quarter earnings on March 17, 2011.
FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services.
With annual revenues of $37 billion, the company offers integrated business applications 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 285,000 team members to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit news.fedex.com.
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, legal challenges or changes related to FedEx Ground's owner-operators, new U.S. domestic or international government regulation, the impact from any terrorist activities or international conflicts, our ability to effectively operate, integrate and leverage acquired businesses, changes in fuel prices and currency exchange rates, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.'s and its subsidiaries' press releases and filings with the SEC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO GAAP FINANCIAL MEASURES
The company believes that meaningful analysis of our financial performance requires an understanding of the factors underlying that performance and our judgments about the likelihood that particular factors will repeat. Excluding the costs of the combination of FedEx Freight and FedEx National LTL operations from our earnings guidance, net of applicable incentive compensation impacts, will allow more accurate comparisons to prior periods of our third quarter expected operating performance. As required by SEC rules, the table below presents a reconciliation of our presented non-GAAP measures to the most directly comparable GAAP measures.
Fiscal 2011 Third Quarter Earnings Guidance
Updated Q3 Diluted
Previous Q3 Diluted
$0.70 to $0.90
$0.95 to $1.15
FedEx Freight Combination Costs
(0.12 to 0.08)
(0.17 to 0.11)
$0.58 to $0.82
$0.78 to $1.04
* This release has been revised to reflect the correct third quarter release date of March 17, 2011.