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FedEx Corp. Reports Higher First Quarter Earnings

September 20, 2016

MEMPHIS, Tenn., September 20, 2016 … FedEx Corp. (NYSE: FDX) today reported earnings of $2.65 per diluted share ($2.90 per diluted share on an adjusted basis) for the first quarter ended August 31, compared to earnings of $2.42 per diluted share a year ago.

During the quarter, the company incurred TNT Express integration and Outlook restructuring program costs of $68 million ($45 million, net of tax, or $0.17 per diluted share).  In addition, the company incurred $28 million ($21 million, net of tax, or $0.08 per diluted share) of intangible asset amortization expense for TNT Express.

“The integration of TNT Express is proceeding smoothly, and the level of team members’ engagement is outstanding,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer.  “Managing our operating companies as a portfolio of customer solutions helped FedEx achieve strong financial and operating results in the quarter, especially given the global economy’s continued low growth.”


First Quarter Results

FedEx Corp. reported the following consolidated results for the first quarter (adjusted measures exclude TNT Express integration and Outlook restructuring program costs and intangible asset amortization expense):

                                                       Fiscal 2017                            Fiscal 2016    

 As Reported




As Reported


Revenue$14.7 billion$14.7 billion$12.3 billion
Operating income$1.26 billion$1.36 billion$1.14 billion
Operating margin8.6%9.3%9.3%
Net income$715 million$780 million$692 million
Diluted EPS$2.65$2.90$2.42


Operating results rose compared to last year due to higher base yields at FedEx Express and FedEx Ground, volume growth at FedEx Ground and ongoing cost efficiencies at FedEx Express.  These factors were partially offset by integration and restructuring program costs and intangible asset amortization at TNT Express, and higher network expansion costs at FedEx Ground.

During the quarter, the company acquired 1.4 million shares of FedEx common stock.


Earnings Guidance

FedEx is unable to forecast the fiscal 2017 year-end mark-to-market pension accounting adjustments.  As a result, the company is unable to provide unadjusted earnings guidance.  Adjusted earnings for fiscal 2017 are projected to be $10.85 to $11.35 per diluted share before year-end mark-to-market pension accounting adjustments.  This forecast includes TNT Express results and assumes moderate economic growth.  Excluding TNT Express-related integration and Outlook restructuring program costs and TNT Express intangible asset amortization, FedEx forecasts fiscal 2017 earnings of $11.85 to $12.35 per diluted share.  The capital spending forecast for the fiscal year, which includes TNT Express, remains $5.6 billion.

“Our team is extremely excited about the TNT Express integration, and we are discovering many possibilities for achieving high returns,” said Alan B. Graf, FedEx Corp. executive vice president and chief financial officer.  “As we integrate these networks and take advantage of the unmatched road capabilities of TNT Express, I am confident there is going to be a tremendous opportunity to increase the earnings of FedEx Corporation.”


2017 Rate Increases

As previously announced, effective January 2, 2017, FedEx Express will increase shipping rates by an average of 3.9%, while FedEx Ground, FedEx Home Delivery and FedEx Freight will increase shipping rates by an average of 4.9%.  The FedEx Express and FedEx Ground U.S. domestic dimensional weight divisor will also change from 166 to 139.  Effective February 6, 2017, FedEx Express and FedEx Ground fuel surcharges will be adjusted on a weekly basis compared to the current monthly adjustment.  Details of all changes to rates and surcharges are available at


FedEx Express Segment

For the first quarter, the FedEx Express segment reported (adjusted measures exclude TNT Express integration costs):

                                                            Fiscal 2017                       Fiscal 2016    

As Reported




As Reported


Revenue$6.66 billion$6.66 billion$6.59 billion
Operating income$624 million$646 million$545 million
Operating income YOY change % 




Operating margin9.4%9.7%8.3%


FedEx Express revenue increased slightly as improved base yields, higher package volume and increased freight pounds more than offset lower fuel surcharges and unfavorable currency exchange rates.  U.S. domestic package volume increased 1% due to growth in overnight box and envelope volumes.  FedEx International Economy volume grew 1%, while FedEx International Priority volume decreased 1%.  Average daily freight pounds increased 8% due to higher U.S. Postal Service volume.

FedEx Express operating results improved due to higher base yields and ongoing cost efficiencies.  As-reported results include $22 million of expenses related to the integration of TNT Express.  Fuel and currency exchange rates had a minimal impact on the quarter’s results.


TNT Express Segment

For the first quarter, the TNT Express segment reported (adjusted measures exclude TNT Express integration and Outlook restructuring program costs and intangible asset amortization expense):

                                                                   Fiscal 2017                    

As Reported




Revenue$1.80 billion$1.80 billion
Operating (loss)/income($14) million$34 million
Operating margin(0.8%)1.9%


The TNT Express as-reported results include $28 million of intangible asset amortization expense and $20 million of integration and Outlook restructuring program costs.


FedEx Ground Segment

For the first quarter, the FedEx Ground segment reported:

Fiscal 2017
Fiscal 2016
Revenue$4.29 billion$3.83 billion12%
Operating income$610 million$537 million14%
Operating margin14.2%14.0% 0.2 pts


Revenue increased due to higher volume and revenue per package. FedEx Ground average daily volume grew 10% in the first quarter, driven by e–commerce and commercial package growth.  FedEx Ground yield increased 2% due to higher base yields partially offset by lower fuel surcharges.

Operating results improved due to higher volumes, increased yields and lower self-insurance costs, partially offset by higher network expansion costs and increased purchased transportation rates including higher postage.


FedEx Freight Segment

For the first quarter, the FedEx Freight segment reported:

Fiscal 2017

Fiscal 2016


Revenue$1.66 billion$1.60 billion4%
Operating income$135 million$132 million2%
Operating margin



(0.1 pts)


Revenue increased as less-than-truckload (LTL) average daily shipment growth of 8% more than offset the impact of lower fuel surcharges and weight per shipment.

Operating results benefited from higher shipment volumes and a favorable rentals comparison, as last year’s results included a charge related to a facility closure.  These benefits were offset by lower revenue per LTL shipment.


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 $58 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 400,000 team members to remain “absolutely, positively” 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 visit

Additional information and operating data are contained in the company’s annual report, Form 10-K, Form 10-Qs, Form 8-Ks, Statistical Books and first quarter fiscal 2017 Earnings Presentation.  These materials, as well as a webcast of the earnings release conference call to be held at 5:00 p.m. EDT on September 20, are available on the company’s website at  A replay of the conference call webcast will be posted on our website following the call.

The Investor Relations page of our website,, contains a significant amount of information about FedEx, including our 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, our ability to successfully integrate the business and operations of FedEx Express and TNT Express in the expected time frame, a significant data breach or other disruption to our technology infrastructure, changes in fuel prices or currency exchange rates, legal challenges or changes related to FedEx Ground’s owner-operators and the drivers providing services on their behalf, new U.S. domestic or international government regulation, our ability to effectively operate, integrate and leverage acquired businesses, disruptions or modifications in service by, or changes in the business of, the U.S. Postal Service, the impact from any terrorist activities or international conflicts, 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 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.



First Quarter Fiscal 2017 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 certain non-GAAP (or “adjusted”) financial measures, including adjusted consolidated operating income and margin, net income and earnings per share, as well as adjusted FedEx Express segment and TNT Express segment operating income and margin. These financial measures have been adjusted to exclude the impact of certain transactions (as applicable):

  • TNT Express integration and Outlook restructuring program costs; and
  • TNT Express intangible asset amortization.

We expect to incur significant expenses over the next few years in connection with our integration of TNT Express and the Outlook restructuring program. We have adjusted the applicable financial measures to exclude these items because we generally would not incur such costs and expenses as part of our continuing operations. The integration expenses are predominantly incremental costs directly associated with the integration of TNT Express, including professional fees, advertising expenses, legal expenses and travel. Internal salaries, wages, and benefits costs are included only to the extent the individuals are assigned full-time to integration activities. The Outlook restructuring program is a TNT Express legacy program that includes various initiatives focused on yield management, improved operational efficiency and productivity and improved customer service.

We will also have recurring intangible asset amortization expenses. The company and TNT Express incurred, and will continue incurring, these expenses solely as a result of the company’s acquisition of TNT Express and the related purchase accounting treatment. We excluded intangible asset amortization from the company’s and TNT Express’s fiscal 2017 first quarter financial results to help investors understand the impact of these expenses on TNT Express’s base business and to facilitate the overall comparability of the company’s consolidated financial results. We will not adjust our financial results for intangible asset amortization beginning in fiscal 2018 because the company’s and TNT Express’s financial results will be comparable year-over-year at that time. Given the timing and complexity of the TNT Express acquisition, the presentation of TNT Express in the company’s financial statements, including the allocation of the purchase price, is preliminary and will likely change in future periods, perhaps significantly, as fair value estimates of the assets acquired and liabilities assumed are refined during the measurement period. We will complete our purchase price allocation no later than the fourth quarter of 2017.

We believe these adjusted financial measures facilitate more meaningful analysis and more accurate comparisons of our ongoing business operations because they exclude items that enhance comparability to prior periods, may not be indicative of, or are unrelated to, the company’s and our business segments’ core operating performance, and are better measures for assessing trends in our underlying businesses. These adjustments are consistent with how management views our businesses. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company’s and each business segment’s ongoing performance.

Fiscal 2017 Earnings Guidance

Our fiscal 2017 earnings guidance is a non-GAAP financial measure because it excludes the fiscal 2017 year-end mark-to-market (“MTM”) pension accounting adjustments, projected fiscal 2017 TNT Express integration and Outlook restructuring program costs, and projected fiscal 2017 TNT Express intangible asset amortization. We have provided this non-GAAP earnings guidance measure for the same reasons that were outlined above for historical non-GAAP measures.

We are unable to predict the amount of the year-end MTM pension accounting adjustments, as they are significantly impacted by changes in interest rates and the financial markets, so such adjustments are not included in our earnings guidance. For this reason, a full reconciliation of our fiscal 2017 earnings guidance to the most directly comparable GAAP measure is impracticable. It is reasonably possible, however, that our fourth quarter fiscal 2017 MTM pension accounting adjustments could have a material impact on our fiscal 2017 consolidated financial results. The last table included below outlines the impact of the items that are excluded from our earnings guidance, other than the year-end MTM pension accounting adjustments.


First Quarter Fiscal 2017

FedEx Corporation
Dollars in millions, except EPS
   Diluted Earnings
Per Share
Non-GAAP measure$1,3609.3%$457$780$2.90
TNT Express integration and Outlook restructuring program costs(68)(0.5%)(23)(45)(0.17)
TNT Express intangible asset amortization(28)(0.2%)(7)(21)(0.08)
GAAP measure$1,2648.6%$427$715$2.65


FedEx Express Segment
Dollars in millionsOperating
Non-GAAP Measure$6469.7%
TNT Express integration costs(22)(0.3%)
GAAP Measure$6249.4%

TNT Express Segment

Dollars in millionsOperating
Non-GAAP Measure$341.9%
TNT Express integration and Outlook restructuring program costs(20)(1.1%)
TNT Express intangible asset amortization(28)(1.6%)
GAAP Measure($14)(0.8%)

Fiscal 2017 Earnings Guidance

Dollars in millions
Diluted Earnings
Per Share
Earnings per diluted share with adjustments $11.85 to $12.35
TNT Express integration and Outlook restructuring program costs($275) 
   Income tax effect292 
   Net of tax effect($183)(0.68)
TNT Express intangible asset amortization($115) 
   Income Tax Effect229 
   Net of Tax Effect($86)(0.32)
Earnings per diluted share without adjustments3$10.85 to $11.35


1Does not sum to total due to rounding.
2Income taxes are based on the company’s approximate statutory tax rates applicable to each transaction.
3This is a non-GAAP measure because the year-end mark-to-market pension accounting adjustments, which are impracticable to calculate at this time, are excluded.



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