FedEx (FDX) Misses Q2 EPS by 25c, Updates FY Guidance

FedEx (NYSE: FDX) reported Q2 EPS of $2.51, $0.25 worse than the analyst estimate of $2.76. Revenue for the quarter came in at $17.3 billion versus the consensus estimate of $17.58 billion.

GUIDANCE:

FedEx sees FY2020 EPS of $10.25-$11.50, versus the consensus of $12.03.

FedEx is unable to forecast the fiscal 2020 year-end mark-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.

FedEx now forecasts fiscal 2020 earnings of $9.10 to $10.35 per diluted share before the year-end MTM retirement plan accounting adjustment, and earnings of $10.25 to $11.50 per diluted share before the year-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 the year-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.

For earnings history and earnings-related data on FedEx (FDX) click here.

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