FedEx (FDX) Tops Q4 EPS by 23c, Offers Outlook

June 19, 2018 4:17 PM EDT

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FedEx (NYSE: FDX) reported Q4 EPS of $5.91, $0.23 better than the analyst estimate of $5.68. Revenue for the quarter came in at $17.3 billion versus the consensus estimate of $17.24 billion.

Outlook

FedEx is unable to forecast the fiscal 2019 year-end MTM retirement plan accounting adjustments. As a result, the company is unable to provide a fiscal 2019 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.

New pension accounting rules will be in effect starting in fiscal 2019 that will impact operating margin but not net income or earnings per share. For reference, comparable measures for fiscal 2018 that have been recast to reflect application of the new rules are provided below.

For fiscal 2019, FedEx is targeting:

  • Revenue growth of approximately 9%;
  • Operating margin of approximately 7.9% (compared to a recast fiscal 2018 operating margin of 6.5%);
  • Operating margin of approximately 8.5% excluding TNT Express integration expenses (compared to a recast fiscal 2018 operating margin of 7.8% excluding TNT Express integration expenses and FedEx Supply Chain goodwill and other asset impairment charges);
  • Earnings of $15.65 to $16.25 per diluted share before year-end MTM retirement plan accounting adjustments;
  • Earnings of $17.00 to $17.60 per diluted share before year-end MTM retirement plan accounting adjustments and excluding TNT Express integration expenses;
  • ETR of approximately 25% prior to year-end MTM retirement plan accounting adjustments, which is higher than the fiscal 2018 ETR due to tax benefits from transactions and TCJA impacts that will not reoccur during fiscal 2019; and
  • Capital spending of $5.6 billion.

These forecasts assume moderate economic growth. The company’s ETR and earnings per share outlook is based on current TCJA interpretative guidance and is subject to change based on future guidance.

“Our fiscal 2019 results will benefit from our continued focus on revenue quality as well as from synergy realization as we make progress in combining TNT Express with FedEx Express,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “We expect improved earnings, cash flows and returns this fiscal year and remain committed to improving operating income at the FedEx Express segment by $1.2 to $1.5 billion in fiscal 2020 versus fiscal 2017.”

(Street sees FY19 EPS of $17.41, may not compare)

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



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