FedEx (NYSE: FDX) shares were trading more than 3% lower after-hours following the company’s first quarter results, with EPS coming in at $4.37, which is below the Street estimate of $5.00. Quarterly revenue grew 14% year-over-year to $22 billion, slightly higher than the consensus estimate of $21.91 billion.

First quarter results were negatively affected by an estimated $450 million year over year increase in costs due to a constrained labor market which impacted labor availability, resulting in network inefficiencies, higher wage rates, and increased purchased transportation expenses.

The company lowered its full 2022-year EPS estimate to $19.75-$21.00 versus $20.50-$21.50 and the consensus of $21.20 as conditions during Q1 were more challenging than expected and are estimated to extend longer.

While the company expects the conditions to continue near-term, they expect a gradual improvement in labor availability combined with its proactive revenue management actions to mitigate the headwinds.