(Updated - September 15, 2022 4:32 PM EDT)

FedEx Corp. (NYSE: FDX) today provided a business update and announced the following preliminary unaudited consolidated results for the quarter ended August 31, 2022 (adjusted measures exclude the items listed below for the applicable fiscal year):

(Consensus sees Q1 EPS of $5.14 on revenue of $23.58 billion)

This year’s and last year’s quarterly consolidated results have been adjusted for:

First quarter results were adversely impacted by global volume softness that accelerated in the final weeks of the quarter. FedEx Express results were particularly impacted by macroeconomic weakness in Asia and service challenges in Europe, leading to a revenue shortfall in this segment of approximately $500 million relative to company forecasts. FedEx Ground revenue was approximately $300 million below company forecasts.

While the company took immediate and decisive action to adjust its cost base, the impact of cost actions lagged volume declines, and operating expenses remained high relative to demand. Please see the tables below for preliminary results for each transportation segment.

“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations,” said Raj Subramaniam, FedEx Corporation president and chief executive officer. “While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives. These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”

Cost Initiatives

The company expects the benefits of cost actions to mitigate the effects of reduced demand throughout the remainder of fiscal 2023. These cost actions include:

• Reduction in flight frequencies and temporarily parking aircraft;
• Volume-related reductions in labor hours and other linehaul expenses;
• Consolidation of certain sort operations to drive productivity;
• Reduction of Sunday operations at a number of FedEx Ground locations;
• Cancellation of certain planned network capacity and other projects;
• Deferral of staff hiring;
• Closure of over 90 FedEx Office locations; and
• Identification of five corporate office facilities to be closed, with additional real estate rationalization planning under way.

Outlook

• As a result of the preliminary first quarter financial performance and expectations for a continued volatile operating environment, FedEx is withdrawing its fiscal year 2023 earnings forecast provided on June 23, 2022.
• While continuing aggressive cost reduction actions, the company expects business conditions to further weaken in the second quarter. For the second quarter of fiscal 2023, FedEx is currently expecting revenue of $23.5 billion to $24.0 billion, earnings per diluted share of $2.65 or greater, and earnings per diluted share excluding costs related to business optimization initiatives and business realignment activities of $2.75 or greater.
• Anticipated capital spending for fiscal year 2023 has been revised to $6.3 billion, compared to the prior forecast of $6.8 billion.
• The company reaffirms its previously announced plan to repurchase $1.5 billion of FedEx common stock in fiscal 2023. The company expects to repurchase $1.0 billion of FedEx common stock during the second quarter.

These forecasts assume the company’s current economic forecast and fuel price expectations, no additional COVID-19-related business restrictions, successful completion of the planned stock repurchases during the second quarter, and no additional adverse geopolitical developments. FedEx’s earnings per share forecast is based on current law and related regulations and guidance.

FedEx plans to provide additional details on its cost initiatives and updated outlook during its upcoming earnings call, scheduled for 5:30 p.m. EDT on September 22, 2022.

Transportation Segment Performance for the Quarter Ended August 31:

FedEx Express

(Adjusted measures exclude the items discussed below under "Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures.")

FedEx Ground

FedEx Freight