FedEx earnings was a miss on the top and bottom lines for their results for Quarter 1 of fiscal year 2025. The fiscal year for FedEx ends on May 31 and is the reason why it is in its 2025 accounting year. The results were a miss on the top, with $21.6B or a 1/2 of one percent less revenue of $100M. On the bottom line, the earnings per share fell nearly 24% to $3.21 from a year ago $4.23. Operating margin fell 1.8% year over year.
Current FedEx Stock Price
FedEx stock (FDX:NYSE) closed today near its 52-week high of $313.84, at $300.39. However, the after hours price dropped to $261.00 in today’s pre-market opening on the earnings announcement of the miss on the top line and bottom line number.
FedEx 1QTR Highlights
According to the release FedEx’s first quarter results were impacted by a shift in service demand, with increased interest in deferred services over priority ones, which constrained yield growth. Higher operational costs and one fewer operating day also hurt performance, but reductions in structural costs from FedEx’s DRIVE program helped offset these challenges.
Raj Subramaniam, FedEx’s president and CEO, reaffirmed the company’s focus on network transformation, efficiency improvements, and cost reduction. He emphasized the goal of leveraging data to create a more flexible and efficient logistics network.
A significant development was the merger of FedEx Ground and FedEx Services into Federal Express on June 1, 2024, streamlining operations and integrating air and ground services. FedEx Freight remains a separate subsidiary, continuing its less-than-truckload services, while FedEx Custom Critical operations have shifted to FedEx Freight.
Embed from Getty ImagesQuarterly Summary:
- Federal Express saw decreased operating results due to fewer operating days and lower U.S. domestic priority package volume. Increased costs like higher wages and transportation rates further affected results.
- FedEx Freight also experienced decreased results, driven by reduced shipment weights and priority shipments. However, it benefited from higher base yields.
- The company completed a $1 billion accelerated share repurchase (ASR) during the quarter, with plans for an additional $1.5 billion in stock buybacks during fiscal 2025.
FedEx Stock Repurchasing Program
During the first quarter, FedEx completed a $1 billion accelerated share repurchase (ASR) transaction, delivering approximately 3.4 million shares through the ASR agreement. This reduction in outstanding shares positively impacted the company’s first-quarter results by $0.03 per diluted share.
Looking ahead, FedEx plans to repurchase an additional $1.5 billion of common stock during fiscal 2025, bringing the total buyback for the fiscal year to $2.5 billion. As of August 31, 2024, the company still had $4.1 billion available under its 2024 stock repurchase authorization. Additionally, FedEx reported $5.9 billion in cash on hand as of the same date, highlighting its strong liquidity position.
A Part of the GTM Golden 25
FedEx Quarterly earnings is important to the expectations within the trucking industry itself and is a member of the Go Trucking Magazine’s Golden 25. It is a key bellwether for the trucking industry due to its extensive logistics network, broad market reach, and role in global supply chains. As one of the largest logistics and delivery companies in the world, FedEx’s performance offers valuable insights into the health of the trucking industry and the broader economy.
FedEx Quarterly earnings is an Industry Indicator
Firstly, FedEx’s operations span air, ground, and freight services, with a significant reliance on trucking to move goods across the country. When FedEx experiences growth or slowdown in its shipping volumes, it often reflects broader trends in consumer demand, e-commerce activity, and industrial production. For example, during periods of economic expansion, FedEx typically sees an increase in shipments, signaling higher demand for trucking services.
Moreover, FedEx’s investments in technology, sustainability, and fuel efficiency often set industry standards, influencing how other trucking companies operate. FedEx’s cost structure, labor relations, and fuel expenses provide clues to broader industry challenges, such as driver shortages or rising fuel prices.
Overall, because of its size, scope, and integration into multiple sectors, FedEx’s performance is closely watched by investors and analysts as an indicator of the health of the trucking industry and the overall economy.
Embed from Getty ImagesFedEx’s Financial Outlook
- FedEx revised its fiscal 2025 outlook, lowering revenue growth projections to a low single-digit percentage increase. Expected earnings per diluted share have been revised to $17.90 to $18.90, down from the previous forecast of $18.25 to $20.25 per share.
- The company remains committed to its DRIVE program, aiming for permanent cost reductions of $2.2 billion and capital spending of $5.2 billion, focused on network optimization and efficiency.
Despite weaker demand trends, FedEx remains confident in its DRIVE initiatives and pricing actions, expecting these measures to mitigate challenges and deliver long-term value. The release can be reviewed in its entirety here.