FedEx Corporation First Quarter FY17 Earnings Review September 20, 2016 This presentation supplements, and should be read together with, our earnings release and statistical book for the quarter ended August 31, 2016 Forward-Looking Statements Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, our ability to successfully integrate the business and operations of FedEx Express and TNT Express in the expected time frame, a significant data breach or other disruption to our technology infrastructure, changes in fuel prices or currency exchange rates, legal challenges or changes related to FedEx Ground’s owner-operators and the drivers providing services on their behalf, new U.S. domestic or international government regulation, our ability to effectively operate, integrate and leverage acquired businesses, disruptions or modifications in service by, or changes in the business of, the U.S. Postal Service, the impact from any terrorist activities or international conflicts, our ability to match capacity to shifting volume levels and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the SEC. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. 2 1
FedEx Executives On the Call Frederick W. Smith, Chairman, President and CEO Alan B. Graf, Jr., Executive Vice President and CFO T. Michael Glenn, President and CEO of FedEx Services Christine P. Richards, Executive Vice President, General Counsel & Secretary Robert B. Carter, Executive Vice President, FedEx Information Services and CIO David J. Bronczek, President and CEO of FedEx Express Henry J. Maier, President and CEO of FedEx Ground Michael L. Ducker, President and CEO of FedEx Freight 3 Overview Frederick W. Smith Chairman, President and CEO 4 2
Strong Financial and Operating Results Compete Collectively, Operate Independently, Manage Collaboratively FY17 revenue and earnings to increase driven by volume growth and improved base yields at FedEx Express, FedEx Ground, and FedEx Freight TNT Express integration proceeding smoothly Purple Promise, “I will make every FedEx experience outstanding” We are committed to improving FedEx Corporation’s margins, earnings per share, cash flows and returns 5 Marketing Review and Outlook T. Michael Glenn President and CEO FedEx Services 6 3
Corporation Economic Outlook Expectation for Continued Moderate Global Growth CY2016 CY2017 GDP Forecast* U.S. 1.6% 2.3% Global 2.2% 2.6% (0.7%) 2.2% U.S. Industrial Production* * FedEx Forecast September 2016 7 Express U.S. Domestic Growing U.S. Domestic Package Volume, Revenue and Yield (Revenue Per Package) Q1FY17 Q1FY16 Change U.S. Domestic Package $2.98B $2.90B 3% Revenue* U.S. Domestic Package 2.65M 2.62M 1% Average Daily Volume U.S. Domestic Package $17.28 $17.03 1% Yield* * Includes fuel surcharge 8 4
Express International Continued Growing Demand for Economy Service Q1FY17 Q1FY16 Change $2.02B $2.04B (1%) Int’l Export Package Revenue* 385K 389K (1%) Int’l Priority Package ADV 178K 176K 1% Int’l Economy Package ADV $55.15 $55.47 (1%) Int’l Export Package Yield* * Includes fuel surcharge and exchange rate impact 9 Ground Growth Strong Demand For Residential and Commercial Service Change Q1FY17 Q1FY16 $4.29B $3.83B 12% Segment Revenue* FedEx Ground 7.39M 6.72M 10% Average Daily Package Volume $8.09 $7.91 2% FedEx Ground Package Yield* * Includes fuel surcharge 10 5
Freight Growth Increasing Average Daily LTL Shipments and Segment Revenue Q1FY17 Q1FY16 Change $1.66B $1.60B 4% Segment Revenue* 105K 97K 8% Average Daily LTL Shipments 1,152 1,189 (3%) Weight Per LTL Shipment (lbs) $229.20 $237.81 (4%) LTL Revenue Per Shipment* * Includes fuel surcharge 11 Business Trends: E-Commerce Growth Expected to Deliver Another Record Peak Season E-commerce market growing at about 15%*, FedEx forecasting record peak volume Volume projected to spread across peak period with multiple peak days Increased investments in people, facilities, aircraft and technology will support outstanding service during peak Close collaboration with large e-tail and retail customers that drive holiday demand 12 * Source: comScore 6
Financial Review and Outlook Alan B. Graf, Jr. Executive Vice President and CFO 13 Corporation First Quarter FY2017 Results Q1FY17 Q1FY17 Q1FY16 As Reported Adjusted As Reported (GAAP) (non-GAAP)* (GAAP) $2.65 $2.90 $2.42 Earnings Per Share $1.26B $1.36B $1.14B Operating Income 8.6% 9.3% 9.3% Operating Margin * See the Non-GAAP Appendix for a reconciliation of presented non-GAAP measures to the most directly comparable GAAP measures 14 7
Ground Segment Double-Digit Revenue and Operating Income Growth Q1FY17 Q1FY16 Change $4.29B $3.83B 12% Revenue $610M $537M 14% Operating Income 14.2% 14.0% 0.2 pts Operating Margin 15 Freight Segment Revenue Up 4% Q1FY17 Q1FY16 Change $1.66B $1.60B 4% Revenue $135M $132M 2% Operating Income 8.1% 8.2% (0.1 pts) Operating Margin 16 8
Express Segment Operating Income and Margins Improved Q1FY17 Q1FY17 Q1FY16 As Reported Adjusted As Reported (GAAP) (non-GAAP)* (GAAP) $6.66B $6.66B $6.59B Revenue $624M $646M $545M Operating Income 14% 19% YOY Change 9.4% 9.7% 8.3% Operating Margin * See the Non-GAAP Appendix for a reconciliation of presented non-GAAP measures to the most directly comparable GAAP measures 17 New Financial Reporting Structure FedEx Express Group = + Segment Segment 18 9
Geography as % of Revenue FedEx Express Group FedEx Corporation FY16 Q1FY17 FY16 Q1FY17 $26.5B $8.5B $50.4B $14.7B 24% 33% 44% 44% 56% 56% 67% 76% U.S. International U.S. International U.S. International U.S. International FY16 only includes TNT revenue for May 25-31, 2016 FY16 only includes TNT revenue for May 25-31, 2016 19 Overview of Global Presence ● More than 200 country and territory destinations served ● Approximately 56,000 team members with 900+ hubs, depots and office facilities ● Approximately 1 million daily packages ● European road network connecting more than 40 countries through 19 road hubs and over 540 depots 20 10
The Acquisition of TNT Strategic Rationale ● ● Combined companies create an Combined companies offer even stronger global competitor comprehensive transportation with the leading global express solutions, such as express, global network in the transportation and freight forwarding, contract logistics logistics industry and surface transportation capabilities ● ● Customer access is considerably Excellent cultural fit, both companies enhanced from the combined focused on service and people strength of TNT Express’s strong European road network for both parcel and freight and FedEx Express’s global strength 21 Multi-Year Integration Process Includes over 200 countries ● Integration process expected to take four years to complete ● Leverages our well-established integration methodology, process and tools ● Focuses on operational efficiencies, service enhancements, and optimization of back-office functions to strengthen our competitive position ● Supported by 20 integration teams including operations, IT, HR, Finance, Legal, Sales, Marketing and Customer Service ● Incorporates models to address markets where both TNT Express and FedEx Express are direct serve, one is direct serve and the other is not, and where both use third-party delivery partners 22 11
First Full Quarter Results Q1FY17 Operating Income/ TNT Express Segment (Loss) Margin Non-GAAP Measure $34M 1.9% TNT Express Integration and Outlook Restructuring Program Costs ($20M) (1.1%) TNT Express Intangible Asset Amortization* ($28M) (1.6%) GAAP Measure ($14M) (0.8%) * Primarily customer related 23 Plan to Realize the Synergies with Optimized Pickup Integrated Improved Efficiency Grow Revenue With and Delivery Global Express of Staff Functions and Best-In-Class Operations Network Processes (SG&A) Service Portfolio 24 12
Corp. Financial Guidance FY17 Adjusted EPS* $11.85 to $12.35 Excludes mark-to-market pension adjustment, TNT Express integration and Outlook restructuring program costs and TNT Express intangible asset amortization Excluding: TNT Express integration and Outlook restructuring program costs ($275M) TNT Express intangible asset amortization ($115M) $10.85 to $11.35 FY17 Adjusted EPS* Excludes mark-to-market pension adjustment * See the Non-GAAP Appendix for a reconciliation of presented non-GAAP measures to the most directly comparable GAAP measures 25 FedEx Corp. Long-Term Financial Goals Achieve 10%+ operating margin Increase EPS 10%-15% per year Grow profitable revenue Improve cash flows Increase ROIC Increase returns to shareowners 26 13
Strategic Questions? 27 28 14
Recommend
More recommend
