FedEx Corp Reports Third Quarter Earnings

Discussion in 'Fedex Freight' started by Freightmaster1, Mar 21, 2017.

  1. Freightmaster1

    Freightmaster1 Well-Known Member

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  2. SwampRatt

    SwampRatt Well-Known Member

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  3. SwampRatt

    SwampRatt Well-Known Member

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    Looks like a Bonus payout will require an O/R somewhere close to 7% in Q-4.

    Also note: salaries, wages and IT expenses are said to be to blame, on the Freight side.

    Freight

    "Revenue increased due to higher base rates and fuel surcharges. Average daily shipments were flat as the company focuses on revenue quality in a continued weak U.S. industrial environment.

    Operating results decreased due to the impact from higher salaries and wages and increased information technology expenses."

    While we're not told the cost of IT expenses (specifically), we can be certain that the cost of wage increase did not "cause" the O/R decline.

    Worth noting, different explanations are given for Ground and Express.

    Ground

    "Revenue increased as higher base rates and commercial volume growth were partially offset by lower residential volume, driven by yield management actions, and the negative impact from one fewer operating day.

    Operating results decreased due to higher rent, depreciation and staffing as a result of network expansion, the negative net fuel impact and one fewer operating day."

    Express

    "Revenue increased 3% as higher base rates and package volume were partially offset by the negative impact from one fewer operating day.

    Operating income declined due to the significantly negative net impact of fuel and one fewer operating day. As-reported results include $31 million of expenses related to the integration of TNT Express."
     
    Last edited: Mar 22, 2017
  4. The Point

    The Point You get it or not!

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    I had heard the number of $50 million thrown around for the total cost of the in cab tablets and camera systems.So if we got the raise in October, mid Q2, why is it still a factor. It was planned Q4 last year and it should have been budgeted for. Analyst failing to project numbers again? We will be out of the money at 7.2%. As far as Ground goes I read this at ABC News "Holiday-season package volume was the heaviest ever, as the big package-delivery company continues to benefit from the growth in online shopping. The drawback is that unlike deliveries to businesses, shipments to consumers are spread out and more costly to deliver." So which is it, higher or lower residential volume?
     
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  5. mattbob

    mattbob Active Member

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    and the excuses will begin for no bonus in july.............just sayin
     
  6. Freightmaster1

    Freightmaster1 Well-Known Member

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    http://seekingalpha.com/article/405...-results-earnings-call-transcript?part=single

    At Freight, higher salaries, wages and information technology expenses reduced operating income. As with Ground, we're working toward a better balance of volume, pricing and capacity. Those efforts along with an expected improvement in the U.S. industrial environment should lead to better operating results at FedEx Freight in coming quarters.
     
  7. Richard Cranium

    Richard Cranium Well-Known Member

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  8. moose

    moose Active Member

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    Sob story take 2!!!
     
  9. Crazy Trucker

    Crazy Trucker Clown Math Expert

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    Nobody forced them to spend all the money on cameras that was their choice. If they wanted to trim some fat maybe they should look at the jobs they created a couple of years ago with a generous salary that serves no purpose IMO.
     
  10. SwampRatt

    SwampRatt Well-Known Member

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    Good info, Point.

    1) If true, that $50 Mil. would be a huge impact on the bottom line. Far more significant than wages/salaries. How it would be calculated into the quarterly report, would be interesting. Certainly not a lump sum entry. Even on an annual basis it would, it would be a large number.

    2) I find it curious that IT costs, as a factor, get no mention in the Express segment. Why is that? Are they not subject to the ELD mandate and the costs associated? Ground I understand, being a different animal. The Contractor model, and all that.

    3) Keep in mind, the size of the 4th quarter "pie" is always larger than the 3rd quarter "pie" *. That makes it have a larger impact on the combined numbers, relative to the bonus. Still, we need the 7%+ ballpark.

    4) I too recall the "heaviest ever" predictions... Excellent observation.

    * Historical quarterly numbers: http://s1.q4cdn.com/714383399/files...ical/FedEx-Historical-Stat-Book-FY05-FY14.pdf
     
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  11. The Point

    The Point You get it or not!

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    1) I would think the tablet/camera cost, if it is to blame, would/should have been spread out across several quarters and not one big hit. It is the only thing I can think of being large enough to effect our numbers so that has to be the IT charge. If this was a lump sum for the total purchase then we should not see another IT hit next quarter as the monitoring cost should be much lower.

    3) Agreed that anything less then a 7.3% Q4 will result in no payout. Hopefully this quarters 1.2% drop will not be repeated next quarter.

    Perhaps a hidden wage cost outlier could be the new vacation pay rate as we head into prime vacation season coupled with all the volunteering off during the slack months this past winter?
     
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  12. aflifer

    aflifer Well-Known Member

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    Ummm.........the federal government mandated the elogs......so yes, the company was most certainly forced to invest in that technology...
     
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  13. Hoot Owl

    Hoot Owl Have a hot dog who needs better insurance...

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    The government didn't mandate the camera or telelmetry system though.....
     
  14. aflifer

    aflifer Well-Known Member

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    Granted, but lots of indications that those could possibly follow closely behind in regulations.

    Understand the angst regarding cameras, but not sure I would pin all that cost solely on them.
     
  15. Crazy Trucker

    Crazy Trucker Clown Math Expert

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    Ummm maybe you should read my post again. The cameras aren't mandated.
     
  16. Crazy Trucker

    Crazy Trucker Clown Math Expert

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    So now were spending money on things that might get regulated???:scratchhead: I hope we didn't order a bunch of 33ft trailers also.:idunno:
     
  17. aflifer

    aflifer Well-Known Member

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    The cameras were part of the package purchased. So you know for a fact that they actually added overall cost to the purchase of the hardware components and programs needed to meet the federal mandate?
     
  18. aflifer

    aflifer Well-Known Member

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    I would think there are times where that would be the most cost effective way to do things. Do we wait for the model year of tractors to order them with known upcoming or reasonably anticipated EPA mandates, only to have to go back and upgrade a large percentage of our fleet, or do we begin purchasing them prior to that year in order to avoid a more costly process of upgrading?
     
  19. Crazy Trucker

    Crazy Trucker Clown Math Expert

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    Again the federal mandate is for elogs thats it. I doubt they got the cameras for free if they purchaed the tablets, would have been a heck of a deal if they did. They could have purchased the tablets alone if they wanted too. My point is don't spend money on something that's not required then whine on financial report about it.
     
  20. Crazy Trucker

    Crazy Trucker Clown Math Expert

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    Cost effective only if it works out and they would have approved the 33 ft trailers otherwise we would have a bunch of 33 ft city trailers. :scratchhead: Bad decisions can hurt the bottom line in a hury.
     

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