FedEx Freight | FedEx Corp. Reports Second Quarter Results (Bonus Numbers)

SwampRatt

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At a glance,

O/M for the quarter: 7.7%
O/M combined Q-1&2: 8.4%
Bonus Amount: 2.19%*

*% of earnings during the 6 Mo. reporting period.


http://s1.q4cdn.com/714383399/files/doc_downloads/statistical/2019/FedEx-Q2-FY19-Stat-Book.xlsx
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https://seekingalpha.com/filing/4273864 (Page 45:)

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Basis for calculation: http://i.imgur.com/RoUkXAt.jpg
 
From the earnings call

Alan Graf:
"International Priority freight pounds were flat and International Economy freight pounds surged 16%. In the U.S., overnight package volumes were up 3%, while deferred package volumes increased 15%. These volume trends accelerated during the quarter and Express operating profit was significantly below our business plan in the first half of fiscal year '19. To address the shifts in our business conditions, we are implementing and accelerating several cost-reduction initiatives, both in the U.S. and internationally. These initiatives include a voluntary employee buyout program, capacity reductions primarily in international airline network, limited hiring and staff functions and reductions in discretionary spending."

(The above applies to Express.)

Ground:
"The Ground segment operating income surged 18% to $586 million on an 8% volume increase and a 6% yield increase.

Despite the upfront costs associated with opening two major hubs and inflationary cost pressures, Ground's operating margin increased 40 basis points to 11.4%. Ground's profitability will increase as investment in our market-leading automation, coupled with large productivity initiatives, come online. We will provide more detail on our Ground strategic projects in the coming months."


Freight:
"Freight segment grew operating income 37% with shipments increasing 8% and yields up 6%. Operating margin was 7.7%, up 120 basis points. Cost-reduction initiatives, combined with continued profit improvements at Ground and Freight are expected to increase the long-term growth in corporate earnings and margins, improve cash flows and increase our competitiveness."

Stock:
"As I mentioned, we are reviewing all aspects of our financial plans, including whether we will repurchase additional shares this year. As a reminder, we spent $11.6 billion, purchasing almost 76 million shares over the last 5.5 years, resulting in the nearly 18% reduction in outstanding shares"
 
Continued...

Fred Smith:
"So there is a question from Brian Ossenbeck of JPMorgan. How has the pilot program for heavy home good deliveries progressed so far? If expanded, would this service take packages shipped with FedEx or would it be incremental volume?"

"Oversized market is basically handled by FedEx Ground where there has been, over the last 5 or 6 years, a substantial growth in that sector and Ground is responding to that by doing some unique things with sortation, automated robotics that handle these types of things. You're going to hear a lot more about it. On the heavy hard-to-handle items and, Brian, this is for both business and residential, not just one, these are items that require a dock height truck, a liftgate, dollies to move it and they generally require movement over the threshold into the office of the building. We've just started offering that as a FedEx Freight product, FedEx Freight Direct, and you'll hear a lot more about it."


Raj Subramaniam:
Yes. As Fred mentioned here, the heavy hard-to-handle goods market is one of the fastest-growing segments in the e-commerce and it represents roughly a $10 billion market opportunity. And the customer response to FedEx entering the market has been quite positive and it'll represent a new revenue stream for us as we go forward.
 
So the big question is when will we get our bonuses? I haven't heard anything mentioned at my yard.
This tidbit (below) from last year, if accurate, might provide some idea.

The bonus checks will pay Jan 26th 2018

And historically, this one (Jan.) comes combined with your regular check, whether you prefer it that way or not.

We'll see...
 
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