FedEx's Recast Second Quarter: $6.1 Billion Net Income, $4.5 Billion Of It From Other Nonoperating Gains
Operating income was $1,327 million on $22,930 million of revenue once the spun-off FedEx Freight is stripped out.
FedEx's recast second-quarter results show net income of $6,129 million, but other nonoperating income of $4,533 million, mostly a gain on its retained FedEx Freight stake, did the heavy lifting. The package company's operating income was $1,327 million, an 8-K filed Wednesday shows.
A paper gain swamps the operating result
FedEx, which runs an air and ground express network reaching more than 220 countries and territories, recast the quarter to show FedEx Freight as discontinued operations. Revenue from continuing operations was $22,930 million, up from $20,788 million in the first quarter, and operating income rose to $1,327 million from $919 million.
Diluted earnings per share were $25.28, against $3.22 in the first quarter. Income from continuing operations was $6,074 million, after a $4,533 million other nonoperating line and $839 million of other retirement plans income.
On an adjusted basis, the company strips out a $4,492 million gain on its retained 19.9% stake in FedEx Freight, restructuring costs and pension mark-to-market adjustments. That leaves diluted earnings of $4.98 per share and a 7.1% operating margin, from adjusted operating income of $1,622 million.
Domestic strength, thin international margin
Express U.S. Domestic earned $1,379 million at a 9.2% margin, up from $880 million and 6.5% in the first quarter. Adjusted, the margin was 10.3%. Average daily U.S. domestic packages rose to 14,317 thousand from 13,716 thousand, and revenue per package to $15.65 from $15.04.
Express International earned $108 million at a 1.5% margin, down from $119 million and 1.8%. Adjusted, the margin was 3.2%. Fuel costs in the segment jumped to $903 million from $541 million.
New segments after the spin-off
FedEx finished spinning off FedEx Freight on June 1 and moved its fiscal year end to December 31 from May 31. The package business now reports as Express U.S. Domestic and Express International, the latter including FedEx Logistics. On October 1, FedEx sold its FedEx Supply Chain business to CMA CGM Group for $1.4 billion.
The exhibit says stranded shared-service costs left with FedEx after the spin-off are expected to fall through transition services agreements and cost management. The figures are unaudited and, the company said, are not a restatement.
FedEx will report the seven-month transition period from June 1 through December 31, 2026, in a Transition Report on Form 10-K.
Sources
- 8-K Filing — FEDEX CORP (FDX) — SEC EDGAR
- Exhibit fedexrecastexhibit991.htm — FEDEX CORP 8-K exhibit — SEC EDGAR
- FedEx Double Beat in Q3 Not Enough for Investors: Stock Falls on Updated Guidance — benzinga.com
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