FedEx Q3 report 2022

Operating Income of $1.3 Billion, Up 32% Year Over Year; Up 37% on an Adjusted Basis

Strong Earnings Growth Expected in Fourth Quarter

Third quarter operating income improved due to higher revenue per shipment and a net fuel benefit at all transportation segments. The quarter’s results also benefited from lower variable compensation expense and less severe winter weather, resulting in favorable year-over-year comparisons. The improved results were partially offset by the effects of the Omicron variant, as well as higher purchased transportation costs and wage rates.

Third quarter net income included a tax benefit of $78 million ($0.29 per diluted share) related to revisions of prior year estimates for actual tax return results. Last year’s net income included discrete tax benefits of $108 million ($0.40 per diluted share).

FedEx Express operating results increased, driven by higher yields, a net fuel benefit, and lower variable compensation expense. The improved results were partially offset by the negative effects of the Omicron variant, which constrained near-term economic growth, labor availability, and shipping demand. These effects also resulted in lower express freight revenue, as air capacity limitations drove a temporary suspension of International Economy Express Freight services and certain U.S. Domestic Express Freight services during the quarter. These negative effects on third quarter results fully offset the estimated benefit from less severe winter weather.