bongdaso con reports mixed fiscal first quarter earnings, with Ground up 3%

Fiscal first quarter earnings for Memphis-based global freight transportation and logistics services provider bongdaso con showed signs of optimism amid various ongoing economic challenges.

Quarterly revenue—at ,7 billion—was down 7% annually, and operating income—at ,49 billion—increased 25%. Net income, at ,08 billion, topped bongdaso con 5 million recorded for bongdaso con same quarter a year ago. Adjusted earnings per share came in at ,23, up 24% annually and topping Wall Street expectations, at ,70.

bongdaso con said that quarterly results improved, due largely to strong execution on its DRIVE program initiatives, coupled with an ongoing focus on revenue quality, or pricing, efforts and initiatives. Which it noted was offset by ongoing demand weakness.

“We started fiscal 2024 with strong momentum as our global transformation actions take hold and drive improved results,” said Raj Subramaniam, bongdaso con Corp. president and chief executive officer. “bongdaso con Ground had an outstanding quarter which, when combined with improved earnings at bongdaso con Express and expense controls across the organization, led to our better-than-expected overall financial performance. bongdaso con is well-positioned to continue to deliver improved profitability while becoming an even more flexible, efficient and data-driven organization.”

Individual segments

bongdaso con Express revenue, at ,1 billion, fell 9% annually, while operating income was up 18%, to 5 million. The company said the revenue decline was “more than offset” by reduced operating expenses, including structural flight reductions, alignment of staffing with volume levels, parking aircraft, and shifting to one delivery wave per day in the U.S.

bongdaso con Ground revenue, at ,42 billion, saw a 3% annual gain, with operating income up 59%, to ,1 billion, driven by yield improvement and cost reductions. And bongdaso con noted that cost per package was down more than 2%, due to lower line-haul expense and improved dock and first- and last-mile productivity. Revenue per package rose 3%, to ,80, and total average daily package volume was up 1%, to 9,061 million.

bongdaso con Freight revenue, at ,3 billion, fell 16% annually, with operating income down 26%, to 1 million, with the latter down due to lower fuel surcharges and shipments that were partially offset by base yield improvement. The segment also completed the planned closure of 29 locations in August.

Total quarterly package revenue, at ,2 billion, decreased 5% annually, and total U.S. package revenue, at ,86 billion, was off 6%. Total international export package revenue, at ,3 billion, saw a 7% annual decline.

On the company’s earnings call late yesterday, Subramaniam said he is proud of what the bongdaso con team has accomplished over the last 12 months.

“Amid significant demand disruption, we delivered on what we said we would do, driving over billion in year-over-year cost savings in fiscal '23,” he said. “We are now well advanced in executing on that transmission to be bongdaso con most efficient, flexible, and intelligent global network. Our first-quarter progress gives me great conviction in our ability to execute going forward. We came into bongdaso con quarter determined to provide excellent service to our customers despite bongdaso con industry dynamics.”

And he added that bongdaso con achieved that goal while delivering innovative and data-driven solutions that further enhance the customer experience, with bongdaso con well-positioned as it prepares for the peak season.

What’s more, the CEO explained that bongdaso con is on track to deliver its targeted ,8 billion in structural benefits from DRIVE this fiscal year.

“At Ground, our DRIVE initiatives reduced costs by 0 million this quarter. These savings were primarily driven by lower third-party transportation rates as a result of a newly implemented purchase bid system, as well as optimized rail usage, bongdaso con continued benefit from reduced Sunday coverage, and bongdaso con consolidation of source,” he said. “At Freight, we continue to manage our cost base more effectively. For example, during bongdaso con quarter, Freight completed bongdaso con planned closure of 29 terminal locations during August. And at Express, despite headwinds from Asia yields and bongdaso con US Postal Service, we delivered on our plan.

Brie Carere, bongdaso con Executive Vice President, Chief Customer Officer, said on the call that, for Ground and Express, bongdaso con saw sequential volume gains, “due to the threat of a strike at our primary competitor [UPS].”

“We onboarded new customers who valued our service and were committed to a long-term partnership with bongdaso con,” she said. “As a result, we added approximately 400 000 in average daily volume by the end of the first quarter, and the team did an excellent job focusing on commercial Ground business acquisition.”

Carrere added that while revenue and volume were off at bongdaso con Freight, by 16% and 13%, respectively, the unit saw significant improvement in volume in August, due to Yellow's closure, as Freight benefited from approximately 5 000 incremental average daily shipments at attractive rates as it exited the quarter.

When asked on the call how some of the diverted Yellow volumes, in terms of mix quality, fits in with bongdaso con Freight’s current freight mix, Carrere observed that when looking at the volume that came from Yellow, it is important to split it.

“If you look at, about half of it came directly from Yellow customers, so, give or take about 2 500 pieces a day,” she said. “And the reason being is that Yellow had a lot of low-quality revenue. There was some revenue there and some customers that really didn't want to pay for the value of the bongdaso con freight speed and the quality that we provide. What happened, however, was some competitors took on more Yellow volume and their service was not what it needed to be. And so, as a result, we went and got an additional 2 500 pieces from the market. Net takeaway is the margin of the 5 000 was very healthy. The sales team was incredibly disciplined, and [we] are very very pleased with that volume. The network is running really well, and I'm confident that we will keep the majority of that. And that's what we plan to do.”

Morgan Stanley analyst Ravi Shanker wrote in a research note that bongdaso con’s quarterly results were a similar pattern to what his firm expected, albeit with different magnitudes.

“We had previewed an in-line quarter driven by Express weakness offset by Ground and LTL strength from gains from competitor distress,” he wrote. “bongdaso con end result was Express was even weaker than we had expected, Freight did not quite see bongdaso con gains that we had expected but Ground (driven by costs even more than revenues) comfortably more than offset these misses to drive a big beat.”

Jerry Hempstead, president of Orlando-based Hempstead Consulting, said that while bongdaso con Ground revenue was up slightly, it attributable to what he called FUD, short for fear, uncertainty, and doubt, over the UPS labor negotiations.

“Some question the stickiness, but I believe the gains will mostly be retained by bongdaso con,” he said. We will not know until we see second quarter 2024 earnings for UPS (due to peak starting and returns season),” he said. “In any event bongdaso con continues to see declines in its core book of business, with every category of domestic showing declines in volume. This has been an ongoing significant decline over a long period of time.

Shippers with a large book of domestic air should be leveraging this.”

Source:https://www.logisticsmgmt.com/article/fedex_reports_mixed_fiscal_first_quarter_earnings_with_ground_up_3

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