Bulletin
Investor Alert

Market Pulse Archives

April 3, 2020, 10:25 a.m. EDT

FedEx remains in compliance with debt covenants, sees results hurt by increased FedEx Ground demand

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    FedEx Corp. (FDX)
  • X
    Dow Jones Transportation Average (DJT)
  • X
    Dow Jones Industrial Average (DJIA)

or Cancel Already have a watchlist? Log In

By Tomi Kilgore

FedEx Corp. /zigman2/quotes/203047719/composite FDX +0.55% said Friday that, including the recent proposed debt offering, it expects to remain in compliance with its debt covenants, but indicated there was risk that it may need to amend the covenants if addtional financing is required and results deteriorate further. The package delivery service said that although it has seen increased demand for its FedEx Ground delivery service in the U.S., as shelter-in-place measures in response to the COVID-19 pandemic has boosted demand for e-commerce, the shift in sales mix is expected to hurt margins and operating results. Results have also been impacted by "significantly weaker global economic conditions" as a result of the COVID-19 pandemic. The company's current debt covenant requires the ratio of debt to consolidated earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) to be no higher than 3.5 to 1.0; as of Februay 29, that ratio was 2.8 to 1.0. after previously announced borrowings and proposed offerings, FedEx expects to remain in compliance with the debt-ratio covenant. "However, if we secure additional financing or experience a deterioration in results of operations that would cause us not to be in compliance with the covenant, we would have to seek to amend this covenant. No assurances can be made that such amendment would be approved by our lenders," the company said in a statement. Separately, FedEx said it has implemented temporary surcharges on all international shipments, and has temporarily eliminated its money-back guarantee for all delivery services. The stock, which fell 3.7% in morning trading, has lost 25.6% year to date, while the Dow Jones Transportation Average /zigman2/quotes/210598063/realtime DJT -1.59% has dropped 32.4% and the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.58% has declined 25.7%.

/zigman2/quotes/203047719/composite
US : U.S.: NYSE
$ 131.15
+0.72 +0.55%
Volume: 3.24M
May 28, 2020 4:00p
P/E Ratio
8.64
Dividend Yield
1.98%
Market Cap
$34.07 billion
Rev. per Employee
$304,846
loading...
/zigman2/quotes/210598063/realtime
US : Dow Jones Indices
9,005.43
-145.96 -1.59%
Volume: 258.27M
May 28, 2020 5:13p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
25,400.64
-147.63 -0.58%
Volume: 378.40M
May 28, 2020 5:13p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.