FedEx CEO Fred Smith: Tax Cut & Jobs Bill will Power the Economy and Make America Corporations Great Again | Bob's Blitz

FedEx CEO Fred Smith: Tax Cut & Jobs Bill will Power the Economy and Make America Corporations Great Again

FedEx stock rose on company's earnings and a sales beat after hours yesterday. And on the earnings call, CEO Fred Smith said, "Our plans remain on target to improve operating income at the FedEx Express segment by $1.2 billion to $1.5 billion in fiscal 2020 versus fiscal 2017. And our goal remains to increase earnings, margins, cash flows and returns, and we are confident we can do so. We're encouraged by the Tax Cuts and Jobs Act legislation advancing in Congress at this very moment. This legislation offers pro-growth, pro-business tax reform solutions that will power the economy, increase business investment, expand job opportunities, and enhance incomes and improve U.S. competitiveness."


So turning to tax reform. I know there are a lot of questions about possible changes for us as a result of that. So let me cover as much as I can. We welcome the possibility of lower corporate tax rate, a territorial tax system and 100% expensing of qualifying capital if these provisions are signed into law. Any capital acceleration for FedEx would primarily be for replacement of equipment and technology. If tax reform is enacted, we expect our uses of cash from tax savings would include: optimizing CapEx to capture the benefits of 100% expensing to further grow the business and create even more upward mobility for our team members; funding our pension plans beyond our current forecast; increasing the dividend as our board may approve; continuing our stock repurchase program at our current modest levels; and investing in M&A where it makes sense. As Raj will discuss, U.S. GDP could increase materially next year as a result of U.S. tax reform. If this occurs, we would likely increase capital expenditures and hiring to accommodate the additional volumes triggered from this incremental GDP growth.

If the Tax Cuts and Jobs Act is enacted as set forth in the Joint Conference Report, we estimate our earnings per share could increase by $4.40 to $5.50 per diluted share for FY '18 before mark-to-market year-end pension accounting adjustments, primarily due to the revaluation of our net deferred tax liabilities. This range also includes an estimated $0.85 to $1 per diluted share due to a lower tax rate on fiscal 2018 earnings for the last 5 months of fiscal '18. As we have stated many times in the past, we would like to see a level playing field for corporate taxes. This tax reform bill would go a long way in making U.S.-based corporations more competitive globally.

The WSJ summed up: "With stronger-than-expected revenue, FedEx now sees adjusted earnings for the 2018 fiscal year ending May 31 of $12.70 to $13.30 a share, up from an earlier estimate of $12 to $12.80.

"That could jump to $17.10 to $18.80 a share if the tax plan is passed, primarily due to an accounting change that would reduce FedEx’s deferred tax liabilities. The lower corporate tax rate would account for about 85 cents to $1 of the total."

6 years ago under the oppressive reign of Barack Obama, Smith talked reform.

And now it's about to actually happen. Idiots like Chuck Schumer can only lie for a bit longer because once 90% of the public see their taxes lower and take home pay higher? These tax cuts will unleash forces that will destroy the Democratic Party.

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