FedEx earnings soar above estimates
Strong season boosts its quarterly profits
FedEx earnings soared above analysts’ estimates Tuesday on the strength of a lighter tax burden, strong demand, favorable fuel prices and higher rates.
Adjusted earnings were $3.72 per diluted share, compared to $2.30 a year earlier and $3.11 predicted by analysts. The adjusted earnings didn’t reflect the benefit of an estimated $1.15 billion cut in the company’s net deferred tax liability because of the Tax Cuts and Jobs Act passed in December.
Without the adjustment, the earnings were $7.59 a share, up from $2.07 a year earlier.
Company founder, chairman and CEO Frederick W. Smith said the outlook is rosy, but he sounded a cautionary note about President Donald Trump’s moves to place tariffs on certain imports.
“Economic growth around the world remains broadly based and we expect U.S. tax reform to continue to increase economic growth and investment. FedEx is concerned about the prospect of increased protectionist tariffs,” Smith told analysts in an earnings call.
“History has shown repeatedly that protectionism is counterproductive to economic growth. The better approach is to encourage open markets and free exchange of products and services and to reduce barriers to trade,” Smith added.
Alan B. Graf Jr., FedEx Corp. executive vice president and chief financial officer. said a 62 percent increase in adjusted earnings per share from a year earlier was “primarily” due to benefits of the tax cuts enacted by Congress in De-
sun disk/globe motif and closed lotus flower capitals, “represented the power and independence of black business,” the history says.
“The use of Egyptian imagery aligned modern success with the achievements of ancient African cultures during an era in which mainstream society reinforced negative stereotypes of African-Americans,” the history adds.
The renovation drew rave reviews from historic preservation boosters who got a sneak peek in early March.
“The building is amazing,” said Memphis Heritage Inc. Executive Director June West, whose organization brought in more than 100 people.
The design retains a central hallway that led to offices from the main entrance. It saves Tennessee marble wainscoting on walls, terrazzo flooring and millwork. Translucent glass panels on wooden office doors still list the employees who worked in the offices. A clock sign outside the entrance has been refurbished.
“I love how they are keeping the building’s main interior hallways intact and reusing the glass and wood office doors,” West said. “The natural light is going to be great. Even the basement floor has windows near the top of the exterior walls that give the basement floor an open feel.”
Tucker said the Memphis Heritage event showed the project has broad appeal.
“This building obviously has an African-American legacy to it, but that event really made the point that around the city, people have an interest in this project, and that was really gratifying to us because this building and the company were so important to the evolution of Memphis during that period from 1923 all the way till the late 1970s,” Tucker said.
The building will be a stop on the Historic Commerce Loop section of a planned Memphis Heritage Trail. The trail is under development to guide visitors to sites important in the civil rights movement, such as Clayborn Temple and the National Civil Rights Museum, as well as historically significant commercial, entertainment and residential properties.
The Universal Life project includes eco-friendly features that are expected to earn it a Leadership in Energy Efficient Design (LEED) Gold certfication, Self said.
An array of solar panels will top covered parking spaces. A green roof will collect rain water and route it to a runoff-retaining rain garden. The building’s many windows have been updated with insulating glass.
The Business Development Center will move from 555 Beale into about 11,000 square feet on street and basement levels, probably in May, Tucker said.
Self+Tucker will move from Tennessee Lofts to a light-filled, 5,000-square-foot second-floor space that once housed the Universal Life clerical pool.
“They had a large clerical pool so you had these tall windows that let a lot of natural light in,” Self said. “In many ways, it was a sustainability design. We work a lot in current designs making sure we can get a lot of daylight deep into a building. They had done that already.”
Tucker said the owners are being selective about leasing other available spaces of 2,000 to 3,000 square feet.
“We are trying to identify some tenants who can hopefully add to the synergy of the building, someone that can benefit by engaging with small businesses around entrepreneurship and business development,” Tucker said.
As anchor, the Memphis Business Development Center will house city services and programs, such as Propel and Sub to Prime, and partner organizations including the Memphis Area Minority Contractors Association, the Black Business Association and the Tennessee Small Business Development Center. Contract compliance and certification functions will remain at City Hall, Joann Massey, director of business diversity and compliance, said.
“The City Of Memphis is excited about the investment that we have made in renovating this historical building,” Massey said. “The programs and services rendered out of this building are empowered by Mayor Strickland’s commitment to equitable economic development practices for all citizens. ‘We Mean Business’ about supporting small, minority- and womenowned businesses and cultivating entrepreneurship to address the economic, business and workforce needs of our diverse community,” Massey said.
The building’s community orientation is expected to include classes and events and a partnership with a restaurateur to operate a cafe in the former basement cafeteria space.
Tucker and Self envision a gathering place where people can learn about economic development through community revitalization and sustainability.
For example, the minority contractors association office is down the hall from a conference room that can accommodate about 75 people.
“From an economic development standpoint, construction is very important,” Tucker said. “So they (MAMCA) will have plans in here that people can take a look at. Someone can come right across the hall and hold a pre-bid meeting. Again, there should be a lot of synergy around the construction industry.”
Tucker and Self are working on other projects in the vicinity as they near the finish line on Universal Life. Self said they’d like to develop apartments next door to Universal Life.
From the rooftop, they have a bird’s-eye view of other opportunities on the horizon: west toward Beale Street and FedExForum; south toward South City, a project to transform the former Foote Homes and surrounding area; and north toward the Edge district, where the Wonder Bread bakery site is being turned into offices and apartments.
“Since we are architects and we’re involved in a lot of the planning process, we want to hold different meetings that will focus specifically on empowering the community around revitalization,” Tucker said.
“Many times people don’t really understand that a project is about to take place in their community until maybe they’re having a groundbreaking ceremony or the project is getting underway, and then they’re wondering what’s going on,” Tucker said.
Reach Wayne Risher at wayne.risher@commercial appeal.com or (901) 529-2874.