分组1 - FedEx reported quarterly earnings of $4.51 per share, missing the Zacks Consensus Estimate of $4.65 per share, but showing an increase from $3.86 per share a year ago, resulting in an earnings surprise of -3.01% [1] - The company posted revenues of $22.16 billion for the quarter, surpassing the Zacks Consensus Estimate by 1.25% and showing growth from $21.7 billion year-over-year [2] - FedEx shares have declined approximately 12.2% since the beginning of the year, compared to a decline of -3.5% for the S&P 500 [3] 分组2 - The earnings outlook for FedEx is mixed, with the current consensus EPS estimate for the coming quarter at $6.83 on revenues of $22.2 billion, and $19.27 on revenues of $87.64 billion for the current fiscal year [7] - The Zacks Industry Rank indicates that the Transportation - Air Freight and Cargo sector is currently in the bottom 16% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - FedEx has surpassed consensus EPS estimates two times over the last four quarters, while it has topped consensus revenue estimates only once [2]

FedEx reported solid revenue growth in its fiscal 2025 third quarter, but fell slightly short of earnings per share expectations.FedEx (FDX -0.57%), the global shipping and logistics company, released its earnings report for the third quarter of its fiscal 2025 on March 20. The company reported a slight miss on adjusted earnings per share (EPS), posting $4.51 against an expected $4.56. However, it achieved commendable year-over-year growth of 16.8% from $3.86 in the prior-year period. Revenue of $22.2 billi ...

Financial Data and Key Metrics Changes - Revenue increased by 2% year-over-year for the first time this fiscal year, with adjusted operating income growth of 12% compared to last year [7][35] - DRIVE savings reached $600 million in the quarter, contributing to the overall financial performance [7][39] - Adjusted EPS growth was reported at 17% year-over-year [35] Business Line Data and Key Metrics Changes - At Federal Express, revenue increased by 3%, driven by higher volume in deferred services [22] - FedEx Freight experienced a 5% revenue decline due to lower volumes and fuel surcharges [21][26] - Ground volumes increased by 7%, supported by both B2B and B2C growth [24] Market Data and Key Metrics Changes - International export package volumes increased by 8% due to growth in the international economy [24] - Average daily pounds for international priority freight increased by 3% [25] - U.S. Domestic package yield remained flat year-over-year, with variations in different service segments [27] Company Strategy and Development Direction - The company is focused on creating a more flexible, efficient, and intelligent network, with ongoing initiatives like Network 2.0 and DRIVE [11][15] - The acquisition of RouteSmart Technologies aims to enhance route optimization capabilities [17] - The company is targeting profitable growth in healthcare and e-commerce segments, with significant new business expected in healthcare [31][32] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the uncertain demand environment and inflationary pressures, leading to a revised adjusted EPS outlook of $18 to $18.6 for FY 2025 [15][40] - The company remains confident in its transformation initiatives and their potential to create long-term value [18][41] - Management noted that the industrial economy continues to pressure B2B volumes, but they are well-positioned for recovery [8][39] Other Important Information - The company completed approximately $500 million in share repurchases in Q3, with a target of returning $3.8 billion to shareholders in FY 2025 [44] - Capital expenditures for FY 2025 are now projected at $4.9 billion, down from $5.2 billion last year [45] - The separation of FedEx Freight is progressing, with a focus on maintaining operational efficiency during the transition [47][48] Q&A Session Summary Question: Impact of inflation on guidance change - Management acknowledged that inflation has been a consistent factor affecting margins and will continue to monitor it closely [51] Question: FedEx's exposure to de minimis shipments - Management confirmed readiness to adapt to changes in de minimis regulations and is working closely with customers to prepare [53][56] Question: Thoughts on fiscal 2026 outlook - Management indicated that while the macro environment may not improve significantly in the first half of FY 2026, they expect to benefit from DRIVE initiatives and continued focus on profitable growth [62] Question: Update on dedicated sales force build-out - Management reported progress in establishing a dedicated sales team focused on profitable growth and improving coverage for small and medium customers [71][73] Question: Pricing environment and deferred volumes - Management noted that the pricing environment remains rational, with improvements in yield growth across various segments [102][105]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents FedEx Corporation's unaudited condensed consolidated financial statements, detailing financial position, performance, and cash flows, and notes on strategic initiatives Q3 FY2025 Key Financials (Three Months Ended Feb 28, 2025) | Financial Metric | Amount (in millions) | YoY Change | | :--- | :--- | :--- | | **Revenue** | $22,160 | +2.0% | | **Operating Income** | $1,292 | +4.0% | | **Net Income** | $909 | +3.4% | | **Diluted EPS** | $3.76 | +7.1% | YTD FY2025 Key Financials (Nine Months Ended Feb 28, 2025) | Financial Metric | Amount (in millions) | YoY Change | | :--- | :--- | :--- | | **Revenue** | $65,706 | +0.2% | | **Operating Income** | $3,424 | -14.5% | | **Net Income** | $2,444 | -14.5% | | **Diluted EPS** | $9.99 | -11.7% | - Announced the planned spin-off of FedEx Freight, expected to be completed by June 2026, creating a new publicly traded company[29](index=29&type=chunk)[108](index=108&type=chunk) - On June 1, 2024, FedEx Ground and FedEx Corporate Services were merged into Federal Express as part of the 'one FedEx' consolidation plan, making Federal Express and FedEx Freight the two reportable segments[27](index=27&type=chunk)[107](index=107&type=chunk) - The Board of Directors approved changing the fiscal year-end from May 31 to December 31, effective June 1, 2026[32](index=32&type=chunk)[108](index=108&type=chunk) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets, liabilities, and common stockholders' investment decreased, primarily driven by reduced cash and treasury stock purchases Balance Sheet Summary (in millions) | Account | Feb 28, 2025 (Unaudited) | May 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $17,214 | $18,207 | | **Net Property and Equipment** | $40,964 | $41,491 | | **Total Assets** | $85,043 | $87,007 | | **Total Current Liabilities** | $13,896 | $13,355 | | **Long-Term Debt, less current portion** | $19,530 | $20,135 | | **Total Liabilities** | $58,335 | $59,425 | | **Total Common Stockholders' Investment** | $26,708 | $27,582 | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 FY2025 saw revenue and net income growth, while nine-month results showed flat revenue and a decline in net income, impacted by rising optimization costs Income Statement Highlights (in millions) | Metric | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $22,160 | $21,738 | $65,706 | $65,584 | | **Operating Income** | $1,292 | $1,243 | $3,424 | $4,004 | | **Net Income** | $909 | $879 | $2,444 | $2,857 | | **Diluted EPS** | $3.76 | $3.51 | $9.99 | $11.31 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased due to working capital changes, while investing cash outflow reduced from lower capital expenditures, and financing cash outflow increased due to stock repurchases Cash Flow Summary (Nine Months Ended, in millions) | Activity | Feb 28, 2025 | Feb 29, 2024 | | :--- | :--- | :--- | | **Cash from Operating Activities** | $4,517 | $5,614 | | **Cash used in Investing Activities** | $(2,660) | $(3,966) | | **Cash used in Financing Activities** | $(3,172) | $(2,834) | | **Net Decrease in Cash** | $(1,366) | $(1,212) | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies and events, including the 'one FedEx' consolidation, planned spin-off, fiscal year-end change, optimization costs, and recent acquisitions and share repurchases - Business optimization costs under the DRIVE program were **$179 million** for Q3 and **$633 million** for the nine months of FY2025, primarily for severance and professional services[41](index=41&type=chunk) - In January 2025, the company commenced debt exchange offers for **$16.2 billion** of senior notes in connection with the planned FedEx Freight separation, successfully completing them in February 2025[76](index=76&type=chunk)[78](index=78&type=chunk) - Acquired RouteSmart Technologies, Inc. on February 4, 2025, for **$113 million** in FedEx common shares and cash[79](index=79&type=chunk) - Repurchased **8.9 million shares** for **$2.5 billion** during the nine months ended February 28, 2025, with **$2.6 billion** remaining available under the 2024 stock repurchase program as of that date[62](index=62&type=chunk) [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) Management discusses Q3 operating income growth driven by DRIVE savings and yields, offset by nine-month declines, while navigating macroeconomic pressures through cost reduction and cautious capital expenditure plans - Q3 operating income increased **4%** to **$1.29 billion**, while nine-month operating income decreased **14%** to **$3.42 billion**[116](index=116&type=chunk)[117](index=117&type=chunk) - Positive impacts from DRIVE initiatives, increased base yields, and higher U.S. ground/international export package demand were partially offset by higher purchased transportation/wage rates, the expiration of the USPS contract, and increased business optimization costs[117](index=117&type=chunk) - The company is experiencing pressure on demand, particularly for priority services, due to macroeconomic conditions like inflation, high interest rates, and uncertainty in international trade[111](index=111&type=chunk)[112](index=112&type=chunk)[140](index=140&type=chunk) - FY2025 capital expenditures are projected to be approximately **$4.9 billion**, down from **$5.2 billion** in FY2024, reflecting reduced capital intensity[141](index=141&type=chunk)[187](index=187&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Q3 FY25 consolidated revenue and operating income increased, driven by Federal Express, despite a decline in FedEx Freight and rising purchased transportation and business optimization costs Segment Operating Income (in millions) | Segment | Q3 2025 | Q3 2024 | % Change | 9M 2025 | 9M 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Federal Express** | $1,294 | $1,173 | 10% | $3,299 | $3,514 | (6%) | | **FedEx Freight** | $261 | $341 | (23%) | $1,012 | $1,314 | (23%) | | **Corporate, other** | $(263) | $(271) | 3% | $(887) | $(824) | (8%) | | **Consolidated** | $1,292 | $1,243 | 4% | $3,424 | $4,004 | (14%) | - Purchased transportation expense increased **5%** in Q3 due to higher rates and increased use of commercial linehaul to support international economy volume growth[129](index=129&type=chunk) - Fuel expense decreased **22%** in Q3 due to lower fuel prices and usage[130](index=130&type=chunk) [Reportable Segments Analysis](index=35&type=section&id=REPORTABLE%20SEGMENTS) Federal Express operating income grew due to higher yields and volume, while FedEx Freight's declined due to lower shipments and surcharges, reflecting differing segment performance amid market conditions - Federal Express Q3 revenue increased **3%** to **$19.2 billion**, with operating income up **10%** to **$1.3 billion** and margin improving to **6.7%**[155](index=155&type=chunk)[161](index=161&type=chunk) - FedEx Freight Q3 revenue decreased **5%** to **$2.1 billion**, with operating income down **23%** to **$261 million** and margin contracting to **12.5%**[165](index=165&type=chunk)[168](index=168&type=chunk) - At Federal Express, a **48% YoY increase** in International Economy average daily package volume was a key growth driver in Q3[157](index=157&type=chunk)[160](index=160&type=chunk) - At FedEx Freight, average daily shipments decreased **5%** in Q3, reflecting reduced demand from macroeconomic conditions[165](index=165&type=chunk)[167](index=167&type=chunk) [Financial Condition](index=44&type=section&id=FINANCIAL%20CONDITION) The company maintains strong liquidity despite decreased operating cash flow, driven by reduced capital expenditures and significant stock repurchases, with future capex projected at $4.9 billion Liquidity and Capital Summary (Nine Months Ended Feb 28, 2025) | Metric | Amount (in millions) | | :--- | :--- | | **Cash and cash equivalents (end of period)** | $5,135 | | **Cash provided by operating activities** | $4,517 | | **Capital expenditures** | $(2,582) | | **Purchases of common stock** | $(2,517) | - Capital expenditures decreased **35%** in the first nine months of FY25, primarily due to lower spending on aircraft, facilities, and vehicles[171](index=171&type=chunk)[175](index=175&type=chunk) - The company maintains investment-grade credit ratings from S&P (**BBB, stable**) and Moody's (**Baa2, stable**)[194](index=194&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk were reported, with primary exposures to foreign currency and fuel prices, the latter largely mitigated by surcharges - The company's primary market risks are foreign currency exchange rates and fuel prices[205](index=205&type=chunk)[207](index=207&type=chunk) - Fuel price risk is largely mitigated through indexed fuel surcharges[207](index=207&type=chunk) [Controls and Procedures](index=56&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Disclosure controls and procedures were deemed effective as of the end of the reporting period[208](index=208&type=chunk) - No material changes were made to internal controls over financial reporting during the quarter[209](index=209&type=chunk) [PART II. OTHER INFORMATION](index=56&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=56&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is defending employment-related lawsuits and settled a negligence case, with no expected material adverse effect from ongoing legal proceedings - FedEx is defending lawsuits related to the employment status of drivers for its service providers[95](index=95&type=chunk) - In February 2025, the company settled a negligence and wrongful death lawsuit related to a driver for an amount below the previously established immaterial accrual[96](index=96&type=chunk) [Risk Factors](index=56&type=section&id=ITEM%201A.%20Risk%20Factors) Key risk factors include uncertainties surrounding the planned FedEx Freight spin-off, potential dis-synergies, management distraction, and the increasing threat of sophisticated data breaches and technology disruptions - The planned spin-off of FedEx Freight faces risks including failure to complete, potential for unfavorable terms, significant costs, management distraction, and no guarantee of achieving intended strategic benefits[212](index=212&type=chunk)[213](index=213&type=chunk) - The company faces increasing risk from sophisticated data breaches and cyberattacks that could disrupt operations, compromise sensitive information, and harm its reputation, with emerging technologies like AI potentially heightening these risks[217](index=217&type=chunk)[225](index=225&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) FedEx issued unregistered shares for the RouteSmart Technologies acquisition and repurchased 1.8 million shares under its stock repurchase program during Q3 FY2025 - Issued **359,052 unregistered shares** valued at **~$90 million** for the acquisition of RouteSmart Technologies[226](index=226&type=chunk) Q3 FY2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Dec. 1-31, 2024 | 540,000 | $276.78 | | Jan. 1-31, 2025 | 1,258,310 | $276.03 | | Feb. 1-28, 2025 | — | $— | | **Total** | **1,798,310** | **N/A** | [Exhibits](index=64&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate governance documents, debt indentures, disability plans, and required certifications

[Executive Summary & Consolidated Results](index=1&type=section&id=Executive%20Summary%20%26%20Consolidated%20Results) This section provides an overview of FedEx's third-quarter fiscal 2025 consolidated financial results and key operational highlights [Third Quarter Fiscal 2025 Consolidated Financial Performance](index=1&type=section&id=Third%20Quarter%20Fiscal%202025%20Consolidated%20Financial%20Performance) FedEx reported improved profitability in Q3 Fiscal 2025, with consolidated revenue increasing by 2% year-over-year to $22.2 billion. Operating income saw a 4% increase on a GAAP basis and 11% on an adjusted basis, driven by cost reduction benefits from the DRIVE program, higher base yield across transportation segments, and increased volume at Federal Express Third Quarter Fiscal 2025 FedEx Corporation (Consolidated) | Metric | Fiscal 2025 (As Reported) | Fiscal 2025 (Adjusted) | Fiscal 2024 (As Reported) | Fiscal 2024 (Adjusted) | | :---------------- | :------------------------ | :--------------------- | :------------------------ | :--------------------- | | Revenue | $22.2 billion | $22.2 billion | $21.7 billion | $21.7 billion | | Operating income | $1.29 billion | $1.51 billion | $1.24 billion | $1.36 billion | | Operating margin | 5.8% | 6.8% | 5.7% | 6.2% | | Net income | $0.91 billion | $1.09 billion | $0.88 billion | $0.97 billion | | Diluted EPS | $3.76 | $4.51 | $3.51 | $3.86 | - Consolidated operating results improved due to cost reduction benefits from DRIVE program initiatives, higher base yield at each transportation segment, and higher volume at Federal Express[2](index=2&type=chunk) [Segment Operating Highlights](index=1&type=section&id=Segment%20Operating%20Highlights) Federal Express segment operating results improved significantly, driven by cost reductions, higher base yield, and increased U.S. and international export volume. Conversely, FedEx Freight segment operating results decreased due to lower fuel surcharges, reduced weight per shipment, and fewer shipments, despite higher base yield [Federal Express Segment Performance](index=1&type=section&id=Federal%20Express%20Segment%20Performance) This section details the factors driving the improved operating results of the Federal Express segment - Federal Express segment operating results improved during the quarter, driven by cost reduction benefits from DRIVE, higher base yield, and increased U.S. and international export volume[3](index=3&type=chunk) - These positive factors were partially offset by higher wage and purchased transportation rates, as well as the expiration of the U.S. Postal Service contract[4](index=4&type=chunk) [FedEx Freight Segment Performance](index=2&type=section&id=FedEx%20Freight%20Segment%20Performance) This section outlines the factors contributing to the decreased operating results of the FedEx Freight segment - FedEx Freight segment operating results decreased during the quarter due to lower fuel surcharges, reduced weight per shipment, and fewer shipments, partially offset by higher base yield[4](index=4&type=chunk) [Share Repurchase Program](index=2&type=section&id=Share%20Repurchase%20Program) FedEx completed its $2.5 billion fiscal 2025 share repurchase plan by repurchasing $0.5 billion in shares during the quarter, acquiring approximately 1.8 million shares. This activity positively impacted third-quarter diluted EPS by $0.12 - FedEx completed its **$2.5 billion** fiscal 2025 share repurchase plan with **$0.5 billion** in share repurchases via open market transactions during the quarter[6](index=6&type=chunk) - Approximately **1.8 million shares** were repurchased, benefiting third quarter results by **$0.12 per diluted share**[6](index=6&type=chunk) - As of February 28, 2025, **$2.6 billion** remained available for repurchases under the company's 2024 stock repurchase authorization[6](index=6&type=chunk) [Cash Position](index=2&type=section&id=Cash%20Position) As of February 28, 2025, FedEx reported a cash on-hand balance of $5.1 billion - Cash on-hand as of February 28, 2025 was **$5.1 billion**[7](index=7&type=chunk) [Fiscal Year 2025 Outlook](index=2&type=section&id=Fiscal%20Year%202025%20Outlook) This section details FedEx's revised and reaffirmed fiscal 2025 forecasts and management's commentary on the outlook [Revised Fiscal 2025 Forecasts](index=2&type=section&id=Revised%20Fiscal%202025%20Forecasts) FedEx has revised its fiscal 2025 outlook, now expecting revenue to be flat to slightly down year over year, a reduction from the prior forecast. Diluted EPS forecasts have also been lowered, both before and after excluding specific adjustments, and capital spending is reduced to $4.9 billion - **Revenue:** Revised to flat to slightly down year over year (prior forecast: approximately flat)[9](index=9&type=chunk)[10](index=10&type=chunk) - **Diluted EPS (before MTM retirement plans accounting adjustments):** Revised to **$15.15 to $15.75** (prior forecast: $16.45 to $17.45)[9](index=9&type=chunk)[10](index=10&type=chunk) - **Diluted EPS (excluding business optimization, international regulatory/legal, and FedEx Freight spin-off costs):** Revised to **$18.00 to $18.60** (prior forecast: $19.00 to $20.00)[9](index=9&type=chunk)[10](index=10&type=chunk) - **Capital spending:** Revised to **$4.9 billion** (prior forecast: $5.2 billion), prioritizing network optimization, efficiency, fleet, facility modernization, and automation[9](index=9&type=chunk)[10](index=10&type=chunk) [Reaffirmed Fiscal 2025 Forecasts](index=3&type=section&id=Reaffirmed%20Fiscal%202025%20Forecasts) Despite revisions, FedEx reaffirmed its forecast for $2.2 billion in permanent cost reductions from the DRIVE transformation program and an effective tax rate of approximately 24.0% prior to mark-to-market retirement plans accounting adjustments - **Permanent cost reductions from DRIVE transformation program:** **$2.2 billion**[15](index=15&type=chunk) - **Effective Tax Rate (ETR) prior to MTM retirement plans accounting adjustments:** Approximately **24.0%**[15](index=15&type=chunk) - These forecasts assume the company's current economic forecast and fuel price expectations, and no additional adverse economic, geopolitical, or international trade-related developments[10](index=10&type=chunk) [Management Commentary on Outlook](index=3&type=section&id=Management%20Commentary%20on%20Outlook) Management highlighted strong progress in cost reduction and operational performance, particularly at Federal Express, supporting income growth. However, the revised outlook reflects continued weakness and uncertainty in the U.S. industrial economy, which is constraining demand for business-to-business services - The revised earnings outlook reflects continued weakness and uncertainty in the U.S. industrial economy, constraining demand for business-to-business services[11](index=11&type=chunk) - Management remains confident in executing transformation initiatives and creating stockholder value despite the uncertainty[11](index=11&type=chunk) [Corporate Information & Disclosures](index=3&type=section&id=Corporate%20Information%20%26%20Disclosures) This section provides FedEx's corporate overview, investor information, and forward-looking statements and risk disclosures [Corporate Overview](index=3&type=section&id=Corporate%20Overview) FedEx Corp. is a global provider of transportation, e-commerce, and business services with annual revenue of $88 billion. The company employs over 500,000 individuals and aims for carbon-neutral operations by 2040 - FedEx Corp. provides transportation, e-commerce, and business services globally, with annual revenue of **$88 billion**[12](index=12&type=chunk) - The company employs over **500,000 people** and is committed to achieving carbon-neutral operations by **2040**[12](index=12&type=chunk) [Investor Information](index=3&type=section&id=Investor%20Information) FedEx provides additional operating data and SEC filings on its investor relations website, investors.fedex.com, which is considered a source of material information for investors, media, and other interested parties - Additional information and operating data are available in the company's annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books[13](index=13&type=chunk) - The Investor Relations page of the company's website, investors.fedex.com, contains significant information about FedEx, including SEC filings and financial and other information for investors, which could be deemed material[14](index=14&type=chunk)[16](index=16&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section outlines various forward-looking statements made in the press release, including expected cost savings, network optimization, the planned FedEx Freight spin-off, and future financial targets. It also details potential risks and uncertainties that could cause actual results to differ materially from these statements, such as economic conditions, implementation challenges, data breaches, and geopolitical events - The press release contains forward-looking statements regarding expected cost savings, network optimization, the planned tax-free spin-off of FedEx Freight, future financial targets, and business strategies[17](index=17&type=chunk) - Potential risks and uncertainties include economic conditions, ability to implement business strategies and achieve cost reduction initiatives, data breaches, successful implementation of the FedEx Freight Spin-off, changes in trade policies, and various operational and external factors[17](index=17&type=chunk)[18](index=18&type=chunk) - FedEx does not undertake any obligation to update or revise any forward-looking statement[18](index=18&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=6&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section explains non-GAAP financial measures, providing detailed reconciliations for consolidated, segment, and EPS forecasts [Purpose and Definition of Non-GAAP Measures](index=6&type=section&id=Purpose%20and%20Definition%20of%20Non-GAAP%20Measures) FedEx supplements its GAAP financial reporting with non-GAAP measures to provide a clearer view of core operating performance by excluding specific items. These adjustments primarily include business optimization costs, international regulatory and legacy FedEx Ground legal matters, and costs related to the planned FedEx Freight spin-off, which are considered unrelated to ongoing business operations - Non-GAAP financial measures are used to supplement GAAP reporting, excluding items like business optimization costs, international regulatory and legacy FedEx Ground legal matters, and FedEx Freight spin-off costs[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - These exclusions are made because they are unrelated to core operating performance and assist investors in assessing trends in underlying businesses[24](index=24&type=chunk)[26](index=26&type=chunk) - FedEx is unable to forecast mark-to-market (MTM) retirement plans accounting adjustments for fiscal 2025, making a GAAP EPS or ETR outlook impracticable[8](index=8&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [Third Quarter Fiscal 2025 and 2024 Reconciliations](index=9&type=section&id=Third%20Quarter%20Fiscal%202025%20and%202024%20Reconciliations) This section provides detailed reconciliations of GAAP to non-GAAP financial measures for both consolidated and Federal Express segment results for the third quarters of fiscal 2025 and 2024, highlighting the impact of business optimization costs, international regulatory and legal matters, and spin-off costs on operating income, net income, and diluted EPS [Consolidated Results Reconciliation](index=9&type=section&id=Consolidated%20Results%20Reconciliation) This section presents the reconciliation of GAAP to non-GAAP consolidated financial results for Q3 Fiscal 2025 and 2024 Third Quarter Fiscal 2025 FedEx Corporation (Consolidated) | Dollars in millions, except EPS | Operating Income | Margin | Income Taxes | Net Income | Diluted Earnings Per Share | | :------------------------------ | :--------------- | :----- | :----------- | :--------- | :------------------------- | | GAAP measure | $1,292 | 5.8% | $272 | $909 | $3.76 | | Business optimization costs | 179 | 0.8% | 42 | 137 | 0.56 | | International regulatory and legacy FedEx Ground legal matters | 38 | 0.2% | 9 | 29 | 0.12 | | FedEx Freight spin-off costs | 5 | 0.0% | 5 | 17 | 0.07 | | Non-GAAP measure | $1,514 | 6.8% | $328 | $1,092 | $4.51 | Third Quarter Fiscal 2024 FedEx Corporation (Consolidated) | Dollars in millions, except EPS | Operating Income | Margin | Income Taxes | Net Income | Diluted Earnings Per Share | | :------------------------------ | :--------------- | :----- | :----------- | :--------- | :------------------------- | | GAAP measure | $1,243 | 5.7% | $304 | $879 | $3.51 | | Business optimization costs | 114 | 0.5% | 27 | 87 | 0.35 | | Non-GAAP measure | $1,357 | 6.2% | $331 | $966 | $3.86 | [Federal Express Segment Reconciliation](index=9&type=section&id=Federal%20Express%20Segment%20Reconciliation) This section presents the reconciliation of GAAP to non-GAAP Federal Express segment results for Q3 Fiscal 2025 and 2024 Third Quarter Fiscal 2025 Federal Express Segment | Dollars in millions | Operating Income | Margin | | :------------------ | :--------------- | :----- | | GAAP measure | $1,294 | 6.7% | | Business optimization costs | 92 | 0.5% | | International regulatory and legacy FedEx Ground legal matters | 38 | 0.2% | | Non-GAAP measure | $1,424 | 7.4% | Third Quarter Fiscal 2024 Federal Express Segment | Dollars in millions | Operating Income | Margin | | :------------------ | :--------------- | :----- | | GAAP measure | $1,173 | 6.3% | | Business optimization costs | 45 | 0.2% | | Non-GAAP measure | $1,218 | 6.5% | [Fiscal 2025 EPS Forecast Reconciliation](index=10&type=section&id=Fiscal%202025%20EPS%20Forecast%20Reconciliation) The fiscal 2025 diluted EPS forecast is presented on a non-GAAP basis, excluding MTM retirement plans accounting adjustments and estimated costs related to business optimization, international regulatory/legal matters, and the FedEx Freight spin-off. Total adjustments before tax effect are $913 million, resulting in a $2.85 per share impact Fiscal 2025 Diluted Earnings Per Share Forecast Adjustments | Dollars in millions, except EPS | Adjustments | Diluted Earnings Per Share | | :------------------------------ | :---------- | :------------------------- | | Diluted earnings per share before MTM retirement plans accounting adjustments (non-GAAP) | | $15.15 to $15.75 | | Business optimization costs | $850 | | | International regulatory and legacy FedEx Ground legal matters | 38 | | | FedEx Freight spin-off costs | 25 | | | Total adjustments | $913 | | | Income tax effect | (214) | | | Net of tax effect | $699 | 2.85 | | Diluted earnings per share with adjustments (non-GAAP) | | $18.00 to $18.60 | - The MTM retirement plans accounting adjustments are impracticable to calculate and are excluded from the forecast[38](index=38&type=chunk) [Detailed Financial Highlights](index=11&type=section&id=Detailed%20Financial%20Highlights) This section provides detailed consolidated financial highlights, balance sheets, cash flow, and segment performance metrics [Consolidated Financial Highlights](index=11&type=section&id=Consolidated%20Financial%20Highlights) Consolidated revenue for Q3 FY25 increased by 2% to $22,160 million, while operating income rose 4% to $1,292 million. Net income increased by 3% to $909 million, and diluted EPS grew 7% to $3.76. For the nine months, revenue was flat, operating income decreased 14%, and net income decreased 14% Consolidated Financial Highlights (Q3 FY25 vs. Q3 FY24) | Metric (Millions) | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | Total Revenue | $22,160 | $21,738 | 2% | | Total Operating Expenses | $20,868 | $20,495 | 2% | | Total Operating Income | $1,292 | $1,243 | 4% | | Net Income | $909 | $879 | 3% | | Diluted Earnings Per Share | $3.76 | $3.51 | 7% | | Capital Expenditures | $997 | $1,379 | (28%) | Consolidated Financial Highlights (Nine Months FY25 vs. Nine Months FY24) | Metric (Millions) | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | Total Revenue | $65,706 | $65,584 | —% | | Total Operating Expenses | $62,282 | $61,580 | 1% | | Total Operating Income | $3,424 | $4,004 | (14%) | | Net Income | $2,444 | $2,857 | (14%) | | Diluted Earnings Per Share | $9.99 | $11.31 | (12%) | | Capital Expenditures | $2,582 | $3,974 | (35%) | [Condensed Consolidated Balance Sheets](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of February 28, 2025, total assets decreased to $85,043 million from $87,007 million at May 31, 2024. Current assets decreased, primarily due to a reduction in cash and cash equivalents. Total liabilities also decreased, while common stockholders' investment saw a slight reduction Condensed Consolidated Balance Sheets (Selected Items) | Metric (Millions) | Feb 28, 2025 | May 31, 2024 | | :---------------- | :----------- | :----------- | | Cash and cash equivalents | $5,135 | $6,501 | | Total current assets | $17,214 | $18,207 | | Net property and equipment | $40,964 | $41,491 | | Total assets | $85,043 | $87,007 | | Total current liabilities | $13,896 | $13,355 | | Long-Term Debt, Less Current Portion | $19,530 | $20,135 | | Total common stockholders' investment | $26,708 | $27,582 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended February 28, 2025, cash provided by operating activities decreased to $4,517 million from $5,614 million in the prior year. Cash used in investing activities also decreased significantly, while cash used in financing activities increased, primarily due to higher common stock repurchases and dividends paid Condensed Consolidated Statements of Cash Flows (Nine Months) | Metric (Millions) | Feb 28, 2025 | Feb 29, 2024 | | :---------------- | :----------- | :----------- | | Net income | $2,444 | $2,857 | | Cash provided by operating activities | $4,517 | $5,614 | | Cash used in investing activities | $(2,660) | $(3,966) | | Cash used in financing activities | $(3,172) | $(2,834) | | Net decrease in cash and cash equivalents | $(1,366) | $(1,212) | | Cash and cash equivalents at end of period | $5,135 | $5,644 | [Federal Express Segment Detailed Highlights](index=14&type=section&id=Federal%20Express%20Segment%20Detailed%20Highlights) The Federal Express segment reported a 3% increase in total revenue for Q3 FY25, reaching $19,181 million, with operating income up 10% to $1,294 million. Operating margin improved to 6.7%. Key drivers included strong growth in U.S. ground and international economy package revenue, alongside an 8% increase in total international export average daily package volume [Federal Express Segment Financials](index=14&type=section&id=Federal%20Express%20Segment%20Financials) This section provides a detailed financial overview of the Federal Express segment, including revenue, expenses, and operating income Federal Express Segment Financials (Q3 FY25 vs. Q3 FY24) | Metric (Millions) | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | Total Revenue | $19,181 | $18,672 | 3% | | Operating expenses | $17,887 | $17,499 | 2% | | Operating income | $1,294 | $1,173 | 10% | | Operating margin | 6.7% | 6.3% | 40 bps | - U.S. ground package revenue increased **7%** to **$8,986 million**[46](index=46&type=chunk) - International economy package revenue increased **32%** to **$1,465 million**[46](index=46&type=chunk) - U.S. freight revenue decreased **55%** to **$286 million**, largely due to the USPS contract expiration[46](index=46&type=chunk) [Federal Express Segment Operating Statistics](index=15&type=section&id=Federal%20Express%20Segment%20Operating%20Statistics) This section presents key operating statistics for the Federal Express segment, including average daily package volume and yield Federal Express Segment Average Daily Package Volume (ADV) (Q3 FY25 vs. Q3 FY24) | Package Type | Feb 28, 2025 (000s) | Feb 29, 2024 (000s) | Percent Change | | :---------------- | :------------------ | :------------------ | :------------- | | U.S. ground home delivery/economy | 7,887 | 7,090 | 11% | | Total U.S. domestic ADV | 14,818 | 14,017 | 6% | | International economy | 583 | 393 | 48% | | Total international export ADV | 1,141 | 1,056 | 8% | | Total ADV | 17,867 | 16,956 | 5% | Federal Express Segment Revenue per Package (Yield) (Q3 FY25 vs. Q3 FY24) | Package Type | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | U.S. priority | $26.44 | $25.20 | 5% | | International priority | $59.65 | $55.48 | 8% | | International economy | $39.92 | $44.71 | (11%) | - Total average daily freight pounds decreased **18%** to **17,676 (000s)**[49](index=49&type=chunk) - U.S. freight average daily pounds decreased **64%** to **2,201 (000s)**[49](index=49&type=chunk) - U.S. freight revenue per pound (yield) increased **23%** to **$2.06**[49](index=49&type=chunk) [FedEx Freight Segment Detailed Highlights](index=16&type=section&id=FedEx%20Freight%20Segment%20Detailed%20Highlights) The FedEx Freight segment experienced a 5% decrease in revenue to $2,089 million and a 23% decline in operating income to $261 million for Q3 FY25, resulting in a 300 basis point drop in operating margin to 12.5%. This was primarily driven by a 5% decrease in total average daily shipments and a 3% reduction in composite weight per shipment [FedEx Freight Segment Financials](index=16&type=section&id=FedEx%20Freight%20Segment%20Financials) This section provides a detailed financial overview of the FedEx Freight segment, including revenue, expenses, and operating income FedEx Freight Segment Financials (Q3 FY25 vs. Q3 FY24) | Metric (Millions) | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | Revenue | $2,089 | $2,205 | (5%) | | Operating expenses | $1,828 | $1,864 | (2%) | | Operating income | $261 | $341 | (23%) | | Operating margin | 12.5% | 15.5% | (300 bps) | [FedEx Freight Segment Operating Statistics](index=16&type=section&id=FedEx%20Freight%20Segment%20Operating%20Statistics) This section presents key operating statistics for the FedEx Freight segment, including average daily shipments and revenue per shipment FedEx Freight Segment Operating Statistics (Q3 FY25 vs. Q3 FY24) | Metric | Feb 28, 2025 | Feb 29, 2024 | Percent Change | | :---------------- | :----------- | :----------- | :------------- | | Total average daily shipments (000s) | 85.1 | 89.2 | (5%) | | Composite weight per shipment (lbs) | 917 | 946 | (3%) | | Composite revenue per shipment | $375.81 | $379.26 | (1%) | | Composite revenue per hundredweight | $41.00 | $40.10 | 2% |

Core Insights - Elemica has achieved FedEx's Compatible Platinum Tier, recognizing its ProcessWeaver solution for shipping automation and multi-carrier connectivity [1][2][3] - The FedEx Compatible Program honors technology providers that integrate seamlessly with FedEx services, emphasizing performance and customer satisfaction [2] - ProcessWeaver by Elemica is endorsed by Gartner as a leading multi-carrier shipping execution system, offering ease of use and real-time visibility [3] Company Overview - Elemica is a leading provider of Digital Supply Chain Management solutions, focusing on multi-enterprise collaboration for process manufacturing industries [5] - The company's solutions enhance supply chain performance by automating information flows and connecting manufacturers with suppliers and logistics providers [5] Product Features - Seamless integration with FedEx allows businesses to automate shipments directly within Elemica's platform, improving order fulfillment [6] - Optimized shipping workflows reduce processing time, leading to faster and more reliable deliveries [6] - Real-time tracking capabilities enhance shipment visibility, providing a better logistics experience for customers [6] - Intelligent shipping automation helps reduce costs by selecting the most efficient shipping methods [6] - The integration supports high-volume multi-modal shipping, suitable for complex global supply chains [6]

Core Viewpoint - FedEx Corporation is expected to report its third-quarter fiscal 2025 results on March 20, 2025, with a consensus estimate indicating a potential earnings increase despite recent downward revisions in expectations [1][2]. Financial Performance - The Zacks Consensus Estimate for earnings per share in Q3 fiscal 2025 is $4.66, reflecting a 20.7% increase from the previous year, although it has been revised downward by 1.7% in the last 60 days [2]. - Revenue expectations for the same quarter are set at $21.88 billion, indicating a 0.8% increase from the year-ago period [2]. Demand and Market Conditions - FedEx is facing challenges due to the normalization of volume and pricing trends post-COVID, compounded by geopolitical uncertainties and high inflation affecting consumer sentiment, particularly in Asia and Europe [4]. - The Express unit, FedEx's largest segment, is anticipated to experience a slight revenue increase of 0.6% compared to Q3 fiscal 2024, despite demand-induced volume weakness [5]. Cost Management Initiatives - FedEx is implementing a companywide cost-cutting initiative named DRIVE, which is expected to positively impact its bottom-line performance in the upcoming quarter [6]. - Cost-reduction measures include reducing flight frequencies, parking aircraft, and staff cuts, with salary and benefit expenses projected to decrease by 0.8% from the previous year [7]. Earnings Prediction and Stock Performance - Current analysis suggests that FedEx may not beat earnings estimates this quarter, as indicated by an Earnings ESP of -2.66% and a Zacks Rank of 3 (Hold) [8][9]. - Over the past three months, FedEx shares have declined by 11.1%, underperforming the industry average decline of 6.5% and rivals such as United Parcel Service (UPS) [10].

Economic & Earnings CommentarySure’n begorrah — we start a new trading week on the stock market with futures trying to notch higher. They’ve improved on the release of new economic data an hour before the opening bell. The Dow is still down: -47 points, but better than the -115 earlier in the pre-session. The S&P 500 has swung from -5 points to +8, with the tech-heavy Nasdaq emerging from flat to +64 points at this hour.Retail Sales Weaker on Headline, Sturdy UnderneathThe February print for U.S. Retail Sal ...

Core Viewpoint - FedEx is expected to report quarterly earnings of $4.66 per share, a 20.7% increase year-over-year, with revenues projected at $21.88 billion, reflecting a 0.8% increase compared to the previous year [1]. Earnings Projections - Over the past 30 days, the consensus EPS estimate has been adjusted downward by 1%, indicating a reassessment by analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Revenue Estimates - Analysts project 'Revenue- Federal Express segment' to reach $18.89 billion, indicating an 87% year-over-year increase [5]. - 'Revenue- Other and eliminations' is expected to be $894.19 million, reflecting a 20% year-over-year increase [5]. - 'Revenue- FedEx Freight segment' is forecasted at $2.09 billion, suggesting a 1.7% year-over-year decline [5]. Freight Revenue and Volume - Total freight revenue for 'FedEx Express- Freight' is estimated at $1.35 billion, indicating a 14.8% year-over-year decrease [6]. - Average daily package volume for 'FedEx Express - Total international export ADV' is expected to reach 1.11 million, up from 1.03 million year-over-year [6]. - 'FedEx Freight - Weight per shipment' is projected at 922.08 thousand, down from 946 thousand year-over-year [7]. Package Volume and Revenue Metrics - Average daily package volume for 'FedEx Express - Total ADV' is estimated at 17.19 million, significantly up from 5.47 million year-over-year [7]. - 'FedEx Express - Freight - Average daily freight pounds - U.S.' is expected to be 2.59 million, down from 6.09 million year-over-year [8]. - 'FedEx Express - Package - Revenue per package - International export composite' is projected at $51.13, slightly lower than the previous year's $51.58 [10]. Stock Performance - FedEx shares have decreased by 9.6% over the past month, compared to a 7.7% decline in the Zacks S&P 500 composite [10].

Core Viewpoint - FedEx is expected to report its Q3 earnings on March 20, with analysts predicting adjusted EPS of $4.64, a 20.2% year-over-year increase, and revenue of $21.89 billion, a 0.71% growth [1] Financial Performance - Following the Q1 earnings report on September 20, FedEx's total return has been -3.89%, compared to the S&P 500's -1.12% [1] - In Q2, FedEx achieved $540 million in cost savings and aims for $2.2 billion in savings by FY2025 [1] - The trend of EPS revisions has been downward in recent years, indicating analyst skepticism about meeting EPS forecasts [1][2] Revenue Insights - International revenue accounted for $4.988 billion, or 22.75% of total revenue in Q2, highlighting the impact of tariffs on international shipping costs [4] - Consumer confidence is low, which may lead to reduced spending, negatively affecting FedEx's cyclical business [6] Market Expectations - The market is looking for updates on the proposed freight business spin-off, which analysts believe could create significant value [7][8] - Stifel analyst J. Bruce Chan estimates over a 50% chance of a spin-off, potentially adding $100 to the stock price [9] Business Segmentation - The freight business has a higher operating profit margin of 19.3% compared to the overall business margin of 7.5% [10][11] - FedEx's freight segment is the largest LTL pure-play business, suggesting it could achieve a premium valuation as a standalone entity [11] Valuation Metrics - FedEx shares are currently trading at 12.6 times FY2025 earnings, 10.7 times FY2026 earnings, and 9.45 times FY2027 earnings, indicating a relatively low valuation [12] - The expected P/E ratio of 11.4 is slightly below the 10-year average, suggesting potential value [13] Analyst Sentiment - Analysts express caution, preferring a larger margin of safety before considering positions, especially given the uncertainty surrounding EPS, revenue, and free cash flow revisions [14] - The potential risks outweigh the rewards entering the Q3 earnings report, with analysts not believing the stock has strong upside potential at this time [15]