Financial Data and Key Metrics Changes - Revenue increased by 3% year over year, driven by strength in U.S. Domestic package services [7] - Adjusted operating income grew by 7% [7] - Adjusted earnings per share reached $3.83, up 6% year over year [39] - Adjusted operating margin expanded by 20 basis points [39] Business Line Data and Key Metrics Changes - Federal Express Corporation (FEC) revenue rose by 4% year over year, with adjusted operating income increasing by 17% [8][42] - FedEx Freight experienced continued pressure, with average daily shipments declining [26] - U.S. Domestic package yield increased by 3%, while international export package yield grew by 4% [27][28] Market Data and Key Metrics Changes - International export volumes declined, particularly on the China to U.S. lane [24] - The LTL market remains rational despite prolonged weakness in the industrial economy [9] - U.S. Domestic small business revenue grew by over 10% year over year [35] Company Strategy and Development Direction - The company is focused on reducing structural costs while advancing its Tricolor strategy and Network 2.0 [6] - A spin-off of FedEx Freight is on track for June 2026, aiming to create a separate public company [6][53] - The company is leveraging data and technology to enhance customer experience and operational efficiency [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite global trade volatility [5] - The outlook for full-year adjusted earnings is projected to be between $17.2 and $19 per diluted share [19][47] - Management remains focused on executing commercial priorities and dynamically matching capacity with demand [20] Other Important Information - The company achieved $200 million in transformation-related savings [7] - A new flight linking Dublin and Indianapolis is set to launch, supporting healthcare and high-value verticals [34] - The company plans to host its next Investor Day in February 2026 [21] Q&A Session Summary Question: Clarification on EPS range - Management indicated that the EPS range is influenced by various factors including global trade evolution and industrial economy health [56][58] Question: Incremental margin growth and headwinds - Management acknowledged the $1 billion headwind from the global trade environment, impacting operating income [60][62] Question: Data strategy and revenue models - The company emphasized the value of its data and AI capabilities, which are expected to create new revenue models [64][66] Question: Sequential earnings growth expectations - Management did not provide specific Q2 guidance but expressed cautious optimism for peak season demand [70][72] Question: Customer reaction to de minimis rule expiry - Management noted that the expiry has been challenging for small exporters, but they are actively supporting customers [107][108] Question: Peak season strength and market conditions - Management expects volume growth during peak season driven by new acquisitions and strong B2C demand [111][115]

Financial Performance - FedEx reported quarterly earnings of $3.83 per share, exceeding the Zacks Consensus Estimate of $3.65 per share, and up from $3.6 per share a year ago, representing an earnings surprise of +4.93% [1] - The company posted revenues of $22.24 billion for the quarter ended August 2025, surpassing the Zacks Consensus Estimate by 2.15%, compared to $21.58 billion in the same quarter last year [2] - Over the last four quarters, FedEx has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Performance and Outlook - FedEx shares have declined approximately 19.8% since the beginning of the year, while the S&P 500 has gained 12.2% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $4.04 for the coming quarter and $18.34 for the current fiscal year [4][7] Industry Context - The Transportation - Air Freight and Cargo industry, to which FedEx belongs, is currently ranked in the bottom 22% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact FedEx's stock performance [5]

FedEx said it expects 4% to 6% revenue growth this fiscal year, above analysts' estimates as compiled by Visible Alpha. Its forecast for adjusted earnings per share, a range of $17.20 to $19, was roughly in line with projections at the midpoint. FedEx also said it's on track to reduce costs by $1 billion in fiscal 2026 and spin off its freight business by next June, The company logged stronger-than-expected results in its fiscal first quarter. It posted adjusted earnings per share of $3.83 on revenue that c ...

Jeni Hollander VP of Investor Relations Forward-Looking Statements and Non-GAAP Financial Measures Fiscal first quarter 2026 earnings September 18, 2025 Certain statements in this oress release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act, such as statements expected cost savings, the optimization of our network 2.0, the planned tax-free full separation of the FedEx Freight business into a new publicly traded company (the l"FedEx Freight Spi ...

Core Insights - FedEx is experiencing a positive market response, with shares rising due to strong performance despite a challenging transport environment [1] - The company has successfully delivered margins amidst concerns over declining import volumes driven by US tariffs and regulatory changes [2] - FedEx's structural cost initiatives are yielding results, contributing to its profitability [3] Company Performance - FedEx is on track to spin off its freight business, which, despite a weaker quarter, is expected to deliver best-in-class profitability [3] - The freight business is estimated to be worth nearly half of FedEx's market capitalization [4] - FedEx is benefiting from a generational shift in the market, as UPS faces structural decline due to Amazon taking away volumes [4][5] Competitive Landscape - UPS is struggling to maintain margins and is experiencing rising costs per package, which is advantageous for FedEx [5] - FedEx is gaining market share as it merges its domestic networks to achieve lower costs [5] Revenue Outlook - FedEx forecasts a revenue growth rate of 4 to 6% year-over-year for fiscal 2026, which is higher than market expectations [6] - The company is seeing domestic volume gains, which contributed to the positive surprise in this quarter [6][7] - While international shipments face challenges, FedEx is guiding for revenue growth above market consensus, indicating a strong topline outlook [7][8]

FedEx Performance & Strategy - FedEx delivered margins despite transport industry concerns about lower import volumes due to US tariffs and rule changes [2] - FedEx is on track to spin off its freight business, which is considered almost worth half the company's market capitalization [3][4] - FedEx is benefiting from structural market share gains as it merges domestic networks to lower costs, while competitor UPS faces challenges [5] Market Dynamics & Competition - UPS's business is in structural decline as Amazon takes volumes off it, leading to increased cost per package [4][5] - FedEx is gaining structural market share due to UPS's challenges [5] Financial Outlook - FedEx forecasts a 4-6% year-over-year revenue growth rate for fiscal year 2026, exceeding previous expectations [6] - Domestic volume gains are driving the revenue growth, while international side faces challenges with mixed priority shipments [6][7] - Management is expected to have a somber outlook for global trade [7]

Core Viewpoint - FedEx's stock experienced a rally in extended trading after the company reinstated its full-year outlook, indicating confidence in its operational performance and market conditions [1] Summary by Relevant Categories Company Performance - FedEx has reinstated its full-year outlook, which suggests a positive shift in its operational expectations and financial health [1] - The stock price of FedEx saw significant movement in extended trading, reflecting investor optimism following the announcement [1] Market Reaction - The reinstatement of the outlook led to a rally in FedEx's stock, indicating strong market confidence in the company's future performance [1] - The positive market reaction may also suggest a broader confidence in the logistics sector as economic conditions evolve [1]

Group 1 - The Federal Reserve has cut rates and indicated more cuts are likely through the end of the year, leading to record highs in stocks and rising bond yields [1] - The 10-year Treasury yield briefly fell below 4% but has since risen to 4.116%, influenced by significant jobless claims data [2] - The jobless claims number represents the largest weekly decline in four years, prompting a reassessment of the Fed's rate cut projections [3] Group 2 - The Fed's decision to prioritize employment risks over inflation risks is seen as a necessary move to prevent potential job losses that could negatively impact the economy [4][5] - Despite the Fed's balanced risk assessment, there is a perception that the risks are skewed more towards employment, justifying the recent rate cuts [6] - The Fed has missed its inflation target for seven consecutive years, with inflation consistently exceeding the target by more than 50 basis points in six of those years [7][8]

Market Overview - Wall Street reached new record highs driven by the Federal Reserve's quarter-point interest rate cut and expectations of further reductions in upcoming meetings [2][8] - The S&P 500, Nasdaq, and Russell 2000 indices all achieved unprecedented levels, with technology stocks leading the gains [2][8] - Nvidia's $5 billion investment in Intel resulted in a significant 23.1% to 24.6% increase in Intel's shares, marking its largest daily gain since 1987 [2][8] Corporate Performance - FedEx reported a strong first quarter for fiscal year 2025, with adjusted earnings per share of $3.83, surpassing the estimated $3.59, and revenue of $22.2 billion, exceeding predictions of $21.67 billion [3][8] - The company's adjusted operating income reached $1.30 billion, higher than the expected $1.21 billion, indicating a robust start to the fiscal year [3] Capital Flows - U.S. Treasury International Capital (TIC) data for July showed a significant decline in net long-term capital inflows, totaling $49.2 billion, down from $150.8 billion in the same period last year [4][8] - Despite the monthly dip, total foreign holdings of U.S. Treasuries reached a record high of $8.339 trillion in July, up from $8.211 trillion in June [4][8] Geopolitical Developments - Former President Trump announced efforts to regain control of Afghanistan's Bagram Air Base, emphasizing its strategic importance due to its proximity to China's nuclear facilities [5][8] Technology Investments - Microsoft announced a $4 billion expansion of its data center investments in Wisconsin, bringing its total investment in the state to over $7 billion [6][8]

FORM 10-Q Cover Page [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides FedEx Corporation's identification details, registered securities, filing status, and common shares outstanding - FedEx Corporation is incorporated in Delaware with its principal executive offices in Memphis, Tennessee[3](index=3&type=chunk) Securities Registered on New York Stock Exchange | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :-------------------------------------- | | Common Stock, par value $0.10 per share | FDX | New York Stock Exchange | | 1.625% Notes due 2027 | FDX 27 | New York Stock Exchange | | 0.450% Notes due 2029 | FDX 29A | New York Stock Exchange | | 1.300% Notes due 2031 | FDX 31 | New York Stock Exchange | | 3.500% Notes due 2032 | FDX 32 | New York Stock Exchange | | 0.950% Notes due 2033 | FDX 33 | New York Stock Exchange | | 4.125% Notes due 2037 | FDX 37 | New York Stock Exchange | - The registrant is a large accelerated filer[6](index=6&type=chunk) Common Stock Outstanding Shares | Metric | Value | | :----- | :---- | | Common Stock Outstanding Shares at September 16, 2025 | 235,955,461 | PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=5&type=section&id=ITEM%201.%20Financial%20Statements) This section presents FedEx Corporation's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income, cash flows, and stockholders' investment, with accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of FedEx's financial position, detailing assets, liabilities, and common stockholders' investment Condensed Consolidated Balance Sheet Highlights (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Total current assets | $19,344 | $18,386 | | Net property and equipment | $41,384 | $41,642 | | Total other long-term assets | $27,688 | $27,599 | | **Total Assets** | **$88,416** | **$87,627** | | Total current liabilities | $15,524 | $15,411 | | Long-term debt, less current portion | $20,291 | $19,151 | | Total other long-term liabilities | $24,830 | $24,991 | | **Total Liabilities** | **$60,645** | **$59,553** | | Total common stockholders' investment | $27,771 | $28,074 | | **Total Liabilities and Common Stockholders' Investment** | **$88,416** | **$87,627** | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement outlines the company's financial performance, including revenue, operating expenses, operating income, net income, and earnings per share Condensed Consolidated Statements of Income Highlights (in millions, except per share amounts) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Revenue | $22,244 | $21,579 | | Operating expenses | $21,058 | $20,499 | | Operating income | $1,186 | $1,080 | | Income before income taxes | $1,134 | $1,056 | | Provision for income taxes | $310 | $262 | | Net income | $824 | $794 | | Basic earnings per common share | $3.48 | $3.24 | | Diluted earnings per common share | $3.46 | $3.21 | | Dividends declared per common share | $2.90 | $2.76 | - Revenue increased by **3.1%** year-over-year, from **$21,579 million** in Q1 2024 to **$22,244 million** in Q1 2025[20](index=20&type=chunk) - Operating income grew by **9.8%** year-over-year, from **$1,080 million** in Q1 2024 to **$1,186 million** in Q1 2025[20](index=20&type=chunk) - Diluted EPS increased by **7.8%** year-over-year, from **$3.21** in Q1 2024 to **$3.46** in Q1 2025[20](index=20&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income (loss) components, including foreign currency translation adjustments and amortization of prior service credit Condensed Consolidated Statements of Comprehensive Income Highlights (in millions) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net income | $824 | $794 | | Other comprehensive income (loss) | ($9) | $27 | | Comprehensive income | $815 | $821 | - Comprehensive income decreased by **0.7%** year-over-year, from **$821 million** in Q1 2024 to **$815 million** in Q1 2025, primarily due to a foreign currency translation loss in 2025 compared to a gain in 2024[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement details cash inflows and outflows from operating, investing, and financing activities, showing the net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Activity | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Cash provided by operating activities | $1,716 | $1,187 | | Cash used in investing activities | ($619) | ($802) | | Cash used in financing activities | ($460) | ($969) | | Net increase (decrease) in cash and cash equivalents | $664 | ($558) | | Cash and cash equivalents at end of period | $6,166 | $5,943 | - Cash provided by operating activities increased by **$529 million (44.6%)** year-over-year[25](index=25&type=chunk) - Cash used in investing activities decreased by **$183 million (22.8%)** year-over-year, primarily due to lower capital expenditures[25](index=25&type=chunk) - Cash used in financing activities decreased by **$509 million (52.5%)** year-over-year, driven by debt issuances and lower common stock repurchases[25](index=25&type=chunk) [Condensed Consolidated Statements of Changes In Common Stockholders' Investment](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20In%20Common%20Stockholders%27%20Investment) This statement details changes in common stockholders' investment components, including common stock, additional paid-in capital, retained earnings, AOCL, and treasury stock Changes in Common Stockholders' Investment (in millions) | Component | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Common Stock (Ending Balance) | $32 | $32 | | Additional Paid-in Capital (Ending Balance) | $4,327 | $4,134 | | Retained Earnings (Ending Balance) | $41,538 | $38,767 | | Accumulated Other Comprehensive Loss (Ending Balance) | ($1,371) | ($1,332) | | Treasury Stock (Ending Balance) | ($16,755) | ($14,425) | | **Total Common Stockholders' Investment Balance** | **$27,771** | **$27,176** | - Total common stockholders' investment increased by **$595 million (2.2%)** year-over-year[27](index=27&type=chunk) - Cash dividends declared were **$2.90 per share** in Q1 2025 and **$2.76 per share** in Q1 2024[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional disclosures for the condensed consolidated financial statements, covering segments, accounting policies, credit losses, comprehensive income, financing, EPS, retirement plans, segment performance, commitments, and contingencies [NOTE 1: DESCRIPTION OF BUSINESS SEGMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%201%3A%20DESCRIPTION%20OF%20BUSINESS%20SEGMENTS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes FedEx's business segments, significant accounting policies, business optimization costs, separation costs, and details on stock repurchases and dividends - FedEx's primary operating companies are Federal Express (express transportation, small-package ground delivery) and FedEx Freight (less-than-truckload freight transportation)[30](index=30&type=chunk) - Business optimization costs for Q1 2026 were **$67 million** (**$52 million** net of tax, or **$0.22 per diluted share**), down from **$128 million** in Q1 2025, primarily related to professional services and severance for Network 2.0 and the Europe workforce reduction plan[42](index=42&type=chunk) - The Europe workforce reduction plan is expected to impact approximately **1,400 employees** and generate annualized savings of approximately **$150 million** starting in calendar 2026, with pre-tax costs of about **$250 million** incurred through fiscal 2026[44](index=44&type=chunk)[45](index=45&type=chunk) - Costs related to the planned spin-off of FedEx Freight were **$43 million** (**$33 million** net of tax, or **$0.14 per diluted share**) in Q1 2026, with the transaction expected to be completed by June 2026[46](index=46&type=chunk)[47](index=47&type=chunk) - FedEx's Board approved a change in fiscal year end from May 31 to December 31, effective June 1, 2026, incurring **$4 million** in costs in Q1 2026[48](index=48&type=chunk) - During Q1 2026, **2.2 million shares** were repurchased for **$500 million** at an average price of **$232.25 per share**; **$1.6 billion** remained available under the 2024 stock repurchase program as of August 31, 2025[59](index=59&type=chunk)[61](index=61&type=chunk) - A quarterly cash dividend of **$1.45 per share** was declared on August 7, 2025, payable October 1, 2025[62](index=62&type=chunk) [NOTE 2: CREDIT LOSSES](index=14&type=section&id=NOTE%202%3A%20CREDIT%20LOSSES) This note details FedEx's credit loss exposure, primarily from trade receivables, and the methodology for determining the allowance for credit losses - Credit losses were **$219 million** for the three-month period ended August 31, 2025, an increase from **$129 million** for the same period in 2024[68](index=68&type=chunk) - The allowance for credit losses increased to **$492 million** at August 31, 2025, from **$438 million** at May 31, 2025[68](index=68&type=chunk) [NOTE 3: ACCUMULATED OTHER COMPREHENSIVE LOSS](index=15&type=section&id=NOTE%203%3A%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) This note presents changes in Accumulated Other Comprehensive Loss (AOCL), net of tax, primarily driven by foreign currency translation and retirement plan adjustments Changes in AOCL (in millions) | Component | August 31, 2025 | August 31, 2024 | | :-------------------------------- | :-------------- | :-------------- | | Foreign currency translation loss (end of period) | ($1,427) | ($1,393) | | Retirement plans adjustments (end of period) | $56 | $61 | | **AOCL at end of period** | **($1,371)** | **($1,332)** | - AOCL increased to a loss of **$1,371 million** at August 31, 2025, from a loss of **$1,332 million** at August 31, 2024, primarily due to foreign currency translation adjustments[69](index=69&type=chunk) [NOTE 4: FINANCING ARRANGEMENTS](index=15&type=section&id=NOTE%204%3A%20FINANCING%20ARRANGEMENTS) This note details FedEx's financing arrangements, including long-term debt issuances, credit agreements, and compliance with financial covenants - On July 30, 2025, FedEx issued **€850 million** of senior unsecured debt (**€500 million** of 3.50% notes due 2032 and **€350 million** of 4.125% notes due 2037), using a portion of proceeds to repay **€500 million** of 0.45% notes due August 2025[71](index=71&type=chunk) Long-Term Debt Carrying and Fair Values (in millions) | Metric | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Long-term debt (carrying value) | $20,400 | $19,900 | | Long-term debt (estimated fair value) | $18,200 | $17,200 | | Annualized weighted-average interest rate | 3.6% | N/A | - FedEx maintains a **$1.75 billion** three-year credit agreement (expiring March 2027) and a **$1.75 billion** five-year credit agreement (expiring March 2029), with no amounts outstanding as of August 31, 2025[74](index=74&type=chunk) - The ratio of debt to adjusted EBITDA was **1.9** at August 31, 2025, well within the covenant limit of not more than **3.5 to 1.0**[75](index=75&type=chunk) [NOTE 5: COMPUTATION OF EARNINGS PER SHARE](index=17&type=section&id=NOTE%205%3A%20COMPUTATION%20OF%20EARNINGS%20PER%20SHARE) This note provides the detailed calculation of basic and diluted earnings per common share for the reported periods Earnings Per Share Calculation (in millions, except per share amounts) | Metric | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Net earnings allocable to common shares | $823 | $793 | | Weighted-average common shares (basic) | 236 | 244 | | Basic earnings per common share | $3.48 | $3.24 | | Weighted-average diluted shares | 238 | 247 | | Diluted earnings per common share | $3.46 | $3.21 | | Anti-dilutive options excluded | 7.1 | 4.3 | [NOTE 6: RETIREMENT PLANS](index=17&type=section&id=NOTE%206%3A%20RETIREMENT%20PLANS) This note outlines costs associated with FedEx's defined benefit pension, defined contribution, and postretirement healthcare plans Retirement Plans Costs (in millions) | Plan Type | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Defined benefit pension plans | $47 | $70 | | Defined contribution plans | $306 | $287 | | Postretirement healthcare plans | $22 | $22 | | **Total retirement plans costs** | **$375** | **$379** | - FedEx made voluntary contributions of **$200 million** to its U.S. Pension Plan during Q1 2026, with no required contributions for fiscal 2026 as the plan is fully funded[79](index=79&type=chunk) [NOTE 7: BUSINESS SEGMENTS AND DISAGGREGATED REVENUE](index=18&type=section&id=NOTE%207%3A%20BUSINESS%20SEGMENTS%20AND%20DISAGGREGATED%20REVENUE) This note provides detailed financial information for FedEx's reportable segments, disaggregated revenue by service type and geographic region, and segment capital expenditures Segment Operating Results (Three Months Ended August 31, 2025, in millions) | Segment | Revenue | Operating Expenses | Operating Income | | :-------------------------------- | :------ | :----------------- | :--------------- | | Federal Express Segment | $19,116 | $17,978 | $1,138 | | FedEx Freight Segment | $2,257 | $1,897 | $360 | | Corporate, other, and eliminations | $871 | $1,183 | ($312) | | **Consolidated Total** | **$22,244** | **$21,058** | **$1,186** | Segment Operating Results (Three Months Ended August 31, 2024, in millions) | Segment | Revenue | Operating Expenses | Operating Income | | :-------------------------------- | :------ | :----------------- | :--------------- | | Federal Express Segment | $18,305 | $17,352 | $953 | | FedEx Freight Segment | $2,329 | $1,890 | $439 | | Corporate, other, and eliminations | $945 | $1,257 | ($312) | | **Consolidated Total** | **$21,579** | **$20,499** | **$1,080** | Revenue by Service Type (Three Months Ended August 31, in millions) | Service Type | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Federal Express segment: | | | | Total U.S. domestic package revenue | $12,694 | $11,798 | | Total international export package revenue | $3,612 | $3,566 | | International domestic | $1,135 | $1,112 | | Total package revenue | $17,441 | $16,476 | | Total freight revenue | $1,426 | $1,558 | | Other | $249 | $271 | | **Total Federal Express Segment** | **$19,116** | **$18,305** | | **FedEx Freight Segment** | **$2,257** | **$2,329** | | Other and eliminations | $871 | $945 | | **Total Revenue** | **$22,244** | **$21,579** | Geographic Revenue Information (Three Months Ended August 31, in millions) | Region | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | U.S. | $15,975 | $15,496 | | International | $6,269 | $6,083 | | **Total Revenue** | **$22,244** | **$21,579** | Segment Capital Expenditures (Three Months Ended August 31, in millions) | Segment | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Federal Express Segment | $568 | $703 | | FedEx Freight Segment | $32 | $35 | | Corporate, other, and eliminations | $23 | $29 | | **Consolidated Total** | **$623** | **$767** | [NOTE 8: COMMITMENTS](index=22&type=section&id=NOTE%208%3A%20COMMITMENTS) This note outlines FedEx's future purchase commitments for aircraft and other items, and minimum lease payments under noncancelable operating and finance leases Purchase Commitments as of August 31, 2025 (in millions) | Fiscal Year | Aircraft and Aircraft Related | Other | Total | | :-------------------------------- | :---------------------------- | :---- | :---- | | 2026 (remainder) | $808 | $626 | $1,434 | | 2027 | $1,119 | $712 | $1,831 | | 2028 | $993 | $545 | $1,538 | | 2029 | $413 | $461 | $874 | | 2030 | $205 | $35 | $240 | | Thereafter | $1,073 | $90 | $1,163 | | **Total** | **$4,611** | **$2,469** | **$7,080** | Aircraft Purchase Commitments as of August 31, 2025 | Aircraft Type | 2026 (remainder) | 2027 | 2028 | 2029 | 2030 | Total | | :-------------------------------- | :--------------- | :--- | :--- | :--- | :--- | :---- | | Cessna SkyCourier 408 | 15 | 4 | — | — | — | 19 | | ATR 72-600F | 3 | 4 | 4 | 4 | 2 | 17 | | B767F | 6 | — | — | — | — | 6 | | B777F | — | 5 | 5 | — | — | 10 | | **Total Aircraft** | **24** | **13** | **9** | **4** | **2** | **52** | Future Minimum Lease Payments as of August 31, 2025 (in millions) | Fiscal Year | Operating Leases | Finance Leases | Total Leases | | :-------------------------------- | :--------------- | :------------- | :----------- | | 2026 (remainder) | $2,332 | $85 | $2,417 | | 2027 | $3,041 | $116 | $3,157 | | 2028 | $2,663 | $115 | $2,778 | | 2029 | $2,260 | $112 | $2,372 | | 2030 | $1,842 | $95 | $1,937 | | Thereafter | $8,086 | $619 | $8,705 | | **Total lease payments** | **$20,224** | **$1,142** | **$21,366** | | Less imputed interest | ($3,492) | ($347) | ($3,839) | | **Present value of lease liability** | **$16,732** | **$795** | **$17,527** | [NOTE 9: CONTINGENCIES](index=23&type=section&id=NOTE%209%3A%20CONTINGENCIES) This note addresses various legal proceedings and claims against FedEx and its subsidiaries, and confirms no material environmental matters requiring disclosure - FedEx is subject to various legal proceedings and claims, including lawsuits alleging employer/joint employer status for service provider drivers, wage-and-hour violations, and responsibility for third-party losses from vehicle accidents[98](index=98&type=chunk) - Management believes the aggregate liability from these actions will not have a material adverse effect on financial position, results of operations, or cash flows[98](index=98&type=chunk) - No environmental matters required to be disclosed for this period, based on the SEC's **$1 million** threshold[99](index=99&type=chunk) [NOTE 10: SUPPLEMENTAL CASH FLOW INFORMATION](index=23&type=section&id=NOTE%2010%3A%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides supplemental cash flow details, specifically cash payments for interest expense and income taxes Supplemental Cash Flow Information (in millions) | Cash Payments for | Three Months Ended August 31, 2025 | Three Months Ended August 31, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | | Interest (net of capitalized interest) | $195 | $158 | | Income taxes | $112 | $75 | | Income tax refunds received | ($27) | ($12) | | **Cash tax payments/(refunds), net** | **$85** | **$63** | [Report of Independent Registered Public Accounting Firm](index=24&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP reviewed FedEx's interim financial statements, finding no material modifications necessary for U.S. GAAP conformity and confirming the fair statement of the May 31, 2025, balance sheet - The independent registered public accounting firm is not aware of any material modifications that should be made to the condensed consolidated interim financial statements for them to be in conformity with U.S. GAAP[102](index=102&type=chunk) - The information in the condensed consolidated balance sheet as of May 31, 2025, is fairly stated in all material respects[103](index=103&type=chunk) [ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition](index=25&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Results%20of%20Operations%20and%20Financial%20Condition) This section provides management's perspective on FedEx's financial performance, liquidity, capital resources, and critical accounting estimates, discussing key trends and segment-specific results [GENERAL](index=25&type=section&id=GENERAL) This section outlines FedEx's business, primary operating companies, and recent strategic decisions, including the planned FedEx Freight spin-off and fiscal year end change - FedEx provides a broad portfolio of transportation, e-commerce, and business services through its global network[107](index=107&type=chunk) - FedEx's Board decided to pursue a full separation of FedEx Freight through a tax-free spin-off to stockholders, expected to be completed by June 2026[109](index=109&type=chunk) - The Board approved a change in FedEx's fiscal year end from May 31 to December 31, effective June 1, 2026[110](index=110&type=chunk) [Trends Affecting Our Business](index=25&type=section&id=Trends%20Affecting%20Our%20Business) This section discusses significant macroeconomic, inflationary, fuel price, and geopolitical trends impacting FedEx's business and the transportation industry - Weakened business conditions in the transportation industry are attributed to a decline in U.S. imports of consumer goods and slowed global industrial production, negatively affecting FedEx Freight shipments[113](index=113&type=chunk) - Changes in the global trade environment, such as the removal of the de minimis exemption for U.S. imports from non-China countries, have contributed to lower international export package volumes[114](index=114&type=chunk) - Elevated global inflation and steady interest rates continue to negatively affect consumer and business spending, pressuring demand for FedEx's transportation services, particularly priority services[115](index=115&type=chunk) - Lower fuel prices in Q1 2026 negatively affected yields due to reduced fuel surcharges but also led to decreased fuel expense across transportation segments[116](index=116&type=chunk) [RESULTS OF OPERATIONS](index=27&type=section&id=RESULTS%20OF%20OPERATIONS) This section analyzes FedEx's operating results, covering consolidated performance, revenue and expense drivers, business optimization and separation costs, income taxes, and the company's outlook Consolidated Operating Results (Three Months Ended August 31, in millions, except per share amounts) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Revenue | $22,244 | $21,579 | 3% | | Consolidated operating income | $1,186 | $1,080 | 10% | | Consolidated net income | $824 | $794 | 4% | | Diluted earnings per share | $3.46 | $3.21 | 8% | | Consolidated operating margin | 5.3% | 5.0% | 30 bp | | Federal Express segment operating income | $1,138 | $953 | 19% | | FedEx Freight segment operating income | $360 | $439 | (18)% | | Corporate, other, and eliminations operating income | ($312) | ($312) | — | | Federal Express segment operating margin | 6.0% | 5.2% | 80 bp | | FedEx Freight segment operating margin | 16.0% | 18.8% | (280) bp | - Operating income was positively impacted by improved yields for U.S. domestic and international priority package services, structural cost reductions from business optimization initiatives, and higher U.S. domestic package demand at Federal Express[121](index=121&type=chunk) - Negative impacts included increased operating expenses, decreased yields for international economy package services, lower international package export volume due to global trade policies, the expiration of the USPS contract, and lower revenue at FedEx Freight[121](index=121&type=chunk) - Business optimization costs were **$67 million** in Q1 2026, down from **$128 million** in Q1 2025[122](index=122&type=chunk) - Costs related to the FedEx Freight spin-off were **$43 million** in Q1 2026[123](index=123&type=chunk) - FedEx repurchased **$500 million** of common stock in Q1 2026, benefiting diluted EPS by **$0.02**[124](index=124&type=chunk) [CONSOLIDATED RESULTS](index=28&type=section&id=CONSOLIDATED%20RESULTS) Consolidated operating income increased by **10%** in Q1 2026, driven by improved yields, structural cost reductions, and higher U.S. domestic package demand at Federal Express [Revenue](index=31&type=section&id=Revenue) Consolidated revenue increased by **3%** in Q1 2026, driven by Federal Express yield improvements and volume, partially offset by USPS contract expiration and FedEx Freight declines - Consolidated revenue increased **3%** in Q1 2026 to **$22,244 million**[130](index=130&type=chunk) - Federal Express segment revenue increased **4%** due to improved base yields, increased U.S. domestic and international economy package volumes, and favorable exchange rates[131](index=131&type=chunk) - FedEx Freight revenue decreased **3%** due to lower volume and lower base yields[131](index=131&type=chunk) [Operating Expenses](index=31&type=section&id=Operating%20Expenses) Total operating expenses increased by **3%** in Q1 2026, driven by higher salaries and purchased transportation, partially offset by a significant decrease in fuel expense Operating Expenses (Three Months Ended August 31, in millions) | Expense Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Salaries and employee benefits | $8,062 | $7,785 | 4% | | Purchased transportation | $5,488 | $5,275 | 4% | | Fuel | $873 | $1,075 | (19)% | | Separation and other costs | $45 | — | NM | | Business optimization costs | $67 | $128 | (48)% | | Other | $3,396 | $3,168 | 7% | | **Total operating expenses** | **$21,058** | **$20,499** | **3%** | - Salaries and employee benefits increased **4%** due to higher wage rates, unfavorable exchange rates, and higher employee benefits, partially offset by lower variable incentive compensation[133](index=133&type=chunk) - Purchased transportation expense increased **4%** due to higher rates and volume[133](index=133&type=chunk) - Fuel expense decreased **19%** due to lower fuel prices and the expiration of the USPS contract[133](index=133&type=chunk) - Other operating expenses increased **7%** primarily due to higher professional fees, credit losses, and self-insurance accruals[133](index=133&type=chunk) [Business Optimization Costs](index=32&type=section&id=Business%20Optimization%20Costs) FedEx incurred **$67 million** in business optimization costs in Q1 2026, a **48%** decrease, related to Network 2.0 and the Europe workforce reduction plan - Business optimization costs were **$67 million** (**$52 million** net of tax, or **$0.22 per diluted share**) in Q1 2026, down from **$128 million** in Q1 2025[135](index=135&type=chunk) - These costs are primarily related to professional services and severance for Network 2.0 and the Europe workforce reduction plan[135](index=135&type=chunk) - Network 2.0, a multi-year effort to improve U.S. and Canada package efficiency, has been implemented in approximately **360 locations** as of August 31, 2025, with U.S. implementation expected by end of calendar 2027[136](index=136&type=chunk) - The Europe workforce reduction plan is expected to yield approximately **$150 million** in annualized savings starting calendar 2026, with pre-tax costs of about **$250 million** through fiscal 2026[137](index=137&type=chunk)[138](index=138&type=chunk) [Separation and Other Costs](index=32&type=section&id=Separation%20and%20Other%20Costs) FedEx incurred **$43 million** for the FedEx Freight spin-off and **$4 million** for the fiscal year change in Q1 2026, primarily for professional services - Costs for the planned FedEx Freight spin-off were **$43 million** (**$33 million** net of tax, or **$0.14 per diluted share**) in Q1 2026, mainly for professional services[139](index=139&type=chunk) - Costs for the fiscal year change were **$4 million** (**$3 million** net of tax, or **$0.01 per diluted share**) in Q1 2026, primarily for professional fees[140](index=140&type=chunk) [Income Taxes](index=32&type=section&id=Income%20Taxes) The effective tax rate for Q1 2026 was **27.3%**, unfavorably impacted by a non-recurring expense, with ongoing evaluation of new legislation and tax examinations - The effective tax rate was **27.3%** for Q1 2026, up from **24.8%** in Q1 2025, due to a non-recurring income tax expense of **$16 million** (**$0.07 per diluted share**)[141](index=141&type=chunk) - FedEx is evaluating the implications of the 'One Big Beautiful Bill Act' signed in July 2025[142](index=142&type=chunk) - The company is under IRS examination for tax years 2016-2021 and is litigating a challenge to a tax regulation related to the TCJA's transition tax, having recorded a cumulative benefit of **$249 million**[143](index=143&type=chunk)[144](index=144&type=chunk) [Outlook](index=33&type=section&id=Outlook) FedEx anticipates continued demand pressure for higher-yielding services, expects **$1.0 billion** in structural cost reduction benefits in fiscal 2026, and projects **$4.5 billion** in capital expenditures - The industrial economy is expected to continue pressuring demand for higher-yielding business-to-business services, with a shift towards deferred service offerings[145](index=145&type=chunk) - FedEx expects an incremental **$1.0 billion** in structural cost reduction benefits from DRIVE and Network 2.0 in fiscal 2026[146](index=146&type=chunk) - Capital expenditures for fiscal 2026 are expected to be approximately **$4.5 billion**, a **$0.4 billion** increase from 2025, driven by Network 2.0 and modernization efforts[148](index=148&type=chunk) - Aircraft spend is expected to decline to approximately **$1.0 billion** in fiscal 2026, **$0.3 billion** lower than 2025[148](index=148&type=chunk) - The full separation of FedEx Freight through capital markets is expected to be executed by June 2026[150](index=150&type=chunk) [RECENT ACCOUNTING GUIDANCE](index=33&type=section&id=RECENT%20ACCOUNTING%20GUIDANCE) This section refers to Note 1 for a discussion of recent accounting guidance, including new accounting standards and those not yet adopted - Refer to Note 1 for a discussion of recent accounting guidance, including ASU 2025-05 (Financial Instruments—Credit Losses), ASU 2023-09 (Income Taxes Disclosures), and ASU 2024-03 (Income Statement–Expense Disaggregation Disclosures)[153](index=153&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) [REPORTABLE SEGMENTS](index=34&type=section&id=REPORTABLE%20SEGMENTS) FedEx's reportable segments are Federal Express and FedEx Freight, with Federal Express operating combined sales, marketing, administrative, and IT functions - Federal Express and FedEx Freight are the major service lines and reportable segments[154](index=154&type=chunk) - The Federal Express segment operates combined sales, marketing, administrative, and IT functions, with net operating costs allocated to other segments based on metrics like relative revenue or estimated services provided[154](index=154&type=chunk)[155](index=155&type=chunk) [CORPORATE, OTHER, AND ELIMINATIONS](index=34&type=section&id=CORPORATE%2C%20OTHER%2C%20AND%20ELIMINATIONS) This category includes corporate headquarters, FedEx Dataworks, FedEx Office, and FedEx Logistics costs, with operating results flat in Q1 2026 due to offsetting factors - Corporate, other, and eliminations includes corporate headquarters, FedEx Dataworks, FedEx Office, and FedEx Logistics[156](index=156&type=chunk)[157](index=157&type=chunk) - Operating results were flat in Q1 2026, driven by decreased purchased transportation costs at FedEx Logistics offset by higher professional fees at corporate headquarters and FedEx Dataworks[158](index=158&type=chunk) [FEDERAL EXPRESS SEGMENT](index=35&type=section&id=FEDERAL%20EXPRESS%20SEGMENT) The Federal Express segment reported a **4%** revenue increase and **19%** operating income increase in Q1 2026, driven by improved yields and higher U.S. domestic and international economy package volumes Federal Express Segment Revenue (Three Months Ended August 31, in millions) | Revenue Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Total U.S. domestic package revenue | $12,694 | $11,798 | 8% | | Total international export package revenue | $3,612 | $3,566 | 1% | | International domestic | $1,135 | $1,112 | 2% | | Total package revenue | $17,441 | $16,476 | 6% | | Total freight revenue | $1,426 | $1,558 | (8)% | | Other | $249 | $271 | (8)% | | **Total revenue** | **$19,116** | **$18,305** | **4%** | | **Operating income** | **$1,138** | **$953** | **19%** | | **Operating margin** | **6.0%** | **5.2%** | **80 bp** | Federal Express Segment Package Statistics (Three Months Ended August 31, in thousands, except yield) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Total U.S. domestic ADV | 13,920 | 13,295 | 5% | | International priority ADV | 562 | 622 | (10)% | | International economy ADV | 518 | 491 | 5% | | Total international export ADV | 1,080 | 1,113 | (3)% | | U.S. domestic composite package yield | $14.25 | $13.87 | 3% | | International priority package yield | $62.77 | $55.37 | 13% | | International economy package yield | $40.87 | $43.33 | (6)% | | Composite package yield | $16.22 | $15.86 | 2% | - U.S. average daily freight pounds decreased **59%** due to the expiration of the USPS contract[164](index=164&type=chunk) - Operating expenses increased primarily due to higher wage and purchased transportation rates and higher credit losses, partially offset by a **20%** decrease in fuel expense[166](index=166&type=chunk)[167](index=167&type=chunk) - The segment incurred **$21 million** in business optimization costs, **$4 million** for the fiscal year change, and **$1 million** for the FedEx Freight spin-off in Q1 2026[168](index=168&type=chunk) [FEDEX FREIGHT SEGMENT](index=39&type=section&id=FEDEX%20FREIGHT%20SEGMENT) The FedEx Freight segment experienced a **3%** revenue decrease and an **18%** operating income decrease in Q1 2026, primarily due to lower volume, base yields, and increased intercompany charges FedEx Freight Segment Operating Results (Three Months Ended August 31, in millions, except per shipment/hundredweight) | Metric | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | **Revenue** | **$2,257** | **$2,329** | **(3)%** | | **Operating income** | **$360** | **$439** | **(18)%** | | **Operating margin** | **16.0%** | **18.8%** | **(280) bp** | | Total average daily shipments (thousands) | 90.0 | 92.0 | (2)% | | Composite revenue per shipment | $374.62 | $378.09 | (1)% | | Composite revenue per hundredweight | $40.50 | $40.73 | (1)% | - Average daily shipments decreased **2%** due to reduced demand from macroeconomic conditions[172](index=172&type=chunk) - Intercompany charges increased **9%** due to increased sales staffing for the planned spin-off[174](index=174&type=chunk) - Fuel expense decreased **7%** due to fewer shipments and lower fuel prices[174](index=174&type=chunk) - The segment incurred **$9 million** in costs related to the planned spin-off of FedEx Freight in Q1 2026[175](index=175&type=chunk) [FINANCIAL CONDITION](index=41&type=section&id=FINANCIAL%20CONDITION) This section assesses FedEx's financial condition, covering liquidity, capital resources, guarantor financial information, and the liquidity outlook [LIQUIDITY](index=41&type=section&id=LIQUIDITY) FedEx's cash and cash equivalents increased to **$6.2 billion**, driven by significantly increased operating cash flows and decreased investing and financing activities Cash Flow Summary (Three Months Ended August 31, in millions) | Activity | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Cash provided by operating activities | $1,716 | $1,187 | | Cash used in investing activities | ($619) | ($802) | | Cash used in financing activities | ($460) | ($969) | | Net increase (decrease) in cash and cash equivalents | $664 | ($558) | | Cash and cash equivalents at end of period | $6,166 | $5,943 | - Cash flows from operating activities increased by **$0.5 billion** in Q1 2026, primarily due to working capital changes[176](index=176&type=chunk) - Capital expenditures decreased in Q1 2026, leading to a decrease in cash used in investing activities[177](index=177&type=chunk) - Cash used in financing activities decreased by **$0.5 billion**, driven by lower common stock repurchases and new debt issuances[178](index=178&type=chunk) [CAPITAL RESOURCES](index=41&type=section&id=CAPITAL%20RESOURCES) FedEx's capital expenditures decreased by **19%** in Q1 2026, primarily due to reduced spending on aircraft, vehicles, and IT, partially offset by increased facilities spending Capital Expenditures by Asset Category (Three Months Ended August 31, in millions) | Asset Category | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Aircraft and related equipment | $60 | $181 | (67)% | | Package handling and ground support equipment | $205 | $197 | 4% | | Information technology | $118 | $153 | (23)% | | Vehicles and trailers | $47 | $90 | (48)% | | Facilities and other | $193 | $146 | 32% | | **Total capital expenditures** | **$623** | **$767** | **(19)%** | Capital Expenditures by Segment (Three Months Ended August 31, in millions) | Segment | 2025 | 2024 | Percent Change | | :-------------------------------- | :----- | :----- | :------------- | | Federal Express segment | $568 | $703 | (19)% | | FedEx Freight segment | $32 | $35 | (9)% | | Other | $23 | $29 | (21)% | | **Total capital expenditures** | **$623** | **$767** | **(19)%** | - Decreased spending on aircraft and related equipment, vehicles and trailers, and information and technology investments at Federal Express and FedEx Freight[180](index=180&type=chunk) [GUARANTOR FINANCIAL INFORMATION](index=42&type=section&id=GUARANTOR%20FINANCIAL%20INFORMATION) This section provides summarized financial information for FedEx (Parent) and its Guarantor Subsidiaries, and for FedEx (Parent Guarantor) and Federal Express (Subsidiary Issuer) - FedEx's senior unsecured debt securities are guaranteed by certain direct and indirect subsidiaries, which are **100%** owned by FedEx, with guarantees being full, unconditional, and joint and several[182](index=182&type=chunk) - FedEx fully and unconditionally guarantees the payment obligations of Federal Express for its **$711 million** Pass-Through Certificates[183](index=183&type=chunk) Parent and Guarantor Subsidiaries Summarized Balance Sheet (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Current Assets | $9,924 | $9,514 | | Intercompany Receivable | $5,145 | $4,278 | | Total Assets | $84,186 | $83,125 | | Current Liabilities | $11,439 | $11,202 | | Total Liabilities | $53,492 | $52,324 | Parent and Guarantor Subsidiaries Summarized Statement of Income (Three Months Ended August 31, 2025, in millions) | Metric | Amount | | :-------------------------------- | :----- | | Revenue | $16,643 | | Intercompany Charges, net | ($1,106) | | Operating Income | $1,265 | | Income Before Income Taxes | $1,043 | | Net Income | $691 | Parent Guarantor and Subsidiary Issuer Summarized Balance Sheet (in millions) | Category | August 31, 2025 | May 31, 2025 | | :-------------------------------- | :-------------- | :----------- | | Current Assets | $9,856 | $9,504 | | Intercompany Receivable | $1,187 | $581 | | Total Assets | $73,227 | $72,044 | | Current Liabilities | $10,598 | $10,310 | | Total Liabilities | $50,346 | $49,200 | Parent Guarantor and Subsidiary Issuer Summarized Statement of Income (Three Months Ended August 31, 2025, in millions) | Metric | Amount | | :-------------------------------- | :----- | | Revenue | $14,302 | | Intercompany Charges, net | ($1,261) | | Operating Income | $894 | | Income Before Income Taxes | $1,035 | | Net Income | $772 | [LIQUIDITY OUTLOOK](index=43&type=section&id=LIQUIDITY%20OUTLOOK) FedEx expects to meet liquidity needs through existing cash, operating cash flows, and available financing, while continuing stock repurchases, voluntary pension contributions, and quarterly dividends - FedEx held **$6.2 billion** in cash and cash equivalents and had **$3.5 billion** in available liquidity under its credit agreements at August 31, 2025[190](index=190&type=chunk) - Costs related to the FedEx Freight spin-off are expected to be significant but not adversely affect liquidity[190](index=190&type=chunk) - The company expects to continue repurchasing additional shares of common stock during the remainder of 2026[191](index=191&type=chunk) - Capital expenditures for 2026 are expected to be approximately **$4.5 billion**, with aircraft spend declining to **$1.0 billion**[193](index=193&type=chunk) - Voluntary contributions of **$200 million** were made to the U.S. Pension Plan in Q1 2026, with up to **$200 million** more anticipated for the remainder of 2026; no minimum contributions are required[198](index=198&type=chunk) - Standard & Poor's and Moody's Investors Service have assigned investment-grade credit ratings with a 'stable' outlook[200](index=200&type=chunk) [CRITICAL ACCOUNTING ESTIMATES](index=44&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Management continuously reviews accounting policies and estimates, with no additional events indicating goodwill impairment testing is required or at risk as of August 31, 2025 - Management does not believe there has been any additional change of events or circumstances that would indicate that additional reevaluation of the goodwill of our reporting units is required as of August 31, 2025, nor do we believe the goodwill of our reporting units is at risk of failing impairment testing[202](index=202&type=chunk) [FORWARD-LOOKING STATEMENTS](index=44&type=section&id=FORWARD-LOOKING%20STATEMENTS) This section provides a cautionary statement regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those contemplated[205](index=205&type=chunk) - Key risks include economic conditions, changes in shipment volumes and prices, geopolitical developments, fuel price volatility, ability to implement business strategy and transformation initiatives (Network 2.0, FedEx Freight spin-off), data breaches, e-commerce growth, and regulatory changes[205](index=205&type=chunk)[215](index=215&type=chunk) - The company is under no obligation to update or alter any forward-looking statements[207](index=207&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section reports no material changes in market risk sensitive instruments, identifying foreign currency exchange rates and fuel prices as principal market risks - No material changes in market risk sensitive instruments and positions since the Annual Report[208](index=208&type=chunk) - Principal foreign currency exchange rate risks relate to the euro, Chinese yuan, British pound, Canadian dollar, Australian dollar, Mexican peso, Hong Kong dollar, and Japanese yen[209](index=209&type=chunk) - The U.S. dollar's weaker performance relative to foreign currencies had a slightly negative effect on results in Q1 2026[209](index=209&type=chunk) - Market risk for changes in vehicle and jet fuel prices is largely mitigated by indexed fuel surcharges[210](index=210&type=chunk) [ITEM 4. Controls and Procedures](index=48&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 31, 2025, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were effective as of August 31, 2025[211](index=211&type=chunk) - No material changes occurred in internal control over financial reporting during the quarter ended August 31, 2025[212](index=212&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=48&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 9 of the condensed consolidated financial statements for a description of all material pending legal proceedings - For a description of all material pending legal proceedings, refer to Note 9 of the accompanying unaudited condensed consolidated financial statements[213](index=213&type=chunk) [ITEM 1A. Risk Factors](index=48&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K - There have been no material changes from the risk factors disclosed in the Annual Report on Form 10-K[214](index=214&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the issuance of unregistered common stock for an acquisition and FedEx's common stock repurchases during Q1 2026 - FedEx issued **359,052 unregistered shares** of common stock (valued at approximately **$90 million**) in February 2025 and an additional **296 shares** in August 2025 as partial consideration for the acquisition of RouteSmart Technologies, Inc[216](index=216&type=chunk) Issuer Purchases of Equity Securities (Q1 2026) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under Program ($ in millions) | | :---------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | :------------------------------------------------------------------------------------- | | Jun. 1-30, 2025 | 650,000 | $224.56 | 650,000 | $1,918 | | Jul. 1-31, 2025 | 1,502,645 | $235.58 | 1,502,645 | $1,564 | | Aug. 1-31, 2025 | — | — | — | $1,564 | | **Total** | **2,152,645** | | **2,152,645** | **$1,564** | - FedEx repurchased **2.2 million shares** for **$500 million** in Q1 2026 under its **$5.0 billion** stock repurchase program, with approximately **$1.6 billion** remaining available as of September 18, 2025[219](index=219&type=chunk)[220](index=220&type=chunk) [ITEM 5. Other Information](index=49&type=section&id=ITEM%205.%20Other%20Information) No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended August 31, 2025 - No director or officer adopted, modified, or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended August 31, 2025[222](index=222&type=chunk) [ITEM 6. Exhibits](index=50&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, indentures, certifications, and interactive data files - The exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Indentures for debt securities, certifications of principal executive and financial officers, and Interactive Data Files (Inline XBRL)[223](index=223&type=chunk) Signature [Official Signature](index=51&type=section&id=Official%20Signature) This section contains the official signature block, confirming the report was signed on behalf of FedEx Corporation by its Corporate Vice President and Chief Accounting Officer - The report is signed by Guy M. Erwin II, Corporate Vice President and Chief Accounting Officer of FedEx Corporation, on September 18, 2025[226](index=226&type=chunk)