FedEx Freight outlook lowered for fiscal 2026

Core Insights - FedEx Corp. has lowered expectations for its less-than-truckload unit, FedEx Freight, with a planned spin-off scheduled for June 1 [1] - FedEx Freight's revenue fell 1.7% year over year to $2.14 billion, with a 2.8% decline in tonnage partially offset by a 1.1% increase in yield [1] Group 1: FedEx Freight Performance - Shipments decreased by 3.9% year over year and were 2.9% lower than the previous quarter, while weight per shipment increased by 1.2% year over year [2] - The adjusted operating ratio for FedEx Freight was 88.7%, which is 300 basis points worse year over year, excluding one-time costs of $152 million related to the spin-off [3] - Top-line weakness and a 110-basis point year-over-year increase in salaries, wages, and benefits expenses were significant headwinds [4] Group 2: Future Expectations - Revenue for FedEx Freight is now expected to decline slightly year over year for the fiscal year ending May 31, a change from the previous forecast of low-single-digit growth [5] - Daily shipments are forecasted to decline by a low-single-digit percentage, with lower volumes expected to continue to negatively impact margins [5] - FedEx Freight's general rate increase of 5.9% will take effect on January 5 [5] Group 3: Consolidated Operations - FedEx reported consolidated adjusted earnings per share of $4.82 for its fiscal second quarter, exceeding consensus estimates by 71 cents and increasing by 77 cents year over year [6] - The company raised its guidance for consolidated revenue growth to 5% to 6% year over year, up from a previous outlook of 4% to 6% [7] - Full-year adjusted EPS is now expected to range from $17.80 to $19, an increase from the previous range of $17.20 to $19 [7]