**Executive Summary & First Quarter Performance**](index=1&type=section&id=Executive%20Summary%20%26%20First%20Quarter%20Performance) FedEx reported year-over-year earnings growth in Q1 FY2026, driven by strategic initiatives and cost reductions, with adjusted diluted EPS increasing to $3.83 [**Consolidated Financial Results (GAAP & Adjusted)**](index=1&type=section&id=Consolidated%20Financial%20Results%20(GAAP%20%26%20Adjusted)) FedEx reported year-over-year earnings growth in Q1 FY2026, with adjusted diluted EPS increasing to $3.83 from $3.60. Revenue grew to $22.2 billion from $21.6 billion, and adjusted operating income improved to $1.30 billion from $1.21 billion, reflecting successful strategic initiatives and cost reductions Consolidated Results (GAAP & Adjusted) | | Fiscal 2026 | | Fiscal 2025 | | | --- | --- | --- | --- | --- | | | As Reported (GAAP) | Adjusted (non-GAAP) | As Reported (GAAP) | Adjusted (non-GAAP) | | Revenue | $22.2 billion | $22.2 billion | $21.6 billion | $21.6 billion | | Operating income | $1.19 billion | $1.30 billion | $1.08 billion | $1.21 billion | | Operating margin | 5.3% | 5.8% | 5.0% | 5.6% | | Net income | $0.82 billion | $0.91 billion | $0.79 billion | $0.89 billion | | Diluted EPS | $3.46 | $3.83 | $3.21 | $3.60 | - Earnings growth is attributed to the success of strategic initiatives, including flexing the network, reducing cost-to-serve, and enhancing value proposition and customer experience[1](index=1&type=chunk) - Consolidated operating results improved, reflecting strength in U.S. domestic package revenue and continued structural cost reduction, despite an unfavorable non-recurring income tax expense of **$16 million ($0.07 per diluted share)**[1](index=1&type=chunk) [**Segment Performance Overview**](index=1&type=section&id=Segment%20Performance%20Overview) The Federal Express segment improved due to higher U.S. domestic and international priority package yields and increased U.S. domestic package volume, while the FedEx Freight segment saw decreased operating results from lower revenue and higher costs [**Federal Express Segment**](index=1&type=section&id=Federal%20Express%20Segment%20Performance) The Federal Express segment improved due to higher U.S. domestic and international priority package yields and increased U.S. domestic package volume, despite higher costs and global trade impacts - Federal Express segment operating results improved during the quarter, driven by higher U.S. domestic and international priority package yields, continued cost savings from transformation initiatives, and increased U.S. domestic package volume[2](index=2&type=chunk) - These positive factors were partially offset by higher wage and purchased transportation rates, the impact of the evolving global trade environment on international export package demand, and the expiration of the U.S. Postal Service contract[2](index=2&type=chunk)[3](index=3&type=chunk) [**FedEx Freight Segment**](index=2&type=section&id=FedEx%20Freight%20Segment%20Performance) The FedEx Freight segment experienced decreased operating results due to lower revenue, higher wage rates, and increased sales professional hiring - FedEx Freight segment operating results decreased during the quarter due to lower revenue, higher wage rates, and the hiring of additional dedicated LTL sales professionals[3](index=3&type=chunk) **Strategic Initiatives & Business Updates**](index=2&type=section&id=Strategic%20Initiatives%20%26%20Business%20Updates) FedEx advanced strategic initiatives including share repurchases, the planned spin-off of FedEx Freight, and announced upcoming rate increases [**Share Repurchase Program**](index=2&type=section&id=Share%20Repurchase%20Program) FedEx completed $0.5 billion in share repurchases during the quarter, buying back approximately 2.2 million shares, which positively impacted diluted EPS by $0.02. The company expects to continue repurchasing shares, with $1.6 billion remaining under the 2024 authorization - FedEx completed **$0.5 billion** in share repurchases via open market transactions during the quarter, repurchasing approximately **2.2 million shares**[4](index=4&type=chunk) - The decrease in outstanding shares benefited first quarter results by **$0.02 per diluted share**[4](index=4&type=chunk) - As of August 31, 2025, **$1.6 billion** remained available for repurchases under the company's 2024 stock repurchase authorization[5](index=5&type=chunk) [**FedEx Freight Separation On Track**](index=2&type=section&id=FedEx%20Freight%20Separation%20On%20Track) The planned spin-off of FedEx Freight into a new publicly traded company (FDXF) is on track for completion by June 2026, expected to be tax-efficient for stockholders. The company submitted its confidential Form 10 to the SEC and requested a private letter ruling from the IRS - The planned spin-off of FedEx Freight into a new publicly traded company (FDXF) continues to advance and is expected to be achieved in a tax-efficient manner for FedEx stockholders and executed by June 2026[6](index=6&type=chunk) - In August, the company submitted its confidential Form 10 to the SEC, and in September, submitted a request for a private letter ruling on the tax treatment of the transaction to the IRS[7](index=7&type=chunk) [**2026 Rate Increases**](index=2&type=section&id=2026%20Rate%20Increases) Effective January 5, 2026, FedEx parcel and FedEx Freight LTL shipping rates will increase by an average of 5.9% - Effective January 5, 2026, FedEx parcel and FedEx Freight LTL shipping rates will increase by an **average of 5.9%**[8](index=8&type=chunk) **Fiscal 2026 Outlook**](index=2&type=section&id=Outlook) FedEx initiated its fiscal 2026 outlook, forecasting revenue growth and adjusted diluted EPS, based on current economic and fuel price assumptions [**Financial Forecasts**](index=3&type=section&id=Financial%20Forecasts) FedEx initiated its full-year fiscal 2026 earnings outlook, forecasting 4% to 6% revenue growth. Adjusted diluted EPS is projected to be $17.20 to $19.00 (excluding MTM retirement adjustments, business optimization, spin-off, and fiscal year change costs). The company also expects $1 billion in permanent cost reductions and $4.5 billion in capital spending Fiscal 2026 Forecasts (Non-GAAP) | Metric | Forecast | | :--- | :--- | | Revenue growth rate year over year | 4% to 6% | | Diluted EPS (before MTM retirement plans accounting adjustments) | $14.20 to $16.00 | | Diluted EPS (after excluding business optimization, FedEx Freight spin-off, and fiscal year change costs) | $17.20 to $19.00 | | ETR (prior to MTM retirement plans accounting adjustments) | Approximately 25% | | Pension contributions | Up to $400 million (vs. prior $600 million) | | Permanent cost reductions (transformation-related savings) | $1 billion | | Capital spending | $4.5 billion | - Reaffirmed fiscal 2026 forecast includes **$1 billion in permanent cost reductions** from structural cost reductions and the advancement of Network 2.0[12](index=12&type=chunk) - Capital spending of **$4.5 billion**, with a priority on investments in network optimization and efficiency improvement, including fleet and facility modernization and automation[12](index=12&type=chunk) [**Key Assumptions**](index=3&type=section&id=Key%20Assumptions) The forecasts assume current economic conditions and fuel price expectations, with no additional adverse economic, geopolitical, or international trade-related developments. The company is unable to provide a GAAP EPS or ETR outlook due to the unpredictability of mark-to-market retirement plan accounting adjustments - 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) - FedEx is unable to forecast the fiscal 2026 mark-to-market ("MTM") retirement plans accounting adjustments, and thus cannot provide a GAAP EPS or effective tax rate ("ETR") outlook[9](index=9&type=chunk)[10](index=10&type=chunk) **Corporate Information & Disclosures**](index=3&type=section&id=Corporate%20Information%20%26%20Disclosures) This section provides an overview of FedEx, details investor resources, outlines forward-looking statements and associated risks, and lists contact information [**Corporate Overview**](index=3&type=section&id=Corporate%20Overview) FedEx Corp. (NYSE: FDX) is a global transportation, e-commerce, and business services provider with $89 billion in annual revenue and over 500,000 employees. The company offers integrated business solutions and aims for carbon-neutral operations by 2040 - FedEx Corp. provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services, with annual revenue of **$89 billion** and over **500,000 employees**[11](index=11&type=chunk) - FedEx is committed to connecting people and possibilities around the world responsibly and resourcefully, with a goal to achieve carbon-neutral operations by **2040**[13](index=13&type=chunk) [**Additional Information & Investor Resources**](index=4&type=section&id=Additional%20Information%20%26%20Investor%20Resources) Additional operating data and SEC filings (10-K, 10-Q, 8-K) are available on the company's investor relations website, investors.fedex.com, which also hosts webcasts of earnings calls and other material information - Additional information and operating data are contained in the company's annual report, Form 10-K, Form 10-Qs, Form 8-Ks and Statistical Books, available on investors.fedex.com[14](index=14&type=chunk) - The Investor Relations page of the website, investors.fedex.com, contains a significant amount of information about FedEx, including SEC filings and financial and other information for investors[15](index=15&type=chunk) [**Forward-Looking Statements & Risk Factors**](index=4&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) The press release contains forward-looking statements subject to various risks and uncertainties, including economic conditions, global trade volatility, ability to implement strategies, cost reduction achievement, data breaches, labor costs, international conflicts, regulatory changes, fuel prices, competition, and successful spin-off of FedEx Freight - Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act, subject to risks, uncertainties and other factors which could cause actual results to differ materially[16](index=16&type=chunk) - Potential risks and uncertainties include economic conditions in global markets, uncertainty and volatility in the global trade environment, ability to successfully implement business strategies and achieve cost reduction initiatives, and the successful implementation of the FedEx Freight Spin-Off[16](index=16&type=chunk)[17](index=17&type=chunk) - Other risks include a significant data breach, ability to meet labor and purchased transportation needs, international conflicts, evolving laws and government regulations, changes in fuel prices or currency exchange rates, and intense competition[17](index=17&type=chunk) [**Contacts**](index=5&type=section&id=Contacts) Contact information for Media Relations and Investor Relations is provided for inquiries - Media Contact: Caitlin Maier (901-434-8100, mediarelations@fedex.com)[18](index=18&type=chunk) - Investor Relations Contact: Jeni Hollander (901-818-7200, ir@fedex.com)[18](index=18&type=chunk) **Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures**](index=6&type=section&id=RECONCILIATIONS%20OF%20NON-GAAP%20FINANCIAL%20MEASURES%20TO%20GAAP%20FINANCIAL%20MEASURES) This section reconciles non-GAAP financial measures to GAAP, explaining adjustments for business optimization, spin-off, and fiscal year change costs for Q1 FY2026 and FY2025, and the FY2026 EPS forecast [**Explanation of Non-GAAP Adjustments**](index=6&type=section&id=Explanation%20of%20Non-GAAP%20Adjustments) FedEx uses non-GAAP financial measures, excluding business optimization costs, FedEx Freight spin-off costs, and fiscal year change costs, to provide a clearer view of core operating performance and assist investors in assessing underlying business trends. These adjustments are consistent with management's view and decision-making processes - Non-GAAP financial measures exclude business optimization costs, FedEx Freight spin-off costs, and fiscal year change costs[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - These adjustments are made to facilitate analysis and comparisons of ongoing business operations by excluding items that may not be indicative of, or are unrelated to, the company's and business segments' core operating performance[26](index=26&type=chunk) - Management uses these non-GAAP financial measures in making financial, operating and planning decisions and evaluating the company's and each business segments' ongoing performance[26](index=26&type=chunk) [**First Quarter Fiscal 2026 Reconciliations**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20Reconciliations) Detailed reconciliation tables are provided for FedEx Corporation, Federal Express Segment, and FedEx Freight Segment, showing the impact of business optimization, FedEx Freight spin-off, and fiscal year change costs on operating income, net income, and diluted EPS for Q1 FY2026 [**First Quarter Fiscal 2026 FedEx Corporation**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20FedEx%20Corporation) First Quarter Fiscal 2026 FedEx Corporation Reconciliation | Dollars in millions, except EPS | | Operating Income | Margin | | Income Taxes | Net Income | Diluted Earnings Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $ | 1,186 | 5.3 % | $ | 310 | $ 824 | $ 3.46 | | Business optimization costs | | 67 | 0.3 % | | 15 | 52 | 0.22 | | FedEx Freight spin-off costs | | 41 | 0.2 % | | 10 | 33 | 0.14 | | Fiscal year change costs | | 4 | — % | | 1 | 3 | 0.01 | | Non-GAAP measure | $ | 1,298 | 5.8 % | $ | 336 | $ 912 | $ 3.83 | [**Federal Express Segment**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20Federal%20Express%20Segment) First Quarter Fiscal 2026 Federal Express Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 1,138 | 6.0 % | | Business optimization costs | 21 | 0.1 % | | FedEx Freight spin-off costs | 1 | — % | | Fiscal year change costs | 4 | — % | | Non-GAAP measure | $ 1,164 | 6.1 % | [**FedEx Freight Segment**](index=8&type=section&id=First%20Quarter%20Fiscal%202026%20FedEx%20Freight%20Segment) First Quarter Fiscal 2026 FedEx Freight Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 360 | 16.0 % | | FedEx Freight spin-off costs | 9 | 0.4 % | | Non-GAAP measure | $ 369 | 16.3 % | [**First Quarter Fiscal 2025 Reconciliations**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20Reconciliations) Detailed reconciliation tables are provided for FedEx Corporation and Federal Express Segment, showing the impact of business optimization costs on operating income, net income, and diluted EPS for Q1 FY2025 [**FedEx Corporation**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20FedEx%20Corporation) First Quarter Fiscal 2025 FedEx Corporation Reconciliation | Dollars in millions, except EPS | Operating Income | Margin | | Income Taxes | Net Income | Diluted Earnings Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | GAAP measure | $ 1,080 | 5.0 % | $ | 262 | $ 794 | $ 3.21 | | Business optimization costs | 128 | 0.6 % | | 30 | 98 | 0.39 | | Non-GAAP measure | $ 1,208 | 5.6 % | $ | 292 | $ 892 | $ 3.60 | [**Federal Express Segment**](index=9&type=section&id=First%20Quarter%20Fiscal%202025%20Federal%20Express%20Segment) First Quarter Fiscal 2025 Federal Express Segment Reconciliation | Dollars in millions | Operating Income | Margin | | :--- | :--- | :--- | | GAAP measure | $ 953 | 5.2 % | | Business optimization costs | 43 | 0.2 % | | Non-GAAP measure | $ 996 | 5.4 % | [**Fiscal 2026 Diluted Earnings Per Share Forecast**](index=11&type=section&id=Fiscal%202026%20Diluted%20Earnings%20Per%20Share%20Forecast) The fiscal 2026 diluted EPS forecast is a non-GAAP measure, excluding MTM retirement plans accounting adjustments and estimated costs for business optimization, FedEx Freight spin-off, and fiscal year change. A table outlines the effects of these exclusions, except for MTM adjustments which are impracticable to predict - The fiscal 2026 EPS forecast is a non-GAAP financial measure because it excludes fiscal 2026 MTM retirement plans accounting adjustments and estimated costs related to business optimization initiatives, the planned spin-off of FedEx Freight, and the planned fiscal year change[28](index=28&type=chunk) Fiscal 2026 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) | | $14.20 to $16.00 | | FedEx Freight spin-off costs | $600 | | | Business optimization | 310 | | | Fiscal year change costs | 30 | | | Total adjustments | $940 | | | Income tax effect | (215) | | | Net of tax effect | $725 | 3.00 | | Diluted earnings per share with adjustments (non-GAAP) | | $17.20 to $19.00 | **Detailed Financial Statements**](index=12&type=section&id=Detailed%20Financial%20Statements) This section presents detailed unaudited consolidated financial statements, including income statements, balance sheets, cash flows, and segment-specific financial and operating highlights [**FedEx Corp. Financial Highlights (Consolidated Income Statement)**](index=12&type=section&id=FEDEX%20CORP.%20FINANCIAL%20HIGHLIGHTS) Presents the unaudited consolidated income statement for the three months ended August 31, 2025, and 2024, detailing revenue by segment, operating expenses, operating income, other income/expense, income before taxes, provision for income taxes, net income, and diluted EPS FedEx Corp. Financial Highlights (Consolidated Income Statement) | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | | | August 31, 2025 | | August 31, 2024 | Percent Change | | Revenue: | | | | | | | Federal Express segment | $ | 19,116 | $ | 18,305 | 4 | | FedEx Freight segment | | 2,257 | | 2,329 | (3) | | (1) Other and eliminations | | 871 | | 945 | (8) | | Total Revenue | | 22,244 | | 21,579 | 3 | | Operating Expenses: | | | | | | | Salaries and employee benefits | | 8,062 | | 7,785 | 4 | | Purchased transportation | | 5,488 | | 5,275 | 4 | | Rentals and landing fees | | 1,192 | | 1,161 | 3 | | Depreciation and amortization | | 1,092 | | 1,078 | 1 | | Fuel | | 873 | | 1,075 | (19) | | Maintenance and repairs | | 843 | | 829 | 2 | | 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 | | Operating income (loss): | | | | | | | Federal Express segment | | 1,138 | | 953 | 19 | | FedEx Freight segment | | 360 | | 439 | (18) | | (1) Corporate, other, and eliminations | | (312) | | (312) | — | | Total Operating Income | | 1,186 | | 1,080 | 10 | | Other (Expense) Income: | | | | | | | Interest, net | | (119) | | (84) | 42 | | Other retirement plans, net | | 60 | | 49 | 22 | | Other, net | | 7 | | 11 | (36) | | Total Other (Expense) Income | | (52) | | (24) | 117 | | Income Before Income Taxes | | 1,134 | | 1,056 | 7 | | Provision for Income Taxes | | 310 | | 262 | 18 | | Net Income | $ | 824 | $ | 794 | 4 | | Diluted Earnings Per Share | $ | 3.46 | $ | 3.21 | 8 | | Weighted Average Common and Common Equivalent Shares | | 238 | | 247 | (4) | | Capital Expenditures | $ | 623 | $ | 767 | (19) | [**FedEx Corp. Condensed Consolidated Balance Sheets**](index=13&type=section&id=FEDEX%20CORP.%20CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Provides the unaudited condensed consolidated balance sheets as of August 31, 2025, and May 31, 2025, detailing current and long-term assets, liabilities, and common stockholders' investment FedEx Corp. Condensed Consolidated Balance Sheets | | August 31, 2025 | | | | | :--- | :--- | :--- | :--- | :--- | | | (Unaudited) | | | May 31, 2025 | | ASSETS | | | | | | Current Assets | | | | | | Cash and cash equivalents | $ | 6,166 | $ | 5,502 | | Receivables, less allowances | | 11,516 | | 11,368 | | Spare parts, supplies, and fuel, less allowances | | 604 | | 602 | | Prepaid expenses and other | | 1,058 | | 914 | | Total current assets | | 19,344 | | 18,386 | | Property and Equipment, at Cost | | 88,126 | | 87,622 | | Less accumulated depreciation and amortization | | 46,742 | | 45,980 | | Net property and equipment | | 41,384 | | 41,642 | | Other Long-Term Assets | | | | | | Operating lease right-of-use assets, net | | 16,368 | | 16,453 | | Goodwill | | 6,672 | | 6,603 | | Other assets | | 4,648 | | 4,543 | | Total other long-term assets | | 27,688 | | 27,599 | | | $ | 88,416 | $ | 87,627 | | LIABILITIES AND COMMON STOCKHOLDERS' INVESTMENT | | | | | | Current Liabilities | | | | | | Current portion of long-term debt | $ | 883 | $ | 1,428 | | Accrued salaries and employee benefits | | 2,333 | | 2,731 | | Accounts payable | | 4,223 | | 3,692 | | Operating lease liabilities | | 2,591 | | 2,565 | | Accrued expenses | | 5,494 | | 4,995 | | Total current liabilities | | 15,524 | | 15,411 | | Long-Term Debt, Less Current Portion | | 20,291 | | 19,151 | | Other Long-Term Liabilities | | | | | | Deferred income taxes | | 4,050 | | 4,205 | | Pension, postretirement healthcare, and other benefit obligations | | 1,690 | | 1,698 | | Self-insurance accruals | | 4,132 | | 4,033 | | Operating lease liabilities | | 14,141 | | 14,272 | | Other liabilities | | 817 | | 783 | | Total other long-term liabilities | | 24,830 | | 24,991 | | Commitments and Contingencies | | | | | | Common Stockholders' Investment | | | | | | Common stock, $0.10 par value, 800 million shares authorized | | 32 | | 32 | | Additional paid-in capital | | 4,327 | | 4,290 | | Retained earnings | | 41,538 | | 41,402 | | Accumulated other comprehensive loss | | (1,371) | | (1,362) | | Treasury stock, at cost | | (16,755) | | (16,288) | | Total common stockholders' investment | | 27,771 | | 28,074 | | | $ | 88,416 | $ | 87,627 | [**FedEx Corp. Condensed Consolidated Statements of Cash Flows**](index=14&type=section&id=FEDEX%20CORP.%20CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Presents the unaudited condensed consolidated statements of cash flows for the three months ended August 31, 2025, and 2024, outlining cash flows from operating, investing, and financing activities FedEx Corp. Condensed Consolidated Statements of Cash Flows | | | Three Months Ended | | | :--- | :--- | :--- | :--- | :--- | | | August 31, 2025 | | | August 31, 2024 | | Operating Activities: | | | | | | Net income | $ | 824 | $ | 794 | | Adjustments to reconcile net income to cash provided by operating activities: | | | | | | Depreciation and amortization | | 1,092 | | 1,078 | | Other, net | | 910 | | 925 | | Changes in operating assets and liabilities, net | | (1,110) | | (1,610) | | Cash provided by operating activities | | 1,716 | | 1,187 | | Investing Activities: | | | | | | Capital expenditures | | (623) | | (767) | | Purchase of investments | | (34) | | (61) | | Proceeds from sale of investments | | 30 | | 13 | | Proceeds from asset dispositions and other investing activities, net | | 8 | | 13 | | Cash used in investing activities | | (619) | | (802) | | Financing Activities: | | | | | | Proceeds from debt issuances | | 997 | | — | | Principal payments on debt | | (625) | | (34) | | Proceeds from stock issuances | | 18 | | 404 | | Dividends paid | | (345) | | (339) | | Purchases of common stock | | (500) | | (1,000) | | Other | | (5) | | — | | Cash used in financing activities | | (460) | | (969) | | Effect of exchange rate changes on cash | | 27 | | 26 | | Net increase (decrease) in cash and cash equivalents | | 664 | | (558) | | Cash and cash equivalents at beginning of period | | 5,502 | | 6,501 | | Cash and cash equivalents at end of period | $ | 6,166 | $ | 5,943 | [**Federal Express Segment Financial & Operating Highlights**](index=15&type=section&id=FEDERAL%20EXPRESS%20SEGMENT%20FINANCIAL%20HIGHLIGHTS) Details the financial and operating performance of the Federal Express segment for the three months ended August 31, 2025, and 2024, including revenue breakdown by package type and freight, operating expenses, operating income, operating margin, and key package and freight statistics (volume, yield) Federal Express Segment Financial Highlights | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | | | August 31, 2025 | | August 31, 2024 | Percent Change | | Revenue: | | | | | | | Package: | | | | | | | U.S. priority | $ | 2,767 | $ | 2,591 | 7 | | U.S. deferred | | 1,273 | | 1,151 | 11 | | U.S. ground | | 8,654 | | 8,056 | 7 | | Total U.S. domestic package revenue | | 12,694 | | 11,798 | 8 | | International priority | | 2,258 | | 2,206 | 2 | | International economy | | 1,354 | | 1,360 | — | | Total international export package revenue | | 3,612 | | 3,566 | 1 | | (1) International domestic | | 1,135 | | 1,112 | 2 | | Total package revenue | | 17,441 | | 16,476 | 6 | | Freight: | | | | | | | U.S. | | 303 | | 569 | (47) | | International priority | | 595 | | 526 | 13 | | International economy | | 528 | | 463 | 14 | | Total freight revenue | | 1,426 | | 1,558 | (8) | | Other | | 249 | | 271 | (8) | | Total revenue | | 19,116 | | 18,305 | 4 | | Operating expenses: | | | | | | | Salaries and employee benefits | | 6,516 | | 6,201 | 5 | | Purchased transportation | | 5,073 | | 4,801 | 6 | | Rentals and landing fees | | 1,013 | | 986 | 3 | | Depreciation and amortization | | 954 | | 935 | 2 | | Fuel | | 760 | | 954 | (20) | | Maintenance and repairs | | 737 | | 719 | 3 | | Separation and other costs | | 5 | | — | NM | | Business optimization costs | | 21 | | 43 | (51) | | Intercompany allocations | | (233) | | (187) | 25 | | Other | | 3,132 | | 2,900 | 8 | | Total operating expenses | | 17,978 | | 17,352 | 4 | | Operating income | $ | 1,138 | $ | 953 | 19 | | Operating margin | | 6.0 % | | 5.2 % | 80 bp | Federal Express Segment Operating Highlights (Package Statistics) | PACKAGE STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | (1) Avg. daily package volume (ADV) (000s) : | | | | | | | U.S. priority | | 1,654 | | 1,600 | 3 | | U.S. deferred | | 1,061 | | 968 | 10 | | U.S. ground commercial | | 4,290 | | 4,289 | — | | U.S. ground home delivery/economy | | 6,915 | | 6,438 | 7 | | Total U.S. domestic ADV | | 13,920 | | 13,295 | 5 | | International priority | | 562 | | 622 | (10) | | International economy | | 518 | | 491 | 5 | | Total international export ADV | | 1,080 | | 1,113 | (3) | | (2) International domestic | | 1,806 | | 1,823 | (1) | | Total ADV | | 16,806 | | 16,231 | 4 | | Revenue per package (yield): | | | | | | | U.S. priority | $ | 26.13 | $ | 25.30 | 3 | | U.S. deferred | | 18.76 | | 18.59 | 1 | | U.S. ground | | 12.07 | | 11.73 | 3 | | U.S. domestic composite | | 14.25 | | 13.87 | 3 | | International priority | | 62.77 | | 55.37 | 13 | | International economy | | 40.87 | | 43.33 | (6) | | International export composite | | 52.27 | | 50.06 | 4 | | (2) International domestic | | 9.81 | | 9.53 | 3 | | Composite package yield | $ | 16.22 | $ | 15.86 | 2 | Federal Express Segment Operating Highlights (Freight Statistics) | FREIGHT STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Average daily freight pounds (000s): | | | | | | | U.S. | | 2,165 | | 5,319 | (59) | | International priority | | 4,647 | | 4,465 | 4 | | International economy | | 11,222 | | 10,706 | 5 | | Total average daily freight pounds | | 18,034 | | 20,490 | (12) | | Revenue per pound (yield): | | | | | | | U.S. | $ | 2.18 | $ | 1.67 | 31 | | International priority | | 2.00 | | 1.84 | 9 | | International economy | | 0.74 | | 0.68 | 9 | | Composite freight yield | $ | 1.24 | $ | 1.19 | 4 | | Operating weekdays | | 64 | | 64 | — | [**FedEx Freight Segment Financial & Operating Highlights**](index=17&type=section&id=FEDEX%20FREIGHT%20SEGMENT%20FINANCIAL%20AND%20OPERATING%20HIGHLIGHTS) Details the financial and operating performance of the FedEx Freight segment for the three months ended August 31, 2025, and 2024, including revenue, operating expenses, operating income, operating margin, and key operating statistics (average daily shipments, weight per shipment, revenue per shipment, revenue per hundredweight) FedEx Freight Segment Financial Highlights | FINANCIAL HIGHLIGHTS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $ | 2,257 | $ | 2,329 | (3) | | Operating expenses: | | | | | | | Salaries and employee benefits | | 975 | | 984 | (1) | | Purchased transportation | | 201 | | 203 | (1) | | Rentals | | 74 | | 71 | 4 | | Depreciation and amortization | | 110 | | 110 | — | | Fuel | | 113 | | 121 | (7) | | Maintenance and repairs | | 81 | | 82 | (1) | | Separation and other costs | | 9 | | — | NM | | Intercompany charges | | 162 | | 148 | 9 | | Other | | 172 | | 171 | 1 | | Total operating expenses | | 1,897 | | 1,890 | — | | Operating income | $ | 360 | $ | 439 | (18) | | Operating margin | | 16.0 % | | 18.8 % | (280) bp | FedEx Freight Segment Operating Statistics | OPERATING STATISTICS | | | Three Months Ended | | | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating weekdays | | 64 | | 64 | — | | Average daily shipments (000s): | | | | | | | Priority | | 62.0 | | 62.9 | (1) | | Economy | | 28.0 | | 29.1 | (4) | | Total average daily shipments | | 90.0 | | 92.0 | (2) | | Weight per shipment (lbs): | | | | | | | Priority | | 933 | | 956 | (2) | | Economy | | 907 | | 868 | 4 | | Composite weight per shipment | | 925 | | 928 | — | | Revenue per shipment: | | | | | | | Priority | $ | 359.54 | $ | 363.97 | (1) | | Economy | | 408.05 | | 408.60 | — | | Composite revenue per shipment | $ | 374.62 | $ | 378.09 | (1) | | Revenue per hundredweight: | | | | | | | Priority | $ | 38.54 | $ | 38.06 | 1 | | Economy | | 44.98 | | 47.09 | (4) | | Composite revenue per hundredweight | $ | 40.50 | $ | 40.73 | (1) |

Core Insights - FedEx reported strong fiscal first-quarter earnings, exceeding both revenue and earnings expectations, leading to a 5% increase in stock price in after-hours trading [1][4] Financial Performance - The company achieved a net income of $820 million, or $3.46 per share, for the first fiscal quarter ended August 31, compared to $790 million, or $3.21 per share, in the same period last year [2] - Adjusted net income, accounting for FedEx Freight spin-off costs, was $910 million or $3.83 per share, surpassing the expected $3.59 [2][4] - Revenue for the quarter was $22.24 billion, exceeding the expected $21.66 billion [4] Operational Metrics - Average daily volumes in the U.S. increased by 6% overall [3] - FedEx anticipates revenue growth in 2026 to be between 4% and 6%, significantly higher than Wall Street's estimate of 1.2% [3] - The company projects full-year earnings per share for fiscal year 2026 to be in the range of $17.20 to $19, with a midpoint of $18.10, close to the estimate of $18.21 [3]

Core Viewpoint - FedEx Corp. reported consolidated results for the first quarter of fiscal 2026, showing revenue growth compared to the previous year, with adjusted operating income also increasing [1]. Financial Performance - Revenue for the first quarter of fiscal 2026 was $22.2 billion, up from $21.6 billion in fiscal 2025, indicating a year-over-year increase of approximately 2.8% [1]. - Operating income for the first quarter of fiscal 2026 was reported at $1.19 billion, compared to $1.08 billion in the same quarter of fiscal 2025, reflecting a growth of about 10.2% [1]. - The operating margin improved to 5.3% in fiscal 2026 from 5.0% in fiscal 2025, indicating enhanced operational efficiency [1].

Core Insights - FedEx Corporation is experiencing a conservative outlook with analysts revising the average price target to $247 from $281, reflecting a decline in optimism over the past year [1][3] - The company is considered undervalued with a price-to-earnings ratio of 13x, indicating potential for stock price appreciation despite recent challenges [2][5] - FedEx's stock has a tendency to decline post-earnings announcements, even when revenue and earnings per share expectations are surpassed [4][5] Analyst Expectations - The average price target for FedEx has decreased significantly from $308.26 a year ago, indicating a shift in analyst sentiment [3] - Analyst Ki Bin Kim from Truist Financial has set a notably lower price target of $166, reflecting a cautious stance on the stock's future performance [4] - The upcoming first-quarter earnings report is anticipated to provide critical insights into FedEx's financial performance and future outlook [5] Market Dynamics - FedEx operates in a competitive transportation and logistics sector, facing challenges from economic conditions, fuel prices, and global trade dynamics [4][5] - The company competes with logistics giants such as UPS and DHL, which influences its market positioning and strategic initiatives [2]

Core Viewpoint - FedEx is expected to report earnings with an adjusted EPS of 3.65 and revenue exceeding 21 billion, reflecting a modest year-over-year growth of 1% despite a significant stock decline of 24% over the past year [1][3]. Company Performance - FedEx's stock has decreased by 24% over the last 52 weeks, while UPS has seen a 35% decline, contrasting with the broader market and industrial sector, which have increased by approximately 17% and 14% respectively [3]. - The company is facing challenges due to a post-COVID shipping slowdown and rising costs attributed to tariffs [1]. Technical Analysis - The stock is forming a symmetrical triangle pattern, indicating a period of consolidation as it approaches earnings, with key resistance levels identified between 240 and 245 [5][6]. - The moving averages are clustered together, suggesting a sideways movement, while the RSI indicates declining momentum leading into the earnings report [7]. Options Market Insights - The options market is pricing in a potential move of about ±7% post-earnings, equating to approximately $16.5 either way from the current share price of around $227 [11]. - A proposed trading strategy involves a double calendar position, buying a 245 strike call and a 210 strike put, while selling the same strikes in a shorter duration to capitalize on elevated implied volatility [12][13]. Trading Strategy - The strategy aims for profitability within a range of approximately 200 to 255, allowing for flexibility without needing to predict the stock's direction [14]. - The risk profile peaks at either 210 or 245, with a preference for movement towards these strikes for profitability [14][15].

So you cut your price target down to 240. The stock trades at about 226 right now. So you're not seeing a lot of upside movement.You also cut to neutral on your rating. What happened. Uh the stock hasn't moved a lot in the last 3 months, but why now.Well, it Good morning, Frank. Uh thanks for having me. And you're right.Uh this change of dimminimus, which went into effect in May for China and Hong Kong, went to the rest of the world at the end of August. And that's going to be a big issue for FedEx. We're g ...

Core Points - The Federal Reserve has initiated a rate reduction cycle, lowering the benchmark interest rate by 0.25 percentage points, with projections for two additional cuts by year-end, bringing the federal funds rate to a range of 3.5% to 3.75% [5][6] - The market's reaction to the rate cut was muted, with the S&P 500 index falling less than 0.1%, the Nasdaq Composite down 0.6%, and the Dow Jones Industrial Average rising 0.5% [3][4] - Fed Chair Jerome Powell highlighted the complexities of the current economic landscape, characterized by weakening job data and persistent inflation, indicating a challenging environment for monetary policy [6] Market Reactions - Stock futures showed positive movement ahead of the market open, with S&P 500 futures rising 0.8%, Nasdaq 100 contracts up 1.1%, and Dow Jones futures increasing by 0.7% [6] - The market had anticipated the rate cut, leading to minimal dramatic movements in stock prices upon the announcement [4] Economic Indicators - Initial jobless claims for the week of September 13 are expected to decrease to 240,000 from 263,000 in the previous week [7] - The Philadelphia Fed manufacturing survey is projected to rebound to 2% after a decline of 0.3% in August [7] - The Conference Board's Leading Economic Index has been declining, with a 2.7% drop from January to July 2025, and is expected to dip by 0.2% in the September reading [7]

Core Viewpoint - Stifel has reduced its price target for FedEx to $308 from $315 while maintaining a Buy rating, citing macroeconomic pressures and consumer caution as potential challenges ahead of the company's fiscal first-quarter 2026 earnings [1]. Group 1: Market Challenges - Macroeconomic pressures, tariff uncertainty, and changes to the de minimis import rule are expected to negatively impact shipping volumes [1]. - Consumer caution may dampen the peak shipping season, further affecting demand [1]. Group 2: Cost-Cutting Initiatives - FedEx's Network 2.0 initiative presents cost-cutting opportunities, with clearer progress anticipated in the upcoming quarter [2]. - Successful execution of this initiative could help mitigate or even exceed the challenges posed by demand fluctuations [2]. Group 3: Valuation and Future Outlook - Despite the variability in earnings outcomes, FedEx's current valuation indicates an attractive risk-reward profile [3]. - There is potential for upside from an expected upcycle within the next 12 months and the planned spin-off of FedEx Freight in 2026 [3].

Market Overview - The Dow finished up 260 points, while the S&P 500 was down about 0.1% and the NASDAQ down approximately 0.3% [2][3] - Small caps, represented by the Russell 2000, ended the day up about 0.5% [2] - The financial sector (XLF) reached its first record high in two weeks [4] Sector Performance - Strong performers included staples, communication services, utilities, energy, materials, and healthcare [4] - Underperformers were in the industrials, tech, and consumer discretionary sectors [5] - Notable declines in the NASDAQ 100 included Broadcom down nearly 4% and Nvidia down 2.5% [5] Federal Reserve Insights - The Fed cut interest rates by 25 basis points and signaled two more cuts in 2025, aiming for a benchmark rate of 3.5% to 3.75% by year-end [25] - The Fed's dot plot showed a more dovish outlook compared to June, with most officials expecting easing this year [26][28] - GDP growth was revised up to 1.6% for 2026, with long-term growth expectations at 1.8% [29] Company-Specific Updates - Cracker Barrel reported fourth-quarter results with total revenue expectations between $3.35 billion to $3.45 billion, reflecting a comparable store traffic decline of 4% to 7% [33][34] - The company faced backlash over its rebranding efforts, leading to a 20% drop in shares [34] - Lyft's shares rose 13% following a partnership with Whimo to launch a robo-taxi service in Nashville [41] Investment Recommendations - Technology remains a favored sector due to ongoing capital expenditure cycles and strong cash flow generation [20] - Global infrastructure is highlighted as an underappreciated sector with inflation protection and yield potential [20] - Municipal bonds are recommended for fixed income investors, particularly municipal high yield, offering attractive taxable equivalent yields [22]

Core Insights - FedEx is expected to report a quarterly profit decline due to President Donald Trump's decision to eliminate tariff-exempt treatment for popular direct-to-consumer shipments [1] Company Impact - The decision by the President will directly affect FedEx's financial results, leading to a profit hit in the upcoming quarterly report [1] Industry Context - The change in tariff treatment reflects broader trade policy shifts that could impact logistics and delivery companies, particularly those involved in e-commerce and direct-to-consumer shipping [1]