Core Insights - FedEx Corporation has raised its fiscal year 2026 earnings per share (EPS) outlook to a range of $19.30 to $20.10, reflecting strong performance in its business-to-business (B2B) segment and improvements from its Network 2.0 initiative [2] Management View - Rajesh Subramaniam, President and CEO, reported "very strong results this quarter," highlighting it as the most profitable peak season to date [2] - The growth in adjusted EPS is attributed to both yield and volume strength across the company's operations, indicating robust demand and operational efficiency [2]

Subramaniam said results were “largely driven” by Federal Express Corporation (FEC), which grew revenue 10% and expanded adjusted operating margin by 50 basis points. He said the quarter marked the sixth consecutive quarter of margin expansion at FEC, with adjusted operating income up 18%.Chief Financial Officer John Dietrich said FedEx’s adjusted earnings per share increased 16% year over year. He noted that third-quarter adjusted EPS included a one-time benefit of $0.41 from a favorable effective tax rate ...

Financial Data and Key Metrics Changes - Revenue increased by 8% year-over-year, driven by yield and volume strength across nearly all package services [6] - Adjusted operating income grew by 7% year-over-year, with a 16% increase in adjusted EPS [25] - Adjusted EPS outlook for FY 2026 raised to $19.30-$20.10 per diluted share [8][29] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue grew by 10%, with adjusted operating margin expanding by 50 basis points, marking the sixth consecutive quarter of margin expansion [7] - FedEx Freight revenue declined by 5%, pressured by lower shipments, but revenue per shipment increased by 1% [17][19] - International priority and economy freight revenue grew by 14%, supported by the Tricolor strategy [16] Market Data and Key Metrics Changes - U.S. domestic package yield increased by 5%, while international export package yield grew by 6% [19] - International export volumes increased by 2% year-over-year for the first time in fiscal year 2026 [18] - The company reduced trans-Pacific outbound capacity by approximately 15% and 25% during the quarter [10] Company Strategy and Development Direction - The company is focused on growing in high-margin verticals, transforming its network, and leveraging data and technology for efficiency gains [5] - Plans to spin off FedEx Freight on June 1, 2026, are on track, expected to unlock long-term value for stockholders [6][37] - The introduction of new technologies, such as the Dun & Bradstreet and FedEx Dataworks Retail Momentum Index, aims to enhance service and operational efficiency [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of consolidated Q3 results and updated assumptions for Q4, expecting continued revenue growth [8] - The company is closely monitoring the situation in the Middle East, emphasizing the safety of team members while managing network adjustments [41] - Management acknowledged challenges in the LTL market but remains optimistic about future growth as the market recovers [18] Other Important Information - The company expects $2 billion in cumulative savings from Network 2.0 and associated initiatives by the end of 2027 [9] - The company is committed to maintaining disciplined capital allocation, with FY 2026 CapEx expected to be no more than $4.1 billion [36] Q&A Session Summary Question: Impact of the Iran conflict on operations - Management is monitoring the situation closely and has adjusted the network to accommodate the conflict, with minimal expected impact on overall revenue [41][42] Question: Outlook for the LTL business - Management noted that the LTL industry is experiencing broader market softness, with increased separation costs expected to continue [47] Question: Year-over-year headwinds for Q4 - Management highlighted a $500 million headwind due to variable compensation, LTL business challenges, and MD-11 impacts [54] Question: Sustainability of volume and yield growth - Management acknowledged the current growth as an anomaly but expressed confidence in maintaining momentum into Q4 [59][60] Question: Cost dynamics and future expectations - Management emphasized ongoing cost containment efforts and the potential for further savings as the company continues to implement structural cost-out initiatives [85]

Financial Data and Key Metrics Changes - Revenue increased by 8% year-over-year, driven by yield and volume strength across nearly all package services [4] - Adjusted operating income rose by 7% year-over-year, with adjusted EPS growth of 16%, including a one-time benefit of $0.41 due to a favorable effective tax rate [22][25] - The company raised its FY 2026 adjusted earnings outlook to $19.30-$20.10 per diluted share [6][25] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue grew by 10%, with adjusted operating margin expanding by 50 basis points, marking the sixth consecutive quarter of margin expansion [5] - FedEx Freight revenue declined by 5%, pressured by lower shipments, but revenue per shipment increased by 1% due to higher weight per shipment [15][17] - International export package revenue grew by 8%, with significant contributions from Europe and the Asia to Europe lane [14] Market Data and Key Metrics Changes - The company experienced a 14% growth in international priority and economy freight revenue, supported by its Tricolor strategy [14] - U.S. domestic package yield increased by 5%, driven by strength across all services [17] - International export volumes turned positive for the first time in fiscal year 2026, up 2% year-over-year [15] Company Strategy and Development Direction - The company is focused on growing in high-margin verticals, transforming its network, and leveraging data and technology for efficiency gains [4][12] - Plans to spin off FedEx Freight on June 1, 2026, are on track, expected to unlock long-term value for stockholders [4][34] - The transformation to one integrated intelligent network is underway, with 35% of eligible volume expected to flow through optimized facilities by the end of the month [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strength of consolidated Q3 results and updated assumptions for Q4, expecting continued revenue quality and growth [6][20] - The company is closely monitoring the situation in the Middle East, emphasizing the safety of team members while managing network adjustments [38] - Management acknowledged the challenges posed by global trade policy changes and LTL industry trends but remains focused on revenue quality and operational efficiency [5][22] Other Important Information - The company introduced new digital tracking and returns offerings, enhancing customer experience and operational efficiency [19] - A strategic collaboration with Dun & Bradstreet aims to launch a Retail Momentum Index to provide insights into U.S. retail supply and demand [10] - The company is implementing autonomous robotic systems to improve operational efficiency in package unloading [11] Q&A Session Summary Question: Impact of the Iran conflict on operations - Management stated that the situation is being monitored closely, with network adjustments made to accommodate the conflict, and the broader global demand is expected to continue into Q4 [37][39] Question: Outlook for the LTL business and investments - FedEx Freight's CFO discussed ongoing investments related to the spin-off and the need to improve yield growth, with a focus on enhancing customer experience and pricing discipline [41][43] Question: Sustainability of current volume and yield growth - Management acknowledged the current growth as an anomaly but expressed confidence in maintaining momentum, targeting 4% revenue growth while ensuring revenue quality [55][57]

1 22 Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act, such as statements regarding expected cost savings, the optimization of our network through Network 2.0, the planned tax-free full separation of the FedEx Freight business into a new publicly traded company (the FedEx Freight Spin-Off), future financial targets, business strategies, management ...

Investor Relations March 19, 2026 Roadshow presentation *Average daily volume information for Q3 FY26, YTD 3 4 4 2 Forward-Looking Statements and Non-GAAP Financial Measures Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act, such as statements regarding expected cost savings, the optimization of our network through Network 2.0, the planned tax-free full separation of the FedEx Freight business into a new p ...

FedEx Corp. plans to close nine shipping facilities in New York and one in Pennsylvania as its multi-year effort to integrate legacy express and ground delivery operations into one unified surface network enters its final phase, FreightWaves has learned. Memphis, Tennessee-based FedEx (NYSE: FDX) completed its Network 2.0 consolidation program for Canada last April and has aggressively worked since then to optimize its terminal footprint in the United States. The concept aims to reduce expensive excess ca ...

Core Insights - FedEx Corp. is focusing on strengthening its position as a leading industrial network to enhance global economic power, prioritizing premium growth in high-margin sectors, scaling digital and AI capabilities, and transforming its network for profit improvement and shareholder value creation [1][2]. Financial Targets - The company has set ambitious financial targets for 2029, aiming for approximately $98 billion in revenue with a compound annual growth rate (CAGR) of about 4%. Operating income is targeted at around $8 billion, reflecting a GAAP CAGR of approximately 17% and a non-GAAP CAGR of about 14% [3]. - The operating margin is expected to reach around 8%, with GAAP margins increasing by approximately 270 basis points and non-GAAP margins by about 200 basis points. The return on invested capital (ROIC) is projected to be around 11%, up by approximately 200 basis points [3]. Strategic Priorities - FedEx will concentrate on high-margin verticals, particularly in premium B2B and specialized B2C segments, targeting industries such as healthcare, automotive, aerospace, data centers, and premium e-commerce [6]. - The company plans to leverage its extensive data processing capabilities and physical network to enhance digital infrastructure, AI, and automation, aiming to improve customer value and unlock new revenue streams [6]. - Ongoing network transformation will include modernizing air and surface networks, enhancing flexibility, asset utilization, and reducing costs while improving customer experience [6]. - The company aims to achieve ongoing efficiency gains through the One FedEx operating model, supported by the DRIVE process [6]. Segment Outlook - In the U.S. Domestic segment, FedEx targets a 10% operating margin by 2029, driven by Network 2.0 and One FedEx initiatives, along with disciplined pricing and growth in B2B and premium B2C volumes [7]. - The International segment aims for an 8% operating margin by 2029, with key growth drivers including improved European performance and premium cross-border and intercontinental lanes [8]. InPost Acquisition - FedEx, in collaboration with Advent International, A&R Investments, and PPF Group, has reached a conditional agreement to take InPost private at €15.60 per share, expected to close in the second half of 2026. This investment is anticipated to be accretive to FedEx's earnings in the first year [9]. Recent Performance - FedEx expects its third fiscal quarter adjusted earnings per share to exceed consensus estimates due to successful execution during the Peak season [10]. FedEx Freight Spin-Off - The planned spin-off of FedEx Freight into a new publicly traded company is on track for June 1, 2026, with the completion of a $3.7 billion senior notes issuance to support this transition [11].

Core Insights - FedEx Corp. has appointed Scott Ray as the new Chief Operating Officer for U.S. and Canada Surface Operations, effective June 1, with a transition period starting February 1 [1][2] - Ray will oversee all aspects of Surface Operations, focusing on daily package delivery and the execution of strategic initiatives like Network 2.0 [2][4] - With 39 years of experience at FedEx, Ray has previously served as president of Surface Operations and has led significant transformation efforts within the company [3][4] Leadership Transition - Scott Ray succeeds John Smith, who will become CEO of FedEx Freight on June 1 [1] - The leadership team of Surface Operations will report directly to Ray, and there are no plans to fill the president of Surface Operations position [4] Company Overview - FedEx Corp. generates annual revenue of $90 billion and offers a wide range of transportation, e-commerce, and business services [5] - The company is committed to achieving carbon-neutral operations by 2040 and emphasizes safety and ethical standards among its workforce of over 500,000 employees [5]

Financial Data and Key Metrics Changes - In Q2, the company achieved adjusted earnings per share of $4.82, representing a 19% year-over-year increase [27] - Consolidated revenue grew by 7% year-over-year, supporting a 60 basis points adjusted margin expansion and a 17% adjusted operating income growth [27] - Adjusted operating income increased by $231 million despite headwinds from global trade policy changes and other factors [27] Business Line Data and Key Metrics Changes - FedEx Express (FEC) revenue increased by 8% year-over-year, with adjusted operating income growing by 24% and adjusted operating margin expanding by 100 basis points [9][27] - FedEx Freight revenue declined by 2%, primarily due to lower average daily shipments, with adjusted operating income decreasing by $70 million [9][27] - B2B services contributed nearly half of the revenue growth, with significant wins in healthcare and automotive sectors [22] Market Data and Key Metrics Changes - U.S. domestic package revenue grew by 12%, with strength across all services [18] - International export volumes declined, particularly on the China to U.S. lane, impacting overall performance [18] - The company shifted capacity to the Asia to Europe lane, which has a favorable B2B mix [11] Company Strategy and Development Direction - The company is on track to spin off FedEx Freight as a separately listed public company by June 1, 2026, with a strong belief in the value that will be unlocked from this separation [8] - Continued focus on high-value segments such as B2B and healthcare is expected to drive future growth [22] - The company is scaling AI adoption across its workforce to enhance operational efficiency and customer service [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate external headwinds, including the grounding of the MD-11 fleet and global trade policy changes [7][10] - The outlook for adjusted EPS has been raised to $17.80-$19, reflecting strong operational execution and ongoing efficiency initiatives [30] - Management acknowledged the challenges in the LTL market but remains optimistic about future recovery and margin improvements [28] Other Important Information - The company has closed more than 150 facilities as part of its ongoing transformation efforts [14] - A global AI program has been launched to enhance innovation and customer service [15] - The company plans to implement a fuel surcharge adjustment to mitigate costs associated with maintaining service quality [24] Q&A Session Summary Question: Dynamics of capturing incremental volume share in the domestic U.S. package business - Management confirmed they are pleased with profitable market share growth and highlighted the focus on B2B strategies and rate discipline [39][40] Question: Breakdown of B2B revenue growth and its sustainability - Management indicated that nearly half of the revenue growth was from new B2B business, share of wallet improvements, and strong performance from small business B2B [45][46] Question: Cost of service and impact of service component in annual cash incentive - Management acknowledged that while the service component adds financial headwinds, it is essential for maintaining service quality during the transformation [48][50] Question: Impact of LTL business and spin-off costs on financial outlook - Management clarified that a portion of the EBIT decline is due to market conditions, with some costs related to the spin-off preparation [53][81] Question: MD-11 aircraft return to service and associated costs - Management expects the MD-11 aircraft to return to service in Q4, with significant costs anticipated in Q3 due to peak season demands [58][60] Question: Breakdown of the $600 million headwind in the second half of the year - Management detailed that the headwind includes softness in the LTL business, costs from the MD-11 grounding, and increased variable compensation [64]