Financial Data and Key Metrics Changes - The company achieved a 1% year-over-year increase in revenue, with adjusted operating income growing by 8% and adjusted operating margin expanding by 60 basis points [12][44] - Adjusted earnings per share for FY 2025 was $18.19, marking two consecutive years of earnings growth despite industry challenges [43] - The company returned $4.3 billion to stockholders, exceeding its previous commitment of $3.8 billion [50] Business Line Data and Key Metrics Changes - At Federal Express Corporation, adjusted operating income increased by $136 million, driven by DRIVE savings and increased U.S. and international export volume [46] - FedEx Freight experienced a decline in operating income by $30 million, but showed sequential improvement with average daily shipments down only 1% year-over-year in Q4 compared to larger declines in previous quarters [44][31] - The company reported a 6% volume growth across U.S. Domestic parcel services, indicating strong performance in this segment [29] Market Data and Key Metrics Changes - International export revenue was flat, primarily due to tariff-related impacts on the Transpacific trade lane, particularly from China to the U.S. [31][34] - The company noted a significant headwind from the expiration of the U.S. Postal Service contract, which is expected to impact revenue in the first quarter of FY 2026 [54][35] - The pricing environment is improving, with domestic yield showing strength in priority services despite overall pressures [72] Company Strategy and Development Direction - The company is focused on its transformation initiatives, including Network 2.0, which aims to optimize operations and reduce costs, with a target of $1 billion in transformation-related savings for FY 2026 [25][57] - The company is adapting its network to changing trade flows and has implemented significant capacity reductions in response to demand shifts [16][18] - The freight spin-off is progressing, with leadership appointments made to ensure a successful transition [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate a volatile global demand environment and adapt to trade policy changes [24][60] - The company anticipates flat to 2% revenue growth in the first quarter of FY 2026, factoring in various headwinds from trade disruptions and the U.S. Postal Service contract expiration [54][35] - Management highlighted the importance of maintaining pricing discipline and focusing on high-margin opportunities in B2B sectors, particularly healthcare and automotive [37][39] Other Important Information - The company completed the optimization of its Canadian operations and is ramping up efforts in other markets, including Europe [20][21] - A non-cash impairment charge of $21 million was recorded due to the retirement of additional aircraft as part of the fleet modernization strategy [49] - The company plans to host an Investor Day in early calendar 2026 to discuss long-term strategies and the upcoming freight spin-off [59][60] Q&A Session Summary Question: Can you discuss the shape of the $1 billion savings from Network 2.0? - Management indicated that $200 million of the savings is expected in the first quarter, with a ramp-up throughout the year, emphasizing the ongoing focus on DRIVE savings [63][66] Question: What is the current competitive dynamic in pricing? - Management noted improvements in the pricing environment, driven by a focus on revenue quality and execution of pricing strategies [70][72] Question: Can you break down the $170 million headwind from international exports? - Management clarified that the majority of the headwind is from the China to U.S. lane, primarily due to tariff impacts, and highlighted ongoing trade negotiations affecting other regions [76][78] Question: What are the expectations for B2B and consumer segments? - Management acknowledged continued pressure on B2B volumes but noted stronger onboarding in the consumer segment, particularly in May [87][88] Question: How is the company adapting to changing global trade patterns? - Management highlighted the flexibility of the network and the ability to respond to shifts in trade patterns, particularly with growth in Southeast Asia [103][106]

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