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 [36] Business Line Data and Key Metrics Changes - Federal Express Corporation (FEC) revenue increased by 4% year over year, with adjusted operating income growing by 17% and adjusted operating margin expanding by 70 basis points [8][38] - FedEx Freight faced continued pressure, with average daily shipments declining due to weakness in the industrial economy [24] - U.S. Domestic package yield increased by 3%, while international export package yield grew by 4% [25][26] Market Data and Key Metrics Changes - International priority and economy freight revenue grew by 14% year over year [14] - U.S. Domestic average daily volume (ADV) increased by 5% year over year [21] - The industrial economy remains weak, impacting FedEx Freight's performance [24] Company Strategy and Development Direction - The company is focused on reducing structural costs and enhancing service quality through the Tricolor strategy and Network 2.0 [6][14] - A spin-off of FedEx Freight is on track for June 2026, aiming to create a separate public company with a strong customer value proposition [6][49] - The company is leveraging data and technology to enhance operational efficiency and customer experience, with a focus on AI and predictive analytics [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite global trade volatility and economic uncertainty [5] - The outlook for full-year adjusted earnings is projected to be between $17.2 and $19 per diluted share, reflecting a dynamic global operating environment [18][43] - Management remains optimistic about peak season growth, expecting modest increases in volume driven by larger B2C customers [28] Other Important Information - The company achieved $200 million in transformation-related savings during the quarter [7] - A 5.9% general rate increase is planned for January, with expectations of strong capture from pricing changes [27] - The company is enhancing its cybersecurity posture to protect strategic advantages [17] 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 domestic demand [52][54] Question: Understanding cost pressures - Management acknowledged significant headwinds from the global trade environment, impacting operating income [56][57] Question: Data strategy and revenue models - Management highlighted the importance of data and AI in creating new revenue models and enhancing operational efficiency [59][60] Question: Sequential earnings growth expectations - Management expects sequential earnings improvement in Q2 but did not provide specific guidance [67] Question: Clarification on global trade headwinds - Management explained that the majority of the headwind is due to reduced top-line revenue from the China lane [75][76] Question: Domestic volume outlook and competitive landscape - Management noted strong execution in the SMB segment and improvements in pricing, contributing to market share gains [85][88] Question: Customer reaction to de minimis rule expiration - Management reported that small exporters faced challenges due to the expiration, but the company is actively supporting them [103]

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]

Core Insights - FedEx utilized its data and digital platform solutions to help navigate challenges related to tariffs and changing trade policies during the recent quarter [1][2] - The company showcased its insights from being at the center of a global trade ecosystem during its fourth quarter earnings call [2][3] Operational Adjustments - FedEx adjusted its operations in response to changing trade policies through its Tricolor network optimization initiative, allowing for quicker market response [3][4] - The company reduced capacity on its Asia-to-Americas lane by over 35% in the first week of May compared to April, and ended May with a 20% reduction in capacity [4] Financial Performance - In the fourth quarter, FedEx reported a 1% year-over-year increase in revenue and an 8% rise in adjusted operating income, continuing its cost reduction efforts initiated in 2023 [5] - The company achieved its DRIVE program's target of $4 billion in structural cost reductions over two years during the quarter [6] Customer Engagement - FedEx's loyalty program for small and medium-sized businesses, FedEx Rewards, experienced growth in enrolled revenue and a lower churn rate compared to nonparticipants [6] - The enrollment in the Rewards program increased by 8% year-over-year, contributing to a more personalized customer experience and driving customer loyalty [7]

Financial Data and Key Metrics Changes - Consolidated revenue increased by 1% year over year, with adjusted operating income growing by 8% and adjusted operating margin expanding by 60 basis points [11][12][44] - Adjusted earnings per share for FY 2025 reached $18.19, marking two consecutive years of earnings growth despite industry challenges [43] - The company returned $4.3 billion to stockholders, exceeding the previous commitment of $3.8 billion [50][52] Business Line Data and Key Metrics Changes - At Federal Express Corporation, adjusted operating income increased by $136 million, with an adjusted operating margin expansion of 70 basis points driven by DRIVE savings and increased volume [46] - FedEx Freight experienced a decline in operating income by $30 million, with operating margin decreasing by 40 basis points, although there was a sequential improvement in performance [48][32] Market Data and Key Metrics Changes - U.S. Domestic volumes showed a 6% growth across parcel services, with a notable increase in late April and May [29] - International export revenue remained flat, primarily due to tariff impacts on the Transpacific trade lane, particularly from China to the U.S. [31][34] Company Strategy and Development Direction - The company is focused on its transformation initiatives, including Network 2.0, which aims to achieve $2 billion in savings by the end of FY 2027 [60] - The strategic emphasis is on improving service quality and pricing discipline, particularly in the B2B segment, healthcare, and automotive sectors [37][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatile global demand environment and emphasized the importance of adapting capacity to match demand [23][54] - The company expects flat to 2% revenue growth in Q1 FY 2026, factoring in headwinds from the expiration of the U.S. Postal Service contract and trade disruptions [34][54] Other Important Information - The company has implemented a workforce reduction plan, expected to yield $150 million in annualized savings by FY 2027 [20] - 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] Q&A Session Summary Question: Discussion on Network 2.0 savings and expectations for the year - Management confirmed an anticipated $200 million in savings from DRIVE and Network 2.0 in Q1, with a ramp-up expected throughout the year [64][67] Question: Competitive dynamics and pricing environment - Management noted improvements in the pricing environment, driven by a focus on revenue quality and execution of pricing strategies [71][74] Question: Guidance and impact of the U.S. Postal Service contract - Management explained that the $120 million headwind from the U.S. Postal Service contract will be a factor in Q1, but will not affect subsequent quarters [77][86] Question: B2B vs. consumer performance - Management indicated continued pressure on B2B volumes, while consumer volumes showed improvement, particularly in May [88][90] Question: Impact of tariffs on revenue - Management highlighted that the majority of the $170 million headwind in Q1 is related to tariff impacts, especially from the China to U.S. lane [80][82]