FedEx (FDX) 26 Jun 192019 Q4 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation Fourth Quarter Fiscal Year 2019 Earnings Conference Call. Today's call is being recorded.

At this time, I will turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead.

Good afternoon, and welcome to FedEx Corporation's fourth quarter earnings conference call. release book earnings website on quarter fedex.com. at fourth and are stat our The being our streamed replay is call This from available about will website for one year. be the where

of the today on us Joining are members the call media.

Act. desires our to one in to that remind accommodate those considered Reform statements of regarding all order of the within be advantage to conference Private such in like Corporation the of to question who the us Harbor listeners question-and-answer would call, Litigation session, to allow this participate. Safe future During provisions Securities performance, will forward-looking meaning all Certain as projections limited take act. callers to I may FedEx want the be statements

uncertainties actual or could factors, risks, Such statements. and such other results differ expressed those forward-looking cause statements implied from by materially forward-looking which subject to are to

these For and SEC. with the releases additional refer information press on to our filings factors, please

portion Please fedex.com Relations refer to website reconciliation measures. this directly on measures the to a the call most at comparable for the non-GAAP discussed GAAP financial Investor of our of

on Executive the Counsel Secretary; Subramaniam, President President, Officer; Information FedEx Rob Brie Executive Chief Marketing Smith, Executive CIO, Vice Carere; Chairman; Mark Graf, today and General Vice Chief Chief Joining us Operating are President Communications Alan Officer; Financial President Vice and Vice Executive call President, Allen, Fred Raj Carter, and Officer. Services and and

quarter. views the his will Fred Now, share on Smith

mix and growth, the Express both the TNT Fiscal after growth We and NotPetya in FedEx. you driven was e-commerce Thank change Welcome demand. rapid Mickey. of revenue of favorable business cyber trade, all less slowdown weakening quarterly very much, challenge by international attack service global faced XXXX our continued of to a year joining call. for

members FedEx the responding will team more are We positive stronger innovative and that even our in future. who with make solutions actions proud and of are very successful

a significant FedEx opportunities premier lead global focus making with the investments the These company for our enhancing automation, Express FedEx and cost on see on necessary increasing transport a include and the deliveries. market modernizing and particularly XXXX integration extending TNT, aircraft and e-commerce logistics improving we productivity, FedEx steps especially sharp capture enters efficiency, unit Indianapolis, and as fleet capabilities, finishing in of and our reducing future. for hub Ground fiscal to today the Memphis speed

investments shareholders haul. margins and will nature these they growth and always success long measured earnings drive and in are long-term over their cash the cannot improve be We're immediately. significant our for flows While returns confident

emphasize, announced, me increase FY U.S. increase FedEx based current our earnings will day the FedEx in earnings the SmartPost. sourcing believe levels, that anticipate margin Ground we've of seven will if on compression week We for any Let current investments the from however, as with forecast GDP delivery, and of XXXX over for despite package large and period. per freight six growth fiscal margin year modest such capabilities we and

also progressing summer I The XXXX. at by a and significant XXXX earnings the to business FY this The TNT cautious disputes create for see focus of we our note good low trade investment is benefits this time global major now uncertainty rates should Global express and growth of leading clip, significant segment. will integration has us be efficiency. in for sustainability projecting strategy and improved and

for steadily additional cost delivery improve areas. serve agreement over to aware in improved requires intend and our our market announced XXXX in several are initiatives Over this packages will market. with X,XXX pickup Dollar To we to million and have in-sourcing rural and and we this packages FY regard. delivering efficiency sparsely SmartPost in announce an example, e-commerce X well locations these recently business to we on-site General sound and initiatives grow profitability populated in We this substantially ends greater residential for

to extrapolating this caution follow in FedEx very be who careful me past observers into assumptions Let also industry the and future. trends

noted increasingly as fulfillment. orders be or have e-commerce Hence ship instance, visible changes, become ensure delivery average not -- most to the to important repeatedly future haul to with store from will package retailers For we've yields to local short operational assess profitability. matched potential

and uniquely long-term discontinuities deliver developments a up and in future by great in will success likely years. supported continue customers, be communities for the owners, and the speeding the is team way members which next serve. Also we deliveries share will position e-commerce for postal have we several to future our reform, FedEx

a turn now take and followed Brie Allen, Mark by by me brief to and Let questions. Raj? then Raj comment we'll Alan, and then

good and Fred afternoon. you, Thank

significant mentioned to serve. we continue profitable our to reinvigorate in reduce the XXXX ways focus last initiatives value. our is As Year capitalize on and drives as long-term costs year that growth increased Fiscal to many transition growth shareholder in call, business for execute a is FedEx, e-commerce to our

U.S. the the by to in expect In market per alone, XXX size than parcel more day packages to we double XXXX. million

do network to invisible grows, for the fast, backbone build market as capabilities and and and easy serves and today, customers. we continuously so upon that to our offering e-commerce demand offerings, the our -- the consumers reliable abilities As offerings our experience global

General. This with of doing retailers their value stores leverage propositions. to show to are includes our FedEx access to as local with multitude a services, we centers strategically offering drop-off is with pick and hours target by enable giving extra working our customers through and market working week's FedEx such as leading up way Dollar One announcement fulfillment last

examples of is strategic These our is capabilities well illustrated more It customers. underway are e-commerce. operations to among key in others in few we our that This on all respond number detail. to the Brie are operating will and by commitment to flex network just initiatives these cover of clear our in continue ways a we a units.

FedEx FedEx standard into for and ground handling. package Ground innovative large network. delivery, week This last seven a solutions rapidly we volume our number operations, announced capabilities includes a around enhancing day Just month, SmartPost integrating network of residential

consumer These the ground changes density challenges improve for to allows directly and of SmartPost efficiency namely, deliveries. the network e-commerce us the Bringing expectations increasing managing the in with into cost volume and the Mile delivery. address some key residential Last inherent

engineering a the It we are in Ground deliver is and such by network millions that directly cost that to enhancing more packages effective significant a Ground. be FedEx of way residential it'll day

the become Ground In fact, the Last provider industry. to we Mile in expect cost low FedEx

exciting announcement who large recent should Ground a of be TVs with click like The a furniture, online purchase to [ph] items and button. kayaks consumers particularly

to XX handling majority of vast to are season. to as prior Ground a approach We The on package existing locations, our more large have peak and in expect operation the and strategic near placing CapEx this package and in these such us facilities, ports railroads. focus large enables nearly facilities minimizes

Ground continues efficiency the help Not improving possible that the and the making one time technology. provide near data element operations maximizing FedEx with matter make will has of will handling packages, been sorting of and without investments optimize Advancements technologies to size. density increasing real the delivery be in in rail, loading, to no this all use transformation and scanning of

advanced assist operations, work and modernizing advanced like allows members an team enhancement safer of paper state Technology midst has of forklift FedEx are driver for advancements automation labels, based. efficiently. electronic computers, Ground. historically systems shipping and continued for This smarter, sets success. us been more up evolution and to long-term is are that and not FedEx example Freight, types the across industry just differentiators technological of the These being true FedEx tools in implemented all of art the

includes With the we Indi, at we have U.S. of rightsizing prepare our volume to FedEx Express Express are Memphis for network cost more investments the initiatives we modernization as two largest on focused launched hubs hub to future this growth. This more handle lowering implementing Express our will multi-year to accommodate enable and these serve in efforts growth efficiently.

in than less is long-term but position. picture ideal, our confident trade global the we are Internationally,

rapidly to moving with are began forward integrated us worldwide. market the that expected is we integration nearly We phase FY XX% a sales single positioning of a every TNT, with in as customers force our global XXXX with

rollout our to shipments the the of Express legacy FedEx schedule on capabilities European completed TNT recently inject have into network. road We intra-European

fiscal with interoperability end turn allow the in networks for We in and at a Express legacy be service operational of and will result This integration TNT faster XXXX. substantially expect the customers complete lower year to between by the cost.

Beyond customer by long-term future and on our touched world. air by continue including fiscal integration initiatives product humbled and are migration, on commitment, than members with have be rationalization. The our dedication around focused key will year FedEx the ongoing am XXXX, XXX,XXX team the innovation work network and the ready, we to areas I today more various position

view, macro provide additional I'll details and turn over Brie? Brie our Now, to growth more it revenue quality initiatives. to on

trends on holding well XXXX. U.S. will open I provide everyone. of Raj. priorities. and calendar our update you, Overall growth in outlook up commentary real our Good X.X% industry and is some growth and quarter year Thank afternoon, the growing first with GDP economic broader with economic

sector output off However, manufacturing was peak. through has December X.X% build industrial out trade suffered an tensions, May and from increased the inventory its

we For weigh economic emerging growth to external in expect as world developed calendar factors the and markets. see growth global year XXXX, on domestic both moderate slower

underpin course to trade negative frictions impact global the continue as sentiment Global sector. and to exerted services manufacturing expect has have of growth. slowed We on a GDP trade

has markets also economy Chinese Asian decelerate the As performance. to this has continued impacted export other

heightened amid European XXXX tensions specific number as almost XX% trade sector United Brexit. in the uncertainty grew for country and remain States. which such tensions, social this as sector, of year with due grown automated policy as disruption economy the related well have exports, to factoring uncertainty, China's slow Outlook to a in fairly factors

Italy two output, year-over-year November turned decline and output In in respectively. with Germany X.X% which Italy, to and for X.X% down Germany manufacturing which April markets and manufacturing us in negative continued important are

stressed adjust encourage tariffs and a Thankfully, trade. have counterproductive to us our customers' certain we meet we issues needs business in and challenges trade before global expand allows that large markets. and have however, network growth are efforts when present to that global As flexible

laser call, As commercial mentioned the our international, essentially growth. focus just I is and is remain has three Sales Raj poised integration as areas team small for headwinds last e-commerce international on business. that macroeconomic I key mentioned on covered, we Despite complete.

is European more and been. faster ever it Our has network reliable than

open within e-commerce our for valve simplified structure pricing have and the Europe. We

from largest Europe pricing also is have Asia, sell We team created lane into this well to world. the as as for in trade into programs the our Europe, new Asian

market to of a total E-commerce continues driving U.S. force be domestic growth.

space networking seven building GDP. this our portfolio, Ground differentiate capacity with the to launch FedEx deliver U.S. seven to thousands of retailers a year service. round the FedEx serve for day We best In XXXX in and days we will week of continue of are example, XX% for

markets. e-commerce move a builds growing transformational in the upon to largest network the truly transportation serve is further commerce This that global world the

faster least market are at the up XX% This move and the us allow of We share. than competition further day already to lanes. network by will to in speed one gain our continue

convenient alliance of options demand told provide will provide and recently saving e-commerce daily with us flexible, access the create lives. delivery for and have very growth With safe places in their services General convenient unmatched opportunities consumer FedEx access that to for The customers customers. and cost Dollar also announced in are FedEx

customers The it consumer for five of FedEx pre-labeled hold to over pre-labeled been locations miles of ever alliance will have than Further, within course drop United before will provide the returns. States off and for including the population. more packages packages, XX% pickup than we additional of X,XXX bring closer to

staffed number the FedEx Dollar XX,XXX. the complete Once is of shipping providing will over retail grow rollout locations to General

continues for of We more e-commerce improve rural, the are the recipients less that service to to excited in areas United FedEx access populated incredibly States. especially

cost achievement, saving increasing just our tremendous in a in customers FedEx. opportunities not creating access, but is and This for for also

weather can instance, delivery by porch to residential ship retailers. service or our and stuff, replacement to retail packages merchants Delivery of related locations, to directly location reduce to retail eliminates for customer surcharges. reduce helping choosing costs costs For damage FedEx convenient

competitive retail making And off returns for drop and in drive efficiency market. even FedEx our returns operational more result in density locations the at greater higher pickup

up opens great a our that now retail have growth We us. competitive for opportunity returns network

we to management. focused continue Across revenue all be our priorities, on very

customer. that pricing see put reporting lighter will contrary e-commerce a packages and moving And the from rational strategy. certainly changes market, erroneous has related to to Street While FedEx pricing distances. one on the note shorter recent to It to misinformed on changes no June pricing our yields we no made in Wall pressure to XXrd, is made changes with have no -- we Journal any continue important

year, a at strategic successful two in fact growth and growth have In made we strong following FY of medium we our and from to pricing XXXX. Express, customers we experienced anticipate small last this product, change FedEx day using product continue Express the

strategies and will confident revenues that to volumes grow global are profitably. allow us our We

call the for Alan turn me Alan? let Now, his to over remarks.

sale weakness operating hiring of trade and afternoon, the Express FedEx declined impacted our several decline by of of significant To including you, spending, TNT a variable a Thank income incentive and and international $XX discretionary non-core also actions immediate weakness year. compensation, good cost in the Brie an on Year-over-year buyout production completing U.S. fourth our last revenue. industrial reductions quarter prior as everyone. Express drove business undertaken comparisons employee have limiting in global we mitigate million and program. voluntary containment gain were

XX, XX% Approximately the May those left employee be Approximately buyout FedEx U.S. the program departed or employees have employees X,XXX of company the on XXXX. leaving XXXX. via by end will of FY voluntarily

voluntary quarter are savings million. cost the less than severance approximately of goal FY By using who benefit for realignment related Business buyout primarily severance These XXXX to business employee by with buyouts. activities. open expected originally achieve million to incurred associated fourth forecasted. our accepted we employees the $XXX realignment expect we positions, eliminating our activities, including We to during costs voluntary $XXX

expenses FY TNT and for were quarter $XX for million million the fourth integration $XXX XXXX.

you our with continuing Raj, activities. we progress integration make As to heard from good are

strong we At to continue e-commerce see fourth growth in Ground, the FedEx volume quarter.

weakening and closed purchase Ground year-round production, impacted per strong X%, January improved by FedEx another XX% X.X%. FedEx the margins increased However, rates shipment the margin income and to were per quarter year revenue of operating despite operating negatively industrial and week operations. income with increased increased Freight six-day launch transportation

increased driven lower discount line the a in capital changes XXXX which retirement the expenditures FY Below significantly plan million. assumptions asset actuarial our net $X.X by of accounting lower-than-expected non-cash and was $X.X a billion liability billion mark-to-market rate, which adjustment substantially loss contributed totaled loss, $X.X the returns. to

fiscal share. decrease adjusted in percentage we For mid-single per XXXX, digit are targeting earnings a

Our performance decisions impact strategic we production, leading continued industrial changing has position in our made global near-term as sustain the marketplace. in and been weakness trade certain negatively well as a affected have by of to

priority lower At expect international in to weakness earnings XXXX in FedEx to revenue down due to ongoing services. FY we Express, yielding and be shift

decision we will optimize we replace a strategic renew headwind, volume XXXX, Our expect to not Amazon Express reverse to be FedEx U.S. domestic and in contract the near-term positive to lost which also the as FY with network. a the

expect not Additionally, a from we changes benefit XXXX fuel repeat surcharge table the FY significant do in and FY XXXX.

and implement to efficiencies to serve, reduce continue will Express actions network FedEx cost to to to global demand. adjusted anticipated match improve

While we work XXXX, in expect continue TNT will to activities FY make integration significant XXXX. FY progress integration into on

incur XXXX total to through in in of XXXX. million FY $XXX expenses expect FY billion We $X.X integration approximately and

FY to At remain FedEx volume revenue Ground, expect growth in we strong very XXXX. and

Raj expanding for safety However, operating as from higher capabilities margins and to FedEx mentioned. will significantly face operating with improve our costs improving delivery headwinds large and associated other investments schedule, packages efficiency Ground’s

to FedEx technology that quality, us LTL we drive performance, focused differentiate efficiency solutions remain revenue improve while the Freight, and At as further implementing we on expect improving market. will in continued

and will investments from FY adjustments that include Our the the is plan aircraft and packages tax technology increase mark-to-market further XXXX to hub to And FY expected our our enterprise be handling efficiency These income, optimize FedEx XX% $X.X improve FedEx in XXXX from cause our likely to in competitiveness. sensitive expected in modernization, vary that rate in to and billion. range. across which investments rate capital spending networks year-end very that investments expenditures effective Express will tax retirement large will Ground to addition, is is XX% our may to rate prior international to vary increase and accounting quarter-to-quarter.

anti-trade moderate our All of business. expectations U.S. current likely fuel international relations adverse conditions. in A economic measures further these no targets price policies and international in economic weakness in growth, changes additional weakening in trade would or assume and and drive further ramping

status to a rates, qualified earlier, mentioned in our changes XXXX actuarial As and lower-than-expected mark-to-market this With XX%. returns negatively plan adjustment. approximately U.S. I FY that funded impacted asset declined assumptions pension substantial in our account decline

not to we are billion. we pension in contribute $X FY XXXX, a to While expecting required are make contribution

and over funded repurchase Also, increases large share years. dividend the have significant last we in several our

be XXXX Our in remains to lower level expected our per stock at FY is dividend significantly buyback quarter. and $X.XX

is our focused FedEx conclusion, improving on management In also performance, near-term position while long-term success. for

adjusting improve our of expand While in we capabilities long-term macro cost we address are areas to invest and uncertainties mitigate will continue efficiencies. and growth our to that the e-commerce,

margins, confident are these growth return. We flows improve that and drive earnings will investments long-term and cash

over is the me let Allen introduce Mark Fred topic call turn going discuss. to Now, the back to to

Alan. you, Thank

I distances. me privilege the operations, ago carriers Facts article shipments for the fast personal the later any medical of long number the that there point years of statement were a in to private a mention documents and to And of before documents. specifically I private it's Express matter that permitted to. it financial type facilitate something take prohibited express yesterday, like Wall unit order movements was First in and which that over uniquely I'm speak that, move qualified do ferry decades documents statutes FedEx when only when relaxation began let of legal are started supplies Journal of the to Street and four legal of the to was

and put market address technology from rather was States any medical overnight than the supplies, company any first up, pick United to together address were And serving. transport to basic other the that we which U.S. packages, was deliver basically in in the

items of far lower business at two added of a the price. Express, we added scale course in larger a today expanded millions and transport pallets up far then internationally, we course, on and far, we Of pick day Express

article built wasn’t and that unit say built perfectly is goes on we the that to to Express exception a address. reality go the for e-commerce it's biggest The forward on issue e-commerce, the the with for basis have

As mine remarks through to that of residential we have both to deliveries, in and which we've said traffic delivering Express the here, including are efficient part very the the moving an of increasing on the residential network. or several be making Ground

Huawei been routed now a confused. on well. back lawsuit peripherally lawsuit amount clarification, it There only as goes miss in concerning. is yesterday. to this by as that in of the involved as filed then packages the erroneously export filed. that of returned one, where let third. two itself apologize the we Department me were in issue as packages with considerable miss and which we we has many contraband, shipper of Number administered reporting the have lawsuit controls The lawsuit is And concerns subject this The which So is Huawei that people and turn many the to to related a It that fact, concerns Commerce. years, not the it and many, important for

work UPS, and does list, drugs, you So Service. you very of all we our networks. look can the unlicensed Postal items at Postal hard go types Service go our as prohibited could Illegal enforcement on law keep the out kinds agency, firearms, of down items the with certain website, and of the

contents. completely, to which importing, about restricted or contraband, prohibited and different. various destinations quite is meaning companies they're are not in either the And certain or of or Commerce administrators, or regulations is that it prohibit to or This about various Department exporting commodities cases, prohibited they many from individuals that's items entities and

remarks, Ross, common to package in what's shipper that get yesterday, the administration, job counsel like comments their will that the we with FedEx issues of certificate one carrier It wants certainly the of speak implementation at and in fact, process as I'm we're a let out or basically you and note with disagrees and And our I lot for from on that list I've have this respect to requires the And our trade statement a the now four understand their on all. that In in further that in and about. dealing by the like a essence, that we the told Department to shipment. put the will of any play these certify, litigation. doesn't of entities a is that in that decades policy But issued general as pain tell this after we Secretary fact the won't the the when Commerce speaks known turn who they here. issue position lawsuit the in the Court. that's his

Mark our Allen, statement. make will a General So Counsel

Court The the common in the contents actual in action we FedEx have that that we no government DC that against a enforcing permanently export circumstances are be filed knowledge yesterday where Administration liable comply in had takes requiring The that the the Regulations apparent shipment administration a knowledge the District carrier request of regulations be can from enjoined held actual the Federal subject the an without do BIS to carrier like position shipments any violation. EARs. FedEx the not that of any that evidence Export for with

we We strongly common the contents packages violation EARs. is on handle through those a unreasonable us XX By our an constitutional contents very of and of believe the rights moving Amendment. global of carrier. is the burden complex clear whether to placing the know million government this network, cannot strict We sort contents Fifth packages with requiring process the a comply liability the police daily that of the due of under imposition our

our out compliance. We know commerce to commitment of to them reached to have let

no to we essentially of way BIS have creating us. an That However, not after if would hope the an agreement a apparent common knowledge be means sense that we harbor forward. violation, on reach come safe will a

your So soon questions now, take probably and teed have we up. will

come Credit And instructions] Landry from today will question [Operator Suisse. Allison with first our

Thanks. Good afternoon.

going be year. for this it’s guys earnings the So cash in you to CapEx, year to difficult you generate a considering is mentioned XXXX transition for bump and clearly

do positive through XXXX the help us you business about think the cash flow generation longer of So, you cash think I expect XXXX? you. you guess, as could and term any Thank and

as do transitional in trade, and that year, past being I I XXXX. China, expect as is far look for And this predict to I about well I happen a FY we free Brexit. think Alan. tariffs, could it improve explain going flow it can't to with what's as Yes, as Allison, cash GXX

step that if that well turns decent. aside you’ll just out or So

We the a rural full have and we’ll operation benefits the improvement running at seven We’ll guys productivity in have improved XXXX growth from have U.S. growth good lower residential of in speed. full Express and cost, continued we’ll got interoperability, we’ll FedEx lot have and will day we ground have TNT productivity. unbelievable freight and Ground

I we we So are to going be it once get paying through macro fantastic in XXXX think over. shape with global the

As spend projects will to a of think returns, our the $X.X good very billion, worked things the push cut. company to good of I didn’t really We upwards make seven. wants to hard that but lot up have strategic

lot grow. a particularly them and we're opportunities going side attack the and cost have We on here to of

question from Wetherbee with Citi. will come next Our Chris

in can some and as the well try that strategically some you be crosscurrents in kind Express a maybe Anyway looks maybe detailed Hey, sense guided the strategic that of are you to be calling maybe as things around parse digits, if and of with are business of decisions out made helpful? in some get pickups what out based some core you’ve the might of trade the double of thanks be wanted a would to could down on sort late-night Yes of good perspective, separate and profit impact that weakness for it afternoon. the customer. the break of the you that guidance on from the delivery out to of from macro from Express that sort doing some you

a talked to we looking don't going Alan there priority our but revenues we're to Chris, about at what's quarter What very out right in again. now, that's not moment tariff, had recover I seeing the trade I’m international here as play upside actually short in so period Express down and I fourth at some where hard just on of that. from that, for time. be know Again, could at

be Our that out could the bad, of really aren’t good Asia load and factors but yields aren’t better. coming

is the biggest the So macro. I issue think

On after our the the we're we what's Express which Express cost a mean, rate intentionally our and on fine. through improve as going that, traffic, well. in as in growth doing get the far U.S. profitability as structure to had went deferred with is we of great in going shape to I

the at the it's for biggest for we're really that's FY XXXX. hangover macro So what looking

And go Stephens. next, we Atkins with will to Jack

time. more integrating details good in effort and size these provide your the your Thank business Hey, you Thank better e-commerce, changes efficiency you some your further an for taking steps Express around you're operations foresee as closely in that such more to word to afternoon. gain in the the to perhaps Could right to model Ground handle do operations? you.

you. packages, locations, general Brie that exploit number recall things that to FedEx business month all don't million Raj a think Smith $X,XXX I is announcements, and a we here, who Raj, knew that and this of package this ago service, optimize. ground in in size, remarks was week sourcing going a of SmartPost Well, I a said access that made you day then did said building X right I large on number my don't call seven announce and to anybody the other to in phone mentioned

So during remarks things tuned this said you year. my recall fiscal stay we’ll that I in please some basically be other telling

residential XXXX about months So listed during e-commerce you other we there that things will were than regard prepared be perspectives, understand We're in we can deliveries. the low and made these will tell just FY for many things more the from this we’re you cost of we specifically, producer in confident other count of I space ago be tell you announce e-commerce it. moves will quite in to issues off. delivery But that the involved to some the on but any prepared that the not we residential Raj point and

from Group Our Research. Wolfe will Scott next question with come

of help why reasons the think any is following could but Afternoon, that cadences of year, quarterly maybe there? Ground comps and if us we maybe I week standpoint any half in give the delivery some consolidate potential? you help Thanks. just earnings right So can from about then, us trends then obviously just way there got incentive we Alan, and you can the any big on the though second up now, really buyout networks Express object there on are And picture a potentially then international

That’s was Scott. three,

spotty. looking and So get going mean, interpretations prove rate got pages coming have to lot of tax all be of right. the we of as the left and assumptions that these a through, still are really we’re to and out we’ve look cadence regs I that at is

that international dealing are We’re dealing B, you with this is from follow we extremely you've with GILTI, probably complex. everybody heard

So to factor in don’t be tax numbers, rate is surprised our a by that. going quarter-to-quarter be

happen just do Secondarily, little piece it, out to But we have right cadence that is of will again, economic capacity place. to the it. the want the cadence going tell of bit the not standpoint, manage then a so global don’t that we it’s you anything I our from the control, need be in to what's can't we stupid going and

we So are extremely carefully. watching that

are a productivity, expansion tell the they have roll XXXX,they and about to and You closer asked to grow going you. year, are, that’s fast the holding ready are they they margins margins can I all that in to and Ground, are have to or be really doing we all they're are consistent to on I they this grow, can hold improving are to great going mean, a year. going growth going going the they with investments if very get so to all

a need is called that days it’s delivery. thing a forget the an need really when which people reason distance, makes there that decides two an service other we we that has Express is customer network the airplane, airplane, The

for over can to make decision. and part I think we it it, there's we've customer when opportunities. explained but the fly the margin most over the got But over we always and fly again to yes, on this that have

Amit Mehrotra question. Bank from our has Deutsche next

be Hi. that a in put Thanks my if would would PBGC Alan the incremental cash the question. in help for voluntary the funded related so debt insurance with has free taking And XXXX with I much. premiums. finer the that delivery. I wondering, from made new assumptions could can billion made. associated you imagine in that pension to I'm just on to that offsetting be dollar day company that fiscal would seven contribution, And Allison's discuss flow the that, macro on given think the contribution, fiscal the question then, based related comment, to just the you that if XXXX. response you costs the better point Thanks savings cash pension

of Well, as -- We've there'll delivery, been we've that seven that incremental gone day, be we But continue not some now nearly the leap to course. day some with of significant. will to them, the incur associated them. six is incurring and costs

And be get and say, they efficiently. way. very lining won't material. up going my those it very to I do to headwind. day, the what start have customers to that But But likely to probably team it seven good a I'm be we'll will I be So to think are from hearing is we're in able a

I'm excited in happening again, about what's So, regard. that

with Our next David from question will come Stifel. Ross

Yes, good afternoon.

which billion initially $X.X of was. the you in integration you TNT or to system? is expenses, to made cost Can TNT and completed to additional be is just back Just the and between for said upgrades what improvement total network double it integration, us a network the going what the be is next need that expense that there difference year, is remind about on

you be us terms had it integrate made a number of And to we've $XXX gave originally we Alan That's Hey, I on complex. things. that to system in never number But couple that's then an the it million double. lot it been One again. a [indiscernible]. updated. David, down. continues a problem slowed it's not rebuild for you is more Not about network of the will and have a that TNT money tell And more and us integration it it's side. purple got a it's basically cost as we with that old

I’ll The good we harvesting Express and of by through without the that when the and seamlessly end really will that the everything add network is flow can And it start done double the road to side interoperability of that year. to this. -- packaging news cost packages benefits on let be handling that's all and double kinds else. fiscal Raj of low we

in the the -- there few Yes, been just on last tremendous months the in momentum I’ll integration. literally last that TNT has say

for is levels up what to to and say the speeding of we by end are waiting lanes, year a with and to are very It's network here we But here. ground. that is want strong. the been fiscal because are the We up and good speak, ultimately one of the customer interoperability our as demand create network vision value for have and are -- customers be for we value service value lot XXXX air, had created we has one I

made is significant So, progress a investment this I come bear in it'll fiscal of and XXXX value onwards. lot we to and think there

with Bernstein. And go next David to we'll Vernon

into say, like Obviously, or maybe of Hey there of Dollar rethink do at footprint? with kind Do ever get you, the have point composition you Fred where still on the retail business? you with Do partnerships things the footprint kind point question part that. services Raj and where virtual why the that expansion look a portfolio portfolio. need a of you a you retail business? the the of we that the General the for Is to

get the especially going plus differentiated. I process that’s Office, on it is as want add don't the are think, you to e-commerce as location to and our I better to FedEx as that. I the services trends Office guess part services value that some of things Brie several network, plays if we know And e-commerce, more asking forward the anything about increase. to unique even role retail very value on hold we the FedEx important of premium you're added a move a return

our thing with we're that of retail The Yes, expansion and will with retail onsite is excited the in I about bring obviously some FedEx locations very and Dollar add Walgreens only our small partnerships Office they of That just General. employees medium profitable stellar when the most internationally were a the when absolutely those and deliver of business shipping just experience they peace they they and want are proper packaging. is get shipping mind because the experience great experience. of

So we're that portfolio. the committed element to very of

as this most the network. these system the don’t size excellent FedEx office to for Brie Yes. to the pointed is an And offices locations, comes And out FedEx are and packages profitable e-commerce. the place FedEx of FedEx conduct office substantial forget

great expanding I partnership and Walmart loved Brie, And inside we're mentioning which becoming thanks it. for profitability stores, a is

Our next with will Barclays. comes Oglenski question Brandon from

the returns, this everyone we what really question afternoon as thanks decade after Good networks and Smith at for like is run low the peak crossing business, economic taking today analyst know submit strategy threshold never my that capital. of the of and I Mr. put And scale margins seen just size. return, a we've good covering guess point same capital right question activity call in seems because never an you in on put of do more that the And optimize, still the humbly can’t really pretty but that but the a Express of but low decade cost I questions. not

on more to the or just I please? a at even going portions why business. maybe at not suggest integrating look that or to think guess look Ground you the footprint the So talk aggressively of more I radical business of someone Can overall Express

a to hell call, till last ask the got were put it you old similar somebody the superior We programs plans me Tyson question. we in asked way bit adage and reminds is a it place get I that in the Mike create mouth. a obviously the analyst same that else Did designed little in is respond everybody didn't plan to do of only look, But hit it the they me returns. and the or for just can question about of me that decide to the

the The assumptions United Cordell the we’ve expand FedEx competition that was amuses about vote, vote on with Secretary has and trade, a that international the last been very made in and so XXXX of to over The State administration. about things the me that economy particularly disappointed So trade. are the a with Trump one watching written has of since always few clearly lot of the with policy growth the years a things we Roosevelt so Hull States international and forth.

I things United and make the despite have basically we a XX% my outside everything own States. huge now is dispute don't world’s don't of I the fact population them, to export frankly need import States I the will that to become And United in where as defined particularly quite the need protectionist borders. is need

is to Chinese from buy I won't vocal with would been I on like So we agree on trade mercantilist. to protectionist position become have a you, but either country. reciprocal the and which a don't We that, sell very you basis. about

said increases exception very hopefully and sort question expected saying look I making Ground and around in at you will of We added and constructed Freight Ground said a it be your expansion any Freight implies and margin for we by small. don't be over as that to some today quote business degree in over the all in due again, have and an we’ve said to increases So earnings we have that compression the segment, to decades. that and single

forward we saying profitability have activity. now conversion issue, probably our growth volume in the the the Express but it’s faster international any any you go our business approach of am neighborhood a the having yields cows international network we XX%, you. that than domestic the to here, I that’s said, rate a Good the is other traffic the We resume to because So would is for doing as goes that to it’s to where have and and don't problem business. of reasons Alan clearly change, our as not change line news and business in Brie business incremental the kind it’s if the bottom is of things Express to if materialize, we any also don't sacred fine, remember

been gone it that of not who the the only the state-sponsored it, of company less have had case and reason on team entity of attack. IT and It In FedEx, TNT I remediated It a knees. to was it say factor put this the It us the with history amazing people the has was out that NotPetya amazed FedEx the that would been disinterest was, had a would've in by was work in attack have than TNT, single of a to fantastic bankrupt. The just Ukraine the went because business. been of been with the subsidiary it its of follow just not our I've world. largest of industry,

So NotPetya was the have been not lot easier waited, a we picked It pieces. sat clearly could coming, we should knowing and would've us. of up on

account color is my So ask I me to other day give think just only magazine. our when underreported most been like to bit about My I’m wired in which going think knowledge, it's this in-depth article the of history. Oh you the that's in he Rob God a stories NotPetya Carter, of was CIO written was giving read And you one I to that the the that ever by

the the was then anticipation assumption are our on The things. two that free stuff we’ve money assuming So these lot those NotPetya to not but and the of to to dealing get two to need in modify we networks of factors which of things to building will make trade, your with. extent point, embrace been we want and we remember and them that to, engineer exogenous a you continued course, of got the

this. to you Rob comment want on So

tools This systems Russia what properly the attack in on stole the were NSA world that were airports systems nuclear in utilize cyber those were was and back the tools that built Ukraine that in lost, the attack by government, all and the monitor were and turned hospital U.S. trains Shadow were the been down, they Ukraine infamous the weapons the down, monitoring devastation [ph] is reported. most just a called Ukraine the lost. on plant by were All grade hasn't group the Chernobyl Broker

in certainly on sale attack every of was state borders that TNT red grocery the looked of screen Internet the thankful least. point considerable stores But FedEx showing at Airport the every devastation TNT in are say amazing impact we big single was in it the and an down thing, our the the screen of Kyiv the that you every to terminal at stop death the same technology to didn’t country. teams This If enterprise. showing the the ATM of the were machine able it are pictures

that better of ever news it high state devastating are Fred's defend good levels than for like place many attack this itself businesses for integrated networks impacted being state was positively a reliability nation is that and running that The right were now. TNT a put with in degrees is that has are and ours others the But impacting for couldn't service well. and significantly today the as

level, talked the I without quarter Brandon, that a question a to cylinders. you question is -- just we we the anything just as at fourth had in providing two CFO. board we on year all about but our me the since add talk just all just was almost -- I let I drag. We things. this an is What feel one, important running the time, Alan. you SMCs, asked want And weigh need like Express TNT we a In ago, to were about talk there.

get that up Express. know reasonable we will I international I successful done global know interoperability will disappointed kind I’m but we it, of we it, any I that's when do can our believe environment strongly haven't that get the it. be do we and trade we we with that So

Our next from come question will Helane with Cowen. Becker

in much, U.S anything? hub this very the Thanks to I China, Fred, time. operator. what Guangzhou the whole appreciate happened situation if trade

citizen stations. States China. that as it. expressed been reported completely good China between TV compliance them and have a a and dedicated decades. But tremendous hourly the going corporate almost is And there we China Well, on is reinforced to in trade in for dispute And the we've business we on to are United

audit So their erroneously Postal locations. as And degree. many and probably with the miss other two result us the increase package. to in there investigation a and cooperated audits returned State they the Guangzhou some of packages we've in been routed But this China an fully of have and Bureau

with has that We’d we promise. they or Huawei. China customer. has Again, but do things the to purple we possessions, to never that our any right, offered for everything left to with customers, the do make nothing to apologize It have done

the of is Guangzhou huge of hub Pearl economy our So a the Basin. part River

there's to further And in we U.S., not relations. China trade any be hope deterioration so going

for Let it these that day It's really is made do we to added wasn't all, important because audience export this. about know on media, we contrary that hear were requirements. complicit in entities me us Huawei be just have Friday, this the request again, last what at which there the this strict these to say extraordinarily on DC at was five new in opaque to with of it's regulations, And led the liability. don't Court end the Circuit of

not Bureau if but If Commerce, BIS, on they Industry and think own law, Department Security, make regulation. on based their of stands of you which mistake, regulations, their a congressional under for are the we empowered

if carrier, been we even $XXX,XXX represented You have find package. complies, that us what's or per certificate shipment, a in that saying common what any other it though

said, to distinct million a So Mark we're the XX three out I day. package don't they was per But hopefully think packages separate that's what deal from And intended. going is as Huawei situation, which of with and them. that

China, and our very our for team tried So government to in we’ve perspective. it's these and a great affairs got this difficult we've Chan, Eddy who days us people. do in China so Karen Reddington, President But runs and to keep

speak to So don't hopefully operational any we issues certainly any issues there, have been up. hadn’t

from Majors question with next The Bascome Susquehanna. come will

how target of tell through quarters was into incentive that on close or fiscal XXXX it taking in much the you for much us how question budgeting the to target And comp my back? come results to curious was level how fully much And XXXX would be are Alan, the first year. $XXX Thanks. a two you thanks absolute I how I million Yes, for outlook? that if helped basis? know could here.

Hey, The I I we you. guidance in it of think that don't question. we Bascome. AIC with We're is to a X-K at forecasting later. for in And don't IR and too that's going the much July. follow that XXXX are why an gave leave have strategic up FY just

will Merrill America Bank Our next Lynch. from of question Ken come with Hoexter

Great. Hey, good afternoon.

still growth up. be incorporated and at would delivery Sunday profit You startup the noted the for Ground

more dynamic of Express for day Given target cost from sorry, a larger Ground going do that to structure? does next shift you delivery Express see your from from to and the change Walmart -- and Amazon, retailers packages move how I'm

this So, Raj. is

and services e-commerce on Let me needs to of have retailers we e-tailers services is of here. reason -- the as forward transportation and the go cater full portfolio a to other all we now

Walmart volume are of and So provider that. overnight Walmart lot overnight for service to a have the while when talked for your we that question, for we

you that need provide well. hours If extra one for need delivery local that, target service we we if we a as zone ground have

we that now and technology it to the as in a have come Chairman is So marketplace. more about along and the services with of my e-commerce point the returns delivery robust most talked portfolio here is full

do So it's we that picture trying really putting are to together the whole here.

we packages can do the network doing What that a for job The we driving wouldn't dramatically, lower if own our a going going Hey taking is than up postage down. Ground it their great and cost Ken, postage. on is we're of wasn't Alan. keep to is structure cost fact working lowering our the be all it the SmartPost cost into

So, you understand. to phenomenon that's an for important

day assets kinds goes we decide, the again, delivery that's but it’s Secondarily make for two-day which really or a kind into the goes can't is double its things, in and how doing distance delivery decides turning, swung Express. of customer late distance when and to Ground network it any next it time all it it’s evening pickup of

by you. its to to I explaining go whatever understanding don't cost people thing, to lowering significantly networks unit it rapidly. got but that wants. important Ground the that's Raj was doing So very as customer provide And We've and want is today

Wadewitz will And next to Tom UBS. we go from

Good could density in color that more in offer drives seems that topic, like will help business, what Sticking the are some are in I but structure on BXC transportation the just cost drive to and actions on intuition number is packages. guess the cost for evening, question. it guess, e-commerce the all-in a Ground. things lower grow perhaps that in could I on you thank of your you some the more my dilution significantly doing density you of

if really the and the wondering some margin understand to help significantly pressure of structure could on the Ground? you're just what you little Alan So saying in of in a cost us terms perhaps offsets lowering more

cost with season. be. to over XX% want we the as compared by Ground on about peak we swinging sometimes the what traffic, world forgets, way the holding have, get growing, us as the and technology one, everybody to lot as got lot competition, of course Ground as they do a fast standards, unit the density is faster the packages faster I does days All to are We how great this and that's lower us handle can iterate is during which and on engineering net, and we I versus or two the that three is lanes are competition well expertise season one, fast makes not it’s the class. place we're whole all that peak fact more and assets as to our more to at a that own a coming

how are that’s place we we're doing think I and So great in it.

Mickey question remarks. turn would that And session And to like our for closing today. over does it I conclude and Foster to answer

for the to feel fourth conference participation free relations on the additional FedEx. you. Thank questions FedEx about anyone you investor Corporation's earnings call in have you if quarter Thank your team call. Please

our your for That conference conclude today. Thank participation. for you does