FedEx (FDX) 18 Mar 212021 Q3 Earnings call transcript

Good day, everyone, and welcome to the FedEx Corporation Third Quarter Fiscal Year 2021 Earnings Conference Call. Today's call is being recorded. At this time, I would like to 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 third quarter earnings conference call.

XX-Q, forecast stat fedex.com. on Form as as quarter economic our our third earnings book release, well The website at call about from will streamed is where This replay the our be year. one website for available being

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

to advantage would statements all other question-and-answer order in within take such performance, like the desires the such which results actual I to factors, callers to forward-looking materially projections remind statements to that provisions may Private question the of session, regarding subject act. accommodate FedEx of to to our Such Act. Securities be could those by cause this limited participate. future implied us During conference differ expressed call, one Safe or Harbor Litigation all listeners Corporation meaning statements forward-looking to to Certain of will forward-looking in allow and those be who the from want uncertainties considered statements. are as Reform risks,

refer the on refer the measures. at on and SEC. directly the For additional Relations with filings measures financial reconciliation factors, Please to releases press to the a of for of these our our fedex.com portion the Investor website GAAP call non-GAAP discussed to information most please comparable

Officer; Counsel Lenz, Brie of Henry Ground; us President the CEO on Marketing Freight. VP Sales Carere, Ground, General And Fred views President CFO; Rob Chief CEO-Elect John will and Lance Executive of Secretary; and of President, Mike Subramaniam, Officer; Smith now, CEO President and Chief Fedex Vice President Executive CEO his FedEx President Brannon, are and Moll, Communications CIO, quarter. VP, call and Fred today Don and President share and Smith, the Allen, FedEx FedEx Carter, Smith, Joining of Information and Executive COO; Maier, Express; on President, Services and FedEx Raj Chairman and and Executive CEO; Mark and Vice Vice Jill Executive Colleran,

you, Thank Mickey.

FedEx of team they've historic FedEx our immensely This XX-year in effects First, of the event. to to and power clear record-breaking how They handled backlog throughout typically members want night season. call, our and winter to to I the peak team many Since diligently who team we say severe to using time winter and quickly a They day for We're their other shipping backlog to a perform understanding, possible. members. am our our also sincerely U.S., caused season customers the volumes and them expanded grateful move navigated volunteered seven-day-a-week holiday includes storms. worked weather the last as of operations, massive Ground help. the earnings safely as proud worked by and I recent the the the as duties their these completed our

Our are of world. the vaccines now and with world vaccines transport on more as and is ingredients long for more than and other XXX territories the job help to as team during the to too. members event, COVID-XX. continuing supplies prepared delivery these FedEx forward We the COVID-XX great weather a to eradicate Canada throughout than to the around countries did XX U.S., countries move vaccines-related necessary

carbon sequestration develop which -- for been natural energy; Vehicle strategy in sequestration. and carbon a regard, in globally be this we bold strategy three measurable of over Natural to Carbon of industries, on pledge Findings the environment part school globally our earlier world-class the education emissions. shared key reach importantly, achieve offset will solutions, on that goal, initial be help XXXX. published our an As Yale this our businesses, work. can to capture emissions decade; and to includes focus legacy and benefit this planet, build responsibility airline The so the establish greenhouse In gas of by carbon Capture. current month, to Center announced our focused operations governments and to to equivalent will we this helping with good the stewards areas: help sustainable plan we've Yale a electrification, To of for research center the and carbon-neutral involved from

As is across reflected earnings our continued margin execution strategies strong and improvement in this company. of quarter's results, our producing growth

future. expect I'm future FedEx unmatched at much hard work. FedEx, very to after International to July like Express grateful have more at about remain the I'd thank and the for solutions e-commerce Henry our and for about of CEO Henry of our Maier, say exceedingly is retiring of years and team than call for service June. We also demand again, to high their XX optimistic of our members We'll to FedEx. more on Ground, who earnings in next President foreseeable the end dedicated

we which Raj? Let your Brie, their ask questions. Mike me will now provide to after Raj, take comments, and

season collaboration QX company's afternoon and quarter our growth the first transporting vaccines packages, included for team holiday Thank circumstances, here X.X This Despite US, through well billion you, everybody. biggest nearly a good the across history. the COVID-XX was Fred peak in FedEx. exceptionally strong operating the challenging of in and companies. shipment performed increasing of delivering

capacity, better Peak to our experience our the maximized XXXX profit. than company's new peak previous different a and moment, standard in and any for we will aligned themselves. for monthly We achieved and in incremental sets Results peak in totals operating In history were December both available cover before costs. a future Brie revenue speak results in years. Our highest prices unlike was as December, better seasons.

and weather couple our the many to in the mitigate storms the impact, will managing network contingencies challenging very including across numerous I'm nature US manufacturing expand very the in economy, were winter had proud haul on line by assist on days, reports unique the more I'm the Fred sorts, these severe operations for team implemented our sales output. which including United last to mentioned, storms. impact and scope situation. throughout overall States. these of of this recovery. the month's seen adding And the and of collaborating through have of impacted retail Mike last illustrate you We As sure

the that announced of speaking and Smith, former retire have of all the Freight, on at we FedEx call summer John Henry has today. Operations Moll, three team, promoted named President pleased will his Maier CEO Now, these SVP we're FedEx gentlemen this and been and of Lance former to Freight, to CEO, successor.

FedEx Now, last record mile The residential and volume efficiency amid investments for with outstanding Ground improvement the ongoing to initiatives costs pay associated These QX even levels. continue the to strategic improve highlights margin and turning in our success of investments to Ground. off. reduce

of year-over-year. as seven-day share remain service improve maximized X% saw QX. expanding our one package one, XX% companies between of examples. year at delivery GDP. unprecedented anniversary three the or to last which me continued effective in their to flex May mile launch in continue total mile last and in U.S. two-thirds to rate stop we Collaboration XX Let assets, we year-over-year very optimistic SmartPost, for in decreased per fixed QX. improvement hour an per Ground. us and month two, will meaningful the FedEx cost formerly the XX% residential, providers number Number Number markets optimization, three, increase the allows cost Ground a stops year-over-year. average per This networks markets at operating marks profitable to our of integrating more by operations rural LMO Xst, economy, covering We and the for expand by deferred six increasing packages. density to And reduced our efficiency growth

shipment increased million kicked X.XX far than deliver in so more Ground off for this Ground time delivered Freight last shipments single has May yet Freight to year, for of year. FedEx support XXXX. This fiscal Additionally, Ground had a as

FedEx Express. to turning Finally,

Our physical a is It at into months. will appropriately the we term, prices ingredients these know, our Express, moving and returns the longer commercial supplies and digital that next flex and not of capacity for FedEx least the At we global COVID-XX network we coordinated in market. expect XX capabilities. pricing as been We networks as our orchestration sustainable speak. elevated has vaccines, are however,

shortly local market the of last with and we set will regulations. month Europe, accordance In as their In here. network. big physical planned service Europe which our new of and business. TNT customers, our very the to will close. addition, a which efficiency mile our and consultations progressing with we be bring in April our out roll continues integration provide we a with announced to by will are complete integration spring restructuring XXXX, We'll detail program, prepare more a executing for physical Brie optimization recently integration European continue the as We network momentum will capabilities in transforming improve local to

largest as network strengthening focused closing, in hub Express in main our We delivering serving air come. European be Indi-dus remain in hub. remains to profitable long-term U.S. years and capabilities with will FedEx growth. Hub upside second [ph] the optimizing committed the In as Paris drive Europe Our for Europe to Liege to our our on

me Brie. strategy so upon have year turn to network, the let seen over results have as and XXXX. team right the that, it the exceptional the We place build in With we fiscal far we in

a with day percentage QX retail market. about of are year expected packages total you, XXX Raj. pre-pandemic domestic United of Thank We e-commerce momentum. to of In in market afternoon, XX% excited calendar the remain seeing XX% to The everyone. diversification as growth sales level. U.S. significantly grow of growth. E-commerce strong a approximately States, we is parcel Good XXXX, and the above evolution the contributing calendar market and U.S. U.S. e-commerce was XXXX, the million by

reported Some even largest XXXX. in and rates through customers high the growth of e-commerce our triple-digits double retail

e-commerce the a deceleration US the potential shopping. short-term we for recognize in reopens, As

that has growth very a of long percentage retail, However, we are confident as runway. e-commerce a

segments. to tremendous sales e-commerce a with year-over-year all with peak. strong, the packages the particular a of could predicted, upon million in XXXX parcel double-digits. you peak. We momentum our delivery volume week delivered customer XX% note, was supported be and XX% upon volume is growth. portfolio daily and more for service of It To of residential execution Turning and QX. XXX remains global growth Ground fastest-growing year-to-date had in remains marketing at growth the FedEx growth a Of services your not have FY average now almost a growing ship Overall, ADV we e-commerce volume the peak solutions strong I certainly proud seven-day one teams, by created. growth

the and year grew US our end medium total US was versus package domestic ago. However, through a mix XXXX XX% of volume small XX% FY In February. segment FedEx residential QX, XX%

It's year-over-year. focused FedEx US increased Ground XXXX we to packages and FedEx economy product mix. formally residential SmartPost. our of by yields by QX, domestic With on XX% and FedEx FY improving yield we're the yield important increase overall residential networks, in XX% note, is Ground In

While growth, the BXB volume the pre-COVID was key US enterprise of our e-commerce is driver overall in levels. January, at

revenue US quality our to Turning strategy.

pursue We yield and actively management, continue product strategies. mix customer to

is ensuring Our large primary customer to pricing focus distribution. their aligns volume

to prioritizing product. Ground, as continue our our premium at well SAM as manage delivery We segment capacity highest home FedEx yielding

XXXX, to of surcharges peak for critical plan a will we fiscal As role. play year our continue peak

to remain now to capacity air And the January. international. year-over-year Global calendar cargo of Turning as remains we of capacity XXXX. down end constrained XX% through cargo year expect air

outbound We partial until in capacity Europe calendar pre-COVID APAC a a From recovered the not between its end end outbound with anticipated has recover to recovery of XXXX. by level by a XXXX recovery XX% a perspective, XXXX full or XX% is the year sometime full expect and of demand recovery XXXX. passenger and pre-COVID, to while expecting XXXX of

With integrators. continue will to freighters and these trends demand projections, favor

for will ability we yields significant elevated in are We least surcharges confident driving international growth increasingly at maintain months. in our e-commerce our internationally, With utilize XX business. peak to

to Finally, strong. incremental capacity performance maintain very executing continues Intercontinental we grow volume to commercial are strategies recovers. and be as our

has Our year-over-year again seen all pound double-digit total international improvements in express key impressive yield markets. per

in volumes. Our fully are Europe, recovering Asia, volumes is BXC fueled our are significant BXB pre-COVID levels growth while and in to by recovered overall

enhance our European quarter, dramatically our will During fourth portfolio. we

significant road on value integration completion the European already stated May, gained road the improvements. previous proposition calls, last As with of our

the network. will we an twice QX, industry-leading an Our TNT origin next-day currently customers Europe-to-the-U.S. enhanced number the have providing European accessing in In countries road of to been service unparalleled the value offered. introduce proposition, U.S.

choice European giving addition, by premium be by customers end Express In Priority day. launching we overnight FedEx new customers' two International offering noon Europe, within our will service, overnight and services between our of

to capabilities the service new these out rolling be will over We coming customers our months.

customers. designed Connect International launch with has while and features specifically targeted Connect We Plus, will support has XXX through outstanding I'll a to his providing countries out portfolio transportation also The Plus Europe service our of summary, modern delivering shipping market XXX have FICP, been Mike experience or is QX. over the online to application that to customer across e-commerce that, coming FedEx the targeted refreshed to across from out an International United is European within momentum and to Europe new FedEx brought lanes. Asia and to comments. we globally. more it rolled In to turn of Europe, and reduce than the States in serve, already cost service for And with great

in FedEx solid growth across package, volume, and Europe; These as by increased revenue you, FedEx Adjusted our of overcame and and of our transportation all met package peak adjusted execution U.S. residential season the profit Brie, everyone. the four factors. our delivered points, led financial the by primarily demand winter priority in noteworthy face basis of Thank results challenges margin were operating strong during and we volume rising weather good increase XXX%, increased operating quarter, XXX due partially international afternoon, domestic February. a improved in and segments. strategies limited management offset and significantly in increasing XX% severe Asia demand to during capacity gains

regulations of was First, consolidated approximately COVID-XX-related million by Express; for million, operating across many FedEx safety incentive and a compensation which events weather make and higher costs million, accommodations lower $XXX at reduced income million; we not the our lastly, second, higher of $XXX direct employees day, of expense with million; and third, to significant does revenues that which cost all $XXX various $XXX team estimated frontline the week the impact operating bonus and $XX global continue to capture our fewer one estimated for variable including operations an guidelines. to of due members approximately comply having special

I the want to impact. add weather its adverse around context Given significance, further

most have with First, The but amounts years months. impacted late as mentioned. our of third particular, quarter, we which always over Fred US. founding in The time a and had Corridor throughout in weather anticipate the and the our and days prior record the a been to Memphis Central snow in country, of XX below the demand seen the not fiscal coupled to and parts South of operational mid Raj spans operations, nine significant freezing, FedEx historic had when events, on for contingencies consecutive impacts impact during winter active many February were

absorbed compensation XX%, package, $XXX quarter both Ground quarter, Express up points, X.X%, of million. expense in headwinds, of Yield to volumes Express margin independent significant quarter, offset to third our domestic priority incentive profit In Operating over operating the prior of Our highest deferred that, payments deliver history. Express million Of and adjusted variable FedEx operating Demand the prior increased an Indianapolis in Express, and million peak was more US $XX basis third Freight. Ground, pace $XXX were XXX at million an than resulting as impacted rates, service estimated North exceptional population growth as million XX%, year the higher well the Despite $XXX were $XXX labor compensation million operating of was yields. weather of while grew million margin which points revenues, various providers, segment hubs X.X%. the was growth with XX% the weather. international adjusted higher to up Texas at US impacted well. as Ground's was the and incentive million $XX on the higher as significant at $XX growing events. basis $XXX by XXX quarter driven in and reported third to by higher had export in portions and and impact, variable were volume FedEx profit operating income February record including international

we e-commerce commercial and Ground, at and the profitable initiatives Raj our to opportunity. highlighted, on As growth yielding operational yield Brie as continue and are will capitalize

increased aligning and to quality, critical improving structure variable revenue the Freight both and Ground impact FedEx their excellent operational levels, Turning despite season support also to cost with continues on their X% operational results of operating current Express. increased business Freight to efficiencies. the with income compensation and focus provided Freight, post weather. peak

rate qualified rate plans. XX% to US $XXX and tax a due effective tax million quarter benefits a from to increase million, in the for was Netherlands of balances Our a applied our contribution to tax tax resulting associated with the voluntary pension deferred $XXX

ahead. to what's turning Now,

degree a full earnings adjusted FY as compared we per begin $X.XX $XX.XX, to EPS we to combating XXXX. share of see While pandemic, there projecting to adjusted remains progress of uncertainty in year are in $XX.XX the

effective to be end year full mark-to-market and XX% the prior expect XXXX. We fiscal year adjustment the tax between for our rate to XX%

We margins higher our week year-over-year include continued restrictions, quarter, compensation and expense be in I to basis the The forecasts employees expect trade, special third achievements on our transportation segments variable higher as recovery excluding in industrial global is plan higher results. we year. and our no reward fourth to all their this day. our These Yale at expect $XXX quarter, million Earlier bonus a pledge in operating US additional business current we mentioned expectations. year-over-year does Fred this University $XXX fourth production operating fourth the the quarter and operating to quarter mentioned we revenue, will than and previously. for in slightly increase the expected income, record sustainability our initiatives million forecast, assume price COVID-XX-related additional incentive fuel which one With

XXst. Act, CARES For be Express from excise in no reduction December there will tax fourth the which aviation in expired benefit the quarter, the on and the

as strategy. flexible In will the execute we in air higher addition, on maintenance year-over-year be our quarter costs fourth Express fleet

park with year of ago, seven equivalent shared a temporarily the you to Just plans MD-XXs. we over

Given to efficiently capacity we the needed increased for expense by our storage. in utilize maintenance aircraft demand, adding customers are temporary from investing

have MD-XXs plan in peak prior parked or to next the to down our in temporarily of to ability response no As a illustrates manner This market. now, changes financially in efficient we flex capacity to season. up

demands. Our our market capital spending improve capacity profitably that will focus our remains cost strategic to our increase structure, growth efficiency, meet and on investments reduce

Our acceleration XX X.X% FY aircraft timing the in to as revenue, initiatives. $X.X billion Ground now level years. expected to XXXX which in roughly CapEx of changes the forecast payments, the That is over well as FedEx lowest due of of projects capacity is

XXXX invest our not and That or While deferred. investments increase, than anticipate specifics capacity we intensity. revenue plans, previously June. less, said, provide capital percentage have will FY of more with I We’ll less spending finalized historical as a proceed as replacement will remains our which X% we in in in capital be CapEx, capital

on five-year allocation at ended aspect of key The billion our quarter Tuesday, and with sheet in on balance balance liquidity strengthening the and sheet, billion Looking credit our the outstanding we our agreement. cash of be strategy and and will billion credit forward XXX-day $X.X moving renewed third $X agreement repayment equivalents, debt. $X.X cash capital

and strong close these that, position, sustainable will we have I in be costs based to and related earnings Session I'll our the conditions, we are generate of we on move confidence to we question-and-answer to by to execute the session. plans this be transactions to cash with transactions, reduce reiterating, existing our have flow. year which would long-term timing flows growth And build as can had in may potential and on evaluating liquidity great debt. material. we Question-and-Answer ability incur our transaction cash Given The any refinance and market successes

we'll Instructions] Chris Thank go you. from to And first, Wetherbee [Operator Citi.

Your line open. is

XX get you pricing, XXXX, overweight side think repricing the product the as first, maybe to say, towards forward, about afternoon. may do that moved and and of we even sense for of in thanks. a as over as market that in wanted been move progress market Maybe ground And on a Ground last think how's the months. has Yeah. mix offering through course I into where I made margins – significant But then I you're are to demand Good grows, maybe your are the it you want But BXC, clearly, margins? play the so that of little Ground around up fiscal start process far. bit heavily understand, we we've so should very impact takes guess, Hey, share. and BXB the of How now? the right this service ultimately,

the for speaking. Chris. Thanks question, It's Brie

from a You know, still strategy believe mix a opportunity from perspective. perspective, we yield we have

dramatic most been this As was perspective. a you probably from make not to we've most the quarter product able saw dramatic the was movement probably or

we've that shift throughout see calendar a to growth. as this I – throughout capacity prioritize going our And be this year SAM anticipate You're as mentioned, result, constrained. will we as to year capacity got

got performance a segment You It's small heard XX%. we've perspective. the best from

prioritize So It continue we're yields work to going up. our to that. will

on, In that, from addition FedEx something will we are that the upside is add focused to and it product here economy Henry? out. very dramatic yield

Chris. Hi,

Let question. me take margin the

teens all, we teens. to of that. the in me – we QX, how be margins business beyond speak But the First let expect see to in

sort productivity and learning more operating we considerable developed And freeing will to up this and match be to on-time there's on They implementing of and are agile capacity. critical network dock out scheduling valuable volume, are capacity delivery in certain framework volumes, initiatives the the on a None believe to operation. capabilities These in are for right dynamic business. the dock ensure in our balance still initiatives sortation possible sort, are the through network to these tools. brick-and-mortar. staffing, for safe AI require also headcount bypass station and right delivery. also right ensure reserved station packages leading capabilities sorts directly right They're industry of the and We're that technology, sort, using vehicles, tools help next-day a machine First, network. volume seven-day to rolling day thereby Strategic upstream enabling overnight realized leverage transfer for improving for we're the closely expense.

transform my business, in we of best FedEx of still them. are Ground all view, Ground's with days to FedEx as ahead that, the continue So

time. the Thanks for

next, to And from Bank Hoexter go of we'll Ken America.

open. is line Your

Great. Good afternoon.

to Express. the were Let upper about exclude margin. talking the to over in you if goes Brie, Express X.X% of you about me months. to guess, I could Maybe maybe up thing switch starting And, the terms weather single-digits on in impacts, the that – side, Maybe just return on the disappear pricing talking of same Ground. XX were BXB you you talk

how that at So business? there you back margins, it or keeps you change to at the some look Do see that structural do this is transitioning double-digit single-digit levels?

Hi, the January, Ken. wasn't heavy It's from Brie. and Mike. States healthcare, over Don pre-COVID BXB, retail, back heavy of I'll volume we mentioned, start was to heavy and a the our It perspective as then have with here The yield the the From within tech. pricing in element yield and a it back turn and as to seen. historically BXB mix was level. what United BXB we obviously

not back industrial. automotive have seen We it and in fully come

the at some So volume outside we're States, look whole you there. United the is back, level, of at When that, Europe upside there's we BXB holistic but think a not.

we intra-Europe there outbound of that up BXC it a opportunity team So European shored they've The done phenomenal up job gap shoring has volume and is intercontinental from volume, that still but Europe. with. see

perspective, weight throughout Express will States there in the Express. Domestic pretty Europe United that increase of from perspective, from on a coming continue From think still confident an feeling as yield because well calendar is e-commerce is at mix yields some Express. the as outside our There still. to out I year a a pressure International upside BXB So yield of the this we're

perspective it quite Mike? we're next comfortable a overall, months, yield growth and over for to the So, I'll XX opportunity turn from and

gains the as quarter, Certainly, three the this Mike. fourth segments. all Chris, said, see transportation margin is Yes. of in I we'll at

about can't And without highly get into gave we on outlook place, the outlined, We'll plans You as and we context can that I the as to have our Don? expectations. put the build confident out not strategies we're be margin more other there that the for with we're given momentum XXXX have the in to you. say going to forward well guidance here but been that falling June.

for quarter company's December comments. for the and highlighted his hit. a the things think, of prepared Mike by provide remarks, few until had same just that we've the in level in the strong Yes, best I to to the about and quarter. quarter, is, was had And mentioned One us, history, on Brie, to the strength a track add weather of performance it your Raj

a as performance. evidence of I billion is to and into Now and job the what $X.X that comment that that we've really now. strong of seen. we'll fundamentals one a revenue it have, highlight Express exist to wonderful fundamentals sales strong quarter. confident not business monetizing Express into the could unit that in a would this of We're have, growth around terms globe about the excellent team of We right should the extremely had the quarter, the is our in deliver turning but thank have, that continue operating did fourth in

soft the increase that it to think is quite longer demand fundamentals maybe with to assessment. medium demand low, going what checks levels Brie's When agree, and is obviously, perspective. in And we and from seeing is as the we're remain I in a short, strong. inventory come marketplace. term. supply in into the the to very business, are even us stimulus relates our international some that As clear yield seeing We're

forward. So in to international you going look we those of have economic especially fundamental terms in our business tri-factor, should continue benefit we us, if think, at issues that it

appreciate Brie, it. Thanks, Don. Mike,

Suisse. Allison from go And Credit to next, we'll Landry

Your line is open.

thanks. So, afternoon. Good

was mute. Sorry, I on

the guess, change surcharges then what think I'm think it's to peak But about yield in contribution X%. or about on could Just more price digging equivalent about little the QX, base and bit and through I surcharges sequential Brie that how up off, some Normally, in in think you a break or piece maybe mix? out obviously, incremental peak Henry, terms from to you I place. QX. revenue trying the of the yield maybe have fall is, Ground versus per the specifically the came best talk surcharges to

out you. just of in looking Thank different contribution So, of terms breaking a pieces for of there. the context bit little the

pricing Hi, Allison. vast perspective, of obviously, majority a on complex is strategy From highly contractual the agreements. volume our

out And to streamline historically, wide. Ground difficult FedEx focused We is has the QX know very too and really FedEx so, now. from the economy much spread you been between us it's yield saw our right for a product; spread, that on and what you that you I Ground our economy perspective, FedEx break product. quite delivery home Ground will But tell

So, we delivery are very at the home focused on prioritizing product. higher-yielding capacity

see going two you're so things happen. And to

You're yield give just to through us home higher quite more frankly, strategies, going the well discussion. calendar and as to this throughout see see and delivery GRI both as capacity contractual surcharges to year, you're going us the increase peak through at yield

really for that that's gap, we've delivery focus making is got home prioritizing capacity for customers. So, sure and our and capacity our closing small medium

what color dollar perspective? just the any And was or from a QX Okay. perspective of sort surcharge peak a on in impact percentage

We're not going to this give that Allison. time, out at

guys. Okay. Thank you,

And Jack Stephens. next go from to Atkins we'll

Your line is open.

taking thanks afternoon Good my questions. and for Great.

from the a lower you when see tax the XX% significant the quarter yypically, guidance and guess, for third the guidance, to earnings earnings maybe normalize XX% quarter, this And to your fourth implied quarter quarter implied it's weather maybe for fourth So, in for guidance quarter. -- I about is rate, XX%. fourth increase the from a Mike, third fairly you. is When one I think ramp to historically, in you

the economy? just Is through of and there? walk you just curious Just factor conservatism a maybe us general. it some if puts Is takes if I'm broader of some So, there? in some uncertainty the can

fourth wouldn't Thank help a more ramp there? quarter you. and us of think you seasonal you can Just guidance why normal implied the see through

for Jack, I would into can to federal takes and going state tax effective -- tax a X% for into the guess rate XX%, higher come the typically, XX%, The thumb of I than that back for X% is rate get all I'm year when in seasonality. not de-comping that puts to full our I a and implies a QX mentioned statutory refer other. XX% to rule year. rate or of an you

the on $XXX in we had of QX call, But to kind through basis. a about as on So, normalized QX. million have XX% mentioned year-to-date discrete events we've of

play earlier, look kind it rehash that a of when strong But it all that so you will leave QX able it So, some I'll I QX. operating to are underlying be will and into at won't the when very think QX piece of at solid other about operating very I it normalize I I there, a performance for elements that. our those. you think and talked together, is

Okay. you. Thank

to And from Jordan next, Sachs. go we'll Alliger Goldman

Your line is open.

volume into comps, at Question, year, fiscal overall the e-commerce the afternoon. to continuing beyond that you difference grow the even fourth though, especially and of that expectation, a quarter when Thanks. you think Ground. in Hi, some next still pace decelerating tougher year year-over-year? this in volume levels Is getting with fiscal you start Yeah. the could your

an than guess is I market through yes. outlook We're anticipating growth a We've market to e-commerce the short XX% from that the the come at CAGR XX% answer going more is, growth, perspective. of long-term e-commerce. got

And Mike, I'm the is, yes. add So to something. like sure short would answer

Jordan, mix, Yeah. basis residential to at went Brie threw up lot XX% were FedEx of we mentioned, from and But -- XX% you. as we XXX Ground's numbers a points. just margins

So of continued speaks execute growth to the to on that we I e-commerce. how plan think

FY And, our that's of forecast you in companies. been you from That But XXXX an pandemic FY of be lot just the at a the fourth has giving been year during course, the anticipate XXXX earnings Mike for quarter, forecast June can a we June. gave not call. with range will that something full available

you. Thank

And we'll Brandon go from Oglenski to next Barclays.

Your line open. is

taking to CapEx the forward and when revenue you on projects, is you these my afternoon mentioned going accelerating investments of outlook the some below talk and Mike, for within to think because Good I you can look be question. thanks of X% Ground Hi. there?

you about one of a broke bit, references. Brandon, asking but up if the CapEx I little understand

So XX% at said, as volume Ground. grew we

our opportunity this through CapEx, that and of And the -- evaluating so December, chance we look look deferred at terms lot get you at the ahead the what's as that maintenance see we and Also, can the looking a year. opportunity. that we to as when vehicles, at of you book in if came stat there, and our you see facilities

well. of that be forward So some as amount going those -- there will

June. we'll you So give certainly it to we'll be more specifics comes when on -- that

guess type projects? longer Difficulty] I I in the of was Mike, [Technical what Yeah, these return are asking, like, term the context,

about I think question the is returns.

all making solid last I generate results with the few You confidence will as showing we're investments are broke up that absolute a will today. again. the years investment just say made very of these return on in investments we've

Thank you.

from Bank. Mehrotra And go Amit next we'll Deutsche to

is line open. Your

-- progress long-term could you but for update can obviously shift get you a margins, to I called that and it you you. was us the secular I given an that's weather. point the question just Hi, all Henry, hoping and mean, just challenges can the you key what you guys for incredible talk hoping if and we've I think margins, business wondering, the Ground was there? density hoping Ground think the And discussion about are that on on guys if that, -- have operator. made million margins And okay? that. annual from you operations. us about of I of the had update outlook everybody. to little do was Ground attribution gave when the quarter, you $XXX can with Thank bit you you you pricing Ground on is ask sustainable I number. BXC think last out to I'm related come Thanks, could basis? Ground business what

Mike. this is Amit,

outlook say increased on But Ground. we've our build in in $XX remarks, profitability generating of June. at of As we've given said, more fourth XXXX my momentum have I ground. weather about Again, said future the million guidance. we're ability the – for FY of in to confident you returns to very and was We'll quarter

since Can in the of it's Ground it excess basis another package. the way I then ask was per XXX points costs same between pricing And spread question? in

the four package moderate quarters? six over recovers, to is and next price why should cost BXC five, there any spread per As between the reason

two the the Well, and we're I the Obviously, to what last we we as shift through going think of move costs quarters, do on pandemic we've in we've unit given our business. move and mix you through results, seen of guidance the the result here, strategic as costs as we've were lap in through unit our in reductions of gone a we've some year but frankly, had comments. in, significant Raj's the outlined initiatives those we've of last many some

expect see in We would considerable operating leverage over the and time. continue business, improve margins to to we

Thank you, Appreciate it. very much.

And Wadewitz to UBS. go Tom next, with we'll

open. is line Your

Yes, good afternoon.

seems And – mind. questions helpful you. but side Express is about integration you to of have give could to it. offset retain us up numbers, of eventually, Ground, some of Express, see. of your and international wanted TNT are one a years, of think device-based for I'm that as some I comes potential and that come in in of a cost to that maybe if potential and sense cost have rates things at initiatives. you look a to out to particular thinking past the back the back. if beneficial very And presumably, you quickly you I potentially the magnitude? Let's same shipments and that's from in profitability I that concern in Thank going on for that of the that's other of wanted is some couple Those BXC strength of that's go see, they the portion potentially

items to you numbers Obviously, I'll So give by the overall. about. Tom, it it's not address just talked possible this is Raj. the that out individual

the if However, that, by more, period we we to passenger expect it the commercial Even and to don't broadly for the it remain first saying our next capability it in up. we carrier we move premium and to let can partner flex -- it the come -- flex me We our it, maybe time. and expect carriers, And does to -- down back capacity of months, XX that will come back, we that have the deferred be demonstrated -- become have able and flex the networks. as needed to is we flex opportunity traffic. they to networks address

activity continue a of FedEx going lot Express. there's improve on to Thirdly, margins that's in to

optimization Our and another Europe transformation was of is expansion in of solid very one last-mile activity. --

Don, world. if feel confident very So of know, want around to to more our don't I future you add the we anything our about Express that?

But, we our clearly, a I have you and business. improving hit margin -- expansion think margin on international domestic in it, both Raj. playbook

think that the to will demand light start it an in works confident way, you I think continue Capacity about traveling in touched term upon the impact working on on levels over again curve I the months, and my think are medium is, earlier of people that happens and highlight basis. that the margin. plans in why remain various we last-mile talk for things our intercontinental to quarantine comments, until we're that because XX I the did We're don't of restrictions We XX one the supply favor. would is that optimization of parts and globe. has that next our our to of to you the want that that, all and didn't

driving either Chairman And Henry our through those amount week-over-week, anniversary can basis. up accelerating significant in sequential density improve very working his the of team. celebrating We're with and the one-year the And on on destiny. to coming optimization, that, our a density volume of think as margin we're closely a says, network. numbers last-mile are month-over-month the I is we And accretive. very our continue networks, Ground much it's

there's pull So of European we a we business, domestic have the and transformation, with lot speak, expansion. continue our multiple our can play, in transformation. the in to leverage improvement we margin as playbooks that But

priority concentrate the the network, allowing on Let require on system vaccines The verticals, in SenseAware deferred count packages we've the execution it hand rural I something me add high the of flawless, of ancillary ID, been LMO the and BXB takes in lower-yielding services ways. millions. of out of and and your that. two Express particularly it's Express to the mean, packages vaccines can that packages box on to almost the number benefits initiative those the One, delivered number delivering. every like with of you And we're single is which that that. issues now residential

dense so, And less more are served. and is to be cost more BXC able in Express effectively Express the areas the

asset a nature, which the and the that got sides, call group, get the cost, somebody things fantastic is know. had definite, has dozen its as density, to close? been in to time I Express has have probably because on the we've that these for to deliver, out. don't far, helps to Henry to rolling technology So, not be time, are mentioned, XX both XX so we us is we've I of of this that residential effect one other the don't time, it hard I We're this that's the of but it's residence one this but side. we not Express half on that's, And that Don just mentioned communicate fantastic packages needs one wouldn't that high, in we We all things Rob the advertise ways, what Ground's on density, of last that calls, Ground a and his in level utilization. think some is so these achieve It going it its team margins. things we something So the going questions or about that in not more helps listen why the have work can confidence future.

productivity us it improvements. want laid a is the you and so some the forth, to out do in to of to So, numbers forecast but there Raj they're in quarterly give mean that what you, for you all I stunning

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these that two going is questions aren't back of everybody two get going calls. calls. margins pandemic well most do are -- to in because the back. Express so the better questions, e-commerce of you're The Both and to the last in these are going in is your coming wrong. inherent to are recurring over Those those up the passenger And go those not are and come because

hole answer felt to down those of I've areas. had finally. step going the you're to in wrong any but I rabbit I not on tried questions, So, both

one just can I thought. more if think offer I

I they're pretty pretty think and it's programs favorable. just big like the magnitude, like seems it

if understand, ton of us I be just and sense factor they -- sense my So, results. seems some doing to a mean, of big I the to a magnitude think going what a makes you're in give trying was you're point. the But may at at question to

anyway, -- all the So, it. for good thanks on perspective just

And next, Evercore from we'll go to ISI. Pfennigwerth Duane

is open. line Your

that guess more out questions. rules Hey, asking Ground seven I

for that cost a this pushed out me, Just versus couple into how volume quarter? much of million $XXX is

And expectations think of as had of course, a most was that. I the $XXX noted have are de-icing event with it a costs. Well, But cost revenue our so collapse, let now. Express from one tell the then where evolution labor couple incremental we costs number significant principally, revenue I'll I you overall beyond will of of and with for facilities the that for, have talk the in And is normal a you is We Brie the million in was well as about snow roof at that related. did additional Netherlands that, we there of removal, well.

guess, the Yes, the way back. I think March about are fundamentals best is to

fundamentals strong, out, February is January, So, they lot is we're BXB shape. like in good take our very is look we did a If confident. in SMB Ground back,

the feel fundamentals about it So, we March. confident February was very revenue, in but

talk versus being initial is could about you've taking or then distribution. And And of vaccine segment you. you either expectations, your activity utilized? thanks Thank wonder I which just for high-level a level surprises the the seen, questions. on quick if any

the Yes. it brag opportunity bit. me gives on a little team to and Thanks, an

how any this network. the if shouldn't guess, these it work provided team organization through have make done is and Yeoman's surprised Richard amazing that have exemplary move his and that to sure Smith there is our vaccines it is me I So service.

of did efficiency, level said, a that that Fred As an shipments extremely not service. high need if handful

to businesses story back what and impact of get of very back day borders network. though, that. they that that's to amount move absolute what almost not about. a really really that people profound proud XX to a look reopen when of In you the lives million have we're a most small our our these note we validates our vaccines about note work, is represents can very, is that we reopen, is on talk at through grand this the very amount I destination. potentially it that one of numbers The purpose, think shipments That's seriously. the it's to But we to network, just put moving vaccines the what's packages small that things, that important of the and portion levels. the when And scheme when in in raw normal amount we save, really important take

they the done market, Get guess, galvanize have So purpose around I so very thinking that every surprise take we our morning to to amazing the is the in team to work that energized has we personally. have mission this about be And that folks that shouldn't purpose. vaccines can really been up get them and these get on.

be the brought couldn't market in So proud more these I way that of the vaccines to globally. team

asking question. So thanks that for

couple timed me couple most of a wait up a on important that that actually it, out going we a about And launched AI But jump that, companies to do -- tied is was of to Fred and one that’s you we ML unprecedented pick the world we do I it need any requires be of the technology happen. a other component, you'll And well. do couldn't I provide vaccines by couple part work, to actually part can what in world That visibility. capability honest, that the And is also the be to do and the able it And to also predictive mean, days. the provides perfectly that. very Yes, done. we last work deposit in only year. of we Surround talked also last SenseAware year, to mean, let which can a I FedEx the any for people of of that ID network. in one have -- to of that, and network. the in this rolled

best possible, the service extremely failures. out, Chairman level pointed the as all low have we it put and You of together;

do and we of ending to this this very part proud are again, continue pandemic. work in So our

And next Allison we'll to go from Wells Poliniak Fargo.

Your line is open.

Hi. for taking the Thanks question.

help new it back sell, mix? term. development you understand of thoughts hole service to any or on be us wanted And about products? you're would on what thought for mix to talked quantify that circle you Is Just there longer a the market way there? business international. capabilities drove I'm Any better to expecting within the a the assuming those

Sure.

three So expansions quarter, we from actually -- I think going what about a in when you think we the service we're going what perspective. have really on fourth have

actually, do we from as BXC as intra-European TNT fastest have growth, network will well integration. We perspective, completed the a BXB both provide will a That have; perspective. ground we network ground the as

States, to intercontinental, about the fastest with to have we the So and absolutely United going Europe that. network Europe. value looking and that can in intra-Europe, from are actually, today, the see we you that. share do take confident we're We're we leading proposition When think to we the double

So We're are to a advantage going origin both nine adding we countries. UPS and DHL. over have dramatic

And the e-commerce. United really And massive today, going DHL have expand as Full we're When of outside really it's talking different us our with that the features clearance both in right growth capabilities. had So story a States see upside. major service one, did share are than this product in to for XX% about international the third, behind markets under-penetrated. And market and in UPS serving as service not Europe. we of ways. parcel so then BXC are playing there opportunity. same about Number its the our well in, we growth the out the to more disclosure, outside we in of as we is we've changed core our of an opportunity in allow couple BXB world coming of only features are from of think you BXB our share both products FICP, FICP, this everywhere

it have a which or we entry low-value clearance the what customer. capabilities, for makes lower call cost we XX, now type So

reduces our cost automating to which the clearance serve. are We capabilities,

we're changing well, make retail terms conditions points we that provide and the the that of the attempts the again, retail, can so out of directly at on are to cost as that rolling number access mile. in Europe course, last we access to will lowering And We serve.

we the it's believe the upside, market FICP, helps a of growing share three for specifically, all United service e-commerce. in segments, but I probably to On these overnight we've that States, play. on a So hope it's clarify. rapidly most got BXB opportunity

you. Thank great. That's

to go Research. Scott we'll next, Group And Wolfe from

Your line is open.

afternoon, thanks, Hey, guys.

just a questions had few Mike, for you. So I

If You've have we been that's a highlighting growth billion to year has quarters. a my headwind, volume – about the comp is that normal of next earnings of incentive year, year. question. of the grown corporate incentive few $X like normal is elimination a more rate last more run a comp Then

losses should be there. future? been Is to less a in I there's in a that think of bunch COVID loss of normalize something start the to that

up mention print-related the is office there results the that is and at thing while FedEx as in spectacularly FedEx office, I impacted in revenue, previously, Scott, one Well, the ADV pandemic. mentioned we've corporate the would by unallocated print-related significantly revenue line, are

some would improvement start see we as to through there. we So come we'll anticipate that,

a to On helps. hope I anticipate guess, we comp, I XXXX. wouldn't variable at what would is to that say the headwind that looking you be I that FY in

you. Thank

it remarks. this turn at closing back for I'll time, to And management

quarter Please questions much. very call FedEx to call. you Thank have about Corporation you Thank you conference on additional Relations in earnings third for participation free if anyone the FedEx. Investor team, feel your

And that call Thank does our today. for your conclude you for participation.

now disconnect. You may